By  on November 29, 2010

WASHINGTON — The U.S. Supreme Court on Monday rejected a petition from Tiffany & Co. asking the court to determine whether eBay Inc. can be held liable for trademark infringement.

In its petition, Tiffany claimed the online marketplace knowingly operates a site that is used to sell counterfeit products, even though eBay does not know which particular goods are fake.

The decision brings the six-year case to a close and hands eBay a major victory in the U.S. over trademark infringement cases that challenge its liability when third parties sell counterfeit products on the site.

Michelle Fang, eBay associate general counsel, said the ruling “validates eBay’s business practices,” and as in the court prior rulings, it finds that “eBay exceeds all legal requirements in the fight against counterfeits.” Tiffany executives declined to comment on the Supreme Court’s decision.

Tiffany’s petition to the high court, filed in August, appealed a decision handed down by the U.S. Second Circuit Court of Appeals in Manhattan in April that certified an earlier ruling that eBay was not liable for trademark infringement or dilution for the sale of counterfeit jewelry on its site. The three-judge circuit court panel upheld a lower court’s finding that eBay had taken adequate measures to block known counterfeit dealers and that it is ultimately Tiffany’s responsibility to patrol its own trademarks.

Tiffany claimed in the petition that eBay operates a site “it knows is used to sell substantial quantities of goods that infringe” on the jewelry brand’s trademarks. The New York-based company asked the Supreme Court to consider whether eBay could be held liable under the doctrine of contributory trademark infringement.

But San Jose, Calif.-based eBay successfully argued that “limiting the scope of the doctrine keeps the primary burden for policing trademarks on the marks’ owners, who have both the economic incentive and expertise to perform this function.”

“Tiffany’s proposed interpretation [of a previous Supreme Court’s decision on the doctrine] would result in a radical shifting of the burden traditionally borne by trademark owners onto third parties,” eBay said in its response brief. “That shift would adversely impact not only eBay, but also other online services that offer important, socially beneficial secondary markets for genuine merchandise.”

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