By  on July 15, 2008

EBay’s business model has been validated — at least on one side of the Atlantic.

After a victory last month in France, luxury brands and other labels sold on eBay in the U.S. were dealt a major setback Monday in their battle with online counterfeiters. A federal judge in Manhattan, ruling in a trademark lawsuit filed four years ago by Tiffany & Co., said the giant online auction house does not have the legal responsibility to prevent the sale of counterfeit goods.

In what is believed to have been the first lawsuit of its kind in the U.S.,

Tiffany had sought to shift the responsibility for policing a trademark from brand owner to eBay. However, Judge Richard Sullivan ruled that it is the burden of Tiffany, not eBay, to maintain and enforce its mark. EBay fulfilled its legal obligations by taking adequate precautions to block the sale of fakes, Sullivan concluded.

Tiffany had sought to shift the responsibility for policing a trademark from brand owner to eBay. However, Judge Richard Sullivan ruled that it is the burden of Tiffany, not eBay, to maintain and enforce its mark. EBay fulfilled its legal obligations by taking adequate precautions to block the sale of fakes, Sullivan concluded.

“The rapid development of the Internet and Web sites like eBay have created new ways for sellers and buyers to connect and to expand their businesses beyond geographical limits,” Sullivan wrote in his 66-page decision. “These new markets have also, however, given counterfeiters new opportunities to expand their reach.

“The court is not unsympathetic to Tiffany and other rights owners who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the Internet,” he continued. “Nevertheless, the law is clear: it is the trademark owner’s burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their general knowledge that trademark infringement might be occurring on their Web site.”

 

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