July 14th the US Federal Court of the Southern District of New York held that on-line auctioneer eBay's use of Tiffany & Co.'s trademarks in it's advertising was fair use and that trademark owners are solely responsible for protecting their trade marks.
EBay used Tiffany's marks on its homepage and in advertisements. The Court found that the use did not suggest sponsorship orendorsement but merely described goods offered for sale.
Since many of the goods were authentic and eBay promptly removed infringing merchandise following a complaint, the Court concluded that use in these circumstances was nominative and descriptive.
Ebay's use of Tiffany's mark as a keyword in search advertising was also found not to be an infringement, an issue the courts have split on in recent judgments.
Regarding contributory infringement, the Court found it immaterial whether eBay or Tiffany could more efficiently police eBay's site for counterfeits. The issue was "whether eBay continued to provide its website to sellers when eBay knew or had reason to know that those sellers were using the website to traffice in counterfeit goods." The Court found that trademark owners are solely responsible for protecting their trademarks.
The decision essentially endorses eBay’s Verified Rights Owner (VeRo) programme which allows trademark owners to report listings that infringe their rights. The French Court of First Instance in Troyes found the exact opposite when it ordered eBay to pay Hermès €20,000 in damages for allowing the online sale of 4 counterfeit handbags. The Court found eBay's VeRo programme inadquate, making suggestions on measures it could take to avoid the sale of counterfeits.
The Federal District Court's decision is technically not binding outside of New York City, but the Court is considered influential.
Tiffany is expected to appeal th decision.
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