In a much anticipated decision, Judge Richard Sullivan of the United States District Court for the Southern District of New York has ruled in favor of eBay on all five claims against it brought by Tiffany & Co.

Tiffany's basic contention was that eBay was both directly and contributorily liable for the sale of counterfeit Tiffany merchandise through eBay's online auction site. The Court concluded that Tiffany failed to carry its burden in all five causes of action, finding specifically as follows:

  • eBay's uses of Tiffany's trademarks in its advertising, both on its homepage and via the purchase of Sponsored Links from Yahoo! and Google, are protected, nominative fair use of the marks.
  • eBay is not liable for contributory trademark infringement, because eBay discontinued supplying its services to sellers when it knew or had reason to know that those sellers were infringing Tiffany's trademarks, and rejecting Tiffany's claim that the court should consider whether eBay could have reasonably anticipated possible infringement by sellers. The court concluded that Tiffany bears the burden of protecting its own trademark.
  • Tiffany did not meet its burden to prove claims for unfair competition, false advertising or dilution.

The court found that eBay took many steps to stop the sale of counterfeit merchandise on its auction site and that the cumulative effect of all these steps insulated it from liability with respect to the sale of counterfeit Tiffany merchandise on its site.

While the Court stated that the same standards for liability that have been imposed on bricks and mortar locations applied to eBay's online sales, and eBay certainly had general knowledge as to the sale of counterfeit Tiffany merchandise on its website, eBay's generalized knowledge did not impose an affirmative duty to remedy the problem. The court also found that eBay was not willfully blind to evidence of infringement on its site. A finding of willful blindness may well have triggered a different result.

Today's ruling is in direct contrast to two decisions issued by French courts in recent weeks in which eBay was found to be liable for the sale of fake LVMH branded goods. In a case brought by LVMH Moet Hennessy Louis Vuitton SA, eBay was ordered to pay LVMH more than $61 million for the sales of counterfeit goods on its site. EBay is appealing that ruling.