Two recent trademark decisions regarding eBay's online initiatives to track counterfeit products stand in stark contrast to one another and highlight contradictory views about who should bear the burden of tracking online trademark infringement. A United States federal judge ruled on July 14 that eBay is not responsible for monitoring the sale of counterfeit goods, and that its current procedures for tracking infringement are reasonable. A French Court of Appeals, on the other hand, fined eBay $61 million in June for selling counterfeit Louis Vuitton and Dior products.
On June 18, 2004, Tiffany and Company ("Tiffany") sued eBay, claiming eBay was liable for trademark infringement, false advertising, unfair competition, and direct and contributory trademark dilution by allowing the sale of counterfeit jewelry on its online auction. Tiffany alleged that it, along with other large designer labels, loses $30 billion annually to online sales of knockoff products. Both Plaintiff and Defendant attempted to prove the inadequacy of other's anti-counterfeiting measures. Tiffany claimed that eBay's $20 million annual anti-counterfeiting budget is insufficient, while eBay claimed that the $14 million Tiffany spends annually to prevent trademark infringement (0.1 percent of its annual revenue) is also insufficient. EBay also pointed out that it maintains a staff of 250 full-time employees responsible solely for tracking trademark infringement, and that through its VeRO (Verified Rights Owner) Program, owners can point out listings selling counterfeit goods which eBay then removes.
A New York judge ruled in favor of eBay on every single count, asserting that trademark owners, not websites, are primarily responsible for protecting their rights. In its June decision, which Tiffany requested the New York Federal Court to recognize before issuing its decision, the French Court of Appeals ruled differently. The Tribunal de Commerce in Paris awarded Louis Vuitton and Christian Dior Couture €38.6 million in damages ($61 million), for eBay's sales of counterfeit products and urged eBay to institute a global solution to the problem of counterfeit products.
A possible explanation for the different outcomes is that the ultra fashion-conscious French culture might simply be more sympathetic to designer labels combating online trademark infringement. France and the United States are both attempting to police internet activity and protect intellectual property, but they fundamentally disagree as to what is realistic and who can effectively achieve these goals.
Vol. 53, June 2010