Court: eBay Not Liable for Counterfeits

Online auction giant eBay is not responsible for monitoring the presence of potentially counterfeit goods up for bid on its website, a federal court judge ruled on Monday. The decision came in a closely-watched dispute over the liability of companies whose websites sometimes facilitate the transfer of phony goods -- and violations of federal laws on copyright and trademark.

The lawsuit was filed by Tiffany & Co., which sought to hold eBay liable for failing to take steps to prevent the auctioning of thousands of pieces of phony Tiffany jewelry on the e-commerce company's website. After a non-jury trial, New York federal district court Judge Richard Sullivan issued a ruling Monday declaring that the law does not impose trademark infringement liability on eBay for its failure to take "preemptive steps" in light of the company's general knowledge that phony goods may be bought and sold on its site, and that ultimately "Tiffany must ultimately bear the burden of protecting its trademark." BusinessWeek calls the case "indicative of other lawsuits that are trying to put more onus on Internet companies to police their pages and ensure they're not being used as a conduit for copyrighted content and pirated or counterfeit goods."

• Read the Decision: Tiffany Inc. v. eBay, Inc.
• BusinessWeek: Judge to Tiffany: Police Your Own Brand
• Reuters: EBay Scores Victory in Internet Trademark Case
• The Hazards of Online Auctions (FindLaw)
• Trademarks and the Law (FindLaw)