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Federal appeals court rules Ebay has no duty to police trademarks

[JURIST] The US Court of Appeals for the Second Circuit [official website] ruled [opinion, PDF] Thursday that Internet auction house eBay [corporate website] is not required to actively monitor its website for the sale of counterfeit goods. The decision comes in a case brought by jeweler Tiffany & Company [corporate website], alleging that eBay diluted its trademark by facilitating the sale of "copycat" Tiffany jewelry. EBay argued that it had no responsibility to take proactive steps against the sale of counterfeit items. Affirming a lower court decision [JURIST report], the appeals court stated:

[Ebay] may lawfully use a plaintiff's trademark where doing so is necessary to describe the plaintiff's product and does not imply a false affiliation or endorsement by the plaintiff of the defendant. While a trademark conveys an exclusive right to the use of a mark in commerce in the area reserved, that right generally does not prevent one who trades a branded product from accurately describing it by its brand name, so long as the trader does not create confusion by implying an affiliation with the owner of the product.

While affirming that Ebay did not infringe Tiffany's trademark, the court remanded Tiffany's claim of false advertising.

The Second Circuit ruling marks a dramatic contrast with recent rulings in Europe. In February, the Paris District Court [official website, in French] ordered [JURIST report] eBay to pay LVMH Moet Hennessy Louis Vuitton (LVMH) [corporate website] 200,000 euros ($275,000) in damages for paying search engines to direct customers to counterfeit LVMH products. In a separate case in September, the European Court of Justice (ECJ) [official website] issued an advisory opinion against LVMH [JURIST report] in its suit to collect damages from Google for Google's AdWords system, which allows companies and individuals to purchase advertising space when a user searches for a product or brand name. In 2008, a French court ordered eBay to pay LVMH $63 million [JURIST report] for failing to prevent the sale of counterfeit luxury goods.

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