eBay Wins Counterfeit Case Against Tiffany

SAN FRANCISCO - eBay(EBAY Quote - Cramer on EBAY - Stock Picks) dodged a major bullet on Monday by prevailing in a court battle against upscale jeweler Tiffany(TIF Quote - Cramer on TIF - Stock Picks).

Judge Richard Sullivan of U.S. District Court in Manhattan rejected Tiffany's argument that eBay be held liable for trademark infringement, unfair competition and trademark dilution for allowing the sale of counterfeits on its site.

In his decision, Sullivan noted that eBay had removed those listings that Tiffany had accused of containing counterfeit items. But he held that the law does not require eBay to take preemptive steps to monitor and take down listings before they are made public.

"Quite simply, the law demands more specific knowledge as to which items are infringing and which seller is listing those items before requiring eBay to take action," he said.

Sullivan ruled that "given Tiffany's choice to sue eBay, rather than individual sellers, and this Court's conclusion that eBay does not continue to supply its services to those whom it knows or has reason to know are infringing Tiffany's trademark, Tiffany's claims against eBay must fail."

For eBay, the ruling came as a huge relief.

"Today's decision is a victory for consumers," the company said in a statement. "The ruling confirms that eBay acted reasonably and has adequate procedures in place to effectively address counterfeiting. The ruling appropriately establishes that protecting brands and trademarks is the primary burden of rights owners."

Last month, eBay lost a similar case to luxury retailer Louis Vuitton in French court. The court ordered the online auction giant to pay $63.2 million to compensate designers for allowing the sale of knock-offs on its site.

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