eBay’s nominative fair use of the trademark does not constitute direct infringement
In Tiffany v. eBay, ___ F. Supp. 2d ___, 2008 WL 2755787 (No. 04 Civ. 4607) (S.D.N.Y. , July 14, 2008) the Southern District of New York rejected an effort by popular jeweler Tiffany to distend the approach of contributory trademark infringement. Tiffany’s theory of secondary liability would have imposed liability for trademark infringement upon web-based intermediaries whose users infringe on trademarks by selling counterfeit goods.
eBay defended against the claims of direct infringement with the defense of nominative fair use, claiming that it was entitled to make minimal use of the trademark to inform third parties of the availability of Tiffany products on eBay. Id.It also contended that because it does not instantly sell anything on the site, and instead only attempts a service to sellers, it cannot be jointly or severally liable for the sellers’ infringement. Id.
Tiffany had discovered, as have many other brand/trademark owners, that many counterfeit “Tiffany” items were creature proclaimed and sold on eBay, falsely identified on the site as genuine treatises (whereas many authentic Tiffany articles were also advertised and sold on the site). eBay has in area numerous mechanisms to minimize counterfeit trades, including a process along which trademark owners can advertise eBay of a counterfeit listing and in response, eBay pulls the listing – this latter is often referred to as a “notice-and-takedown” contrive.
The Court coincided with eBay, holding that the tenet of nominative fair use enables resale of genuine, trademarked goods, so long as the reseller’s use is not likely to confuse consumers about the source of the product or the trademark owner’s sponsorship or affiliation with the reseller. 2008 WL 2755787, *26.
that “(1) it has a legal mark that is entitled to protection below the Lanham Act; and that (2) the defendant accustomed the mark, (3) in commerce, (4) ‘in articulation with the sale . . .
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The court summed up its opinion by stating, “The result of the petition of this legal standard is that Tiffany must ultimately bear the burden of protecting its trademark. Policymakers may but decide that the law as it stands is inadequate to defend rights owners in light of the increasing coverage of Internet commerce and the concomitant ascend in potential trademark infringement. Nevertheless, under the law as it currently stands, it does not stuff whether eBay or Tiffany could more efficiently bear the burden of policing the eBay website for Tiffany counterfeits — an open question left unresolved by this trial.” 2008 WL 2755787, *2.
But afterward hundreds of thousands of these takedown notices over several years, Tiffany contended that eBay had sufficient notice of such rampant counterfeiting of Tiffany products on its site that it should be more proactive about policing for those counterfeit items. It filed suit against eBay in the Southern District of New York, seeking to hold eBay liable especially for direct and contributory trademark infringement, in other related claims.
CONCLUSION
Tiffany & Co., the world-renowned jeweler, has spent 170 years creating its noted trademarked mark, synonymous with luxury and high quality. eBay is a renowned online marketplace where people can sell their material to eBay purchasers.
Background
or advertising of merchandise or services,’ (5) without the plaintiff’s consent.” 1-800Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 406-07 (2d Cir. 2005).
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Tiffany argued that eBay directly infringed on its “Tiffany” trademark in three ways: 1) by advertising the availability of Tiffany items on eBay and by deriving revenue from the sale of Tiffany products on the site; 2) by purchasing “sponsored links” on Google and Yahoo! advertising eBay’s sale of Tiffany products; and 3) via joint and several liability with the infringing eBay seller, since eBay advises and helps the seller. 2008 WL 2755787, *25.
In its attitude, the court alluded to potential hereafter deeds of lawmakers to residence trademark protection in the ever-changing globe of Internet commerce. Indeed, if Tiffany loses its pending appeal (which seems promising, given the comprehensive, well-researched and reasoned attitude of the District Court), the war may migrate to Congress, where advocates of trademark holders ambition hall to amplify their protections online in light of this verdict.
The court held that though evidence showed that although eBay had generalized knowledge that some of the claimed “Tiffany” goods sold on eBay might be counterfeit, that generalized notice was not sufficient to levy upon eBay “an positive duty to cure the problem.” 2008 WL 2755787, *38. The fact that many of the “Tiffany” products sold on eBay were authentic Tiffany products highlighted the truth that eBay only knew that some of the “Tiffany” items listed for sale on its site might infringe, and that was insufficient to shift the policing obligation to eBay. The court stated: “Such common knowledge … does not require eBay to take action to discontinue supplying its service to all those who might be busy in counterfeiting.” 2008 WL 2755787, *40.
To assess Tiffany’s contributory trademark infringement claim, the court relied heavily upon the determination in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982). In Inwood, the U.S. Supreme Court held that: “if a manufacturer or distributor intentionally induces variant to infringe a trademark, or if it continues to supply its product to an whom it knows or has reason to understand is engaging in trademark infringement, the contractor or distributor is contributorially responsible for any damage done for outcome of the pretence.” 456 U.S. at 854 (citations erased) (emphasis joined). The Tiffany court resolved that the Inwood test is appropriately applied to service providers beyond orthodox “manufacturers and distributors” and thus could be applied to eBay. 2008 WL 2755787, *36.
The Court sided with eBay on all of Tiffany’s claims, finding that, under current law, eBay’s actions do not subject it to liability under both direct or contributory theories. Tiffany v. eBay, ___ F. Supp. 2d ___, 2008 WL 2755787 (No. 04 Civ. 4607) (S.D.N.Y. , July 14, 2008). The court stated: “The center of this squabble is not if counterfeit Tiffany jewelry should flourish on eBay, yet prefer, who should bear the burden of policing Tiffany’s invaluable trademarks in Internet commerce.” 2008 WL 2755787, *1.The court resolute that Tiffany, not eBay pierce that burden.
In array apt create direct trademark infringement, a accuser must establish
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Tiffany argued that eBay should be held contributorily liable for trademark infringement for eBay was put on notice that counterfeit sales were rampant on the site, and it did not do ample to prevent them. 2008 WL 2755787, *1.
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[1] Compare this circumstance with the recently-decided Standard Process Inc. v. Total Health Discount Inc., 559 F. Supp. 2d 932 (E.D. Wisc. 2008). There, a corporation sued one online reseller of its products for resale without license. Like eBay, the reseller had purchased keyword advertisements embodying the trademarked terms. However, diverse the eBay, the reseller comprised terms like “we” and “our” in its online product descriptions, potential confusing users almost the sponsorship alternatively affiliation of the trademark owner with the reseller, precluding the nominative fair use ward. 559 F. Supp. 2d by 938-939.
eBay’s generalized notice of infringement does not shift the valid burden to eBay
product or service to the infringer.” 2008 WL 2755787, *46.
Moreover, the court lauded the nationwide anti-fraud amounts and investments eBay had made to minimize the risk of fraudulent sales. The court also famous that eBay had been exceedingly responsive whenever a trademark holder like Tiffany notified eBay of a specific instance of infringement or deceit, catching appropriate treads to take down the offending sale and, constantly, discontinue the rights of the offending jobber. The court noted: “Courts have routinely declined to impose liability where a defendant, once it possesses sufficient knowledge, takes ‘appropriate steps’ to hack off the supply of its
However, those advocates will face against from free lecture advocates and representatives of online intermediaries, who hail the Tiffany ruling as a victory. Tiffany protects service providers from the illegal acts of their users, unless they have specific wisdom or notice of those acts. If online service providers can be held liable for the pleaded infringement of their users, their reaction will afterward be to remove anything that might possibly constitute infringement. That slippery slope will turn service providers into censors, potentially leading to removal of creative and official online behaviour and speech.
Tiffany tried to discuss that eBay should be held to the “reasonable anticipation” test articulated in the Restatement (Third) of Unfair Competition, section 27 (1995). Under the Restatement connection, a gathering can be found contributorily liable for infringement when it fails to take precautions against a third party’s infringement if that infringement tin be “reasonably anticipated.” 2008 WL 2755787, *33. Tiffany argued that eBay could reasonably forecast the infringement deserving to the many before examples of it, and should reasonably be expected to take precautions opposition it. Id. The Court upheld the Inwood “knows or has cause to know” criterion, citing a great many courts who have similarly upheld the Inwood standard over that of the Restatement. Id.
In order to establish nominative fair use, eBay had to show: 1) that the product in answer cannot be readily identified without use of the trademark; 2) only as many of the mark is used as necessary to identify the product, and 3) eBay did not do anything to recommend sponsorship or endorsement by Tiffany[1]. 2008 WL 2755787, *27.The Court found that eBay met all of these units to testify nominative fair use, which served as a defense to all of Tiffany’s direct infringement claims. Id. at **27-28.
Similarly, in this case, the tribunal declined to hold eBay contributorily liable. Its generalized notice was insufficient to require it to take preemptive operation to discourage whichever infringement from happening. Moreover, when it received characteristic placard of infringement, it took appropriate responsive action, which is always that the present decree requires of eBay.
