eBay Prevails In Tiffany Counterfeiting SuiteBay Prevails In Tiffany Counterfeiting Suit

Legendary jeweler Tiffany has failed to convince a federal appellate court to reverse a lower court ruling that found eBay was not responsible for counterfeit goods sold on its auction site.

The U.S. Second Circuit Court of Appeal left intact Thursday the lower court ruling handed down in July 2008 in New York. In agreeing with the previous ruling, the appellate court found that eBay is meeting its responsibilities in combating counterfeiting under trademark law.

Tiffany sued eBay in the summer of 2004 after failing to convince eBay to take additional actions to combat sellers of counterfeit products. On Thursday, Tiffany issued a statement saying it was "very disappointed" in the ruling, and had harsh words for eBay.

"As an e-commerce leader, eBay has a responsibility to protect consumers and promote trust in its marketplace," Michael J. Kowalski, chairman and chief executive officer of Tiffany, said. "EBay knew that counterfeit merchandise was being sold on its site -- and eBay took no effective steps to stop it.

"EBay deliberately misled consumers for profit, and unfortunately, the court has justified its actions. The consumer is the real loser today."

Tiffany said the latest decision leaves room for the jeweler to purse claims of false advertising against eBay. The company also said it would consider an appeal to the U.S. Supreme Court.

Of course, eBay had a different take on the ruling, calling it a "critically important victory for online consumers."

"The ruling validates eBay's leading efforts to fight counterfeiting and its commitment to providing consumers with choice and value in a safe and trusted marketplace," eBay lawyer Michael R. Jacobson said in a statement. "We continue to support cooperation, rather than litigation, as the best way to address these issues in everyone's best interests."

Jacobson said the company was confident that it would win, if Tiffany decided to pursue false advertising claims against eBay.

EBay removes counterfeits when manufacturers of the real products bring the knockoffs to its attention. The company has developed a reporting system for manufacturers and blacklists sellers caught peddling fakes.

Nevertheless, Tiffany claims eBay isn't doing enough. In the suit, the New York jeweler claimed that in 2003 and 2004 the company had eBay remove more than 19,000 auctions selling counterfeit Tiffany products.

However, the courts so far have agreed with eBay's argument that it is up to the trademark owners to watch for counterfeits, and its eBay's responsibility to remove fakes as soon as they are found.