Summary
The Second Circuit reviewed Tiffany's claims that eBay was liable for trademark infringement, contributory trademark infringement, trademark dilution, and false advertising arising from counterfeit Tiffany goods sold through eBay's online marketplace. The court affirmed judgment for eBay on the trademark infringement and dilution claims, concluding that eBay's use of Tiffany's mark to describe genuine goods was lawful and that eBay was not contributorily liable on the record. It remanded for further proceedings on Tiffany's false advertising claim.
Topics
Practice areas
Questions Presented
- Whether eBay's use of the Tiffany mark in website listings and sponsored-link advertisements constituted direct trademark infringement.
- Whether eBay was contributorily liable for trademark infringement by sellers of counterfeit Tiffany goods under the Inwood standard.
- Whether eBay was willfully blind to particular infringing transactions for purposes of contributory trademark liability.
- Whether eBay's use of the Tiffany mark constituted trademark dilution by blurring or tarnishment.
- Whether eBay's advertisements for Tiffany goods were literally false or likely to mislead or confuse consumers under the Lanham Act.
Holdings
- eBay's use of the Tiffany mark to identify and advertise genuine Tiffany goods offered through its marketplace was lawful because it accurately described the goods and did not imply Tiffany's affiliation with or endorsement of eBay.
- A service provider is not contributorily liable under Inwood merely because it has general knowledge that its service is being used to sell counterfeit goods; liability requires contemporary knowledge of particular listings or sellers that are infringing or will infringe.
- A service provider may not deliberately shield itself from learning of particular infringing transactions; willful blindness is equivalent to actual knowledge for purposes of Lanham Act contributory liability.
- eBay did not dilute Tiffany's mark by blurring or tarnishment because it did not use the mark as a designation for eBay's own product or mark, and there was no second mark or product to blur with or tarnish Tiffany.
- The record did not permit affirmance of the district court's conclusion that eBay's advertisements were not likely to mislead or confuse consumers; the false advertising claim had to be remanded for reconsideration based on extrinsic evidence of consumer deception or confusion.
Key quotations
“For contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods.” (108)
“A service provider is not, we think, permitted willful blindness.” (110)
“willful blindness is equivalent to actual knowledge for purposes of the Lanham Act.” (110)
“The law prohibits an advertisement that implies that all of the goods offered on a defendant's website are genuine when in fact, as here, a sizeable proportion of them are not.” (114)
Factual background
eBay operated an online marketplace through which users sold genuine and counterfeit goods, including purported Tiffany jewelry, while eBay earned listing and transaction fees. Tiffany's investigations found high percentages of counterfeit items among the items it purchased through eBay, although the district court also found that many authentic Tiffany goods were sold on the site. eBay used notice-and-takedown procedures, fraud filters, seller warnings and suspensions, buyer protections, and other anti-counterfeiting measures. eBay also advertised the availability of Tiffany merchandise through website links and search-engine advertisements.
Procedural history
The district court conducted a week-long bench trial and issued findings of fact and conclusions of law on July 14, 2008. It entered judgment for eBay on all claims. The Second Circuit affirmed the judgment on the trademark infringement and dilution claims but remanded the false advertising claim for further proceedings and retained jurisdiction for possible appellate review.
Remand instructions
The district court was instructed to reconsider Tiffany's false advertising claim, limited to whether eBay's advertisements were likely to mislead or confuse consumers in light of the opinion and the applicable extrinsic-evidence standard. The judgment was affirmed as to trademark infringement and dilution. The Second Circuit retained jurisdiction for possible review after the district court's judgment on remand.