Tiffany (NJ), Inc. v. eBay, Inc.
600 F.3d 93 (2010)
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Rule of Law:
An online service provider is not liable for contributory trademark infringement for counterfeit goods sold by third parties on its platform if, upon learning of specific infringing listings, it promptly removes them. Mere generalized knowledge that infringing activity may be occurring is insufficient to establish liability.
Facts:
- Tiffany and Company ('Tiffany'), a luxury jewelry brand, sells its new products exclusively through its own authorized channels.
- eBay, Inc. ('eBay') operates a massive online marketplace where third-party sellers can list and sell goods, but eBay itself does not take possession of or sell the items.
- Tiffany became aware that a significant number of counterfeit Tiffany jewelry items were being sold on eBay by third-party users.
- Tiffany sent demand letters to eBay and conducted 'Buying Programs' which found over 73% of purported Tiffany items purchased on the site were counterfeit, sharing these results with eBay.
- eBay had general knowledge that some counterfeit Tiffany goods were being sold on its site and received complaints from buyers.
- In response, eBay spent millions on anti-counterfeiting measures, including a 'notice-and-take-down' system ('VeRO') which allowed rights-holders to report infringing listings.
- When Tiffany used the VeRO system to report specific listings, eBay promptly removed them and penalized repeat offenders.
- eBay advertised the availability of Tiffany merchandise on its website and purchased sponsored links on search engines to promote sales of 'Tiffany' items.
Procedural Posture:
- Tiffany filed a lawsuit against eBay in the U.S. District Court for the Southern District of New York.
- The complaint alleged, among other things, direct and contributory trademark infringement, trademark dilution, and false advertising.
- Following a week-long bench trial, the district court entered a judgment in favor of eBay on all of Tiffany's claims.
- Tiffany, as the appellant, appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Is an online marketplace operator contributorily liable for trademark infringement when it has generalized knowledge that counterfeit goods are being sold on its site, but it removes specific infringing listings upon notification from the trademark owner?
Opinions:
Majority - Sack, J.
No. An online marketplace operator is not contributorily liable for trademark infringement under these circumstances. To establish contributory trademark infringement under the standard from Inwood Laboratories, Inc. v. Ives Laboratories, Inc., a plaintiff must show the defendant service provider either intentionally induced the infringement or continued to supply its services to someone it knew or had reason to know was engaging in infringement. The court held that the 'knows or has reason to know' standard requires more than generalized knowledge of infringing activity on a platform. Instead, liability attaches only when a service provider has specific knowledge of particular infringing listings or sellers and fails to take action. Because eBay promptly removed any specific listings Tiffany identified through its 'notice-and-take-down' system, it did not continue to supply its service to known infringers. The court also rejected the argument that eBay was willfully blind, finding that eBay's substantial investment in anti-counterfeiting measures demonstrated it was not ignoring the problem. The court affirmed the district court's judgment for eBay on the trademark infringement and dilution claims but remanded the false advertising claim for further consideration.
Analysis:
This landmark decision establishes a high bar for holding online intermediaries liable for contributory trademark infringement. By distinguishing between generalized awareness and specific knowledge, the ruling places the primary burden on trademark holders to actively police online marketplaces and report specific instances of infringement. This framework has profoundly shaped the law of internet intermediary liability, providing significant protection for platforms like eBay and Amazon so long as they maintain effective 'notice-and-take-down' procedures. It forces rights-holders to invest heavily in enforcement rather than shifting the entire policing burden onto the platforms themselves.
