Internet Trademark Case Summaries

Tiffany (NJ) Inc. v. eBay, Inc.

576F. Supp. 2d 463 (S.D.N.Y. July 14, 2008)

Plaintiff Tiffany sold jewelry under the federally registered marks TIFFANY and TIFFANY & CO. Sellers on eBay’s Internet marketplace and auction website offered for sale both genuine and counterfeit Tiffany jewelry. eBay advertised the availability of Tiffany jewelry on the home page of its main website and included the TIFFANY mark in a list of links to the most popular brand names available for sale on eBay. When clicked, the TIFFANY link would take users directly to listings offering Tiffany jewelry (both genuine and counterfeit). eBay advertised to its sellers and buyers that TIFFANY and TIFFANY & CO were two of the top search terms in its jewelry and watch category. eBay also purchased keywords containing Tiffany’s marks on Yahoo! and Google that resulted in advertisements for Tiffany items available for sale on eBay. Although eBay ceased directly purchasing keywords containing the TIFFANY marks, it continued to reimburse “affiliates” for their purchase of TIFFANY keywords on Google that advertised sales of Tiffany jewelry on eBay. Tiffany sued for trademark infringement (direct and contributory) and dilution by both blurring and tarnishing, among other claims. eBay defended its use of Tiffany’s marks under the doctrine of nominative fair use, arguing it was “entitled to inform third parties of the availability of listings of Tiffany merchandise on its website.” Tiffany claimed that eBay contributed to infringement by “continu[ing] to provide its platform despite knowledge, or reason to know, that counterfeit merchandise is being sold.” eBay argued that it had adequate fraud-detection processes in place, including systems that allowed Tiffany employees to monitor Tiffany auctions and submit to eBay a Notice of Claimed Infringement form (“NOCI”) requesting investigation and removal of any auction offering counterfeit goods. Following a bench trial, the court agreed with eBay on the direct trademark infringement claim, finding that the uses of the TIFFANY marks on its website were protected by the nominative fair use doctrine. First, the court held that eBay’s use of the TIFFANY marks on its home page as popular brand-name links and in company publications to sellers were protected under the nominative fair use doctrine because: (1) Tiffany jewelry was not identifiable without the use of the TIFFANY mark—“[a]bsent the Tiffany brand, a silver heart necklace . . . would simply be a piece of jewelry, instead of a symbol of luxury,” (2) eBay’s use of the TIFFANY marks was limited to the TIFFANY name, i.e., eBay did not use any of Tiffany’s fonts or logos, and (3) eBay did not do anything to suggest sponsorship or endorsement by Tiffany, as there was no evidence presented that the public thought Tiffany was selling its own merchandise through eBay. According to the court, “while customers may have been confused about whether the product they purchased was an authentic Tiffany [product] or a counterfeit, they were certainly not confused about the immediate source of the silver jewelry namely, individual eBay sellers.” The court also noted that Tiffany’s “About Me” page on the eBay website clearly stated the risks faced by consumers purchasing TIFFANY jewelry on eBay, which “constituted an explicit disclaimer that Tiffany did not endorse or sanction the sale of its products through eBay.” Second, the court held that the nominative fair use doctrine also protected eBay’s purchase of the TIFFANY marks as Google and Yahoo! keywords. The court initially examined if eBay’s keyword purchases constituted use in commerce under 1-800 Contacts v. WhenU.com, where the Second Circuit found no commercial use of a trademark when used as an internal mechanism to trigger pop-up advertisements. The court distinguished 1-800 Contacts, finding that eBay’s use was not “entirely internal” because the keyword-produced ads displayed Tiffany’s marks to the Internet searcher, rather than keeping them internal as in 1-800 Contacts. For example, one sponsored link stated “Tiffany for sale. New and Used Tiffany for sale. Check out the deals now! www.ebay.com.” The court then held that eBay’s keyword purchases were permissible nominative fair uses because “eBay’s use of the TIFFANY marks in sponsored links is effectively identical to its use of the Tiffany name on the eBay website.” The court rejected Tiffany’s argument that eBay was directly liable for trademark infringement on the theory that eBay was jointly and severely liable with the sellers of counterfeit TIFFANY products because: (1) eBay never took possession of products sold through its website, and (2) eBay did not directly sell the counterfeit TIFFANY goods to buyers. Turning to Tiffany’s contributory trademark infringement claim, the court analyzed the standard set out by the Supreme Court in Inwood Labs, which provided for liability if “a manufacturer or distributor . . . continues to supply its product to one who it knows or has reason to know is engaging in trademark infringement.” The court compared this standard with an alternative Restatement standard proposed by Tiffany that substituted a lower “failure to take reasonable precautions” knowledge standard for the Inwood Labs “knows or has reason to know” standard. The court rejected Tiffany’s argument, stating that that the “reasonable anticipation” standard was discussed in an Inwood Labs concurrence and rejected by the majority of the Court. The court next found that the Inwood Labs standard was not limited to manufacturers or distributors of products and applied to eBay’s online marketplace and services over which eBay had control. The court then found eBay’s knowledge of third-party infringement too “generalized” to warrant contributory liability. Tiffany had provided eBay with demand letters “articulating its belief that large quantities of counterfeit Tiffany merchandise were being sold thorough eBay,” the results of the “Tiffany Buying Program” where 73% of random purchases of Tiffany goods bought from eBay auctions were found to be counterfeit, and evidence of thousands of NOCIs “alleging a good faith belief that certain listings were counterfeit.” In finding this evidence too generalized, the court cited “a substantial number of authentic items sold on eBay” and refused to expand Tiffany’s rights in its marks to the point that legitimate sales of Tiffany goods on eBay were stifled. The court also rejected Tiffany’s Buying Program evidence, which was not provided to eBay until after the lawsuit was filed, as “methodologically flawed and of questionable value.” Tiffany also failed to establish that eBay was “willfully blind” to counterfeiting activities on its website. According to the court, “the record clearly shows that over the time period relevant to this litigation, eBay was continually taking steps to further refine its anti-fraud measures” and that eBay invested “significant resources” to detect and eliminate counterfeit goods. Finally, the court found that when eBay had sufficient knowledge of an infringement it removed that listing, and that eBay suspended sellers who repeatedly engaged in counterfeit activity. Accordingly, the court held that eBay was not liable for contributory trademark infringement. Finally, the court held that Tiffany failed to show that eBay used the TIFFANY marks in a way likely to cause dilution by blurring or tarnishment because eBay did not use those marks to identify its own goods and services. Moreover, even if Tiffany had successfully demonstrated dilution by blurring or tarnishing, eBay’s use of the TIFFANY marks fell within the statute’s nominative fair use exception.