What is a Market?

The French have views that strike Americans as strange on lots of issues, like Middle East terrorists, mistresses, Web censorship and now trademark rip-offs. So it was a big relief when, after last month’s French decisions for Louis Vitton and Hermes against eBay, the U.S. courts disagreed. It’s Up to You, Tiffany, to Keep the Counterfeiters Away [Law Blog-WSJ.com]. (The French apparently never got the memo that the Internet is a borderless network where national law can’t be effectively applied.) Seems that Tiffany’s high-priced lawyers argued that there was so much counterfeit merchandise sold on eBay that the company somehow had a legal obligation to police its auctions.

Well, that’s backwards. Intellectual property owners already can demand “notice and takedown” of infringing materials; the same thing is undoubtedly true of eBay. All that Vuitton, Hermes or Tiffany’s had to do was monitor auction and sales listings and notify eBay when they found fake items. Well, it’s much easier just to shift blame — and money — to someone else than take responsibility. All this case was about was moving financial responsibility for the cost of running a business (jewelry) from the retailer to the “deep pockets” dot.com company. That’s shameful.

In fact, U.S. District Judge Richard J. Sullivan in New York ruled that eBay and affiliates can’t be held liable for trademark infringement “based solely on their generalized knowledge that trademark infringement might be occurring on their Web sites.” The judge reasoned that when Tiffany notified eBay of suspected counterfeit goods, eBay “immediately removed those listings.” That’s the correct decision and strikes the appropriate balance between IP holders and Web sites, IMHO.