No one blinks

Reuters reports that the Tiffany trademark suit against eBay is really going to trial. Really!

I am sure no one expected this. I certainly didn’t.

Old timers here will perhaps tire of my raising this again, but there are, I am thankful to say, a lot of new readers of this blog since the question of third-party liability for auction sites was last broached. Along with attorney Roberta Kraus I was the primary co-author of this report (PDF) several years ago that assessed whether or not such an action could lie. By the time it was passed up to the leadership of the “City Bar” here, it had been quite committee-fied — lots of hedging and “balance,” which is what committee reports have. But in fact the report was based on a much more forceful memorandum I had originally written for a client, urging that there definitely should in fact be third party liability here just as there is for brick and mortar landlords who knowingly permit markets in counterfeits , a conclusion European courts have had no difficulty reaching either.

I don’t mind saying that a Tiffany attorney asked me for a copy of the City Bar version of the report, which I had mentioned in an email discussion group, shortly before Tiffany brought suit; it may have stiffened their spine but it surely was not a “but for” cause of the decision to proceed with litigation. Tiffany and other luxury goods companies are getting killed on eBay.

eBay has had forever to clean up its act on this, and while its efforts are greater than zero, they don’t come close to what they ought to be. (It certainly knows how to act as a trademark plaintiff when its own ox is being gored.) The problem for Tiffany is that American courts are simply flabby on this issue: They are easily swayed by the argument that it’s “just too hard” for eBay to “police” a million zillion auctions. “Just too hard,” though, really means “just too expensive” — but does eBay has a constitutional right to a billion dollars in profits on over $6 billion in revenues?

I don’t begrudge eBay the money, but I do begrudge them essentially placing the obligation to police its own market on the owners of trademarks. They’re profitable too, but the law grants them the right to whatever nutty markup the public is willing to pay and to protection from counterfeits. There is no reason under that law that eBay should be allowed to profit so profoundly from creating a market in counterfeits, including a piece of the action for every sale of a fake that takes place. Maybe Tiffany will be the one to force the issue in this country — finally.

Originally posted 2007-11-13 12:37:45. Republished by Blog Post Promoter