Tiffany v. eBay: Court Rejects Tiffany's Expansive Trademark Infringement Theories
In a decision that surely will be cited many times in coming years, Judge Richard Sullivan today sided with eBay in his decision [sixty-six page PDF] in the Tiffany v. eBay trademark trial. In so doing, the judge confirmed that trademark law is about consumer protection, not about squelching speech, and also rejected an attempt by Tiffany radically to expand the reach of contributory infringement.
First, the judge squarely rejected Tiffany's direct infringement claim. Tiffany noted that eBay had, for a time, "actively advertised the availability of Tiffany merchandise," both on eBay's own website and using sponsored links on Google and Yahoo!. The judge's reaction was, in a nutshell, "so what?" The judge rightly concluded that there isn't any reasonable way to describe the fact that people are selling Tiffany goods without saying "Tiffany." So long as you don't confuse consumers about the source of goods and/or suggest a mark owner endorses your activity, you're free to use a trademark accurately to describe products made by the trademark owner - here, to describe Tiffany jewelry as, um, "Tiffany jewelry."
But what if consumers are confused in another way, because it isn't Tiffany jewelry? What if it's fake? Tiffany argued that eBay should be held liable for sales of counterfeit Tiffany goods on the eBay site because eBay had been put on notice that such sales were (according to Tiffany) rampant on the site. Leaving aside the question of how extensive the sale of counterfeit goods actually is on eBay (the judge pointed out a number of problems with Tiffany's evidence), generalized notice of infringement - notice that there's "infringement in the air," as opposed to notice of a specific instance of claimed infringement - shouldn't magically shift the burden of policing for counterfeits from Tiffany to eBay. And the evidence showed that eBay quickly takes down listings when Tiffany sends specific notices that the goods being sold are not genuine.
Happily, the judge recognized as much and rejected Tiffany's "infringement in the air" theory. He pointed to a 1946 decision in which Coca-Cola had tried to argue that Snow Crest Beverages should be held liable, under a theory of contributory infringement, for the fact that some bartenders were using its Polar Cola in "rum and Coke" cocktails. "The  court reasoned that if it imputed knowledge to the defendant based on Coca-Cola's blanket demand, the court would be expanding Coca-Cola's property right in its trademark, allowing Coca-Cola to secure a monopoly over the entire mixed drink trade." Judge Sullivan concluded that just as Snow Crest shouldn't be held liable based on generalized notice of what others might be doing with its product, eBay shouldn't be held liable based on generalized notice that some of its users (or even many of its users) were selling counterfeit Tiffany goods on its site:
Significantly, Tiffany has not alleged, nor does the evidence support a conclusion, that all of the Tiffany merchandise sold through eBay is counterfeit. . . . [T]he doctrine of contributory trademark infringement should not be used to require defendants to refuse to provide a product or service to those who merely might infringe the trademark. . . . Were Tiffany to prevail on its argument that generalized statements of infringement were sufficient to impute knowledge to eBay of any and all infringing acts, Tiffany’s rights in its mark would dramatically expand, potentially stifling legitimate sales of Tiffany goods on eBay. . . .* * *
The Court is not unsympathetic to Tiffany and other rights owners who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the Internet. Nevertheless, the law is clear: it is the trademark owner's burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites.
This decision sends a clear signal to intermediaries worried about their liability for their users' potentially infringing activity: it is not your job to police all potential infringement on your site. That is a good thing for free speech of all kinds. When platform providers are concerned about being held liable for the alleged misdeeds of their users, their reaction is to remove anything that might be infringing. As a result, wide swaths of creative and lawful conduct are wiped from the Internet, like dolphins caught in a tuna driftnet. We're pleased Judge Sullivan resisted Tiffany's urging to shift its policing burden onto eBay, so that the dolphins can live to swim another day.