NEW YORK — EBay Inc. scored an important victory in court Monday as a federal judge said companies such as jeweler Tiffany & Co., not auction platforms like EBay, are responsible for policing their trademarks online.
Tiffany had sued EBay in 2004, arguing that most items listed for sale as genuine Tiffany products on EBay's sites were fakes.
But U.S. District Judge Richard J. Sullivan in New York ruled that EBay couldn't be held liable for trademark infringement "based solely on their generalized knowledge that trademark infringement might be occurring on their websites."
The judge said that when Tiffany notified EBay of suspected counterfeit goods, EBay "immediately removed those listings." Although the online auction firm refused to go further, by preemptively taking down suspicious listings for Tiffany jewelry, the judge said EBay didn't have to make such a move.
EBay spokeswoman Nichola Sharpe said Monday that the ruling "confirms that EBay acted reasonably and has adequate procedures in place to effectively address counterfeiting."
Mark Aaron, a spokesman for Tiffany, said the company was "shocked and deeply dismayed" by the decision. Tiffany lawyer James Swire said his company might appeal it. Swire said EBay should be responsible for counterfeits on its sites, or else sellers of fakes could "go on victimizing consumers."
The Tiffany ruling was a welcome twist for EBay, which recently lost a different case stemming from counterfeit luxury goods. Last month a French court ordered EBay to pay more than $61 million to LVMH Moet Hennessy Louis Vuitton, which said it was hurt by the sale of knockoff bags, perfume and clothes. EBay is appealing that ruling.
EBay says it spends tens of millions each year to combat counterfeiting. It runs a program that lets companies review listings and inform EBay of those they believe are for fake goods; EBay removes ones that participants flag. The company also suspends and blocks users who have been found selling or are suspected of selling fake goods on the site.
EBay has said that in 2007, 50,000 sellers were thrown out over counterfeits, and 40,000 previously suspended sellers were blocked from returning.
Anthony LoCicero, a lawyer at New York firm Amster Rothstein & Ebenstein who specializes in trademark and patent law, called the decision "tremendously important" for EBay and Internet commerce.
"Brand owners have to be vigilant," he said. "That's the message."
If the case had gone the other way, it could have made it much harder to legitimately buy and sell used but trademarked goods, said Wendy Seltzer, a fellow at Harvard University's Berkman Center for Internet and Society.
"If EBay had to preemptively examine the trademark status of every item that was posted . . . it would be much more expensive to put a listing on" the site, she said.