Courtroom is Packed for Tiffany vs. eBay Appellate Hearing
Yesterday attorneys for Tiffany and Co and eBay presented oral arguments in front of a federal appeals court in the ongoing five year case over the selling of fake Tiffany jewelry on eBay. Tiffany is appealing the lower court's ruling which puts the burden on Tiffany to scour eBay for fake items then notify eBay every time it finds one. Tiffany wants the burden to be on eBay to police its own items. The ruling will have a wide-ranging effect on how luxury items are sold on the Web.
"This is a new business model," Tiffany attorney James Swire said of eBay during his argument. "If you're going to place that burden on brand owners, you have to consider that there’s a lot of small brand owners out there."
Swire used his time before the three-judge panel to restate Tiffany's argument that eBay’s business model contributed to, and sometimes profited from, the sale of counterfeit goods. Based on that general knowledge, Swire said, the Web site should be held responsible for verifying the goods its users sell. Tiffany sought to protect the consumer and protect the brand owner, he said.
"That focus is not mentioned once in the district court decision," he added.
During Swire's argument, Judge Richard Goldberg interrupted to ask what more eBay could do to prevent counterfeits.
"They could do a lot more if they had the responsibility to take action," Swire replied.
Bruce Rich, attorney for eBay, countered that the Web site does respond to brand owners' specific requests and pointed out that Vero, its own notification system, had stopped hundreds of thousands of counterfeit auctions in recent years. Rich told the court Tiffany is asking eBay to police every item labeled "Tiffany" on the site with tools it does not have.
"Multiply that out by all the other luxury goods on sale at eBay and you would have a model that collapses," he said.
The appeals court panel acknowledged the importance of the case, allotting each side 20 minutes to make its argument, instead of the typical five or 10.
Judge Barrington Parker Jr. alluded to the historical significance of the proceedings when he referred to Inwood Laboratories Inc. vs. Ives Laboratories Inc., a 1982 case upon which the lower court based much of its ruling. In that case, the U.S. Supreme Court found that those not directly responsible for trademark infringement could still be held responsible for it. Brands have used the case to target flea market owners and landlords who allow counterfeiters to sell on their property.
"When Inwood was written, what we're dealing with now would have been in the realm of science fiction," Parker said.
This case and the Trovato vs. Forever 21 case are being closely watched by the fashion and retail industries. Usually appellate arguments happen in a deserted courtroom. But the Tiffany courtroom was packed with attorneys representing everyone from Amazon to Yahoo. The Council of Fashion Designers of America, Yahoo and Coty have all filed briefs in the case, hoping to influence the outcome in their favor.
