Authenticate This: Revamping Secondary Trademark Liability Standards to Address a Worldwide Web of Counterfeits

Abstract

For years, eBay has described itself as an online sales platform that links buyers and sellers. In recent years, however, eBay has not only become the world’s largest online marketplace but also “the center of a new universe of counterfeit products.” Although eBay did not create the counterfeiting problem, its success as a forum for sales of counterfeit products has made it a target for luxury brand owners. Premier jeweler Tiffany & Co. (“Tiffany”) first filed suit against eBay in New York district court, claiming that eBay facilitated and allowed the sale of thousands of pieces of fake Tiffany products and, in the process, devalued the 150-year-old Tiffany brand. On appeal, the Second Circuit affirmed the district court’s conclusion that eBay was not contributorily liable for trademark infringement. Specifically, the court found that eBay’s prompt responses to notices of potentially infringing listings prevented it from possessing the specific knowledge of infringement necessary for a finding of contributory liability. This Note addresses the problem of trademark infringement of luxury brands on eBay. By examining the Second Circuit’s decision in Tiffany v. eBay, the efficacy of eBay’s current anti-fraud systems, and the conflicting interests at stake, this Note proposes a balancing framework that will likely promote the integrity of the online marketplace while allowing room for the public to engage in legitimate secondary market activity. Although counterfeiting is not limited to premium goods, luxury brands – especially coveted names like Tiffany, Louis Vuitton, and Gucci – are among the fastest-growing targets for counterfeits on the Internet. This Note explains how the Second Circuit’s approach to eBay’s secondary liability fails to lay a reasonable template for addressing misaligned interests and complex issues of technological change. Shielding eBay from liability where it lacks specific knowledge of infringement largely eliminates worthwhile incentives to develop more effective solutions. As there is evidence that eBay’s efforts at combating infringement have not been effective, a balancing framework will likely encourage eBay to adopt more effective alternative anti-counterfeiting mechanisms as they become available. Importantly, by putting pressure on eBay and Tiffany to work together, a balancing framework can promote a legitimate secondary marketplace without restricting technological innovation.