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EBay Trademark Suit Is The Real Thing

There are good deals on eBay, but most deals on Tiffany jewelry are too good to be true.

Tiffany & Co. alleges that the majority of so-called Tiffany items sold by the online marketplace are bogus. In a suit filed June 18, 2004, the company charges that eBay facilitates and participates in counterfeiting and trademark infringement of Tiffany's trademarks.

The suit comes at a time when online auctions top the list of online fraud complaints, at 12 percent, according to information from the U.S. Federal Trade Commission.

According to Tiffany, trademark infringement and counterfeiting in the United States exceed $200 billion annually, with around $30 billion worldwide, or 10 percent of the total counterfeit market, trafficked online.

In April 2003, the Federal Bureau of Investigation arrested several members of a counterfeiting ring in New York City that was selling counterfeit Tiffany merchandise on eBay. In 2002, Tiffany obtained a civil seizure against another company selling counterfeit jewelry on the site.

Tiffany charged that tens of thousands of counterfeit Tiffany items are sold on eBay each year, with the marketplace raking in hundreds of thousands of dollars from the sales.

Moreover, eBay features the Tiffany brand on its front pages and buys keyword advertising on Google and Yahoo touting low prices on Tiffany wares, the suit said.

Tiffany's position is that eBay's provision of the trading platform, as well as advertising of the brand, actively encourages the sale of counterfeit merchandise by suggesting that the items in question are genuine Tiffany goods.

The company sued after requests, beginning in 2003, for eBay to stop advertising and enabling the sale of the counterfeits. When two employees Tiffany employees policed the eBay site and found over 19,000 auctions of phony goods, eBay did remove the auctions.

In its initial response to the complaint, filed on October 1 2004, eBay denied all the charges. The company didn't respond to requests for comment, but a spokesman yesterday told the New York Times that because eBay never takes possession of goods sold on the site, it has no way of telling whether something is genuine or not.

That defense may not hold up in court, according to Lee Bromberg, a trademark specialist with the law firm Bromberg & Sunstein.

"That has been eBay's position whenever it's gotten entangled in one of these --and we're seeing increasing ferment about fakes being sold on eBay," he told internetnews.com. "There may be factual circumstances in which that is true, but there also may be circumstances in which they have more responsibility."

According to Bromberg, trials of cases like this one are fact-intensive; there are no marketplace generalities to be applied.

The extent of eBay's liability for contributing to the sale of bogus merchandise will depend on whether, in individual cases, the online marketplace could have or should have known it was helping to traffic fakes.

"They can't just say, 'Throw this case out, because we're just a marketplace.' That's not going to work," Bromberg said.

Tiffany said it had notified eBay that any lots of more than five items were likely fakes.

The case has fallen behind schedule; expert reports were to have been served by December 9, 2005, but none have yet been filed with the court.

In its most recent quarterly earnings statement, filed January 18, eBay reported net revenues of $1.329 billion.

A search of eBay's site on Tuesday showed 7905 Tiffany items for sale.