Tiffany and eBay in Fight Over Fakes - New York Times

“I will hopefully turn this around very speedily later that,” he told the lawyers.

Mr. Potter said that whether the decide base that eBay had the same responsibility as flea markets and traditional retail stores to no sell counterfeit products, “eBay ambition possible must either stop auctioning noted elegance productions or radically vary the direction it does business so that it tin precertify the authenticity of those products.”

SAN FRANCISCO, Nov. 26 — For years, eBay has defined itself simply as an online marketplace that correlates purchasers and sellers.

But in his closing controversy last Tuesday, James B. Swire,Over-Sized Eyewear Still In Style, the attorney for Tiffany, told Judge Sullivan that eBay instantly advertised the sale of Tiffany jewelry on its home sheet, and “because eBay profits from the sales generated at these and other actions,” Tiffany considers its movements direct copyright infringement.

“As a marketplace, we not take estate of any of the goods sold on the site, so it would be impossible for us to solely determine the authenticity of an item,” Mr. Durzy said. “And we work on and beyond what the law requires us to do to keep counterfeits off the site.”

In his opening statement last week, Mr. Swire, Tiffany’s lawyer, said that in 2003 Tiffany put eBay on placard approximately the counterfeit items and requested that the company investigate. Yet “eBay simply cornered a blind eye,” Mr. Swire said.

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Tiffany has requested injunctive relief that would require eBay to alter its procedures to exclude counterfeit silver Tiffany merchandise from its auctions. Judge Richard Sullivan instructed either sides to document post-trial briefs by Dec. 7.

Mr. Swire added that “there’s surely much in the disc apt show that eBay namely liable because contributory infringement.”

Hani Durzy, one eBay talker, said eBay was not responsible for determining if each product sold on the site was fake.

Of lesson, fakes are sold everywhere, as anybody attempting to avoid the street vendors selling fake designer handbags in Times Square can attest. But the anonymity and reach of the Internet makes it perfect for selling knockoffs. And as the biggest online marketplace, eBay is the heart of a new macrocosm of counterfeit products.

Mr. Kowalski said it had been difficult — and often fruitless — to chase tradesmen who catalogue counterfeits on eBay, as they frequently change personality.

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“We’re quite pleased with the way the trial went,” Mr. Durzy said.

Mr. Durzy said that eBay had put in place annexed anticounterfeiting amounts since Tiffany filed its suit. These comprise closer monitoring of categories chosen most often by counterfeiters, like expensive jewelry and handbags, as well as PayPal verification requirements, selective restrictions on sales volume and limits on cross-border sales.

In its native grumble, Tiffany nourished that anyone selling five or more pieces of jewelry said to be Tiffany’s at a discount “is virtually certainly selling counterfeit Tiffany goods.” Other makers of luxury goods have complained that sales of counterfeit items are aching their businesses.

“One way that eBay could do this would be to require proof that Tiffany had been paid for the items, ahead eBay permits an auction of multiple, alike professed Tiffany products,” Mr. Potter said.

After each side presented closing arguments, the judge famous what he phoned “a fundamental variance with adore to what the law is here.”

Mr. Potter said eBay did manage to keep other illegal items — person apparatuses, artillery, and baby pornography — off the site. “The fact of the matter is that if eBay ambitioned to keep counterfeit Tiffany merchandise off, it probably could,” he said.

“The fact that eBay has chosen to set up its business in a manner that makes it extremely difficult for it to monitor the goods that is sold at its auctions is not a defense,” said Geoffrey Potter, chairman of the anticounterfeiting practice at Kramer Levin Naftalis & Frankel, a New York law firm.

Bruce Rich, eBay’s lawyer, told the court the company had dispatched its liability to discourage the sale of counterfeit goods. In his closing argument, he said the law places the basic policing duty on the trademark employer, Tiffany, because Tiffany has the essential expertise to identify counterfeits of its products.

“We simply felt that we were chasing ourselves,” he said, and “chasing specter sites that would be taken down one day and pop up another daytime, and so we were in a vicious circle.”

If Tiffany triumphs its case, not merely could other lawsuits follow, merely eBay’s business model could be threatened for it would be complicated and highly valuable for the company, based in San Jose, Calif., to police a site that now has 248 million enrolled consumers international and approximately 102 million items for bargain at anyone an time.

“Louis Vuitton believes that folk lest buying their signature bags because of always the fake ones out there,” Mr. Potter said.

In the end, Mr. Kowalski said, “The heart of the publish was the distribution network,” referring to eBay.

Although Judge Sullivan gave little indication of how he might rule, he pointed to lawful precedents that have found that if a manufacturer or distributor continues to supply a product understanding it is engaging in trademark infringement, that manufacturer or distributor is “contributorily responsible” for any damage done as a outcome of the fraud.

Last Tuesday, Judge Sullivan questioned Michael J. Kowalski, Tiffany’s chairman and central executive, about the measures Tiffany has taken to trace down and prosecute the counterfeiters.

But in a weeklong bench trial in Federal District Court in Manhattan that ended last Tuesday, lawyers for Tiffany & Company argued that the online auction house was distant more than that: it is a distribution network that enables the trading of counterfeit Tiffany items.

When Tiffany filed its suit opposition eBay in 2004, it said that Tiffany workers had trolled eBay to ascertain fake Tiffany silver jewelry and concluded that 73 percentage of 186 chips they purchased on eBay were counterfeit.

Tiffany & Company has accused eBay of creature a delivery web that enables the trading of counterfeit Tiffany items.