U.S., Europeans disagree on trade-mark protection

For the London Free Press – August 18, 2008

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In a decision that has been termed a “crucial victory” and a “knockout decision,” a New York District Judge ruled that EBay was not responsible for policing and enforcing trade-mark infringement of goods posted for sale on the website. That decision is a radical departure from recent European decisions in France and Germany. The District Court Judge ruled that plaintiff Tiffany & Co. was responsible for policing and protecting its own trademark.

Therefore, host sites such as EBay are not responsible to police and review all goods placed for sale on its site.

As recently as June of this year, European courts have ruled in a drastically different way. In France, a French Tribunal ruled that EBay failed to effectively protect trade-marks such as Dior and Louis Vuitton, proved by the existence of numerous counterfeit items on EBay’s French website. In this case, EBay was ordered to pay an astounding US$61 million in damages.

In April, a German court set the European precedent when it ruled that EBay must protect against the sale of fake Rolex watches posted for sale on its website. The prevailing European attitude seems then to be that EBay must take responsibility for protecting trade-marked products and effectively stomp out the sale of counterfeit goods.

The New York District Court however did not agree with that logic. Although EBay does remove counterfeit items once it is notified by Tiffany & Co. that trade-mark infringement has occurred, the U.S. District Judge ruled:

“. . . the law is clear: it is the trade-mark owner’s burden to police its mark, and companies like EBay cannot be held liable for trade-mark infringement based solely on their generalized knowledge that trade-mark infringement might be occurring on their websites.”

Therefore, in the U.S., EBay cannot be held “pre-emptively” responsible for trade-mark infringement just because some of its sellers are advertising and selling fake goods. Prevalent public policy in the U.S., now recognized by the courts, instead puts the responsibility onto the trade-mark owner, most often the giant manufacturers.

EBay was also found to have acted responsibly in the past when faced with issues of trade-mark infringement. When trade-mark owners had issued concerns about possible infringement, EBay took all possible steps to remove the goods from its site. It also provides trade-mark holders with the software tools to search for possible counterfeit items.

Although this is a step in the right direction for trade-mark law, in the closely related area of copyright law, the decision has yet to appear as bright-lined. In the on-going litigation surrounding the lawsuit of Google/YouTube by Viacom for copyright infringement, the courts have yet to reach a definitive answer.

The potential of host-site liability for copyright infringement is therefore still undecided.

Tiffany has announced that it will appeal this decision. Hopefully the appeal court will agree with the trial court.

And hopefully the court deciding the Google/YouTube copyright issue will look back to the reasoning in the EBay case and see that holding host-site responsible for copyright infringement review and enforcement makes as little sense as it did for trade-mark infringement.

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