## Facts

- eBay, Inc. operated an online marketplace where third-party sellers listed goods for sale and buyers purchased them; eBay earned revenue from listing fees and commissions on completed sales.
- Tiffany (NJ), Inc. and Tiffany and Company (together, Tiffany) manufactured and sold high-end jewelry under the TIFFANY marks.
- Tiffany goods (including second-hand goods) were listed for sale on eBay, and many listings using the TIFFANY marks involved counterfeit items sold by third parties.
- Because online marketplaces can be used to sell counterfeit and otherwise fraudulent goods, eBay implemented anti-fraud and anti-counterfeiting measures, including dedicating significant personnel to fraud prevention, using automated detection tools, and suspending sellers and transactions connected to counterfeit sales.
- eBay maintained a notice-and-takedown process for trademark owners; when Tiffany notified eBay of particular listings it believed were counterfeit, eBay promptly removed those listings.
- Tiffany asserted that counterfeiting on eBay remained widespread even with eBay’s enforcement efforts and brought suit alleging, among other claims, that eBay should be responsible for third-party trademark infringement occurring through the site.
- After a bench trial in the Southern District of New York, the district court entered judgment for eBay on Tiffany’s Lanham Act claims and related state-law claims.
- Tiffany appealed, and eBay cross-appealed on limited issues.

## Issues

1. Whether eBay was contributorily liable for trademark infringement based on third-party sellers’ sales of counterfeit Tiffany goods on eBay.
2. Whether eBay directly infringed Tiffany’s trademarks by using the TIFFANY marks on its site and in advertising to refer to Tiffany-branded goods offered by third-party sellers.
3. Whether eBay’s use of the TIFFANY marks diluted Tiffany’s famous marks under federal dilution law.
4. Whether eBay engaged in false advertising under Lanham Act § 43(a) based on statements suggesting Tiffany goods were available on eBay, including the phrase “Tiffany & Co. under $150.”

## Decision

- The Second Circuit affirmed the judgment for eBay on contributory trademark infringement, holding that Tiffany did not show eBay had the required knowledge (or reason to know) of specific instances of infringement while continuing to provide services to the infringers, and that generalized awareness that counterfeits existed on the site was not enough.
- The court affirmed judgment for eBay on Tiffany’s direct trademark infringement and unfair competition theories based on eBay’s referential use of the TIFFANY marks to describe Tiffany-branded goods offered by sellers; the court treated the use as permissible nominative use where it truthfully identified the goods being sold and did not, on this record, mislead consumers into thinking Tiffany sponsored or ran eBay’s marketplace.
- The court affirmed judgment for eBay on federal dilution, concluding eBay’s use of TIFFANY was not a source-identifying use for eBay’s own goods or services in a manner that established actionable dilution.
- The court affirmed rejection of most false advertising theories but vacated and remanded for further proceedings limited to whether the specific advertisement “Tiffany & Co. under $150” was literally false.

## Legal Principles

- A service provider is liable for contributory trademark infringement when it continues to supply its services to a party it knows or has reason to know is engaging in trademark infringement; general knowledge that infringement occurs somewhere on the service is insufficient without knowledge tied to specific infringing conduct.
- Prompt removal of listings identified by a trademark owner through a notice-and-takedown system, along with other anti-counterfeiting efforts, can support a finding that the service provider did not continue providing services with the requisite knowledge of particular infringements.
- Use of a trademark to identify the trademark owner’s goods in a marketplace (for example, using a brand name to describe what users are offering for sale) may be permissible nominative use when it truthfully refers to the branded goods and does not imply sponsorship or endorsement.
- Federal trademark dilution generally requires a qualifying use of the famous mark as a mark (a source identifier) in a way that causes blurring or tarnishment; referential use to describe the trademark owner’s goods may fail to meet that requirement on the facts presented.
- Under Lanham Act § 43(a), a false advertising claim may proceed where an advertising statement is literally false or, if not literally false, is misleading in context and likely to deceive consumers; when a statement’s truth is uncertain on the record, remand may be appropriate to determine literal falsity.

## Conclusion

The Second Circuit largely affirmed judgment for eBay after a bench trial, holding that eBay was not contributorily liable for counterfeit Tiffany sales because Tiffany did not prove eBay had specific knowledge of particular infringing listings while continuing to supply services, and that eBay’s use of TIFFANY to describe Tiffany-branded goods offered by third-party sellers did not establish direct infringement or dilution on this record; the court remanded only for further proceedings on whether the phrase “Tiffany & Co. under $150” was literally false advertising.


Tiffany (NJ), Inc. v. eBay, Inc., 600 F.3d 93 (2010)