Thursday, July 24, 2008

eBay's Advertising of Tiffany Jewelry Not Proven False

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Famous jeweler Tiffany failed to establish that online marketplace eBay engaged in false advertising under the Lanham Act in connection with the sale of counterfeit jewelry on its site, the federal district court in New York City has ruled.

eBay allegedly engaged in false advertising by (1) referring to Tiffany merchandise in promotional features on the eBay home page and Jewelry & Watches page and (2) purchasing “Tiffany” as a keyword to indicate the availability of Tiffany merchandise on eBay via “sponsored links” on Internet search engines such as Yahoo! and Google.

Literal Falsity

Because authentic Tiffany merchandise was sold on eBay’s website, Tiffany failed to prove that eBay’s challenged advertising was literally false, the court said. Tiffany argued that while the advertising might be literally true, it was nevertheless likely to mislead or confuse consumers into believing that any given piece of silver jewelry labeled “Tiffany” was genuine when, in fact, a consumer was more likely to receive counterfeit silver jewelry than authentic silver jewelry.

Fair Use

Tiffany’s false advertising claims focused on the same practices as Tiffany’s direct trademark infringement claims and were unsuccessful for the same reasons, according to the court. eBay’s use of the term “Tiffany” in advertising was a protected, nominative fair use. To the extent that Tiffany argued that eBay’s advertising was impliedly false, that argument rested on Tiffany’s assertion that eBay knew that jewelry sold on its website was counterfeit.

While eBay certainly had generalized knowledge that Tiffany products sold on eBay were often counterfeit, Tiffany did not prove that eBay had specific knowledge as to the illicit nature of individual listings. To the extent that the advertising was false, the falsity was the responsibility of third party sellers, not eBay.

Misleading Customers

In short, Tiffany failed to establish that eBay’s ads were likely to mislead consumers because authentic items were offered for sale, and inauthentic items were only listed on eBay due to the illicit acts of third parties. It could not be said that eBay was misleading customers when eBay was diligently removing listings from the website that were purportedly counterfeit, according to the court.

The July 14 decision in Tiffany (NJ) Inc. v. eBay, Inc. will be published at CCH Advertising Law Guide ¶63,019.

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