International Anticounterfeiting Coalition (IACC) Urges U.S. Appeals Court to Hold Ebay Contributorily Liable for Continuing Rampant Internet Sales of Counterfeit Goods

The law is clear: if a marketplace operator either actually knows, or should have known about widespread counterfeiting, it is obligated to take action both to prevent that illegal conduct and to stop providing services to those engaged in the violation. Tiffany sent eBay 20,915 notices about the "deluge of counterfeit merchandise" in 2003; 45,242 in 2004; 59,012 in 2005; and 134,779 in 2006. Despite being aware of the continuing extraordinary ongoing volume of counterfeit Tiffany trade on its site, eBay continued to provide material assistance to direct infringers rather than implementing policies that could have reduced the volume of counterfeit items, the IACC brief says.

Robert Barchiesi, President of the IACC said, "Counterfeiting is a criminal activity carried out on global scale and, with eBay turning a blind eye, broadly on the Internet. In fact, eBay is estimated to provide the forum for 29 percent of the entire online counterfeit market, which has widespread public health and safety hazards, as well as causing substantial economic harm to legitimate business. Therefore, we need to take vigilant action to prevent it."

"It is not acceptable that today eBay still tolerates blatant counterfeits being sold on its website. The lower court's ruling in Tiffany's suit against eBay, if left to stand, would result in consumers continuing to be victimized, and place an impossibly onerous burden on trademark owners to police the eBay site on their own. Our brief asks the Court to recognize both eBay's contributory and direct liability as well as the pressing need to take action to protect consumers."

Mr. Barchiesi continued, "The Court must prevent eBay both from providing the online marketplace necessary for criminals to conduct infringing and counterfeit transactions, and also from assisting sellers in promoting illegal sales. The counterfeit trade has direct negative consequences for consumers, who are routinely deceived into purchasing illegal counterfeit goods - especially when making purchases online, without an opportunity to personally inspect the goods--and to legitimate businesses throughout the world who are the victims of such blatantly illegal activity."

"If the law is applied correctly and the Court holds eBay responsible for the open and notorious counterfeiting that occurs, with its knowledge and to its economic benefit on its sites, there is no doubt it will lead to new policies and procedures designed to deter the counterfeit trade at all online markets. This will result in less piracy and counterfeiting, thus improving the overall climate for legitimate businesses and consumers of genuine products."

According to FBI, Interpol, World Customs Organization and International Chamber of Commerce estimates, roughly 7-8 percent of world trade every year is in counterfeit goods. United States "businesses and industries lose about $200 billion a year in revenue and 750,000 jobs due to the counterfeiting of merchandise"; worldwide, counterfeiting accounts for more than half a trillion dollars in global trade each year.

The IACC's brief was filed in connection with the lawsuit filed in 2004 by Tiffany and Company and Tiffany (NJ), Inc. against eBay for trademark violation and on which the United States District Court for the Southern District of New York ruled in July 2008. Tiffany has filed an appeal of the July ruling in the United States Court of Appeals for the Second Circuit.

The IACC is committed to championing the rights of trademark owners and the consumers who purchase their goods. To this end, until the U.S. judicial system takes appropriate action with respect to eBay in forcing it to more aggressively fight the proliferation of counterfeit sales through its site, the IACC warns consumers that they should not feel confident in the legitimacy of certain of the products they acquire on eBay.

Contact: IACC
Robert Barchiesi
President
845-629-4220