Tiffany filed a complaint against eBay in the US District Court for the Southern District of New York in 2004 alleging that the company failed to stop the sale of fake Tiffany products on its online auction site.
In addition to trade mark infringement, the complaint also alleged unfair competition, false advertising and direct and contributory trade mark dilution.
Tiffany specifically claimed that eBay failed to control the illegal activities of counterfeit sellers despite having been notified that a problem existed and that it was therefore guilty of contributory trade mark infringement, which could have had far-reaching implications for eBay's business model.
But ruling last Monday Judge Richard Sullivan said: "Tiffany must ultimately bear the burden of protecting its trademark. Policymakers may yet decide that the law as it stands is inadequate to protect rights owners in light of the increasing scope of Internet commerce and the concomitant rise in potential trademark infringement. Nevertheless, under the law as it currently stands, it does not matter whether eBay or Tiffany could more efficiently bear the burden of policing the eBay website for Tiffany counterfeits — an open question left unresolved by this trial."
He added: "The issue is whether eBay continued to provide its website to sellers when eBay knew or had reason to know that those sellers were using the website to traffic in counterfeit Tiffany jewelry. The Court finds that when eBay possessed the requisite knowledge, it took appropriate steps to remove listings and suspend service."
The judge also found that Tiffany had failed to prove each of its other claims.
The decision contradicts a ruling by the Tribunal de Commerce in Paris, France on June 30 that eBay was at "a serious fault" by failing to keep counterfeit goods off its site, especially Louis Vuitton and Christian Dior bags.
In that case, the French court ordered eBay to pay €19.28 million in damages to Louis Vuitton, €17.3 million to Christian Dior Couture (also owned by the LVMH Group) and €3.25 million to four of LVMH's perfume brands.
eBay has vowed to fight for e-commerce and has said that it will appeal the decision.
On June 4, the Tribunal de Grande Instance in Troyes, France also ruled that eBay was responsible for the sale of three counterfeit versions of Hermes bags and ordered the auction site to pay €20,000 in damages to the fashion house.
Last week's ruling represented a significant victory for eBay, as a decision in favour of Tiffany could have resulted in a slew of suits in the US by brand owners demanding that eBay police counterfeit goods.
eBay says it prohibits the sale of counterfeits, and established the Verified Rights Owners (VeRO) programme to facilitate collaboration with rights owners to identify and remove counterfeit items.
"The ruling appropriately establishes that protecting brands and trademarks is the primary burden of rights owners," said eBay in a statement. "While today's decision is a victory for consumer choice, it is a shame that so much effort has been wasted when Tiffany could have worked with eBay to more effectively fight counterfeits. eBay will continue to lead the industry with innovative solutions to stop the sale of counterfeits."
