US Economy: Online Auctioneer Ebay Victorious in Us Counterfeit Case

The world's top online auctioneer, eBay, has emerged triumphant from a four-year legal battle with the exclusive jeweler Tiffany which complained that its bargain-hunting website amounted to a "rat's nest" of counterfeit watches, bracelets and necklaces.

A judge in New York ruled today that eBay cannot be held responsible for policing the contents of its site and that it is Tiffany's role to draw any fake designer jewelery to the auction firm's attention.

The verdict is a relief to eBay which lost a similar case in Paris just two weeks ago when a French court ordered it to pay ?38.6m ($60m) in damages to the luxury goods manufacturer LVMH for allowing the sale of fake bags, perfumes and designer clothes under brands such as Christian Dior and Louis Vuitton.

Internet experts had suggested that a series of verdicts against eBay could threaten the fundamental business model of many customer-to-customer commerce websites, although critics maintain that a crackdown on online fraud is long overdue.

In a written ruling, US district judge Richard Sullivan said: "Tiffany must ultimately bear the burden of protecting its trademark."

However, he said he was "not unsympathetic" to Tiffany's complaint and hinted that US law might need a fresh look: "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."

The dispute between eBay and the 170-year-old jewelery boutique goes back to June 2004 when Tiffany became impatient with the quantity of silver merchandise available on the internet which claimed to bear its brand.

Some earrings and pendants faked a distinctive kidney-bean design trademarked by Tiffany.

In court, the jeweler described eBay as a "proverbial rat's nest" of knocked-off goods and it testified that the auctioneer earned $4.1m of revenue from purported Tiffany goods over a four-year period.

While eBay did not deny that counterfeit items sometimes appear on its site, it argued that it removes them swiftly whenever they are flagged up by Tiffany or any other brand-holder.

"Today's decision is a victory for consumers," said eBay in a statement. "The ruling appropriately establishes that protecting brands and trademarks is the primary burden of rights owners."

The outcome was greeted enthusiastically by the NetChoice Coalition, an organization representing high-tech companies. Its executive director, Steve DelBianco, said a Tiffany victory "would have ended up foreclosing an entire category of ecommerce".

Copyright remains a contentious issue in cyberspace ? YouTube continues to fight regular battles with broadcasters over unauthorized postings of television and movie clips.

The jewelery firm, which was immortalized in Truman Capote's novel Breakfast at Tiffany's, said it was "shocked and deeply disappointed" by the judge's ruling and that it was considering an appeal.