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Appeals court sides with eBay in Tiffany suit

The auction site received a favorable ruling in the longstanding suit brought on by Tiffany & Co. over the sale of counterfeit goods.

A New York appeals court has ruled in eBay's favor in its longstanding legal dispute with Tiffany & Co. over whether the auction giant is responsible for policing the sale of counterfeit goods. The legendary jewelry company had alleged that trademark law requires eBay to keep tabs on the legitimacy of products sold on its platform and that the sale of counterfeit goods amounts to false advertising on eBay's part; the U.S. Second Circuit Court of Appeals ruled Thursday that this is not the case.

"The decision is a critically important victory for online consumers who want the best prices for genuine products and underscores eBay's commitment to connecting buyers and sellers under the pillars of trust, value, and selection," the statement from eBay general counsel Michael R. Jacobson read. "The ruling validates eBay's leading efforts to fight counterfeiting and its commitment to providing consumers with choice and value in a safe and trusted marketplace. We continue to support cooperation, rather than litigation, as the best way to address these issues in everyone's best interests and we remain confident that the one remaining issue in the case will be decided favorably on remand."

Tiffany & Co. originally sued eBay in 2004 after finding through an internal investigation that 73 percent of a sample of supposed eBay listings for Tiffany products were fakes; in July 2008, the case appeared to have reached a conclusion when U.S. District Judge Richard Sullivan ruled that trademark law did not require eBay to police its auction listings to identify counterfeit products. The following month, Tiffany appealed the ruling.

"If one were a flea market operator and you become aware that counterfeiting is going on with the individual sellers at the flea market, you have a duty to investigate it," a lawyer for Tiffany said at the time. "Why is eBay any different from that analogy?"

eBay has not been so lucky in other disputes with the luxury-goods market: Last year, a French court ordered eBay to pay a $2.5 million fine after LVMH, the parent company of Louis Vuitton, claimed that it had violated a court order by not halting the sales of LVMH products--even legitimate ones. According to LVMH, only authorized resellers are allowed to do this.