In Tiffany, Inc. v. eBay, Inc., 2008 U.S. Dist. LEXIS 53359 (S.D.N.Y. 2008), the court held that eBay was not liable for contributory trademark infringement, though listings on its site offered counterfeit silver Tiffany jewelry for sale. In analyzing Tiffany, Anne Gilson LaLonde, the author of Gilson on Trademarks, examines eBay’s anti-counterfeiting procedures and Tiffany’s efforts to stop counterfeiting and discusses the doctrine of contributory infringement. She writes:
While the court sympathized with Tiffany’s position, it was also distinctly unimpressed by the amount of resources Tiffany had dedicated to fighting the sale of counterfeit Tiffany goods on eBay. It noted that, [n]otwithstanding the significance of the online counterfeiting problem, it is clear that Tiffany invested relatively modest resources to combat the problem. Tiffany had budgeted $14 million to anti-counterfeiting efforts over five years, $3 to 5 million of which was spent in its litigation against eBay. In addition, Tiffany’s time dedicated to monitoring the eBay website and preparing NOCIs [Notices of Claimed Infringement] was limited. It did not report violations to eBay on a daily basis until 2006, and it had rejected the use of additional technology that had been suggested by eBay to help monitor and report violations.
The court concluded that, [g]iven the limited technology and staff Tiffany chose to employ to pursue reporting . . . , the sheer volume of Tiffany items available on eBay made it difficult for Tiffany to comprehensively review all of the Tiffany listings on eBay. Ultimately, the court declared, Tiffany could have invested additional resources in monitoring the eBay website and reporting NOCIs through the VeRO [Verified Rights Owner] Program. Had Tiffany done so, Tiffany could have captured more of the infringing listings on eBay.
. . . .
The doctrine of contributory infringement imposes liability on parties other than the immediate infringer in two situations: for intentionally inducing the other party’s infringement or for continuing to supply a product to a party it knows or has reason to know is using that product to infringe. Here, Tiffany did not claim that eBay intentionally induced its sellers to infringe its marks, but instead argued that eBay continued to supply its services to parties that it knew or had reason to know were using that service to infringe.
. . . .
While sympathetic to Tiffany’s frustration from the substantial counterfeiting of its goods, the court instructed Tiffany that it was ultimately its responsibility to police its own marks. This conclusion did not mean that eBay had no responsibility to prevent counterfeiting on its site. In fact, eBay did have a legal obligation, once it knew of specific instances of counterfeiting, to stop those sales. But the court’s message was that Tiffany could not abdicate its responsibility to alert eBay to potentially infringing listings. Once eBay had made sufficient efforts to eliminate listings that it knew or had reason to know offered counterfeits, Tiffany bore the burden to stop the sales of any other, more non-obvious counterfeits, those that eBay could not otherwise know or have reason to know were infringing.
(citations omitted)