There has been a surge recently in receiving fake goods from e-commerce platforms in India. Most of the complaints pertain to counterfeit products, invalid discounts, non-delivery, seller canceling the order, delayed delivery, and various other irregularities.
The situation was so grim that big brands such as Lenovo, Canon, and Dell warned their customers not to purchase their products from online platforms such as Flipkart and Snapdeal.
Counterfeit goods have been flowing freely in the market under the authorities’ vigilance in most small cities, which has become a widespread phenomenon, happening almost in all countries.
This is because online platforms are open to selling anything sans verifying the goods’ sellers or authenticity which speaks of the need for online logo registration.
In this blog, we will be discussing the famous Tiffany Inc. vs eBay Inc. case where identifying the original product gets crucial to avoid hefty penalties.
Tiffany Inc. VS eBay Inc. case.
The origin of the case starts with trademark infringement. The plaintiff is Tiffany & Co., which is a luxurious jewelry retailer situated in New York, sells jewelry and other accessories. The defendant is eBay, Inc., which is an American e-commerce platform.
eBay used to advertise the availability of Tiffany jewelry on its website. After the complaint from Tiffany, eBay discounted placing the advertisements based on suspicion of the investigation as to the genuineness of the goods on its website via third-party sellers bearing the name of Tiffany.
Later, it was revealed that almost 70% of the Tiffany items bought on eBay were counterfeit. Tiffany filed a lawsuit against eBay in 2004 in the U.S. district court, claiming the goods sold under the name of Tiffany were counterfeit, which leads to trademark infringement, contributory trademark dilution, unfair competition, and false advertising claims.
The advertisement made by eBay about Tiffany also led to trademark infringement. The judgment observed ruled that eBay was not liable for trademark infringement by enabling fake Tiffany goods to be sold on the websites by individuals.
There are two issues that we need to look into.
– eBay enabled the sale of counterfeit Tiffany merchandise on its selling platform via third-party sellers.
Despite being cognizant of counterfeit goods that were there on its platform, eBay kept on advertising that Tiffany jewelry was available on its website via unverified sellers.
Tiffany accused eBay of trademark infringement where the law says;
– direct trademark infringement under 15 U.S. code 1125.
– Contributory trademark infringement, where even though the Lahman Act does not explicitly enforce the liability for contributory infringement, was there in the landmark case of Inwood Laboratories VS. Ives Laboratories.
– Fake advertisement is a breach of section 43(a) of the Lahman Act.
Tiffany said that eBay infringed its trademark violation of section 32 of the Lahman Act. Under the said section, the mark’s owner registered with the patent and trademark office can bring a civil action against the individual alleged to have used the mark sans consent of the owner.
The second circuit ruled that such advertisements could comprise false advertising.
– They implied the authenticity of all the Tiffany goods on eBay’s website.
– Such advertisements can mislead the buyers. The court notices that the advertisement is unlawful when it implies that all goods that are on publication for advertisement for sale are genuine when they are not.
Tiffany argued that eBay was acting blindly and, on purpose, avoided knowing the truth about the sale of counterfeit goods on its site.
To establish liability for a false advertising claim, the plaintiff should prove that the false or misleading statement was made in commercial advertising that creates the likelihood of harm to the plaintiff.
It is, therefore, necessary to know about the perils of trademark infringement with its remedies available for owners before going out in the market.
The question we should ask ourselves would be;
Is the defendant liable for the direct contravention of the plaintiff’s mark via counterfeiting vendors who are using its website?
The answer is no.
The court of appeals for the second circuit reaffirmed the trial court’s ruling pertaining to trademark contravention and its dilution. The defendant could not guarantee the authenticity of all the products offered on its website would have unduly inhibited the lawful resale of genuine goods.
Court also noticed that eBay had poured millions of dollars into recognizing and removing the counterfeit listings from the platform.
For this reason, eBay would not be able to have been wilfully blind. As it only provides the platform between the buyer and seller. The same goes with any e-commerce platform such as Flipkart and Myntra in India.
eBay is cognizant that many people misuse its platform. That’s why they have a fraud engine that costs around 5 million dollars annual maintenance. It has VeRO (verified rights owner) program as well, where customers can report misleading goods.
The trial court ruled against Tiffany on all claims, and the company appealed its decision in 2008. In the court of appeals, the second circuit affirmed the lower court’s decision in April 2010, which did not find eBay liable for contributory trademark contravention for the sale of counterfeit Tiffany goods by third-party sellers on its website.
On claim of trademark contravention made by Tiffany, the court found eBay’s use of Tiffany marks on its websites secured under the nominative fair use doctrine.
Court also ruled that eBay has been taking proactive steps to remove counterfeit goods from its platform.
Global perspective (case of India).
Such types of unlawful practices are happening on Indian e-commerce platforms as well. The government bans platforms such as Jiomart and Club Factory from selling such goods.
The giant ones like Amazon and IndiaMART have received notices from the (DCGI) concerning such goods. All Indian e-commerce platforms have taken small steps to remove such goods.
It’s crucial to ensure that e-commerce platforms provide authentic goods to customers to avoid legal entanglements in today’s world.