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Should Online Marketplaces be the Trademark Police?

The Tiffany & Co v. eBay trial began yesterday, and as this news article noted, the case is about who is responsible for the policing of counterfeit products on eBay.

It’s an important case, and implicates all e-commerce marketplaces, so it’s impact extends beyond just eBay. And its resolution may come down to whether you believe
sites like eBay are akin to a traditional retail store or more like a
facilitator between buyers and sellers, much like a flea market. Tiffany claims that eBay participates in and facilitates the
counterfeiting and trademark infringement of
its jewelry and other items in violation of the Lanham Act.

But here’s the kicker:  Tiffany wants to enjoin eBay from selling any item on its site has hasn’t been made, sponsored, or approved by Tiffany. This goes too far, way beyond the policing of trademarks.

Instead, it appears that Tiffany would like to control the distribution channel, and use trademark law to do so. Retailers and distributors often hate that their products can be sold outside of their control. We’ve seen this attempt to control distribution when venues complain about the sale of event tickets on secondary market sites like StubHub, RazorGator and eBay.

eBay has an extensive program for dealing with intellectual property rights violations. Trademark owners should be vigilant when protecting their brands, not vindictive towards marketplaces that are themselves not the bad actors.