Summary
Tiffany is awaiting verdict in a lawsuit claiming that eBay is a distribution network that allows counterfeit Tiffany items to be sold. The verdict could set a precedent impacting other internet retailers.
Analysis
Tiffany is awaiting verdict in a lawsuit claiming that eBay is a distribution network that allows counterfeit Tiffany items to be sold. The verdict could set a precedent impacting other internet retailers. Tiffany is also seeking injunctive relief requiring eBay to remove counterfeit Tiffany merchandise from its website.
Tiffany is claiming eBay directly advertises the Tiffany merchandise on its website. eBay in return is claiming that it does not take possession of the merchandise, and is therefore not responsible for validation of merchandise authenticity. eBay is also claiming that policing the merchandise should be left to Tiffany, who has the expertise to determine what merchandise is real and what merchandise is counterfeit.
The judge has questioned Tiffany asking what actions they have taken to prevent counterfeit merchandise. Tiffany has responded that policing counterfeiters is difficult, as counterfeiters often change identities.
Both eBay and Tiffany have the responsibility to protect the integrity of the products they sell, and make reasonable efforts to guarantee that customers are paying for the merchandise that is advertised, and receive authentic merchandise.
The question of competition or business is not an issue here as these items are counterfeit, falsely using the Tiffany label, which is much different than a less expensive product using its own label, or someone with legitimate and unique merchandise trying to start a new business at a lower price, which is legitimate and competitive.
Counterfeit Tiffany silver is an important issue. Silver is increasing in price, and demand for silver products is strong. Customers are willing to pay a good price for sterling silver merchandise, the authenticity of which must be verifiable.
Tiffany must determine a method of identifying its product, such as identifiable codes, used by the Bradford Exchange, or a unique and hidden insignia, as used by some manufacturers. Even bicycles have an identifiable code on the to ascertain authenticity. In this way Tiffany has not properly policed its merchandise. This method must be easily traceable by a telephone call to Tiffany, or accessible record on eBay before purchase, and it must be known to exist by the customers.
eBay has worked out an agreement with eTopps sports cards, to guarantee authenticity, whereby eBay sells authentic collectors cards for eTopps, either on the market in virtual form, or in hard copy, and eTopps registers and records every sports card issued to guarantee authenticity. Thus there are now 2 types of sports cards, the kind we collected as children, and "collectors cards" which are individually authenticated by eTopps, and sold only through either eTopps or eBay, at investor market prices. The Bradford Exchange has done something similar by opening their own market and giving every item an identifiable code.
This is an issue of authenticity and fraud, not of mere distribution. If it was an issue of distribution alone it would be a less serious issue. Both eBay and Tiffany have the responsibility of making certain their customers receive authentic merchandise.
