• by Wendy Davis  @wendyndavis, December 5, 2008

Web giants Google and Amazon are backing eBay in its ongoing legal battle with jewelry company Tiffany & Co. about the sale of knockoffs on the site.

The Internet companies say eBay shouldn't be held responsible for the sale of counterfeits on the site because it has no way of knowing whether sellers are offering knockoffs or the real thing. They warn that holding eBay liable would effectively end people's ability to sell used merchandise online.

"Tiffany's position," Google, Amazon and other companies argue, "would as a practical matter severely damage or eliminate secondary markets for the sale of used goods on the Internet, causing great harm to consumers and the public interest."

Tiffany is currently appealing a decision by a federal district court dismissing a trademark infringement lawsuit against eBay. The jeweler alleged that eBay did not do enough to stop people from selling fakes.

The trial judge, Richard Sullivan in New York, sided with eBay, rejecting Tiffany's stance that eBay should have ensured that counterfeiters were not selling goods on the site. "Tiffany must ultimately bear the burden of protecting its trademark," he wrote.

Tiffany had wanted eBay to prohibit sellers from listing five or more Tiffany items. eBay countered that it removed knockoffs once it had reason to know the pieces were fake, but that it wasn't required to impose arbitrary rules that could prevent users from selling legitimate items.

Tiffany appealed Sullivan's decision to the 2nd U.S. Circuit Court of Appeals, arguing that eBay knew users were selling fakes and should have done more to stop it. "Although eBay profits handsomely from a system of its own invention that facilitates substantial fraud, the district court believed that the 'solution' to the counterfeiting problem is to put the burden on the victim," the jeweler wrote in its brief.

The case has drawn widespread attention by Web companies and others, including the Electronic Frontier Foundation, which also filed a brief on eBay's behalf. Corynne McSherry, a lawyer with the digital rights group, said that forcing sites like eBay into becoming "trademark cops" could end up curbing online speech as well as commerce.

That's because some companies have accused critics, including bloggers and parodists, of trademark infringement for using the companies' name in their posts.

"If intermediaries get the message that it's going to be their job to find out if there's any trademark infringement on any of their sites, they're going to start getting very concerned," she said. "They're going to start wondering whether it's worth it to provide these services."