The landmark lawsuit also alleges that eBay, in addition to facilitating sales of fake Tiffany goods, also makes millions of dollars from fees charged for counterfeit sales.

Two years ago, Tiffany bought several hundred items on eBay and found that three quarters of the items purchased were counterfeit.

The Tiffany lawsuit, which originally was filed in 2004 in a New York State court, is expected to go to trial by the end of this year, according to press reports.

Death Blow

If Tiffany wins its case, eBay's business model could suffer a severe blow, as this would open the door for other brand owners to sue it over counterfeit sales.

But eBay claims it is only a marketplace that brings together buyers and sellers, and cannot be held responsible for sales of counterfeit items.

"We are disappointed that Tiffany filed the suit, given that we have cooperated with their brand-protection efforts for several years through our Verified Rights Owner (VeRO) program," said Hani Durzy, an eBay spokesperson. "Through VeRO, we have worked with Tiffany to develop substantial proactive monitoring efforts and given them the tools to report problem listings, which we promptly remove."

Durzy said that eBay will continue to cooperate with Tiffany along these lines but will fight the legal action because "its claims are without merit."

"If the court finds in Tiffany's favor, this would set a precedent and would place additional pressure on eBay to ascertain the provenance of goods sold," said Stacey Quandt, research firm Aberdeen Group's director of security solutions and services.

"Determining whether this would be a death blow depends on the damages and the number of fraudulent goods sold on eBay," said Quandt. "The outcome could also spark both legitimate and fraudulent insurance offerings to protect consumers."

Hidden Agenda

Martin Reynolds, an analyst with research firm Gartner, said he suspects Tiffany has a hidden agenda in wanting to sue eBay. "Tiffany would really like to restrict secondary sales of its products, as this would then force people to buy exclusively from Tiffany," he said. "The net effect would be to increase Tiffany's sales."

It is not cost-effective for Tiffany to go after all the second-hand antique stores that sell genuine and counterfeit Tiffany products, Reynolds said. "But if this lawsuit scares eBay into taking all Tiffany products off its Web site, then Tiffany will have managed to strike a major blow against second-hand sale of Tiffany items." (continued...)

1  |  2  |  Next Page >