Mon Jun 21, 2004 03:03 PM ET
By Brad Dorfman

CHICAGO (Reuters) - Luxury jeweler Tiffany & Co. (TIF.N: Quote, Profile, Research) has sued eBay Inc. (EBAY.O: Quote, Profile, Research) , claiming the online auctioneer has contributed to violations of the Tiffany trademark by letting counterfeit items be sold on its Web site, a Tiffany spokesman said on Monday

A study of certain pieces of "Tiffany" jewelry sold on eBay this year showed that 73 percent of the jewelry was counterfeit, Mark Aaron, a Tiffany spokesman, said in a statement confirming the lawsuit, which was filed Friday afternoon in U.S. District Court in New York.

An eBay spokesman could not immediately be reached for comment.

The lawsuit asks that eBay be stopped from listing any "Tiffany" merchandise that is not genuine and for eBay to account for profits it made on the sale of counterfeit Tiffany merchandise or else pay up to $1 million for each type of fake Tiffany merchandise sold on the Web site, said James Swire, the lawyer representing Tiffany.

"We have been in correspondence with eBay for some period of time," Swire said. "A year ago, they declined to themselves police their auction sites for counterfeit Tiffany merchandise and said we should use the programs they have to police the site."

Using eBay computer programs, Tiffany had two employees work full-time policing the site and forced the shutdown of about 19,000 auction sites on eBay, he said. This year, Tiffany randomly bought silver "Tiffany" jewelry on eBay and found that 73 percent of it was counterfeit, 5 percent of it was genuine and the rest was promoted as "Tiffany-like" but not promoted as genuine.

By Richard Waters in San Francisco
Published: June 22 2004 0:11 | Last Updated: June 22 2004 0:11

Tiffany�has sued�eBay�over what it claimed was the widespread sale of counterfeit jewellery online, opening up a rare challenge to the legal immunity of the rapidly growing internet auction site.

The high-end US jeweller said its tests had shown that 73 per cent of items advertised by sellers on eBay as being from Tiffany were fake, and that eBay should be held liable for trademark counterfeiting and infringement.

EBay said it had yet to receive the Tiffany lawsuit and would not comment, though it added it had a well-developed programme in place to prevent the sale of fake items.The lawsuit from Tiffany, filed in federal court in New York, marks the first time a prominent maker of brand-name goods has sued eBay in the US.

The company has faced a similar challenge from Rolex, the watchmaker, in German courts during the past three years. A decision in eBay's favour in that case was upheld on appeal, though Rolex was given leave to take the case to the country's federal supreme court.In the only lawsuit of its kind in the US, eBay won a case in 2000 that alledged the sale of bootleg music. That case was brought under the Communications Decency Act, though since then a new piece of legislation, the Digital Millenium Copyright Act, has been introduced. The act protects internet service providers and other online companies from claims about the validity of third-party content they "host" online, though its provisions have yet to be tested in regard to eBay's auctions.

Tiffany said its study of jewellery auctions on eBay involving the company's brand name showed that 73 per cent involved fake items and only 5 per cent genuine, with the rest claiming to be "Tiffany-like".

EBay said it did not have any legal responsibilities as a middleman in the transactions on its site and that it would not be practical to validate every item that was sold. "We don't sell the items, and we're not experts in 50,000 different categories," the number of groups of products for sale on eBay, a spokesman said. Under a program called VeRO, eBay said owners of trademarks and other rights could contact the auction company and have disputed items removed.

As of yesterday, a search on eBay revealed nearly 4,000 jewellery items that used the Tiffany name to attract attention.

In its most recent annual filing with the Securities and Exchange Commission eBay warned it was likely to face an increasing number of legal disputes in the US as trademark owners sought to test the recent legislation."We expect that we will increasingly be subject to copyright and trademark infringement claims as the geographical reach of our services expands."