Judge Tells Tiffany To Police Their Own Merchandise On EBay

Remember the French lawsuit that Louis Vuitton won against eBay earlier this month? A French court said eBay was responsible for policing their auctions for counterfeit items—at least that was the official language. It also, unfortunately, helped solidify LVMH’s tight control over who sells its luxury merchandise. This week a judge in New York ruled the opposite direction against Tiffany & Co., telling them, “Tiffany must ultimately bear the burden of protecting its trademark.” It’s a win for eBay. Is it for the consumer?

The New York Times says eBay should still police for counterfeits if it wants to win back customers:

eBay would generate enormous goodwill if it instituted a policy of proactively fighting fraud on the site, instead of forcing companies to point out individual items, day after day, which it then takes down.

That’s true, but eBay would also win goodwill if it didn’t allow luxury companies to bully individuals who are obviously reselling their used luxury goods—it’s pretty obvious that when a company like LVMH goes after a person selling a single used, slightly damaged luxury case, they’re not really concerned with stomping out counterfeiting rings.

This hard-to-read press release from something called the “Luxury Institute” (an institute for luxury? I want to work there!) calls the ruling an “egregious injustice to the consumer” because it removes any protection from the customer—a valid claim (despite the source) that resonates with anyone who’s been scammed on eBay. The Luxury Insititute suggests alternate luxury auction sites like Portero.com.

BusinessWeek quotes an e-commerce advocate who says the ruling also helps keep the marketplace more open, by taking some of the power away from companies like LVMH and Tiffany:

Many of the smaller vendors that make a living selling through eBay were also relieved at the verdict. Had the U.S. judge echoed the opinions of European courts, major brands that did not want their merchandise to be resold on a discount site would have had a strong weapon to keep resellers from advertising their brand names online, even when dealing with genuine articles. “This was never about controlling counterfeits. It was really about how consumers could buy and sell Tiffany’s products and maintaining margins,” says Steve DelBianco, executive director of NetChoice, a coalition that advocates for e-commerce. “If you aren’t born with a Tiffany silver spoon in your mouth, you can buy one on eBay.”

What do you think? Should eBay be required to police luxury brands more closely, and would that help shoppers in the long run? Or are companies like Tiffany and LVMH using the counterfeit issue to solidify control over online sales of their merchandise?

“Judge to Tiffany: Police Your Own Brand” [BusinessWeek]
(Photo: jillclardy)

Comments

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  1. Bladefist says:

    I agree with the NY judge. Ebay should patrol as well, looking for fraud, but not because they have to, but because it’s good for business.

    If ebay becomes overrun w/ fraud, no one is going to buy or sell stuff there. Based on what I’ve seen in my ebay days, they are pretty good at taking known fakes off there.

  2. Franklin Comes Alive! says:

    @Bladefist: “*If* ebay becomes overrun w/ fraud”?

    Pretty sure it’s already there!

  3. satoru says:

    @Bladefist: I agree it seems similar to how wine distributors were railing against internet companies selling wine. They claimed it was to protect against underage drinking, but in reality they were trying to control their own distribution networks that the wineries were forced to use in order to cross state lines.

  4. SkokieGuy says:

    @Bladefist: Hmmn, not sure I agree. One one hand, our government and police have more important things to do and spend taxpayer dollars on.

    On the other hand, our courts are saying we have full knowledge of crimes occuring, but choose not to bother.

    If ebay requires sellers to verify all statements and claims of authenticity be true, then the sellers of mislabelled knock offs are commiting the crime. Why should ebay be an investigatory body? They have no law enforcement authority.

  5. snoop-blog says:

    I would like to see ebay sell only the real thing, mainly because if I DO want a knock off, There are plently of stores in the town I live that sell them.

  6. I’m all for not being a fraud victim when I shop on e-bay but I know people look for “replica” items on eBay and they know exactly what they’re buying.

    I also think that the manufacturer has no right to try to stop someone from reselling a legitimate item.

  7. fredmertz says:

    How exactly can Ebay police counterfeits? It’s not like they ever have possession of the items.

  8. Part of the reason that eBay won is that they were able to demonstrate that they are proactively fighting fraud and fakes. eBay had hundreds of people looking for shady auctions on the site. Tiffany? An intern for a few hours a week (and eBay promptly acted on everything Tiffany flagged).

    Like Bladefist said, it’s good for business for eBay to keep working on that and it’s nice of them. But, ultimately it’s up to Tiffany. Their real goal is to prevent any resale, legitimate or not, and eBay doesn’t need to help them lock down the market.

  9. thrlsekr says:

    Can see the point of having an open market but to the other side of the coin, eBay has gotten so out of hand being the best place to sell stolen merchandise and not having to pay tax maybe the French have a point!

  10. AD8BC says:

    I agree with Bladefist….

    If I put up for auction a 1/4-20 1″ bolt that I claimed was from Grainger but was actually purchased from True Value, Ebay would have no idea where I actually purchased it.

    Best advice? If you are buying some sort of expensive fashion nonsense from a seller on Ebay, be very careful and skeptical. Ebay cannot be expected to verify everything for sale on their site. It would drive fees through the roof!

    Ebay has never given me any trouble. A few sellers have, but it was easily taken care of.

  11. JayDeEm says:

    The bigger point here is what will happen if your wife finds out that her ‘Tiffany’ necklace might be a fake. I am willing to take no such risk. :)

  12. MercuryPDX says:

    @SkokieGuy: It’s like someone selling Bootleg DVDs at a flea market. The person running the flea market needs to shut them down and not claim ignorance when the real authority shows up.

    Unfortunately eBay is so huge there’s no way to successfully police it without taking TSA-style measures (eg. verifying every item before making it visible to the world, requiring documentation verifying authenticity, etc.).

    I’d say eBay won here, but echo the sentiment of other posts that eBay needs to do SOMETHING to curtail fraud on the site, rather than profit from it.

  13. Bladefist says:

    @Michael Belisle: Right. It’s very obvious Ebay is on the scene. I’ve seen many-a-auction-get-deleted in my day.

    @SkokieGuy: There is no way for eBay to know until it’s reported later. And they are pretty good with returning your money if the item arrives not as described. And at some point you have to stand and say enough is enough. Are you going to investigate BobsAuctions.com? It’s impossible, and I know I don’t want my tax dollars to go to it.

    The fact is, eBay invests a lot in preventing fraud. They’ll return your money. Tiffanys needs to be proactive as well. As a consumer, you may want to re-think buying those types of items from an online auction. If there was an OP here right now, I may blame them.

    “Hey, I’m gonna get my finances wedding ring on eBay” — Probably not the sharpest tool in the shed.

  14. SkokieGuy says:

    @MercuryPDX: But how is it possible for ebay to verify sales?

    Even if there were some sort of serial number, how could one prove that the item with the authorized serial number left the seller and was received by the buyer? Either could substitute something else and claim ‘victim’.

    And again, ebay has no law enforcement authority. If they do shut down a merchant, what proof is there? Why isn’t that a crime (restraint of trade?).

    I’m certainly not supporting ebay on this, but I see it as an unsolvable problem.

  15. CRSpartan01 says:

    It’s not really eBay’s job to police everything that is sold. If Tiffany’s wants to do something about someone selling knockoffs on eBay, they themselves will have to do it. That’s what happens when you play the trademark game.

  16. fostina1 says:

    i believe most people buying counterfeit stuff on ebay are doing so on purpose.

  17. BusinessHut says:

    The majority of “counterfeit” merchandise being sold is being purchased by consumers who KNOW the item is counterfeit. They (the consumers) like the term “knockoff” because it sounds less illegal. The knockoff purses, sunglasses, etc… that you buy in the back of a shop or on the street is 100% illegal! If consumers knowingly patronize the knockoff/counterfeit industry, it will only continue to grow.

  18. ideagirl says:

    @BusinessHut: I agree with you about the consumers, but IMO the items should be advertised as knock offs.

  19. cosby says:

    This is a win for consumers. Sure you have counterfeit items being sold but I agree with others that say Tiffany’s wanted more control over their items and is trying to stop people from being able to buy them used as easy.

  20. Triborough says:

    So I guess if I ever want to sell the one Tiffany item I own (a gift from channel 2), eBay is probably not the best place.

  21. SkokieGuy says:

    If Tiffany wants control of the sale of their legit products, I be confused!

    How can a seller aquire a legit Tiffany product to resell other than buying it through Tiffany or one of their resellers (Macy’s, Nordstroms, etc.), or buying it used.

    If Tiffany made the profit from the original sale, why would resale be an issue? When Grandma dies, her treasured Tiffany vase can nevere be resold?

    Counterfit items devalue the brand and I can understand that, but is there really a significant amount of ebay traffic in legit luxury goods and if so, how does this hurt the owner of the brand?

  22. krom says:

    A good way to avoid being screwed by counterfeit high-ticket-brand-name products is to stop buying overpriced shit just for the high ticket brand name.

    otherwise why do you even care if its counterfeit if the name looks right?

  23. @SkokieGuy:

    Luxury items have traditionally had large markups. Let’s use Nordstrom’s since you mention that store by name. Nordstroms is always located in a better shopping mall or better shopping district than Bob’s Discount Bargin Outlet. That location overhead could be a killer for Nordstroms. Tiffany trying to protect the brand name will yield higher prices and let Nordstroms make more profit from the sale of the product and help keep Nordstrom’s open for business.

    You are right that Tiffany already made their profit when they sold the item. Protecting the brand name allows Tiffany to make more profit when Nordstrom’s makes a rebuy of the same products. Keeping Nordstrom’s around is just good business for Tiffany.

    Yes, Tiffany could just say too hell with this whole price / brand protection plan and just sell to Bob’s Discount Bargin Outlet. Except a couple problems. A) Nordstrom’s has been around since forever and Bob’s could be out of business tomorrow B) Nordstrom’s does a LOT of customer service support for their products, customer service that Bob’s may or may not do, and most likely will not do if Bob is aggressively discounting the products C) Tiffany has their own distribution methods for some products and wants to keep their own profit margins high D) Tiffany’s products are priced at a premium versus the competition. Never said the products were better, just being sold at a premium and therefore potentially more profitable than competing products. Letting Bob’s devalue the product only serves to harm Tiffany’s possibly larger than normal profit margins.

  24. MercuryPDX says:

    @SkokieGuy: My apologies… I lost a sentence somewhere:

    Unfortunately eBay is so huge there’s no way to successfully police it without taking TSA-style measures (eg. verifying every item before making it visible to the world, requiring documentation verifying authenticity, etc.). Even then you won’t catch everybody, just the most obvious people when the auction is posted.

    I agree with you. At this point and time it’s unsolvable.

  25. SkokieGuy says:

    @Corporate-Shill: I’m not sure you’ve explained anything.

    Tiffany only sells their product to whom they choose. Either through their own stores or authorized retail outlets, i.e. Nordstroms.

    The only way Bob’s Discount could sell a legit Tiffany item is either buying it at retail, which he couldn’t do and make a profit. He can of course buy used, at estate sales and similar, or off ebay.

    Legit Tiffany is widely available in antique shops, obtained by purchasing used products, just like Discount Bob could.

    So again, I understand how knock offs devalue the brand, but how does the resale of legit goods harm the brand?

  26. CyberSkull says:

    eBay should patrol for fraud of course. But I also don’t want a company telling me I can’t sell something that I paid for. If it’s mine, I can sell it if I want. It should just be that simple. If they don’t want me to sell it, buy it from me.

  27. CyberSkull says:

    @CyberSkull: D’oh! I forgot to hit preview, sorry!

  28. britne says:

    @krom: yeah, agreed.
    bought a d&b bag on ebay for cheap, because i liked the pattern, and d&b discontinued it. could be a knock-off, no difference to me. i like my pink heart purse.

  29. InThrees says:

    If I answer a classified ad and buy the offered HDTV and it turns out to be a ‘Sorny’ or a ‘Magnetbox’, I don’t see how the paper can be held liable.

    What ebay does need is more strict account creation and applicant identification protocols.

    If someone DOES sell me a knock off or rips me off, it would be kind of nice to be able to get justice rather than be screwed.

  30. Geekybiker says:

    @CyberSkull: You can sell it. Doctrine of first sale and all. However ebay can refuse to let you list it.

  31. speedwell (propagandist and secular snarkist) says:

    @Geekybiker: No, see, Tiffany is making it more difficult for me if I should ever want to sell my Tiffany stuff, which I bought partly as an investment. If I didn’t care so much about the image and the resale value, I could simply go to Patel’s Diamond Importer down in the import store district, get damn near the same quality, but no head-turning name.

    By causing my right to dispose of my property as I see fit to be restricted, Tiffany stole part of the value of my investment.

  32. MercuryPDX says:

    @InThrees: Maybe that’s it for me. I used to think it was relatively safer back in the day, but my impression now is that eBay could give “two splits” about what happens to either the buyers or some of the smaller-time sellers. Until that feeling subsides, I’ll stear clear.

  33. North of 49 says:

    Ebay pulls hundreds of fakes of their sites everyday. The problems is that there are MILLIONS of listings on multiples eBay sites around the world. eBay has a program called Vero ([pages.ebay.com.au]). All companies have to do is join the program. From that point on all they have to do is say “Listing blahblah is fake, pull it.” and eBay will. eBay staff aren’t cops, they’re working for a merchant site that sells a service.

    -Would eBay like to stop all counterfeits on the site? Yes.
    -Why? Because people who get fakes don’t want to come back and eBay loses money.
    -Can they stop them all? No.

  34. angryhippo says:

    @Geekybiker:

    Heh. Don’t tell the RIAA or MPAA that…

  35. 44 in a Row says:

    If I answer a classified ad and buy the offered HDTV and it turns out to be a ‘Sorny’ or a ‘Magnetbox’, I don’t see how the paper can be held liable.

    Part of the difference is that the newspaper isn’t getting a cut of the sale like eBay does. An argument can be made that it’s actually in eBay’s financial interest to allow counterfeits to be sold as the real thing; the higher the final selling price of an item, the higher the fee that gets paid to eBay. I don’t think this necessarily changes the legal argument here, but it’s at least something to consider.

  36. Cliff_Donner says:

    @InThrees: You don’t want the Magnetbox OR the Sorny — go for The Carnivale — two-pronged wall plug, pre-molded hand grip well, and durable outer casing to prevent fall apart.

  37. ElizabethD says:

    I have sent e-mails to manufacturers to alert them of blatant copies being sold on eBay, and never gotten a response, a thanks, or any indication that anyone cared. Most recent example: North Face. This spring I was ripped off to the tune of $85 plus shipping for a new “North Face” polarfleece jacket that is clearly a fraud and was shipped from Hong Kong. The seller was selling loads of them and had all positive feedback (most likely salted by colleagues/friends). I’m trying to negotiate a PayPal chargeback. So I told North Face about it, more than a month ago… Deafening silence.

  38. ogremustcrush says:

    I think eBay should take down counterfeit items that are being represented as an original. I don’t think they should take down items that are being clearly represented as a knock-off. They should not take down legitimate authentic items being resold to appease some companies distribution agreements. Neither eBay nor the consumer have any agreement or responsibility to ensure that a certain companies products are only sold at certain stores. It is in both of their best interests to allow resale of these luxury items, as eBay makes their fees, and the consumer is able to purchase these items at a discount from the prices on the controlled distribution networks.

  39. loserflame says:

    Read the book “Deluxe”. It’s a pretty good expose’ of the “Luxury” industry

  40. muffingal says:

    @ogremustcrush: You hit the nail on the head.

    @fostina1: Not most, but alot of people are well aware they are purchasing a counterfeit on eBay. If someone honestly believes they are getting a Tiffany bracelet from Hong Kong for $30, they are lying to themselves or they just want others to believe it’s Tiffany.

    eBay is definately a buyer beware market now. I try to be a realistic buyer and most “luxury” products are iffy there.

  41. fencepost says:

    I’m sure that people have followed this path in the past, but what legal recourse might someone have in (for example) the Louis Vuitton case?

    Probably wouldn’t hit slander/libel even though it was presumably communicated to eBay in written form (“User X is selling counterfeit merchandise.”), but if it shows on your account anywhere public that you’ve had auctions canceled by eBay then it might qualify. I’m not sure how far the “publication” requirement really goes.

    I suspect that eBay is well covered in this case, but if you’re selling something legitimate and the manufacturer accuses you of being a fraud with no evidence, are there repercussions?