Counterfeit products showing up on eBay is not anything new. Three out of every four items that are advertised as being authentic Tiffany’s jewelry actually are just fakes. This data goes all the way back to 2004 when the employees of Tiffany’s actually purchased hundreds of these “authentic” pieces of Tiffany’s jewelry and tested them.

Based on the majority of these Tiffany jewelry products being fakes, Tiffany sued eBay for “trademark violations on its site alleging that eBay had general knowledge that the infringement was occurring.”

eBay has over 100 million listings on any given day. As noted in an appeal decision, eBay spends about $20 million each year on tools which promotes trust and safety on their website. They even have a “trust and safety” department with over 4,000 employees.

One of their tools used to defend against counterfeit and trademark violation listings is their VeRO system – verified rights owner program. This system is a rapid notice-and-takedown program able to respond very quickly to trademark complaints and remove copyrighted infringement if it is in fact just that.

Those sellers on eBay who are caught are suspended, and if repeated offenses occur, then they are permanently banned from selling their goods on eBay. Hundreds of thousands of these sellers are suspended each year.

According to a recent article by David Canton, “the United Sates Court of Appeals has recently upheld the decision that eBay is not liable for trademark violations as against jewelry retailer Tiffany. This decision is significant to retailers and the general public alike.”

The court decided that eBay is not liable in this case due to the fact that it is not eBay itself selling these counterfeit goods or violating any trademarks, and eBay deals with sellers making false claims about such products when they are made aware of it.

Based on the court’s rulings of this matter, e-commerce buyers and sellers both win – more than you’d perhaps originally think. As stated by David Canton, “If Tiffany had been successful; it would have likely resulted in over-policing of vendors by all online intermediary selling sites. (Other examples of such sites are Craigslist and Kijiji.) If these companies had to worry about trademark lawsuits and liability for every single sale that took place on their sites — and thus verify the authenticity of everything offered for sale on their sites — there would be a chill on e-commerce.”