Judge Rules For eBay |In Fake Jewelry Dispute

NEW YORK (CN) - EBay is not responsible for policing counterfeit Tiffany jewelry hawked by online sellers, a federal judge in Manhattan ruled. The decision contradicts a French court ruling last month ordering eBay to pay $61 million to Louis Vuitton in a similar dispute over knockoff luxury goods.

Tiffany, a famous high-end jeweler, claimed eBay allowed "hundreds of thousands" of counterfeit silver Tiffany items to be sold on its online auction. The jeweler sued for direct and contributory trademark infringement, unfair competition and false advertising, among other claims, claiming eBay knew about the widespread fakes, but failed to investigate or curb illegal sales.

EBay argued that it was Tiffany's job to monitor the site for counterfeit goods and to alert eBay of any potential infringement. EBay removed all listings that had been flagged as counterfeits, but refused to monitor the site for fakes or preemptively bar anyone from offering five or more Tiffany items in a single listing.

U.S. District Judge Richard Sullivan sympathized with Tiffany's frustration, but said the task of monitoring falls on the seller.

"(T)he fact remains that rights holders bear the principal responsibility to police their trademarks," Sullivan wrote. The decision conflicts with a French court's ruling for LVMH, which argued, successfully, that eBay was liable for allowing fake Louis Vuitton handbags and Dior perfumes to proliferate on the site. The LVMH decision came a month after another French court ordered eBay to pay Hermes $31,600 for sales of counterfeit Hermes handbags.

EBay also faces lawsuits from L'Oreal cosmetics and the Conseil de Ventes, which represents French auctioneers.

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