EBay Faces Groundbreaking Case In Tiffany Counterfeit Suit

EBay spokesman Hani Durzy said the company was "disappointed" that Tiffany filed the suit, given that both companies have collaborated in removing auctions of fake Tiffany products.

"While we will continue to cooperate with Tiffany in these efforts, we will fight the legal action because its claims are without merit," Durzy said.

As a marketplace, it only provides the online real estate for goods to be sold and never sees or actually touches the items, Durzy said. Therefore, the responsibility lies with the trademark owners to watch for counterfeits. When an item is found to be fake, EBay immediately removes it from the site.

"(The trademark) owners are the only ones who can truly understand who owns the rights, and what is fake and what is real," Durzy said.

Tiffany, however, is arguing that EBay is not a neutral vendor offering an online mall. The company has advertised on its homepage on Mother's Day the availability of Tiffany silver among its sellers, James Swire, lead attorney for Tiffany and a partner in the law firm Arnold & Porter LLP, said. In addition, EBay has placed sponsored links on Google and Yahoo advertising the availability of Tiffany silver.

Unfortunately, most of the advertised items were fake, Swire said.

"Those are indicative of the kinds of things they are doing that show they are not just a renter of space," Swire said.

In advertising items on its site, EBay, Tiffany argues, has the responsibility for making sure the items are authentic. In addition, EBay makes millions of dollars through marketing goods on its site, Swire said.

The jewelry seller estimates that at least three out of four Tiffany products sold on EBay are counterfeit, and that the marketplace is aware of the problem, Swire said.

The judge has not set a date for trial, but it's "quite possible" it could begin by the end of the year, Swire said.