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Audrey Hepburn at Tiffany's

No cigar for Tiffany in any of its claims against eBay

BREAKING NEWS: The District Court for the Southern District of New York has today ruled that Tiffany’s false advertising claim against eBay has failed.  Judge Richard Sullivan issued a seven page order to address whether certain of eBay’s advertisements were likely to mislead or confuse consumers, after all other aspects of Tiffany’s appeal against his 2008 decision had been dismissed by the Second Circuit in April 2010.

Tiffany’s remanded claim rested on section 43(a)(1)(B) Lanham Act, which forbids any false or misleading descriptions or representations of fact concerning “the nature, characteristics, qualities, or geographic origin of … goods, services or commercial activities” (15 U.S.C. § 1125(a)(1)(B)).  This can be proved in one of two ways:  either the claims are literally false; or they are likely to mislead or confuse customers. (Tiffany (NJ), Inc. v. eBay, Inc.,  600 F.3d 112, quoting Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 114, 153 (2d Cir. 2007)).Since the claims in this case were not literally false, Tiffany had to “demonstrate, by extrinsic evidence that the challenged commercials tend to mislead or confuse consumers” and that “a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenegd advertisement” (Tiffany, 600 F.3d at 112-113, quoting Johnson & Johnson, Merck Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297, 98 (2d Cir. 1992)).  It was “for the limited purpose of the District Court’s re-examination of the false advertising claim” that the Second Circuit had remanded the case to the District Court.Denying Tiffany’s petition, Judge Sullivan stated:

“For the reasons that follow, and by Plaintiff’s own admission, the Court concludes that there is insufficient evidence in the extensive trial record to support a finding that the challenged advertisements were misleading or confusing.  The Court further rejects Plaintiff’s post-appeal argument that the limited remand from the Circuit left open alternative theories of liability under the Lanham Act.” (Internal quotations omitted.)

The Order shows that although the evidence presented by Tiffany demonstrated confusion on the part of at least some consumers, there was no evidence of their statistical significance and no proof that they had been confused by the advertising at the center of Tiffany’s complaint.  In fact, the testimonies of Tiffany’s witnesses seemed to indicate the opposite, i.e. that the “Tiffany on eBay” advertising had played no part in their confusion.

Finally, Tiffany argued that its false advertising claim could succeed where it could adequately demonstrate that eBay had “intentionally set out to deceive the public”, and that eBay’s “deliberate conduct in this regard is of an egregious nature” (Merck 960 F.2d at 298).  Judge Sullivan rejected this argument for two reasons.  First, it was not raised until after the Second Circuit had remanded the false advertising issue back to the District Court, and therefore it was not admissible.  Second, even if it had been admissible, “nothing in the trial record indicates that eBay was aware [this is what the Order says, but should it say “intended”?] that consumers were being misled by eBay advertisements”.

This decision does not create new law.  It is unlikely to surprise many and is even less likely to have any significant impact on brand protection policies, given that the suit was filed in response to eBay’s 2004 practices.  Internet service providers have evolved significantly since then and currently offer a variety of rights protection programs that seem to be helping them survive lawsuits quite well.  Even if online businesses, including auction houses, will have no reason to change their current practices as a result of today’s ruling, brand owners will always be well advised to bear in mind that working with ISPs to tackle counterfeiting will often be a cost-effective alternative to litigation.

UPDATED to include Tiffany Ebay False Advertising Decision

The case is Case 1:04-cv-04607-RJS, Tiffany (NJ), Inc. v. eBay, Inc.

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