Tiffany Sues eBay

A giant among traditional retailers has launched a lawsuit against a king of the new.

Tiffany is suing eBay, claiming the auction site profits from the widespread sale of counterfeit Tiffany products.

The company did a test buy of some 186 silver jewelry products said to be Tiffany's on eBay. Of the total, 73% turned out to be fake, 5% were genuine, and 22% fell in a gray area (for example, some were described as "Tiffany-inspired").

"Thousands of consumers have bought counterfeit 'Tiffany' jewelry through eBay believing that their purchases were genuine, but they have been deceived, and Tiffany's reputation has been damaged in the process," says a company statement. "Tiffany believes eBay should bear responsibility for the sale of counterfeit merchandise on its site."

Tiffany lawyer James Swire says that the company felt it had a particularly strong complaint since eBay had bought sponsored links for Tiffany's on Google and Yahoo, and because the retailer has such a tight distribution network.

"Tiffany has advised eBay that … a seller who is offering for sale more than a small quantity—five or less—of jewelry items that he or she claims are from Tiffany is almost certainly selling counterfeit Tiffany goods," said the company's complaint.

But the company says its pleas were ignored. "We've talked to them about it and this is the only way to get their attention," says company vice president Mark Aaron.

In response, an eBay statement says, "We have not seen the complaint yet, so we can't comment on it specifically. However, we take these concerns very seriously, which is why we have worked closely with Tiffany and thousands of other rights owners for many years through our VERO Program to help them address these types of issues."

Swire said that Tiffany did participate in the VERO program for five months last year, and ended up taking down 19,000 auctions.

"We had to devote full-time two skilled employees to it, and the total was staggering," he said.

This case will likely be watched closely by companies like Rolex, which also have complained about widespread counterfeits on eBay.

"We are going to watch the case with interest," says Brian Brokate, Gibney, Anthony and Flaherty, general counsel to Rolex. "It's going to be very interesting for those trademark holders who have problems on eBay to watch and to monitor this suit closely."