2010),[1] was a landmark case in which the United States Court of Appeals for the Second Circuit first addressed contributory trademark infringement in the context of online marketplaces.

[5] Founded in 1837, Tiffany & Co. is an established brand of luxury goods with high-end quality, including jewelry, watches, and home items.

"[8] Tiffany marks are famous and a valuable asset for the company and are closely controlled through the distribution chains of its goods.

eBay makes revenue by charging the sellers a commission fee for its listing services and for each completed deal.

[7]: 463, 478  The fraud engine is a collection of software rules and models that automatically find and remove listings that violate eBay policies.

"[7] Tiffany alleged eBay violated the Lanham Act and New York state common law by directly infringing on its trademark in three ways.

The reason is simply that eBay's use of the TIFFANY Marks in sponsored links is effectively identical to that on its own website, and thus the same conclusions can be made.

[1]: 103 Tiffany claimed the contributory trademark infringement of eBay, which was a judicially constructed doctrine articulated by the Supreme Court in Inwood Laboratories, Inc. v. Ives Laboratories, Inc. and found the liability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another.

"[7]: 463, 502 [14] Using this finding, Tiffany claimed that eBay continued to provide its platform despite its knowledge, or reason to know, that counterfeit merchandise is being sold.

Tiffany argued that eBay's generalized knowledge of the counterfeit items should have prompted them to "preemptively remedy the problem at the very moment that it knew or had reason to know that the infringing conduct was generally occurring, even without specific knowledge as to individual instances of infringing listings or sellers.

Nevertheless, evidence showed that eBay had spent significant efforts to fight with the sales of counterfeit items on its websites, including the VeRO program and the fraud engine.

The court concluded that eBay did not ignore the infringing activities and tried to prevent the sale of counterfeit items, as evidenced by the VeRO program and the "fraud engine".

The Court held that, first of all, Tiffany wrongly equated the NOCIs, which were merely a good belief, with the determination of counterfeit, and moreover, Tiffany failed to provide evidence for this claim, as the record showed that eBay took appropriate steps to remove such listings and warn the users who sold counterfeit items, instead of continuing to supply such individual sales.

Tiffany alleged "unfair competition, infringement, and the use of false descriptions and representations under Section 43(a) of the Lanham Act and New York common law.

[1]: 93, 113  The Second Circuit reversed, holding that extrinsic evidence was necessary to determine if eBay's advertisements were likely to mislead or confuse consumers.

[1]: 114 On remand, the district court concluded that no extrinsic evidence indicated that the advertisement in question misled or confused any consumers.

The court saw eBay's use of the mark as a way "to describe accurately the genuine Tiffany goods offered for sale on its website.

Although the Inwood test was meant for regulating the manufactures or distributor of products, Courts have decided to extend it to services, which eBay provided in this case.

Tiffany argued that eBay knew clearly that the infringing sales were ubiquitous on its websites and continued to provide its services.

The Court rejected this argument and found such general knowledge was still insufficient for eBay to take an affirmative duty.

Tiffany contended that eBay's advertising practices constituted trademark dilution under the Lanham Act and New York state business law.

[7]: 463, 521  Tiffany argued that counterfeit items of inferior quality were sold, harming the distinctiveness, value, and reputation of the trademark.

The district court rejected this claim and thought eBay's advertisement was not literally false because genuine products were indeed sold on their websites.

[17] EFF argued that internet commerce would be stifled if the burden of policing for trademarks were placed on intermediaries, such as eBay, because any listing even remotely suspicious would be removed.

[19] Organizations such as the International AntiCounterfeiting Coalition (IACC), however, accuse eBay of "turning a blind eye" to the amount of counterfeiting that occurs on its website.

The liability appears to trigger only when specific individuals (i.e., sellers or stores) are engaged in the counterfeiting of goods, and can be notified to eBay.

In 2008, Louis Vuitton Moet Hennessy (LVMH) sued eBay in France over the sales of counterfeit perfumes and handbags on its website.

[25] In 2010, LVMH again sued eBay, this time for harming the reputation of the Louis Vuitton trademark and domain name.

[26] The French tribunal put the onus on eBay to enforce adequate measures to prevent illicit goods from entering the market.