Intellectual Property Law

Sandra Rierson, my colleague and co-author on Confronting the Genericism Conundrum, and I were emailing about the Tiffany v. eBay case the other day. She noted that the case furthers a mistake regarding contributory and vicarious liability. I asked her whether she’d like to write a special to Co-Op about the topic, and she agreed. So here is Sandy Rierson explaining an important difference in theories of liability.

Contributory Trademark Infringement in an On-line Marketplace
by
Sandra Rierson

The Second Circuit’s recent decision in Tiffany v. eBay addresses the issue of contributory trademark infringement in an on-line marketplace. Without even reading the case, you can probably figure out why the lawsuit was filed: fake Tiffany stuff being sold on eBay. The question is, whose problem is this? According to the Second Circuit, the answer is “not eBay’s.” Several people have provided excellent covered the details of the case. You can to Greg Lastowka’s, Rebecca Tushnet’s, or Eric Goldman’s respective blog posts about the case for the details and their thoughts.

To me, however, the most interesting aspect of this opinion is one that the parties did not even contest on appeal: whether the Inwood test for contributory liability should apply to on-line service providers at all. At trial, eBay argued that Inwood’s test for contributory liability should not apply to entities such as itself, which provide a service that is allegedly being used to infringe, rather than a product. eBay did not contest the applicability of the Inwood standard on appeal.

Even though the Second Circuit’s analysis of whether and when the Inwood standard should apply to service providers such as eBay is dicta in this opinion, it made me cringe nonetheless. In the eBay decision the Second Circuit adopts the standard set forth by the Ninth Circuit in Lockheed v. NSI for determining when Inwood applies to a service provider: “Direct control and monitoring of the instrumentality used by a third party to infringe the plaintiff’s mark” permits application of the Inwood test for contributory infringement to service providers. The Ninth Circuit was wrong when it articulated this standard, and it pains me to see the Second Circuit breathing life into it in this opinion.

The Ninth Circuit’s “direct control and monitoring” standard is incorrect as a matter of law and invites bad behavior as a matter of policy. By grounding applicability of the contributory trademark infringement doctrine on a determination of whether the defendant exercises “direct control” over the infringer, the Ninth Circuit (and now the Second Circuit) muddied and confused contributory and vicarious liability.

Read More »Errors in Tiffany v. eBay, Contributory Liability Is Not the Same as Vicarious Liability