Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947 (2d Cir. 2010)
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08-3947-cv Tiffany (NJ) Inc. v. eBay Inc. 1 2 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: July 16, 2009 Decided: April 1, 2010) 5 Docket No. 08-3947-cv 6 ------------------------------------- 7 TIFFANY (NJ) INC. and TIFFANY and COMPANY, 8 Plaintiffs-Appellants, 9 - v. - 10 eBay Inc., 11 Defendant-Appellee. 12 ------------------------------------- 13 14 15 16 Before: SACK and B.D. PARKER, Circuit Judges, and Goldberg, Judge.* 17 Court for the Southern District of New York. 18 (Richard J. Sullivan, Judge) concluded, inter alia, that eBay -- 19 the proprietor of a website through which counterfeit Tiffany 20 merchandise was sold -- did not, on the facts presented, engage 21 in trademark infringement, false advertising, or trademark 22 dilution. 23 claims of trademark infringement and dilution, but remand for 24 further proceedings with respect to Tiffany's claim of false 25 advertising. Appeal from a judgment of the United States District * The district court We affirm the judgment with respect to Tiffany's The Honorable Richard W. Goldberg, Senior Judge, United States Court of International Trade, sitting by designation. 1 2 3 4 5 JAMES B. SWIRE (H. Peter Haveles, Jr., Peter L. Zimroth, Erik C. Walsh, and Elanor M. Lackman, on the brief) Arnold & Porter LLP, New York, NY, for Plaintiffs-Appellants. 6 7 8 9 R. BRUCE RICH (Randi W. Singer, Jonathan Bloom, and Mark J. Fiore on the brief) Weil, Gotshal & Manges LLP, New York, NY, for Defendant-Appellee. 10 11 12 13 14 Bruce P. Keller, David H. Bernstein, Michael R. Potenza, Debevoise & Plimpton LLP, New York, NY, for Amicus Curiae The International Anticounterfeiting Coalition. 15 16 17 18 John F. Cooney, Janet F. Satterwaite, Meghan Hemmings Kend, Venable LLP, Washington, D.C., for Amicus Curiae Coty, Inc. 19 20 21 22 Alain Coblence, Coblence & Associates, New York, NY, for Amicus Curiae The Council of Fashion Designers of America, Inc. 23 24 25 26 27 28 29 30 31 Patric J. Carome, Samir C. Jain, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C., for Amici Curiae Amazon.com, Inc., Google Inc., Information Technology Association of America, Internet Commerce Coalition, Netcoalition, United States Internet Service Provider Association, and United States Telecom Association. 32 33 34 35 36 Meredith Martin Addy and Howard S. Michael, Brinks Hofer Gilson & Lione, Chicago, IL, David S. Fleming, Brinks Hofer Gilson & Lione, New York, NY, for Amicus Curiae Yahoo! Inc. 37 38 39 40 41 Fred von Lohmann, Michael Kwum, Electronic Frontier Foundation, Francisco, CA, for Amici Curiae Electronic Frontier Foundation, Citizen, and Public Knowledge. 2 The San The Public 1 SACK, Circuit Judge: 2 eBay, Inc. ("eBay"), through its eponymous online 3 marketplace, has revolutionized the online sale of goods, 4 especially used goods. 5 by hundreds of millions of people and entities, to their benefit 6 and eBay's profit. 7 users as a means to perpetrate fraud by selling counterfeit 8 goods. 9 It has facilitated the buying and selling But that marketplace is sometimes employed by Plaintiffs Tiffany (NJ) Inc. and Tiffany and Company 10 (together, "Tiffany") have created and cultivated a brand of 11 jewelry bespeaking high-end quality and style. 12 Tiffany's concern that some use eBay's website to sell 13 counterfeit Tiffany merchandise, Tiffany has instituted this 14 action against eBay, asserting various causes of action -- 15 sounding in trademark infringement, trademark dilution and false 16 advertising -- arising from eBay's advertising and listing 17 practices. 18 district court's judgment with respect to Tiffany's claims of 19 trademark infringement and dilution but remand for further 20 proceedings with respect to Tiffany's false advertising claim. 21 22 Based on For the reasons set forth below, we affirm the BACKGROUND By opinion dated July 14, 2008, following a week-long 23 bench trial, the United States District Court for the Southern 24 District of New York (Richard J. Sullivan, Judge) set forth its 25 findings of fact and conclusions of law. 26 eBay, Inc., 576 F. Supp. 2d 463 (S.D.N.Y. 2008) ("Tiffany"). 3 Tiffany (NJ) Inc. v. 1 When reviewing a judgment following a bench trial in the district 2 court, we review the court's findings of fact for clear error and 3 its conclusions of law de novo. 4 163, 168 (2d Cir. 2009). 5 conclude that the district court's findings of fact are not 6 clearly erroneous. 7 findings in setting forth the facts of, and considering, this 8 dispute. 9 Giordano v. Thomson, 564 F.3d Except where noted otherwise, we We therefore rely upon those non-erroneous eBay eBay1 is the proprietor of www.ebay.com, an Internet- 10 11 based marketplace that allows those who register with it to 12 purchase goods from and sell goods to one another. 13 "connect[s] buyers and sellers and [] enable[s] transactions, 14 which are carried out directly between eBay members." 15 576 F. Supp. 2d at 475.2 16 "provides the venue for the sale [of goods] and support for the 17 transaction[s], [but] it does not itself sell the items" listed 18 for sale on the site, id. at 475, nor does it ever take physical It Tiffany, In its auction and listing services, it 1 eBay appears to be short for Echo Bay -- the name of eBay's founder's consulting firm was Echo Bay Technology Group. The name "EchoBay" was already in use, so eBay was employed as the name for the website. See http://en.wikipedia.org/wiki/ EBay#Origins_and_history (last visited Feb. 26, 2010); http://news.softpedia.com/news/eBay-Turns-Ten-Happy-Birthday-7502 .shtml (last visited Feb. 26, 2010). 2 In addition to providing auction-style and fixed-priced listings, eBay is also the proprietor of a traditional classified service. Id. at 474. 4 1 possession of them, id. 2 whether or when an item is delivered to the buyer." 3 Thus, "eBay generally does not know eBay has been enormously successful. Id. More than six 4 million new listings are posted on its site daily. 5 given time it contains some 100 million listings. 6 Id. At any Id. eBay generates revenue by charging sellers to use its 7 listing services. For any listing, it charges an "insertion fee" 8 based on the auction's starting price for the goods being sold 9 and ranges from $0.20 to $4.80. Id. For any completed sale, it 10 charges a "final value fee" that ranges from 5.25% to 10% of the 11 final sale price of the item. 12 purchasing, at additional cost, features "to differentiate their 13 listings, such as a border or bold-faced type." Id. Sellers have the option of Id. 14 eBay also generates revenue through a company named 15 PayPal, which it owns and which allows users to process their 16 purchases. 17 processes, 1.9% to 2.9% of the transaction amount, plus $0.30. 18 Id. 19 volume and the price of the goods sold on its website. PayPal deducts, as a fee for each transaction that it This gives eBay an added incentive to increase both the Id. 20 Tiffany 21 Tiffany is a world-famous purveyor of, among other 22 things, branded jewelry. Id. at 471-72. Since 2000, all new 23 Tiffany jewelry sold in the United States has been available 24 exclusively through Tiffany's retail stores, catalogs, and 25 website, and through its Corporate Sales Department. 26 73. Id. at 472- It does not use liquidators, sell overstock merchandise, or 5 1 put its goods on sale at discounted prices. 2 not - nor can it, for that matter -- control the "legitimate 3 secondary market in authentic Tiffany silvery jewelry," i.e., the 4 market for second-hand Tiffany wares. 5 developed at trial "offere[d] little basis from which to discern 6 the actual availability of authentic Tiffany silver jewelry in 7 the secondary market." 8 9 Id. at 473. Id. at 473. It does The record Id. at 474. Sometime before 2004, Tiffany became aware that counterfeit Tiffany merchandise was being sold on eBay's site. 10 Prior to and during the course of this litigation, Tiffany 11 conducted two surveys known as "Buying Programs," one in 2004 and 12 another in 2005, in an attempt to assess the extent of this 13 practice. 14 eBay and then inspected and evaluated them to determine how many 15 were counterfeit. 16 purported Tiffany goods purchased in the 2004 Buying Program and 17 75.5% of those purchased in the 2005 Buying Program were 18 counterfeit. 19 the Buying Programs were "methodologically flawed and of 20 questionable value," id. at 512, and "provide[d] limited evidence 21 as to the total percentage of counterfeit goods available on eBay 22 at any given time," id. at 486. 23 that during the period in which the Buying Programs were in 24 effect, a "significant portion of the 'Tiffany' sterling silver 25 jewelry listed on the eBay website . . . was counterfeit," id., 26 and that eBay knew "that some portion of the Tiffany goods sold Under those programs, Tiffany bought various items on Id. Id. at 485. Tiffany found that 73.1% of the The district court concluded, however, that The court nonetheless decided 6 1 on its website might be counterfeit," 2 found, however, that "a substantial number of authentic Tiffany 3 goods are [also] sold on eBay." 4 id. at 507. The court Id. at 509. Reducing or eliminating the sale of all second-hand 5 Tiffany goods, including genuine Tiffany pieces, through eBay's 6 website would benefit Tiffany in at least one sense: 7 diminish the competition in the market for genuine Tiffany 8 merchandise. 9 some basis in the record for eBay's assertion that one of It would See id. at 510 n.36 (noting that "there is at least 10 Tiffany's goals in pursuing this litigation is to shut down the 11 legitimate secondary market in authentic Tiffany goods"). 12 immediate effect would be loss of revenue to eBay, even though 13 there might be a countervailing gain by eBay resulting from 14 increased consumer confidence about the bona fides of other goods 15 sold through its website. The 16 Anti-Counterfeiting Measures 17 Because eBay facilitates many sales of Tiffany goods, 18 genuine and otherwise, and obtains revenue on every transaction, 19 it generates substantial revenues from the sale of purported 20 Tiffany goods, some of which are counterfeit. 21 Watches category manager estimated that, between April 2000 and 22 June 2004, eBay earned $4.1 million in revenue from completed 23 listings with 'Tiffany' in the listing title in the Jewelry & 24 Watches category." 25 revenue from all sales of goods on its site, including 26 counterfeit goods, the district court found eBay to have "an Id. at 481. "eBay's Jewelry & Although eBay was generating 7 1 interest in eliminating counterfeit Tiffany merchandise from 2 eBay . . . to preserve the reputation of its website as a safe 3 place to do business." 4 goods might, if and when the forgery was detected, fault eBay. 5 Indeed, the district court found that "buyers . . . complain[ed] 6 to eBay" about the sale of counterfeit Tiffany goods. 7 487. 8 complained to eBay about purchasing 'Tiffany' items through the 9 eBay website that they believed to be counterfeit." 10 Id. at 469. The buyer of fake Tiffany Id. at "[D]uring the last six weeks of 2004, 125 consumers Id. Because eBay "never saw or inspected the merchandise in 11 the listings," its ability to determine whether a particular 12 listing was for counterfeit goods was limited. 13 Even had it been able to inspect the goods, moreover, in many 14 instances it likely would not have had the expertise to determine 15 whether they were counterfeit. 16 instances, determining whether an item is counterfeit will 17 require a physical inspection of the item, and some degree of 18 expertise on the part of the examiner."). Id. at 477-78. Id. at 472 n.7 ("[I]n many 19 Notwithstanding these limitations, eBay spent "as much 20 as $20 million each year on tools to promote trust and safety on 21 its website." 22 "buyer protection programs," under which, in certain 23 circumstances, the buyer would be reimbursed for the cost of 24 items purchased on eBay that were discovered not to be genuine. 25 Id. at 479. 26 department, with some 4,000 employees "devoted to trust and Id. at 476. For example, eBay and PayPal set up eBay also established a "Trust and Safety" 8 1 safety" issues, including over 200 who "focus exclusively on 2 combating infringement" and 70 who "work exclusively with law 3 enforcement." 4 Id. at 476. By May 2002, eBay had implemented a "fraud engine," 5 "which is principally dedicated to ferreting out illegal 6 listings, including counterfeit listings." 7 theretofore employed manual searches for keywords in listings in 8 an effort to "identify blatant instances of potentially 9 infringing ... activity." Id. Id. at 477. eBay had "The fraud engine uses rules and 10 complex models that automatically search for activity that 11 violates eBay policies." 12 actually advertised as counterfeit, the engine also incorporates 13 various filters designed to screen out less-obvious instances of 14 counterfeiting using "data elements designed to evaluate listings 15 based on, for example, the seller's Internet protocol address, 16 any issues associated with the seller's account on eBay, and the 17 feedback the seller has received from other eBay users." 18 addition to general filters, the fraud engine incorporates 19 "Tiffany-specific filters," including "approximately 90 different 20 keywords" designed to help distinguish between genuine and 21 counterfeit Tiffany goods. 22 dispute,3 eBay also "periodically conducted [manual] reviews of Id. In addition to identifying items Id. at 491. 3 Id. In During the period in In its findings, the district court often used the past tense to describe eBay's anticounterfeiting efforts. We do not take this usage to suggest that eBay has discontinued these efforts, but only to emphasize that its findings are issued with respect to a particular period of time prior to the completion of trial and issuance of its decision. 9 1 listings in an effort to remove those that might be selling 2 counterfeit goods, including Tiffany goods." 3 Id. For nearly a decade, including the period at issue, 4 eBay has also maintained and administered the "Verified Rights 5 Owner ('VeRO') Program" -- a "'notice-and-takedown' system" 6 allowing owners of intellectual property rights, including 7 Tiffany, to "report to eBay any listing offering potentially 8 infringing items, so that eBay could remove such reported 9 listings." Id. at 478. Any such rights-holder with a 10 "good-faith belief that [a particular listed] item infringed on a 11 copyright or a trademark" could report the item to eBay, using a 12 "Notice Of Claimed Infringement form or NOCI form." 13 the period under consideration, eBay's practice was to remove 14 reported listings within twenty-four hours of receiving a NOCI, 15 but eBay in fact deleted seventy to eighty percent of them within 16 twelve hours of notification. Id. During Id. 17 On receipt of a NOCI, if the auction or sale had not 18 ended, eBay would, in addition to removing the listing, cancel 19 the bids and inform the seller of the reason for the 20 cancellation. 21 cancel the transaction. 22 auction, eBay would refund the fees it had been paid in 23 connection with the auction. 24 25 If bidding had ended, eBay would retroactively Id. In the event of a cancelled Id. at 478-79. In some circumstances, eBay would reimburse the buyer for the cost of a purchased item, provided the buyer presented 10 Id. at 479.4 1 evidence that the purchased item was counterfeit. 2 During the relevant time period, the district court found, eBay 3 "never refused to remove a reported Tiffany listing, acted in 4 good faith in responding to Tiffany's NOCIs, and always provided 5 Tiffany with the seller's contact information." Id. at 488. 6 In addition, eBay has allowed rights owners such as 7 Tiffany to create an "About Me" webpage on eBay's website "to 8 inform eBay users about their products, intellectual property 9 rights, and legal positions." Id. at 479. eBay does not 10 exercise control over the content of those pages in a manner 11 material to the issues before us. 12 Tiffany, not eBay, maintains the Tiffany "About Me" With the headline "BUYER BEWARE," the page begins: 13 page. 14 of the purported TIFFANY & CO. silver jewelry and packaging 15 available on eBay is counterfeit." 16 in original). 17 18 19 20 21 22 23 24 25 "Most Pl.'s Ex. 290 (bold face type It also says, inter alia: The only way you can be certain that you are purchasing a genuine TIFFANY & CO. product is to purchase it from a Tiffany & Co. retail store, via our website (www.tiffany.com) or through a Tiffany & Co. catalogue. Tiffany & Co. stores do not authenticate merchandise. A good jeweler or appraiser may be able to do this for you. Id. 4 We note, however, that, Tiffany's "About Me" page on the eBay website states that Tiffany does not authenticate merchandise. Pl.'s Ex. 290. Thus, it may be difficult for a purchaser to proffer evidence to eBay supporting a suspicion that the "Tiffany" merchandise he or she bought is counterfeit. 11 1 In 2003 or early 2004, eBay began to use "special 2 warning messages when a seller attempted to list a Tiffany item." 3 Tiffany, 576 F. Supp. 2d at 491. 4 seller to make sure that the item was authentic Tiffany 5 merchandise and informed the seller that eBay 'does not tolerate 6 the listing of replica, counterfeit, or otherwise unauthorized 7 items' and that violation of this policy 'could result in 8 suspension of [the seller's] account.'" 9 original). These messages "instructed the Id. (alteration in The messages also provided a link to Tiffany's "About 10 Me" page with its "buyer beware" disclaimer. 11 "continued to list an item despite the warning, the listing was 12 flagged for review." 13 Id. If the seller Id. In addition to cancelling particular suspicious 14 transactions, eBay has also suspended from its website "'hundreds 15 of thousands of sellers every year,' tens of thousands of whom 16 were suspected [of] having engaged in infringing conduct." 17 at 489. 18 suspensions, but would suspend sellers after the first violation 19 if it was clear that "the seller 'listed a number of infringing 20 items,' and '[selling counterfeit merchandise] appears to be the 21 only thing they've come to eBay to do.'" 22 listed a potentially infringing item but appeared overall to be a 23 legitimate seller, the 'infringing items [were] taken down, and 24 the seller [would] be sent a warning on the first offense and 25 given the educational information, [and] told that . . . if they Id. eBay primarily employed a "'three strikes rule'" for 12 Id. But if "a seller 1 do this again, they will be suspended from eBay.'" 2 (alterations in original).5 3 Id. By late 2006, eBay had implemented additional anti- 4 fraud measures: delaying the ability of buyers to view listings 5 of certain brand names, including Tiffany's, for 6 to 12 hours so 6 as to give rights-holders such as Tiffany more time to review 7 those listings; developing the ability to assess the number of 8 items listed in a given listing; and restricting one-day and 9 three-day auctions and cross-border trading for some brand-name 10 items. 11 Id. at 492. The district court concluded that "eBay consistently 12 took steps to improve its technology and develop anti-fraud 13 measures as such measures became technologically feasible and 14 reasonably available." Id. at 493. 15 eBay's Advertising 16 At the same time that eBay was attempting to reduce the 17 sale of counterfeit items on its website, it actively sought to 18 promote sales of premium and branded jewelry, including Tiffany 19 merchandise, on its site. 5 Id. at 479-80. Among other things, According to the district court, "eBay took appropriate steps to warn and then to suspend sellers when eBay learned of potential trademark infringement under that seller's account." Tiffany, 576 F. Supp. 2d at 489. The district court concluded that it was understandable that eBay did not have a "hard-andfast, one-strike rule" of suspending sellers because a NOCI "did not constitute a definitive finding that the listed item was counterfeit" and because "suspension was a very serious matter, particularly to those sellers who relied on eBay for their livelihoods." Id. The district court ultimately found eBay's policy to be "appropriate and effective in preventing sellers from returning to eBay and re-listing potentially counterfeit merchandise." Id. 13 1 eBay "advised its sellers to take advantage of the demand for 2 Tiffany merchandise as part of a broader effort to grow the 3 Jewelry & Watches category." 4 eBay advertised the availability of Tiffany merchandise on its 5 site. 6 Pl.'s Exs. 392, 1064, a "Fall FASHION BRAND BLOWOUT," Pl.'s Ex. 7 392, "Jewelry Best Sellers," id., "GREAT BRANDS, GREAT PRICES," 8 Pl.'s Ex. 1064, or "Top Valentine's Deals," Pl.'s Ex. 392, among 9 other promotions. Id. at 479. And prior to 2003, eBay's advertisements trumpeted "Mother's Day Gifts!," It encouraged the viewer to "GET THE FINER 10 THINGS." 11 reader with hyperlinks, at least one of each of which was related 12 to Tiffany merchandise -- "Tiffany," "Tiffany & Co. under $150," 13 "Tiffany & Co," "Tiffany Rings," or "Tiffany & Co. under $50." 14 Pl.'s Exs. 392, 1064. 15 Pl.'s Ex. 392. These advertisements provided the eBay also purchased sponsored-link advertisements on 16 various search engines to promote the availability of Tiffany 17 items on its website. 18 such case, in the form of a printout of the results list from a 19 search on Yahoo! for "tiffany," the second sponsored link read 20 "Tiffany on eBay. 21 million items for sale every day, you'll find all kinds of unique 22 [unreadable] Marketplace. 23 face type in original). 24 practice in 2003, and eBay told Tiffany that it had ceased buying 25 sponsored links. Tiffany, 576 F. Supp. 2d at 480. Find tiffany items at low prices. www.ebay.com." In one With over 5 Pl.'s Ex. 1065 (bold Tiffany complained to eBay of the Tiffany, 576 F. Supp. 2d at 480. 14 The district 1 court found, however, that eBay continued to do so indirectly 2 through a third party. Id. 3 Procedural History 4 By amended complaint dated July 15, 2004, Tiffany 5 initiated this action. It alleged, inter alia, that eBay's 6 conduct -- i.e., facilitating and advertising the sale of 7 "Tiffany" goods that turned out to be counterfeit -- constituted 8 direct and contributory trademark infringement, trademark 9 dilution, and false advertising. On July 14, 2008, following a 10 bench trial, the district court, in a thorough and thoughtful 11 opinion, set forth its findings of fact and conclusions of law, 12 deciding in favor of eBay on all claims. 13 14 Tiffany appeals from the district court's judgment for eBay. DISCUSSION 15 16 We review the district court's findings of fact for 17 clear error and its conclusions of law de novo. 18 Giordano v. Thomson, 564 F.3d 163, 168 (2d Cir. 2009). 19 I. 20 Tiffany alleges that eBay infringed its trademark in 21 Direct Trademark Infringement violation of section 32 of the Lanham Act.6 6 The district court That section states in pertinent part: Any person who shall, without the consent of the registrant -- (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such 15 1 described this as a claim of "direct trademark infringement," 2 Tiffany, 576 F. Supp. 2d at 493, and we adopt that terminology. 3 Under section 32, "the owner of a mark registered with the Patent 4 and Trademark Office can bring a civil action against a person 5 alleged to have used the mark without the owner's consent." 6 Ltd. v. Punchgini, Inc., 482 F.3d 135, 145-46 (2d Cir.), cert. 7 denied, 552 U.S. 827 (2007). 8 familiar two-prong test. 9 plaintiff's mark is entitled to protection, and second to whether ITC We analyze such a claim "under a The test looks first to whether the 10 the defendant's use of the mark is likely to cause consumers 11 confusion as to the origin or sponsorship of the defendant's 12 goods." 13 2004) (alterations incorporated and ellipses omitted), cert. 14 denied, 546 U.S. 822 (2005). 15 Savin Corp. v. Savin Group, 391 F.3d 439, 456 (2d Cir. In the district court, Tiffany argued that eBay had 16 directly infringed its mark by using it on eBay's website and by 17 purchasing sponsored links containing the mark on Google and 18 Yahoo! 19 that eBay and the sellers of the counterfeit goods using its site 20 were jointly and severally liable. Tiffany, 576 F. Supp. 2d at 494. Id. Tiffany also argued The district court use is likely to cause confusion, or to cause mistake, or to deceive; . . . shall be liable in a civil action by the registrant for the remedies hereinafter provided. 15 U.S.C. § 1114(1)(a). Tiffany's complaint asserts causes of action under both the Lanham Act and New York State common law. The claims are composed of the same elements. We therefore analyze them together. See, e.g., Standard & Poor's Corp. v. Commodity Exch., Inc., 683 F.2d 704, 708 (2d Cir. 1982). 16 1 rejected these arguments on the ground that eBay's use of 2 Tiffany's mark was protected by the doctrine of nominative fair 3 use. Id. at 494-95. 4 The doctrine of nominative fair use allows "[a] 5 defendant [to] use a plaintiff's trademark to identify the 6 plaintiff's goods so long as there is no likelihood of confusion 7 about the source of [the] defendant's product or the mark- 8 holder's sponsorship or affiliation." 9 Health Consulting, Inc., 425 F. Supp. 2d 402, 413 (S.D.N.Y. Merck & Co. v. Mediplan 10 2006). 11 Appeals for the Ninth Circuit. 12 Am. Publ'g, Inc., 971 F.2d 302 (9th Cir. 1992). 13 the protection, according to that court: 14 service in question must be one not readily identifiable without 15 use of the trademark; second, only so much of the mark or marks 16 may be used as is reasonably necessary to identify the product or 17 service; and third, the user must do nothing that would, in 18 conjunction with the mark, suggest sponsorship or endorsement by 19 the trademark holder." 20 The doctrine apparently originated in the Court of See New Kids on the Block v. News To fall within "First, the product or Id. at 308. The Court of Appeals for the Third Circuit has endorsed 21 these principles. 22 Lendingtree, Inc., 425 F.3d 211, 222 (3d Cir. 2005).7 7 See Century 21 Real Estate Corp. v. We have The Third Circuit treats the doctrine as an affirmative defense, see Century 21, 425 F.3d at 217-32, while the Ninth Circuit views the doctrine as a modification to the likelihoodof-confusion analysis of the plaintiff's underlying infringement claim, see Playboy Enters. v. Welles, 279 F.3d 796, 801 (9th Cir. 2002). 17 1 referred to the doctrine, albeit without adopting or rejecting 2 it. 3 (2d Cir. 2002) (noting that the district court had "[a]ppl[ied] 4 the standard for non-trademark or 'nominative' fair use set forth 5 by the Ninth Circuit"). 6 See, e.g., Univ. Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d 413, 7 424 (1st Cir. 2007); Pebble Beach Co. v. Tour 18 I Ltd., 155 F.3d 8 526, 547 (5th Cir. 1998), abrogated on other grounds by TrafFix 9 Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001). See, e.g., Chambers v. Time Warner, Inc., 282 F.3d 147, 156 10 Other circuits have done similarly. We need not address the viability of the doctrine to 11 resolve Tiffany's claim, however. We have recognized that a 12 defendant may lawfully use a plaintiff's trademark where doing so 13 is necessary to describe the plaintiff's product and does not 14 imply a false affiliation or endorsement by the plaintiff of the 15 defendant. 16 use of a mark in commerce in the area reserved, that right 17 generally does not prevent one who trades a branded product from 18 accurately describing it by its brand name, so long as the trader 19 does not create confusion by implying an affiliation with the 20 owner of the product." 21 Inc., 451 F.3d 295, 308 (2d Cir. 2006); see also Polymer Tech. 22 Corp. V. Mimran, 975 F.2d 58, 61-62 (2d Cir. 1992) ("As a general 23 rule, trademark law does not reach the sale of genuine goods 24 bearing a true mark even though the sale is not authorized by the 25 mark owner" (footnote omitted)); cf. Prestonettes, Inc. v. Coty, 26 264 U.S. 359, 368 (1924) (when a "mark is used in a way that does "While a trademark conveys an exclusive right to the Dow Jones & Co. v. Int'l Sec. Exch., 18 1 not deceive the public," there is "no such sanctity in the word 2 as to prevent its being used to tell the truth. 3 taboo."). 4 It is not We agree with the district court that eBay's use of 5 Tiffany's mark on its website and in sponsored links was lawful. 6 eBay used the mark to describe accurately the genuine Tiffany 7 goods offered for sale on its website. 8 of the mark suggested that Tiffany affiliated itself with eBay or 9 endorsed the sale of its products through eBay's website. 10 And none of eBay's uses In addition, the "About Me" page that Tiffany has 11 maintained on eBay's website since 2004 states that "[m]ost of 12 the purported 'TIFFANY & CO.' silver jewelry and packaging 13 available on eBay is counterfeit." 14 479 (internal quotation marks omitted). 15 explained that Tiffany itself sells its products only through its 16 own stores, catalogues, and website. 17 Tiffany, 576 F. Supp. 2d at The page further Id. Tiffany argues, however, that even if eBay had the 18 right to use its mark with respect to the resale of genuine 19 Tiffany merchandise, eBay infringed the mark because it knew or 20 had reason to know that there was "a substantial problem with the 21 sale of counterfeit [Tiffany] silver jewelry" on the eBay 22 website. 23 knowledge vel non that counterfeit Tiffany wares were offered 24 through its website is relevant to the issue of whether eBay 25 contributed to the direct infringement of Tiffany's mark by the 26 counterfeiting vendors themselves, or whether eBay bears Appellants' Br. 45. As we discuss below, eBay's 19 1 liability for false advertising. But it is not a basis for a 2 claim of direct trademark infringement against eBay, especially 3 inasmuch as it is undisputed that eBay promptly removed all 4 listings that Tiffany challenged as counterfeit and took 5 affirmative steps to identify and remove illegitimate Tiffany 6 goods. 7 genuineness of all of the purported Tiffany products offered on 8 its website would unduly inhibit the lawful resale of genuine 9 Tiffany goods. 10 To impose liability because eBay cannot guarantee the We conclude that eBay's use of Tiffany's mark in the 11 described manner did not constitute direct trademark 12 infringement. 13 II. 14 The more difficult issue, and the one that the parties Contributory Trademark Infringement 15 have properly focused our attention on, is whether eBay is liable 16 for contributory trademark infringement -- i.e., for culpably 17 facilitating the infringing conduct of the counterfeiting 18 vendors. 19 conclude that the district court correctly granted judgment on 20 this issue in favor of eBay. 21 A. Principles 22 Acknowledging the paucity of case law to guide us, we Contributory trademark infringement is a judicially 23 created doctrine that derives from the common law of torts. 24 e.g., Hard Rock Café Licensing Corp. v. Concession Servs., Inc., 25 955 F.2d 1143, 1148 (7th Cir. 1992); cf. Metro-Goldwyn-Mayer 26 Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005) 20 See, 1 ("[T]hese doctrines of secondary liability emerged from common 2 law principles and are well established in the law.") (citations 3 omitted). 4 in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 5 844 (1982). 6 drug manufacturers had induced pharmacists to mislabel a drug the 7 defendants produced to pass it off as Ives'. 8 According to the Court, "if a manufacturer or distributor 9 intentionally induces another to infringe a trademark, or if it The Supreme Court most recently dealt with the subject There, the plaintiff, Ives, asserted that several See id. at 847-50. 10 continues to supply its product to one whom it knows or has 11 reason to know is engaging in trademark infringement, the 12 manufacturer or distributor is contributorially responsible for 13 any harm done as a result of the deceit." Id. at 854.8 The 8 The Supreme Court cited two cases in support of this proposition: William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924), and Coca-Cola Co. v. Snow Crest Beverages, Inc., 64 F. Supp. 980 (D. Mass. 1946) (Wyzanski, J.), aff'd, 162 F.2d 280 (1st Cir.), cert. denied, 332 U.S. 809 (1947). Like Inwood, Eli Lilly involved an allegation by a plaintiff drug manufacturer that a defendant drug manufacturer had intentionally induced distributors to pass off the defendant's drug to purchasers as the plaintiff's. 265 U.S. at 529-30. The Supreme Court granted the plaintiff's request for an injunction, stating that "[o]ne who induces another to commit a fraud and furnishes the means of consummating it is equally guilty and liable for the injury." Id. at 530-31. In Snow Crest, the Coca-Cola Company claimed that a rival soft drink maker had infringed Coca-Cola's mark because bars purchasing the rival soft drink had substituted it for CocaCola when patrons requested a "rum (or whiskey) and Coca-Cola." 64 F. Supp. at 982, 987. Judge Wyzanski entered judgment in favor of the defendant primarily because there was insufficient evidence of such illicit substitutions taking place. Id. at 990. In doing so, the court stated that "[b]efore he can himself be held as a wrongdoer o[r] contributory infringer one who supplies another with the instruments by which that other commits a tort, must be shown to have knowledge that the other will or can 21 1 Court ultimately decided to remand the case to the Court of 2 Appeals after concluding it had improperly rejected factual 3 findings of the district court favoring the defendant 4 manufacturers. Id. at 857-59. 5 Inwood's test for contributory trademark infringement 6 applies on its face to manufacturers and distributors of goods. 7 Courts have, however, extended the test to providers of services. 8 The Seventh Circuit applied Inwood to a lawsuit against 9 the owner of a swap meet, or "flea market," whose vendors were 10 alleged to have sold infringing Hard Rock Café T-shirts. 11 Hard Rock Café, 955 F.2d at 1148-49. 12 trademark infringement as a species of tort," id. at 1148, and 13 analogized the swap meet owner to a landlord or licensor, on whom 14 the common law "imposes the same duty . . . [as Inwood] impose[s] 15 on manufacturers and distributors," id. at 1149; see also 16 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 17 1996) (adopting Hard Rock Café's reasoning and applying Inwood to 18 a swap meet owner). 19 See The court "treated Speaking more generally, the Ninth Circuit concluded 20 that Inwood's test for contributory trademark infringement 21 applies to a service provider if he or she exercises sufficient 22 control over the infringing conduct. 23 Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir. 1999); see Lockheed Martin Corp. v. reasonably be expected to commit a tort with the supplied instrument." Id. at 989. 22 1 also id. ("Direct control and monitoring of the instrumentality 2 used by a third party to infringe the plaintiff's mark permits 3 the expansion of Inwood Lab.'s 'supplies a product' requirement 4 for contributory infringement."). 5 We have apparently addressed contributory trademark 6 infringement in only two related decisions, see Polymer Tech. 7 Corp. v. Mimran, 975 F.2d 58, 64 (2d Cir. 1992) ("Polymer I"); 8 Polymer Tech. Corp. v. Mimran, 37 F.3d 74, 81 (2d Cir. 1994) 9 ("Polymer II"), and even then in little detail. Citing Inwood, 10 we said that "[a] distributor who intentionally induces another 11 to infringe a trademark, or continues to supply its product to 12 one whom it knows or has reason to know is engaging in trademark 13 infringement, is contributorially liable for any injury." 14 Polymer I, 975 F.2d at 64. 15 The limited case law leaves the law of contributory 16 trademark infringement ill-defined. 17 first court to consider the application of Inwood to the 18 Internet, see, e.g., Lockheed, 194 F.3d 980, supra (Internet 19 domain name registrar), we are apparently the first to consider 20 its application to an online marketplace.8 8 Although we are not the European courts have done so. A Belgian court declined to hold eBay liable for counterfeit cosmetic products sold through its website. See Lancôme v. eBay, Brussels Commercial Court (Aug. 12, 2008), Docket No. A/07/06032. French courts, by contrast, have concluded that eBay violated applicable trademark laws. See, e.g., S.A. Louis Vuitton Malletier v. eBay, Inc., Tribunal de Commerce de Paris, Premiere Chambre B. (Paris Commercial Court), Case No. 200677799 (June 30, 2008); Hermes v. eBay, Troyes High Court (June 4, 2008), Docket No. 06/0264; see also Max Colchester, "EBay to Pay Damages To Unit of LVMH," The Wall Street Journal, Feb. 12, 2010, 23 1 B. Discussion 2 1. Does Inwood Apply? 3 In the district court, the parties disputed whether 4 eBay was subject to the Inwood test. See Tiffany, 576 F. Supp. 5 2d at 504. 6 service while Inwood governs only manufacturers and distributors 7 of products. 8 It adopted instead the reasoning of the Ninth Circuit in Lockheed 9 to conclude that Inwood applies to a service provider who eBay argued that it was not because it supplies a Id. The district court rejected that distinction. 10 exercises sufficient control over the means of the infringing 11 conduct. 12 exercised by eBay over its sellers' means of infringement," the 13 district court concluded that Inwood applied in light of the 14 "significant control" eBay retained over the transactions and 15 listings facilitated by and conducted through its website. 16 at 505-07. Id. at 505-06. Looking "to the extent of the control Id. http://online.wsj.com/article_email/SB100014240527487043370045750 59523018541764-lMyQjAxMTAwMDEwMjExNDIyWj.html (last visited Mar. 1, 2010) ("A Paris court Thursday ordered eBay to pay Louis Vuitton ¬200,000 ($275,000) in damages and to stop paying search engines to direct certain key words to the eBay site."); see generally, Valerie Walsh Johnson & Laura P. Merritt, TIFFANY v. EBAY: A Case of Genuine Disparity in International Court Rulings on Counterfeit Products, 1 No. 2 Landslide 22 (2008) (surveying decisions by European courts in trademark infringement cases brought against eBay). 24 1 On appeal, eBay no longer maintains that it is not 2 subject to Inwood.9 3 Inwood's test for contributory trademark infringement governs. We therefore assume without deciding that 4 2. Is eBay Liable Under Inwood? 5 The question that remains, then, is whether eBay is 6 liable under the Inwood test on the basis of the services it 7 provided to those who used its website to sell counterfeit 8 Tiffany products. 9 providers, there are two ways in which a defendant may become 10 contributorially liable for the infringing conduct of another: 11 first, if the service provider "intentionally induces another to 12 infringe a trademark," and second, if the service provider 13 "continues to supply its [service] to one whom it knows or has 14 reason to know is engaging in trademark infringement." 15 456 U.S. at 854. 16 sale of counterfeit Tiffany goods on its website -- the 17 circumstances addressed by the first part of the Inwood test. 18 argues instead, under the second part of the Inwood test, that 19 eBay continued to supply its services to the sellers of 9 As noted, when applying Inwood to service Inwood, Tiffany does not argue that eBay induced the It Amici do so claim. See Electronic Frontier Foundation et al. Amici Br. 6 (arguing that Inwood should "not govern where, as here, the alleged contributory infringer has no direct means to establish whether there is any act of direct infringement in the first place"). We decline to consider this argument. "Although an amicus brief can be helpful in elaborating issues properly presented by the parties, it is normally not a method for injecting new issues into an appeal, at least in cases where the parties are competently represented by counsel." Universal City Studios, Inc. v. Corley, 273 F.3d 429, 445 (2d Cir. 2001). 25 1 counterfeit Tiffany goods while knowing or having reason to know 2 that such sellers were infringing Tiffany's mark. 3 The district court rejected this argument. First, it 4 concluded that to the extent the NOCIs that Tiffany submitted 5 gave eBay reason to know that particular listings were for 6 counterfeit goods, eBay did not continue to carry those listings 7 once it learned that they were specious. 8 2d at 515-16. 9 to remove the challenged listing from its website, warn sellers 10 and buyers, cancel fees it earned from that listing, and direct 11 buyers not to consummate the sale of the disputed item. 12 516. 13 liable for the infringing conduct of those sellers. 14 On appeal, Tiffany does not appear to challenge this conclusion. 15 In any event, we agree with the district court that no liability 16 arises with respect to those terminated listings. Tiffany, 576 F. Supp. The court found that eBay's practice was promptly Id. at The court therefore declined to hold eBay contributorially 17 Id. at 518. Tiffany disagrees vigorously, however, with the 18 district court's further determination that eBay lacked 19 sufficient knowledge of trademark infringement by sellers behind 20 other, non-terminated listings to provide a basis for Inwood 21 liability. 22 or at least had reason to know, that counterfeit Tiffany goods 23 were being sold ubiquitously on its website. 24 evidence, it pointed to, inter alia, the demand letters it sent 25 to eBay in 2003 and 2004, the results of its Buying Programs that 26 it shared with eBay, the thousands of NOCIs it filed with eBay Tiffany argued in the district court that eBay knew, 26 Id. at 507-08. As 1 alleging its good faith belief that certain listings were 2 counterfeit, and the various complaints eBay received from buyers 3 claiming that they had purchased one or more counterfeit Tiffany 4 items through eBay's website. 5 taken together, this evidence established eBay's knowledge of the 6 widespread sale of counterfeit Tiffany products on its website. 7 Tiffany urged that eBay be held contributorially liable on the 8 basis that despite that knowledge, it continued to make its 9 services available to infringing sellers. 10 Id. at 507. Tiffany argued that Id. at 507-08. The district court rejected this argument. It 11 acknowledged that "[t]he evidence produced at trial demonstrated 12 that eBay had generalized notice that some portion of the Tiffany 13 goods sold on its website might be counterfeit." 14 (emphasis in original). 15 it as "whether eBay's generalized knowledge of trademark 16 infringement on its website was sufficient to meet the 'knowledge 17 or reason to know' prong of the Inwood test." 18 (emphasis in original). 19 knowledge is insufficient, and that the law demands more specific 20 knowledge of individual instances of infringement and infringing 21 sellers before imposing a burden upon eBay to remedy the 22 problem." 23 Id. at 507 The court characterized the issue before Id. at 508 eBay had argued that "such generalized Id. The district court concluded that "while eBay clearly 24 possessed general knowledge as to counterfeiting on its website, 25 such generalized knowledge is insufficient under the Inwood test 26 to impose upon eBay an affirmative duty to remedy the problem." 27 1 Id. at 508. The court reasoned that Inwood's language explicitly 2 imposes contributory liability on a defendant who "continues to 3 supply its product [-- in eBay's case, its service --] to one 4 whom it knows or has reason to know is engaging in trademark 5 infringement." 6 also noted that plaintiffs "bear a high burden in establishing 7 'knowledge' of contributory infringement," and that courts have Id. at 508 (emphasis in original). The court 8 9 10 11 12 13 14 15 16 17 been reluctant to extend contributory trademark liability to defendants where there is some uncertainty as to the extent or the nature of the infringement. In Inwood, Justice White emphasized in his concurring opinion that a defendant is not "require[d] . . . to refuse to sell to dealers who merely might pass off its goods." Id. at 508-09 (quoting Inwood, 456 U.S. at 861 (White, J., 18 concurring) (emphasis and alteration in original).10 19 Accordingly, the district court concluded that for 20 Tiffany to establish eBay's contributory liability, Tiffany would 21 have to show that eBay "knew or had reason to know of specific 22 instances of actual infringement" beyond those that it addressed 23 upon learning of them. 24 a showing. 25 Id. at 510. Tiffany failed to make such On appeal, Tiffany argues that the distinction drawn by 26 the district court between eBay's general knowledge of the sale 27 of counterfeit Tiffany goods through its website, and its 28 specific knowledge as to which particular sellers were making 10 The district court found the cases Tiffany relied on for the proposition that general knowledge of counterfeiting suffices to trigger liability to be inapposite. Id. at 510. 28 1 such sales, is a "false" one not required by the law. 2 Appellants' Br. 28. 3 question is "whether all of the knowledge, when taken together, 4 puts [eBay] on notice that there is a substantial problem of 5 trademark infringement. 6 liable for contributory trademark infringement." 7 Tiffany posits that the only relevant If so and if it fails to act, [eBay] is We agree with the district court. Id. at 29. For contributory 8 trademark infringement liability to lie, a service provider must 9 have more than a general knowledge or reason to know that its 10 service is being used to sell counterfeit goods. 11 contemporary knowledge of which particular listings are 12 infringing or will infringe in the future is necessary. 13 Some We are not persuaded by Tiffany's proposed 14 interpretation of Inwood. Tiffany understands the "lesson of 15 Inwood" to be that an action for contributory trademark 16 infringement lies where "the evidence [of infringing activity] 17 direct or circumstantial, taken as a whole . . . provide[s] a 18 basis for finding that the defendant knew or should have known 19 that its product or service was being used to further illegal 20 counterfeiting activity." 21 Tiffany reads Inwood too broadly. 22 articulated a "knows or has reason to know" prong in setting out 23 its contributory liability test, the Court explicitly declined to 24 apply that prong to the facts then before it. 25 U.S. at 852 n.12 ("The District Court also found that the 26 petitioners did not continue to provide drugs to retailers whom Appellants' Br. 30. 29 We think that Although the Inwood Court See Inwood, 456 1 they knew or should have known were engaging in trademark 2 infringement. 3 and we do not address it.") (internal citation omitted). 4 Court applied only the inducement prong of the test. 5 852-59. 6 The Court of Appeals did not discuss that finding, The See id. at We therefore do not think that Inwood establishes the 7 contours of the "knows or has reason to know" prong. 8 it speaks to the issue, though, the particular phrasing that the 9 Court used - that a defendant will be liable if it "continues to 10 supply its product to one whom it knows or has reason to know is 11 engaging in trademark infringement," id. at 854 (emphasis 12 added) -- supports the district court's interpretation of Inwood, 13 not Tiffany's. 14 Insofar as We find helpful the Supreme Court's discussion of 15 Inwood in a subsequent copyright case, Sony Corp. of America v. 16 Universal City Studios, Inc., 464 U.S. 417 (1984). 17 defendant Sony manufactured and sold home video tape recorders. 18 Id. at 419. 19 Productions held copyrights on various television programs that 20 individual television-viewers had taped using the defendant's 21 recorders. 22 use of the recorders constituted copyright infringement for which 23 the defendants should be held contributorily liable. 24 ruling for the defendants, the Court discussed Inwood and the 25 differences between contributory liability in trademark versus 26 copyright law. There, Plaintiffs Universal Studios and Walt Disney Id. at 419-20. The plaintiffs contended that this 30 Id. In 1 2 3 4 5 6 7 8 9 10 11 If Inwood's narrow standard for contributory trademark infringement governed here, [the plaintiffs'] claim of contributory infringement would merit little discussion. Sony certainly does not 'intentionally induce[]' its customers to make infringing uses of [the plaintiffs'] copyrights, nor does it supply its products to identified individuals known by it to be engaging in continuing infringement of [the plaintiffs'] copyrights. 12 Id. at 439 n.19 (quoting Inwood, 456 U.S. at 855; emphases 13 added). 14 Thus, the Court suggested, had the Inwood standard 15 applied in Sony, the fact that Sony might have known that some 16 portion of the purchasers of its product used it to violate the 17 copyrights of others would not have provided a sufficient basis 18 for contributory liability. 19 have required knowledge by Sony of "identified individuals" 20 engaging in infringing conduct. 21 therefore contrary to the interpretation of that case set forth 22 in Sony. 23 Inwood's "narrow standard" would Tiffany's reading of Inwood is Although the Supreme Court's observations in Sony, a 24 copyright case, about the "knows or has reason to know" prong of 25 the contributory trademark infringement test set forth in Inwood 26 were dicta, they constitute the only discussion of that prong by 27 the Supreme Court of which we are aware. 28 persuasive authority here.11 11 We think them to be In discussing Inwood's "knows or has reason to know" prong of the contributory infringement test, Sony refers to a defendant's knowledge, but not to its constructive knowledge, of a third party's infringing conduct. Sony, 464 U.S. at 439 n.19. We do not take the omission as altering the test Inwood 31 1 Applying Sony's interpretation of Inwood, we agree with 2 the district court that "Tiffany's general allegations of 3 counterfeiting failed to provide eBay with the knowledge required 4 under Inwood." 5 demand letters and Buying Programs did not identify particular 6 sellers who Tiffany thought were then offering or would offer 7 counterfeit goods. 8 buyer complaints gave eBay reason to know that certain sellers 9 had been selling counterfeits, those sellers' listings were Tiffany, 576 F. Supp. 2d at 511. Id. at 511-13.12 Tiffany's And although the NOCIs and 10 removed and repeat offenders were suspended from the eBay site. 11 Thus Tiffany failed to demonstrate that eBay was supplying its 12 service to individuals who it knew or had reason to know were 13 selling counterfeit Tiffany goods. 14 Accordingly, we affirm the judgment of the district 15 court insofar as it holds that eBay is not contributorially 16 liable for trademark infringement. 17 3. Willful Blindness. 18 Tiffany and its amici express their concern that if 19 eBay is not held liable except when specific counterfeit listings 20 are brought to its attention, eBay will have no incentive to root 21 out such listings from its website. 22 effectively require Tiffany and similarly situated retailers to 23 police eBay's website -- and many others like it They argue that this will -- "24 hours a articulates. 12 The demand letters did say that eBay should presume that sellers offering five or more Tiffany goods were selling counterfeits, id. at 511, but we agree with the district court that this presumption was factually unfounded, id. at 511-12. 32 1 day, and 365 days a year." 2 America, Inc. Amicus Br. 5. 3 most mark holders cannot afford to bear. 4 Council of Fashion Designers of They urge that this is a burden that First, and most obviously, we are interpreting the law 5 and applying it to the facts of this case. 6 we thought it wise, revise the existing law in order to better 7 serve one party's interests at the expense of the other's. 8 9 We could not, even if But we are also disposed to think, and the record suggests, that private market forces give eBay and those 10 operating similar businesses a strong incentive to minimize the 11 counterfeit goods sold on their websites. 12 complaints from users claiming to have been duped into buying 13 counterfeit Tiffany products sold on eBay. 14 2d at 487. 15 reason to identify and remove counterfeit listings.13 16 has spent millions of dollars in that effort. 17 eBay received many Tiffany, 576 F. Supp. The risk of alienating these users gives eBay a Indeed, it Moreover, we agree with the district court that if eBay 18 had reason to suspect that counterfeit Tiffany goods were being 19 sold through its website, and intentionally shielded itself from 20 discovering the offending listings or the identity of the sellers 21 behind them, eBay might very well have been charged with 22 knowledge of those sales sufficient to satisfy Inwood's "knows or 23 has reason to know" prong. Tiffany, 576 F. Supp. 2d at 513-14. 13 At the same time, we appreciate the argument that insofar as eBay receives revenue from undetected counterfeit listings and sales through the fees it charges, it has an incentive to permit such listings and sales to continue. 33 1 A service provider is not, we think, permitted willful blindness. 2 When it has reason to suspect that users of its service are 3 infringing a protected mark, it may not shield itself from 4 learning of the particular infringing transactions by looking the 5 other way. 6 willfully blind, a person must suspect wrongdoing and 7 deliberately fail to investigate."); Fonovisa, 76 F.3d at 265 8 (applying Hard Rock Café's reasoning to conclude that "a swap 9 meet can not disregard its vendors' blatant trademark See, e.g., Hard Rock Café, 955 F.2d at 1149 ("To be 10 infringements with impunity").14 11 Circuit, "willful blindness is equivalent to actual knowledge for 12 purposes of the Lanham Act." 14 In the words of the Seventh Hard Rock Café, 955 F.2d at 1149.15 To be clear, a service provider is not contributorially liable under Inwood merely for failing to anticipate that others would use its service to infringe a protected mark. Inwood, 456 U.S. at 854 n.13 (stating that for contributory liability to lie, a defendant must do more than "reasonably anticipate" a third party's infringing conduct (internal quotation marks omitted)). But contributory liability may arise where a defendant is (as was eBay here) made aware that there was infringement on its site but (unlike eBay here) ignored that fact. 15 The principle that willful blindness is tantamount to knowledge is hardly novel. See, e.g. Harte-Hanks Commc'ns, Inc. v. Connaughton, 491 U.S. 657, 659, 692 (1989) (concluding in public-official libel case that "purposeful avoidance of the truth" is equivalent to "knowledge that [a statement] was false or [was made] with reckless disregard of whether it was false" (internal quotation marks omitted)); United States v. Khorozian, 333 F.3d 498, 504 (3d Cir. 2003) (acting with willful blindness satisfies the intent requirement of the federal bank fraud statute); Friedman v. Comm'r, 53 F.3d 523, 525 (2d Cir. 1995) ("The 'innocent spouse' exemption [from the rule that married couples who file a joint tax return are jointly and severally liable for any tax liability found] was not designed to protect willful blindness or to encourage the deliberate cultivation of ignorance."); Mattingly v. United States, 924 F.2d 785, 792 (8th Cir. 1991) (concluding in civil tax fraud case that "the element of knowledge may be inferred from deliberate acts amounting to willful blindness to the existence of fact or acts constituting 34 1 eBay appears to concede that it knew as a general 2 matter that counterfeit Tiffany products were listed and sold 3 through its website. 4 more, however, this knowledge is insufficient to trigger 5 liability under Inwood. 6 consideration, that eBay was not willfully blind to the 7 counterfeit sales. 8 erroneous.16 9 about counterfeit sales on its website. Tiffany, 576 F. Supp. 2d at 514. Without The district court found, after careful Id. at 513. That finding is not clearly eBay did not ignore the information it was given conscious purpose to avoid enlightenment."); Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 F. 685, 694 (7th Cir. 1893) ("The mind cannot well avoid the conclusion that if they did not know of the fraudulent purposes of Davis it was because they were willfully blind. Such facility of belief, it has been well said, invites fraud, and may justly be suspected of being its accomplice."); State Street Trust Co. v. Ernst, 278 N.Y. 104, 112, 15 N.E.2d 416, 419 (1938) ("[H]eedlessness and reckless disregard of consequence [by an accountant] may take the place of deliberate intention."). 16 Tiffany's reliance on the "flea market" cases, Hard Rock Café and Fonovisa, is unavailing. eBay's efforts to combat counterfeiting far exceeded the efforts made by the defendants in those cases. See Hard Rock Café, 955 F.2d at 1146 (defendant did not investigate any of the seizures of counterfeit products at its swap meet, even though it knew they had occurred); Fonovisa, 76 F.3d at 265 (concluding that plaintiff stated a claim for contributory trademark infringement based on allegation that swap meet "disregard[ed] its vendors' blatant trademark infringements with impunity"). Moreover, neither case concluded that the defendant was willfully blind. The court in Hard Rock Café remanded so that the district court could apply the correct definition of "willful blindness," 955 F.2d at 1149, and the court in Fonovisa merely sustained the plaintiff's complaint against a motion to dismiss, 76 F.3d at 260-61, 265. 35 1 2 3 4 III. Trademark Dilution A. Principles Federal law allows the owner of a "famous mark" to 5 enjoin a person from using "a mark or trade name in commerce that 6 is likely to cause dilution by blurring or dilution by 7 tarnishment of the famous mark." 8 9 15 U.S.C. § 1125(c)(1). "Dilution by blurring" is an "association arising from the similarity between a mark or trade name and a famous mark 10 that impairs the distinctiveness of the famous mark." Id. 11 § 1125(c)(2)(B). 12 absence of actual or likely confusion, of competition, or of 13 actual economic injury." 14 examples of blurring include 'hypothetical anomalies as Dupont 15 shoes, Buick aspirin tablets, Schlitz varnish, Kodak pianos, 16 Bulova gowns, and so forth.'" 17 Coffee, Inc., 588 F.3d 97, 105 (2d Cir. 2009) (quoting Mead Data 18 Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 19 1031 (2d Cir. 1989)). 20 consumers would likely confuse the source of a Kodak camera with 21 the source of a "Kodak" piano. 22 instead to "'the whittling away of [the] established trademark's 23 selling power and value through its unauthorized use by others.'" 24 Id. (quoting Mead Data Cent., 875 F.2d at 1031). It can occur "regardless of the presence or Id. § 1125(c)(1). "Some classic Starbucks Corp. v. Wolfe's Borough It is not a question of confusion; few Dilution by blurring refers 25 Federal law identifies a non-exhaustive list of six 26 factors that courts "may consider" when determining whether a 27 mark is likely to cause dilution by blurring. 36 These are: (1) 1 "[t]he degree of similarity between the mark or trade name and 2 the famous mark";17 (2) "[t]he degree of inherent or acquired 3 distinctiveness of the famous mark"; (3) "[t]he extent to which 4 the owner of the famous mark is engaging in substantially 5 exclusive use of the mark"; (4) "[t]he degree of recognition of 6 the famous mark"; (5) "[w]hether the user of the mark or trade 7 name intended to create an association with the famous mark"; and 8 (6) "[a]ny actual association between the mark or trade name and 9 the famous mark." 15 U.S.C. § 1125(c)(2)(B)(i-vi). 10 In contrast to dilution by blurring, "dilution by 11 tarnishment" is an "association arising from the similarity 12 between a mark or trade name and a famous mark that harms the 13 reputation of the famous mark." 14 "generally arises when the plaintiff's trademark is linked to 15 products of shoddy quality, or is portrayed in an unwholesome or 16 unsavory context likely to evoke unflattering thoughts about the 17 owner's product." 18 43 (2d Cir. 1994). 19 15 U.S.C. § 1125(c)(2)(C). This Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, New York State law also "provide[s] for protection 20 against both dilution by blurring and tarnishment." 21 Corp., 588 F.3d at 114; see N.Y. Gen. Bus. Law § 360-l. 17 Starbucks The We have recently explained that under the Trademark Dilution Revision Act of 2006 ("TDRA"), Pub. L. No. 109-312, 120 Stat. 1730, 1731 (Oct. 6, 2006), the similarity between the famous mark and the allegedly blurring mark need not be "substantial" in order for the dilution by blurring claim to succeed. See Starbucks Corp., 588 F.3d at 107-09. The district court concluded that the TDRA governs Tiffany's claim. See Tiffany, 576 F. Supp. 2d at 522-23. We agree and note that Tiffany does not dispute this conclusion on appeal. 37 1 state law is not identical to the federal one, however. New York 2 "does not[, for example,] require a mark to be 'famous' for 3 protection against dilution to apply." 4 at 114. 5 has occurred the same. 6 New York law does not permit a dilution claim unless the marks 7 are 'substantially' similar." 8 B. Starbucks Corp., 588 F.3d Nor are the factors used to determine whether blurring "Most important to the distinction here, Id. Discussion 9 The district court rejected Tiffany's dilution by 10 blurring claim on the ground that "eBay never used the TIFFANY 11 Marks in an effort to create an association with its own product, 12 but instead, used the marks directly to advertise and identify 13 the availability of authentic Tiffany merchandise on the eBay 14 website." 15 that "just as the dilution by blurring claim fails because eBay 16 has never used the [Tiffany] Marks to refer to eBay's own 17 product, the dilution by tarnishment claim also fails." 18 525. 19 20 21 Tiffany, 576 F. Supp. 2d at 524. We agree. The court concluded Id. at There is no second mark or product at issue here to blur with or to tarnish "Tiffany." Tiffany argues that counterfeiting dilutes the value of 22 its product. 23 the goods at issue, it did not itself engage in dilution. 24 Perhaps. But insofar as eBay did not itself sell Tiffany argued unsuccessfully to the district court 25 that eBay was liable for contributory dilution. 26 Assuming without deciding that such a cause of action exists, the 38 Id. at 526. 1 court concluded that the claim would fail for the same reasons 2 Tiffany's contributory trademark infringement claim failed. 3 Tiffany does not contest this conclusion on appeal. 4 do not address it. 5 179 (2d Cir. 2006) (issues not raised on appeal are treated as 6 waived). Id. We therefore See Palmieri v. Allstate Ins. Co., 445 F.3d 7 IV. 8 Finally, Tiffany claims that eBay engaged in false 9 10 False Advertising advertising in violation of federal law. A. Principles 11 Section 43(a) of the Lanham Act prohibits any person 12 from, "in commercial advertising or promotion, misrepresent[ing] 13 the nature, characteristics, qualities, or geographic origin of 14 his or her or another person's goods, services, or commercial 15 activities." 16 advertising may be based on at least one of two theories: "that 17 the challenged advertisement is literally false, i.e., false on 18 its face," or "that the advertisement, while not literally false, 19 is nevertheless likely to mislead or confuse consumers." 20 Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 153 (2d Cir. 21 2007). 22 15 U.S.C. § 1125(a)(1)(B). A claim of false Time In either case, the "injuries redressed in false 23 advertising cases are the result of public deception." 24 Johnson * Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 25 960 F.2d 294, 298 (2d Cir. 1992) ("Merck"). 26 theory, the plaintiff must also demonstrate that the false or 39 Johnson & And "[u]nder either 1 misleading representation involved an inherent or material 2 quality of the product." 3 n.3.18 4 Time Warner Cable, 497 F.3d at 153 Where an advertising claim is literally false, "the 5 court may enjoin the use of the claim without reference to the 6 advertisement's impact on the buying public." 7 Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir. 8 1991) (internal quotation marks omitted). 9 likelihood-of-confusion case where the statement at issue is not McNeil-P.C.C., To succeed in a 10 literally false, however, a plaintiff "must demonstrate, by 11 extrinsic evidence, that the challenged commercials tend to 12 mislead or confuse consumers," and must "demonstrate that a 13 statistically significant part of the commercial audience holds 14 the false belief allegedly communicated by the challenged 15 advertisement." 16 497 F.3d at 153 ("[W]hereas plaintiffs seeking to establish a 17 literal falsehood must generally show the substance of what is 18 conveyed, . . . a district court must rely on extrinsic evidence 19 [of consumer deception or confusion] to support a finding of an 20 implicitly false message." (internal quotation marks omitted and 18 Merck, 960 F.2d at 297, 298; Time Warner Cable, We recently adopted "the 'false by necessary implication' doctrine," under which "a district court evaluating whether an advertisement is literally false 'must analyze the message conveyed in full context.'" Time Warner Cable, 497 F.3d at 158; cf. S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001) ("In considering a false-advertising claim, [f]undamental to any task of interpretation is the principle that text must yield to context." (quoting Avis Rent A Car Sys., Inc. v. Hertz Corp., 782 F.2d 381, 385 (2d Cir. 1986) (internal quotation marks omitted)). 40 1 emphasis and alterations in original)). 2 B. 3 Discussion eBay advertised the sale of Tiffany goods on its 4 website in various ways. Among other things, eBay provided 5 hyperlinks to "Tiffany," "Tiffany & Co. under $150," "Tiffany & 6 Co.," "Tiffany Rings," and "Tiffany & Co. under $50." 7 290, 392, 1064, 1065. 8 search engines, in some instances providing a link to eBay's site 9 and exhorting the reader to "Find tiffany items at low prices." Pl.'s Exs. eBay also purchased advertising space on 10 Pl.'s Ex. 1065 (bold face type in original). 11 court found, and eBay does not deny, that "eBay certainly had 12 generalized knowledge that Tiffany products sold on eBay were 13 often counterfeit." 14 argues that because eBay advertised the sale of Tiffany goods on 15 its website, and because many of those goods were in fact 16 counterfeit, eBay should be liable for false advertising. 17 Yet the district Tiffany, 576 F. Supp. 2d at 520-21. The district court rejected this argument. Tiffany Id. at 519- 18 21. 19 were not literally false "[b]ecause authentic Tiffany merchandise 20 is sold on eBay's website," even if counterfeit Tiffany products 21 are sold there, too. 22 The court first concluded that the advertisements at issue Id. at 520. The court then considered whether the advertisements, 23 though not literally false, were nonetheless misleading. 24 concluded they were not for three reasons. 25 found that eBay's use of Tiffany's mark in its advertising was 26 "protected, nominative fair use." 41 Id. It First, the court Second, the court found 1 that "Tiffany has not proven that eBay had specific knowledge as 2 to the illicit nature of individual listings," implying that such 3 knowledge would be necessary to sustain a false advertising 4 claim. 5 extent that the advertising was false, the falsity was the 6 responsibility of third party sellers, not eBay." 7 Id. at 521. Finally, the court reasoned that "to the Id. We agree with the district court that eBay's 8 advertisements were not literally false inasmuch as genuine 9 Tiffany merchandise was offered for sale through eBay's website. 10 But we are unable to affirm on the record before us the district 11 court's further conclusion that eBay's advertisements were not 12 "likely to mislead or confuse consumers." 13 F.3d at 153. 14 Time Warner Cable, 497 As noted, to evaluate Tiffany's claim that eBay's 15 advertisements misled consumers, a court must determine whether 16 extrinsic evidence indicates that the challenged advertisements 17 were misleading or confusing. 18 gave for rejecting Tiffany's claim do not seem to reflect this 19 determination, though. 20 eBay's advertisements were nominative fair use of Tiffany's mark. 21 The reasons the district court The court's first rationale was that But, even if that is so, it does not follow that eBay 22 did not use the mark in a misleading advertisement. 23 after all, constitute fair use for Brand X Coffee to use the 24 trademark of its competitor, Brand Y Coffee, in an advertisement 25 stating that "In a blind taste test, 9 out of 10 New Yorkers said 26 they preferred Brand X Coffee to Brand Y Coffee." 42 It may, But if 9 out 1 of 10 New Yorkers in a statistically significant sample did not 2 say they preferred X to Y, or if they were paid to say that they 3 did, then the advertisement would nonetheless be literally false 4 in the first example, or misleading in the second. 5 There is a similar difficulty with the district court's 6 reliance on the fact that eBay did not know which particular 7 listings on its website offered counterfeit Tiffany goods. 8 is relevant, as we have said, to whether eBay committed 9 contributory trademark infringement. That But it sheds little light 10 on whether the advertisements were misleading insofar as they 11 implied the genuineness of Tiffany goods on eBay's site. 12 Finally, the district court reasoned that if eBay's 13 advertisements were misleading, that was only because the sellers 14 of counterfeits made them so by offering inauthentic Tiffany 15 goods. 16 infringement claim, but less relevant, if relevant at all, here. 17 It is true that eBay did not itself sell counterfeit Tiffany 18 goods; only the fraudulent vendors did, and that is in part why 19 we conclude that eBay did not infringe Tiffany's mark. 20 did affirmatively advertise the goods sold through its site as 21 Tiffany merchandise. 22 accountable for the words that it chose insofar as they misled or 23 confused consumers. 24 Again, this consideration is relevant to Tiffany's direct But eBay The law requires us to hold eBay eBay and its amici warn of the deterrent effect that 25 will grip online advertisers who are unable to confirm the 26 authenticity of all of the goods they advertise for sale. 43 See, 1 e.g., Yahoo! Inc. Amicus Br. 15; Electronic Frontier Foundation 2 et al. Amicus Br. 18-19. 3 will be so dire. 4 cease its advertisements for a kind of goods only because it 5 knows that not all of those goods are authentic. 6 might suffice. 7 implies that all of the goods offered on a defendant's website 8 are genuine when in fact, as here, a sizeable proportion of them 9 are not. We rather doubt that the consequences An online advertiser such as eBay need not A disclaimer But the law prohibits an advertisement that 10 Rather than vacate the judgment of the district court 11 as to Tiffany's false advertising claim, we think it prudent to 12 remand the cause so that the district court, with its greater 13 familiarity with the evidence, can reconsider the claim in light 14 of what we have said. 15 United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994), for further 16 proceedings for the limited purpose of the district court's re- 17 examination of the false advertising claim in accordance with 18 this opinion. 19 may seek appellate review by notifying the Clerk of the Court 20 within thirty days of entry of the district court's judgment on 21 remand. 22 399 (2d Cir. 2005). 23 filing of a new notice of appeal. 24 the matter will be referred automatically to this panel for 25 disposition. The case is therefore remanded pursuant to We retain jurisdiction so that any of the parties See, e.g., Galviz Zapata v. United States, 431 F.3d 395, Such notification will not require the 44 Id. If notification occurs, 1 If circumstances obviate the need for the case to 2 return to this Court, the parties shall promptly notify the Clerk 3 of the Court. Id. CONCLUSION 4 5 For the foregoing reasons, we affirm the judgment of 6 the district court with respect to the claims of trademark 7 infringement and dilution. 8 return the cause to the district court for further proceedings 9 with respect to Tiffany's false advertising claim. Employing a Jacobson remand, we 45
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