Tiffany (NJ) Inc. et al v. eBay Inc.

Filing 49

MEMORANDUM OF LAW in Opposition to Defendant's Pretrial Memorandum. Document filed by Tiffany (NJ) Inc., Tiffany and Company. (Haveles, H.)

STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

TIFFANY (NJ) INC. and TIFFANY AND
COMPANY,

04 Civ. 4607 (KMK) Plaintiffs,

eBAY TNC.,
Defendant.

MEMORANDUM

OF LAW

IN OPPOSITION

TO DEFENDANT'S PRETRIAL MEMORANDUM

ARNOLD 399 Park

& PORTER Avenue

LLP

New York, New York

10022

[phone] Attorneys for Plaintiffs
Tiffany (NJ) Inc. et al v. eBay Inc. Doc. 49

Dockets.Justia.com

OF CONTENTS

Page TABLE OF AUTHORITIES ....................;.................;...............................................,,,,,,,,,,,,,~..~,,. .....................................................................................................1 ii

PRELIMINARY ARGUMENT

STATEMENT

.............................................................................,.............~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~3

POINT I

EBAY'S CONTRIBUTORY INFRINGEMENT ANALYSIS
MISSTATES THE LAW .........................................................................................3

A.

eBay Supplies a Service That Facilitates the Sale of Counterfeit Goods .........,...,3

B.

eBay Knows That Counterfeit Tiffany Silver Jewelry is Sold on Its
Website ....................................................................................~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7

1.

Knowledge Standard ............................................;...................................

....7

2. 3. C.
POINT II

The RestatementTest Does Applyto Tiffany's Contributory
In~-ingement Claims ......................................................:.............................9

The Applicationof CopyrightPrinciplesSupportsa Finding of
Liability...................................................................... .........~,~~~~~~~~~~~~~~~~~~~.~ 11

eBay Has an AffinnativeDuty to PreventSalesof CounterfeitTiffany
Silver Jewelry..................................................................................,.,,,,,,,,,....~,~~~~~~ 13 TIFFANY'S STATE LAW CLAIMS ARE NOT PREEMPTED BY THE
COMMUNICATIONS DECENCY ACT..............................................................15

POINT III A. B.

TIFFANY IS ENTITLED INJUNCTIVE RELIEF ...................,........................... eBay Is Not Entitled to Raise the "Printer-Publisher''

17

Defense ............................. 18

An Injunction Against eBay Would Not Be Overbroad ........................................21

CONCLUSION............................................?..........................................................~~~~~~~~~~~~~~~~~~~~~~~23

OF AUTHORITIES

Paae(s)
CASES

AlliedMaintenance Corp. v. AlliedMechanical Trades, Inc., 42 N.Y.2d 538, 399 N.Y.S.2d 628 (1977) ................................................................... 18
Arista Records, Inc. v Flea World, Inc., 78 U.S.P.Q. 2d 1339 (D.N.J. 2006) .............................................................................12 Arista Records, Inc. v. MP3Board, Inc., No. 00 Civ. 4660 (SHS),

2002 WL 1997918 (S.D.N.Y. Aug. 29, 2002) ............................................................. 12 Ciba Geigy Corp. v. Bolar Pharmaceutical Co.,
547 F. Supp. 1095 (D.N.J. 1982),

a~i"d~ F.2d 56 (3d Cir. 1983), 719

cert. denied,465 U.S. 1080(1984)..............................................................................1 1
Coca-Cola Co. v. Snow Crest Beverages, Inc.,
64 F. Supp. 980 (D. Mass. 1946), a~fd, 162 F.2d 280 (Ist Cir.),

cert, denied, 33 U.S. 832 (1947) .............................................................................. ....10 Crowley v. Cybersource Corp., 166 F. Supp. 2d 1263 (N.D. Gal. 2001) .......................................................................19 Desiderio v. National Association of Securities Dealers, 191 F.3d 198 (2d Cir. 1999), cert. denied, 531 U.S. 1069 (2001)...............................21
Dyer v. Northwest Airlines Corps.,

334 F. Supp. 2d 1196 (D.N.D. 2004)...............r...........................................................19
800-JR Cigar, Inc. v. GoTo.com, Inc., 437 F. Supp. 2d 273 ..............................................................................................~~,,~~~16

I;are Deals, Ltd. v. World Choice Travel.com, Inc., 80 F. Supp. 2d 678 (D. Md. 2001).............................................................................5. 6
Fonovisa, Iitc. v. Cherry Auction, Inc.,

76 F.3d 259 (9th Cir. 1996).............................................................................4. 11 5, 6,
Fonovisa, Inc. v. Cherry Auction, Inc., 847 F. Supp. 1492 (E.D. Gal. 1994),

rev 'd, 76 F.3d 259 (9th Cir. 1996) .................................................................................8

eBay. Inc.,
99 cat. App. 4th 816(2002) ................................;........................................................15 Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511 (S.D.N.Y. 2004)..........................................................................22
Gucci America, ~nc. v. Hall di Associates,

135 F. Supp. 2d 409 (S.D.N.Y. 2001)....................................................................15. 16 Gwaltney ofSmithfield, Ltd. v. Chesapeake Bay Foundation, Inc.,
484 U.S. 49 (1 987).......................................................................................................21

Habeeba 's Dance of the Arts, Ltd. v. Knoblauch, 430 F. Supp. 2d 709 (S.D. Ohio 2006) ..........................................................................4 Hamilton Watch Co. v. Benrus Watch Co., 206 F.3d 738 (2d Cir. 1953)......................................................................................... 14 HardRocklLicensing Corp. v. Concession Sewices, Inc.,

955 F.2d 1143 (7th Cir. 1992).......................................................................4. 7, 8 5, 6,
Hendrickson v. eBay Inc.,

165 F. Supp. 2d 1082 (C.D. Gal. 2001) ...................................................................6. 18 In re Aimster Copyright Litigation, 52 F. Supp. 2d 634 (N.D. hi. 2002), a~9"d, 334 F.3d 643 (7th Cir. 2003),

cert. denied, 540 U.S. 1007(2004)........................................................................ 12 11,
In re JetBlue Airways Corp. Privacy Litigation, 379 F. Supp. 2d 299 (E.D.N.Y. 2004) .........................................................................19 Inwood Laboratories, Inc. v. Ives Laboratories, Inc.,

446 U.S. 844 (1982)....................................................................................;3. 7, 10 4, 5, KentuckyE;riedChickenCorp. v. DiversiJied Packaging Corp.,
549 F.2d 368 (5th Cir. 1977) .......................................................................................22

Levi Strazcss Co. v. Textiles Confecciones & y Europeas, SA.,
222 U.S.P.Q. 971 (S.D.N.Y. 1983).........................................;.................................... 10 Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949 (C.D. Gal. 1997), a~cd, 194 F.3d 980 (9th Cir. 1999) ..............................................................................10

Martin Corp. v. Network Solutions, Inc., 194 F.3d 980 (9th Cir. 1999) .....................................................................................4. 5

Medic Foundation Inc.v.Coral Alert U.S., Co~p.,
43 F. Supp. 2d 933 (N.D. m. 1999) .............................................................................13 Monsanto Co. v. Campuzano, 206 F. Supp. 2d 1271 (S.D. FZa. 2002) ........................................................................13

My~VebGrocer,LLC v. Hometown Infomzation, Inc., 375 F.3d 190 (2d Cir. 2004)...................................................................................22. 23 National Federation of the Blind, Inc. v. Loompanics Enterprises, Inc., 936 F. Supp. 1232 (D. Md. 1996) ................................................................................1 O
Nike, Inc. v. -Variety ~holesalers, Inc., 274 F. Supp. 2d 1352 (S.D. Ga. 2003),

a~g"d,107 Fed. Appx. 183 (Ilth Cir. 2004) .................................................................13 Parker v. Google, Inc.,
422 F. Supp. 2d 492 (E.D. Pa. 2006) ........................................................................... Fatsy 's Brand, Inc. v. I. O.B Realty, Inc., 317 F.3d 209 (2d Cir. 2003).........................................................................................22 Perfect 10, Inc. v. CCBillLLC, 16

No. 04-57143, 2007 WL 925727 (9th Cir. Mar. 29, 2007)........................;...........16. 17

)

Perfect 10, Inc. v. CCBIIIUC,
340 F. Supp. 2~ 1077 (C.D. Gal. 2004), a~d in part and rev 'd in part, No. 04-57143, 2007 WL 925727 (9th Cir. Mar.' 29, 2007)....................................16. 17 Perfect IO, Inc. v. Cybernet Yentures,Inc,
213 F. Supp. 2d 1146 (C.D. Gal. 2002) .......................................................................1 1

Playboy Enterprises, Inc. v. Russ Hardenburgh, Inc.,
982 F. Supp. 503 (N.D. Ohio 1997).................... ......................................................... Polo Fashions, Inc. v. Ontario Printers, Inc., 12

601 F. Supp. 402 (N.D. Ohio 1984).............................................................................19 Polo Ralph Lauren Corp. v. Chinatown GiJt Shop,
855 F. Supp. 648 (S.D.N.Y. 1994) ................................................................................4

Designs v. Reebok International, Ltd.,

338 F. Supp. 2d 904 (N.D. m. 2004)................................................................,.,..........4 Secretaryoflabor v. Burger King Corp., 955 F.2d 681, 683-86(Ilth Cir. 1992)......................................................................~,2 1 South Central Bell TelephoneCo. v. Constant,Inc.,
304 F. Supp. 732 (E.D. La. 1969),

a~ff'd, F.2d 1207(5th Cir. 1971)................................................................~,~,~~~~~~~~20 437
Stoner v. eBay Inc.,

56 U.S.P.Q.2d 1852(Cal. Super.Ct. 2000)................................................................ 15
Stop YouthAddiction v. Lucky Stores, Inc., 17 Gal. 4th 553, 950 P.2d 1086 (1998) ................................................................~~~~~~~~ 15

Tommy ~-lilfiger Licensing, v. Goody FamilyClothing, Inc. 's Irnc.,
No. 1:00-CV-1934-BBM,

2003 WL 22331254(N.D. Ga. May 9, 2003)...............................................................,8
Tri-StarPictures, Inc. v. Unger,

14F. Supp.2d 339(S.D.N.Y. 998)......................................................~~~~~~~~~~~~~~~~ 1 17, 18
UnionTank Car Co. v. LindsaySoft WaterCo~p.,
257 F. Supp. 510 (D. Neb. 1966),

ac~fd nom.,Heaton DistributingCo. v. UnionTank Car Co., sub UnitedStates v. ChemicalsforResearch & Industry,
UnitedStates v. WT Grant Co.,

387 F.2d 477 (8th Cir. 1967) ;..................................................~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

10 F. Supp. 2d 1125 (N.D. Gal. 1998) ...................................................~~~~~~~~~~~~~~~~~~~~~~~~

345U.S.629(1953)...............................................~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 21

United States v. Loew's, Inc., 371 U.S. 38 (1962) ...............................................~,~~~~~~~~~~~~~~~~~~~~~~~~~~~~;~~~~;~~~~~

Warner Brothers, Inc. v. Gay Toys,Inc., 724 F.2d 327 (2d Cir. 1983)................................................~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

WorEdSpoNetworksLtd. v. Art~nternet rt S.A.,

No. 99-CV-616, WL269719(E.D.Pa. Apr.28, 1999) 1999 ................................22. 23
OTHER AUTHORITIES

15U.S.C.~ 1114(2) ............................................~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 18,.19

U.S.C. ~ 230(e)(2).........................................................................................................15 47 U.S.C. ~ 230(e)(3).;.......................................................................................................17 S. Rep. No. 98-526, 98th Gong., 2d Sess; 16(1984), reprinted in 1984 U.S.C.C.A.N. 3627 .........................................................................22 Trademark Law Re\rision Act of 1988, 134 Gong. Rec. H10411-02 (Oct. 19, 1988) .......................,..................................

18, 19

11A Charles A. Wright, Arthur R. Miller and Mary Ray Kane, Federal Practice and Procedure ~ 2950 (2007) .......................................................... 4 J. Thomas McCarthy, McCarthy on Trademarks and UnfairCompetition ~ 25:19 (4th ed. 2004) ....................................................................................................8 4 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition ~ 25:20 (4th ed. 2004) ....................................................................................................9

14

5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition
~ 30:1 (4th ed. 2004) .................................................................................................... 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition ~ 30:4 (4th ed. 2004) ....................................................................................................22 Restatement ofTorts ~ 738 (1938).....................................................'................................10 Restatement (Second) of Torts ~ 877(c) (1 979) ...................................................................4 18

Restatement (Third) of Unfair Competition 26 (1995) .............................................:.....18
Restatement (Third) of Unfair Competition ~ 27 (1995) .........................................9. 10, 11

Deborah J. Peckham, The Internet Auction House and Secondary Liability --Wi'll eBay Have to Answer to Grokster, 95 Trademark Reporter 977 (Sept. - Oct. 2005) ............................................................9

STATESDISTRICTCOURT
SOUTHERN DISTRICT OF NEW YORK

TIFFANY (NJ) INC. and TIFFANY AND COMPANY, 04.Civ. 4607 (KMK) Plaintiffs,

eBAY INC.,
Defendant.

MEMORANDUM TO DEFENDANT'S

OF LAW IN OPPOSITION PRETRTAT, MEMORANDUM

Pursuant~to Rule 3(C)(iii) of the Court's Individual Rules of Practice and the Court's

Order,datedNovember 2006,plaintiffs 6, Tiffany Inc.andTiffany Co.(collectively, (NJ) and
"Tiffany")submit this memorandum oppositionto the pretrial memorandum law of in of

defendant Inc.("eBay"). thismemorandum, eBay In Tiffanyy addresses errors thekeylegal the in
propositions discussed in eBay's pretrial memorandum. PRELIMINARY STATEMENT

Tiffany,one of the world'smost famousand established brands,broughtthis actionto addressthe sale of overwhelming numbersof counterfeit silverTiffany jewelryon eBay. The evidencewill showthat approximately of the listingsfor Tiffanysilverjewelryon eBay 75% involvecounterfeit goods. eBaydivertspotential buyersto thesegoods,substantially assiststhe
efforts of the sellers of these goods, and receivesa portion of the proceedsfrom the sale of these
goods.

undertakes substantial measures to protect its marks. Notwithstanding those efforts, eBay also has a legalobligation to stop the sale of counterfeit Tiffany jewelry on the eBay website. Despite the obligation to institute reasonable measures to prevent these unlawful
activities, eBay has refused to do so.

eBay would like the Court to conclude that it is nothing more than a passive "want ad" or bulletin board that enables potential buyers and sellers to come together on their own initiative. That characterization is misleading. It cannot be disputed that eBay assists and facilitates sellers

in their efforts to sell counterfeitTiffany goods. eBay is more activelyinvolved in the sale of jewelry such as the counterfeitTiffany goods than are the flea market operators that the courts have held liable for contributoryinfkingement.Moreover,unlike want ads, eBay's marketplace
puts the buyer at risk vis a vis essentially anonymous sellers who receive payment before the

i

buyer even receives the purchased merchandise, eBay, of course, shares in the buyer's sales proceeds. Consequently,by virtue of its knowledgeand involvementin the sale of the goods, eBay has an independentobligationto prevent the sale of the counterfeitgoods. It has failed to
comply with that obligation. eBay protests that, if the Court requires eBay to implement reasonable measures to stop

the sale of counterfeitTiffanymerchandise,the floodgateswill open and eBay will be requiredto monitor all of the listingson its site. eBay arguesthat such a result will force eBay to shut down
entirely, eBay's plea distorts both the relief sought in this action and the law underlying

Tiffany's claims. The law requires that a vendor, such as eBay, that knows or has reason to
know that it is facilitating trademark in~ingement must adopt reasonable, effective measures that
will minimize in~-ingement. Here, such measures are both available and feasible.

trial will establishthat eBay has failedto complywith its obligations under the Lanham andrelatedlaws. Accordingly, Courtshould Act the holdeBayliablefor facilitating the sale of counterfeit goods and shouldenjoineBayfrom allowingTiffanysilverjewelryto be offeredfor saleon its websiteuntileBayimplements measures will substantially that reducethe
sales of counterfeit Tiffany silver jewelry.
ARGUMENT POINT I

EBAY'S
MISSTATES

CONTRIBUTORY
THE LAW

INFRINGEMENT

ANALYSIS

The SupremeCourt set forth the elementsof a claim for contributory trademark infringement InwoodLaboratories. v. IvesLaboratories, in Inc. Inc., 456 U.S. 844 (1982). In

that decision,Supreme held a claim contributory infringement the Court that for trademark is
established the defendant if either(i) intentionally induced another partyto infringea trademark
or alternatively(ii) continuedto supply its productto one whom it knows or has reason to know
is engaging in trademark inftingement. Id. at 854. This decision reflects the law that has

developedover the last 60 years with respect to contributorytrademarkin~-ingement.In its trial memo, however, eBay substantially misstates the law that this Court is to apply when

determining whethereBayhas contributorily infr-inged Tiffany'strademarks facilitating by the
sale of counterfeitsilverj ewelryon the eBay website. A. eBas Supplies a Service That Facilitates the Sale of Counterfeit Goods

eBay misappliesthe legal analysisunder the first prong of~nwood. See eBay's Memo at 11-12. Contraryto eBay's assertion,an entity such as eBay that suppliesa service,as opposedto a product, may neverthelessbe liable for contributorytrademarkinfi-ingement.See generally

FindingsFact Conclusions at30-32. of and ofLaw Indeed, contention eBay's isbelied
by the very authority that it cites. See eBay's Memo at 11-12.
In Hard Rock Caf~ Licensing Corp. v; Concession Sewices, Inc., 955 F.2d 1143, 1 148-49 (7th Cir. 1992), the Seventh Circuit held that, under Inwood, a flea-market operator who never

manufactured or distributed a product, but instead leased stalls to retailers selling in~-inging goods, can be liable for contributory trademark infkingement. The court analogized the fleamarket operator to a landlord who is responsible "for the torts of those it permits on its premises 'knowing or having reason to know that [they are] acting or will act toitiously ... ."' Id. at 1149 (quoting Restatement (Second) ofTorts ~ 877(9) (1979)). In that case, the flea-market operator was not merely a landlord, but also "'advertise[d] and promoted the activity on its premises, [sold] admission tickets to buyers and supervise[d] the premises."' Id. at 1148 (citation omitted). The Ninth Circuit's decision in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996), likewise held that suppliers of a service may be liable for contributory trademark in~ingement. The Ninth Circuit endorsed the reasoning of Hard Rock, and denied a motion to dismiss a claim of contributory trademark infringement against a swap meet operator. The court held that it was sufficient that the defendant was supplying the necessary marketplace for the sale

of infringingmusic in substantialquantities. Id. at 265.'
Courts routinely recognize that contributory trademark i~ingement liability applies to suppliers of a

F.3d980,984(~thCir.1999); Hnbeeba's Dance theArts, v.Knoblauch, F. Supp. 709,714of Ltd. 430 2d
15 (S.D. Ohio 2006) (citing Hard Rock and Fonovisa in denying a motion to dismiss against a claim of
contributory trademark infringement against a YWCA that rented space to an individual holding a dance

service after Hard Rock and Fonovisa. See, e.g., Lockheed Martin Corp. v. Network Solutions, Inc., 194

symposium that used an~allegedly in~inging name); SE Designs v. Reebok International, Ltd., 338 F. Supp. 2d 904, 913 (N.D. Ill. 2004) ("Hard Rock Cafe does extend the contributory liability doctrine of Inwood Laboratories beyond the manufacturer-distributor context."(citation omitted)); Polo Ralph Lauren Corp. v. Chinatown Gift Shop, 855 F. Supp. 648, 650 (S.D.N.Y. 1994) (citing Hard Rock, the Court denied a motion to dismiss a contributory infkingement claim against a landlord who leased a
building to a tenant who sold counterfeit goods out of the building).

erroneously attempts to turn the decision in Fonovisa to its favor. See eBay's
Memo at 15 n.5. eBay latches on to the fact that the Court looked for additional conduct. That

fact, as demonstratedby Tiffany's proposed findings,does not aid eBay. Much like eBay does with its sellers, the swap-meetoperator "materially contributed"to the infringing activity by providing"services"such as 'Wleprovisionof space,utilities,parking,advertising,plumbingand customers" to the vendors. 76 F.3d at 264. The court held that the swap-meetoperator could thus be held liable for contributoryinfiingementbecause"it would be difficult for the infr-inging activity to take place in the massivequantitiesallegedwithout the support servicesprovidedby the swap meet." Id. Here, Tiffany will adduce substantialevidencethat eBay engaged in the type of additional conduct that the Ninth Circuit held provides a basis for liability. See
Plaintiffs' Proposed Findings ofr;act f~T 12-20, 46-47. As the Ninth Circuit stated in Lockheed Martin Corp. v. Network Solutions, Inc., 194

F.3d 980, 984 (9th Cir. 1999), "Hard Rock and Fonovisa teach us that when measuring and weighinga fact pattern in the contributoryin~ingementcontextwithoutthe convenient'product' mold dealt with in InwoodLab., we considerthe extent of control exercisedby defendantover
the third party's means of in~-ingement." Id. (citing Hard Rock, 955 F.2d at 1148-49, and

Fonovisa, 76 F.3d at 265). Therefore,"direct controland monitoringof the instrumentality used by a third party to infringethe plaintiffs mark permits the expansionoflnwood Lab. 's 'supplies a product' requirementfor contributoryin~ingement." Id. (suggestingthe contributoryliability theory could be appliedto the Intemet if there was evidencnof monitoringand control);accord
Fare Deals, Ltd. v. World Choice Travel.com, Inc., 180 F. Supp. 2d 678, 690 (D. Md. 2001) (contributory liability of flea market operators stems fi·om support of and control over their

business and ~om "providing the very medium through which the in~-inging vendors conducted their businesses."). eBay contends that this line of decisions does not apply because eBay is "merely a venue

that has no control over the items that third-party sellers offer on its site (the 'instrumentalit[ies] '

used by... third partCies] inff~inge.") to ....

See eBay'sMemoat 12 (citationomitted). The

evidence will demonstrate that eBay's contention is wrong. First, eBay incorrectly asserts that it cannot directly monitor and control the

"instrumentality used by a third party to infringe," because the "instrumentality" is the infringing

item itself. See id. at 11-12. eBay's understanding of"instrumentality" is inconsistent with the Hard Rock and Fonovisa line of cases, in which the courts focused on the marketplace that the defendants provided. The "instrumentality" is not the infiinging item. It is the service that eBay provides to its sellers - the online marketplace whereby sellers and buyers exchange goods. Second, eBay's self-serving characterization of itself as a mere venue and publisher of
classified ads is misleading. eBay is not a bulletin board. Rather, eBay is just like the swap meet

operators in Hard Rock and Fonovisa.2 See Hendricksortv. eBay,Inc., 165 F. Supp. 2d 1082,
1084 n.2 (C.D. Gal. 2001) (rejecting eBay's characterization of itself as a mere online venue that publishes "electronic classified ads," and finding that that "eBay's Internet business features elements of both traditional swap meets.., and traditional auction houses...."). The

substantial evidence regarding the sales, planning and marketing efforts and coordination with sellers to fUrther eBay's marketing and sales goals belies any attempt to trivialize eBay's role
and function.

Moreover, eBay has a classified advertising service on its website, which is an entirely separate
service than the listings that are at issue here.

eBay Knows That Counterfeit Tiffany Silver Jewelry
is Sold on Its Website

1.

Knowledge Standard

Inwoodprovides a defendant be liablefor contributory that may trademark in~-ingement

when"it knows hasreason know" its sellers or to that would engage trademark in in~kingement.
456 U.S. at 854. eBay's interpretationof the "knowledge"prong of the Inwood test takes this

standard anabsurd to extreme, making virtually it impossible satisfy.According eBay, is to to it
not enough for Tiffany to show that eBay has "knowledgeor reason to know" of the fact that

75% of Tiffanysilverjewelryon eBayis likelycounterfeit.eBaywronglyarguesinsteadthat

Tiffany mustshowthat eBayhad actualknowledge "specific of infr-ingements." eBay's See
Memo at 13-14.

The meaning of "knowledge or reason to know" for such a claim "falls somewhere

betweenthe scienterrequirements negligence knowledge."UnitedStatesv. Chemicals of and

SorResearch Industry, F. Supp. 1125, di. 10 2d 1128 (N.D. 1998); alsoHardRock, Gal. see 955

F.2dat 1149 ("the'reason know' of thestandard contributory requires to part for liability
[defendant] (orits agents) understand areasonably to what prudent personwouldunderstand
...." (citationomitted)). "Knowledge"is also expansiveenoughto include situationswhen the

defendant hidesits headin the sandto avoidgaining knowledge the infringing of activity.In
other words,a defendant be foundto have."knowiedge" will whenit is "willllly blind,"i.e., whenit merely"suspect[s] wrongdoing deliberately and fail[s]to investigate."Hard Rock,955
F.2d at 1149 (emphasis added; citation omitted).

For example, courtin Hard Rockdid not saythat the defendant the flea-market operator had to haveactualknowledge eachinfkinging the flea-market of sale; operator neededonlyto be
willfully blind. Thus, knowledge may be inferred. In Hard Rock, the defendant had the

to observethat the goods were being sold for a very cheap price and did not ask the

individual vendors whether theirgoodsmightbe counterfeit because weresureto lie to him. they Id. In Fonovisa, swap-market a operator "knowledge," counterfeit had as goodshad beenseized 18monthspriorto suit,an investigator hiredby the operator that somevendors saw wereselling counterfeit musictapes, and, after the complaint served,the investigatorrevisited site was the and foundmanyvendorsselling"counterfeits tellingly prices." Fonovisa, v. Cherry at low Inc. Auction.Inc., X47F. Supp. 1492,1495(E.D.Gal. 1994),rev'd, 76 F.3d 259 (9th Cir. 1996);
accord TommyHil~ig~rLicensing,Inc. v. Goody's Family Clothing,Inc., No. 1:00-CV-1934BBM, 2003 WL 22331254,**19-22(N.D. Ga. May 9, 2003). In McCarthyon Trademarks,this requirementis describedas follows: -Evayone who knowingly participates in the preparation,

distribution sale of infi-inging and goodsor servicesis potentially
liable as a contributoryinfi-inger. The subjectivemental intent of the alleged contributoryin~inger may often be an essentialissue. Most courts will adopt the "should have known" approach mentionedabove, to hold liable one who assists in illegal conduct
and should have known that the logical result of such conduct was

illegal. This is a standard of care much like the "reasonably

prudentperson"test. Thatis, the ordinary business personcannot
claim innocenceif the facts are such that any reasonableperson in such a position should have known that it was actively participatingin an operationwhich constitutedunfair competition
ortrademarkinfiingement.

4 J. Thomas McCarthy, McCarthy Trademark;s UnfairCompetition 25:19at 25-44(4th on and ~
ed. 2004) (footnote omitted).

cites no authorityholdingthat "knowledge"requiresa showingthat a defendanthas

actualknowledge of"specificin~ingements."3 Instead, eBaycitesdecisions involving copyright infiingement. thosedecisions notholdthatactualknowledge specificin~ingements Yet, do of is required. Indeed,the courtsin thosedecisions haverejected veryargument the eBayis tryingto
make here. See this Memo at ,inJi~a.

2.

The Restatement Test Does Apply to Tiffany's
Contributory Infringement Claims

Courts,both before and after Inwood,have also employedthe test under Section'27(b)of

the Restatement(Third) of Unfair Competition an alternativestandard for knowledge. as
Section27(b) provides for contributory liability when "the actor fails to take reasonable precautionsagainstthe occurrenceof third person's in~inging conductin circumstancesin which the in~-ingingconduct can be reasonablyanticipated." eBay, however,contends that the' Court

shouldignoreSection because, 27 according eBay,"the Supreme to Courtin Inwoodrejectedthe
Restatement approach." See eBay's Memo at 14 & n.3 (emphasisin original). The Court in
Inwood did no such thing.

eBay relies on commentb of the Reporter'sNotes on Section27. Id. Contraryto eBay's

assertion, comment not say that the Supreme the does Court"rejected Restatement the
approach." Rather, it says that the Court in Inwood concluded that "the fact that a manufacturer

'could reasonably anticipate' the infringing conduct was not itself su~tj~icient establish to
eBay's only supportfor this contentionis a sectionofMcCarthy on Trademarks. See eBay's Memo at 12-13 d n.2. That section merely observesthat the author of an article in The TrademarkReporter "has opined that trademarkowners 'may have a difficult road' in establishingliability 'unless notice of specific infringementswas unheededby the service provider."' 4 J. Thomas McCarthy,McCarthy on
Trademarks & Unfair Competition ~ 25:20 (4th ed. 2004) (quoting Deborah J. Peckham, The Intemet Auction House and Secondary Liability - Will eBay Have to Answer to Grokster?, 95 Trademark Reporter 977, 994 (Sept.-Oct. 2005)). That article provides no basis for adopting such a narrow definition ofthe knowledge requirement.

inducement

and hence contributory

liability under ~32 of the Lanham Act."

Restatement ~ird)

of Unfair Competition ~ 27 cmt. B (1995) (emphasis added); see Inwood,

456 U.S. at 861 (White, J., concurring). "Intentional inducement," however, is the standard set
forth in Section 27(a). The standard at issue here is Section 27(b), which does not include the phrase "intentional inducement" and which sets forth a two-fold test, "reasonable precautions" when "infringing conduct can be reasonably anticipated." Comment c to Section 27(b) is clear

that Section27(b) is alive and operative,even after the Inwooddecision.4
The standard for contributory in~-ingement set forth in Coca-Cola Co. v. Snow Crest

Beverages. 64F.Supp. 9X9 Mass. Inc., 980, (D. 1946) (defendant continued sellto retailers to
that it knew or had reason to know were engaging in infr~inging practices), a~f~d, 162 F.2d 280 (Ist Cir.), cert. denied, 33 U.S. 832. (1947), is based in part on Section 738 of theRestatement of

Torts (the predecessor to Section 27(b)), and that decision is the foundation for the standards set

forth in Section 27(b). The Coca Cola decision was explicitly approved in Inwood, see Inwood,
456 U.S. -at 954, and it continues to be cited by the courts. See Lockheed Martin Corp. v. is "a seminal

Network Solutions, Inc., 985 F. Supp. 949, 964 (C.D. Gal. 1997) (Coca-Cola contributory in~ingement

case"), a~tr~d,194 F.3d 980 (9th Cir. 1999); Levi Strauss di Co. v. SA., 222 U.S.P.Q. 971, 973-74 (S.D.N.Y. 1983) (citing

Textiles y Confecciones Europeas, Inwood and Coca-Cola);

see also National

I~ederation of the Blind, Inc. v. Loompanics

Enterprises, ~nc., 936 F. Supp. 1232, 1245 (D. Md. 1996) (citing Restatement (Third) of Unfair

The Reporter's

Note commentary regarding Section 27(a) belies the contention that the Supreme

Court in Inwood rejected Section 27. The Reporter's Note observes that not even Inwood has been "interpreted to preclude reliance on a 'reasonably anticipate' standard in actions at common law." See
Restatement (Third) of Unfair Competition ~ 27, cmt. B.

O27asthecurrent version Restatement ~738indiscussion of ofrorts ofthird-party
liability).

Finally, assuming arguendo Inwood that rejected "reasonable the anticipation" standard, the rejection thatstandard limited claims of is to underSection 32(1)of the Lanham Act. The

"reasonable anticipation" sfandard nevertheless applies claims to underSection43(a) the of Lanham andstate See, Ciba Act law. e.g., Geigy Corp. Bolar v. Pharmaceutical Inc.,547 Co..
F. Supp.1095, (D.N.J. 1116 1982), a~d, 719F.2d56(3dCir.1983), denied, U.S.1080 cert. 465
(1934).

3.

The Applicationof CopyrightPrinciplesSupports a Finding: LiabiliCv qf

Even though nocopyright areasserted thiscase, relies copyright to claims in eBay on law
bolsterits arguments. eBay'sMemoat 15-16. To the extentthat the courtchooses See to

consider principlescontributory of in~ingement context online inthe of copyright infringement,5
contrary eBay's to contention, application those the of principles supports Tiffany's claim.

,,

·

Forinstance, incorrectly thatcopyright requires eBay asserts law knowledge"specific of

actsof in~ttingement." eBay's See Memo 15-16.In fact,thecourts rejected a at have such narrow interpretation the knowledge of requirement. e.g.,In re Aimster See, Copyright
Litigation, F. Supp.2d 634,651(N.D.Ill. 2002)("It maybe truethat,due to Aimster's 252

encryption scheme, Defendants unaware the actualspecific are of transfers specific of
copyrighted between music specific usersof theAimster system.However, is absolutely there no indication theprecedential in authority suchspecificity knowledge required the that of is in
Somecourtshaveturnedto copyright for guidance.See,e.g.,PerfectlO, v. Cybemet law Inc. Y,ntures, Inc., 213 F.Supp.2d 1146,1188(C.D.Cat. 2002)(citingFonovisa, F.3d at 265)) 76 (considerations a contributory in trademark inf~-ingement analysis "similar,if not completely are
equivalent, theprinciples to applicable thecopyright in context.").

in~-ingement context" (emphasisin original)),a~f~d, F.3d 643 (7th Cir. 2003), 334 cert. denied, 540 U.S. 1107 (2004);Arista Records,Inc. v. MP3Board,Inc., No. 00 Civ. 4660 (SHS), 2002 WL 1997918,at *8 (S.D.N.Y.Aug. 29, 2002) (Stein, J.) (holdingthat, when links appearing on site indicated illegal activity, combined with acknowledgementof defendant's employees of "a statisticalpossibility"that some of the links appearingondefendant's senrice went to copyrightedworks and that users had downloadedunauthorizedcopies through such links, a triable issue of fact remained as to whether defendanthad constructiveknowledge of infringement); Playboy~nterprises, Inc. v. Russ Hardenburgh,Inc., 982 F. Supp. 503, 514 (N.D. Ohio 1997)(there was evidenceof"at least constructiveknowledge"that infiinging activitywas

likely be occurring defendant's to on online bulletin board system, defendants aware as were that
plaintiff was enforcingits copyrightsagainstother bulletinboard systemowners). A recent decision involving a flea-market held that specificity of knowledge ·is not required. In Arista Records, Inc. v. Flea ~Yorld, ~nc., 78 U.S.P.Q.2d 1339 @.N.J. 2006), the court rejected the defendants' assertion that the knowledgerequirementis satisfied only when there is actual knowledge of the specific in~ingement or the party has turned a blind eye. Instead, the court held that it is enoughthat the secondarvinfringerknows or has reason to know that the act of infringement. Id. at 1353. The court held that the flea-market operator had constructive knowledge based on the control that it exercised. Among other things, they
monitored their vendors' booths for prohibited materials, received notification ~iom the

RecordingIndustryAssociationof Americathat thousandsof counterfeitrecordingswere being
sold at the flea-market, and were aware of two raids that led to the seizure of thousands of counterfeit recordings. Id. at 1353-54.

Thus, eBay's use of copyright law is incorrect and fails to insulate eBay fkom liability.

eBay Has an Affirmative Duty to Prevent Sales of

Counterfeit Tiffany Silver Jewelrs

eBay contendsthat it has no affirmative duty to take precautions againstthe sale of counterfeits. See eBay's Memoat 18-22. eBay's position,however,is premisedon the contention Tiffanycannotsatisfythe requirements a claimfor contributory that of infringement. As shownabove,becauseTiffanycan establish requirements the Inwoodand Restatement the of tests, eBayis obligated take affirmative to stepsto preventthe saleof counterfeit Tiffanysilver jewelry on its website. eBaymay not take the positionthat the problemmust be addressed
exclusively by Tiffany.

The decisions cited by eBay do not aid eBay. See eBay's Memo at 18-20. In those

decisions, defendant the eitherdid not have a suspicion it was facilitating that trademark in~-ingement whenit didhavesucha suspicion, tookreasonable or, it measures remedy to the problem. e.g.,Nike, v. Variety See, Inc. Wholesalers, 274F. Supp. 1352, Inc., 2d 1371 (S.D.Ga. 2003)(no willful blindness foundwhen,oncedefendant on noticethat it hadpurchased was counterfeit goods, immediately manystepsto ensure theNikeproducts bought it "took that it
were genuine"), aff'd, 107Fed.Appx. 183(Ilth Cir. 2004);Monsanto v. Campuzano, Co. 206
F. Supp. 2d 1271, 1276 (S.D. Fla. 2002) (no willful blindness found when defendant seller

thoughtbuyerwas purchasing productfor exportand had no knowledge following that, completion saleto buyer,buyerwas not exporting of product instead but repackaging in it counterfeit boxes); Medic AlertFoundation Inc.v. CorelCoip.,43 F. Supp.2d 933,940 U.S.,
(N.D.ill. 1999)(therewasno showing consumer of confusion ~om use of trademark, defendant
receivedno notice of any allegedinfr-ingements to lawsuit,and there was no reason to think prior that other users of the software would in~inge trademark,and defendanthad ceased all use of
trademark in its software).

the same reasons, eBay also cannot place any reliance on the unpublisheddecision

issuedfromthe benchdenying preliminary a injunction Robespierre eBay. SeeAppendix in v. A

hereto.6 In that action,the courtaddressed motionfor a preliminary a injunction, by and
definition did not address the merits of the case.7 See id. at 2-3. Further, the substanceof the

decisionhas no application here. Unlikehere,the plaintiffwasnot ableto tell the court,despite the smallquantityof goodsinvolved, whatpercentage its goodson eBaywerecounterfeit of as
opposedto genuineand could not show that any counterfeitgoodshad, in fact, been sold.8 Id.at 4. The inability of the plaintiff to identifl pervasive counterfeitsales was at the heart of the

court's decision denythe preliminary to injunction.Id. at 11 . Giventhosecircumstances, the

court expressed about concern interfering thesale legitimate with of merchandise. id,at29See
30. Consequently, whenbalancing elements a preliminary the of injunction (i.e.,the likelihood

of success, irreparable andequitable injury nature the relief), courtconcluded a of the that
sufficient showing notbeenmadeat theearlystageof theproceedings. had Id.

Withits trialmemorandum, submitted incomplete eBay an versionof the transcript the hearing of on the preliminary injunction motion Robespiewe in action.In orderfor the Courtto understand entirety the of the rulingon that motion,it is criticalto see the entiretranscript, opposedto excerptsfrom it. as
Accordingly,a copy of the entiretranscriptis annexedas AppendixA hereto.

It iswell established rulings preliminary that on injunctions notaccorded weight rulings are the of on
the merits and do not provide a basis for how the merits of a dispute should be resolved. See Warner Bros., Inc. v. Gay Toys,Inc., 724 F.2d 327, 330 (2d Cir. 1983);Hamilton WatchCo. v. Benrus WatchCo.,

206F.2d738,742(2d Cir. 1953);11ACharles Wright, A. ArthurR. MillerandMaryKayKane,Federal PracticeandProcedure~ 2950(2007) ('Wle court'sfindings factandconclusions lawwithregardto of of the preliminary injunction notbinding trial. Based, theyusuallyare,on incomplete are at as evidence and
a relativelyhurried consideration the issues,these provisionaldecisionsshouldnot be used outsidethe of contextin which they originallywere rendered."(footnoteomitted)).

s Itsbestestimate which notsubstantiated was byevidence admitted thecourt wasthatthree by percent of NanetteLePoregoods on eBay were counterfeit,while eBay claimedthat tens of thousandsof LePore listings appeared on eBay since 2000, and of those, five, at most, were sold. See Singer Aff.,
Ex. B at 6-7.

II

TIFFANY'S

STATE

LAW

CLAIMS

ARE

NOT

PREEMPTED
ACT

BY THE

COMMUNICATIONS

DECENCY

Tiffany also asserts a number of state, statutory and common law claims under which

eBay is liable for the sale of counterfeit Tiffanysilverjewelry on the eBay website. eBay
contendsthat these claims are preemptedunder federallaw. eBay assertsthat the Communications DecencyAct ("CDA'~), which does not bar federal

brademark nevertheless New state claims. eBay's at23-25. claims, bars the York law See Memo
eBay's solebasisfor this proposition a set of California is decisions interpreting California state
statutes including broad consumer protection claims such as Section 17200 of the California

Business Professions and Code- thatarenot analogous federal to intellectual property claims.g This set of California decisions includestwo actionsbroughtagainsteBay. Theyhave nothingin common withthis caseexcepta common defendant.No intellectual propertyclaims, such as copyright trademark, or wereassertedin them. SeeStonerv. eBayInc., 56 U.S.P.Q.2d 1852,1852(Cal.Super.Ct. 2000)(publisher immunity underSection of the CDAappliesto 230 the specific~ 17200 claimtheplaintiff broughtagainsteBay);Gentry eBay,Inc.,99 Gal.App. v. 4th 816, 831 (Cal. Ct. App. 2002) (Section230immunityapplied to the negligenceand
Section 17200 asserted against eBay).

Section230 of the CDA providesthat "[n]othingin this sectionshall be construedto limit or expand any law pertainingto intellectualproperty." 47 U.S.C. ~ 230(e)(2). That section's

Section 17200 of the Caliornia

Business

and Professions

Code has been construed

to reach

"'anything which can properly be called a business practice and that at the same time is forbiddenby law."' Gucci America, Inc. v. Hall d~Associates, 135 F. Supp. 2d 409, 415 n.13 (S.D.N.Y. 2001) (quotingStop Youth Addictionv. LuckyStores,Inc., 17 Gal.4th 553, 950 P.2d 1086, 1090(1998)).

of "intellectual property" encompasses both federal and state intellectual property claims. Gucci America, 135 F. Supp. 2d at 415 (distinguishing "defamation and other forms of tort liability" from "[t]he instant [federal and New York state and common law] claims are j grounded in the law of intellectual property ... "); see id. at 417 ("The legislative history cited
by [defendant] indicates only that Section 230(c) immunizes ISPs frpm defamation and other,

non-intellectual property, state law claims arising from third-party content.))); see also 800-JR Cigar, Inc. v. GoTo.com, Inc., 437 F. Supp. 2d 273, 295 (D.N.J. 2006) (immunity under the CDA did not apply to state and federal ~aud claims "because the alleged· fraud is the use of the trademark name...."); Parker v. Google, Inc., 422 F. Supp. 2d 492, 500-01 (E.D. Pa. 2006)

(CDA immunity in copyright and trademark case applied only to claims of defamation, invasion
ofprivacy and negligence).

eBay requests that this Court ignore the carefUl analysis in Gucci in favor of adopting the Ninth Circuit)s sweeping dismissal of California state law claims in Perfect 10, Inc. v. CC Bill
LLC, No. 04-57143, 2007 WL 925727 (9th Cir. Mar. 29, 2007), which involved a claim for copyright in~-ingement. This decision should be ignored because the Ninth Circuit failed to

consider a key portion of the CDA that is expressly contrary to its ruling.
The plaintiffs state law claims in Perfect 10 consisted of "wrongfUl use of registered

mark under California state law," "violation of right of publicity under California state law," and
unfair competition and false advertising in violation of Sections 17200 and 17500 of the

California Business & Professions Code. Perfect 10, Inc. v. CC Bill LLC, 340 F. Supp. 2d 1077, 1085 (C.D. Gal. 2004), qffd in part and rev 'd in part, No. 04-57143, 2007 WL 925727 (9th Cir. March 29, 2007). The Court evaluated whether those claims could be asserted in light of

Section 230(e)(2) of the CDA, which requires that the immunity set forth in Section 230(c)(l) be

in a mannerthat will neither limit nor expandany law pertainingto intellectual
property. Perfect 10, 2007 WL 925727 at."l i. The Court then observed that the breadth of state

lawsthatmayor maynotbe characterized "intellectual as property" claims verybroadand are
not uniform. In lightof that observation, Courtconstrued term"intellectual the the property" in Section230(e)(2) meanonly "federal intellectualproperty." Id. Therefore,the Court to dismissed of the statelawclaims. In rendering determination, all that however, NinthCircuit the

ignored failed consider and to Section 230(e)(3) theCDA, of which explicitly thatnothing states
in Section "shall be construed preventany State ~om enforcingany State law that is 230 to
consistent with this section." In fact, the Ninth Circuit's decision cannot be reconciled with this

provision.'" a result, Ninth As the Circuit's decision contrary thedecisions othercourts, is to of
includingGucciAmerica, whichhaveupheldthe abilityof a plaintiff enforcestateintellectual to
property claims notwithstanding the provisions in Section 230 of the CDA.

Thus, this Court should ignore the PerfectlO decision as a flawed and anomalous

decision.If thePerfect decision ignored, it should eBayhasno legalbasisto assert IO is as be, that Tiffany'sstatelaw claims preempted.At most,Perfect is applicable to the are 10 only
unique and extraordinarily broad California laws that were at issue therein.
POINT III

TIFFANY

IS ENTITLED

INJUNCTIVE

RELIEF

BecauseeBayis liablefor contributory in~ingement, Tiffanyis entitledto a permanent injunction prohibiting eBay~om engaging suchconduct.See,e.g., Tri-StarPictures,Inc. v. in

'O Notably, defendants notappeal theruling theCDA the did from that immunity notapply would to
Perfect 10's Californiastate law claim of "wrongfuluse of a registeredmark" under Gal. Bus. & Prof.
Code ~ 14335. See Pe~ect 10, 340 F. Supp. 2d at 1107-08.

17

14 F. Supp. 2d 339, 359 (S.D.N.Y.1998);Allied MaintenanceCo~p.v. Allied MechanicalTrades,Inc., 42 N.Y.2d538, 544, 399 N.Y.S.2d628, 631 (1977);5 J. Thomas McCarthy,McCarthyon Trademarkrand Unfair CoPnpetition s30:1 (4th ed. 2004) ("An

injunction the usualand standard is remedy oncetrademaik in~-ingement beenfound."). has
eBaydisputes Tiffany'sentitlement suchreliefonthe grounds it is an "innocent to that infringer" andthat suchreliefis overbroad burdensome. and Neither contention anymerit. has
A. eBalvIs Not Entitled to Raise the "Printer-Publisher'' Defense

eBayattempts squeezeitselfwithinthe limiteddefinition the "innocent to of in~tiinger" defensefoundin 15U.S.C.~ 1114(2).SeeeBay'sMemoat 25-29. eBayis not entitled assert to
this defense.

eBay is not an online version of a newspaper or magazine (which is entitled to First

Amendment protection).SeeHendrick;son eBay,Inc., 165F. Supp.2 1082,1084n.2 (C.D. v.

Gal.200!) (rejecting eBay'scharacterization itselfas a mereonlinevenuethat publishes of
"electronic classified ads," and finding that that "eBay's Internetbusiness features elementsof both traditional swap meets... ~u;d traditionalauctionhouses...."); TrademarkLaw Revision

Act of 1988, 134 Gong. Rec. H10411-02 (Oct. 19, 1988) (Remarksof Rep. Kastenmeier) (explaining the 1988revisionsto 15 U.S.C.~1114(2) that "protectO newspapers, magazines,
broadcasters,and other media ~om liability for the innocentdisseminationof commercialfalse

advertising, including promotional material"); Restatement (Third)of UnfairCompetition 26, ~
commenta (1995) ("Persons subject to liability under this Section include printers who reproducethe mark on labels, wrappers,tags, or containers,... and publishersand broadcasters who reproducethe mark in advertisements disseminatedon behalf of another."). eBay is not a memberof the media. Rather,it is a host retailerthat activelyfacilitatesthe sale of goods.

1114(2)(B) protectsa "publisher distributor suchnewspaper, or of magazine, or

othersimilar periodical electronic or communication ." 15U.S.C. 1114(2)(B). types ... ~ The
of publishers distributors electronic or of communications areprotected that underthe sectionare

thosethatfit within Electronic the Communications Privacy Act(ECPA).See134Gong. Rec. H10411-02 (Section1114(2)was revisedto protect"electronic media,incorporating the
definition forthin the Electronic set Communications Privacy ... .'3. Whileinternetservice Act

providers subject theECPA, are to websites eBayarenot. SeeIn re JetBlue like Airways Coip.
PrivacyLitigation,379 F. Supp.2d 299, 307-08(E.D.N.Y. 2004);Dyer v. Northwest Airlines Corps.,334 F. Supp.2d 1196,1199(D.N.D.2004)(the ECPA"encompasses internetservice providersas well as telecommunications companies whoselinescarryIntemettraffic,but does not encompassbusinesses selling traditionalproducts or services online."); Crowley v.

Cybersource Corp.,166F. Supp. 1263, 2d 1270 (N.D. 2001) Gal. (distinguishing Amazon.com
fiom ISPs in analyzing the ECPA).

Assuming arguendothat eBayis a "printer"or "publisher" under 15 U.S.C.~ 1114(2), eBaycannotestablish it is "innocent."The evidence establish eBayknewthat the that will that listingsfor Tiffanysilverjewelry on the eBay websitein~ingedTiffany'srights. That fact
precludes eBay ~-omavailing itselfofthe "innocentinfiinger" defense. See Polo Fashions, Inc.

v. OntarioPrinters,Inc., 601F. Supp.402,403(N.D.Ohio1984)(printers "cannotbe naiveand be like ostriches put theirheadsin the sandand ignoreobviousfactsthat shouldbe readily and
apparent to a reasonable business person.").

Regardless eBay's abilityto availitself of the defense,at the least, this Courtmay of
nonethelessenjoin eBay ~om allowing"Tiffany" listings ~om any seller that has been found to

have listed counterfeit "Tiffany"goodsin the past. Wherean ihentified infringeris likelyto

again, the court may issue an injunctionthat binds not only the infi-inger, any third but
parties that might accept advertising from the infringer or otherwise participate in the defendant's fUture in~-inging acts. See Union Tank Car Co. v. Lindsay Soft Water Corp., 257 F. Supp. 510, 517 @. Neb. 1966), a~d sub nom. Heaton Distributing Co. v. Union Tank Car Co., 387 F.2d 477 (8th Cir. 1967) (telephone company enjoined from accepting advertising from

infringer, even when the infr-inger ceaseduse ofin~inging name and did not admit liability);see
also South Central Bell Telephone Co. v. Constant, Inc., 304 F. Supp. 732, 736 (E.D. La. 1969) (when the party had the means to prevent its equipment fkom being used by defendant to violate court order against it, party was enjoined ~om allowing defendant to use party's equipment in the future), a~j~d,437 F.2d 1207 (5th Cir. 1971). In connection with its argument that it is an "innocent in~inger", eBay makes passing

i

reference its "proacttve to effortsto monitorfor andremovefromall its siteslistingsand sellers
that offer infi-inging items ...." See eBay's Memo at 27. Similarly, in its proposed findings,

eBay makes reference to a "series of new measures designed to prevent counterfeit items ~om being listed." Defendant's Proposed Findings of Facts f 26. eBay's new measures, which adopt some but not all of the things that Tiffany has been requesting for the last several years, does not j relieve eBay of any liability for its contributory in~ingement. In fact, those new measures

demonstrate that eBay has always had the ability to address the sale of counterfeit items on its
websites, but had chosen for business reasons not to do so.

Although the new measures have been somewhat effective, they do not eliminate the need for an injunction here. Regardless of their efficacy, it is well-settled that 'troluntary
cessation of allegedly illegal conduct ; .. does not make the case moot. A controversy may

remain to be settled in such circumstances, e.g., a dispute over the legality of the challenged

The defendant is ~ee to return to his old ways." United States v. ~4~T. Grant Co., 345 U.S. 629, 632 (1953) (citations and footnotes omitted); accord Secretary of labor v. Burger King Corp., 955 F.2d 681, 683-86 (1 Ith Cir. 1992) (adoption of new policies on the eve of trial "cannot be considered the clear proof of abandonment of illegal activity necessary to render [the]
lawsuit moot.").

eBay must demonstrate that it is "'absolutely clear that the allegedly wrongfUl behavior

could not reasonablybe expectedto recur."' GwaltneyofSmithfield,Ltd. v. ChesapeakeBay
Foundation, Inc., 484 U.S. 49, 66 (1987) (emphasis in original; citations omitted). It cannot do so. Indeed, the timing of these new measures, some of which have been'publicly announced

only in early April 2007, is revealing. See W.T.Grant, 345 U.S. at 632 n.5. ("It is the duty of the
courts to beware of efforts to defeat injunctive· relief by protestations of repentance and reform, especially when abandonment seems timed to anticipate suit, and there is probability of resumption." (citation omitted)). Thus, assuming arguendo that eBay can show that its new

initiatives are effective, an injunctionis neverthelessnecessaryto ensure that eBay keeps such
measures in place and does not revert to its prior conduct once the case is over. See, e.g, Desiderio v. NationalAssociation of Securities Dealers, 191 F.3d 198, 202 (2d Cir. 1999) (when voluntary adoption of new policy was due to outside pressure, defendant could not show that old policy would not be reinstated in the absence of an injunction), cert, denied, 521· U.S. 1069
(2001).

B.

An Iniunction Against eBay Would ~ot Be Overbroad

eBay argues that Tiffany seeks an injunction that is unduly overbroad because Tiffany seeks to enjoin "all Tiffany listings even unquestionably authentic ones." See eBay's Memo

at 29. Tiffany, however, has never requested such broad relief.

the fact that an injunctionmay affect the'sale of genuinegoods is not dispositive. It is black-letter law that, even when an injunctionmay affect the sale of some genuine goods, that fact is not a basis for denyinginjunctiverelief. See UnitedStates v. Loew's, Inc., 371 U.S. 38, 53 (1962) ("To ensure, however, that relief is effectual, otherwise permissible practices connected with the acts found to be illegal must sometimesbe enjoined." (citations omitted)); Fatsy 's Brand, Inc. v. I.O.B. Realty,Inc., 317 F.3d 209, 220 (2d Cir. 2003) ("'a court can ~ame an injunction which will keep a proven infringer safely away from the perimeter of

infiingement."'(citation omitted));Kentucky Fried ChickenCorp. v. DiversiJied Packaging
Corp., 549 F.2d 368, 390 (5th Cir. 1977) ("Even if [defendant]originally would have been entitled to use the marks, we hold that the unqualifiedinjunctionagainsttheir use is justified by

Cdefendant's] historyof improper behavior."); GucciAmerica, v. DutyFree Apparel,Ltd., Inc.

4

315F.Supp. 511,523(S.D.N.Y. (ordering defendant Gucci 2d 2004) that obtain merchandise
only directly from Gucci-authorized dealers); 5 J. ThomasMcCarthy,McCarthyon Trademarlrs

and UnfairCompetition, 30:4(4thed. 2004);see also S. Rep.No. 98-526, ~ 98thGong., Sess. 2d
16 (1984), reprinted in 1984 U.S.C.C.A.N. 3267, 3642 (for purposes of seizure orders for counterfeitgoods, Fourth Amendmentis satisfiedeven if a few genuine goods are seized along
with the counterfeit goods).

eBay's reliance on Gucci America v. Duly Free, WorldSportand MyWebGroceris
unavailing. See eBay's Memo at 28-29. Although the court in Gucci America declined to issue

an injunction, the court nevertheless fashioned a curative remedy requiring the defendant to
acquire Gucci merchandise only directly fkom Gucci-authorized dealers and to maintain records of all its purchases. See 315 F. Supp. 2d at 523. Imposing a similar set of requirements on eBay would be consistent with the relief Tiffany requests.

22

relief requested in WorldSport Network;s~ Ltd. v. Artlntemet S.A., No. 99-CV-616, 1999 WL 269719, *3 (E.D. Pa. Apr. 28, 1999), is inapposite to the relief requested here. There, the court explained that the injunction was too broad because it sought to bar the "registration of

any domain name similar to Plaintiffs mark by any applicant." Id. (emphasisin original).
Tiffany is seeking to enjoin only counterfeits, i.e., identical marks.

Finally,the statementthat eBay quotes fromMyWebGrocer, LLC v. HometownInfo, Inc., 375 F.3d 190, 195 (2d Oh. 2004), is dicta. The court's reason for denying relief was that the
plaintiff did not show a likelihood of success on the merits on its motion for a preliminary
injunction. Id. at 194.
CONCLUSION

For the foregoing reason,plaintiff~ Tiffany (NJ) Inc. and Tiffanyand Company are
entitled to judgment grantingtheir claimsand requestedrelief in their entirety.
Dated: NewYork, New York April 13, 2007 Respectfully submitted,
ARNOLD & PORTER LLP

By: James B. Swire (JS-5996) H. Peter· Haveles, Jr. (HH-8230) Eleanor M. Lackman (EL-3668) Erik C. Walsh (EW-2765)
399 Park Avenue

New York, New York

10022

[phone] Attorneys for Plaintiffs

OF SERVICE

I, AnthonyD. Boccanfuso,the undersignedattorneyat law duly admittedto practicein

theState New respectfully that the13'h of York, show on dayofApril, theannexed 2007,
MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT'S PRETRIAL

MEMORANDUM was served by hand delivery upon:

Mark Fiore, Esq.
WEIL GOTSHAL & MANGES LLP 767 Fifth Avenue

New York, NY 10153

Anthony D. Boccanfuso