cyckV4

196 TRADEMARK INFRINGEMENT
that facilitates or encourages or controls and profits from the trademark infringement of
others but does not itself infringe?
In the online world, secondary liability for violation of intellectual property rights—
particularly copyright and trademark rights—is vital. Increasingly, rights holders want to
curtail the activities of intermediaries—the internet service providers, online
marketplaces, search engines, social networks and file lockers that provide services that
can be used legally but can also be used to violate intellectual property rights—rather than
going directly after the individuals that do so. The reasons are fairly obvious. First, the
primary infringers are hard (and expensive) to find and to control once found. They do
not have deep pockets. Second, from the point of the right-holder, the intermediaries are
profiting from the portion of their activities that facilitates infringement. Why should they
not internalize the costs, the “negative externalities” as economists would put it, that their
activities are helping to create? Would this not appropriately incentivize them to cut down
on infringement, like the polluting factory forced to internalize the costs of its own
pollution? Finally, are the intermediaries not morally culpable? Are they not aware of high
levels of illegal activity? Do they not turn a deliberate blind eye to it?
The opposing position sees the attempt to impose secondary liability—liability for
contributing to infringement—as fraught with extraordinary difficulty. Google copies the
entire web every day. That is what a search engine does. Must it therefore be liable when it
copies infringing pages along with non infringing ones? These intermediaries—viewed by
rights owners as facilitators of piracy—are also a central part of the architecture of the
internet, the entities whose activities facilitate all the expressive, commercial and communicative
possibilities the internet involves, the revolution in “disintermediation” it has brought
about. Finally, some critics view attempts to expand secondary liability as an attempt by
incumbent industries to immunize themselves against the disruption to their business models
wrought by the internet. We will be dealing with secondary liability both in trademark and,
later in the course, in copyright. As you look at the legal regime the judges and legislators
carve out, ask yourself how they are balancing these two competing views.
Tiffany Inc. v. eBay Inc.
600 F.3d 93 (2d Cir. 2010)
SACK, Circuit Judge.
eBay, Inc. (“eBay”), through its eponymous online marketplace, has revolutionized
the online sale of goods, especially used goods. It has facilitated the buying and
selling by hundreds of millions of people and entities, to their benefit and eBay’s profit.
But that marketplace is sometimes employed by users as a means to perpetrate fraud by
selling counterfeit goods. Plaintiffs Tiffany (NJ) Inc. and Tiffany and Company (together,
“Tiffany”) have created and cultivated a brand of jewelry bespeaking high-end quality
and style. Based on Tiffany’s concern that some use eBay’s website to sell counterfeit
Tiffany merchandise, Tiffany has instituted this action against eBay, asserting various
causes of action—sounding in trademark infringement, trademark dilution and false
advertising—arising from eBay’s advertising and listing practices. For the reasons set
forth below, we affirm the district court’s judgment with respect to Tiffany’s claims of
trademark infringement and dilution but remand for further proceedings with respect to
Tiffany’s false advertising claim.