Monday, November 26, 2007

Tiffany vs. eBay ... what next?

Each side has presented its closing arguments. Although the Judge gave little indication of how he might rule, he pointed to legal precedents that have found that if a distributor continues to supply a product knowing it is engaging in trademark infringement, that distributor is "contributorily responsible" for any harm done as a result of the deceit.

If Tiffany prevails, then eBay is faced with the challenge of verifying the authenticity of products on its site (or ban their sale). There's no way eBay can guarantee the authenticity of products its customer sell online, but a number of possibilities are:

- insist upon the seller showing a receipt of purchase (of course the receipt could be fake, too)
- have a third party physically inspect and authenticate the product (expensive, and currently there aren't trusted third parties who do this), such as an escrow service
- authenticate the products internally, and be the trusted third party (expensive, tough to scale and not core to eBay's value proposition. There is a company that is trying this:
- Provide sellers with a means to display to buyers some other form of authenticity (this would require Tiffany to provide its customers with some kind of proof of authenticity, such as a secure code or certificate)