In Tiffany v. eBay, the U.S. Court of Appeals for the Second Circuit ruled in 2010 that an online marketplace is not liable for counterfeit goods sold by third parties unless it has specific knowledge of particular infringing listings and fails to act. General awareness that fakes are being sold somewhere on the platform is not enough. That single distinction, between knowing counterfeiting happens and knowing which listings are counterfeit, still governs how brands, platforms, and sellers interact online.
What Tiffany Sued Over
Tiffany filed suit in 2004 after running its own investigation. The jeweler hired a third party to buy a random sample of items listed under “Tiffany” keywords on eBay. Roughly three-quarters of the purchases came back counterfeit.1United Nations Office on Drugs and Crime. Tiffany Inc v eBay Inc
Armed with that number, Tiffany argued eBay was contributorily liable for trademark infringement because it knew its site was flooded with fakes and kept collecting fees on the sales. Tiffany also pointed to eBay’s own advertising: eBay had bought search engine ads using the word “Tiffany” and built site links steering shoppers to categories of Tiffany-branded items. In Tiffany’s view, that was active promotion of the counterfeit trade, not passive hosting.2Justia. Tiffany (NJ) Inc v eBay Inc
eBay’s response was that it never touched the goods, never inspected them, and could not reasonably vet millions of live listings. It pointed to its Verified Rights Owner (VeRO) program, a notice-and-takedown system that let trademark owners flag specific infringing listings for removal. When Tiffany submitted VeRO reports, eBay took the listings down and suspended repeat offenders.1United Nations Office on Drugs and Crime. Tiffany Inc v eBay Inc
What the Second Circuit Decided
The Second Circuit affirmed the ruling in eBay’s favor on the trademark infringement and dilution claims. The court applied the contributory infringement standard from the Supreme Court’s 1982 decision in Inwood Laboratories v. Ives Laboratories, which imposes liability on a supplier that intentionally induces infringement or that continues supplying a party it knows or has reason to know is infringing.3Cornell Law – Legal Information Institute. Inwood Laboratories Inc v Ives Laboratories Inc The hard question was what “knows or has reason to know” means for a platform that never handles the merchandise.
Specific Knowledge, Not General Awareness
The court held that “for contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”2Justia. Tiffany (NJ) Inc v eBay Inc
Understanding that counterfeiting was happening somewhere on eBay was not the same as knowing that a given seller was listing a fake ring on a given day. Only that second kind of knowledge triggers liability. The evidence showed that when Tiffany identified specific listings through VeRO, eBay removed them and disciplined the sellers. That responsiveness was decisive.
The Willful Blindness Limit
The specific-knowledge rule is not a license to look away. The court warned that if eBay had “reason to suspect that counterfeit Tiffany goods were being sold through its website, and intentionally shielded itself from discovering the offending listings or the identity of the sellers behind them,” it could be charged with knowledge of those sales.2Justia. Tiffany (NJ) Inc v eBay Inc
A platform that dismantles its reporting tools, discourages complaints, or ducks obvious red flags can still face liability without ever receiving a formal notice. eBay avoided that trap because it had invested in anti-counterfeiting measures rather than avoiding evidence.
eBay’s Use of the Tiffany Name in Ads
The court also rejected Tiffany’s direct infringement theory built on eBay’s keyword ads and category links. Using the Tiffany mark to describe genuine Tiffany products available on the site was permissible, because it did not suggest that eBay was affiliated with or endorsed by Tiffany.2Justia. Tiffany (NJ) Inc v eBay Inc The reasoning tracks the nominative fair use doctrine without formally adopting the label.
One Claim Sent Back
The ruling was not a clean sweep for eBay. Tiffany’s false advertising claim, based on the argument that eBay’s promotions gave shoppers the impression that all “Tiffany” items on the site were authentic, was sent back to the district court for reconsideration in light of the appellate opinion.2Justia. Tiffany (NJ) Inc v eBay Inc The trademark infringement and dilution claims were finally resolved; the false advertising question was left open.
What the Ruling Means in Practice
The framework divides the work. Brand owners carry the burden of policing their own marks. They have to monitor marketplaces, identify counterfeit listings, and report them through whatever system the platform provides. Waiting for the marketplace to catch fakes on its own is not a viable legal position under this ruling; a brand that fails to use available reporting tools has a harder time arguing the platform should have done more.
For marketplaces, the duty is reactive. A platform does not have to authenticate every item before it goes live. It does have to keep an accessible reporting channel open and act promptly on specific complaints, and it cannot structure its operations to avoid receiving those complaints. VeRO became the working model, and similar systems now exist across most major marketplaces.
Brand owners describe the practical result as whack-a-mole. A seller gets reported, the listing comes down, and the same counterfeits appear the next day under a new account. Tiffany’s rule does not require platforms to prevent that cycle on their own initiative. It requires them to respond, listing by listing, to each specific complaint.
What Counterfeit Sellers Themselves Face
The ruling insulates platforms, not the sellers behind the fakes. Those sellers face substantial exposure on their own.
Under the Lanham Act, a brand owner can elect statutory damages instead of proving actual losses. The range runs from $1,000 to $200,000 per counterfeit mark per type of goods sold, and the ceiling climbs to $2,000,000 per counterfeit mark per type of goods where the infringement is willful.4Office of the Law Revision Counsel. US Code Title 15 Section 1117
Trafficking in counterfeit goods is also a federal crime. A first offense by an individual carries up to 10 years in prison and fines up to $2,000,000. A second offense doubles to 20 years and $5,000,000. Corporate fines run up to $5,000,000 for a first offense and $15,000,000 after that, and penalties escalate further where counterfeits cause serious bodily injury or death, up to life imprisonment in death cases.5Office of the Law Revision Counsel. US Code Title 18 Section 2320
How the Law Has Moved Since 2010
The Tiffany ruling is still good law, but Congress has since layered new obligations on top of it.
The INFORM Consumers Act
In effect since 2023, the INFORM Consumers Act requires online marketplaces to verify the identity of high-volume third-party sellers. A high-volume seller is one who has made 200 or more transactions and earned at least $5,000 in gross revenue in any 12-month period within the past 24 months. Once a seller crosses that threshold, the marketplace has 10 days to collect bank account details, contact information, and a tax identification number. Sellers must recertify their information annually, and marketplaces must suspend those who refuse. Violations carry civil penalties of up to $53,088 per infraction.6Federal Trade Commission. Informing Businesses about the INFORM Consumers Act
The INFORM Act does not change the Tiffany liability standard, but it does make it harder for anonymous sellers to cycle through disposable accounts after getting caught.
The SHOP SAFE Act
A more aggressive proposal, the SHOP SAFE Act, would directly reshape the Tiffany framework. As of early 2025, the bill had been introduced and heard by the Senate Judiciary Committee’s Subcommittee on Intellectual Property, but had not been enacted.7Congress.gov. S2934 – SHOP SAFE Act of 2023
If it passed, the Act would flip Tiffany’s presumption for consumer products that implicate health and safety. Marketplaces would be contributorily liable for counterfeit sales by default unless they met a set of safe-harbor requirements: proactively screening every seller and listing before publication, verifying seller identity, running expeditious removal programs, and maintaining a public repeat-offender termination policy. It would apply to platforms with more than $500,000 in annual sales, with smaller platforms brought in six months after they had received 10 counterfeit notices. Enactment would shift the balance the Tiffany court struck.