Tiffany v. eBay created a “contemporary knowledge requirement” that shielded online platforms from trademark infringement liability if they lacked “specific knowledge” of infringement. This caused a shift from proactive enforcement by platforms to reactive, whack-a-mole enforcement by brands

However, we do not see this theory being applied in the online marketplace space. Instead, the current case law leaves a gap by not requiring e-commerce marketplaces to take responsibility for guardianship and protection of consumers on their sites.

i. The Tiffany v. eBay Case

In 2010, the Second Circuit in the Tiffany v. eBay case26 noted the extension of the Inwood test to service providers, such as the flea market owners in Hard Rock,27 and then also noted that they were the first to apply this test to an online marketplace.28 The standard set here for secondary liability for an online marketplace was that if the service provider: “‘[c]ontinues to supply its [service] to one whom it knows or has reason to know is engaging in trademark infringement’” —and “[s]ome contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary—”29 otherwise known as the contemporary knowledge requirement.30 The e-commerce platform eBay was found not liable for secondary trademark infringement because they had responded to specific suspected counterfeit postings reported by Tiffany and they had no onus to search proactively for counterfeit postings.31

ii. Practical Impact of Tiffany

From a liability perspective under the current state of the law, there is no obligation on any party to proactively address online counterfeit postings. Some online marketplaces understand that there is a massive problem with counterfeit postings and remove some counterfeit postings that are reported to them (notice and take down) or found through internal self-investigation by technology or otherwise (before the intellectual property rights holder reports the posting)—what I would refer to as a reactive response.

A few may proactively vet sellers or postings, but these are not the majority. Under the recently passed INFORM Consumer act, e-commerce platforms must collect basic information from high-volume third-party sellers,32 but platforms are not required to vet sellers’ postings, nor to proactively monitor their own platform for counterfeit goods. Further, this is not required by the law. Under the Tiffany standard, they must only remove them reactively, or when they have “specific knowledge.”

A intellectual property rights owner, however, does not want injury to its reputation, or injury to its consumers;33 so, practically that owner tries to monitor and notify the online marketplace or social media platform to remove a suspicious listing, counterfeit listing, or a seller that is selling an illicit, counterfeit, or unauthorized product, even though the counterfeit product does not belong to the intellectual property rights owner. For every listing that a brand owner successfully petitions to have removed from an online marketplace, many more illicit listings will likely take its place34—leading to what is called in the industry the “whack-a-mole” problem.