Squo under Tiffany fails -- E-commerce expanding with fatal counterfeiting impacts. It’s impossible for trademark owners to identify counterfeits and enables a “hands-off” approach for service providers.

Since the advent of the internet, online shopping has gone from a rarity to a necessity.3 The Department of Commerce estimates that in 2020, e-commerce sales amounted to 791.7 billion which was a 32.4 percent increase from 2019.4 In the fourth quarter of 2020 alone, e-commerce sales accounted for 15.7 percent of all total retail sales for the quarter, amounting to approximately $245.3 billion.5 Online shopping is drastically more efficient than traditional in-person shopping.6 Online shoppers tend to find better deals, a larger variety of products, and easier methods of product comparison than they would find in traditional stores.7 As a result, brick-and-mortar stores are closing at record rates.8 More than 11,000 stores closed in 2020, with the trend likely to continue well into 2021 as the COVID-19 pandemic continues to ravage the traditional storefront model. 9 Consumers rely on online shopping when purchasing their everyday essentials-buying brands they know and trust. But is the product they buy online actually the same as the one in stores? Although consumers think they are getting the same product from the same brand they know and trust online, the mysterious process of order fulfillment often means the consumer receives a counterfeit product in lieu of the authentic product.10 While receiving a counterfeit iPhone charger may seem inconsequential to consumers, receiving a counterfeit N95 mask would have dire consequences in the COVID-19 pandemic. 1 Online marketplaces such as Alibaba, Amazon, and eBay are actively expanding into markets traditionally reserved for brick-and-mortar stores.12 When consumers shop at these online marketplaces, they often see products and brands they trust at a fraction of the cost.13 Once consumers enthusiastically purchase the product, the possibility that the item may be a counterfeit rarely crosses their mind. Some consumers will realize that they received a counterfeit item as soon as they open the box; some will realize when they go to use the product and it fails to function properly; and some will not realize it until there are devastating consequences, such as injury, sickness, or death. The pervasiveness of counterfeits on these online storefronts is the result of insufficient policing of trademark infringements by the online marketplaces. 1 4 In order to protect trademarks and to ensure the safety of consumers, a uniform system for reporting and enforcing infringements for online merchants must be established. In addition, creating stronger legislation to hold online merchants contributorily liable for counterfeits would incentivize platforms to diligently police counterfeit products on their websites. Tiffany v. eBay is the landmark case addressing trademark infringement in the realm of counterfeit products that are sold on online marketplaces.1 5 Tiffany is a world-renown luxury jewelry retailer that exclusively sells its branded jewelry through its own retail stores, website, catalogues, and Corporate Sales Department. 16 eBay is an online marketplace that facilitates registered users to buy and sell products amongst one another." Although eBay "provides the venue for sale [of goods] and support for transaction[s], it does not itself sell the items listed on the site," nor is it ever in physical possession of the items.18 eBay attempted to take steps to monitor counterfeit listings, however, the problem persisted, 19 and Tiffany sued eBay for contributory trademark infringement for facilitating the counterfeit product listings' use of their trademarks.2 When Tiffany lost its case in the district court it appealed to the Second Circuit.2 1 The Second Circuit agreed with the district court's holding that although eBay generally knew that there were counterfeit items on their website that infringed upon Tiffany's trademarks, general knowledge is insufficient to hold a service provider liable for contributory infringement.2 2 In addition, the court stated that Tiffany did not demonstrate eBay's continued sale of infringing products after Tiffany notified them of the specific infringements. 23 This case is the reason that service providers are under no affirmative obligation to police counterfeits, and instead the burden rests on the trademark owner.24 The sheer quantity of products online makes it untenable for trademark owners to accurately police every listing, and it can be difficult for a trademark owner to determine whether a listed product is authentic, sold under the first sale doctrine, or is a counterfeit simply by looking at a listing.25 Often listings will utilize pictures of authentic popular brands in their product description while the actual product for sale is a counterfeit-thereby violating trademark rights and risking consumer safety.26 For example, an Amazon listing for a "4 in 1 Baby Car Seat and Stroller" included images of the popular car seat brand Doona, but the list price was approximately $200 cheaper than the real Doona. 27 Unsurprisingly, the listed car seat was actually a knock-off of the Doona car seat. 28 The counterfeit seat failed to meet basic safety standards, endangering the countless children still sitting in them.29 Service providers have more authority and better resources to actively screen products listed on their websites, but they can be hesitant to do so.30 Consumers are subjected to deceptive business practices and potentially dangerous counterfeits, while service providers facilitate sales with impunity and without oversight. 3 1 The court's holding in Tiffany enables service providers to take a hands-off approach to the trademark infringements occurring on their platforms. 3 2 The lack of liability on the part of service providers harms both brand owners and consumers and should be remedied through consistent policing of infringements by all parties involved: service providers, brand owners, governments, and consumers. 33