Strengthening contributory liability causes aggressive policing by brands to shut down sustainable upcycling

The leading case in the online context is probably Tiffany (NJ) Inc. v. eBay Inc.[256] In this case, the famous jewelry company, Tiffany, argued that eBay should be liable for the large number of counterfeit Tiffany merchandise available on the auction site.[257] As in the music filesharing cases, the issue was the extent to which eBay is responsible for the illegal actions of third parties on their site, particularly when actual knowledge is extraordinarily difficult to glean until an aggrieved trademark owner submits a notification.[258] Dismissing the notion that eBay induced any infringement, the court considered whether its continued supply of services to counterfeiters constituted contributory infringement.[259] The court rejected Tiffany’s argument, finding that in order to be liable, “a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods.”[260] As a result, courts and commentators have generally agreed that “good faith” online retail sites are not liable for infringement without actual knowledge and thus have no need to engage in overly aggressive policing.[261]

Nevertheless, many service providers bemoan the lack of certainty in online liability standards for contributory infringement.[262] The incentives are for sites to block goods that even potentially infringe, and in fact many prominent forums like Etsy and Shapeways engage in rather aggressive policing.[263] Additionally, legislation has been proposed to essentially overturn the Tiffany v. eBay standard. The SHOP SAFE Act[264] creates a contributory infringement regime that applies even in the context of generalized knowledge unless certain steps are taken to earn “safe harbor” status.[265] In combination, the restrictive actions of third parties have the potential to dramatically curb sustainable upcycling.