Monthly Archives: August 2012

The Billion Dollar Game: Samsung and Apple fight it out

24’th Aug 2012 was another milestone date indicating the value that IP can (of course in geographies which have respect and appreciation for IP!!!) hold and govern for a corporate. More than the award, it’s the injunction and respect for IP that matters and boosts the confidence of Corporates that have innovation as a core philosophy of their existence. The story of contention between Apple and Samsung is not new and has been on in various geographies for over 2 years now but the verdict of last Friday did make waves, tremors of which would have surely been felt strongly in South Korea as well. Apple was awarded USD 1.05 Billion in damages and it was found that Samsung was infringing on valid design and utility patents. Although, the hearing for injunction (to be given by a judge and not jury) is due for 20’th of September this year, such a unanimous decision by the jury on almost all patents being used by Apple is sure to increase the probability of getting injunctions on most tablet/smart-phone products of Samsung.

Although the jury did mention that Apple could not prove that Samsung had broken any antitrust laws or violated its agreements with the UMTS standards bodies and also that Samsung couldn’t have enforced ‘516 and ‘941 3GPP patents against Apple due to “patent exhaustion”, the mandate of this article would be to give a brief on the patents that Apple was able to enforce against most devices of Samsung including Galaxy S II variants, Galaxy S, Galaxy Tabs, Galaxy S 4G, Gem, Indulge, Mesmerize, Nexus, and Vibrant among many others.

US 7,469,381, which relates to a window bounce back feature, is the biggest bet for Apple as Claim 19 of ‘381 led to most infringement counts of Samsung products. Claim 19 states:

19. A device, comprising:

a touch screen display;

one or more processors;

memory;

and one or more programs, wherein the one or more programs are stored in the memory and configured to be executed by the one or more processors,

the programs including:

instructions for displaying a first portion of an electronic document;

instructions for detecting a movement of an object on or near the touch screen display; instructions for translating the electronic document displayed on the touch screen display in a first direction to display a second portion of the electronic document, wherein the second portion is different from the first portion, in response to detecting the movement; instructions for displaying an area beyond an edge of the electronic document and displaying a third portion of the electronic document…in response to the edge of the electronic document being reached while…; and

instructions for translating the electronic document in a second direction until the area beyond the edge of the electronic document is no longer displayed to display a fourth portion of the electronic document.

The primary mandate of this patent is to show an area beyond the edge of the document when movement of an object is continued and reaches an edge.

Most but not all products of Samsung also infringed on a zooming and scrolling Patent US 7,844,915 ‘915 of Apple. The contended claim 8 of Apple claims the following subject matter:

Claim 8. A machine readable storage medium storing executable program instructions which when executed cause a data processing system to perform a method comprising:

receiving a user input, the user input is one or more input points applied to a touch-sensitive display that is integrated with the data processing system;

creating an event object in response to the user input;

determining whether the event object invokes a scroll or gesture operation by distinguishing between a single input point applied to the touch-sensitive display that is interpreted as the scroll operation and two or more input points applied to the touch-sensitive display that are interpreted as the gesture operation….

Yet another patent that was successfully enforced is tap to zoom patent US 7,864,163 (’163) of Apple, of whose the cited claim 50 claims:

50. A portable electronic device, comprising:

a touch screen display;

one or more processors;

memory;

and one or more programs… wherein the structured electronic document comprises a plurality of boxes of content… instructions for detecting a first gesture at a location on the displayed portion of the structured electronic document; instructions for determining a first box in the plurality of boxes at the location of the first gesture; instructions for enlarging and translating the structured electronic document so that the first box is substantially centered on the touch screen display…

Apart from the utility patents discussed above, four other design patents were successfully enforced by Apple. D618,677 as shown on the right covers the basic shape of the iphone.

D 593,087 also claims the shape of the iphone and an exemplary shape, as claimed, is shown on the left.

Finally, D604,305 (‘305) Patent covers the trade dress registration of the iPhone’s home screen

Further, a quick look at Samsung’s Fascinate on the left, against which the maximum monetary award of USD 1, 43, 539, 179 were awarded, could probably give us at least an idea on the potential infringement on the design patents:

Conclusion:

The key take away for the moment is for relatively smaller companies that are playing in the touch screen space. With Apple’s patents being held valid and enforceable, utility patents, typically which relate to zooming and scrolling (‘915) need to be kept closely monitored. The other two utility patents covering the bounce back and tap to zoom features can still be designed around (possibly) along with the UI (specially covered through D’305) so as develop a non-infringing method of implementing the same features.

About the Author: Tarun Khurana, Patent Attorney, available at tarun@khuranaandkhurana.com

Smile, you are on camera!

Every celebrity would agree when we say that stardom comes at a price. Their right to privacy is always threatened with the constant paparazzi encroaching upon their personal lives. Unauthorized photography often results in tabloid and defamatory reports in the media, which can sometimes scar the celebrity’s life forever.  From sports persons to movie stars to politicians to Princes and Princesses- they are all celebrities.

The Indian Copyright Act, 1957 defines a ‘performer’ in Section 2(qq). It includes ‘an actor, singer, musician, dancer, acrobat, juggler, conjurer, snake charmer, a person delivering a lecture or any other person who makes a performance’.

A celebrity is licensable for commercial benefits, since his public image is a monetary asset for himself.  But how are his rights protected? The first resort a celebrity would take would be a passing off (in case of an unregistered trademark) or an infringement action (in case of a registered trademark).  With respect to performer’s rights, on June 8, 2012, an amendment was passed in the Indian Copyright Act. Section 38 provides rights of the performers.  A performer who appears in any performance has a right over such a performance until fifty years from the beginning of the calendar year next following the year in which the performance is made. Further, a person would be deemed to have infringed the performer’s rights if he makes a sound/visual recording with his consent or broadcasts it without permission. Hence, the performer has a right to restrain or claim damages in respect of any distortion, mutilation or other modification of his performance that would be prejudicial to his reputation. Sadly, the rights of the extras in films cannot be protected since they are not covered under the definition of a performer.

Once a performer gives valid consent for the incorporation of his performance in a film, he cannot be able to object to the enjoyment by the film’s Producer of his performer’s right in it. But there are two important limitations here though. One is that there is no statue that prohibits a performer from entering into an agreement which states that he could object to the producer enjoying his performer’s rights in the film. Next, the Producer’s enjoyment of the performer’s right in the film is limited to the film, so the Producer would not be able to have the benefit of the performer’s right for the purpose of out-film use such as in ring tones or public performances, which is used for the promotion of his film. Section 13 (4) provides that separate creative components within a film are copyrightable.

In Milder v Ford Motor Co & Others (1988) 849 F.2d 460 (9th Cir), the advertising company wanted to use a song by Bette Milder in a commercial for Ford cars. The license for the song itself was accepted but Milder turned down the request for permission to use the song in her version. The Agency then contacted Ula Hedwig, a singer who had been a back-up vocalist for Milder and asked her to sing the song under the instructions ‘to sound as much as possible like the Bette Milder record’. Milder sued when the commercial was aired on television.  The defendants argued that this was in accordance with Section 3344 of the Civil Code since they had not used the ‘name, voice, signature, photograph or likeness’ of Milder rather they had used the voice of Ula Hedwig. The court held that the defendants were liable since by using a sound alike, they had clearly sought a commercial association with an attribute of Milder’s identity. This was held as the right of publicity,that grants entertainers or public figures exclusive control over the commercial exploitation of their names and other aspects relating to them.

In India, there is a need for such legislation in order to protect rights of a performer and his different shades. With the advent of technology, now any film star’s image can be created by animation and be reproduced in unauthorized usage in film footages. Another burning question left unanswered in India is whether the author has copyright protection over digitally made graphics or cartoons. If the digital image is of a well-known personality, is there a conflict between the author’s right in his creation and the actor’s right in his image.

In India, it is only through litigation that the celebrity’s rights are protected. Heavy amount of damages have been awarded to the celebrities who have won such suits. But there is an urgent need for the legislature to recognize the astounding gaps in the Copyright Act and recognize the commercial and moral rights needed to protect the image of the celebrities.

About the Author: Ms. Madhuri Iyer, Trade Mark Attorney at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com

Recent Indian Patent Office Updates

1. The Indian Patent Office publishes list of all Applications related to Traditional Knowledge

The Indian Patent Office makes available the list of the Patent Applications filed at the Indian Patent Office relating to the Traditional Knowledge here. The published applications are around 795 in number.  The List contains the Application Number, Date of Filing, title of the invention, Applicant’s name and address and publication date.

TKDL (Traditional Knowledge Digital Library) comprises of approximately 2.08 lakh formulations based on Ayurveda, Siddha, Unani, and Yoga. These have been transcribed in five different languages, namely, English, French, German, Spanish and Japanese, with the objective of preventing its misappropriation at the Foreign patent offices. India has provided access of the TKDL to the major Foreign Patent Offices including USPTO, EPO, JPO, Canadian Patent Office.

TKDL mentions at their website that around 75 Europeans patents and around a dozen USPTO patents are modified because of TKDL.

However, surprisingly the access of the TKDL has not been given to the Indian Patent Office. Also, unlike Korean and Chinese Traditional Knowledge databases, TKDL does not give a free access to all and is regarded as ‘confidential’.

Now the Indian Patent Office publishes the list of the pending patent applications relating to the Traditional Knowledge. However the purpose of such activity could not be ascertained. It might be regarded as a step towards greater transparency.

2.  Indian Patent Office publishes the list of pending & granted Product Patents in the field of Pharmaceutical and Food Products

In another update, the Indian Patent Office publishes lists of granted Product Patents, granted between 1-1-2009 to 31-12-2011 in the field of Pharmaceutical and Food Products.  The Patent Office also publishes lists of pending Product Patent Applications in the field of Pharmaceuticals and Food products. All these lists could be accessed over here. The lists contain, Application Number/Patent Number, Title of the invention, Applicant’s/Patentee’s name and Date of Filing/Grant.

These lists could be handy resources for the ones who are looking forward to attempt to oppose related applications/patents similar to their own inventions or for the ones who believe such application could not be a patentable subject matter in light of some already existing prior art or under other grounds such as section 3(d).

The pre-grant opposition can be filed by “any person” by way of representation at any time before the grant of the patent u/s 25(1) of the Indian Patent Act. The post-grant opposition can be filed by “any interested person” by filing Notice of Opposition within 12 months from the date of grant of the patent u/s 25(2) of the Indian Patent Act.

About the Author: Mr. Nagaraj Mannikeri, Patent Associate at Khurana & Khurana and can be reached at: nagaraj@khuranaandkhurana.com

Examination Guidelines/Standards – Indian Patent Office

This article relates to a recent judgment of IPAB for a patent application 2254/DELNP/2005 which was refused to proceed further by the Indian patent office. The judgment illustrates the mode in which decisions are established by the patent office during the examination/prosecution phase. Copy of the decision can be accessed here.

Brief summary of the case

The patent application relates to “A New Crystal Form of Adefovir Dipivoxil and its Composition” and was filed by Tianjin Kinsly Pharmaceutical Co., Ltd, China on 26th May 2005 bearing patent application number 2254/DELNP/2005. The application claimed a new crystal form of Adefovir dipivoxil {9-[2-[[bis[(neovaleroxy)-methoxy] phosphinyl] methoxy] ethyl] adenine} and its composition, and the method to prepare the crystal. However, the patent office refused to proceed further on the basis that the claims were not allowed on account of section 3(d) of Patent act, 1970 and inability of the Applicant to provide evidence showing enhanced efficacy. Furthermore, the patent office held that the claims 4-7 were not allowable under section 3(e) of Patent act 1970 while claims 7-10 were beyond scope of limit.

The applicant for the said application challenged the order given by patent office in the Intellectual Property Appellate Board (IPAB).

We herein evaluate the decision given by the Patent office in a step wise manner as follows:

First paragraph of the order of the Patent Office:

“1. The present invention relates to a new crystalline form of a compound and its composition, and in particular, to a new crystalline form of adefovir dipivoxil with the nomenclature of 9- [2-[bis(pivaloyloxy)- methoxy] phosphinyl] methoxy) ethyl] adenine and a composition containing that new crystalline form.

“The claim 1-4 could not be allowable under section 3(d) of patent act 1970, and the agent have not able to prove enhance efficacy. There is no data submitted in the complete specification for clinical trial on human being, “for the support of therapeutical efficacy.  “The experimentation must be done with the human body, for testing a drug on a lion or a horse or monkey might not prove anything about its effect on man”””.

The applicant appealed before the board that the above order is a mere collection of lines taken from an extract of an article from internet. The article which was published by David W. TSCHANZ, MSPH, Ph.D. is cited below (can be accessed from here Page 16):

“Ibn Sina and Clinical Trials

Discussing Ibn Sina is like ………………………….. These principles still form the basis of modern clinical drug trials.

1. The drug must be free from any extraneous accidental quality…………………………………………………………..if this did not happen, it was an accidental effect. 7. The experimentation must be done with the human body, for testing a drug on a lion or a horse might not prove anything about its effect on man.

The board states that the order given by the patent office is a word to word copy from the above source provided as evidenced by the Applicant.

Second paragraph of the order of the Patent Office

“2. What is the clinical trial?

A clinical trial (also called a clinical study) is a medically supervised procedure in which investigational drugs are given to patients for a set period of time while changes in the patients’ disease and overall health are monitored through physical examinations and laboratory tests. Typically, during the time patients are taking a drug, they make periodic visits to the doctors in charge of the trial. On these visits, patients usually provide information about how they are feeling, undergo physical examinations, and are given diagnostic tests meant to measure how their condition is responding to the drug. Clinical trials can vary in length from days to years, depending on how long it takes to measure the effect of the investigational drug on the disease being treated.”

Counsel of the Applicant argued before the board that the order is a word by word copy from the extract from Procter & Gamble’s website with even the same font size and same spacing.

THIRD PARAGRAPH OF THE ORDER OF THE PATENT OFFICE

The 3rd paragraph of the order was:

“3. Five (5) different types classifying trials:

  • Prevention trials: look for better ways to prevent disease in people who have never had the disease or to prevent a disease from returning. These approaches may include medicines, vitamins, vaccines, minerals, or lifestyle changes.
  • Screening trials: test the best way to detect certain diseases or health conditions.
  • Diagnostic trials: conducted to find better tests or procedures for diagnosing a particular disease or condition.
  • Treatment trials: test experimental treatments, new combinations of drugs, or new approaches to surgery or radiation therapy.
  • Quality of life trials: explore ways to improve comfort and the quality of life for individuals with a chronic illness (a.k.a. Supportive Care trials).”

The applicant submitted that the above statement was a word by word extraction from wikipedia under “Clinical Trial”. This can be accessed from here. The appellate board stated that the order was extracted from the said document under the heading “Types”.

Failed to submit Experimental Data

Furthermore, the order states that “The applicant failed to submit any experimental clinical data done on human being in support of therapeutic efficacy.” However, the counsel of the applicant stated that the experimental data was submitted before the patent office but was not considered. The counsel stated that the order was totally a copy-paste material from published articles from Internet without any further comments.

Finally, the appellate board after going through the arguments from the counsel of the applicant, ordered the patent office to reconsider the patent again independently. The board also blamed the patent office for the way the order was given by them. The board stated “This is not how an order shall be passed by the Patent Office.  The Controller has the duty to examine the claims and test them for patentability. This order must be set aside.  The application is sent back to the Controller who shall consider it independently.” The board further stated that the Controller shall re-examine each claim of the applicant independently and give reasoned order to the applicant.

Assuming that the examination standards continue to remain as exemplified above, the positive point to bring home for the Patentees is that any order from the Patent Office should not to be taken for granted or binding, and presence/availability of Appellate Boards such as IPAB should be fully exercised for accurate assessment of fulfillment of patentability requirements.

About the Author: Mr. Sitanshu Shekhar Singh, Patent Associate at Khurana & Khurana and can be reached at: sitanshu@khuranaandkhurana.com

Ambushed!

India may be a cricket crazy nation but it is the Olympics that has every Indian clinging on to his television set these days, cheering for his country. The Olympics is one of the biggest sporting events in the world where more than 200 nations participate in nearly 400 events. The media exposure became a lucrative business and since it is held once in four years, it is a tussle between brand owners to sponsor this major international event. In the extraordinary growth of sponsorship over the last decade, there is a raging competition between companies to secure and protect their hard-earned sponsorship rights. With this respect, there is a rise in ambush marketing which is the biggest menace when it comes to sponsorship.

Sandler and Shani (1989) were among the first to discuss ambush marketing. They suggested that ‘ambush marketing’ occurred when a non-sponsor of an event attempted to pass itself off as an official sponsor. 

In short, a particular sponsor pays millions of dollars for their brand to grab the spotlight in a major event, and a non-sponsor tries to encash in their glory, by not paying anything, but by freely presenting their brand as another sponsor of the event. In return for the fees, the real sponsor gets exclusive advertising space in the form of billboards, ad campaigns and other promotional gear in the form of T-shirts, bottles, food and drink. Now, rival companies manufacturing the same product, will both not win sponsorship rights for a particular event, hence ambush marketing steps in. It does not weasel its way simply into sporting events; it comes into play in any major international event.

There are two views on whether this is legal or not. Brand owners have taken the stand that it is illegal since it is a burgeoning threat to their own brand. The public on seeing both the brands would naturally assume both of them to be the official sponsors. To determine its legality, it has to be seen whether the impact of passing off is subtle or a complete rip-off.  Let us look at when ambush marketing started first:

In 1984, for the first time, the International Olympics Committee (IOC) presented the first Olympics that did not need public funding. Hence, profitable sponsorship contracts were offered to potential brands for this mammoth event. Fuji won the race against Kodak for the rights to be an official sponsor of the 1984 Olympics. In a backlash, Kodak broadcasted several advertisement campaigns and promotional products during the games. Naturally, the public would be deceived into assuming Kodak and Fuji were both sponsors.

Unfortunately, Fuji could do nothing about it since the laws were very loose in terms of ambush marketing. Kodak had actually gone by what was written in the law. The sloppy mistake was on part of Fuji; nothing in their sponsorship contract guaranteed that no competitor or rival’s advertisements would run during the Olympic games.

In 1988, the tussle between Kodak and Fuji resumed. Kodak secured the worldwide category sponsorship for that year’s Olympic Games, while Fuji had won the sponsorship of the U.S. swimming team. Both the brands aggressively marketed their products. But here, the IOC determined that Kodak was the official sponsor and Fuji was usurping them. Fuji had all the legal rights to ensure their sponsorship in a sub-event, if not the main event, hence their marketing strategies were justified. But it was obvious on the part of the IOC to protect its own revenue streams than it would care to protect its sponsor’s rights. It is pertinent to note that 40% of the IOC’s revenue streams comes from sponsorship fees.

In another famous instance, American Express Co. displayed advertisement campaigns in 1992 with scenes from Barcelona, Spain which was the host for the 1992 Summer Olympics, along with a message “You don’t need a visa to visit Spain”. Visa Inc., the official sponsors of the event, claimed that American Express was trying to ambush Visa. American Express safely said that the commercials did not refer to Olympics so they never ambushed Visa. This was a subtle form of ambushing which was perfectly legal in the eyes of law.

India has also been a victim to ambush marketing. There was an instance of 1996 cricket world cup where Coca Cola was the official sponsor but its sponsorship was clearly overshadowed and ambushed by the cheeky and catchy slogan “nothing official about it” of Pepsi. Again in 2003, the Indian cricket team nearly boycotted the Champions Trophy as they took a stand that they could not participate in accordance with the strict International Cricket Council (ICC) sponsorship rules as they went against their individual contracts with other sponsors.

Such cases would make you feel that it is only the sponsors, prospective sponsors and event owners at stake, but we find instances where even the competing athletes and fans are at stake. In 1992, when Michael Jordan accepted his Olympic medal on the podium, he had to drape a towel over the Adidas brand to satisfy his individual contract with Nike. Despite Adidas being the official sponsor, Nike had made this move to protect its individual association with Jordon. With respect to the fans, in the 2006 FIFA World Cup, the brewer Bavaria gave away their branded lederhosen to Dutch fans travelling to Germany for the game which was officially sponsored by the competing brewer Anheuser Busch. When the fans unwittingly arrived, wearing this branded merchandise, the officials forced the fans to remove their lederhosen and watch the game in their underclothes, which caused great inconvenience to the fans who only became an innocent victim. The irony is that even though the fans later on found out that Bavaria was not the official sponsor, because of the magnitude of this incident, they would always continue to associate the product with both Bavaria and Anheuser Busch.

Law in India

At present, India has not enacted specific anti-ambush marketing laws. The Indian courts seek redress from the Trade Marks Act, 1999 and the Copyright Act, 1957.

The Copyright Act, 1957 states that a copyright in a work is deemed to be infringed when any person, without a license granted by the owner of the copyright does anything, which is the exclusive right to do, conferred by the Act upon the owner of the copyright. The alleged infringement should resemble the original in a large measure and it must be derived from the original copyrighted work. In this perspective, the ‘lay observer’ test is to be relied on under which, it states that it if there was no appearance of reproduction, then there is no infringement of copyright in the particular work which is under the scanner.

In the case of ICC Development v. Evergreen Service Station, (2003) 26 PTC 228, the Delhi High Court granted an injunction preventing the defendants from using the logo of ‘ICC World Cup 2003’ consisting of black & white strips and the mascot ‘Dazzler’, and held it to be an artistic work under Section 2( c) of the Copyright Act, 1957.

Further, the Trade Mark Act, 1999 provides privileges to a registered trademark of the title, right to use and the right to obtain relief in the case of an infringing mark. The holder of the mark needs to show that the infringing mark is deceptively similar to his own mark, to claim relief. There must be likelihood of confusion in the mind of a potential consumer.

Several measures are sought to be taken to protect a sponsor’s rights at such major events. Athletes are not allowed to bring their own food and drink in the Olympics village, as they can be photographed holding brands which are not official sponsors. In conclusion, a more stringent law must be enacted. The stake in such major international events is very staggeringly high since the event would promote tourism and develop their own economy. Hence, there is an urgent need to seek relief against ambush marketing. No brand will indulge into direct ambush marketing; it would always be a more subtle spoof or parody which would not attract any provision in the already enacted laws. It is about time that the Indian legislators recognize this urgency and implement a law against ambushers.

About the Author: Ms. Madhuri Iyer, Trade Mark Attorney at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com

A Bid for Trouble?

With the advent of technology, online auctions have become popular over the years. People find it convenient since it removes the geographical, space and time limitations and it reaches out to a wider audience.  Of course, the meaty discounts are another incentive!! Auction sites like eBay, uBid and Bidz.com are among the top 3 sites who maintain the mantle of the leaders in this field. While the advantages are many, there are also shortcomings to this medium of internet. All bids cannot be genuine and it cannot be always ascertained, whether the bid is authentic or false.  Shill bidding (placing fake bids), fraud (replacing the purchased product with a replicated version of it), selling stolen or counterfeit goods are some of the ways a potential consumer can be tricked.

When a seller (brand owner) is alleged to have deceived the buyer into buying his products, naturally, legal action would be taken against the seller. Many times, even the online auction website is held jointly liable along with the seller for trademark infringement.

When it comes to liability, there is one view that brand owners should only bear it, since the goods ultimately belongs to them, and they can detect the authenticity of the goods or any other violation of the goods. Another view states that auction sites should bear the burden since they have the ability to filter the content on their site and ultimately they should take action against sellers and prevent any illicit activities. It can be seen that auction sites ultimately profit from sales on the site, which includes the counterfeit sales, whereas on the other hand, brand owners lose out on revenue which they could have collected through their genuine products. Let us look at a leading case in this respect and see what stand the court took:

In 2008 in the United States case of Tiffany (NJ) Inc. and Tiffany and Company v. eBay Inc., 576 F. Supp. 2d 463 (S.D.N.Y. 2008), Tiffany filed a suit against eBay for direct and contributory trademark infringement, false advertising and trademark dilution, with respect to the sale of counterfeit jewellery on eBay.  Tiffany, in its claim, acknowledged that eBay was not responsible for trademark infringement by the individual sellers. They claimed that eBay should be held liable merely for the fact that eBay knew that sellers sold counterfeit items on their site, and they allowed this punishable offence.  Further, eBay’s use of the marks of ‘TIFFANY’ for the counterfeit goods constituted to trademark dilution and false advertising.

Meanwhile, eBay negated these claims stating that in its policies it was clearly mentioned that they remove potentially infringing listings when it was reported to them.  Even if they inconsistently applied this policy, it was sufficient to exclude them from the ambit of contributory infringement. Moreover, they further stated that the law per se did not mention anything about a website having to monitor and remove listings before they are made to the public. It was not the duty of the operators of an auction site to check the authenticity of the items; the liability falls back on the owner. They were merely a passive host between the seller and the buyer.

The U.S. Court of Appeals for the Second Circuit rejected the claim of direct infringement stating that mere use of Tiffany’s mark on the goods by eBay did not amount to Tiffany’s affiliation to eBay or that Tiffany endorsed the counterfeit goods.

Further, on the question of contributory infringement, the Court ruled:

“An auction site may be liable if it ‘continues to supply its service to one whom it knows or has reason to know is engaging in trademark infringement.’”  However, regarding the requisite degree of knowledge, the Court ruled that “for contributory trademark infringement 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”.

The Court noted that eBay, in the past, had removed listings after knowing that they contained infringements and suspended the repeated offenders. Keeping this in mind, the Court held that eBay was not liable for contributory infringement.

In a different hindsight, the Court prohibited eBay from ‘willful blindness’. That means, if eBay suspected a user was infringing a trademark, it is not permitted to ‘look the other way’ in an effort to shield itself from liability.

With respect to the claim of trademark dilution, the Court held that this was never in the picture since eBay never sold the products under its own name. Trademark dilution essentially means that an owner of a famous trademark can be allowed to forbid others from using the same mark in a way that its usage would lessen its uniqueness. The Court did not answer on the false advertising claim and remanded it back to the District Court.

In my opinion, since, eBay was not held to be liable on all the other grounds, it cannot be said to have indulged in false advertising, since they never advertised the product in their own name.

A number of suits have been filed against eBay holding it liable for trademark infringement and other grounds, in countries like UK, Belgium and France. In Belgium and France, eBay has not been held to be liable, whereas in UK, the case is still pending.

In 2009, in Louis Vuitton Malletier, S.A., v. Akanoc Solutions, Inc., et al., CV07-03952 JW (N.D. Cal. 2007), a U.S. District Court in California found that two ISPs (internet service providers) and the brand owners were jointly liable for contributory trademark infringement for hosting websites that sold counterfeit LOUIS VUITTON goods. The Court held that the information provided by Louis Vuitton was sufficient to have given the ISPs prior knowledge of the infringement.

In conclusion, we can say that brand owners are usually held liable for trademark infringements, and the auction sites can be let off if they can prove they did not have sufficient knowledge of the prohibited activity. But as mentioned above, if the Court finds the ISP to be having ‘willful blindness’ i.e. ‘actual knowledge’, they can be held jointly liable.

About the Author: Ms. Madhuri Iyer, Trade Mark Associate at Khurana & Khurana and can be reached at: Madhuri@khuranaandkhurana.com