Tiffany, Inc. vs EBay, and Inc. A.V. vs Iparadigms Case Study Assignments

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Tiffany (NJ) Inc. v. eBay, Inc.

A.V. v. iParadigms

Bernadette Gibson

Liberty University

BMIS 570: Ethics and Legal Issues

Professor Dwight Elliott

April 1, 2020

Tiffany (NJ) Inc. v. eBay, Inc.

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Parties

Tiffany (NJ) Inc. v. eBay, Inc. (eBay)

United States District Court for the Southern District of New York, 2008

Facts

eBay, Inc. ("eBay"), through its eponymous online marketplace, has revolutionized the online

sale of goods, especially used goods (Berntsen, 2010 p. 102-104). eBay has eased the online

buying and selling process for millions of people and business entities. eBay has been hugely

successful and more than six million new items are posted on its site daily (Reder & Darrow

2015, p. 140-141). eBay’s marketplace allows users to purchase and sell goods to one another.

eBay provides the setting for its auction and listing services for the sale of goods and generates

revenue by charging a final value fee that ranges from 5.25%-10% (Reder & Darrow 2015, p.

140-141). eBay does not physically handle the goods nor do they sell the items. The users are

responsible for selling the items. “The online marketplace is sometimes employed by users as a

means to perpetrate fraud by selling counterfeit goods. As a result, eBay blossomed into the

world's largest marketplace where anonymous sellers offer unseen and unexamined merchandise

to distant buyers” (Berntsen, 2010 p. 102-104). “The effect of counterfeiting takes a toll on a

large number of people; for example, counterfeit merchandise is estimated to be directly

responsible for the loss of almost one million jobs in the United States alone. Counterfeit goods

sold over the Internet have consequences not only for buyers but also for businesses operating

the websites that facilitate the fraudulent sales” (Bailey, 2009 p. 131). Internet auction sites are

responsible for nearly half of the reported online fraud and an estimated 29% happens on eBay

(p. 102-104). “They account for approximately 15% of known fraud on the Internet. Fraud on

eBay occurs twice as frequently as online identity theft and credit card fraud put together, and

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amounts to an estimated annual loss of 32 million dollars” (p. 102-104). To try and reduce the

amount of fraudulent activity, eBay has been controlling and implemented the Verified Rights

Owner “VeRO” Program - a “notice and takedown system” that allows owners of intellectual

property rights to report to eBay any fraudulent or potentially infringing items (Reder & Darrow

2015, p. 140-141). As a result eBay removes the listings or users from the site. “Tiffany & Co

("Tiffany") the luxury jewelry maker, realized that considerable quantities of counterfeit jewelry

were being sold on eBay and wrote to eBay in 2003 in an attempt to curb the problem”

(Berntsen, 2010 p. 102-104). After contacting eBay and having numerous conversations, Tiffany

was still unhappy with their actions to control the counterfeiting problem. “Tiffany filed suit in

2004 claiming that eBay was committing contributory trademark infringement by facilitating the

sale of counterfeit Tiffany jewelry on its website” (p. 103). Tiffany conducted surveys known as

“Buying Programs” by buying Tiffany items off of eBay and determining how many products

they purchased were counterfeit. “Tiffany found that the number of counterfeit products that they

purchased off eBay was 73.1% in 2004 and 75.5% in 2005” (Reder & Darrow 2015, p. 140-141).

The district court, however, decided that these “Buying Programs” were professionally flawed

and questionable in value.

Issue

Is eBay liable for contributory trademark infringement?

Decision

The district court declined to hold eBay contributorily liable.

Reasoning

Tiffany has a long history of selling luxury goods such as jewelry and watches under the Tiffany

Marks. “The Tiffany Marks are "indisputably famous," and maintaining the integrity of Tiffany's

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brand is essential to the company's reputation and success. In an effort to retain its reputation for

quality, Tiffany requires its goods to pass exacting quality checks and closely controls its

distribution channels. In fact, since 2000, new Tiffany goods must be purchased directly through

Tiffany, and are never sold at a reduced price” (p. 108). “The Supreme court most recently dealt

with the subject of contributory trademark infringement in Inwood Laboratories inc. v. Ives

Laboratories” (Reder & Darrow 2015, p. 140-141). According to Inwood, a contributory

infringer is liable when "it continues to supply its product to one whom it knows or has reason to

know is engaging in trademark infringement” (Berntsen, 2010 p. 102-104). “Tiffany argued that

eBay continued to supply its services to sellers of counterfeit Tiffany goods while knowing or

having reason to know that such sellers were infringing Tiffany marks” (Reder & Darrow 2015,

p. 140-141). eBay argued that they have no responsibility for prescience issues of counterfeit and

are not obligated to monitor its site for these issues. Tiffany has a duty to proactively protect its

marks because they boast about how a Tiffany mark can be distinguished between authentic and

counterfeit. eBay also argued that Tiffany has the tools to distinguish between authentic and

counterfeit and eBay does not have the same comparable knowledge (Berntsen, 2010 p. 113).

eBay’s practice regarding counterfeit vendors is to remove challenged listings from its website,

warn sellers and buyers, cancel fees it earned from the listing, and direct buyers not to

consummate the sale of the disputed item. eBay began using special messages that instructed the

seller to make sure that the item they were selling was authentic and that they do not tolerate

counterfeit items. These violations could suspend the user's account. eBay also instructed a three

strict policy and users would be suspended immediately if they listed multiple counterfeit items

for sale. Repeated offenders were also suspended from the site. “In brief, the court concluded

that "the burden of policing the Tiffany mark appropriately rests with Tiffany" (p. 116). Because

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of eBay’s willingness to stop and shut down counterfeiting vendors, the district court declined to

hold eBay contributorily liable.

Conclusion

In conclusion, I believe that the court ruling was fair and justified. eBay has general knowledge

about infringement but they did not have specific knowledge about these issues. eBay is only

responsible for providing a venue for users to sell their products. Because eBay doesn't

physically see the products, the ability to determine that goods are being counterfeit is slim to

none. Determining whether an item is counterfeit or not would require an expert which could be

expensive. eBay did not act unethical and tried to correct the fraud issues surrounding the

company. They took the appropriate actions to control fraud and trusted the users to act ethically.

A.V. v. iParadigms

Parties

A.V. v. iParadigms (Turnitin)

United States District Court, Eastern District of Virginia, 2008

Facts

“iParadigms, LLC ("iParadigms") owns and operates Turnitin Plagiarism Detection Service, an

automated online service that evaluates written works to discover potential plagiarism” (Kim,

2010 p. 95). High school and college students are required to use Turnitin when submitting

papers to ensure they have used original ideas. Failure to submit a paper to Turnitin would result

in a zero for the assignment. The participating school subscribes to iParadigms’ services and

requires students to submit papers using a class ID number and his or her own password (Reder

& Darrow 2015, p. 180). Each student must also verify that they accept the terms and agreements

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with Turnitin. When a paper is submitted, Turnitin performs a comparison of the paper with other

available online content. This includes databases of scholarly journals and student papers that

have been previously submitted to Turnitin. They then produce a report indicating the likelihood

that the paper was plagiarized. “Schools that subscribe to Turnitin may opt to have their students'

papers "archived," which means that they are added to Turnitin's database of student papers.

When this happens, Turnitin retains digital copies of the essays to be "archived," but the

"employees of iParadigms do not read or review the archived works" (Gingerich, 2010 p. 346).

Four high school students submitted their papers on Turnitin as required by their schools. One of

the students submitted his paper online using a college-level password he found on the internet

instead of using the password he was assigned. When iParadigms uncovered the prohibited

access by the student, they investigated the action as a breach of contract. The student agreed to

specific terms when the paper was submitted but went against these agreements. “In 2007, the

four high school students brought a copyright infringement claim in the United States District

Court for the Eastern District of Virginia against iParadigms for archiving their papers without

their permission. In response, iParadigms counterclaimed against the plaintiff-student who

gained unauthorized access to Turnitin under the Computer Fraud and Abuse Act and the

Virginia Computer Crimes Act” (Kim, 2010 p. 95).

Issue

Did iParadigms violate the students' copyrights in their class papers?

Decision

“The Fourth Circuit affirmed the district court's summary judgment on the students' copyright

infringement claim, concluding that iParadigms' use of the students' work was fair use” (p. 96).

Reasoning

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The court examined the four fair use factors in determining whether the notion of fair use

allowed iParadigms’ to utilize the students' papers. The four fair use factors are: “(1) the purpose

and character of the use, including whether such use is of a commercial nature or is for nonprofit

educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of

the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon

the potential market for or value of the copyrighted work” (p. 96). Looking at the first factor, the

court stated that although the use of copyrighted material that has a commercial purpose tends to

weigh against the finding of fair use, a use of character or purpose could outweigh the

significance of that use (Reder & Darrow 2015, p. 180). iParadigms business purpose was to

detect and prevent plagiarism. These findings were enough to be transformative. The court

rejected the Plaintiffs' arguments because iParadigms was not altering or changing the students'

work (p. 180). The second factor did not favor either party. The court noted that, “fair use is more

likely to be found in factual works than in fictional works,' whereas 'a user is less likely to be

deemed fair when the copyrighted work is a creative product” (Gingerich, 2010 p. 349).

Although the students' papers submitted were highly creative, the court expressed that Turnitin

only kept the papers on the database for comparative purposes. Turnitin wanted to confirm that

students were using their own ideas, not diminishing the students' creativity. After analyzing the

third factor, the court again did not favor either party. “Generally, the greater the amount of the

copyrighted material copied, the less the likelihood that its use is a fair use. However, courts

must also consider the "' quality and importance' of the copyrighted materials used" (p. 351). The

third factor overlays the first factor because iParadigms used the students' papers for comparative

purposes, which is completely unrelated to the creative content in the students' work. “The court

also noted that the third factor required evaluating not only the quantity but also the quality and

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importance of the original work used by iParadigms” (Kim, 2010 p. 97). The use of the students'

work was limited in range and for comparison purposes only. “Lastly, the court found that the

original works' marketability was not affected because iParadigms' use did not serve as a market

substitute and did not harm the market value of the works at any level” (p. 97). Even though

there was a potential market for the four students to sell their papers to other classmates, they

stated that they had no plan to sell their work. The students did not want to be involved with

cheating. After viewing all of the evidence, the use of the students' work was under fair use.

The recoveries regarding the Computer Fraud and Abuse Act and the Virginia Computer Crimes

Act were decided on the same basis. “The court held that iParadigms could recover for the

consequential damages resulting from the student who gained unauthorized access to iParadigms’

computer system. The case was remanded for further proceedings to determine potential

recovery” (p. 97).

Conclusion

After reading the case and doing my own research, I believe the court made the right decision.

Students are required in all schools to submit their papers through an online site to check for

plagiarism. These sites are meant to stop students from copying work from other classmates and

prevent them from copying and pasting information from other sources. Why should a student

who spends hours on a paper putting out original ideas receive the same grade as someone who

copied their entire paper? It’s not fair to the students who continue to work hard and put their

own ideas on paper. Not every idea is original and most students gain information from scholarly

articles. If they are cited correctly, the information is very valuable. Teachers are very

understanding and want students to cite papers. If a paper does not include citations, that's

generally a red flag. The one high school student who used a college student's password when

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submitting his assignment must have plagiarized his paper. If the student wasn't worried about

plagiarism, he would have used his designated high school password. There's no reason he

should have used a different password. Jeremiah 23:30 it states, “Therefore, behold, I am against

the prophets, saith the LORD, that steal my words every one from his neighbour” (Stamps &

Adams, 2003 p. 1117). Stealing original ideas from another person is unethical and the bible

abides by these rules in all aspects. Having rules set in place for students encourages them to

work harder and become more intelligent.

References

Bailey, S. (2009). Fighting an anonymous enemy: The uncertainty of auction sites in the face of

Tiffany v. eBay and lvmh v. eBay. California Western International Law Journal, 40(1),

129-176. https://heinonline.org/HOL/P?

h=hein.journals/calwi40&i=131&a=bGliZXJ0eS5lZHU

Berntsen, M. C. (2010). Knowledge and misfeasance: Tiffany v. eBay and the knowledge

requirement of contributory trademark infringement. Boston University Journal of

Science & Technology Law, 16(1), 102-129. https://heinonline.org/HOL/P?

h=hein.journals/jstl16&i=104&a=bGliZXJ0eS5lZHU

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Gingerich, J. (2010). A.v. ex. rel. vanderhye v. iparadigms, llc: Electronic databases and the

compartmentalization of fair use. IDEA: The Intellectual Property Law Review, 50(2),

345-366.https://heinonline.org/HOL/P?

h=hein.journals/idea50&i=349&a=bGliZXJ0eS5lZHU

Kim, M. (2010). A.v. ex rel. vanderhye v. iparadigms, llc 562 f.3d 630 (4th cir. 2009).

Intellectual Property Law Bulletin, 15(1), 95-98. https://heinonline.org/HOL/P?

h=hein.journals/iprop15&i=95&a=bGliZXJ0eS5lZHU

Reder, M. E., Darrow, J. J., Melvin, S. P., Chang, K. K. (2015). Cyberlaw: Management and

entrepreneurship. New York, NY: Wolters Kluwer.

Stamps, D. C., & Adams, J. W. (2003). Life in the spirit study Bible: King James Version. Grand

Rapids, MI: Zondervan.