EBay scored a major court victory Monday when a federal judge ruled that Tiffany had failed to prove the online auctioneer was responsible for the sale of fake Tiffany jewelry on its site.
The ruling in the lawsuit brought by Tiffany in 2004 in U.S. District Court in New York could play a key role in deciding the ground rules for doing business over the Web and further refines trademark and copyright protections in cyberspace.
Tiffany alleged that eBay turned a blind eye to the sale of fake Tiffany silver jewelry on its site; eBay said the high-end jeweler chose not to participate in eBay programs that help brand owners prevent fraud.
"The Court concludes that Tiffany has failed to meet its burden in proving its claims," wrote U.S. District Judge Richard Sullivan in his opinion.
"Given Tiffany's choice to sue eBay, rather than individual sellers, and this Court's conclusion that eBay does not continue to supply its services to those whom it knows or has reason to know are infringing Tiffany's trademarks, Tiffany's claims against eBay must fail," wrote the court.
Ebay, which has been trying to increase trust between buyers and sellers in its main auction business, has increased spending on technology and people to stem the sale of fake goods on its site.
San Jose, Calif.-based eBay says it takes down more than 90 percent of fraudulent goods on its site within four hours of their posting.
Shares of eBay were down more than 2 percent on the Nasdaq Monday.