Tiffany v. eBay Post-Trial Briefs

By Eric Goldman

[UPDATE: If you're looking for discussion of the July 2008 District Court ruling, go here.]

Fred was kind enough to post the post-trial briefs filed by Tiffany and eBay in the lawsuit over eBay’s contributory liability for Tiffany counterfeit goods sold via eBay. These briefs provide a nice overview of the points of contention as well as a treasure trove of facts. Some highlights:

* Tiffany sent almost 135k takedown notices to eBay in 2006. (Interestingly, that number appears to have dropped substantially in 2007). That translates to about 370 takedown notices each day, or 15 every hour, or about one every 4 minutes.

* As reported via Tiffany, eBay’s top 10 filers of takedown notices filed a quarter-million per month in 2003, growing to over 400,000 takedown notices per month in 2005–or, about 5,000,000 takedown notices per year from just the top 10 complainers.

* In 2004, Tiffany purchased 186 Tiffany items listed for sale on eBay and, according to its assessment, only 5% of those were legitimate Tiffany goods.

* Tiffany repeatedly calls eBay a “rats nest” for Tiffany counterfeits (presumably, the rodential analogy to “red flags” of infringement under 512).

* eBay says that Tiffany has dedicated only 0.1% of its gross sales to counterfeit enforcement (excluding the litigation costs in this case). [This raises a terrific issue for empirical research or a law review paper--what percentage of revenues should an IP owner spend on enforcement of its IP?]

* eBay thinks Tiffany could have spent 1.0-1.5 FTE on additional paralegal support for reporting through the VeRO program (at $50k/FTE) to achieve the same results that it is trying to achieve through this $3-5M litigation.

* eBay’s service levels for takedown response: “eBay’s practice is to remove reported listings within 24 hours, with about 95 to 99 percent removed during that time; 70 to 80 percent of reported listings were removed within 12 hours of notification during the course of the litigation, and nearly three-quarters are currently removed within four hours.”

* Less than 50 of the 100,000 takedown notices from Tiffany between 2003-05 required any followup by Tiffany.

* 1/4 of eBay’s worldwide employee headcount of 16,000 is devoted to trust & safety issues. [That number sounds a little puffy; I'd love to see what departments got defined this way. Then again, I've heard repeatedly that eBay has 2,000+ CSRs, all of whom have T&S responsibility.] Of those, 200 work full-time on combating infringement, and 70 work full-time coordinating with law enforcement.

In the end, just like the battle over 512, this lawsuit is really a battle about who will bear the investigation costs for questionable user content. Framed that way, given the fat profits earned by both litigants in this case, it’s hard to find a lot of sympathy for either side. But in a world of long-tail content where each content item has relatively low economic value to anyone, the allocation of investigation costs may be dispositve. This case could have a significant bearing on that allocation.

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