A few weeks ago a French court ordered eBay to pay about $60 million in damages to Louis Vuitton and other manufacturers of luxury bags, finding that eBay failed to take adequate steps to prevent sales of counterfeit merchandise on its site. This week a U.S. court handed eBay a victory in a similar lawsuit brought by Tiffany and Company, holding under U.S. law that eBay had no obligation to prevent sale of counterfeit trademarked goods. The court said “to the extent that eBay may have possessed general knowledge of infringement and dilution by sellers on its Web site, eBay did not possess knowledge or a reason to know of specific instances of trademark infringement or dilution as required under the law.”
The contrary results under European and U.S. law reflect the profound changes in Internet law over the past decade. When I started to teach Internet law in 2001 the popular wisdom held the Internet was beyond the reach of national law, that it existed in some extra-legal dimension subject to its own unique forces. No more. Internet businesses must, like trans-national brick-and-mortar companies before them, decide how to structure operations to meet the unique legal environment of each country in which it operates.