Tiffany had sued eBay over the sale of counterfeit jewelry on eBay's sites.
U.S. District Judge Richard J. Sullivan in New York said in a Monday ruling that eBay can't be held liable for trademark infringement "based solely on their generalized knowledge that trademark infringement might be occurring on their Web sites."
Sullivan's ruling came in response to a lawsuit filed in 2004, in which the jeweler alleged that most items listed on eBay as genuine Tiffany products were fakes. The company said it had asked eBay to remove counterfeit listings, but the sales continued.
EBay spokeswoman Nichola Sharpe said Monday that the ruling "confirms that that eBay acted reasonably and has adequate procedures in place to effectively address counterfeiting."
A Tiffany spokeswoman did not immediately return a call for comment.
The Tiffany ruling was a welcome twist for eBay, which recently lost a different case stemming from counterfeit luxury goods. Last month, a French court ordered eBay to pay more than $61 million to LVMH Moet Hennessy Louis Vuitton SA, which complained it was hurt by sale of knockoff bags, perfume and clothes. EBay is appealing that ruling.
EBay says it spends tens of millions each year to combat counterfeiting. It runs a program that lets companies review listings and inform eBay of those they believe are for fake goods. The company also suspends and blocks users who have been found selling or are suspected of selling fake goods on eBay.
EBay says that in 2007, 50,000 sellers were thrown out for counterfeits, with 40,000 previously suspended sellers blocked from returning.
