Jewelry maker Tiffany & Co. failed to convince a judge that eBay was not doing enough to fight counterfeiting on its site. When Tiffany sued eBay in 2004, it said 73% of items purchased on eBay in a study it conducted were counterfeit. Two years later, eBay launched an anti-counterfeiting initiative that may have helped sway the judge, who heard the case last year and issued his opinion on Monday. The win for eBay comes after it lost a similar lawsuit last month in France filed by LVMH.

US District Judge Richard J. Sullivan said the heart of the dispute was not whether counterfeit Tiffany jewelry should flourish on eBay, but rather, who should bear the burden of policing Tiffany's trademarks in Internet commerce.

The Court found that eBay was not liable for contributory trademark infringement. "In determining whether eBay is liable, the standard is not whether eBay could reasonably anticipate possible infringement, but rather whether eBay continued to supply its services to sellers when it knew or had reason to know of infringement by those sellers," wrote Sullivan. "When Tiffany put eBay on notice of specific items that Tiffany believed to be infringing, eBay immediately removed those listings. eBay refused, however, to monitor its website and preemptively remove listings of Tiffany jewelry before the listings became public."

The Court found that Tiffany failed to meet its burden in proving its claims for unfair competition.

In regard to Tiffany's claim for false advertising, the Court concluded that eBay's use of the Tiffany trademarks in advertising (on its homepage and in sponsored links purchased through Yahoo! and Google), is a protected, nominative fair use of the marks. It also found that Tiffany failed to prove that eBay's use of the TIFFANY Marks was likely to cause dilution.

Interestingly, Sullivan said Tiffany failed to prove that eBay acted unreasonably by not implementing anti-fraud measures before 2006. "To the contrary, the record is clear that eBay consistently took steps to improve its technology and develop anti-fraud measures as such measures became technologically feasible and reasonably available."

Last month, eBay lost a lawsuit brought by LVMH in France, and lost its appeal in the case on Friday.

An interesting nugget in the Tiffany ruling: Judge Sullivan wrote, "Accordingly, the Court concludes that eBay is analogous to a flea market like those in Hard Rock Café and Fonavisa, and that it is inappropriate to compare eBay to an online classified ad service."