J.K. Rowling, creator of Harry Potter, is suing the online auction platform eBay, charging that scam artists used the Indian version of the website to sell unauthorized versions of her books. In January, Judge A.K. Sikri of the High Court of Delhi signed an order that compels eBay to prevent the pirated e-books from being uploaded for sale on the website.

Rowling joins a growing line of litigants assailing eBay for abetting breach of copyright, but some observers point out that the recent Indian high court ruling ordering eBay to bar the listing of illegal copies of Rowling’s work may lay valuable groundwork for aggrieved firms like New York City-based Tiffany & Co., which also has tried to get the website to police its sellers’ auctions for copyright violations. In the past, eBay has denied responsibility for the auctions conducted on its website, saying it merely provides a platform for transactions and cannot monitor every vendor and transaction.

Filed in India to capitalize on that country’s copyright law holding a company responsible if its “premises” are used to infringe copyright, the case also has significant implications for eBay’s current business model and for the legions of everyman auctioneers who offer trademarked items †many of them unauthenticated †for sale on the website.

Tiffany filed a claim in July 2004 in New York’s Southern District Court aiming to change eBay’s “takedown notice” model of removing fakes once notified by copyright holders and to make the online auction hosting service responsible for policing wrongdoing on its site. Tiffany alleged that San Jose, Calif.-based eBay and “John Does 1‵0” †that is, the myriad of sellers conducting auctions of what are described as Tiffany items at any given time †are involved in facilitating, counterfeiting and infringing and diluting Tiffany’s venerable trademark.

Tiffany’s label, according to the complaint, showed up not only on eBay’s onsite advertising, but also on ads that popped up when people performed searches on Yahoo and Google. “The sale of counterfeit goods using the Tiffany trademark by defendants John Does 1‵0 and facilitated and encouraged by eBay is intended to cause and has caused confusion, mistake or deception of the trade and public and is intended to cause and has caused them to believe that those counterfeit products are the same as Tiffany’s products or are authorized, sponsored or approved by Tiffany or are otherwise affiliated or connected with Tiffany and/or Tiffany’s products,” the complaint stated.

In its defense, eBay does remove offenders that are brought to its attention through a combination of its Verified Rights Owner Program and appeals to its users to enforce a kind of “neighborhood watch” that entails contacting the intellectual property rights owner about suspected counterfeiting. According to Tiffany’s complaint, eBay removed more than 19,000 auctions that were spotted by Tiffany employees policing eBay auction sites over a five-month period in 2003 and 2004.

This new legal development, however, may bolster the contention by firms like Tiffany, Louis Vuitton, Christian Dior and other luxury brands that eBay knows that fakes continue to be advertised and sold on its website. They contend that eBay is being willfully blind to the activity and profiting on the illegal activity through the fees that it charges for listing and closing fees on transactions. “EBay’s actions and failure to act have caused and will continue to cause immediate and irreparable harm to Tiffany and to the substantial goodwill embodied in Tiffany’s registered trademarks,” Tiffany’s complaint stated.

The value of goodwill is something eBay apparently understands, because in an application also filed before Justice A.K. Sikri, the firm countered, “J.K. Rowling and her representatives are spreading misinformation about two [High Court] stay orders&†The distorted manner in which wide publicity is given in the media †print and electronic †has caused immense harassment and humiliation to eBay and also damaged its goodwill and reputation.”

The next Indian high court hearing is scheduled for May 2008. The Tiffany suit is expected to go to court by the end of this year.