NEW YORK | Tue Sep 14 - Online auctioneer eBay Inc on Monday won the dismissal of Tiffany & Co's 2004 lawsuit accusing it of deceiving customers by allowing the online sale of counterfeit Tiffany-branded jewellery.

U.S. District Judge Richard Sullivan in Manhattan rejected Tiffany's allegation that eBay engaged in false advertising, the last remaining claim after a federal appeals court on April 1 dismissed the rest of Tiffany's trademark infringement case.

"Tiffany failed to establish that eBay intentionally set out to deceive the public, much less that eBay's conduct was of an egregious nature sufficient to create a presumption that consumers were being deceived," the judge wrote.

EBay's associate general counsel, Michelle Fang, cited the trial court's ruling in eBay's favor on every claim brought by Tiffany as "an unequivocal validation of eBay's business practices."

Tiffany did not immediately return requests for comment.

The case has been viewed as a benchmark challenge in the United States to Internet-based companies such as eBay, Google Inc and others that may claim merely to be hosting services, and not responsible for users' trademark violations.

About $3.99 billion, or 46 percent, of eBay's 2009 revenue came from the United States, a regulatory filing shows.

Tiffany accused eBay of advertising the sale of its goods through ads on its website, and through sponsored links on search engines, which would sometimes link to its own website and exhort readers to "Find Tiffany items at low prices."

Sullivan agreed with Tiffany that eBay knew "a portion" of the goods being sold were fake.

But he said Tiffany failed to show that eBay's advertisements actually misled customers or necessarily implied that all Tiffany products sold on its website were genuine.

"Tiffany has failed to present evidence that rises to the high level of egregious misconduct required to demonstrate that eBay had an intent to deceive customers," he wrote.

Sullivan also pointed to eBay efforts to combat fraud, which the company has said costs up to $20 million a year.

In its April 1 ruling, the U.S. Second Circuit Court of Appeals had upheld Sullivan's July 2008 dismissal of most of Tiffany's lawsuit, saying that "eBay did not itself sell counterfeit Tiffany goods; only the fraudulent vendors did."

Tiffany is based in New York, and eBay in San Jose, California.

The case is Tiffany (NJ) Inc et al v. eBay Inc, U.S. District Court, Southern District of New York, No. 04-04607.

By Jonathan Stempel