EBay Inc did not engage in trademark infringement and dilution by selling counterfeit Tiffany & Co (TIF.N) goods on its website, a U.S. appeals court ruled on Thursday, but it ordered further review of the jeweler's claim of false advertising.

Tiffany and other luxury brands have long argued that counterfeit merchandise bearing their names is sold on eBay (EBAY.O). The Web commerce company, which does not itself put the goods up for sale, says it has spent millions of dollars to track down counterfeiters and remove such listings.

The case was seen as a major challenge in the United States to the freedom of Web companies from eBay to Google Inc (GOOG.O), which claim that they are merely hosting services, and any trademark infringement lies with others, not them. Google won a major trademark victory in the European Union over similar claims last month [ID:nLDE62L0P7].

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