$32 Million Trademark Infringement Case

[Nightowl]

Two webhosting companies have been hit with $32 million in fines for hosting sites that sold fake Louis Vitton merchandise. Read about it here:

Web hosters ordered to pay $32M for contributing to trademark infringement

- Nightowl

[greenovni]

That's BS. Why the web host if they are not responsible for the content we put in their servers.

[Darth Executor]

Originally Posted by greenovni

That's BS. Why the web host if they are not responsible for the content we put in their servers.

Read the article. They knowingly allowed it. Let them burn as far as I'm concerned. Weeding out unethical businesses can only help us all in the long run.

[lexilexi]

My first thought was "wow this is preposterous" but then when reading the article, it came a little clearer: The Web Hosts were made aware by Vuitton that the sites they were hosting were selling counterfeit goods, but they did nothing about it.

This is definitely going to make a number of web hosts pee their pants. We'll probably see a few accounts being closed.

[greenovni]

I agree with you that unethical users should be shut down. The problem is going after the web hosting company company who is not responsible for what their users post according to previous law that covers ISP.

A web host IS an ISP!

With out web hosts, there is no web.

[lexilexi]

I think it falls under some law of knowingly permitting unlawful activity to take place. They knew it was going on and chose to ignore the warning shot; that's a lot different from not knowing anything about it.

They were stupid. You get a cease and desist from the legal representation of a big company over serious criminal activity going on with sites you host, you wake the hell up and pay attention or face the consequences, it's as simple as that.

I don't think ordinary web hosts have much to worry about.

[lisag]

I got as friendly note from my local newspaper one day saying they did not appreciate me putting their RSS article feed on my web site. They asked me politely to cease violating their copyright.

I wrote back: "Sure, thanks for bringing it to my attention. I took it down." They went away. Chances are Louis Vitton would have gone away too if the web hosts had done the proper thing and shut the violating sites down.

I say they made their own problems and they deserve what they get. There's more than a thin line between free speech and dishonest speech..

[greenovni]

I think it falls under some law of knowingly permitting unlawful activity to take place.

MANY private companies do the same each and every day.

The point is that the Communication Decency Act of 1996 hold ISPs harmless from the postings of a 3RD party.

[Robyn8243]

Frankly I find this very scary.

Are Hosting companies supposed to be able to determine the legal merits of a Trademark infringement case before a Court has made a legal determination as to whether there is a violation?

If the violation was in fact clear, Louis Vuitton should have been able to get a court order for an injunction. Holding a Hosting company accountable without a legal determination from a court is opening the door for bullying by big business who may or may not have legitimate Trademark claims.

Under this scenario any company with a Trademark can go running to a hosting company to shut down a company who they believe is violating their trademark without having to prove they are right in court.

Just because a company says that someone is violating their Trademark does not make it so...I thought that was what Courts and Attorneys were for.

It will be interesting to see whether this decision is appealed.

Robyn

[Teresa Coppes]

I didn't think an ISP and a web host are not the same. An ISP allows me to connect to the internet which connects to a site hosted by a web host. Without my ISP I can't connect to a web host.

Greenovni - you say down with the unethical losers but feel that the web host shouldn't be held accountable. What happens if someone blatantly steals your product/work, you contact their webhost and they refuse to take it down even after you've produced legal claim to the product? Would you not feel shafted by the webhost?

[theimdude]

I design sites and also host my clients. I have one that I did but found out that although they claim they have a approved health product it was a submission for approval and is yet to be approved. As I know this now I am not sure what to do about it but if I should get a letter from the health department I will have to suspend the account to keep my side clear but will contact my client first

And it is not acia berry related

[GarrieWilson]

Originally Posted by Teresa_C

I didn't think an ISP and a web host are not the same. An ISP allows me to connect to the internet which connects to a site hosted by a web host. Without my ISP I can't connect to a web host.

I.S.P. = Internet Service Provider = One who providers Internet related services.

The term ISP is very lose.

[Paul Myers]

Are Hosting companies supposed to be able to determine the legal merits of a Trademark infringement case before a Court has made a legal determination as to whether there is a violation?

Nope.

If they receive a DMCA notice, they're supposed to address it with the owner of the site that's alleged to be infringing. If that site owner disputes the claims, the web host can leave it up, and is held to be out of the issue, as they're not capable of making that judgement.

Then it becomes a matter for the courts. The offending party can get hammered harder for it, though, if they push things after being notified.


Paul

[greenovni]

@Teresa_C Yes, I would be upset but I can't hold them responsible according to the Communication Decency Act of 1996.

If that was the case, even this forum would cease to exist if someone talks bad, defames etc another person.

There have been many threads here with items like:

Google Money Tree (Which clearly is using the Google trade mark)
Make money with ebay (eBay trademark)

etc

Allen is not responsible for the postings of a 3rd party according to the Communication Decency Act of 1996

The Warrior forum itself falls under the ISP clause, so did web hosting companies, blogs, forums etc.

The person creating the content is the one responsible for whatever he put online.

[GarrieWilson]

Originally Posted by Paul Myers

Nope.

If they receive a DMCA notice, they're supposed to address it with the owner of the site that's alleged to be infringing. If that site owner disputes the claims, the web host can leave it up, and is held to be out of the issue, as they're not capable of making that judgement.

Even if the site owner does not dispute it, the host must restore the site or whatever if the complaining party doesn't files a lawsuit within 10-14 days.

And to be protected by safe harbor the "ISP" must have a registered agent.

Garrie

[DeePower]

I read the article and I find it odd that there is no mention of the website owners being found guilty of infringing on a trademark. Is this a case of Louis Vitton going after the deep pockets of the web hosts?

They also went after ebay in an earlier proceeding.

And as far as Warrior Forum being held liable for comments of its posters, yes that can happen. I know of one active case where the owners of a public discussion board are being sued for liable.

Dee

[Tsnyder]

Originally Posted by greenovni

I think it falls under some law of knowingly permitting unlawful activity to take place.

MANY private companies do the same each and every day.

The point is that the Communication Decency Act of 1996 hold ISPs harmless from the postings of a 3RD party.

This case would seem to be on point... and disagrees with your assertion...

Gucci America, Inc. v. Hall & Associates
135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

Gucci America, Inc. v. Hall & Associates - Internet Library of Law and Court Decisions

Tsnyder

[GarrieWilson]

Originally Posted by greenovni

Allen is not responsible for the postings of a 3rd party according to the Communication Decency Act of 1996

The Warrior forum itself falls under the ISP clause, so did web hosting companies, blogs, forums etc.

Actually, you are incorrect.

If you moderate, you can be held liable.

If you dont have a registered agent, you can be liable.

Example: Some one posts a WSO for pirated software and since Allen doesnt have a registered agent to accept complaints, he can be sued.

[Shaka]

While I agree with most of the other posts that decry contributory behavior to fraudulent internet activity, in this case I’m not completely sure of all of the facts nor did the article explain the damage figure. For example what other sites was this company hosting? Was this an aberrant website or typical of the sites they hosted e.g. did they host other sites selling fake goods? Did the website owner provide the hosting company with answers to Louis Vitton’s claim? And what damages and losses did Louis Vitton attribute to the actions of this company?

In any case, I am quite sure that this jury award is going to be appealed minimally to the Ninth Circuit and perhaps to the Supreme Court. I see many issues at stake with this case. Many times what appears to be a clear-cut case turns out to be very murky once you dissect the details.

[Tsnyder]

Originally Posted by Nightowl

Two webhosting companies have been hit with $32 million in fines for hosting sites that sold fake Louis Vitton merchandise. Read about it here:

Web hosters ordered to pay $32M for contributing to trademark infringement

- Nightowl

Small point but jury awards are not fines.

Tsnyder

[George Wright]

Hi Garrie,

Could you explain more about the term "registered agent?"

Thanks,

George Wright

Originally Posted by GarrieWilson

Actually, you are incorrect.

If you moderate, you can be held liable.

If you dont have a registered agent, you can be liable.

Example: Some one posts a WSO for pirated software and since Allen doesnt have a registered agent to accept complaints, he can be sued.

[GarrieWilson]

Hi George,

Basically, it's a person registered w/ the copyright office and the website(s) list this person as the contact for notices of infringements.

It's only good for ISPs and creates a safe harbor provided certain conditions are met.

I'm trying to figure out the form so I can register for a few sites of mine.

You can read about it at:
U.S. Copyright Office - Online Service Providers

Garrie

[Black Hat Cat]

And as far as Warrior Forum being held liable for comments of its posters, yes that can happen. I know of one active case where the owners of a public discussion board are being sued for liable.

Being sued does not mean being held liable. It means they are being sued. If the suit is about the comments of posters, the forum owners will most likely win.

[Kevin AKA Hubcap]

I'm just wondering why a legal determination isn't made before going to the web host. This opens up the door to deep pocketed corporations being able to shut down smaller competitiors for an alleged act without having a judicial ruling one way or the other. Why not have the courts rule on the infringement first. Once that's sorted everything should fall into place. A webhost is not going to know all of their client's actions and probably won't be able to determine what's an infringement and what's not.

Kevin

Originally Posted by Tsnyder

This case would seem to be on point... and disagrees with your assertion...

Gucci America, Inc. v. Hall & Associates
135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

Gucci America, Inc. v. Hall & Associates - Internet Library of Law and Court Decisions

Tsnyder

[kindsvater]

Originally Posted by Kevin AKA Hubcap

A webhost is not going to know all of their client's actions and probably won't be able to determine what's an infringement and what's not.

That is the problem - it is impossible to ask a webhost to act as a lawyer and a judge and make a legal determination of what is a legitimate claim of trademark infringement.

This is an extremely disturbing case. Many trademark infringement claims are asserted in nasty reading letters - but very few are worth the paper they're printed on.

Until now. As as web host, it's not worth the risk.

[kindsvater]

There is a 2nd very important issue ... affiliate liability for merchant trademark infringement.

The same type of contributory infringement argument can be made, except that the trademark owner doesn't have to worry about sending notice.

If you search for the "Oprah" threads I previously mentioned the new lawsuit targeting an affiliate for something very similar - where the affiliate has liability for seemingly worse conduct - affirmatively sending customers to buy from a merchant which has a trademark infringement issue.

2010: Could be the year trademark litigation explodes across the net. (Except against Google, they get away with anything.)

[geolt7]

This will certainly send a shockwave to the web hosting communities. $32M is a harsh but I guess necessary decision to get the message across.

[bobsilber]

Originally Posted by Kevin AKA Hubcap

I'm just wondering why a legal determination isn't made before going to the web host. This opens up the door to deep pocketed corporations being able to shut down smaller competitiors for an alleged act without having a judicial ruling one way or the other. Why not have the courts rule on the infringement first. Once that's sorted everything should fall into place. A webhost is not going to know all of their client's actions and probably won't be able to determine what's an infringement and what's not.
===

Originally Posted by Tsnyder
This case would seem to be on point... and disagrees with your assertion...

Gucci America, Inc. v. Hall & Associates
135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

Gucci America, Inc. v. Hall & Associates - Internet Library of Law and Court Decisions

Tsnyder
Kevin

Kevin, you skipped over the key word "notice." In the law, one missing word can mean the difference between being liable or not. That is why copying copyrighted material from the Internet, especially legal documents, besides being illegal, is foolish.

.
.

[SageSound]

There may be something hiding here in all of the legalease and gibberish.

If you set up a hosting account on a shared server, anybody offering that service is likely to have verbage in their "rental agreement" that states they can shut you off for any number of reasons, including if they get a DCMA or CDA notice. Their motivation is to protect the other users on that server.

OTOH, if you rent a dedicated server and host some sites that are risky or you think might offend somebody, then who's the "host provider"? Wouldn't that be YOU? Or, if you're smart, it would be a separate business entity that you control.

(And your "registered agent" would be the same person/agency listed on your corporation or LLC papers filed with the state.)

The DATA CENTER is not likely going to be held liable for renting a box and hooking it to their data pipe. That's like saying a city is responsible for someone dying in a "crack house" that caught fire just because it was within the city's limits.

If you and your "alter ego", in the guise of two separate business entities, conspire to host sites on dedicated servers that you deliberately set up to take advantage of well-known trademarks, then you ignore complaints submitted under DCMA or CDA thinking you're protected under some ISP safe-harbor provisions, you deserve to get body-slammed IMHO!

Now, I'm sure there are people reading this that have no clue what I'm talking about. And it's also likely that most news reporters and others wouldn't know the difference between "someone leasing a dedicated server" (as a business entity) and a "host provider" (as a service), assuming the "host provider" is someone who rents out shared hosting accounts to hundreds of clients.

How many clients does the average dedicated server have? One? Two? Not "hundreds" ... unless they ARE acting as a shared-service hosting provider.

-David