A little outside the world of pure domaining, but as another example of how trademark owners are continuing to press for greater protection for their brands and expanding those they are trying to hold responsible for infringement, comes the news that a jury in the U.S. District Court for the Northern District of California found 2 Web hosting companies and their owner (personally) liable, for contributing to trademark and copyright infringement for hosting sites selling counterfeit Louis Vuitton goods.
The jury awarded damages of $32.4 million against hosting companies Akanoc Solutions Inc., Managed Solutions Group Inc., and the owner of the 2 companies, Steven Chen.
Of the amount awarded, $31.5 million was for contributory trademark infringement and $900,000 for contributory copyright infringement.
I know you might be asking yourself “what the hell is Contributory Trademark Infringement?”
The reason you have never heard of it is this is the FIRST case in which a jury has bought this theory and awarded damages based on this theory.
Contributory Trademark Infringement is when a participant in the chain, in this case a hosting company, knew, or SHOULD HAVE known, that they are enabling illegal activities, and therefore the theory goes has an obligation to remedy the situation. Entities that fail to do so, are legally responsible for contributing to the illegal activities.
The jury found that the hosting companies knowingly allowed Web sites they hosted, to sell products that infringed Louis Vuitton’s copyrights and trademarks and awarded the damages.
Just to be clear here, there was no argument that the hosting companies owned the site or got any direct financial benefit (commission or otherwise) from the sale of the items.
The hosting company was held liable for the acts of its client.
Certainly a must read for anyone hosting sites for others.
Also the question can be asked, who else could be sued in the future for acts of others, under this Contributory Trademark Infringement theory?