Internet Service Provider Potentially Liable for Copyright Infringement of Hosted Websites

Author: Allison Pedrazzi Helfrich

Following an investigation and notification attempts, clothing distributor Louis Vuitton Malletier filed a complaint against several websites that it believed were selling goods that infringed on Vuitton’s copyrights and trademarks, alleging contributory trademark infringement; vicarious trademark infringement; contributory copyright infringement; and vicarious copyright infringement. The court denied the defendants’ motion for summary judgment on the contributory copyright and trademark infringement claims. With respect to the contributory trademark infringement claim, the court held that the proper inquiry in this context was how much control the defendant had over the means of infringement.

In late 2006, Louis Vuitton Malletier, S.A., famous for its luxury handbags and other prestige goods, discovered websites that it claimed were selling goods that infringed on its copyrights and trademarks. Several of the websites were using IP addresses provided by Akanoc Solutions, Inc. and Managed Solutions Group, Inc., both of which are owned by Steven Chen. Vuitton sent notices requesting that the offending websites be taken off the server, but several websites remained operable while others were moved to different IP addresses also owned by Chen. After ordering several items to ensure they were counterfeit products, Vuitton filed a complaint alleging contributory trademark infringement; vicarious trademark infringement; contributory copyright infringement; and vicarious copyright infringement. In response, defendants filed a motion for summary judgment on the theory that Vuitton provided no evidence of underlying direct infringement by third parties or that Akanoc, et al. contributed to the copyright or trademark infringement.
On December 23, 2008, a U.S. District Court in San Jose, California, issued an order denying summary judgment on the contributory infringement claims while simultaneously dismissing the vicarious infringement claims. With respect to contributory copyright infringement, the court held that the knowledge requirement was fulfilled by the plaintiff’s initial letters of complaint, notwithstanding Chen’s claim that investigating all such allegations would be impossible and standard practice is to send a take-down notice to any sites about whom they receive complaints. The court also determined that “knowingly providing the ‘site and facilities’ for infringing activity is a material contribution.”
The court went on to explain that the test for contributory trademark infringement was more difficult to satisfy, following a disjunctive test set out in Perfect 10: “(1) intentionally induced the primary infringer to infringe, or (2) continued to supply an infringing product to an infringer with knowledge that the infringer is mislabeling the particular product supplied.” Perfect 10, Inc. v. Visa International Service Assoc., 494 F.3d 788, 806 (9th Cir. 2007). However, the court added that the Ninth Circuit has found the rule less restrictive in cases involving services where the defendant exercised a high degree of control over the third parties means of infringement, suggesting it may no longer be acceptable for a defendant to maintain willful blindness over trademark infringement occurring on its network.
The court granted the motion for summary judgment in regards to the vicarious copyright infringement claims on the ground that there is no evidence Akanoc’s customers were drawn to the company because Akanoc was willing to turn a blind eye to their infringement activities. The court also dismissed the vicarious trademark infringement claim due to the lack of any “finding that the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.” Perfect 10, 494 F.3d at 807.

Opinion: http://docs.justia.com/cases/federal/district-courts/california/candce/5:2007cv03952/194697/99/0.swf