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Web Host Services Liable for Louis Vuitton Trademark Infringement

Wednesday, December 16, 2020

Notoriously litigious, Louis Vuitton Malletier (“Louis Vuitton”) aggressively polices unauthorized use of its well-known marks, logos, and guarded designs, particularly within the digital age when promoting counterfeit items is as straightforward as establishing an internet site.

In 2006, Louis Vuitton found web sites not directly promoting knock-off items whereas utilizing Louis Vuitton’s copyrighted photos, designs, and logos with out permission. Upon additional inquiry, Louis Vuitton found the web sites have been utilizing IP addresses assigned to Managed Solutions Group, Inc. (“MSG”) and Akanoc Solutions, Inc. (“Akanoc”), each of that are within the “web hosting” enterprise. MSG leased servers, bandwidth, and a few IP addresses to Akanoc, which in flip, operated the servers and in any other case ran the webhosting enterprise. Akanoc leased packages of server area, bandwidth, and IP addresses to its web site clients, a few of whom have been positioned exterior the United States, primarily in China. Both MSG and Akanoc are owned and managed by Steven Chen (“Chen”). Louis Vuitton despatched no less than 18 infringement notices and take-down calls for to MSG and Akanoc figuring out the trademark and copyright infringement occurring on varied web sites hosted by them. MSG and Akanoc, nevertheless, failed to reply to the notices or in any other case to take away the infringing content material from their servers or require their clients to take action. As such, the web sites continued to function and infringe on Louis Vuitton’s mental property utilizing MSG and Akanoc’s servers and IP addresses.

Louis Vuitton sued MSG, Akanoc, and Chen (the “Defendants”) for contributory trademark and copyright infringement. Arguing Defendants had precise data of their web site purchasers’ actions, ignored Louis Vuitton’s infringement notices, caught their heads within the sand as to keep away from studying the complete extent of their internet purchasers’ infringement, and continued to supply webhosting companies to identified infringers who used these webhosting companies to promote counterfeit items and to infringe on Louis Vuitton’s logos and copyrights, Louis Vuitton sought to carry Defendants collectively and severally liable for the direct infringements of their web site purchasers.

After trial, the jury returned a verdict in favor of Louis Vuitton, holding Akanoc, MSG and Chen liable for contributory infringement of 13 logos and two copyrights. The jury awarded $10,500,00 in statutory damages for willful contributory trademark infringement and $300,000 for willful contributory copyright infringement towards every defendant. Defendants moved for judgment as a matter of legislation requesting the court docket put aside the jury verdict as unsupported by the proof. The Northern District of California granted the movement as to MSG, discovering there was no proof MSG did something greater than personal and lease the {hardware} operated by Akanoc and Chen, however denied the movement as to Akanoc and Chen. An attraction to the Ninth Circuit adopted.

The Ninth Circuit affirmed the district court docket’s granting of MSG’s movement to put aside the jury verdict as a result of there was no “substantial evidence” introduced at trial to indicate MSG, which didn’t function the servers that hosted the direct infringers’ web sites, had cheap means to withdraw companies to the direct infringers.

The Ninth Circuit additionally affirmed the district court docket’s refusal to overturn the jury verdict as to Akanoc and Chen as a result of the jury had adequate details to conclude Defendants continued to provide companies to clients they knew or had cause to know have been participating in trademark and copyright infringement. See Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (ninth Cir. 2011).

To prevail on its contributory trademark infringement claims, along with establishing Defendants continued to provide companies to these they knew or ought to have identified have been participating in trademark infringement, as a result of Defendants have been service suppliers quite sellers of products, Louis Vuitton additionally needed to show Defendants had “direct control and monitoring of the instrumentality used by a third party to infringe” Louis Vuitton’s marks. Even although Defendants offered respectable webhosting companies and weren’t concerned of their clients’ infringing enterprise, Defendants had a “master switch,” which they might and will have used to take the infringing web sites offline. Therefore, as a result of Defendants had data of their web site clients’ infringement (through Louis Vuitton’s notices), however did not take cheap motion, i.e. terminating webhosting companies to infringing purchasers, Defendants might be held contributorily liable for the direct infringements of its web site purchasers – even when Defendants had no intent to help or help within the infringements. Accordingly, the Ninth Circuit affirmed the jury verdict.

Affirming the contributory copyright infringement verdicts, the Ninth Circuit held that an specific discovering of intent shouldn’t be required for contributory copyright infringement legal responsibility. Rather, intent is implied on account of “a service provider’s knowing failure to prevent infringing actions.” Additionally, an specific discovering of materials contribution shouldn’t be essential since materials contribution exists the place a defendant’s service or exercise “substantially assists” direct infringement. By offering server area to direct infringers and never shutting the web sites down after receiving discover of the infringement, Defendants’ companies have been “an essential step in the infringement process.”

Finally, the Ninth Circuit discovered the jury’s statutory harm awards of $10,500,000 per defendant ($21,000,000 whole) for willful contributory infringement of Louis Vuitton’s logos and $300,000 per defendant ($600,000 whole) for willful contributory infringement of Louis Vuitton’s copyrights, violated the statutory maximums set forth within the Lanham Act, 15 U.S.C. § 1117(c)(2), and within the Copyright Act, 17 U.S.C. § 504(c). Under 17 U.S.C. § 504(c), the statutory most for willful copyright infringement is $150,000 “for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally.” Under 15 U.S.C. § 1117(c)(2), the statutory most for willful trademark infringement involving counterfeit marks on the time of trial was $1,000,000 “per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.” The Ninth Circuit decided there was no authorized foundation for multiplying the harm awards by the variety of defendants since, when mixed, the awards ($21,000,000 for trademark infringement and $600,000 for copyright infringement) exceeded the statutory minimums ($13,000,000 for 13 logos & $600,000 for two copyrights). As such, Ninth Circuit discovered Akanoc and Chen collectively and severally liable for $10,500,000 for contributory trademark infringement and $300,000 for contributory copyright infringement.

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