Letter from AmeriKat II: ISPs, Catcher and i4i

What blows in the 2nd may not blow in the 9th

Two Fridays ago a San Jose California jury reached a verdict awarding statutory damages of US$32.4 million in favour of Louis Vuitton Malletier (LVMH) in a contributory trade mark and copyright infringement claim brought by the luxury good giant against California-based ISP webhosting operations company Akonac Solutions Inc. In 2006, LVMH’s investigators purchased counterfeit goods from websites hosted by Akanoc, which resulted in LVMH requesting that Akanoc remove identified websites that distributed counterfeit Louis Vuitton products. Akanoc removed some of these sites but, according LVMH’s amended complaint, several infringing websites were still in operation as of last summer.

Regarding proof of contributory infringement the Supreme Court in Inwood Labs, Inc v Ives Labs, Inc stated that

“if a supplier of a manufacturer or distributor intentionally induces another to infringe a trade mark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trade mark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit.”

This has subsequently been interpreted to include the instance where a defendant is providing a venue to the supplier of counterfeit/infringing goods, such as where ISPs host websites that sell counterfeit/infringing objects. Whether a supplier “knows or has reason to know” was tried before Judge Sullivan in Tiffany v eBay in the Southern District of New York. Here, Tiffany argued that demand letters and like communication sent to eBay that stated the amount and extent of infringing product being sold on eBay constituted sufficient evidence in which to impute knowledge on eBay. Judge Sullivan, however, was not convinced and held that this knowledge was only generalized and did not constitute specific knowledge of actual counterfeit goods present on their website sufficient enough to impute the requisite knowledge to constitute contributory infringement.

In LVMH, however, Judge Ware concluded that such evidence was held to be admissible in that it showed the defendants’ knowledge of and control over infringing websites. This evidence was primarily relied upon by the jury in their finding of contributory infringement. As reported by Reuters, Louis Vuitton’s counsel Andy Combs stated:

"This verdict clearly establishes a standard for infringement complaints on the Internet based on trademark. It represents a positive contribution to existing case law and marks the first time statutory damages have been awarded against those found contributorily liable for trademark infringement. The standard applied to copyright infringement claims must also be applied to trademark infringement claims. The jury recognized that having an appropriate use policy is not sufficient. Internet Service Providers have an obligation to effectively enforce that policy as well."

The different approaches by the Ninth and Second Circuits in holding what constitutes sufficient evidence to impute knowledge and fall outside the DCMA’s “safe harbour” legislation will in no doubt be of concern to ISPs and eBay. The AmeriKat looks forward to the finding of the Second Circuit Court of Appeals, which heard oral arguments in the Tiffany v eBay appeal this past July.

Speaking of Court of Appeals….

 Last Thursday a three-judge panel of the Second Circuit Court of Appeals began questioning in the appeal of the Catcher in the Rye sequel case (see the AmeriKat’s previous reports here, here, here and here). The three-judge panel raised doubts over Judge Batts' decision this past summer that Fredrik Colting’s sequel should be subject to an injunction. However, this did not stop Judge Guido Calabresi from calling the sequel a “rather dismal piece of work if I may say so.” Judge Calabresi also questioned Salinger’s lawyer, Marcia Beth Paul, as to whether Judge Batts might need to hear further evidence given Colting’s assertions of First Amendment violations. The panel has yet to issue a ruling.

 As predicted last week, the US Court of Appeals for the Federal Circuit granted Microsoft’s 18 August motion to stay the injunction granted by Judge Davis in the i4i case. Microsoft and its amici curia are in no doubt happy with this stay. i4i Chariman Loudon Owen however stated that

“to paraphrase the great heavy weight boxing champion Joe Louis, ‘They can run, but they can’t hide’…Microsoft’s time will eventually run out.”

The AmeriKat thinks that to be unlikely. The appeal hearing is scheduled for 23 September 2009.