The sale of counterfeit goods by sellers based in foreign countries has, unfortunately, become a familiar problem to many companies. Fake goods originating from countries such as China and Thailand are increasingly making their way directly to buyers in the U.S.. The foreign counterfeiters sell their illicit goods to U.S. buyers over the internet and simply ship the products directly to the U.S. buyer. The lack of transparency in the foreign countries can make it difficult, if not impossible, to determine precisely who is the foreign seller. These facts make it extremely challenging for the owners of U.S. trademarks or copyrights to protect their rights against these foreign infringers in U.S. courts.
Consequently, many U.S. trademark and copyright owners have sought alternative ways of protecting their rights in U.S. courtrooms. Some companies have brought suit against entities that, although not selling fake goods themselves, enable the foreign counterfeiters to engage in their illicit businesses. Lawsuits alleging “contributory” trademark and copyright infringement have been filed against internet service providers (ISPs) that provide Internet Protocol (IP) addresses to the foreign counterfeiters, on-line auction sites (such as eBay) that allow counterfeiters to list and sell fake goods, and even credit card companies that process payments for the counterfeiters.
In one such case, a San Jose federal jury recently handed Louis Vuitton a resounding victory in that company’s fight against internet trafficking of counterfeit goods. On August 28, 2009, the jury found three California-based internet service providers (ISPs) liable for contributory trademark and copyright infringement for hosting internet websites used by Chinese sellers to sell counterfeit Louis Vuitton merchandise to buyers in the U.S.. The jury’s awarded Louis Vuitton damages totaling $32.4 million.
In that case – Louis Vuitton Malletier, S.A. v. Aknoc Solutions, Inc. et al., United States District Court for the Northern District of California, Case No. C 07-03952 JW – the ISPs themselves were not directly involved in the sales of the counterfeit goods. Instead, the sales were made entirely by sellers based in China who acquired their IP addresses through the ISPs. The Chinese sellers were not parties to the lawsuit that resulted in the jury’s verdict.
The jury found the ISPs liable for contributory trademark and copyright infringement because (1) the ISPs “knew or should have known” that the Chinese sellers were using sites hosted by the ISPs to sell the counterfeits, (2) the ISPs had the power withdraw their services so that the Chinese sellers could no longer use the websites to sell infringing goods, and (3) the ISPs continued to provide services to the Chinese sellers.
Before filing suit against the ISPs, Louis Vuitton sent several notices to the ISPs alerting them to the fact their IP addresses were being used to sell counterfeit goods. The notices also demanded that the offending websites be removed from the ISPs’ servers. Despite the notices, the ISP either allowed the websites to remain operable or simply moved the offending content to a different IP address also hosted by the ISPs.
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