Web host Akanoc hit with $32M contributory TM judgment for customers’ counterfeiting http://bit.ly/3BR6ZW Whoa. More to come … Louis Vuitton v. Akanoc jury verdict http://bit.ly/OCNwr & Aug. dismissal motion http://bit.ly/A1WQ7 My Jan. blog post http://bit.ly/4tYgZ5
Whoa?! How can this be! Isn’t all the traffic in the other direction on contributory infringement? Isn’t that unthinking application of judicial trendiness what’s been making LIKELIHOOD OF CONFUSION® pull his few remaining hairs out?
Not so fast. Jane Coleman explains, in her forthcoming treatise on just that topic, that Akanoc, the ISP in question, was not just another server farm (some citations omitted), but had its cyberfingers all over what was going on with its clients. That’s why the claim against it was sustained on a motion to dismiss:
Courts have suggested that internet service providers (ISP’s) may, in appropriate circumstances, bear contributory liability for trademark infringement by the websites or other end users they service. Different ISP’s offer different services, and their liability will turn on the extent of their involvement with infringing customers. . . .
Thus, where the defendant ISPsâ€™ activities included providing Internet Protocol (â€œIPâ€) addresses, routing internet traffic to websites and servers that stored internet content, and allowing that content to be accessed through the internet, the court sustained a contributory liability claim against the defendant ISPs, likening them to the flea market operators in Fonovisa. Louis Vuitton Malletier, S.A. v. Akanoc Solutions, 591 F.Supp.2d 1098, 1112 (N.D. Cal. 2008). Akonoc arose out of sales of counterfeits of plaintiff Louis Vuittonâ€™s luxury goods taking place at websites serviced by the defendant ISP’s. Louis Vuitton was able to trace those websites to the defendant ISPs who were apparently hosting them. After several rounds of letters and take-down notices, the company finally filed suit against the ISP’s, alleging both contributory and vicarious trademark infringement liability.
The defendant ISP’s moved to dismiss both claims and the court granted the motion with regard to the vicarious liability claim but refused on the contributory liability claim. . . . The ISP’s argued, among other things, that under Lockheed Martin, they were not required to â€œmonitor the internet.â€ Louis Vuitton Malletier, S.A. v. Akanoc Solutions, 591 F.Supp.2d 1098, 1112, citing Lockheed, 194 F.3d at 985.
The court rejected their argument, because the services they provided involved them more closely with their customers than those provided by the ISP in Lockheed Martin. That ISP â€œmerely provided a ‘rote translation service,’ by which the defendant translated domain names into IP addresses.â€ In Akanoc, however, the ISP’s â€œphysically host[ed] websites on their servers and route[d] internet traffic to and from those websites.â€ Id. This service, the court held, was â€œthe Internet equivalent of leasing real estate[,]â€ just as the flea market owners had done in Fonovisa. Taken together with the ISPsâ€™ ability to remove infringing websites, the defendantsâ€™ activities â€œentail[ed] a level of involvement and control that [went] beyond ‘rote translation.’â€ The court therefore sustained the contributory liability claim against them.
So: An ISP by any other name would… well, I don’t think they smell sweet or otherwise, but, anyway, it may or may not be “an ISP,” under the law, for all kinds of reasons, and just maybe you can’t get away with just anything because of what you call yourself. [UPDATE:] Here the court reasoned that this much ISP’ing was too much — especially considering the high level of specific knowledge of specific infringement that Akanoc just plain ignored.
And the $24 million amount? Yes, I have learned the hard way that juries can be very dangerous things in trademark cases, because the law is not clear about how exactly trademark damages ought to be measured and neither are most judges. I will certainly be interested in looking at the jury instructions as to damages. For now, though, I’m mostly looking forward to the explanation of how this reconciles with the decision in Perfect 10, Inc. v. Visa regarding what constitutes actionable “control” by a third party, because it doesn’t.
Not all judges are created equal either, you know.
UPDATE: Here are the Akanoc jury instructions and, below, is the Akanoc verdict sheet. Read the jury’s contributory trademark infringement damages verdict (page 8), in light of the jury instructions, and tell me how satisfied you are with the thoroughness with which they came to these numbers:
UPDATE too: Eric Goldman promised more; here it is.