In July 2008, the Southern District of New York ruled that eBay could not be held liable for direct or contributory trademark infringement or dilution in a suit brought by retailer Tiffany & Co. Tiffany had argued that eBay should be liable for trademark infringement because it allowed counterfeit Tiffany items to be sold on its auction site. The court found that eBay’s use of Tiffany’s trademarks was nominative fair use and that it was the trademark owner’s burden to police its mark; eBay could not be required to monitor its site for counterfeit goods simply because of “generalized knowledge” that trademark infringement might be occurring on its site. Tiffany has appealed the case to the Second Circuit.

Not to be discouraged from fighting the sale of counterfeit goods, one retailer, Louis Vuitton, has found a new target of liability: the web host itself, rather than the website. The fashion retailer sued eBay’s web hosts, including Akanoc Solutions, Inc., in the Northern District of California claiming contributory copyright and trademark infringement. Louis Vuitton alleged that the web hosts “knowingly allowed and encouraged certain websites to use Defendants’ services for infringing Plaintiff’s valid trademarks and copyrights.”

Judging from the California court’s summary judgment ruling issued in December, targeting the web host may prove a more successful strategy than suing a site like eBay. The court denied summary judgment to Akanoc, holding that a web host can be contributorily liable for sales of allegedly counterfeit goods that are sold on its websites. The court granted summary judgment on Plaintiff’s vicarious infringement claims but allowed the contributory claims to go forward since Louis Vuitton had presented emails from the web host indicating the host’s knowledge that the infringing acts were occurring on their sites, and the host still failed to take preventive measures against them.

Interestingly, the court did not cite the Tiffany case, and trademark holders will have to wait and see whether suing the web host of an online auction site is a new viable weapon for protecting products and designs from counterfeit sales, or whether the court will still ultimately find for the defendant and place the burden on the trademark holder. For more information on the court’s ruling, click here.

Rachel Friedman

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