USDC N.D. California, August 28, 2009
- Jury awards trademark and copyright owner $31.5 million for contributory and vicarious trademark infringement and $900,000 for contributory and vicarious copyright infringement against defendant web site hosting companies; jury determined that defendants knew their customers were selling counterfeit goods and had the ability to disable or limit the web site hosting services that their customers were using to sell counterfeit goods but failed to do so.
Plaintiff, the luxury goods company Louis Vuitton Malletier, filed an action for contributory and vicarious trademark and copyright infringement against web site hosting companies Akanoc Solutions, Inc. and Managed Solutions Group, Inc. and Steven Chen, the owner and operator of these companies. Louis Vuitton alleged that the defendants provided web site hosting services to web sites that sold and advertised counterfeit Louis Vuitton products. Louis Vuitton further alleged that the defendant companies were formed for and existed primarily to facilitate the promotion of counterfeit merchandise; that most, if not all, of the web sites hosted by the defendants sold counterfeit goods; that the defendants facilitated communications between the sellers of counterfeit products and their customers; and that the defendants knowingly aided and abetted the distribution of counterfeit goods. Louis Vuitton claimed that the defendants were repeatedly placed on notice of the counterfeit activity which occurred using their hosting services, that the defendants did not take any steps to limit or disable the web hosting services they were providing to their customers selling counterfeit goods, and that the defendants generated revenue and profit from the Internet traffic and counterfeit sales that occurred as a result of their hosting activity.
The jury awarded the plaintiff $31,500,000 for willful trademark infringement and $900,000 for willful copyright infringement. Regarding the trademark infringement claims, the jury concluded that the plaintiff proved that the defendants’ customers were selling counterfeit products, that the defendants knew or should have known their customers were selling counterfeit products, and that the defendants had reasonable means to withdraw their web hosting services but failed to do so. The jury awarded $10,500,000 against each of three defendants for trademark infringement.
Regarding the copyright infringement claims, the jury concluded that the defendants’ customers used the defendants’ services to directly infringe the plaintiff’s copyright, that the defendants knew, or should have known, that one more of the defendants’ customers were using their web hosting services to infringe, or facilitate others to directly infringe, the plaintiff’s copyright, and that the defendants had reasonable means to withdraw their services but failed to do so.
The jury also decided that the defendants failed to prove that they were service providers entitled to immunity from copyright infringement under the “safe harbor” provisions of the Digital Millennium Copyright Act. The jury awarded Louis Vuitton $300,000 against each of three defendants for willful copyright infringement.