In what is being called a landmark decision, a jury in U.S. District Court for the Northern District of California this week found that two ISPs and their owner are liable for contributing to trademark and copyright infringement for hosting sites selling counterfeit Louis Vuitton merchandise.
The jury awarded $32.4 million in damages to Louis Vuitton in a lawsuit against Akanoc Solutions Inc. and Managed Solutions Group Inc., two California-based hosting companies both owned by Steven Chen of Fremont, California. The Plaintiff argued that the ISPs should have known sites that they were hosting were selling counterfeit LV goods, and therefore demonstrated contributory liability for trademark infringement by providing the infrastructure that enabled the sale of the fake merchandise.
In 2008, Louis Vuitton won a $63 million judgment against eBay in a French court for the sale of fake LV goods on the popular auction site (see French Court Orders eBay to Pay $61 Million for Sale of Counterfeit Goods).
With the latest case, LV argued that the ISPs waived their “safe harbor” immunity under the Digital Millennium Copyright Act (DMCA) because they knowingly hosted sites selling the counterfeit material.
Per the LV complaint, the hosting companies “were formed for and exist primarily to facilitate the promotion and advertisement of offers for counterfeit and infringing merchandise”.
Some of the sites offering fake LV merchandise included luxury2us.com, louis-vuitton-bags.org, and handbagsell.com, all of which overtly offered unauthorized and unlicensed replica products, with marketing statements such as “no one will know that they are not the original Louis Vuitton”, though they items featured the LV trademarked symbols.
Attorneys representing LV notified the two ISPS of the counterfeit sites and reportedly received no responses.
The jury found both Chen and his two ISP companies liable for aiding in the infringement, awarding $31.5 million in damages ($10,500 for each of the ISPs and Chen personally).
The Court is expected to issue a permanent injunction that bans the ISPs from hosting websites that sell counterfeit Louis Vuitton merchandise.
The following is a press release issued by Louis Vuitton:
Jury Finds Akanoc Solutions Inc., Managed Solutions Group Inc.and Steve Chen
Liable for Contributory Trademark and Copyright Infringement
NEW YORK–(Business Wire)–
Louis Vuitton Malletier, S.A. (“Louis Vuitton”) part of LVMH, the world`s
leading luxury group, today announced that it has won the lawsuit it filed in
2007 against the California based Internet hosting business of Akanoc Solutions,
Inc., Managed Solutions Group, Inc., and Steven Chen (the “Akanoc Defendants”)
in the United States District Court, Northern District of California (San Jose).
On August 28th, the jury found the Akanoc Defendants liable for contributory
trademark and copyright infringement, and awarded statutory damages in the
amount of $32,400,000.00. The court is expected shortly to issue a permanent
injunction banning the Akanoc Defendants from hosting websites that sell
counterfeit or infringing Louis Vuitton goods.
Nathalie Moullé-Berteaux, Intellectual Property Director of Louis Vuitton, said,
“We are very pleased that the jury recognized the Akanoc Defendants`
contributory liability. This decision is another important step towards reducing
the illegal activity of websites selling counterfeit merchandise and enforcing
the rule of law on the Internet. The Akanoc Defendants` specific business model
of providing unmanaged server capacity to web hosting resellers does not exempt
them from taking active steps to effectively prevent infringing activity upon
notification from an intellectual property rights owner. This case is a
particularly important one in that it involves the successful application on the
Internet of the theory of contributory liability-those who know or should have
known that the business operations, for which they provide venues are conducting
illegal activities, have an obligation to ensure those business operations are
legal.
“The size of this award should make it clear to all Internet Service Providers
(ISPs) that they cannot act, or fail to act, with impunity when a trademark
owner provides notice that websites hosted by the ISP are selling counterfeit
goods. We believe the size of the damages awarded should serve as a deterrent to
other ISPs who may consider ignoring counterfeit trade on the websites they
host. Louis Vuitton will continue its fight throughout the world-concrete and
virtual- to protect its brand and customers against counterfeiting.”
Andy Coombs, Louis Vuitton`s counsel, said, “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.”
About Louis Vuitton
The world leader in luxury, Louis Vuitton has been synonymous with the art of
stylish travel since 1854. Since 1987, it has been part of LVMH/Moët Hennessy
Louis Vuitton, the world`s most prestigious luxury goods group headed by Bernard
Arnault. Since 1997, with the arrival of the designer Marc Jacobs, it has
extended its expertise to women`s and men`s ready-to-wear, shoes, watches and
jewelry, sunglasses, combining traditional craftsmanship with flair and
innovation to create a complete lifestyle experience.
Past articles published by the Original Prop Blog related to other legal disputes and court proceedings can be found via the portal below:
Jason DeBord