Secondary Liability for Trademark Infringement and the Internet

SECONDARY LIABILITY FOR TRADEMARK INFRINGEMENT

AND THE INTERNET

BY DARIN M. KLEMCHUK, KLEMCHUK KUBASTA LLP

OVERVIEW Origin of Secondary Liability

Specific Places Where it Arises

Remedies

Take Aways

BACKGROUND OF SECONDARY LIABILITY

Contributory Liability - Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S.

844 (1982)—a TWO PART TEST

(a) If a manufacture or distributor intentionally induces another to infringe a trademark...

Or

(b) If a manufacturer or distributor continues to supply its product to one whom knows or has reason to know is engaging in trademark infringement...

The case did not reach the issue of whether a supplier of service could be liable for contributory infringement

Contributor liability could attach in two types of cases involvingproducts:

Domain Name Registrars Domain name registrars have not typically been held contributorily liable without some sort of action outside “core” registering activities.

Lockheed concluded that direct control and monitoring of the instrumentality used by a third party to infringe the plaintiff’s mark permits the expansion of Inwood’s ‘supplies a product’ requirement of contributory infringement. However, monitoring and controlling the instrumentality of the infringement must be coupled with proof that the defendant have actual or constructive knowledge of the alleged infringement.

Lockheed Martin Corporation v. Network

Solutions, Inc.

SPECIFIC INSTANCES WHERE IT ARISES...


Internet WebsitesTo hold a defendant liable for contributory infringement on an Internet website, a plaintiff must prove both that it directly controlled and monitored the activities of the infringing website, and that the defendant had actual or constructive knowledge of the infringement.

Faredeals.com

Internet Service Providers (“ISP’s”)

The level of an ISP’s knowledge of its customer’s infringing website and its involvement in the same directly determines its liability.

Demand letters, take-down notices, and reminders that identify specific websites selling counterfeit goods support a finding of “knowledge” in a contributory liability case.

Louis Vuitton Malletier, S.A. v. Akanoc Solutions


The Online MarketplaceThe court established that trademark owners have the burden of policing their trademarks in online marketplace websites, where online marketplace website owners provide an adequate process to remove potentially infringing listings once reported.

Tiffany Inc. v. eBay, Inc.


Affiliate MarketingThe primary issue in online advertising cases tends to be whether the ad creates confusion as to its source. In the context of keyword-linked search results, infringing ads are the ones that fail to identify the true source of the ad, either by falsely identifying the ad as being from the trademark holder or by giving no indication as to the source of the ad.

1-800 Contacts, Inc. v. Lens.com, Inc.


Search Engine Companies

A search engine company’s potential contributory liability stems from its sale of trademarks, used as keywords or search terms, to third parties.

While the current state of the law is uncertain with respect to the extent necessary of a search engine company’s involvement to constitute contributory liability, some courts have found it only where the search engine company knowingly continued to supply its services to an infringing third party.

Rosetta Stone Ltd. v. Google Inc.


REMEDIES AVAILABLE Lanham Act (15 U.S.C. Section 1117)

Subsection (b)(2) specifically addresses contributory counterfeiting

Plaintiff can elect statutory damages or defendants’ profits or plaintiff’s actual losses resulting from the infringing activity

Law regards contributory and direct infringers as joint tortfeasors

Injunctive Relief under 15 U.S.C. Section 1116(a)

Damages under applicable state law under various state unfair competition laws

SUMMARY AND TAKE AWAYS

Domain Name Registrars

Internet Websites

ISPs

The Online Marketplace

Domain name registrars have not typically been held contributorily liable without some sort of action outside “core” registering activities.

Monitoring and controlling the instrumentality of the infringement must be coupled with proof that the defendant has actual or constructive knowledge of the alleged infringement.

The level of an ISP’s knowledge of its customer’s infringing website and its involvement in the same directly determines its liability.

Trademark owners have the burden of policing their trademarks in online marketplace websites, where online marketplace website owners provide an adequate process to remove potentially infringing listings once reported.

Search Engine Companies -- Potential liability stems from its sale of trademarks, used as keywords or search terms, to third parties.

Affiliate Marketing -- Primary issue in online advertising cases tends to be whether the ad creates confusion as to its source.

SUMMARY AND TAKE AWAYS

Darin Klemchuk is co-founder and managing partner of Klemchuk Kubasta LLP, a Dallas-based IP boutique law firm that offers comprehensive intellectual property legal services, including litigation and enforcement of all forms of intellectual property as well as registration and licensing of patents, trademarks, trade dress and copyrights. To contact Mr. Klemchuk, email him at [email protected]

Technology

Secondary Liability for Trademark Infringement and the Internet