Transcript Pirates and Protocols: Trademark Use and Protection on the

Pirates and Protocols:
Trademark Use and Protection on the
Internet
Wednesday, March 18, 2009
7:00 p.m.
New York City Bar Association
42 West 44th Street
New York, NY
Pirates and Protocols: Trademark Use and Protection on the Internet
Moderator
Monica Richman, Partner
Sonnenschein Nath & Rosenthal LLP
Speakers
Mark Fiore
Weil, Gotshal & Manges LLP
Erik Walsh
Arnold & Porter LLP
Heather Greenberg
Associate General Counsel
The Topps Company, Inc.
Mitchell Stein
Partner
Sullivan & Worcester LLP
Jonathan Sirota
Secretary & Director of Legal Affairs
SmartMoney
Kevin Taylor
Partner
Taylor & Mrsich, LLP
Counsel for eBay, Tiffany v. eBay
Counsel for Tiffany, Tiffany v. eBay
Pirates and Protocols: Trademark Use and Protection on the Internet
The format for the discussion will be as follows:
(1) Strategies for enforcement of trademark rights against online
infringers and counterfeiters - a discussion of Tiffany (NJ), Inc.
and Tiffany and Company v. eBay, Inc., 2008 U.S. Dist. LEXIS 53359
(S.D.N.Y., July 14, 2008).
(2) Guidelines for using ‘adwords’ and behavioral advertising on the
Internet - what is happening right now?
(3) Recent developments regarding intellectual property and use on the
Internet.
Pirates and Protocols: Trademark Use and Protection on the Internet
TIFFANY & CO.
v.
eBay Inc.
Pirates and Protocols: Trademark Use and Protection on the Internet
Counterfeiting of the Tiffany Marks

Greatest threat to the Tiffany brand

Until the early-mid 2000’s, anticounterfeiting efforts focused on streetlevel
 Customs Seizures
 Raids
 Canal St.
 Litigation against Individual
Vendors/Manufacturers
Pirates and Protocols: Trademark Use and Protection on the Internet
Counterfeit Trade Explodes on the Internet

Early 2003, Tiffany observes significant number of counterfeit Tiffany items
available on eBay.

Tiffany initially pursues legal action against individual counterfeiters selling
on eBay.

Pursuing legal action against individual eBay sellers does not stem the tide.

Too many

Relative anonymity

Many located abroad

Little likelihood of enforcing judgment
Pirates and Protocols: Trademark Use and Protection on the Internet
Why Sue eBay?
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Active Role in the Sales



eBay takes a fee at:



Listing
Sale
Payment (if through PayPal)



Business advice
Marketing calendars
Advertising assistance (reimbursements)



Inform sellers that “Tiffany” is a top seller
“Hot Lists”
Sponsored links to advertise “Tiffany” on eBay
eBay assists its sellers to help grow their sales
eBay focuses on Luxury Brands
Pirates and Protocols: Trademark Use and Protection on the Internet
Tiffany’s Chain of Distribution

No sale/discounted merchandise

No liquidation

Controlled Chain (No Wholesalers)

No Overruns Allowed by Manufacturers

Full Refund on Returns

Nevertheless, eBay sellers observed offering hundreds
of “Tiffany” items at a time
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Efforts to Prevent Counterfeits
Ineffective:

VeRO
VeRO Program and its Deficiencies
 Rights owners submit a Notice of Claimed
Infringement (“NOCI”)
 Good faith basis (under penalty of perjury) that listing is
infringing
 eBay will remove upon receipt




Burden on rights owner
Not proactive
Too many listings to review
Dynamic nature of eBay
 Timing: Items can be sold between searching, reporting and
removal
 Clever counterfeiters
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Efforts to Prevent Counterfeits
Ineffective:
Fraud Engine

eBay system that flags listings for eBay
employees to review

Most of the filters flag only those items
that are blatantly counterfeit
– e.g., “faux Tiffany”; “counterfeit Tiffany”
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Efforts to Prevent Counterfeits:
Repeat Offenders

Tiffany has identified dozens of repeat
offenders
– Identified numerous sellers that it reported on
3 or more occasions
– Identifies repeat offenders who come back
listing dozens, sometimes hundreds of
“Tiffany” items
Pirates and Protocols: Trademark Use and Protection on the Internet
Tiffany’s VeRO Reporting

Tiffany among the most active VeRO participants
– 2003: 20,915 listings reported
– 2004: 45,242
– 2005: 59,012
– 2006: 134,779
– Between 2003 and trial (November 2007):
284,149

Tiffany among Top 10 VeRO Reporters in 21 of
the 28 months between June 2003 and
September 2005
Pirates and Protocols: Trademark Use and Protection on the Internet
Summary of Tiffany’s Claims at Trial
Contributory Infringement
 Direct Infringement
 False Advertising
 Dilution

Pirates and Protocols: Trademark Use and Protection on the Internet
Arguments on Appeal

Inwood
– General vs. Specific Knowledge
 Snow Crest, Inwood, Fonovisa

Comparative burden analysis

Applicability of Nominative Fair Use doctrine

Public Policy implications of District Court’s
decision
Pirates and Protocols: Trademark Use and Protection on the Internet
Tiffany’s Allegations
•
Tiffany’s central allegation: eBay knowingly facilitated
the sale of counterfeit Tiffany silver jewelry items by
sellers on the eBay website
•
Tiffany’s ancillary allegations: eBay advertised the
availability of Tiffany goods via promotions on its
website and via “sponsored links” on search engines
such as Google and Yahoo
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Anti-Infringement Measures
Context: eBay’s Website
•
More than 200 million registered users worldwide
At least 100 million listings on eBay at any given time
• Approximately 6 million new listings posted each day
• eBay itself does not sell any items
• eBay never possesses nor inspects items listed on its
website
• Subject to eBay policies, sellers are responsible for
creating their own listings
•
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s VeRO Program
eBay’s “Notice-and-Takedown” System
• eBay allows rights owners to report listings through
VeRO
• eBay automatically removes reported listings
• More than 14,000 rights owners participate in VeRO
• Thousands of listings are removed each week
• All fees associated with removed listings are refunded
• Listings are removed within 24 hours, usually in under 4
hours
•
Pirates and Protocols: Trademark Use and Protection on the Internet
Notice of Claimed Infringement
Pirates and Protocols: Trademark Use and Protection on the Internet
Reporting an eBay Listing
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Responses to Tiffany’s Reports
•
The trial record showed that eBay routinely removed
listings that Tiffany reported to it
•
eBay never refused to remove a reported listing
•
Evidence showed that eBay’s response rate was close
to 100 percent
•
Tiffany could point to only 15 instances in which eBay
allegedly did not respond to a report and thus required
Tiffany to follow up (based on nearly 300,000 reported
listings)
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Additional Key Anti-Infringement Measures
More than 4,000 eBay and PayPal employees are
devoted to anti-infringement/anti-fraud activities
• eBay requires users to abide by its User
Agreement and has implemented policies that
forbid infringing items
• eBay uses pop-up warning messages and
undertakes efforts to educate users about
intellectual property rights
• eBay allows rights owners to create “About Me”
webpages to provide information about
themselves
•
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Fraud Engine
eBay proactively monitors listings on its site via
a “fraud engine” consisting of tens of thousands
of search rules
• The fraud engine automatically flags for further
review and removal listings that may be offering
infringing items
• Listings are flagged if they explicitly offer
“knock-off” items or meet other criteria of
suspiciousness
• Thousands of listings are flagged each day
•
Pirates and Protocols: Trademark Use and Protection on the Internet
Suspensions of eBay Users
eBay suspends users, on both temporary and
permanent bases, based on willful or repeat
violations
• eBay suspends hundreds of thousands of sellers
each year, including tens of thousands for
infringing conduct
• Tiffany could point to only a handful of
instances where users were alleged to have not
been suspended, and the District Court did not
credit those instances
•
Pirates and Protocols: Trademark Use and Protection on the Internet
District Court’s Application of Inwood
•
The Legal Standard:
“[I]f a manufacturer or distributor intentionally
induces another to infringe a trademark, or if it
continues to supply its product to one whom it
knows or has reason to know is engaging in
trademark infringement, the manufacturer or
distributor is contributorially responsible for any
harm done as a result of the deceit.”
Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982).
Pirates and Protocols: Trademark Use and Protection on the Internet
Specific Versus Generalized Knowledge
•
The District Court held that generalized knowledge of infringing
activity is insufficient under Inwood: “[C]ompanies like eBay cannot
be held liable for trademark infringement based solely on their
generalized knowledge that trademark infringement might be
occurring on their websites.”
•
“[T]rademark plaintiffs bear a high burden in establishing
‘knowledge.’” Gucci Am., Inc. v. Hall & Assocs., 135 F. Supp. 2d
409, 420 (S.D.N.Y. 2001).
•
Drawing support from copyright law, the District Court noted that
“generalized knowledge that copyright infringement may take place
in an Internet venue is insufficient to impose contributory liability.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Rejection of Restatement

The Restatement (Third) of Unfair Competition states that contributory
infringement occurs where a defendant “fails to take reasonable
precautions” against infringing activity in circumstances in which that
activity “can be reasonably anticipated.”
•
Noting that the Supreme Court in Inwood called the “reasonable anticipation”
standard “watered down and incorrect,” the District Court held that the
Restatement did not govern: “Tiffany’s argument is foreclosed by Inwood itself.”
•
“In determining whether eBay is liable, the standard is not whether eBay could
reasonably anticipate possible infringement, but rather whether eBay continued
to supply its services to sellers when it knew or had reason to know of
infringement by those sellers.”
•
The rejection of the “reasonable anticipation” standard is consistent with the
principle that generalized knowledge is insufficient for contributory liability.
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Alleged Knowledge

The District Court:
•
rejected Tiffany’s demand letters as a basis for knowledge, concluding
that demand letters generally “are insufficient to impute knowledge as
to instances not specifically identified in such notices, particularly in
cases where the activity at issue is not always infringing.”
•
rejected Tiffany’s “five-or-more” rule, by which Tiffany alleged that
any seller of “five or more” Tiffany items is “almost certainly” selling
counterfeit items: “Tiffany’s own CEO disavowed the importance of
the five-or-more rule.”
•
declined to credit the “buying programs” Tiffany conducted in an
attempt to determine the amount of counterfeit Tiffany items on
eBay: “Tiffany entirely suspended its normal policing procedures
during the programs.”
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Responses When It Had Knowledge

When advised of specific instances of infringement,“eBay responded
appropriately.”
• Even if a defendant has knowledge of infringing activity, contributory
liability only attaches if the defendant fails to take steps to remedy it,
that is, if the defendant “continues to supply” its product or service.
• “Here, when Tiffany put eBay on notice of specific items that Tiffany
believed to be infringing, eBay immediately removed those listings.”
• Tiffany conceded at trial “that eBay always acted in good faith and
never refused to remove a listing after a NOCI had been filed.”
•
In addition, “when eBay had knowledge that a seller was repeatedly
engaging in counterfeit activity, eBay’s pattern was to suspend that
seller and then take further corrective action.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Authentic Tiffany Items on eBay

Relevant to the District Court’s conclusion was evidence showing
that authentic Tiffany items are sold on eBay.
• “[A] substantial number of authentic Tiffany goods are sold on eBay,
including both new and vintage silver jewelry, sometimes in lots of five
or more.”
• The doctrine of contributory trademark infringement “cannot be used as
a sword to cut off resale of authentic Tiffany items.”
•
“eBay and other online market websites may properly promote and
facilitate the growth of legitimate secondary markets in brand-name
goods.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Trademark Owner’s Policing Duty
•
“Tiffany and eBay alike have an interest in eliminating counterfeit
Tiffany merchandise from eBay.”
•
“[T]he heart of this dispute is . . . who should bear the burden of
policing Tiffany’s valuable trademarks in Internet commerce.”
•
“The law is clear: it is the trademark owner’s burden to police its
mark”; “Tiffany must ultimately bear the burden of protecting its
trademark.”
•
See also, e.g., Standing Stone Media, Inc. v. Indiancountrytoday.com, 193 F. Supp. 2d 528,
532 (N.D.N.Y. 2002) (trademark owners have duty to “police and enforce their trademark
rights”); McCarthy on Trademarks and Unfair Competition (“[C]orporate owners of
trademarks have a duty to protect and preserve the corporation’s trademark assets through
vigilant policing and appropriate acts of enforcement.”).
Pirates and Protocols: Trademark Use and Protection on the Internet
Willful Blindness in Trademark Law
•
As a corollary to the knowledge requirement for
contributory trademark liability, courts have recognized
the concept of “willful blindness.”
•
“To be willfully blind, a person must suspect
wrongdoing and deliberately fail to investigate.” Hard
Rock Cafe Licensing Corp. v. Concession Servs., Inc.,
955 F.2d 1143, 1149 (7th Cir. 1992).
•
But a defendant “has no affirmative duty to take
precautions against the sale of counterfeits.” Hard Rock,
955 F.2d at 1149.
Pirates and Protocols: Trademark Use and Protection on the Internet
eBay’s Alleged Willful Blindness


The District Court held that the evidence did not support
a finding of willful blindness by eBay.
The court instead found, among other things, that:
• eBay had committed as much as $20 million each year to tools
to promote trust and safety on its site.
• one quarter of eBay’s workforce was devoted to trust and safety.
• eBay proactively searched listings on its site for indications of
fraudulent activity.

“Put simply,” the court concluded, “it cannot be said
that eBay purposefully contrived to avoid learning of
counterfeiting on its website, or that eBay failed to
investigate once it learned of such counterfeiting.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Tiffany’s Remaining Claims

The District Court rejected Tiffany’s remaining claims of direct
trademark infringement and false advertising, direct and
contributory dilution, unfair competition, and analogous state-law
claims.

Tiffany challenged eBay’s use of Tiffany’s trademarks on its website
and its purchases of “sponsored links” on Google and Yahoo to
advertise the availability of Tiffany jewelry on eBay.
• These practices are protected by the doctrine of “nominative fair use,”
pursuant to which “trademark owners cannot prevent others from
making a descriptive use of their trademark.”
• The doctrine “is essential because it is undisputed that trademark
owners cannot use trademark law to prevent the resale of authentic,
trademarked goods.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral
Advertising
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising
Advertising targeted to a specific individual based on
that person’s web-surfing behavior.
With behavioral advertising, this means that two
people could see vastly different ads when viewing
the identical webpage at the same time.
Pirates and Protocols: Trademark Use and Protection on the Internet
Contextual Advertising
What is contextual advertising?
•
“Keywords” are pre-identified relevant terms that
are used to trigger appropriate “contextual advertising.”
•
Keywords can be either generic terms or trademarks
(e.g., “cars” and “insurance”; “Ford” and “GEICO”).
Pirates and Protocols: Trademark Use and Protection on the Internet
Contextual Advertising
• Contextual advertising providers, such as adware
companies and search engine providers, program their
systems to match interested consumers to contextual
advertising based on keywords.
• Under the contextual advertising model, advertisers bid
on “keywords” that an Internet user might enter in a
search query. The search engine then matches the
advertisement and sponsored hyperlink to the keyword
the advertiser purchased. When an Internet user enters
the keyword as a search, it triggers the sponsored link to
appear on the search results page either to the right or
immediately above the natural search results.
Pirates and Protocols: Trademark Use and Protection on the Internet
Contextual Advertising
Advertisers’ Position:
The practice should be considered a
permissible noncommercial use or fair use
of a trademark that places an
advertisement in front of a potential
purchaser, which is no different from other
types of competitive / comparative
advertising.
Pirates and Protocols: Trademark Use and Protection on the Internet
Contextual Advertising
Trademark Owners’ Position:
Many trademark owners consider the use of their
marks as keywords to constitute infringement or
unfair competition that improperly diverts Internet
traffic from their sites and confuses consumers about
the source of the products they encounter via pop-up
ads, banners and sponsored search results.
But does the sale of trademarks as keywords to
trigger ads represent “use” in commerce, a
prerequisite to an infringement cause of action under
the Lanham Act?
Pirates and Protocols: Trademark Use and Protection on the Internet
Statutory Requirements
Trademark infringement claims under § 32(1) of the
Lanham Act, 15 U.S.C. § 1114(1)2, require that the
plaintiff establishes that
(1) it has a valid mark that is entitled to protection
under the Lanham Act; and that
(2) the defendant used the mark,
(3) in commerce,
(4) ‘in connection with the sale . . . or advertising of
goods or services,’ 15 U.S.C. § 1114(1)(a),
(5), without the plaintiff's consent.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Statutory Requirements
The plaintiff must also show that the defendant's use of
that mark “is likely to cause confusion . . . as to the
affiliation, connection, or association of [the defendant]
with [the plaintiff], or as to the origin, sponsorship, or
approval of [the defendant's] goods, services, or
commercial activities by [the plaintiff].” 15 U.S.C. §
1125(a)(1)(A).
Pirates and Protocols: Trademark Use and Protection on the Internet
Use in Commerce
Courts are split on whether the sale and/or purchase of another's
trademark as a keyword constitutes use of the mark in commerce.
Does not constitute “Use in Commerce”
Fragrancenet.com Inc. v. Fragrancex.com Inc., 439 F. Supp. 2d 545
(E.D.N.Y. 2007) (12 ECLR 653, 7/18/07)
Site Pro-1 Inc. v. Better Metal LLC, U.S. Dist. LEXIS 34107 (E.D.N.Y.
May 9, 2007) (12 ECLR 459, 5/16/07)
Merck & Co. v. Mediplan Health Consulting Inc., 431 F. Supp. 2d 425
(S.D.N.Y. 2006) (11 ECLR 375, 4/5/06)
Pirates and Protocols: Trademark Use and Protection on the Internet
Use in Commerce
Does Constitute “Use in Commerce”
Government Employee Ins. Co. v. Google Inc., 330 F. Supp. 2d 700 (E.D.
Va 2004) (9 ECLR 772 9/15/04)
Google Inc. v. American Blind and Wallpaper Factory Inc., No. 03-05340
(N.D. Cal. March 30, 2005) (10 ECLR 361, 4/6/05)
Buying for the Home v. Humble Abode LLC, D.N.J., No. 03-2783,
10/20/06
Pirates and Protocols: Trademark Use and Protection on the Internet
Initial Interest Confusion
In 2004 the Ninth Circuit held - without addressing the "use in
commerce" question - that the use of trademarks to trigger the
display of banner advertising creates initial interest confusion
(Playboy Enter. Inc. v. Netscape Communications Corp.,354 F. 3d
1020 (9th Cir. 2004) (9 ECLR 55 1/21/04)
International Profit Associates, Inc. v. Paisola, 461 F. Supp. 2d 273
(D.N.J. 2006)
Edina Realty Inc. v. MLSonline.com, Civ. 04-4371, 2006, WL
737064 (D. Minn. March 20, 2006)
Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal.
Feb. 15, 2008)
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
• Self-Regulatory Principles For Online Behavioral Advertising
(“Principles”) - Federal Trade Commission staff report issues on
February 12, 2009.
• Online Behavioral Advertising “means the practice of tracking a
consumer’s online activities over time – including searches the
consumer has conducted, the web pages visited, and the content
viewed - in order to deliver advertising targeted to the individual
consumer’s interests”
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
• FTC – First Party Behavioral Advertising “is behavioral
advertising by and at a single website, which practice is more likely
consistent with consumer expectations, and less likely to lead to
harm than other forms of behavioral advertising”
• FTC – Contextual Advertising is “advertising based on a
consumer’s current visit to a single web page or single search query
that involves no retention of data about the consumer’s online
activities - beyond that necessary for the immediate delivery of an
ad or search result – is likely to be less invasive than other forms of
behavioral advertising.”
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
• First Party and Contextual Advertising:
•
Fall outside the scope of the Principles
•
Still subject to other laws and policies that impose
obligations regarding the collection of data
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
• FTC – Personally Identifiable Information and NonPersonally Identifiable Information “in context of behavioral
advertising, rapidly changing technology and other factors have
made the line between personally identifiable and non-personally
identifiable information increasingly unclear.”
• The Principles are designed to serve as the basis for industry self
regulatory efforts to address privacy concerns regarding the
following four (4) aspects of online consumer data collection:
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
First Aspect: Transparency and Consumer Control
• Meaningful disclosure to consumers about the practice of behavioral
advertising
• Disclosures within a privacy policy/terms of use is no longer
considered “best practice”
• Disclosure via a prominent link attached to each targeted
advertisement served or that is placed on the home page linking to
a page describing behavioral advertising practices
• A choice to opt out should be easily accessible
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
Second Aspect: Reasonable Security and Limited Data
Retention for Consumer Data
• Reasonable data security measures so that behavioral data does not
fall into the wrong hands
• Retain data only as long as necessary for legitimate business or law
enforcement needs
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
Third Aspect: Affirmative Express Consent Before For
Material Changes To Existing Privacy Promises
• FTC understands that businesses have a legitimate need to change
their privacy policies on a prospective basis to engage in new
advertising practices
• Prospective changes - affirmative express consent is not required
when changes only relate to the use of newly collected data in
accordance with a changed privacy policy. However, prominent
disclosure of the changed privacy policy as well as an easily
accessible choice to opt out is expected
• Companies are bound by promises made to consumers at the time
of data collection regarding how such data is collected, used, and
shared
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
Third Aspect Continued
• “Material” refers to uses of behavioral data that are materially
different from promises made at the time the data was collected
• “Retroactive” and “Material” changes to privacy policies require
affirmative express consent
• “Affirmative express consent” - pre-checked boxes, disclosures
buried in a privacy policy, and other similar mechanisms are not
sufficient to constitute affirmative consent.
• However, the Principles do not list any specific mechanisms that are
sufficient to constitute affirmative consent
Pirates and Protocols: Trademark Use and Protection on the Internet
Behavioral Advertising Guidelines
Fourth Aspect: Affirmative Express Consent To (Or
Prohibition Against) Using Sensitive Data For
Behavioral
Advertising
•
“Sensitive Data” – is data such as information about
children, medical information, account numbers, sexual
orientation, or finances
•
Note: Certain data may also be subject to obligations
under other policies or laws, such as children’s data (COPPA),
health data (HIPAA), and financial data (GLB).
Source – February 2009 FTC Staff report titled “Self-regulatory
Principles For Online Behavioral Advertising”
Pirates and Protocols: Trademark Use and Protection on the Internet
IAB Advertising Addendum
• IAB's Board of Directors Adopts Privacy Guidelines for Interactive
Advertising
• Applicable to Internet media companies, ad serving organizations
and rich media vendors
• Meant to be an addendum to the existing IAB standard terms and
conditions
Pirates and Protocols: Trademark Use and Protection on the Internet
Case Law Round-up
Pirates and Protocols: Trademark Use and Protection on the Internet
ISP “Secondary Liability”

ISPs can be contributorily liable for
trademark infringement
– Factors:
 Defendant intentionally induced the infringement;
or either
 Defendant continued to supply an infringing
product to a third party after learning that the
product was infringing; OR
 For on-line services, that defendant had
knowledge of and direct control over the infringing
activity.
Pirates and Protocols: Trademark Use and Protection on the Internet


ISPs can be vicariously liable for
trademark infringement
To establish vicarious liability, defendant
and infringer must have either:
– a partnership, or authority to bind one
another; or
– otherwise exercise joint ownership or control
over the infringing product.
Pirates and Protocols: Trademark Use and Protection on the Internet

Contributory and Vicarious Liability claims
have generally failed against:
– Credit card companies. see e.g., Perfect 10,
Inc. v. Visa Int’l Serv. Ass’n, 2004 WL
1773349 (N.D. Cal. Aug. 5, 2004);
– Search engines, see, e.g., Newborn v. Yahoo,
Inc., 391 F.Supp.2d 181 (D.D.C. 2005); and
– Domain name registrars, see, e.g., Lockheed
Martin Corp. v. Network Solutions, Inc., 194
F.3d 980 (9th Cir. 1999).
Pirates and Protocols: Trademark Use and Protection on the Internet

Secondary liability claims have succeeded
against ISPs on basis that ISPs are
analogous to brick-and-mortar “landlords”
who are aware of, and benefit from, the
infringer’s legal activities
– See, e.g., Gucci Am. V. Hall & Assocs., 135
F.Supp.2d 409 (S.D.N.Y. 2001)
Pirates and Protocols: Trademark Use and Protection on the Internet

Recent Cases:
– Louis Vuitton Malletier SA v. Akanoc Solutions, Inc.,
591 F.Supp.2d 1098 (ND Cal. Dec. 23, 2008) (claims
of ISP contributory and vicarious liability survive
motion for SJ)
– Heartland Beef Inc. v. Lobel’s of New York LLC, (S.D.
Tex. Feb. 5, 2009) 2009 WL 311087 (Yahoo not liable
under LA for causing sponsored link to trigger based
on user-inputted term)
– Voyageurs du Monde, Terres d’Aventure v. Google,
(TGI Paris, Jan. 7, 2009) (Google liable for failing to
establish means to verify advertisers had right to use
ad words and failing to make clear that ad words
were advertisements)
Pirates and Protocols: Trademark Use and Protection on the Internet
Using Marks on or in Web Pages
 Risk of Liability arises from unauthorized
use of other’s trademarks on:
 Web Pages
 Hyperlinks
 Metatags
 Liability can arise from “initial interest
confusion.”
Pirates and Protocols: Trademark Use and Protection on the Internet

Recent Cases:
– BabyAge.com Inc. v. Leachco Inc., 2009 WL 82552
(M.D. Pa. Jan. 12, 2009) (on-line company may be
liable for providing links to its products on web page
despite listing other company as “featured brand”)
– Indiaweekly.com LLC v. Nehaflix.com Inc., 2009 WL
189867 (D. Conn. Jan. 27, 2009) (on-line use of
competitor’s tm on web site in order to appear in
search engine hits states actionable claim under LA)
Pirates and Protocols: Trademark Use and Protection on the Internet

Recent Cases (cont.)
– Market America v. Optihealth Products, Inc., 2008 WL
5069802 (M.D. N.C. Nov. 21, 2008) (use of
competitor’s tm in metatags and as trigger for
sponsored links constituted “use in commerce” under
LA)
– Suarez Corp. Indus. V. Earthwise Technologies, Inc.,
2008 WL 4934055 (W.D. Wash. Nov. 14, 2008) (use
of competitor’s tm in domain names and metatags
likely caused confusion, despite disclaimer)
Pirates and Protocols: Trademark Use and Protection on the Internet
Domain Names

Domain Names can be:
– Hijacked, see 15 U.S.C. Sec 1125(d) (requires
bad faith)
– Reverse Hijacked, see 15 U.S.C. sec.
1114(2)(D)(v) (mark must be suspended,
disabled or transferred)
– Tasted
– Kited
Pirates and Protocols: Trademark Use and Protection on the Internet

Representative Domain Tasting Cases:
– Neiman Marcus Group, Inc. v. Dotster, Inc.,
C06-5292RBL (W.D.Wash. May 30, 2006)
– Neiman Marcus Group, Inc. v. Name.com,
LLC, 07-CV-00525-WYD-BNB (D.Co. March 15,
2007)
– Dell, Inc. v. BelgiumDomains, LLC, No. 0722764 (S.D.Fla. Nov. 2, 2007) (PI granted
Nov. 20, 2007)
Pirates and Protocols: Trademark Use and Protection on the Internet




Are domain names contract rights or
property rights?
If property, where are domain names
located for jurisdictional purposes?
Can domain names be seized or forfeited?
See Kentucky v. 141 Domain Names, 08CI-1409 (Ky Cir. Court, Oct. 16, 2008),
rev’d No. 2008-CA-002000-OA (Ky. Ct.
App. Jan 20, 2009).
Pirates and Protocols: Trademark Use and Protection on the Internet
Personal Jurisdiction

When does a web page create minimum
contacts with a particular state?
– Passive vs. Interactive Websites: a sliding
scale
– Interactively, however, may be insufficient:
still need “purposeful availment”
– Also, economic harm to in-state plaintiff may
satisfy state long-arm statutes.
Pirates and Protocols: Trademark Use and Protection on the Internet

Recent Cases:
– Portfolio Solutions LLC v. ETF Portfolio
Solutions, Inc., 2009 WL 111908 (E.D. Mich.
Jan. 15, 2009) (web site was basis for
jurisdiction under federal and Michigan law)
– Chanel, Inc. v. Guetae, 2009 WL
348501(D.N.J. Feb. 11, 2009) (“highly
interactive” web site insufficient basis for
jurisdiction absent purposeful availment)
Pirates and Protocols: Trademark Use and Protection on the Internet
 Recent Cases (cont.)
– Kruska v. Perverted Justice Foundations, Inc., 2009
WL 577708 (D. Ariz. Feb. 2, 2009) (registration of
domain name in AZ and location of server in AZ
insufficient to establish personal jurisdiction over
defendant)
– Family Watchdog LLC v. Schweiss, 2009 WL 276856
(S.D. Ind. Feb. 5, 2009) (interactivity of web site
insufficient by itself: there needs to be nexus
between website and cause of action)
Pirates and Protocols: Trademark Use and Protection on the Internet
Virtual Trademarks:
The Fight over SLART
 The Lanham Act protects trademarks
created and used in virtual worlds against
real and virtual infringement.
 Minsky v. Linden Research (N.D.N.Y. 2008)
 What about protecting real world
trademarks in virtual worlds?
Pirates and Protocols:
Trademark Use and Protection on the Internet
Thank you to our speakers:
Mark Fiore
[email protected]
Heather Greenberg
[email protected]
Jonathan Sirota
[email protected]
Mitchell Stein
[email protected]
Kevin Taylor
[email protected]
Erik Walsh
[email protected]