Web Hosts Hit With $32 Million Judgment For Content

mikesd81 tips news that a California jury has found two web hosting companies liable for "contributing to trademark and copyright infringement" after hosting web sites that sold counterfeit Louis Vuitton items. Both companies are owned by the same man, Steven Chen, and are being ordered to pay $32 million in fines. A similar judgment for $61 million went against eBay last year for facilitating the sale of counterfeit Louis Vuitton merchandise. "The US District Court for the Northern District of California is expected to issue a permanent injunction banning the internet service providers from hosting Web sites that selling fake Louis Vuitton goods in the future, the company said. Attorneys for the luxury goods maker said in a statement that the case is the first successful application on the internet of the theory of contributory liability for trademark infringement. Under this theory, companies that know, or should know, that they are enabling illegal activities have an obligation to remedy the situation. Entities that fail to do so, as Louis Vuitton alleged in this case, can be held legally responsible for contributing to the illegal activities."

Comments

Jury Selection

[theY4Kman]

I'm glad the defense chose people aware of the DMCA.

Re:Jury Selection

[metziel]

Actually, reading through the actual jury ruling (sorry, scribd is the best I can find), jury question #12 explicitly asks:

Did Defendants prove by a preponderance of evidence that they are service provides [sic] who acted in a manner that entitles Defendants to the "safe harbor" provisions of the Digital Millennium Copyright Act?

the jury answered "no" for all three parties, including the service provider. They considered the DMCA and rejected that defense.

It looks to me like this is a lot of people getting upset over nothing; to the best I can tell (without access to other court documents), the host blatantly ignored DMCA-like steps to mitigate the situation, acted willfully to support the copyright infringers, and got financial compensation for doing so. Justice was served.

Re:Jury Selection

[Zombywuf]

There have been a few cases recently of fashion designers suing people selling goods that were legitimate goods, but were not being sold through approved vendors. Fashion designers are the kind of people who get uptight about their stuff appearing on eBay because it damages their brand. The press releases all said counterfeit goods, but that's not my definition of counterfeit. I wonder if this case was the same.

Eh not really a free speech issue

[Brian Gordon]

The government has wiiiiiiiiiiiiiiide powers to regulate commerce. I'm not really concerned if they mess with sites linked by money to the real world- it doesn't stop the flow of information.

Re:Eh not really a free speech issue

[evilkasper]

Yeah but isn't this setting a bad precedent? This basically says webhosts are responsible for their clients content. Sure that may seem fine and dandy, but for large webhosts, verifying that all your clients have legal and legitimate content and goods posted would be a nightmare.

Re:Eh not really a free speech issue

[wizardforce]

The government has wiiiiiiiiiiiiiiide powers to regulate commerce

some [including myself] would argue that the government's powers over commerce are *too exansive* often these powers lead to violating other rights [no knock raids, warrent-less surveillance etc...] The drug war and draconian copyright laws as examples.. The government has given its self the power to ruin peoples' lives to protect intellectual property and prosecute non-violent drug use. There is something very un-nerving about it all.

Re:Eh not really a free speech issue

[abigsmurf]

Hosts are under no obligation to actively investigate their content. In this case the hosts were informed about illegal content and took no action against it. This wasn't a case of them not spotting 1 website out of 1000 doing illegal activity, it was a case of them knowing about the activity but not caring.

Re:Eh not really a free speech issue

[wizardforce]

Yes it rather is setting a nasty precedent. Either these webhosts will filter the heck out of their content and lose out to some other site that doesn't [eg. the pirate bay] or copyright claims are nigh unenforceable for small acts of copyright infringement. Unfortunately the reality is likely a combination of both... Sites will be liable for others' content and fail miserably to both stay afloat and filter their conetent.. *And* piracy/infringement will continue in the spirit of the internet routing around the damage that is the copyright/trademark system.

Re:Eh not really a free speech issue

[clickclickdrone]

I must admit, I didn't read the article (c'mon) but in that case, I have little sympathy for the hosting company.

Re:Eh not really a free speech issue

[Anonymous Coward]

It is a freedom issue though.
If you hold the host liable what's next, surveillance cameras in hotel rooms making sure no one is engaging in illegal activities?

Re:Eh not really a free speech issue

[sjames]

Frequently, sites that are doing nothing wrong whatsoever are targeted by threatening their provider or at least making bogus IP claims to the provider. Shall we make the rule take down first, ask questions later? How will that play when a whistle blower's site is taken down for IP violations when Badco claims that the fact that they're dirty cheating scum is their valuable IP?

If I tell your bank that you're a fraud artist, shall they freeze your account and in the process destroy your business? Should they have any duty whatsoever to determine where the money comes from? If banks were held liable for every illegal transaction they unwittingly contribute to, they'd have been out of business a long time ago.

It seems to me that law enforcement and the courts are the ones who are supposed to decide when someone is committing a crime. Then the court should produce a takedown order. Naturally, an ISP ignoring a valid court order would be a very different matter, but until this went to court, all they had was a few letters purporting to be from a foreign company alleging trademark infringement.

Re:Eh not really a free speech issue

[Anonymous Coward]

Hosts are under no obligation to actively investigate their content. In this case the hosts were informed about illegal content and took no action against it. This wasn't a case of them not spotting 1 website out of 1000 doing illegal activity, it was a case of them knowing about the activity but not caring.

Excellent. Now I can sue Qwest and AT&T when telemarketers call me to sell fradulent items. After all, they are also "aiding" in this criminal enterprise...

What's good for the goose is good for the gander.

Re:Eh not really a free speech issue

[klingens]

Shall we make the rule take down first, ask questions later?

We already have that rule, we commonly call it DMCA

Re:Eh not really a free speech issue

[hoooocheymomma]

Yeah because there is no way that this ruling could be used as a precedent in a libel case against a web host.

Re:Eh not really a free speech issue

[Anonymous Coward]

Shall we make the rule take down first, ask questions later?

The rule is: You get a notification, you notify the owner of the site with the alleged violation, you receive an affirmation of legality from the site owner, you do nothing. If you do not receive that affirmation, then you suspend the site.

Re:Eh not really a free speech issue

[bignetbuy]

There is a "reasonable man" test here. The hosting company was approached by the manufacturer of said bags. The manufacturer, who can speak authoritatively about the bags, complained about a hosting company's customer selling fakes. The hosting company need only look at the website to confirm. Instead they ignored the problem. They got what they deserved.

Using your example, the bank would, or should ask you questions about the alleged fraud. When they find out you're a kook, they hang up on you.

Re:Eh not really a free speech issue

[sjames]

Except that the DMCA allows the ISP to put it back up if their client tells them the claim is false. The DMCA then holds the ISP harmless.

Re:Eh not really a free speech issue

[sonnejw0]

This is a Renter's issue. If I lease out an office space to people whom I know are dealing cocaine, I get put in prison too unless I notify authorities and cooperate with the investigation. The host being penalized for knowingly hosting a website dealing illegally in IP is analogous. What's the hubbub about? Seems reasonable to me.

No one suggested the host had to take-down the site, the host probably should have notified the IP holder and worked with authorities. It's not the host's responsibility to kick his leasees out of his office space, in fact the host has a legal obligation to not interfere with a leasee's space unless invited in during the terms of the lease. The IP holder has no authority to demand a takedown, only a judge does, but you can cooperate to get to the bottom of the issue instead of being an antisocial asshat that ignores everyone. A simple call a lawyer "I've been notified that a website I host is dealing in illegal items and I'm calling to cooperate with any investigations currently underway or that you will initiate." Not so hard.

If you receive a takedown notice, take it to a lawyer and say you want to cooperate but need to validate the notice, have your lawyer contact the author of the takedown to say you're cooperating but need more information such as patent information or copyright filings. A takedown notice is not a judicial document, you need a judge for that, and if you initiate the judicial process through cooperation no judge will fine you excessively if you unwittingly facilitated the activity. Don't get so paranoid. It's like the internet is filled with twelve year-olds that put MP3s up on their Geocities page to look like a 'cool' technogangsta and don't know what their rights are or how to be a good responsible citizen.

Re:Eh not really a free speech issue

[Vicarius]

The manufacturer, who can speak authoritatively about the bags...

You making the same incorrect assumption that the judge did in this case. Manufacturer has no idea if bags are fake until they buy and test them.

Low price alone does not mean that merchandise is fake. Some items might have been bought on clearance at outlets (which already have pretty good discounts), while others could have been "taken" out of back door in the factory (which alone does not make product a "fake").

On eBay, of instance, luxury manufacturers try to control prices of their products by sending take down notices to everyone who tries to undercut their retail prices. First Sale Doctrine does not seem to apply to people with deep pockets.

Re:Eh not really a free speech issue

[sjames]

There is a trail of emails showing the ISP doing exactly that.

This has chilling effect written all over it.

Re:Eh not really a free speech issue

[FooAtWFU]

The DMCA - the good part - at first sounds like it should be applicable and good, but it seems that it wasn't designed with trademarks in mind. Just copyright. Ah, the joys of modern IP law....

Re:Eh not really a free speech issue

[sjames]

The hosting company was approached by the manufacturer of said bags.

The hosting company received emails CLAIMING to be from the manufacturer. They most likely also received a few dozen emails from "Egg Bank", "Bank of America", "Your Bank", and even "support@their-own-domain" that day. Not to mention a few dozen barristers informing them of untold riches that have been willed to them. They may have even received a grant notification from Bill Gates.

I've received personal visits from repo-men claiming that someone I've never heard of lived in my house and had a car I've never seen parked somewhere. Considering that I've lived here since it was built, I doubt their claims but they were quite sincere in their belief.

Using your example, the bank would, or should ask you questions about the alleged fraud. When they find out you're a kook, they hang up on you.

And what if I'm a really convincing kook or a really unconvincing legitimate complainant? Are they doomed to a multi-million dollar loss if they guess wrong? Are you doomed to a loss if they guess wrong?

Neither the bank nor the ISP are empowered to perform criminal investigation, so there's only so much they can do. All they know for a fact is that some guy on the phone says you're a fraud and you say you're not.

Re:Eh not really a free speech issue

[MaerD]

If I tell your bank that you're a fraud artist, shall they freeze your account and in the process destroy your business? Should they have any duty whatsoever to determine where the money comes from? If banks were held liable for every illegal transaction they unwittingly contribute to, they'd have been out of business a long time ago.

Never worked for a bank, have you? ALL employees (even those of us who had no contact with customers or money) are required to take money laundering training.

The short version goes something like this (for US banks, Europe has similar requirements): If a transaction is over a certain amount, it gets reported. If you do a bunch of small transactions around the limit to even appear to avoid the reporting, you get reported. If a bank fails to report it, they're liable for fines and penalties. You, as the employee responsible to do the reporting will also be possibly liable for fines, and will be lucky if all that happens is you lose your job. So yes, they do try to hold banks liable for every illegal transaction they unwittingly contribute to.

Re:Eh not really a free speech issue

[sjames]

NO. They are required to REPORT certain transactions that may or may not be evidence of fraud. Then the courts tell them if they should freeze the account. They do not get nailed to the wall as accomplices or co-conspirators and they are not required to decide on their own initiative to freeze an account.

Re:Eh not really a free speech issue

[yuna49]

The hosting company received emails CLAIMING to be from the manufacturer.

TFA states, "... Chen and his companies had been informed of the activity by Louis Vuitton." I don't see any reference to emails there. Perhaps you have another source for your assertion?

Would you feel any differently if they had received a registered letter from Louis Vuitton SA, or from Vuitton's attorneys in the US?

Re:Eh not really a free speech issue

[MaerD]

Ah, and here you've found the analogy. They were apparently told "hey, these guys you host are doing something illegal" and ignored it.

Re:Eh not really a free speech issue

[shark72]

"Yes it rather is setting a nasty precedent. Either these webhosts will filter the heck out of their content and lose out to some other site that doesn't [eg. the pirate bay] or copyright claims are nigh unenforceable for small acts of copyright infringement."

The case in TFA is about trademark infringement. There's already plenty of precedent in the US for going after webhosts who knowingly allow their users to infringe copyright. This is why the US-based P2P services (remember Aimster?) and the big US-based tracker sites that specialized in pirated material are largely gone. Note that I wrote "largely" -- there are still a few around, but typically because they haven't yet caught the attention of the feds, and not because they've discovered some magic loophole.

We don't know all the facts in this case. Judges and lawyers are typically somewhat intelligent, and given the size of the judgement, it appears that mens rea was applied here -- Steven Chen knew exactly what he was doing, in the same way that tracker owners will tell you that they don't know nothing about no piracy when in truth they understand that it's their bread and butter. Googling his company names gives the impression that Steven Chen wasn't simply running a respectable hosting company. Like tracker operators see the demand for pirated materials, Steven catered to spammers and purveyors of counterfeit goods.

Re:Eh not really a free speech issue

[Anonymous Coward]

Can't Decide if +Funny or +Insightful as both apply. Damn if we could pull that off, maybe we'd finally kill the damn telemarketing business

Re:Eh not really a free speech issue

[plague3106]

Well, a similar analogy is the phone companies. They are used for illegal activity all the time, providing a number to a paying customer who is breaking the law (for example, these debt collectors that are threatening or harrasing people). I'm sure that at least one time they were "made aware" of a customer who was using their purchased number to break the law, but they have immunity.. as they should. If you want to stop selling counterfit handbags, the hosting companies shouldn't be involved (except to give information in response to a subpoena), go after the person actually selling the bags.

Re:Eh not really a free speech issue

[Frank T. Lofaro Jr.]

A bank being ordered by the government to freeze an account is way different than a hosting company being told by a manufacturer to remove a site which allegedly sells counterfeit merchandise.

Government orders are legally presumed correct. If the gov't orders one to do something one knows one has an obligation. That doesn't apply for private companies or individuals. If you think it does, I hereby order you to send me $10000.

Re:Eh not really a free speech issue

[DragonWriter]

The rule is: You get a notification, you notify the owner of the site with the alleged violation, you receive an affirmation of legality from the site owner, you do nothing.

Actually, that's very close to the special "safe harbor" rule with regard to copyright infringement that was part of the DMCA. No such "safe harbor" rule exists with regard to trademark infringement.

Re:Eh not really a free speech issue

[Mister Whirly]

Except Qwest and AT&T actually do have full carrier status which prevents this exact scenario. ISPs have some protection, but not as much as the big networks do.

Re:Eh not really a free speech issue

[sjames]

Not all that much. ISPs are still not courts legally empowered to decide matters of law for 3rd party disputes. Registered mail with a working reply address would have verified that the complainant was actually Vuitton but wouldn't have verified the correctness of their claim. Their fame doesn't make them infallible.

I might have had a bit more sympathy for the jury's decision but still wouldn't fully agree.

My feelings would be quite different if Vuitton had sued the OWNERS of the website (the ISP's client) and a resulting court ordered take-down had been ignored by the ISP, or at least if Vuitton had then furnished an authenticatable judgment that the client was in fact infringing, but that's nothing like what happened.

Re:Eh not really a free speech issue

[sjames]

Yep, same way I routinely ignore people telling me things without evidence. "The government shot down TWA flight 800", "The towers were destroyed by the government", "Iraq has WMD", etc etc.

It's the court's job to figure out if infringement exists and then tell the ISP if the site needs to come down.

Re:Eh not really a free speech issue

[PainKilleR-CE]

This is a Renter's issue. If I lease out an office space to people whom I know are dealing cocaine, I get put in prison too unless I notify authorities and cooperate with the investigation. The host being penalized for knowingly hosting a website dealing illegally in IP is analogous. What's the hubbub about? Seems reasonable to me.

No one suggested the host had to take-down the site, the host probably should have notified the IP holder and worked with authorities. It's not the host's responsibility to kick his leasees out of his office space, in fact the host has a legal obligation to not interfere with a leasee's space unless invited in during the terms of the lease. The IP holder has no authority to demand a takedown, only a judge does, but you can cooperate to get to the bottom of the issue instead of being an antisocial asshat that ignores everyone. A simple call a lawyer "I've been notified that a website I host is dealing in illegal items and I'm calling to cooperate with any investigations currently underway or that you will initiate." Not so hard.

According to TFA (reality may exist separately from what the article's author has written), they were expected to take down the site when they were notified of the "illegal activity". Now the fact that the web hosts were sued and found guilty leads me to believe that it is more likely they were being stubborn and not helping the investigation. However, the article didn't really make that clear.

What the article did seem to make clear, though, was that the web host's lawyers seemed to rely on existing DMCA law and case law, while Vuitton's lawyers relied on existing trademark law as applied to the physical realm. How they made the stretch from cooperating with a legal investigation to, for instance, give police access to a rental property where someone believes counterfeit goods are sold or manufactured, vs. taking down a web site where someone alleges counterfeit goods are being sold, I don't know. I would imagine the web host's lawyers thought they were in the right in advising their client, but I would hope he also followed the steps put in place by the DMCA to comply with a takedown notice, rather than just filing it in the junk mail.

Re:Eh not really a free speech issue

[jim_v2000]

Apparently you're wrong in this case because there was sufficient evidence of their negligence to cost them $32 million.

Re:Eh not really a free speech issue

[sjames]

I would argue that the COURT and perhaps the law is wrong to consider policing customer's trademark violations a duty of the ISP in the first place. Law is not necessarily equal to just, correct, or ethical.

Re:Eh not really a free speech issue

[skarphace]

The DMCA - the good part - at first sounds like it should be applicable and good, but it seems that it wasn't designed with trademarks in mind. Just copyright. Ah, the joys of modern IP law....

What do you think the 'C' in DMCA stands for?

Re:Eh not really a free speech issue

[commodore64_love]

So if Mall of America learns that one of their kiosks is selling counterfeit watches, they are obligated to shut it down? Or else be fined by the government? Hmmmm. That's something I never knew before.

Re:Eh not really a free speech issue

[BitterOak]

Actually, that's very close to the special "safe harbor" rule with regard to copyright infringement that was part of the DMCA. No such "safe harbor" rule exists with regard to trademark infringement.

That's because at the time the DMCA was passed, there was no such thing as contributory trademark infringement. This is a new doctrine created by this court. Having a safe harbor for some types of infringement but not others completely nullifies the effect of the safe harbor provision to begin with. People now have a mechanism to silence other people's speech: complain they are contributing to violation of their trademark. With no safe harbor, no sane ISP will ignore their request. Especially considering the size of a judgement like the one in the present case.

Re:Eh not really a free speech issue

[jesset77]

Except Qwest and AT&T actually do have full carrier status which prevents this exact scenario. ISPs have some protection, but not as much as the big networks do.

+1 Insightful, in this country Might = Right. Either have deep pockets, or obey the deep pockets. $32 Million judgments await you if you are foolish enough to think for yourself.

Re:Eh not really a free speech issue

[DragonWriter]

That's because at the time the DMCA was passed, there was no such thing as contributory trademark infringement.

Not so. Contributory trademark infringement has been recognized for quite some time; the standards applied by the courts in finding it were clearly articulated by the Supreme Court in Ives Labs v. Inwood Labs, 456 US 844 (1982). It was a well-established doctrine when the DMCA was passed in 1998.

People now have a mechanism to silence other people's speech: complain they are contributing to violation of their trademark. With no safe harbor, no sane ISP will ignore their request.

I don't think you understand the DMCA safe harbor provision, which only protects the ISP from the complaining (supposed) rights holder if it does obey the request to take material down. A similar safe harbor for trademark infringement would not encourage ISPs to ignore takedown requests.

Guilty by association

[Anonymous Coward]

So when a landlord rents out a property and it's turned into a drug farm, he too should be jailed when they get caught ?

Or is that just making the whole thing too simple.

Re:Guilty by association

[abigsmurf]

If the landlord knew his property was being used to make drugs and did nothing about it, potentially yes, he would be at risk from prosecution.

Re:Guilty by association

[jedidiah]

That's fine if you are some small time operation with 1 tennant
and you have the time to NOSE INTO YOUR TENANTS BUSINESS. Otherwise,
it's going to be an unrealistic burden. IOW, you have a bunch of
stupid slobs that can't manage to get out of jury duty trying to
determine what's reasonable for a business.

The problem with "they should have known" is that you've got a
bunch of clueless vindictive losers making the determination.

It sounds like the corporate equivalent of the Jamie Thomas verdict.

Real cops are bad enough. We don't need every business proprietor pretending they're Dirty Harry.

Re:Guilty by association

[Burdell]

It wasn't "they should have know", it was "they were informed and ignored the warnings". Big difference.

Re:Guilty by association

[Joce640k]

In the USA the entire building could be seized and the owner would have to reclaim it.

http://www.usdoj.gov/dea/pubs/csa/853.htm#n

Until recently he would also have to prove in court that he knew nothing about what it was being used for. It's kinda hard to prove a negative so there were plenty of cases of (eg.) people renting out big boats only to have the government seize them because the renter used them to transport drugs.

http://www.accessmylibrary.com/coms2/summary_0286-632700_ITM

War on drugs, yay!

Re:Guilty by association

[umghhh]

I do not live in US and I could not care less but here it says that the public prosecutor can chose whether federal or state law applies and that under the first it can even confiscate property used for drugs production even if owners did not know about such activity taking place. This looked odd to me that such practice could be possible but that does not surprised me at all - I know it from my country that drug laws are strange.

Re:Guilty by association

[RenderSeven]

I get the distinction, but businesses "get informed" all the time about all manner of stuff, much of it bogus. If all it takes to establish liability is for the plaintiff to send me an email claiming something that sets the bar pretty low. How much investigation would the court recognize as appropriate? What if I investigate and I determine that the accusation is without merit and they sue anyway? Do I have to investigate every complaint no matter how ridiculous and no matter the cost, to establish that I dont arbitrarily enforce? And so on. At least with DMCA there is established procedure and dispute resolution that can hold the plaintiff to some standard of proof. This is casting a pretty wide net and has pretty significant implications for extending liability *way* beyond the crime itself. If I were an ISP I'd be moving my servers offshore as we speak.

Re:Guilty by association

[Joce640k]

That link, I don't think it goes where you think it goes.

The government promised to clean up it's "seize everything!" act back in 2000, I don't know how effective it was (seizing stuff was a good source of income - I heard of cases of large buildings being seized just because drug paraphernalia was present, not even drugs). http://www.fear.org/ is a website dedicated to this stuff.

Re:Guilty by association

[bignetbuy]

Doesn't even come close to being comparable. The OP is about a civil case. Different rules apply.

Re:Guilty by association

[Eskarel]

Despite the belief of Slashdot, most companies don't get to the point of a $32 million dollar lawsuit without trying some fairly rigorous steps to prevent getting to that point. Nor do judges tend to make decisions about "should have known" without at least "some" evidence that this was the case. Hell no one has even tried this one against a file sharer or torrent site, and I'm sure some lawyers thought about it.

The premise for cases like this is that deliberate ignorance is not a defense. You can't do a house inspection walk through the basement and pretend that the meth lab isn't there, you know it's there and you're responsible for doing something about it.

Re:Guilty by association

[DragonWriter]

If the landlord knew his property was being used to make drugs and did nothing about it, potentially yes, he would be at risk from prosecution.

Actually, given the rules that have been applied in the War on Drugs, even if the landlord didn't know his property was being used to make drugs, it could be seized by law enforcement in a civil forfeiture action.

Re:Guilty by association

[RenderSeven]

I dont disagree but I was expressing concern as to what constituted "deliberate ignorance". Obviously the prosecution and defense will differ wildly on what rises to the level of "deliberate" and "complicit". Claiming a service provider that implicitly enables a crime *might* be a steep slippery slope. Do we go after the software vendor that supplied the shopping cart service? How about Firefox for not blocking the site? How about Visa and Mastercard for processing the payments? Comcast for not blocking the site? I hope that in this case the court found that the ISP was particularly deliberate rather than just the easiest to prosecute.

Re:Guilty by association

[Grishnakh]

I was informed yesterday, by email, that I won a huge lottery prize in a foreign country I've never been to, and also that some guy in Nigeria would like to give me several million dollars in exchange for using my bank account to move money out of his country. Should I assume these emails are true?

Re:Guilty by association

[dkf]

I dont disagree but I was expressing concern as to what constituted "deliberate ignorance".
[...]
I hope that in this case the court found that the ISP was particularly deliberate rather than just the easiest to prosecute.

I imagine that's part of why this went to a jury trial.

Re:Guilty by association

[Anonymous Coward]

Banning ISPs from hosting Web sites that sell fake goods is like requiring landlords to evict tenants upon learning of their unlawful activities rather than merely report them to law enforcement.

ruh roh

[KillerBob]

What about all tje murders and other crimes that get committed while wearing Louis Vuitton apparel? Hmm? Does this mean we can hold them liable for it? After all, they have an obligation to stop any crimes that are committed using their product....

Re:ruh roh

[Anonymous Coward]

Thats silly. The murders are not commited *using* Louis Vuitton apparel. Even if they were (you strangle someone with a leather strap maybe?) the purpose of the product was something else entirely. The product is not integral to the crime.

Here the *sole* purpose of the 'product' is to host a website, and the website being hosted is illegal. The product is in inseparable part of the crime.

I'm not saying the decision is justified, I'm just pointing out that your analogy is weak.

Re:ruh roh

[El_Muerte_TDS]

s/Louis Vuitton apparel/guns/ ?

Re:ruh roh

[elnyka]

What about all tje murders and other crimes that get committed while wearing Louis Vuitton apparel? Hmm? Does this mean we can hold them liable for it? After all, they have an obligation to stop any crimes that are committed using their product....

Dude, you suck at logic. Seriously.

I know what you are trying to argue for. Unfortunately, this particular example of yours failed miserably. Go back and re-read the case in question. If after doing that you still see parallels with that retarded example, then forget everything I just said. You are beyond hope.

Re:ruh roh

[elnyka]

s/Louis Vuitton apparel/guns/ ?

Or in his case, s/possibly good point/incredibly stupid and retarded analogy/g

Re:ruh roh

[KillerBob]

1. Not dude. Not even close.
2. You suck at noticing facetious and tongue-in-cheek remarks.
3. If this is any attempt at logic at all, it's the Absurd Case.

Re:ruh roh

[Anonymous Coward]

yay - finally a non-dude!

Re:ruh roh

[sjames]

Perhaps the purpose of the product was to host a legal website but the client mis-used the product for an illegal purpose?

Re:ruh roh

[vigmeister]

I feel memetic today...
 

1. Not dude. Not even close.

In Soviet Russia, KillerBob you?

Also, seeing as you're on /., you're not gonna be close to a dude in the foreseeable future...

*rimshot*

Re:ruh roh

[elnyka]

1. Not dude. Not even close.

What, Klingon? KillerBob != dude, man, amazing.

2. You suck at noticing facetious and tongue-in-cheek remarks.

If by facetious you mean something devoid of any textual emotion that can convey a joking nature, however remote that might be, on a site full of pseudo-libertarian nerd rage, then yeah, I guess I sucked at noticing your facetious remarks.

3. If this is any attempt at logic at all, it's the Absurd Case.

No attempt at logic at all, just a reply of a nature appropriate to your retarded... oh, sorry, facetious statement.

once again the DMCA

[nimbius]

saves the day. wasnt our last post about how innovation in tech is experiencing a lull?

Re:once again the DMCA

[Virak]

Except the DMCA is an innovation in technology law, not technology itself. Sadly there is no shortage of innovation in that area.

There goes the internet...

[db32]

So...if I sell Cisco gear, and it turns out that I wind up with counterfeit Cisco gear, they could argue that because I know what real Cisco gear looks like I should be able to identify any counterfeit Cisco gear. Then Cisco can come in and slap me for some unholy sum for "should have known". I wonder how much they lose in sales due to cheap counterfit equipment. I mean, arguably, someone buying a cheap counterfit is not likely to pay the full price for a real one, so it is pretty difficult to call all of it lost sales. So...now there is an active disincentive to protect your goods from counterfit. Instead of worrying about counterfit, they can just go sue the shit out of anyone selling counterfit to people who probably wouldn't have purchased an original anyways. Thus turning a bunch of non-sales into revenue. This is just fucking brilliant.

Re:There goes the internet...

[abigsmurf]

They would have to prove you knew (which for convincing fakes would be incredibly hard to do).

However if, Cisco informed you that you were selling fakes and you continued selling what you knew to be fakes, are you seriously suggesting you shouldn't then be liable for selling counterfeit goods?

Ignorance is still a valid defence, however if you RTFA you will see the web hosts were informed they were hosting websites selling illegal goods and did nothing to remedy this. The sellers made money selling dodgy goods, the web hosts made money directly from the illegal activity and enabled it to continue.

Re:There goes the internet...

[Anonymous Coward]

They would have to prove you knew (which for convincing fakes would be incredibly hard to do).

Less and less so, especially in the area of copyright and trademark. It's more and more moving from "we have to prove you are guilty" to "you have to prove you are innocent".

Re:There goes the internet...

[Runaway1956]

From TFA, "They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility." This proves the defendant and his attorneys were idiots - they had been informed that the trademark was being infringed. They can't pretend that they didn't know the products were counterfeit and illegal.

I can't see how that DMCA defense applies to trademark, or how DMCA applies to real world physical assets. The DMCA is applicable to "intellectual property" as nearly as I can tell.

Re:There goes the internet...

[Geoffrey.landis]

While I agree with your main issue here-- pointing out that the company was informed, and chose to do allow the activity to continue--

I can't see how that DMCA defense applies to trademark, ... The DMCA is applicable to "intellectual property" as nearly as I can tell.

Trademark is a form of intellectual property

Re:There goes the internet...

[elnyka]

So...if I sell Cisco gear, and it turns out that I wind up with counterfeit Cisco gear, they could argue that because I know what real Cisco gear looks like I should be able to identify any counterfeit Cisco gear.

Only with reasonable cause. If a counterfeit and a real cisco gear are identical or near identical by the of visual inspection one would reasonably do when shopping for that gear, then you are not liable.

If you find that you have reasonable cause to believe something is a counterfeit (or if one of your clients reports one to you), then you contact your supplier of the event. Hopefully at this point, you have all your bills, receipts and purchase orders in good order to demonstrate all your purchases have been done in good faith (so that no one can argue you bought your shit down a dark alley at 2AM from this dude showing the merchandise he has in his trunk.)

BTW, those receipts you get from a well-known supplier, those are documents that prove you bought what you thought was legitimate cisco gear. If you buy it from e-bay, you make print shots of the e-bay announcement that says the gear is legitimate, and you cross-reference that to the serial # of the equipment being sold/purchased.

If you are buying them directly from someone, in addition to asking for a receipt from them, you ask your supplier to sign a receipt of your own making where you state that on that date and time and on that location, you gave them X amount of money for Y amount of cisco gear and that the supplier signing therein assures the gear is legitimate.

That last piece is valuable in demonstrating that you completed the transaction to the letter of the law and that you acted in good faith. Having the supplier sign that puts the onus of counterfeit detection on him, not you.

Obviously, this is all excessive if you are buying gear for yourself. However, if you are buying gear with the intention of reselling, that is the minimum you must do, to protect yourself, and to uphold the letter of the law. Obviously you will keep a log and incident paperwork showing you contacted the supplier regarding the counterfeit merchandise. If nothing comes out of it, then you contact Cisco, which most likely will also ask you to contact the local authorities.

In other words, you act in good faith and to the letter of the law when you discover you have counterfeit gear. As I understand it, that was not the case with the defendants in this case.

Then Cisco can come in and slap me for some unholy sum for "should have known".

See above.

I wonder how much they lose in sales due to cheap counterfit equipment.

Non sequitur.

I mean, arguably, someone buying a cheap counterfit is not likely to pay the full price for a real one, so it is pretty difficult to call all of it lost sales.

Still, non sequitur. Whether it's a $100 or a $1 a piece loss, it's a loss committed by robbery. Aside from that, there is no guarantee that a counterfeit will perform with the same quality as an original one. That on itself can hurt the reputation of cisco products.

So...now there is an active disincentive to protect your goods from counterfit. Instead of worrying about counterfit, they can just go sue the shit out of anyone selling counterfit to people who probably wouldn't have purchased an original anyways.

It does not follow that a person who bought a counterfeit did it on purpose. Does it?

Cisco has every right to sue you if you knowingly or carelessly

• sold counterfeit gear, and/or
• allowed your facility to cater individuals looking for counterfeit products on purpose.

You make sure you buy and sell legitimate gear (and you keep a paper trail that you do that in good faith as explained above), and when someone suggest to buy/sell counterfeit gear, you turned them away (and call t

Re:There goes the internet...

[Anonymous Coward]

I don't know. If it were only Louis Vuitton contacting me, I'd be tempted to tell them "Talk to the police first and get a court order. Then I will promptly comply." If all it takes is a company *saying* the goods are counterfeit (rather than, hypothetically, someone selling below the supplier-preferred price and the company doesn't like it), I'd worry about the potential for abuse. I'd also worry about a web customer suing the host for terminating the service without due cause. Hopefully the terms of service would cover the circumstances, but there still has to be some kind of due diligence. Wouldn't it be dangerous to automatically comply with a mere accusation? What if the accusation is false?

If it really is clear that the products on the site were infringing, yeah, there's an obligation on the part of the web site provider, and they are legally culpable. But what level of documentation is needed to justify the accusation? I guess I'll have to read the case.

Re:There goes the internet...

[sjames]

However if, Cisco informed you that you were selling fakes and you continued selling what you knew to be fakes, are you seriously suggesting you shouldn't then be liable for selling counterfeit goods?

A lot of companies claim a lot of things that don't turn out to be true. Sometimes it's an honest mistake, sometimes it's an outright lie. If the RIAA claims that reselling used media is illegal, do you necessarily believe it? They once claimed that a downloadable file, usher.mp3 was a copyright violation and demanded that it be taken down. Turns out that Professor Usher took exception to their claim of copyright over his recorded lecture. Should his free speech have been effectively denied on the RIAA's say so?

Supposedly, in matters of law, the COURTS are supposed to decide who is telling the truth, not businesses. In a world where the law is sane, Vuitton would have taken the actual owner of the website to court, the court would decide if there was a trademark violation, and then would issue a take-down order to the ISP if it found that there was cause.

What the ISP knew is that someone claiming to represent Vuitton claimed that their customer was selling counterfeit goods and that it was a trademark violation. It did not know if that person actually represented Vuitton, if the goods were counterfeit or if that was a trademark violation. In this case, those claims turned out to be true. It could have as easily been a competing website that wanted to sweep the competition away. That's the sort of thing that courts are supposed to decide.

Re:There goes the internet...

[db32]

I realize now that my example was incorrect. I would be expected to take down a site one of my servers hosted based on being informed by Cisco (not the authorities) that the site was selling counterfeit goods. So it is even more insane! So...if I don't like my competition, I call their web host and tell them if you don't take down the entire site right now then I will sue you for millions because I said they are doing something wrong. Brilliant!

What they can't pretend is that another company with a competitive interest in the site told them to shut it down because they claimed they were selling counterfeit goods. None of the companies involved have the responsibility of determining if it was illegal. The authorities should have been involved and it never should have involved the web host without a note from the authorities. Imagine...he takes the site down, the companies selling the goods somehow wrangle out of the problem, and then THEY sue him for millions for taking down their sites illegally...

Re:There goes the internet...

[Runaway1956]

Like AC above you, you seem to assume that the actual owner of a trademark doesn't know his own goods, and/or his own supply chain. I think that if one receives such a notice, the recipient has an obligation to examine the claims, at the least. If such examination seems to have any merit, then compliance with the notice only makes sense.

If, on the other hand, the claims seem to have no validity, handing it off to a lawyer might make sense.

In the case at hand, the claims of sales of counterfeit goods proved to be true, and the site owner took no steps to protect himself against charges of complicity.

Re:There goes the internet...

[Anonymous Coward]

DCMA only refers to copyrights and only for digitally conveyed IP.

Re:There goes the internet...

[shark72]

The huge difference is that you would be acting in good faith. Steven Chen was not.

The more I read about the case and about his businesses, it's clearly not a case of "innocent webhost caught in the crossfire." It's more like "entrepreneur sees market in providing hosting to companies selling counterfeit goods, profits from it, gets caught." Before he was in this business, he catered to spammers.

Sometimes there are bad guys out there./p.

Re:There goes the internet...

[russotto]

Like AC above you, you seem to assume that the actual owner of a trademark doesn't know his own goods, and/or his own supply chain. I think that if one receives such a notice, the recipient has an obligation to examine the claims, at the least. If such examination seems to have any merit, then compliance with the notice only makes sense.

The actual owner of a trademark may NOT know his own supply chain. Furthermore, even if he does, he may lie about it. For instance, suppose a store which had a lot of Vuitton bags went bankrupt, and the bags were picked up for pennies on the dollar by a liquidator. The liquidator then sells the (perfectly genuine) bags on his website for less then the Vuitton minimum advertised price. Vuitton asserts that the bags are fake to get the site shut down; the liquidator denies it. What's the ISP to do, measure the penis size of the lawyers for both sides and obey the larger one?

Re:There goes the internet...

[db32]

Explain to me how any of this is the responsibility of the web hosting company. This is between the guy selling the goods being claimed as counterfeit and the guy claiming they are counterfeit. This just opens a big damned door for all manner of stupid liability for web hosting companies. The ONLY reason for this kind of bullshit excuse is to pick the pockets of those who you think have the most money and not who has the most responsibility.

Re:There goes the internet...

[Attila Dimedici]

I don't know. If it were only Louis Vuitton contacting me, I'd be tempted to tell them "Talk to the police first and get a court order. Then I will promptly comply." .

That was covered under the "refused to implement a policy to remove the offending sites". What you suggest is implementing a policy to remove the offending sites. The evidence suggests that if the web hosts in question had offered Louis Vuitton an avenue to pursue to have the offending sites removed, Louis Vuitton would have been willing to follow it (assuming that it was reasonable).
I believe that, at least in part, is why the web hosts in this case lost. They did not respond to the complaint by offering a series of steps to get the offending websites removed. If they had told Louis Vuiton, "If you do X, Y and Z, then we will remove the sites" and Louis Vuitton had sued without doing X, Y or Z, Louis Vuitton would quite possibly have lost.

Re:There goes the internet...

[kaffekaine]

However if, Cisco informed you that you were selling fakes and you continued selling what you knew to be fakes, are you seriously suggesting you shouldn't then be liable for selling counterfeit goods?

But, on the internet, no one knows (for sure) that you're Cisco!

Re:There goes the internet...

[BobMcD]

A lot of companies claim a lot of things that don't turn out to be true. Sometimes it's an honest mistake, sometimes it's an outright lie.

The system has code for this, its only that we never use it. Making such a false claim is, or at least was, illegal and carries with it penalties. Were we, as a society, to actually stand up for those laws and see that they are enforced, these claims would probably become worthy of trust again.

Additional links and info

[1sockchuck]

This is being widely discussed in the hosting industry. The full jury ruling is online, and there's additional analysis and discussion at the Web Host Industry Review, TechDirt and Data Center Knowledge.

Re:Additional links and info

[Anonymous Coward]

tl;dr. cliffs?

Re:Additional links and info

[Anonymous Coward]

Maybe you better go back to Fark.com where you belong.

Cloudy Business

[Anonymous Coward]

The internet cloud is not some mystical wonderland. Take e-business from cloud and wrap in earthly brick and mortar. Any judge would hold same brick and mortar selling counterfeit to same liability in damages.

Re:Cloudy Business

[Anonymous Coward]

We're not talking about the guy who leases the building out.

Re:Cloudy Business

[jedidiah]

This isn't the store, it's the not even the relevant "mall". It's the REIT that holds the mall.

If you are not co-located with the offending physical store presence, how are you supposed to know it's counterfeit?

Re:Cloudy Business

[clickclickdrone]

>Any judge would hold same brick and mortar selling counterfeit to same liability in damages.
So if I rent some premises to a shop and they then sell dodgy goods, I'm liable? Are you sure? Sounds bogus to me.

Re:Cloudy Business

[sjames]

But they wouldn't have held the landlord responsible. They'd suggest suing the actual business selling the fakes.

Re:Cloudy Business

[pentalive]

REIT = "Real Estate Investment Trust"

I had to look it up..

http://en.wikipedia.org/wiki/Real_estate_investment_trust

Re:Cloudy Business

[BobMcD]

This isn't the store, it's the not even the relevant "mall". It's the REIT that holds the mall.

If you are not co-located with the offending physical store presence, how are you supposed to know it's counterfeit?

I assume when you got a letter from an attorney that said "it is counterfeit", you researched it and found the claims to be valid, and you notified the offenders of your acceptable use policy?

Why is this any different than child porn, pirate data, or any other thing that we expect these companies to police?

When are we going to build that giant spaceship

[captainpanic]

...and put all the lawyers, hairdressers and managers in it?

Re:When are we going to build that giant spaceship

[Anonymous Coward]

...and put all the lawyers, hairdressers and managers in it?

What are you talking about? It was already built and sent on its mission a loooong time ago. Should I tell you where it ended up?

Re:When are we going to build that giant spaceship

[Anonymous Coward]

Just make sure we keep all the telephone booth cleaners off the ship. Nasty things could happen if we do.

Re:When are we going to build that giant spaceship

[Anonymous Coward]

What have other worlds done to deserve such a punishment???

Re:When are we going to build that giant spaceship

[DoofusOfDeath]

...and put all the lawyers, hairdressers and managers in it?

So that we're free of them, or so that we can have the best reality show ever?

Re:When are we going to build that giant spaceship

[geminidomino]

...and put all the lawyers, hairdressers and managers in it?

So that we're free of them, or so that we can have the best reality show ever?

Only one episode[0], but it would have the highest ratings ever, even on reruns...

[0] How many times can you send a ship into the sun, after all?

Re:When are we going to build that giant spaceship

[DoofusOfDeath]

Only one episode[0], but it would have the highest ratings ever, even on reruns...

[0] How many times can you send a ship into the sun, after all?

Not sure they'd get that far. Hairspray is flammable.

Re:When are we going to build that giant spaceship

[geminidomino]

Only one episode[0], but it would have the highest ratings ever, even on reruns...

[0] How many times can you send a ship into the sun, after all?

Not sure they'd get that far. Hairspray is flammable.

Ooooo... Cliffhanger!

Re:When are we going to build that giant spaceship

[stimpleton]

....and methodists?

Methodists are bad

Not the best write-up

[Zocalo]

You need to dig a bit (it's mentioned in the seventh paragraph of the linked article, with a more detailed discussion on the second page), but basically the ISP in question failed to take action to shut down the hosted sites despite repeated takedown notices from Louis Vuitton. The only real precedent that this sets if you ask me is a very positive one in that if your "abuse@" email is a blackhole then you had better have extremely good liability cover and/or be very hard to reach to avoid being served with lawsuits.

Re:Not the best write-up

[migla]

So, it's the ISP:s responsibility to decide what is or isn't illegal activity? Shouldn't some court or something first decide whether Lois Vuitton has merit to their claims?

(I'm not saying it is so. I'm asking.)

Re:Not the best write-up

[sjames]

From the ISPs viewpoint, someone purporting to represent Louis Vuitton sent several notices claiming that their customer was violating trademark law. A lot of people and companies claim a lot of things all the time. Some true, some not. The one thing that is consistent in all of those claims is that having people believe them is good for their profits.

Re:Not the best write-up

[Zocalo]

Having dealt with some particularly aggressive corporate and legislative senders of take down notices while working for an ISP, the standard form basically boils down to "Take this down, now!" where "now" is usually specified as a deliberately panic inducing number of hours. That statement will usually be backed up with another one stating that making you, as the ISP, will be held jointly liable if you don't comply within the stated time frame, which is probably why the ISPs concerned here came so unstuck. This can arrive via post or via email, hence the reason why black-holing "abuse@" or whatever your whois contact might be is a bad idea, particularly in light of this case. As you point out, so far that could easily be someone with an axe to grind against the target pretending to be an authorized issuer of the take down or someone relying on scare tactics.

In practice, on authentic take downs for anyone that knows what they are doing there is *always* a responsive contact at the source with verifiable credentials and most respectable ISPs will be well aware that whatever "now!" is defined as is flexible provided that action is being seen to be taken. That's where it gets more iffy; large scale operations like YouTube receive so may take downs that they simply don't have the resources to contact each individual target of a take down and let them state their case, so it's act first and deal with the fallout later, if any.

Provided you're not dealing with a pile them high and sell them cheap sales model then in reality there is plenty of time for due process, if the ISP chooses to do so and has the procedural framework and resources in place to support it. That can easily include verification of the source of the take down notice, allowing the target of the take down a chance to voluntarily comply or present evidence why they are not in breach of legal/ToS/AUP requirements, send that back to the source for comment and anything else you care to dream up depending on the situation. Needless to say, anything you do needs to be documented, relevant logs need to be preserved, and *everything* gets CC'd to your own Legal Department so they can intervene if things start getting ugly.

Re:Not the best write-up

[Mozk]

But how the hell would I know that Louis Vuitton is a real company and that the website I'm hosting is infringing on their trademarks/copyrights/patents?

Let's say that I host a website for an obscure company called Giggity Incorporated that sells a product called Giggity Goo. Another obscure company called Quagmire LLC emails me and says that they are the true producers of Giggity Goo and that the product on the website I'm hosting is counterfeit and uses their trademark illegally.

Why the hell should I believe Quagmire LLC owns the Giggity trademark, believe that this counterfeit uses their trademark illegally, believe that it's even a counterfeit, or believe that Quagmire LLC is even a real company?

Re:Not the best write-up

[hydroponx]

Yes, and from the ISP viewpoint, as a hosting provider one should know how to at least read and verify mail headers. simply put: 1. check first outbound mailserver it hits 2. verify the domain of first mailserver is owned by Louis Vuitton 3. If in doubt, contact the technical contact of Louis Vuitton's domain Could some of this be forged ? Sure If it meant my business, would I take the chance? Absolutely Not After all, if it's a legit operation the victim can always file a claim to re-instate the site, with this in place, you were just doing what's required under the DMCA. Either way tt's an ugly battle to get caught in the middle of ......

Re:Not the best write-up

[DarkAce911]

Sorry, sending email to some random address is not a valid way to handle problems like this. There should have been a certified letter with return receipt sent at some point, even then it would go the legal department. Email is not the same as a physical letter and how this even got as far to a jury is beyond me. Try going to small claims court and pull "but I sent him an email" and see how far it goes. Bad ruling and in a sane world should be overturned.

Re:Not the best write-up

[Tablizer]

As proof, "abuse@goatse.x" has never responded to me.

Re:Not the best write-up

[sjames]

I agree that there is some ability to possibly verify the origin. Now would you care to suggest how (short of creating their own court system) they should determine if the company is correct in their allegations?

Designers HAVE been known to work hard to kill off legitimate clearance/firesale and second hand sales. Companies in general have been known to make mistakes.

Re:Not the best write-up

[Anonymous Coward]

the way the DMCA is written (which might not even apply since this is trademark infringement, not copyright infringement) in regards to take down notices, is you take down first, ask question later (aka your client can then send a counter-notice claiming that it is not a violation and you can put the sight back up and be in the clear).

Re:Not the best write-up

[ConstableBrew]

Really? What an A**Hole!

The salient point :

[aepervius]

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

If true, then they got it coming their way. You do not willingly ignore that one of your customer do illegal activity when it has been reported to you.In addition :
Under existing precedent (outside of the Internet realm) a plaintiff seeking to prove contributory trademark infringement needs to prove that a defendant intentionally and knowingly enabled another to infringe a trademark, Johnson said. In this case, the jury appears to have been convinced by the evidence presented by Louis Vuitton that the Web hosting companies had clear knowledge of the infringing activity, he said.

Re:The salient point :

[schon]

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Since when did ISPs become the gatekeeper of what is and isn't legal?

Re:The salient point :

[Anonymous Coward]

Hmm, $32M - isn't that the equivalent selling price of around 4 LV handbags? Must have been a crap site.

Re:The salient point :

[bravo369]

I won't argue that LV told the ISP but was a court injunction ordered by the court? was the guy found guilty yet? I would be very hesitant to take the word of a 3rd party without any legal documentation to back it up. You cannot really say that the ISP had clear knowledge. They just had clear knowledge of what they were told. Let the court decide and then let the ISP comply with a takedown. This is the type of thing the RIAA wants to do with a 3 strikes law in which under no proof, just the word of the RIAA, they want the ISP to cut internet access to the user.

Re:The salient point :

[Registered Coward v2]

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Since when did ISPs become the gatekeeper of what is and isn't legal?

As I understand the DCMA, you'd comply with the take down order and the seller would have to provide information that they were not selling fakes. If they do, they could conceivably pursue LV for interference with trade, and LV possibly committed perjury as well. However, IANAL so YMMV.

Either way, an ISP cannot simply ignore illegal activity once they are made aware of it, and need to have policies and take actions to remove such sites. A others pointed out, that's been the law for a long time before the internet came to be.

As for someone selling fakes versus real used (err - preowned) it'd be pretty easy to separate the two simply because a second hand store would probably not have the amount of merchandise and clearly state that the items were used. I would suspect a second hand store that deals in high end merchandise would also be pretty good at spotting fakes or else they'd be out of business quickly.

Re:The salient point :

[hattig]

You aren't meant to verify it. You simply take it down. The offending site can then issue a counter-notification, after you've presumably told them what has happened, and presumably sent on the legal stuff so that they can do such an action.

It's protecting the ISPs, they don't even have to make a judgement on whether the site is legal or not. That can be done by the law.

Of course there are problems - there's a cost associated with being the middle-man, taking down sites, putting them back up. In addition it is possible to be sending abusive takedown notices without specific details. There's no mediation stage, not that a counterfeiter is going to turn up to such a thing. There's no compensation stage for incorrect notices (or is there?).

I don't even know what Louis Vuitton is, but I presume it's a handbag and women's pointless apparel (sorry, "women's fashion") manufacturer. There wouldn't be a counterfeit market if the prices were reasonable for the goods in the first place instead of being massively marked up to create something "valuable because of artificial scarcity".

Re:The salient point :

[Anonymous Coward]

Well, one view is that you the ISP aren't supposed to verify it, and should instead simply comply. However, you would inform the second hand goods company why they were being disconnected, and they would then have legal remedies available to them (e.g., suing LV for improper take-down request, lost business, whathaveyou). Presumably, you the ISP would also be able to tag along for a smaller chunk of lost hosting revenue change if the second hand company won.

Personally, I think that sort of path puts too much power in the hands of larger companies with better legal resources, but it's not a completely unworkable solution. A more idealistic alternative might be for the larger company to be required to prove that goods, content, etc are infringing to some sort of legal authority, and said legal authority issued takedown notices, but that has some pragmatic cost differences (e.g., the larger company has to expand its legal budget for these takedown proceedings, the government has to provide for the judgment on those proceedings).

Perhaps this policy decision was made amidst cigar-smoke and tinkling whiskey glasses, or perhaps it was simply, like some many other issues, and thorny problem. Probably a bit of both.

Re:The salient point :

[Anonymous Coward]

The DMCA is not relevant. It does not cover trademark law, only copyright law.

Re:The salient point :

[Dragonslicer]

They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Since when did ISPs become the gatekeeper of what is and isn't legal?

Maybe it depends on exactly how they refused to act. If they simply ignored the notices, then I'd say it's their own fault for getting in trouble. The obviously smart thing to do would be to ask their lawyer about the notices and either agree to remove the illegal sites or respond with an explanation of why they won't remove the sites, plus an addendum with their lawyer's contact information.

Re:The salient point :

[kchrist]

If true, then they got it coming their way. You do not willingly ignore that one of your customer do illegal activity when it has been reported to you.

In my experience (five years in the abuse department of a top-five US ISP), this is exactly what we did when people complained about web sites we hosted. Maybe "ignore" isn't the right word, but we definitely did not get involved in an issue between two third parties.

Our standard procedure for complaints of this sort was to instruct the complainant to contact our legal department with a subpoena for the identity of the web site's owner and then take legal action with them directly. We didn't release that information without a subpoena, but neither did we stand in the way when proper procedure was being followed.

This obviously doesn't apply to more black-and-white issues like warez sites and the like, but it's how we handled anything we couldn't easily verify ourselves, such as issues like this one, defamation claims, etc.

Re:The salient point :

[Anonymous Coward]

> As I understand the DCMA

District of Columbia Masturabatory Act??

Re:The salient point :

[russotto]

So, I'm an ISP, and I host someone who runs a second-hand store. They sell legitimate "Louis Vuitton" crap, but at prices well below retail.

Louis Vuitton "informs" me that the material is counterfeit. I'm supposed to verify this how?

Look, it's simple enough. Louis Vuitton has big pockets and can sue you for millions of dollars for trademark infringement. The secondhand store probably doesn't have enough to pay a lawyer, and at worst, they can sue you for thousands of dollars for breach of contract if you cut them off. So you do what Louis says. Capiche?

Re:The salient point :

[Anonymous Coward]

there you go:

you are hereby informed that your posts violate louis vuitton trademarks and you are not allowed to post here.

slashdot admins, please delete aepervius accounts.

or else,
louis vuitton.

Ahmen

[theolein]

I thought there would be a semi rational explanation behind the usual Slashdot hysteria.

Re:Ahmen

[betterunixthanunix]

"Semi-rational" is a stretch. Basically, this is affirming what people said would happen: if a takedown notice is received, the hosting company must assume that it is valid or face liability. If I want to take your website offline, I just claim that it is violating my copyright, and the hosting company must take it down before finding out whether or not there was an actual violation. How is that anything approaching rational?

Re:Ahmen

[BobMcD]

Because society has penalties for making false claims. We need to give those provisions teeth again, and we could then start to trust them.

It is merely out of balance with the penalties for not acting when the claims are valid.

Bye bye california hosting industry

[Sjefsmurf]

How long until we see a mass movement of hosting facilities to other states and countries? This is really scary. I don't mind the fact that hosting facilities are now liable a lot more than before, but the court just _forced_ hosting providers to become judges of who is in breach or not of copyright. No sane hosting provider will ever protect its customer from for instance the laywers of MS. Practically any content you have can, one way or the other, be twisted into a copyright infringement by a clever lawyer. You can be shut down at any time without any chance to protect yourself. Yikes!

Re:Bye bye california hosting industry

[hydroponx]

No, the court just enforced the DMCA's take down provisions that is all. Seriously, quit blowing this so out of proportion. I hate the DMCA as much as anyone else here, but it is repealed or we get sane judges to smack it down, we're stuck with it.

Re:Bye bye california hosting industry

[hydroponx]

No, the court just enforced the DMCA's take down provisions that is all. Seriously, quit blowing this so out of proportion. I hate the DMCA as much as anyone else here, but until it is repealed or we get sane judges to smack it down, we're stuck with it.

Re:Bye bye california hosting industry

[canajin56]

They didn't issue a DMCA take down notice. And, in fact, Slashdot fake summary notwithstanding, copyright isn't mentioned at all. It's trademark.

We need a "DMCA safe harbor" for trademarks etc

[jonwil]

There needs to be a new law that operates similar to the DMCA safe harbor and take-down notice system works for copyrights. If Louis Vitton thinks that someone is selling a fake Louis Vitton bag on, say, eBay, they would send eBay a take down notice alleging (under penalty of perjury) trademark/trade dress infringement. eBay then takes down the auction when notified (and in doing so is given safe harbor from any infringement connected with the auction). And just like the DMCA take-down notice system, if the take-down is baseless (i.e. no violation has taken place), the item can be re-listed (or the information can be re-posted or whatever). And just like the DMCA, when you file a counter claim, you are alleging (under penalty of perjury) that no violation has taken place.

sites get protection from being sued for allowing items/content/etc that violate someones IP to be listed/sold/posted/etc
Companies who's IP is being violated have a simple way to get infringing content/auctions/etc taken down (but only if its actually infringing)
And those who are selling legitimate items that DON'T violate someone else's IP (such as a genuine Louis Vitton bag) are free to go on selling without the risk of having their legit auction pulled.

Re:We need a "DMCA safe harbor" for trademarks etc

[ArsenneLupin]

Add to this: "and if the take-down notice is baseless, the filer has to pay damages to the hosting company and their customer to make up for the inconvenience".

Re:We need a "DMCA safe harbor" for trademarks etc

[adamstew]

The DMCA Copyright safe harbor protection has something similar to this. The problem is that no (or very few) of the webhosts follow through on the 2nd part, in that most web hosts don't give an opportunity for their clients to sign an affidavit of legitimacy.

When I ran a very small web hosting company a few years ago, i'd occasionally receive a DMCA takedown notice (all of them via email, typically from an anonymous email service...hotmail, gmail, etc). My response to those was to send a reply asking the alleged content owner to provide a signed statement where they swore, under penalty of perjury, that the content they were asking to be removed was in fact their own copyright. I also required their full name, address, and real-world contact information. I gave them my mailing address and my fax number to provide the requested signed documents.

Not ONE of them ever followed through with the requested information. I received about 15-20 of them over the 4 years I did hosting. I only ever received one reply to my request for more information, and that was an email saying that they would get back to me.

Re:We need a "DMCA safe harbor" for trademarks etc

[Anonymous Coward]

if the take-down is baseless (i.e. no violation has taken place)

and who will bear the cost to determine if it's baseless? What are the consequences to the original Trade Mark holder if found that the claim is baseless/abusive?
 

This should be up to the courts to provide the order for take down and not on some third party who has no authority to verify and uphold the claim...

Re:We need a "DMCA safe harbor" for trademarks etc

[achemyst]

Change this to "the accusing company would get a court order for a take down notice". The problem is that take-down notices coming from companies should have no legal weight. Even those coming from a company's lawyer should have no weight until a court/judge decides there is enough evidence to warrant one. Getting a take down notice SHOULD require a procedure similar to a search warrant. A judge should have to sign off that a legal infraction has been made before the take-down notice is issued. However, as a hosting provider, if a company sent me a notice that a client was using the site for illegal purposes, I would investigate, contact the client and, if I could not determine that an infringement was being done, have my lawyer contact the accusing company for more information and a request for a legal take-down notice, if that is what is required. Unfortunately, with this precedent set, companies can issue take-down notices and file lawsuits against hosting providers with little proof that an infringement is taking place. Most hosting providers do not have deep enough pockets to fight a big lawsuit. Until a provider does fight back - this precedent will stand.

Re:We need a "DMCA safe harbor" for trademarks etc

[shambalagoon]

What you are suggesting is that the defendant is guilty until proven innocent. The accusation alone is enough to halt their business and take down their site. This should only happen if a court determines that there is a violation.

Also, perjury doesn't matter at all here - if someone is alleging a copyright infringement, then that needs to be investigated. Both the plaintiff and defendant can believe that they are in the right, and make claims in line with this, but if they're wrong, it's not perjury.

IANAL

Re:We need a "DMCA safe harbor" for trademarks etc

[BobMcD]

Add to this: "and if the take-down notice is baseless, the filer has to pay damages to the hosting company and their customer to make up for the inconvenience".

I'm fairly certain this could be covered by existing law. Libel, probably. With tortuous intent.

under DMCA to avoid liability you take it down

[Anonymous Coward]

or you risk liability. this is a big problem with DMCA

Chen, to lawyer: "So do I have a case? ..."

[kale77in]

"... or is it more a sort of handbag, really?"

The Pirate Bay case, only worse.

[tecnico.hitos]

Seems that now anyone who provides a service can be held liable for illegal activities from its users.

You know, it's unfeasible to keep control of user content. An automated system can only detect so much, and may block legitimate content. Having employees responsible of verifying the user content would cause delay and extra costs to the service provider. Even so, it would still be possible to ignore these measures by requiring authentication.

They would need both an advanced AI/an army of moderators and destroy all privacy to make sure no user content is infringing laws. Very unlikely to happen.

Re:The Pirate Bay case, only worse.

[bleh-of-the-huns]

If you read the entire article, you would have noticed that the hosting company was notified on several occasions and did not comply with the requests. To me, that is a blatant violation of any number of rules, and I have no sympathy for them.

I am no fan of the DMCA, or any of the related think of the children laws, but in this case, the hosting provider screwed up.

On the other hand, I can also see LV going after people selling legit LV products below the cost that LV thinks those products should be sold at... That would be abuse of the laws, but I doubt it would stop them.

Re:The Pirate Bay case, only worse.

[Anonymous Coward]

and if you had read just about every other comment on this story so far, you would have noticed that there is no way for a hosting company to know whether the "notifications" are in any way legitimate. they don't know if the notifications are actually from LV. they don't know if the products LV claims are infringing actually are. they are being forced to take LV's word for it, and shut down a business based on that.

the point people are trying to make here is that if this is true, i could shut down every business on the internet just by sending emails to hosting companies claiming to be a trademark holder and my trademarks are being violated. that should not be the case. what should be the case is that a COURT OF LAW should demand the takedown, after a company goes through due process to prove the web site is actually committing a crime.

Re:The Pirate Bay case, only worse.

[achemyst]

However, the notifications came from the company, not from a court - so they bear no legal weight. Following the logic that this is acceptable, any company can cry foul and issue a take-down notice. Is the hosting provider required to remove the offending material regardless of if it is proven - or not - of infringement? This is paramount to "guilty until proven otherwise" - not something we promote in the U.S. - or it should not be.

Re:The Pirate Bay case, only worse.

[tnk1]

and if you had read just about every other comment on this story so far, you would have noticed that there is no way for a hosting company to know whether the "notifications" are in any way legitimate. they don't know if the notifications are actually from LV. they don't know if the products LV claims are infringing actually are. they are being forced to take LV's word for it, and shut down a business based on that.

Actually, your points really aren't as valid as you may think. You can easily confirm that the notices are valid by simply contacting LV itself through publicly available information that you can get from places like their website or SEC 10-Ks or other public records. They will inform you if they, or related counsel, sent the request. In the meantime, you can certainly leave the site up if you are a provider. No one will expect you to take down the site while you are doing due diligence.

As far as anti-competetitive requests go, I still don't see why it would be so impossible for someone to be able to prove that the merchandise is real or not. I would think that a reasonably worded request to LV or any other owner stating their desire to cooperate, but their need for proof would be more than sufficient. I would imagine that a court would see that as proof that their request was taken seriously and that there was a good faith attempt to comply. Certainly, I doubt that LV could state that whatever small-time profits being made by the counterfeiter were a clear and present danger to LV's bottom line and needed to be removed immediately to stave off severe harm.

Most of the problems with takedowns is that the ISP's themselves are too lazy to go to these lengths and they takedown first and ask questions later. This protects them from annoyance, and certainly from liability. An ISP with principles could prevent malicious takedown requests from affecting legitimate customers, if they wanted to go to the trouble. The real problem is with the ISPs, and sometimes these big companies understand this and will use that to get their way.

However, in neither case can an ISP *ignore* a reasonable request from an owner, and it appears that this one did. You can protect yourself and even your customers, but you cannot simply tell IP owners to buzz off or refuse to work with them.

Re:The Pirate Bay case, only worse.

[yuna49]

On the other hand, I can also see LV going after people selling legit LV products below the cost that LV thinks those products should be sold at.

I think that would be very difficult. LV products are licensed, so unlicensed competitors can't just ask a wholesaler to ship them a bunch of LV bags at cost, then resell them at less than published retail prices. It's pretty likely that anyone selling these items below retail either obtained a bunch that "fell off a truck" or is selling counterfeits.

Re:The Pirate Bay case, only worse.

[Attila Dimedici]

What you are missing is that the web host did not reply and say, "Do X, Y, and Z in order to confirm that this is a legitimate claim." X, Y and Z could have included asking for a court order. The webhost merely ignored the communication.
In order to shut down a business on the Internet you would have to comply with the appropriate policies of the hosting company that they use. In this case, the hosting company didn't have any policies for Louis Vuitton to follow.

Re:The Pirate Bay case, only worse.

[Anonymous Coward]

if "ignoring a communication" from an unverified entity with an unverified claim constitutes a willful contribution to trademark infringement, then that sounds like total crap to me.

i am still of the opinion that the webhost should not be obligated to take any action regarding anything unless ordered to do so by a court.

Re:The Pirate Bay case, only worse.

[bleh-of-the-huns]

I don't remember the vendor, but a while back there was a high end product vendor/manufacturer that requested ebay take down any and all listings related to their product, counterfit or not (and by not I mean people selling off their old non counterfit products).

It was a while ago...

Re:The Pirate Bay case, only worse.

[bleh-of-the-huns]

While they bear no legal weight, you see the result, the company will just sue the provider.

The correct choice would have been for the web hosting company to atleast acknowledge receipt, and request that they provide proof, a court order, any response really. In this case, they just ignored LV, that was not the correct action.

From TFA: explains it all in one paragraph

[MikeRT]

Louis Vuitton claimed that Chen and his hosting companies were contributing to the illegal activities by providing the infrastructure that enabled the sale of counterfeit goods. They further said that Chen and his companies had been informed of the activity by Louis Vuitton but still refused to implement a policy for removing the offending sites, which was their responsibility.

This is really a no-brainer. The DMCA stops protecting a host the moment that they are informed of the infringement and refuse to cooperate.

That does it!

[Anonymous Coward]

I will buy no more Louis Vuitton merchandise!

Re:That does it!

[Anonymous Coward]

It is no use saying that unless you can afford to buy their stuff in the first place. IMHO, it (like certain other makes) is over priced junk and wouldn't be seen dead in one of their stores but then I'm hardly their target market which is AFAIK, vain women.

Re:That does it!

[Anonymous Coward]

I think the appropriate response to that argument is: Wooosh!

Is this going to be a precident?

[Anonymous Coward]

FTS

Under this theory, companies that know, or should know, that they are enabling illegal activities have an obligation to remedy the situation. Entities that fail to do so, as Louis Vuitton alleged in this case, can be held legally responsible for contributing to the illegal activities.

 
Under this umbrella it would seem that the MPAA, and RIAA have fuel for their fires, they could easily argue, in CA at least that this includes digital media.
 
Yeah I know I didn't bother to RTFA. I'm interested in hearing fellow ./'ers thoughts on this one though.

Swap Meet Louis

[bandy]

So that's where the folks selling the fake stuff down at the swap meet (flea market) get their goods.

I am officially informing Slashdot..

[z80kid]

Via this posting, I am officially informing Sourceforge that editor kdawson has been using the site "slashdot.org" to send sensitive information to terrorist cells around the world via bogus article summaries.

See? Now that I've informed Sourceforge, it's incumbent upon them to take Slashdot down or suffer the consequences.

only in the us

[darrenkopp]

i just got back from italy, and literally right across from the louis vitton store there were people on the street selling fake louis vitton bags. the only reason they are doing this in the US is because we're the only people who will do anything about fakes.

Re:only in the us

[canajin56]

You chose a funny country to cite in your "USA=Crazy" post. If you buy a body kit in Italy and put it on your car to make it look like a Ferrari, YOU will get fined. They busted up a ring selling such body kits threw them all in prison, then tracked down their buyers and went after them, too. Seized all of their cars. In Europe, trademark violation is the most serious thing there is. They're full of ancient companies. Even possessing a counterfeit item is illegal in Europe.

Tactical

[kenp2002]

Thus only large uber-corporations will provide ISP\Web hosting with strict controls putting the Internet solely in the hands of multinationals that can afford the risk.

Freedom takes another blow and more and more of the Internet as we knew it vanishes. Soon there will be nothing left except big business and big government on the Internet... or whatever you want to call what it has become...

I'm not big on conspiracies but all these dominos falling seem a tad too corrdinated for my tastes...

Step 1: Gain control of communications
Step 2: Commoditize communication
Step 3: Litgate liability
Step 4: Censor in the name of controlling liability
Step 5: Control the flow of information
Step 6: Persecute, I mean prosecute those who share 'dangerous and subversive' information

Hilter, Stalin, and Mao would be proud of the direction we are headed... The Internet was a great dream and a place for freedom. Now there are so few dominos left to fall before that dream lies dead...

Interesting verbiage

[Anonymous Coward]

"The US District Court for the Northern District of California is expected to issue a permanent injunction banning the internet service providers from hosting Web sites that selling fake Louis Vuitton goods in the future, the company said."

So does that mean that hosting a web site that sells fake Louis Vuitton goods is not actually illegal (unless someone complains), or are they really going to issue an order saying "Don't break the law"

The DMCA does not apply here!

[yuna49]

Can we please stop making reference to the Digital Millenium Copyright Act in this discussion? The case in point concerns trademark infringement. The DMCA does not apply to this.

And for all those who say, "oh, but what if I get a phony notice," how hard is it to verify that someone is a licensed Louis Vuitton distributor? I'd agree that simply looking at the site may not be sufficient to determine whether the hosting client is engaged in trademark infringement, but the site's owner should at least be able to demonstrate that he or she is a licensed distributor.

I'm on Vuitton's side in this one.

Re:The DMCA does not apply here!

[Frank T. Lofaro Jr.]

First Sale Doctrine says even an "unlicensed distributor" is allowed to sell an item.

Well, until a law gets passed which repeals it. Which is fairly likely to happen in the not to distant future.

Re:The DMCA does not apply here!

[yuna49]

As I mentioned in another posting, unlicensed distributors would need to obtain legitimate stock from somewhere. I presume wholesalers in these items know who is a legitimate retailer and who is not. If someone is dealing in legitimate licensed goods, they'd have to buy them at retail somewhere which significantly reduces the available profit margins from undercutting the manufacturer's preferred retail price. I suppose there could be arbitrage opportunities from buying at retail in one country and selling in another if prices or exchange rates are sufficiently out of whack, but I doubt that's a very common practice. Counterfeiting seems a much more profitable venture.

Regardless of first-sale laws, the DMCA is still not applicable to trademark infringement.

Re:The DMCA does not apply here!

[Anonymous Coward]

I suppose there could be arbitrage opportunities from buying at retail in one country and selling in another if prices or exchange rates are sufficiently out of whack, but I doubt that's a very common practice.

I don't know about the USA, but this used to be very common in the UK. Until Levi's (the jeans company) took Tesco (the biggest British supermarket) to the European court claiming that Tesco's advertising of genuine Levi's at much lower than normal price was damaging Levi's brand and was therefore some kind of trademark infringement. And the court, in just about the worst anti-consumer decision of all time, agreed.

Now that it's illegal such arbitrage is uncommon in Europe. But if it's legal in the USA I'd be surprised if it wasn't common. The price differences can be large.

Re:The DMCA does not apply here!

[Anonymous Coward]

> how hard is it to verify that someone is a licensed Louis Vuitton distributor?

So I can't sell a used bag now, unless I'm a distributor!?

Re:The DMCA does not apply here!

[Anonymous Coward]

...how hard is it to verify that someone is a licensed Louis Vuitton distributor?

How hard is it for Louis Vuitton to get a court order to take the site down? It's much easier for an ISP to verify the authenticity of a court order than it is to evaluate the merits of the take down notice. I'd expect an ISP to forward the take down notice to their subscriber to either allow the subscriber to remove the offending parts of the site or contest the order in court and to inform the sender of the take down notice that the request has been forwarded and that they need a court order to actually take down the site.

If the ISP didn't do that, I agree they were in the wrong. But if the ISP did that and was still in the wrong, the laws should be changed. The courts should bear the burden of evaluating the merits of a take down notice, not ISPs. In the end, you're right that it should have come down to someone verifying whether the site's owner is a licensed distributor, but that someone should have be a judge.

The article doesn't provide this information, so I can't say whether I agree with the decision or not.

Re:The DMCA does not apply here!

[Registered Coward v2]

Can we please stop making reference to the Digital Millenium Copyright Act in this discussion? The case in point concerns trademark infringement. The DMCA does not apply to this.

And for all those who say, "oh, but what if I get a phony notice," how hard is it to verify that someone is a licensed Louis Vuitton distributor? I'd agree that simply looking at the site may not be sufficient to determine whether the hosting client is engaged in trademark infringement, but the site's owner should at least be able to demonstrate that he or she is a licensed distributor.

I'm on Vuitton's side in this one.

I think we are in pretty close agreement here.

While I realize that there is a difference between copyright, which the DMCA addresses, and trademark law, I can see the DCMA being used to fight the sale of knock-offs. If the site used photo's, descriptions, and logos taken from a LV site, then that could conceivably be a copyright violation covered by the DCMA.

I don't see it as an either or; invoking the DCMA allows the trademark owner to rapidly take down a site and stop sales of counterfeit goods and still go after the sellers for trademark violations. The DCMA is simply one more weapon in their armory they can chose to use if it is appropriate.

Of course, that doesn't mean that every application of the DCMA will be legitimate or proper. In the end, lawyers can take actions they know won't really stand up in court in the hopes of getting the other side to fold. It's about winning and losing, not right and wrong.

As a side note, I also am on LV's side.

Re:The DMCA does not apply here!

[Registered Coward v2]

First Sale Doctrine says even an "unlicensed distributor" is allowed to sell an item.

Well, until a law gets passed which repeals it. Which is fairly likely to happen in the not to distant future.

Well, yes and no. I did some research a while back on the doctrine of first sale for an article I wrote and the general legal consensus was it is not cut and dry. State laws vary, as does what qualifies as a sale and what you actually bought.

That may have changed (I wrote that over 10 years ago), but I was surprised that it was not as simple as I initially thought.

Re:The DMCA does not apply here!

[Registered Coward v2]

As I mentioned in another posting, unlicensed distributors would need to obtain legitimate stock from somewhere. I presume wholesalers in these items know who is a legitimate retailer and who is not. If someone is dealing in legitimate licensed goods, they'd have to buy them at retail somewhere which significantly reduces the available profit margins from undercutting the manufacturer's preferred retail price. I suppose there could be arbitrage opportunities from buying at retail in one country and selling in another if prices or exchange rates are sufficiently out of whack, but I doubt that's a very common practice. Counterfeiting seems a much more profitable venture.

While price arbitrage is used (generally for what are called gray market goods); resellers can also buy from legitimate sellers at below retail. The store may want to order more to get a bigger discount and offload the excess to someone else at a discount because they can't sell or carry the finance costs for the entire order.

Re:The DMCA does not apply here!

[Registered Coward v2]

I suppose there could be arbitrage opportunities from buying at retail in one country and selling in another if prices or exchange rates are sufficiently out of whack, but I doubt that's a very common practice.

I don't know about the USA, but this used to be very common in the UK. Until Levi's (the jeans company) took Tesco (the biggest British supermarket) to the European court claiming that Tesco's advertising of genuine Levi's at much lower than normal price was damaging Levi's brand and was therefore some kind of trademark infringement. And the court, in just about the worst anti-consumer decision of all time, agreed.

Now that it's illegal such arbitrage is uncommon in Europe. But if it's legal in the USA I'd be surprised if it wasn't common. The price differences can be large.

As I understand the TESCO case, they were importing Levi's from the US and selling them in Britain; and the EU court ruled they can't import them from outside of the EU.

So TESCO was not blocked form selling the jeans, just importing them from outside the EU. Since Levi Strauss probably better controls pricing in the EU than in the US that essentially ended Tesco's ability to offer cut rate prices.

While I disagree with such laws, the US has them as well and companies have used them to limit gray market imports. IANAL, but as I understand it they block entry based on trademark and licensing grounds; with the idea that companies have a right to control how their trademark is used in commerce. As I recall, it tends to be high end luxury goods where relatively small currency differences give rise to decent profits based on arbitrage.

This, of course, is just another example of regulatory capture.

Correct but Irrelevant

[Anonymous Coward]

The DMCA covers copyright law, not trademark law. Trademark infringement is still decided by a court, not via email.

Re:Correct but Irrelevant

[einhverfr]

I wonder what the prospects for an appeal look like.

For Sale

[InsertWittyNameHere]

100% brand new Louis Vuitton bag!
ONLY $20!!!

Interested buyers please reply to this post.






Direct all complaints to lawsuits@slashdot.org

Re:For Sale

[ColdWetDog]

Dude, you are really barking up the wrong tree on this site. Unless I am quite mistaken about the sexual predilections and social goals of most of the people on Slashdot.

so when are they going after every sweatshop buyer

[Anonymous Coward]

wal-mart, target, and every other huge company that looks the other way while laws are violated in other countries to make cheap shit to put on the shelf?

not to mention KBR, halliburton, and blackwater, shell, and every other company doing dirty deeds in the third world for profit.

A fair verdict against an irresponsible colo

[bzzfzz]

I used to read and reply to complaints email for a large web site.

I think that the verdict is entirely reasonable and that the objections voiced above are not firmly grounded in facts.

The first thing to understand is that, even for an extremely large and popular web site, the volume of plausible complaints is not especially high. Most of the complaints are genuine, at least as far as their origin. Nobody goes around and pretends to be Louis Vitton or Cisco (to cite another example from the discussion above) and sends out C&D notices. There are some cases where C&D notices get sent out that lack legal basis. So, if you're going to run a business that makes real money, you have to have legal counsel to sort through these kinds of claims. This is not any different than bricks and mortar retail. If you're running a hosting company or colo, the complaint volume isn't going to be that great unless you are knowingly allowing dodgy websites or have hosting customers who are deliberately pushing the boundaries. Getting a few plausible complaints a month (spam, DMCA notices, hosting viruses and other malware, subpoenas and other requests from law enforcement) is part of the hosting business. If you're going to be in the business, you have to be prepared to review such complaints and respond to the ones that have sound basis.

The availability of these kinds of remedies in the courts is valuable and slashdotters should support it. Without such remedies, companies can engage in Hollywood accounting, just as spammers and telemarketers do, and leave no effective remedy.

How come no-one ever sues CHINA?

[tekrat]

Loius Vuitiion (or whatever the hell his name is), makes an over-priced, uber-expensive handbag, and then complains when knock-offs come around? Isn't that capitalism? I also notice that this dude and his bag of lawyers sue or jail everyone selling the stuff.

But not the guys making the stuff.

Because his handbags come out of the same Chinese factory as the knock-offs. That's why most people will never notice that they *are* knock-offs. During daylight hours, the factory produces legitimate "on the books" merchandise, and then the night shift takes over, making the exact same stuff, but "off the books", which are then sold cheap, and shipped off to the rest of the world.

Legitimate copyright holder screams bloody murder, and sues and jails everyone, except the factory, who have already made their profit by selling the knock-offs to the distribution channel. And the guy can't sue or jail the factory in China, because during the day, they make his "real" merchandise.

The Chinese have figured out capitalism pretty well for a communist country. They've got capitalsim down better than the USA, that's for sure.

Re:How come no-one ever sues CHINA?

[david_thornley]

Relax, guy. Anybody is free to make and sell a less expensive handbag. What they can't do is use somebody else's trademark. Trademark law is basically pro-consumer, in that the point is to tell me who made, or is responsible for, stuff.

Capitalism owns morals?

[Anonymous Coward]

Saying that an ISP should be held accountable for supplying "bad guys" the oppertunity and methods to sell their faked goods or (dare I say it) just to host a torrent tracker is just utterly dumb and incompetent.

And then being proud if it makes it worse, understand that we live in a world where capitalism has taken over moral value.

Here in Sweden we have the Department of Roads (VÃgverket)... should they be held accountable when people speed or when people drive drunk?
Also should they be charged when someone kills someone with their car?
They we're technically on a road which they have supplied... are they accomplices then?

I can with most certainty, even thou I have no clue on prejudiced cases about people charging the state with accessory to murder when someone runs someone else over, say that you won't be convicted in this case.

This is just another of those things that shows how morally corrupt humanity has become, all because of the bling and cash

"Intellectual property" in action

[Whatsisname]

Noticing how many posts are from people making references to the DMCA, despite this case being about a trademark, shows to me that the 'intellectual property' campaign to confuse people and treat information like property, and to blur the difference between patents, trademarks, and copyrights, is having success and is helping destroy society.

http://www.gnu.org/philosophy/not-ipr.html

Guess all ISPs will come to Nepal then!

[herojig]

Heck, come on down, you can find a great ISP for less then 100USD per year and do whatever the heck u want to do. The servers are all located/mirrored in the US, so speed is great, and there are no restrictions. Oh, by the way, we get all our Louis Vuitton on the street here, there are vendors almost 24x7 selling stuff there, no shipping and handling required.

A brick and mortar analogy

[einhverfr]

To John's Paint Store:

We believe your customer, Mr David Jones, is using your paints to create signs which violate our trademarks. You are to cease and dissist from providing him with such paints or we will sue you for contributory infringement.

Sincerely:
so-and-so, Lawyer for Acme Industries, Inc.

Same? Different? On what basis?

Re:A brick and mortar analogy

[BobMcD]

Not close enough, I don't think.

More like a billboard company allowing them to put up signs which violate their trademarks.

It isn't so much the paint, but the platform for putting up the sign.

Re:A brick and mortar analogy

[einhverfr]

I am not sure it matters. In both cases, you have someone profiting by selling services that he/she arguably knows or should know are contributing to trademark infringement. I am not sure why selling paints should be different than renting out the billboard, if we are trying to apply the same principles that seem to occur in contributory infringement for copyrights. In both cases the businesses are enabling the infringement and profiting from it. I.e. I don't see web hosting as different from video casset recorders in terms of general safe harbor.

I personally think the bar should be VERY HIGH for contributory infringement for trademarks (and similar to the bars for copyright infringement). I.e. if you sell a neutral good or service to all who come and use it, and you are not generally responsible for the final product, then you shouldn't be liable for contributing to the infringement. On the other hand, if your service is not neutral (for example you advertise its infringing uses as in Grokster) or you do have final control (i.e. as graphics design services) then the bar should be lower.

In short I think the same principles applied regarding contributory liability for copyright infringement in both Betamax and Grokster should guide ideas regarding contributory liability for trademarks.

Consider the following hypothetical:

Dear Mr Smith;

Be believe that Joe's Billboard Shop is infringing on our trademark, namely the wordmark "JBS." If this continues, and if he continues to rent from you, we will hold you liable for contributory infringement.

Sincerely,
Mr Brown, General Counsel for Jake's Billboard Shop

Re:A brick and mortar analogy

[BobMcD]

I am not sure why selling paints should be different than renting out the billboard

Materials seem different than services to me. The paint example would be closer to them suing Microsoft over Notepad.exe, if that were what the infringer's used to edit the html.

I.e. I don't see web hosting as different from video casset recorders in terms of general safe harbor.

You'd be correct, but again you're not separating the service from the materials. To use a cassette analogy, this would be closer to Walmart stocking the copied tapes, even after they had been told to stop.

They're not after the creation of the site, nor the materials or processes used to cause it to exist. They are after the facilitation of the site being published to the public.

I think your hypothetical is exactly on target with the case in the fine article.

Re:A brick and mortar analogy

[einhverfr]

You'd be correct, but again you're not separating the service from the materials. To use a cassette analogy, this would be closer to Walmart stocking the copied tapes, even after they had been told to stop.

Ok. Let's look at the problems that occur with this distinction though, i.e. the rented store front vs the neutral product sale. If you are saying that a lessor should be able to be held liable for contributory infringement of trademarks by a lessee (who is using the lease to bring an infringing good to market) and must evict to avoid liability, and that the bar should be "we told you to stop you didn't evict him" then this places too much power in the hands of plaintiffs who can, effectively, shut businesses down without court oversight while trying to get things resolved.

For example, suppose I start a business called Intelcom focusing on intelligent mobile devices. I get a loan from a bank and purchase an office building. Intel Corp decides they want to enforce their trademark against me and tells the bank to stop providing the credit or else they will get sued too. Should the bank be required to call the loan early and repossess the office building if I can't quickly find another loan? After all, it too is a financial service which is facilitating, in their mind the trademark infringement.

The issue here is that this makes trademark disputes extremely dangerous to businesses since legitimate businesses may be blocked from critical infrastructure. I don't think this should be something left to tortuous interferance claims either. I think the simpler solution is to require active collaboration or endorsement to a contributory infringement claim regarding trademarks.

Re:A brick and mortar analogy

[BobMcD]

The issue here is that this makes trademark disputes extremely dangerous to businesses since legitimate businesses may be blocked from critical infrastructure. I don't think this should be something left to tortuous interferance claims either. I think the simpler solution is to require active collaboration or endorsement to a contributory infringement claim regarding trademarks

I agree that greater limits on this action are a great long-term goal, I just think we can give more power to the interference statutes that already exist while we work towards greater change.

I don't however disagree with the overall notion that knowingly supporting a criminal enterprise is punishable.

Re:A brick and mortar analogy

[einhverfr]

I don't however disagree with the overall notion that knowingly supporting a criminal enterprise is punishable.

Nor do I. I just don't think providing hosting for a normal fee, a lease for storefront space, etc. is "supporting."

On the other hand, if you show you are endorsing infringing uses, or building a service specifically targetted towards infringing uses, that is pretty clear.

In short I would apply the same lines as found in Betamax and Grokster to services and to contributory infringement of trademarks. That seems the best way to go in my opinion.

Does this apply to government entities as well?

[Locke2005]

Under this theory, companies that know, or should know, that they are enabling illegal activities have an obligation to remedy the situation. Entities that fail to do so, as Louis Vuitton alleged in this case, can be held legally responsible for contributing to the illegal activities.

90% of all US currency contains traces of cocaine. The US mint knows, or should know, that they are contributing to the illicit drug trade by making currency available, since virtually all illegal drugs are purchased with cash. Shouldn't we also hold the US Mint legally responsible for the drug trade? After all, don't we hold gun manufactures legally responsible for everyone who gets murdered? Don't we hold hotels legally responsible for any acts of prostitution that occur on their premises? Don't we hold television networks, magazines, and newspapers legally responsible for any fraudulent advertising they carry? Don't we hold ISPs responsible for distributing kitty porn? Under this theory, shouldn't people with lung cancer be able to sue any company that ever accepted cigarette ads? NBC knew, or should have known, that the advertising would kill people!
Or perhaps this "theory" is just a crock of shit...

Douglas Adams.

[Fantastic Lad]

The Hitchhiker's Guide To The Galaxy has a few things to say on the subject of Hand Bags. . .

"A handbag, it says, is the most massively useful thing an intergalactic hitchhiker can have. [Insert witty Adams-isms about the usefulness of hand bags here.] [. . .] thus leading to The Great Counterfeit Hand Bag Crisis of the early twenty-first century. The judges, lawyers and general rif-raf of the legal profession as it happened all had wives who were partial to their expensive accessories and none too pleased to see cheap knock-offs of their own fashionable handbags being carried about by simply EVERY other woman on the street. As such, the wives exerted their collective will toward the task of making their husbands entirely miserable until something was done about this altogether offensive state of affairs. Now, as is well recognized that the collective might of any large group of truly unhappy women is approximately equal in its force upon a planetary culture as a prolonged, large-scale military engagement, it was not long before the crime of hand bag counterfeiting was elevated to the very top of the list of humanity's most heinous mis-doings, right up there with the really bad stuff, --like listening to music without a license, and forcing children to make handbags and other fashion accessories in musty sweat-shops. Indeed, handbag counterfeiting and listening to music without a license were swiftly and severely punished leading to the establishment of a planet-wide police state. And while sweat-shop labor received somewhat less attention, it was nonetheless strongly frowned upon; people would shuffle while looking at their shoes and utter things like, "Oh, yes, well that's simply terrible, that is! Simple terrible." Indeed, it was considered altogether so terrible that it was often considered wise to simply not mention it at all, particularly when attending those swank gatherings where the finest handbags were on display."

-FL

In other news...

[AlgorithMan]

In other news the government is being sued, because they should know, that they are enabling illegal activities and have an obligation to remedy the situation, because they are building streets (which are used to transport counterfeit Louis Vuitton merchandise)

also Microsoft is being sued, because they should know, that they are enabling illegal activities and have an obligation to remedy the situation, because they distribute Windows and Internet Explorer (which are used to put counterfeit Louis Vuitton merchandise on eBay)

also the postal service is being sued, because they should know, that they are enabling illegal activities and have an obligation to remedy the situation, because they transport counterfeit Louis Vuitton merchandise

Any different from French aristocracy ?

[unity100]

they were also the ones leaning on centuries old laws to assert their 'rights' as lawful. i see little difference in the implementation of such stupidity on behalf of a private interest by a court, than a french aristocrat enforcing his 'rights' over local people through a french court back in 1780.

they needed their heads chopped to get it mildly right. i dont think the current 'nobility' of the capitalist system will let you go with anything less.

What a crock...

[Puppet Master]

I work for a hosting company and just so happen to deal with these legal matters on a daily basis.

The only time I take down a site that "supposedly" is infringing on a copyright is if I have a court order forcing me to do so.

I get tons of emails, phone calls and letters from lawyers telling me I have to shut down website xyz.com because they "may" be infringing on their clients copyrights.

Kiss my ass!!! How do I know your client isn't infringing on my clients copyright???
How do I know you're not some asshat competitor trying to get the site shut down???

Point being, is that if the judge ordered them to shut down the site and they didn't then yes, they are liable. But if there is no court order enforcing this, then they can appeal and most likely overturn that case.

Issuing takedown notice against Louis Vuitton

[Anonymous Coward]

So if I send a takedown notice claiming the official Louis Vuitton website is in fact selling counterfeit merchandise and using my trademark, can I get their site taken down?

Re:Issuing takedown notice against Louis Vuitton

[sjames]

Given the way large businesses typically get a free pass probably not, even if they actually are infringing on your copyright or trademark.

RTFA!

[visible.frylock]

Since when did ISPs become the gatekeeper of what is and isn't legal?

FTA:

In a verdict handed down last week, [...]

Since last week, apparently.