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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."
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.
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.
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.
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.
UNIX? They're not even circumcised! Savages!
It wasn't "they should have know", it was "they were informed and ignored the warnings". Big difference.
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.
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.
I had to look it up..
http://en.wikipedia.org/wiki/Real_estate_investment_trust
There is a trail of emails showing the ISP doing exactly that.
This has chilling effect written all over it.
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.
I put on my robe and wizard hat..
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.
The DMCA covers copyright law, not trademark law. Trademark infringement is still decided by a court, not via email.
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.
Sitting in my day care, the art is decopainted.
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.
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.