Now days, Trademark and copyright infringement are becoming increasingly common in the world. And due to the difficulty to catch direct infringers who sell counterfeit or other infringing products on the internet, as they can easily mask their identities and avoid liabilities by shutting down and reopen under different domain name. So the intellectual property owners have turned to enforce their trademark and copyrights against internet-based infringers, and try to impose liabilities on parties that have some involvement in counterfeit or infringing product transactions rather than imposing liabilities on the direct infringers. Search engines, auction sites that facilitate transactions involving infringing products, and credit card companies involved processing payments for such products, can be considered as examples of these parties. (McCue, 2012)
Louis Vuitton Malletier, S.A. vs. Akanoc Solutions, Inc case may provide contributory trademark infringement, counterfeiting and copyright infringement example. Louis Vuitton, an international French fashion house and luxury brand, sued Akanoc, a California-based internet service provider, for hosting Chinese websites which sold counterfeit Louis Vuitton merchandise. Vuitton sent eighteen notices of infringement to Akanoc documenting trademark and copyright infringement on websites hosted by the latter that sold counterfeit LV goods and demanding that Akanoc remove the infringing content, but Akanoc neither responded to these notices nor removed the infringing content.
The jury found Akanoc and its owner Steven Chen liable for contributory trademark infringement, and awarded $32.4 million to Vuitton based on contributory trademark and copyright infringement claims.
Akanoc has filed post-trial motions attempting to overturn the jury’s verdict chiefly on the grounds that U.S. law does not apply because any alleged infringement occurred in China, but because Vuitton notified Akanoc many times that it is hosting websites that sell counterfeit goods, and Akanoc continues to supply its services with actual or constructive knowledge that the users of their services were engaging in trademark infringement. Therefore Akanoc should be held liable for contributory infringement. (Hahn Loeser, 2009)
Although the Lanham Act does not expressly impose liability for contributory infringement, the U.S. Supreme Court has recognized that “liability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another”. (Legal Information Institute, n.d.) So the Supreme court set out the doctrine of contributory trademark infringement in Inwood Labs Inc. v. Ives Labs Inc, 456 U.S. 844, 855 (1982) to imply such a cause of action and enunciated what remains the standard for contributory trademark infringement.
The Court stated that a party which “intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement is contributorially responsible for any harm done as a result of the deceit.” The Court stated that the determination of contributory infringement depends upon a defendant’s intent and knowledge of the wrongful activities. (Tabbers Temptations, n.d.)
This doctrine helps Louis Vuitton to win the case, by proving that Akanoc was aware that it is involved in contributory infringement so the verdict set totally aside Vuitton. But as the difficulty in stopping counterfeiters on the Internet continues, intellectual property owners will continue to try to impose liabilities on secondary parties and sue them. Accordingly, the law of secondary liability will continue to be unsettled for some time, because it is hard to conform to precedent case law, as the secondary liability in each case was addressed in a new context. So it is more likely that courts will continue to attempt to draw a principled line to define the contours of secondary liability.