Web Hosts May Be Liable for Trademark Infringement on Hosted Sites

Web Hosts May Be Liable for Trademark Infringement on Hosted Sites

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A federal court has held that the broad immunity given to ISPs and web hosting companies under the Communications Decency Act (CDA) does not protect them from trademark infringement claims. In Gucci America, Inc. v. Hall & Associates, the United States District Court for the Southern District of New York held that ISPs can be held liable for contributory trademark infringement committed by web sites they host.

The CDA states that "no provider . . . of any interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." As discussed in our December 5, 2000 Internet Alert, many courts have held that this provision protects ISPs from claims of defamation, obscenity, and a wide variety of state law claims, including unfair competition, negligence, and intentional infliction of emotional distress. Further, as discussed most recently in our March 13, 2001 Internet Alert, Congress also granted ISPs limited immunity from copyright infringement under the Digital Millennium Copyright Act (DMCA). Gucci suggests, however, that despite the wide array of immunities enjoyed by ISPs, they may still be liable for trademark infringement.

In Gucci, the American subsidiary of the famous Italian design house sued an online jewelry retailer and its web hosting company, MindSpring (which later merged with EarthLink), for infringing the Gucci trademark on the online retailer’s web site. MindSpring moved to dismiss the lawsuit against it, arguing that under the CDA, it could not be held liable for infringement of the Gucci trademark merely because it hosted an alleged infringer’s web site.

The court rejected MindSpring’s argument, citing another CDA provision that explicitly states that the law may not be "construed to limit or expand any law pertaining to intellectual property," including trademark law. The court reasoned that the protection sought by MindSpring under the CDA would improperly limit the application of intellectual property laws.

In addition to its trademark infringement claims, Gucci also brought a claim for unfair competition. At least one other court, the San Francisco superior court in Stoner v. eBay, Inc. also discussed in our December 5, 2000 Internet Alert, has held that the CDA immunizes ISPs from liability for such claims. Noting that Stoner involved only business competition claims rather than intellectual property claims, the Gucci court found that Stoner did not answer the question whether the CDA immunized ISPs from intellectual property infringement. The Gucci court was silent on what effect Stoner should have on Gucci ’s unfair competition claim.

Although the Gucci court declined to extend the CDA’s immunity provision, the court noted that MindSpring might still be able to use the so-called "innocent infringer" defense, under which a trademark infringer who is merely engaged in the business of "printing" the infringing mark "for others" unless it actually knew, or was reckless in not knowing, that the trademark owner's rights were being infringed. Gucci would bear a heavy burden to prove that MindSpring acted with actual malice or with knowledge that it was engaged in contributory trademark infringement.

By limiting other courts’ expansive interpretations of the CDA, Gucci shows that in some cases, ISPs may be held liable for trademark infringement on web sites they host -- even if that content is created and posted by third-parties. The DMCA protects ISPs from copyright infringement on third party sites. Now, a legislative remedy may be needed to provide similar protection against trademark infringement claims.

Jeffrey Morgan
[email protected]

Michael Bevilacqua
[email protected]

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