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Web Hosts Hit With $32 Million Judgment For Content
from the time-to-pay-the-piper dept.
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A court in France ordered eBay to pay more than 61 mega-dollars to the parent company (LVMH) of Givenchy, Fendi, Marc Jacobs and Louis Vuitton, because a user sold fake goods on the website. eBay has been sued by other 'luxury goods' vendors (such as Tiffany's (US), Rolex (Germany) and L'Oreal (EU)). Problems stem from some companies demanding that their merchandise (even legal merchandise) not be displayed nor sold as it is a violation of their 'property.' Others have complained that eBay is too slow to take down claims. Apparently eBay was hit with two violations: 1) eBay illegally allowed legitimately purchased and owned products made by LVMH to be resold on its website by 3rd parties not under the control of LVMH, and 2) not doing enough to protect LVMH's brands from illegal sales. eBay has said it will appeal. So eBay is to know what products every company allows to be sold before allowing them to on auction?
(There's also coverage at Yahoo News.)
Update: 07/01 17:15 GMT by T : That's LVMH throughout, rather than LVHM, as originally rendered.
Eh not really a free speech issue (Score:3, Insightful)
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 (Score:5, Insightful)
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Re:Eh not really a free speech issue (Score:5, Insightful)
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.
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Re: (Score:3, Informative)
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 (Score:5, Insightful)
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 [wikipedia.org] does not seem to apply to people with deep pockets.
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Re:Eh not really a free speech issue (Score:5, Insightful)
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.
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Re:Eh not really a free speech issue (Score:4, Insightful)
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.
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Re: (Score:3, Insightful)
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 (Score:4, Informative)
There is a trail of emails showing the ISP doing exactly that.
This has chilling effect written all over it.
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Re:Eh not really a free speech issue (Score:4, Informative)
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.
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Re: (Score:3, Interesting)
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 (Score:4, Interesting)
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.
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Re:Eh not really a free speech issue (Score:4, Interesting)
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.
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There goes the internet... (Score:4, Insightful)
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... (Score:5, Informative)
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.
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Re:There goes the internet... (Score:5, Insightful)
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.
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Re:There goes the internet... (Score:4, Informative)
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.
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Re:There goes the internet... (Score:4, Insightful)
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
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Additional links and info (Score:5, Informative)
When are we going to build that giant spaceship (Score:4, Funny)
...and put all the lawyers, hairdressers and managers in it?
Not the best write-up (Score:5, Informative)
Re:Not the best write-up (Score:5, Interesting)
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.)
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Correct but Irrelevant (Score:3, Informative)
The DMCA covers copyright law, not trademark law. Trademark infringement is still decided by a court, not via email.
The salient point : (Score:5, Interesting)
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 : (Score:5, Insightful)
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?
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Re: (Score:3, Interesting)
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
The DMCA does not apply here! (Score:5, Informative)
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.
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Re: (Score:3, Insightful)
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.
Bye bye california hosting industry (Score:4, Insightful)
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We need a "DMCA safe harbor" for trademarks etc (Score:4, Insightful)
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 (Score:5, Informative)
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.
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Re: (Score:3, Interesting)
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.
Chen, to lawyer: "So do I have a case? ..." (Score:5, Funny)
Tactical (Score:3, Insightful)
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...
How come no-one ever sues CHINA? (Score:5, Interesting)
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.
"Intellectual property" in action (Score:4, Interesting)
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 [gnu.org]
Douglas Adams. (Score:4, Insightful)
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
Re:Guilty by association (Score:5, Informative)
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Re:Guilty by association (Score:5, Informative)
It wasn't "they should have know", it was "they were informed and ignored the warnings". Big difference.
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Re: (Score:3, Insightful)
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 ho
Re: (Score:3, Insightful)
Re:Cloudy Business (Score:4, Insightful)
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?
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Re: (Score:3, Informative)
I had to look it up..
http://en.wikipedia.org/wiki/Real_estate_investment_trust [wikipedia.org]
A brick and mortar analogy (Score:3, Interesting)
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:The Pirate Bay case, only worse. (Score:4, Insightful)
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.
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Re: (Score:3, Interesting)
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:Jury Selection (Score:5, Informative)
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.
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