Web Hosts Hit With $32 Million Judgment For Content 202
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."
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.
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: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?
Re:Eh not really a free speech issue (Score:5, Insightful)
Bye bye california hosting industry (Score:4, Insightful)
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: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?
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
The Pirate Bay case, only worse. (Score:2, Insightful)
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: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.
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.
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.
Re:Eh not really a free speech issue (Score:1, Insightful)
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:We need a "DMCA safe harbor" for trademarks etc (Score:1, Insightful)
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:The Pirate Bay case, only worse. (Score:1, Insightful)
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: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.
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...
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.
Re:Bye bye california hosting industry (Score:2, Insightful)
Re:The DMCA does not apply here! (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.
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.
Re:Guilty by association (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 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:Bye bye california hosting industry (Score:3, Insightful)
Re:Guilty by association (Score:3, Insightful)
Re:Eh not really a free speech issue (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:The Pirate Bay case, only worse. (Score:1, Insightful)
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 salient point : (Score:1, Insightful)
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.
Re:The Pirate Bay case, only worse. (Score:3, Insightful)
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.
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
What a crock... (Score:3, Insightful)
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.