You Can Be Held Liable For Trademark Infringement on Your Site

In light of the changes to the rules on DP I present t he following in hopes that you will find it useful. I recently read the case of Gucci America, Inc., V. Hall & Associates, Denise Hall, and Mindspring Enterprises, Inc., 135 F.Supp.2d 409 (2001). It answers a few questions that may be of interest to some of you. It addresses the issue of liability when others publish on your hosting service or website. If you have a website or hosting service you can be held liable for the actions of your customers.


It is a New York Case, where the court ruled that a web hosting provider is liable for the trademark infringement by one its customers. In this case the customer had a website where it was selling products as Gucci, but where in fact not Gucci products.
Gucci contacted the host by e-mail on two occasions to let them know that their customer was using the hosting services to aid in acts of trademark infringement and unfair competition, including the advertising of jewelry on the goldhaus website which bore (and infringed) the Gucci Trademark.


The host ignored the e-mails and was sued for contributory trademark infringement under Section 32(1) of the Trademark Act of 1946 (the "Lanham Act"), 15 U.S.C. § 1114(1), false designations of origin and false descriptions and representations under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and trademark infringement and unfair competition under New York common law.


Liability arises under what is called the doctrine of contributory infringement, that "if a manufacturer or distributor continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement," the manufacturer or distributor itself may held be liable for infringement.


In this case the court also distinguished between trademark infringement and first amendment right. Trademark infringement law does not curtail or prohibit the exercise of the First Amendment right to free speech. Defendant's use of another entity's mark is entitled to First Amendment protection when his use of that mark is part of a communicative message, not when it is used to identify the source of a product. In other words, you can talk about someone else's product that have a trademark, but not to mislead consumers to think that your products are of that particular trademark.
There is a liability limitation for innocent infringement. The liability limitation afforded under the "innocent infringer" defense, contained are in Section 32(2) of the Lanham Act, codified at 15 U.S.C. § 1114(2). It says that when the infringer is innocent the only remedy available is an injunction. Meaning a court order can be issued to stop publishing it.

An infringer is "innocent" unless it he acted either (1) with knowledge of the infringement or (2) with reckless disregard as to whether the material infringed the trademark owner's rights. If you know about it or have reason to know about it, you need to stop the infringement immediately. If you know John Smith is selling hand bags as Gucci for $10, that would likely be reckless disregard making you liable. You should also have a way for people to contact you when there is an alleged infringement, otherwise you would likely be held accountable.


The case came out of New York and it talks about a hosting company, but the same principals would apply to anyone with a website, not just a hosting company. If you have auction site for example or classified website, where people are regularly selling stuff you can be held accountable for ignoring requests to take something down.