Contributory liability is important for brand owners to consider when seeking to enforce their trademarks online, especially when dealing with online marketplaces. The Ninth Circuit is the most recent circuit court to weigh in on the correct standard for evaluating such claims.
After trial, the district court let the verdict stand for all claims, except for the contributory counterfeiting claim for one of
Contributory Liability
Under the Lanham Act, a party can be contributorily liable if it "continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement." A party meets the "knows or has reason to know" standard if it is willfully blind to infringement. Willful blindness, in turn, requires two elements: (1) a "subjective belie[f] that infringement was likely occurring"; and (2) "deliberate actions to avoid learning about the infringement."
In the copyright context, the Ninth Circuit noted that general knowledge is insufficient to find contributory infringement. And because "trademark infringement liability is more narrowly circumscribed than copyright infringement," the court reasoned, the trademark standard should be at least as demanding. With this ruling, the Ninth Circuit joins the Second, Fourth, and Tenth Circuits in holding that willful blindness requires specific knowledge of infringers or instances of infringement.
Once a marketplace knows about specific infringers or instances of infringement, the court continued, a defendant could shield itself from liability with "bona fide efforts to root out infringement," even if such efforts are not fully successful. But the Court cautioned that context matters. "[A] reasonable response for a flea market might not be reasonable for an online marketplace with millions of listings. . . . Removing infringing listings and taking appropriate action against repeat infringers in response to specific notices may well be sufficient to show that a large online marketplace was not willfully blind." The Ninth Circuit instructed the district court to reconsider
Contributory Counterfeiting
The Ninth Circuit also disagreed with the district court's ruling that a contributory trademark counterfeiting violation can only occur with similar products. Not only did the district court "gloss[] over" whether
Permanent Injunction
The Ninth Circuit then turned to the issue of a permanent injunction. The Lanham Act creates a "rebuttable presumption of irreparable harm" when a party seeks a permanent injunction. The district court found
Prejudgment Interest
Finally, the Ninth Circuit analyzed the issue of prejudgment interest for statutory damages under § 1117(c). According to the Ninth Circuit, prejudgment interest serves to compensate the victim in full for the damages suffered from the infringement. Statutory damages, on the other hand, "may compensate the victim, penalize the wrongdoer, deter future wrongdoing, or serve all those purposes." Therefore, allowing prejudgment interest might inflate statutory damages to amounts disproportionate to the harm. Moreover, the inclusion of prejudgment interest in another damages section (Section 1117(b)) further suggests that
The case is
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
20001-4413
Tel: 2024084000
Fax: 2024084400
E-mail: info@finnegan.com
URL: www.finnegan.com
© Mondaq Ltd, 2023 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source