Dreadful Ruling: Web Hosts Hit With $32 Million Judgment For Content On Customers' Websites
from the chilling-effects dept
Well, this is bad. We've worried in the past about the lack of a specific safe harbor to protect trademark infringement claims being brought against third party service providers. The DMCA has a safe harbor that protects against copyright claims, and the CDA has a safe harbor that protects against all non-intellectual property claims, such as defamation. But trademark is a loophole... and because of that you can get some really dreadful results. Earlier this year, we noted that a court had ruled that web hosting firms could be liable for trademark infringement done by their customers. The case involved luxury goods retailer Louis Vuitton suing some web hosting firms for the actions of their customers. Any common sense ruling would find that the hosts are simply the tool providers, and it was the customers running the actual websites who were liable. That is, if there were common sense.Instead, as Eric Goldman alerts us, the jury has sided with Louis Vuitton and awarded the company $32.4 million in damages from the web hosts.
This is a bad end result no matter how you look at it. If you do any sort of web hosting, your liability just went up by a tremendous amount, and you may now be expected to proactively police all your customers' websites for anything that might possibly be seen as trademark infringement. It's safe to say that this is not what Congress intended -- given the nature of the safe harbors it set up in the DMCA and the CDA. Hopefully, either a higher court will toss this out and/or Congress will finally get its act together and extend safe harbor protection to trademarks as well.
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Filed Under: chilling effects, liability, safe harbors, trademark, web hosts
Companies: akanoc, louis vuitton
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Why surprise?
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Re:
Only a lawyer could possibly think holding somebody who was at no fault what so ever responsible for somebody else's actions is good.
Damn lawyers and greedy people.
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(1) not quite so cut-and-dried (2) failure to read RFC 2142
(2) An astonishing number of webhosts, email providers, and just ordinary domain owners have failed to read RFC 2142 and do what it says. This means that they have -- either through ignorance, incompetence, laziness or just contrariness -- done the Internet equivalent of sticking their fingers in their ears so that they can't hear problem reports. And of course, many of subsequently feign shock that whatever-it-is has been going on for a very long time, and have their paid professional spokesliars say things like "We were unaware..."
RFC 2142 requires that a number of email addresses be supported: for example, if you have a mail server, you must support "postmaster", and you had darn well better have the people doing the care and feeding of your mail server reading it and paying close attention to what shows up there. If you have a web site: "webmaster". Then there's "abuse" -- probably most relevant to this conversation. Compliance with RFC 2142 is trivially simple and is part of baseline due diligence for all Internet operations (whether a network, web host, domain owner, or anyone else). Yet 12 years after it was published, and many more years after its provision were widely recognized as de facto best practices, huge numbers of people still don't do it. And some of them have the audacity to whine when their choices are noted by sites like rfc-ignorant.org -- rather than recognizing that it is their own failure which is the real problem.
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And imbrucy, you are right. We don't need the Congress Doing Something. We already have the 'Rules' in place. This webhost just chose not to follow them
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re
So you or your employee has to sift through 10,000 daily emails subject - V!@gA, eX$EnD youR pEn!s etc etc to find out who is bitching about trademark infringement. How about, as Mike suggested, they just go after the infringers themselves and NOT the Web Hosts?
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Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
When are we going to get over this idea that shutting off internet services should have ANYTHING to do with a business dispute? Why are they contacting the ISP AT ALL? What they should have done is inform THE INFRINGER that they were being noticed and warned, and then proceeded with legal action against them as necessary. Why involve the ISP at all? If somebody is running counterfit purses an selling them out of their van, do I call Shell Oil and insist that they stop selling the guy gas?
"then what we have here isn't a webhost blindsided by what a customer was doing, but a webhost that deliberately ignored a problem."
Right, because it isn't THEIR PROBLEM! It has nothing to do with them. Again, what would Shell Oil say if you told them about the guy in the van?
"(2) An astonishing number of webhosts, email providers, and just ordinary domain owners have failed to read RFC 2142 and do what it says. This means that they have -- either through ignorance, incompetence, laziness or just contrariness -- done the Internet equivalent of sticking their fingers in their ears so that they can't hear problem reports."
How have you taken an RFC and turned it into the definitive statute on receiving complaints? First, it's only email covered by the RFC. Second, it's a guideline on generic email addresses for departments that are rather static across a variety of departments. Do you know that they don't have any of the abuse/complaints/noc/security addresses? Only one of those is SUGGESTED by the RFC (and it is only a suggestion or guideline).
"RFC 2142 requires that a number of email addresses be supported"
No. Not even close to required. From the RFC:
-This document specifies an Internet standards track protocol for the Internet community, and requests discussion and suggestions for improvements-
That doesn't sound like a REQUIREMENT. Nor does:
-organizations which support email exchanges with the Internet are encouraged to support AT LEAST each mailbox name for which the associated function exists within the organization-
ENCOURAGED, not REQUIRED. And that's only if you have someone fulfilling that function. No Webmaster? Then you don't need a webmaster@company.com
It's definitely best practices, sure, and maybe I'm nitpicking, but I hate non-humorous hyperbole like a KKK member hates hip hop....
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Re:
So why in the flying hell would you go after a service rather than the infringer? That's like suing my electric company because I'm burning DVDs.
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A fair question, but what about situations where a web host (e.g., eBay) is show by credible evidence to have intentionally buried its head in the sand while profiting from misconduct by one of its users? In the case in question, the jury instructions and verdict suggest this was the case. Of course, if I was privy to the evidence presented at trial I may have come to a different conclusion. Apparently the jury in the case, after hearing the evidence presented at trial, unanimously believed that LV demonstrated that the web site was not exactly one with "clean hands" in this matter, and thusly unable to avail itself of the safe harbor provisions under US law.
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Re:
Then they are very, very bad internet citizens that STILL haven't done anything wrong. Firms that sell raw materials to despots overseas that they know are doing absolutely horrible things with the materials (like building weapons, using slave labor, etc.) aren't responsible for that despots actions. They probably shouldn't be doing business with them morally, but there isn't anything ILLEGAL about it.
We've lost sight in this country of a very basic principle: You can't legislate morality.
You hear that, Pat Robertson? Now stop being a fuckhead and go eat another twinkie, you prejudice douchebag.
Ahem, sorry....
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Judgement
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Re:
Like kickbacks? Or are we talking about liability because the web host excepts money to host a website? Or eBay excepts money to host an auction?
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shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
That's one heck of a stretched analogy, but I'll go with it. What if that gas station was warned repeatedly that the gas they were selling was being delivered to them by a counterfeit provider, who was siphoning gas from the refinery, diluting it, and selling it via their refinery as "Shell" gasoline? They continue to be warned of this fact, and there is significant evidence of this presented in court. Would that gas station be liable for damages to the refinery>
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Re: re
I think this is the point at which I'll quote Bill Cole: Current Peeve: The mindset that the Internet is some sort of school for novice sysadmins and that everyone not doing stupid dangerous things should act like patient teachers with the ones who are."
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What I do know though, is that if I were selling paper, one of my customers uses said paper to write a death threat and I get sued for providing him with the means by which to do so, I'm gonna be pissed the fuck off!
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Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
B. You completely murdered it by turning Shell, the ISP, into the ones purchasing counterfeit material.
Shell isn't doing that. They are selling gas to a van that's filled with countefeit merchandise the same way that the ISP is selling bandwidth or website space to a company who's inventory is filled with counterfeit merchandise.
I fail to see why Shell Oil or the ISP have any involvement in this manner. They sell gas/internet services, and they did so legaly. Shell isn't responsible for what drivers do with their gas and ISPs aren't responsible for what people do with their bandwidth/space. How is that not simple? And the counter arguments never seem to make much sense either:
1. ISPs make money from other's using their services for illegal activities: Yeah? And Shell Oil makes money off of the gas used by drug runners, speeders, etc. What difference does that make?
2. The ISPs were warned repeatedly that their customers were doing terrible, terrible things and they just ignored it: So? Why wouldn't they? They aren't involved any more than Shell Oil in Mexican drug cartels. Would you go up to the CEO of Shell Oil, proclaim, "Mr. CEO, Mexican drug runners are driving cars up to the States using Shell gas!" and expect him to do anything other than politely ask you to get out of his way since he has a tee time in an hour?
3. It's morally wrong: Probably true, but irrelevant. You can't legislate morality, and that's what is happening, from the bench no less, making this doubly worrisome.
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Re:
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Re: Re:
Quick! Patent that method!
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Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
An RFC is a Request For Comments. It may or may not be considered an Internet Standard by the IETF, but it hardly carries the force of law in either case.
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Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
Now if the other counterfeit refinery was making a similar gasoline compound and selling it as Shell Oil then you could hold the DOT liable since their roads were used to transport the oil from the refinery to the gas station. That makes perfect sense to me! (Sarcasm noted)
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Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
(2) It appears that you are unfamiliar with the purpose, intent and usage of RFCs, as well as with the specific choices of language used within them. RFCs use the terms "must", "should", "may" and the like very carefully -- please read RFC 2119 for an introduction to this, but recognize that even that only scratches the surface. In this particular case, however, note for example (from RFC 2142): "For example, if an Internet service provider's domain name is COMPANY.COM, then the address must be valid and supported". That's a "must". And not only does RFC 2119 spell that out, but anyone equipped with substantial experience and who has been paying even a little bit of attention knows what that means. Even someone who's never read RFC 2142 should have a clue: it's been discussed ad infinitum on innumerable mailing lists, web forums, Usenet newsgroups, etc. for years.
More broadly, compliance with RFC 2142 is not only trivially easy, it's part of baseline due diligence, and has been for a very long time. Anyone who can't handle an essential and simple task like this is very likely not at all ready to tackle far more complex problems.
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Re: Re:
And we agree that legislating morality is truly bad idea.
Where we part company (maybe) is on a basic principle, one that has been part of the fabric of the 'net for many decades: everyone is responsible for what their operation does to the rest of the 'net. Whether that "operation" is a single laptop that they're carrying around, or a huge multi-site hosting farm, or a network, or anything else, doesn't matter: the principle is the same. This isn't legislated -- and doesn't need to be. It's how the Internet works, on a very deep and fundamental level, and many of the problems we currently face are problems because it's not sufficiently put into practice.
If that operation is emitting abuse, then it's their abuse: it came from their server, or their network, therefore they own it. Now...they may of course not be the only ones who own it: it may be a misbehaving customer who's really doing it, in which case they own it too. But whoever owns it, they have the responsibility to make it stop.
Which leaves us with the question of "what's abuse?" I say that spam, DoS attacks, phishing, etc. are, and that file-sharing isn't -- for examples, I could add dozens of items into each columns. I'm sure you could too, and so could everyone else reading this, and all our choices would probably be different.
In this particular case, it's not clear to me yet that what was going on actually was abuse, although so far it sure looks that way. (As I've said twice previously, I'm still reading, so my opinion may change.) If it wasn't abuse, then I'll probably concur that remedial/punitive measures should be directed at the customer, not the host. If it was abuse, then the host should be on the hook for it as well.
That said: any sane host should be doing everything it can to be alerted to such issues, so that it can make a determination for itself which of those it is, what their exposure is, etc. "Read abuse reports and forward the tricky ones to the legal department for study" is admittedly a simplistic approach, but at least it's better than "ignore them entirely and hope the problem goes away".
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Re: Re: Re:
Wonderful in theory, and maybe when the 'net was smaller in active population that made sense, but the times they are a changin' and I don't think that unspoken rule is workable any longer.
More importantly, your way requires more lawyers than mine since there are more parties involved, and upon takeover I'll be rounding all the lawyers up and submitting them to a "Can you breath mustard gas" test, so we need to come up with a new plan....
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Seems to me
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Who rules on the allegations?
This seems very similar to sites removing allegedly infringing content based on receiving takedown notices from content owners. But, removing a potentially infringing video from YouTube is much less significant from a business standpoint than shutting down a company's website based on a third party allegation. I can certainly foresee a situation where a company might send frivolous complaints to a competitor's hosting company in an attempt to get their site shut down (even if it is just for a few days).
Just food for thought.
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Re: Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
How about this one? Is a flea market liable if a vendor in the market is repeatedly selling counterfeit goods? After of course multiple warnings about the vendor have been provided to the flea market?
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Without that - the content couldn't have been online either - so the power company is just as liable with this in mind.
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Re: Who rules on the allegations?
But what if the 'infringing video' was informing the public of a company's bad practices? Dumping hazardous chemicals into the water supply or something? I'd call that at least as bad.
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Re: Re: Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
Sorry, but that's not specific enough for me.
If the warnings are provided by the police, particularly if there has been action taken against them by a court or there is a court order for the vendor to cease their activity, then yes, they are obligated to follow the court's order and to assist law enforcement in any way.
If the warnings came from a company, then absolutely not, they are obligated to nothing. Because how do they know that the company is being truthful and accurate?
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Re:
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Re: Re: Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
If I kick someone out just because Joe Shmoe says they are doing something Illegal (that isn't easily verifiable) I would lose customers and probably be sued by the stall owner, if I help you contact the stall owner then you can talk to them directly and/or send the police to someone directly.
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Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
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Hmm. Nearly all of the court cases along these lines that have involved eBay have shown that the company bent over backwards to accommodate trademark holders. They absolutely did not "bury their head in the sand." In fact, in the Tiffany ruling, the court found that eBay went WAY above and beyond what was legally necessary to protect such trademarks.
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Re: ISP or infringer?
The web has been harder. Usually sending a C&D letter is enough. But we had one person using a Yahoo address with our servicemark in their name. Yahoo ignored any request for takedown or removal of this person from their systems. Maybe now, they'll listen. $32M is a lot of "Pay attention to me" money!
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Re: re
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Maybe not, but it's exactly what the corporations want.
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Re: Re:
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Re: Re:
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Re: Re: ISP or infringer?
I thought that to be a violation of a service mark the usage had to be IN the advertisement of the service. How does someone having a Yahoo account with your service mark fall under that distinction?
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Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
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Re: Re: Re: Re:
Today, not so much, BUT: there's no need to involve lawyers in this at all. While it not be feasible to unplug "them" from "us", it's trivially easy to unplug "us" from "them" and lots of people are already doing so, in cases involving the most egregious offenders. The Spamhaus DROP list, suitable for inclusion in perimeter firewalls/routers, is one such mechanism, but there are many others (including rfc-ignorant, for people that don't read and follow RFC 2142 and RFC 822 & successors.)
Use of these is entirely elective and doesn't require any legal proceedings: it's just a choice that any server/network operator can make. The problem is making those operators aware of their existence and providing guidance on which ones are appropriate when and where.
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Re: Re:
What do you actually know about Pat Robertson being prejudiced?
How many wells have you dug in villages in Africa and Latin America for people you don't even know so they wouldn't have to walk 2 hours plus every day just to get water?
How quickly did you go and help the tsunami victims, the very same countries that topped lists of KILLING CHRISTIANS mere months earlier, and go and help rebuild their countries for free just because?
Were you the very first organization to show up in Nashville after the hurricane? Are you still there helping after all these years?
How many CEOs of multi-million dollar corporations refuse when their board gives them a raise from $80,000 because they feel like they don't need any more than that to live a great life in America, and would rather the additional money go to strangers all over the earth?
Talk about prejudiced... I believe it means speaking from hatred born of ignorance...
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Re: Re: ISP or infringer?
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Re: Re: Re:
You know, that was a good question, so I threw his name into wikipedia. One of the sites that came up was "pat robertson controversies"....and it's like 10k words long. How about a few highlights, shall we?
1. Prejudice against certain Christian demoninations: On January 14, 1991, on The 700 Club, Pat Robertson attacked a number of Protestant denominations when he declared: "You say you're supposed to be nice to the Episcopalians and the Presbyterians and the Methodists and this, that, and the other thing. Nonsense. I don't have to be nice to the spirit of the Antichrist."
2. Prejudice against feminists: He has described feminism as a "socialist, anti-family political movement that encourages women to leave their husbands, kill their children, practice witchcraft, destroy capitalism and become lesbians." (In case you're a nutcase, please note that those claims are ridiculous)
3. Prejudice against...well, everyone who disagrees with him: He agreed with Falwell when Falwell stated[8] that the September 11, 2001 terrorist attacks were caused by "pagans, abortionists, feminists, gays, lesbians, the American Civil Liberties Union and the People For the American Way."
4. Prejudice against homosexuals: Robertson stated that the acceptance of homosexuality could result in hurricanes, earthquakes, tornadoes, terrorist bombings and "possibly a meteor."
5. Prejudice against the Scotish: In 1999 Robertson said Scotland was "a dark land" overrun by homosexuals. This caused the Bank of Scotland to drop plans for a business operation with him.
6. Prejudice against rulers of soveriegn foreign nations, like Hugo Chavez: "I don't know about this doctrine of assassination, but if he thinks we're trying to assassinate him, I think that we really ought to go ahead and do it. It's a whole lot cheaper than starting a war, and I don’t think any oil shipments will stop."
7. Prejudice against Dover, Pennsylvania: Robertson told citizens of Dover, Pennsylvania that they had rejected God by voting out of office all seven members of the school board who support intelligent design.
8. Prejudice against Palestinians: Robertson said that Ariel Sharon's illness was possibly retribution from God for his recent drive to give more land to the Palestinians. He also claimed former prime minister Yitzhak Rabin's 1995 assassination may have occurred for the same reason.
9. Prejudice against Islam: Robertson has frequently denounced the religion of Islam and Muslim people. During a 1995 taping of The 700 Club, he called the religion a "Christian heresy".[48] During a September 19, 2002 episode of FOX News Channel's Hannity & Colmes, Robertson claimed that the Muslim Prophet Muhammad, was "an absolute wild-eyed fanatic … a robber and a brigand."
10. Prejudice against Asians: On the February 7, 2007 edition of The 700 Club, Robertson stated that people who have too much plastic surgery "got the eyes like they're Oriental" and stretched his eyelids in a manner stereotypical of Asians.[
11. Prejudice against Hindus: On March 23, 1995, Pat Robertson led a television program in which he attacked Hinduism, calling it "demonic".
12. Prejudice against common sense: Robertson claims on his web site that through training and his "Age-Defying energy shake", he is able to leg press 2,000 pounds
But, yeah, you know, Pat Robertson is great because he goes to decimated areas like New Orleans with food and water, which you get if you attend his prayer sessions.
Pat Robertson is a prejudiced ass. Goood works from bad men don't make them good men. Al Capone had a great PR manager too, didn't make him any less of a mobster....
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Re: Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
2) Actually in any lawsuit, baseline due diligence is a burden born by the serving party, not the party being served. There are of course statutory requirments. For example a corporation generally must register an agent for service in any state where they do business. That would indeed be the appropriate place to begin legal process serving. Pretending that an internet standards board somehow redefines statutory requirements for operating a business is absurd.
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Re: Re: re
So you would immediately evict someone upon an unsubstantiated report that comes to you as a form letter from a corporation that mass produces form letters telling you that your paying tenant is a crack dealer?
No, you would do what you are able to do under the law. You notice your tenant that you will be inspecting the premises, at least 24 hours in advance as required by law. Oddly, 24 hours later you find no crack and no signs of crack or anything that would lead you to suspect crack dealing, and THEN YOU DO NOTHING.
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Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
I thought that it was still necessary, though, to serve legal notices by registered mail. It is not that hard to send something to the address of the administrative contact. I wonder why this wasn't used--here's betting the lawyers wanted money not compliance.
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@ everyone that thinks that this ruling is okay...
If I recall correctly, copyrights must be protected by their owners or else they arent valid. Should this not be the same for trademarks? If gucci wants their knockoff competitors "knocked off" they should take the action themselves, not complain at the webhost.
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Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
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Re: Re: Re:
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Sleazy lawyers look for the deepest pockets.
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Nice robbery!
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Re:
The jury got punked on this one. Idiots.
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Re: Re: Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
Err .. what are the police supposed to be doing at the time ? I mean you're typing with counterfeit logic there, dleather - should your ISP get sued because you're using their bandwidth to provide a counterfeit item?
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Re: Re: ISP or infringer?
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There Was a Safe Harbor!
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Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
Try this:
A gas station owner sells fake "Shell" gasoline. The gas station owner also leases the land from a landlord. The landlord is warned multiple times that the gas station owner is selling fake Shell gas.
Is the landlord liable?
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Re: Re: Re:
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Re: Re:
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Re: There Was a Safe Harbor!
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Re: Re: There Was a Safe Harbor!
People say that this case establishes a horrible precedent, but the only documents they provided are light on substance. Was the issue litigated in pretrial motions? A copy of the pretrial rulings on the issue might be helpful.
I'm reading that the sky is falling, but only have Chicken Little's word on this. The ruling could easily be a real outrage, but we are scant on information.
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Re: Re: shell gas analogy...Re: Re: (1) not quite so cut-and-dried (2) failure to read RFC 2142
Seems like a jury could probably go either way...
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Response to Stuart's questions
First of all, this case never should have gone to court. It was filed in 2007, after LV tried for 2 years (dozens of emails, letters, etc.), to try and get Akanoc to stop hosting these websites. LV has asked other hosts to stop hosting counterfeit sites, and they have done so, without legal action. Other companies have also had success with other legitimate web hosters. Akanoc, for 4 years, ignored the fact that their customers were using Akanoc's servers to sell illegal counterfeit goods. They did nothing. Until after the lawsuit was filed. Then they did a little bit. There are some of those sites still up! Manufactuing is another issue, falls under different laws and is almost impossible to find these people in China. The buck stops at the web host. That is the logical place.
There were counterfeit goods purchased from some of the MANY sites that Akanoc was hosting. These items were purchased on behalf of LV and presented in court. There was never any testimony that Akanoc/MSG had any question about the products being counterfeit.
There was legal evidence presented that proved these sites were on the Akanoc/MSG servers. The fact that Akanoc's VERY OWN user agreement with it's customers forbids them to use Akanoc's servers to market/sell or whatever counterfeit goods was not enforced. There was more than 1 stipulation in their own user agreement that Akanoc violated itself.
It was proven that Akanoc had the ability to shut off the IP's or terminate the customer for non-response. It was Akanoc's own greed; they didn't didn't want to give up the monthly income from their customers.
Safe Harbor refers to things such as transient use or caching. That did not apply in this case.
The law allows for the protection of trademark and copyright as it should. The holder of trademarks and copyrights own that intellectual property and deserve that protection. Because of the relative newness of the internet, this issue hadn't really been dealt with. The jury was allowed to find an amount (up to 1 million as set by Congress) and charge for each trademark infringement. This ruling will also protect a smaller, less known company if their intellectual property is stolen. That is a good thing! If you have intellectual property this ruling helps protect what could be your life's work. The defendant in this case was willful and knew he was CONTRIBUTORILY infringing on trademark and copyright. For 4 years.
There was 2 years of pre-trial talks after the suit was filed.
As to the issue of fakes, some of the sites did say they were fakes. Trademark still infringed. Even if one says, I am selling counterfeits, trademarks and copyrights can still be infringed. And it's against the law. Some were designed to confuse the consumer who may be spending their hard earned money and thinking they are getting a really great deal.
The defendant KNEW. It wasn't 'should have known'. It was brought to his attention, over and over and over and over and over. He did nothing.
Terrible precedent for whom? The counterfeiters? People who keep helping them while the owner of intellectual property sees the value plunge? This wasn't just about LV, it was about protecting intellectual property owners from others who think they can just walk all over them.
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Re: Why surprise?
The fix: SUE THEM !!
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So are you telling us that the ISP ignored an injunction for four years. Nope, sorry, I forgot about contempt.
You're telling us that "LV" didn't bother to file for an injunction, 'cause that would have opened them up for contempt.
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