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Ninth Circuit Finds Web Host Liable for Its Customers' Trademark Infringement

Chicago… I proclaim it the most beautiful city in America.

I just made a crack commando visit to the Windy City.

Or as I have decided, the most beautiful city in America.

I long thought San Francisco deserved that honor, but I was wrong.

Chicago. What a town.

I blew in town for barely 24 hours to talk about the Rosetta Stone v. Google keyword advertising appeal. With oral arguments scheduled to be heard in Richmond tomorrow, it was a pretty timely discussion. I was asked to focus on Rosetta Stone’s side, which was easy. Of course, the Eastern District of Virginia got the result right: Google shouldn’t be liable for selling trademarks as sponsored links in its search engine results. But taking Rosetta Stone’s position in the Association of Intellectual Property Firms’ panel discussion was a no-brainer given how badly the Eastern District of Virginia stumbled on the way to the right result.

One of the issues in the case was contributory infringement — whether Google should be liable for enabling counterfeiters to infringe Rosetta Stone’s trademark. That led to a discussion of the Ninth Circuit’s Sept. 9 decision in Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. — which also involved contributory liability.

In that case, Louis Vuitton complained to Web host Akanoc Solutions that some of Akanoc’s customers had been selling counterfeit Louis Vuitton merchandise on their Web sites. Indeed, Louis Vuitton complained on 18 separate occasions, and Akanoc did not act on the warnings.

The result? The Northern District of California jury charged Akanoc with actual knowledge of the trademark infringement and slapped it with a damages award of $31,500,000.

The Ninth Circuit pared the award back to $10,500,000, but affirmed the jury’s finding of contributory infringement.

In doing so, the court found: “Plaintiffs asserting contributory trademark infringement claims must prove that defendants provided their services with actual or constructive knowledge that the users of their services were engaging in trademark infringement. An express finding of intent is not required.”

The court found that Akanoc’s continuing to allow its customers to operate Web sites about which Louis Vuitton complained 18 times made Akanoc separately liable.

Back to Rosetta Stone. According to Rosetta Stone’s appellate brief, the language software company provided evidence it complained to Google about 200 instances of sponsored links advertising counterfeit product. Yet, after receiving such notice, Google continued to sell Rosetta Stone trademarks as keywords to those same advertisers. The court seemingly ignored this evidence when it granted Google’s motion for summary judgment.

Louis Vuitton ought to give the Fourth Circuit pause tomorrow when it considers the propriety of the district court’s decision.

The case cite is Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., __ F.3d __, 2011 WL 4014320, Nos. 10-15909 and 10-16015 (9th Cir. Sept. 9, 2011).

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