Web Host gets slammed by Louis Vuitton for $32.4 million
Monday, August 31, 2009 French Fashion corporation Louis Vuitton Malletier won a lawsuit against a California based hosting company for 32.4 million dollars. The Fremont California hosting companies of Akanoc Solutions, Managed Solutions Group and owner Steven Chen where charged for hosting sites that contained e-stores that sold fake Louis Vuitton products. The lawsuit was originally filed in 2007 when several sites where counterfeit Louis Vuitton were sold were discovered to have the same ip and lead to accused web hosting service. The verdict held the web hosting companies were responsible for copyright and contributory trademark infringement. They would also receive a permanent injunction on hosting any sites selling counterfeit goods. The verdict could come up for appeal in the near future.
This action by Louis Vuitton Malletier follows a similar action taken against Ebay in 2008 where the designer was awarded 62.3 million for damages due to knockoff products by a French court. They also undertook action with Versign and other domain names to transfer ownership of copycat domains products such as 7starhandbags.com over to their control. And they are currently in a court case against Google for allowing adwords advertisers to bid for their trademark terms. The company has taken a very proactive stance in preventing its brand from being diluted in any fashion.
For the web host provider this verdict again throws the whole question of web host liability to the forefront. Section 512 of the Online Copyright Infringement Liability Limitation Act (OCILLA) “safe harbor provision” of 1998 and Section 230 of the Communications Decency act of 1996 (CDA) have been used by hosting providers to provide protection in copyright and web content legal cases. The first law provides for protection if the hosting company did not know about a copyright violation, took steps to remove the item when informed about the infraction and did not have a direct reward financially from the violation. The second law provides protection for hosting services from material published on their websites, such as articles, pictures and related material.
Both of these laws have come under attack with mixed results. The Communications Decency Act has been under attack in legal cases such as Ramey v. Darkside and the famous Carafano v. Metrosplash.com Inc. (“Star Trek”) case. With both these cases the CDA withstood the legal attack granting hosting providers protection for the content place on their hosting servers. That legal defense remains intact for hosting providers.
The second piece of legislation the Online Copyright Infringement Liability Act “safe harbor” provision has not held up that well though in court. There was the one billion dollar “Viacom vs Google (Youtube) lawsuit of 2007 over Youtube videos , and the Lenz v Universal Music Corp case which involved a baby video and copyrighted music as examples of recent lawsuits. Although the act was upheld in both of these cases there has been a active movement to curtail the legal strength of the provisions such as through the proposed Consumer Broadband and Digital Television Promotion Act, Balance act and other reforms.
The bottom line for web hosting providers is to keep a tab on your web hosting and follow the legal cases on internet content and copyright law. Cases such as this show that the best defense is awareness of your business and the changing legal world.
