Passing the Virtual Buck: How the Ninth Circuit Used Contributory Trademark Law to Expand Liability for Web Hosts

Journal of Intellectual Property Law Volume 19 | Issue 2 Article 9 March 2012 Passing the Virtual Buck: How the Ninth Circuit Used Contributory Trademark Law to Expand Liability for Web Hosts Alessandra Backus Follow this and additional works at: https://digitalcommons.law.uga.edu/jipl Part of the Computer Law Commons, and the Intellectual Property Law Commons Recommended Citation Alessandra Backus, Passing the Virtual Buck: How the Ninth Circuit Used Contributory Trademark Law to Expand Liability for Web Hosts, 19 J. Intell. Prop. L. 427 (2012). Available at: https://digitalcommons.law.uga.edu/jipl/vol19/iss2/9 This Notes is brought to you for free and open access by Digital Commons @ Georgia Law. It has been accepted for inclusion in Journal of Intellectual Property Law by an authorized editor of Digital Commons @ Georgia Law. Please share how you have benefited from this access For more information, please contact . Backus: Passing the Virtual Buck: How the Ninth Circuit Used Contributory NOTES PASSING THE VIRTUAL BUCK HOW THE NINTH CIRCUIT USED CONTRIBUTORY TRADEMARK LAW TO EXPAND LIABILITY FOR WEB HOSTS AlessandraBackuf TABLE OF CONTENTS I. INTRO D UCTIO N .......................................................................................... 429 II. BACK G RO UN D ............................................................................................. A. COUNTERFEITING OVER THE INTERNET ....................................... B. TRADEMARK INFRINGEMENT ........................................................... C. CONTRIBUTORY TRADEMARK INFRINGEMENT............................. 431 D. 1. The Landlord-TenantExtension..................................................... 2. Extension to Serices ........................................................................ 431 432 433 435 436 THE GROWING USE OF CONTRIBUTORY LIABILITY FOR INTERNET-BASED CASES.................................................................... 438 1. Cybersquating and the Domain Name Trademarks......................... 439 2. The Online Marketplace and Contributory Trademark Infringement...................................................................................... 440 E. F. III. THE COPYRIGHT COROLLARY........................................................... THE LOUIS TIUITFON CASE................................................................. A N ALYSIS . ...... ..................................... .......................................... A. WHY WEB HOSTS ARE NOT COVERED BY PREVIOUS JURISPRUD EN CE ................................................................................... B. 1. The Landlord-TenantAnalogy........................................................ 2. Lockheed and Cbersquatting........................................................ 3. Tiffany and the Online Marketplace................................................ POTENTIAL PROBLEMS CAUSED BY THIS PRECEDENT ................. 441 444 446 447 447 449 450 451 J.D. Candidate 2013, University of Georgia School of Law. The author would like to thank everyone on the journal for their assistance in the editing process. She would also like to thank her family for their unending love and support. This Note is dedicated to Beau Backus, whose patience, love, and understanding guided me through these tough three years. 427 Published by Digital Commons @ Georgia Law, 2012 1 Journal of Intellectual Property Law, Vol. 19, Iss. 2 [2012], Art. 9 J.INTELL PROP.L 428 1. 2. 3. 4. C. IV. [Vol. 19:427 Improper Delegation ofAuthoriy...................................................... Inefficieng of the Evaluation Shift.................................................... ...... ........................... Perverse Incentives ................... Failureto Address Content............ PRO PO SAL.............................................................................................. CONCLUSION https://digitalcommons.law.uga.edu/jipl/vol19/iss2/9 .................................................... 451 451 451 452 452 454 2 Backus: Passing the Virtual Buck: How the Ninth Circuit Used Contributory PASSING THE VIRTUAL BUCK 2012] 429 I. INTRODUCTION Imitation is the sincerest form of flattery, yet corporations whose trademark rights are infringed by the production and sale of counterfeit goods would likely disagree.' This sentiment is fueled by the fact that trademark infringement is not accidental. Counterfeit goods are generally produced with the specific purpose of infringing upon a company's trademark, as the product is intended to pass as that of the trademark holder.2 Years ago, the sale of counterfeit goods could be traced to pop-up vendors in localized markets, often infamous for selling cheap knock-off products. Places such as Canal Street in New York City, where vendors sell designer label products of dubious quality and origin, epitomized this localization and reflected the practical limitations a physical market imposed on counterfeiting. Today, an internet search for "replica louis vuitton" reveals the prevalence and availability of counterfeit goods. The millions of search results illustrate how the internet and e-commerce have exacerbated the problems previously posed by counterfeiting. 3 Now, counterfeit goods are everywhere due to factors such as increased international supply chains, the downturned global economy, the shift of manufacturing jobs to countries with poor intellectual property protection, and the growth of the online marketplace. 4 Trademark law has struggled to keep up with the ever-changing technology of the internet-based marketplace. In the copyright context, the complexity of potential infringement in an interconnected society has been addressed both jurisprudentially and statutorily. 5 The law is somewhat less instructive for a trademark owner concerned about online infringement. 6 This legal uncertainty has been particularly troublesome for companies that find the web littered with counterfeit goods sold from locations that are often difficult to trace. The complexity of seeking out online sellers of counterfeit goods complicates the process of a company bringing a direct infringement claim. Companies have thus turned to secondary trademark liability, predicated on the relationship between a third party and the alleged infringing activity, to protect 1 The Spread of Counterfeiing: Knock-ofs Catch On, ECONOMIST, Mar. 4, 2010, http://www.econo mist.com/node/15610089?storyid=ElTVGTDDRJ. 2 SeeJulio 0. De Castro, David B. Balkin & Dean A. Shepherd, Can EntrepreneurialFirms Beneft from Product Piracy?, 23 J. Bus. VENTURING 75, 78 n.3 (2008) (differentiating between counterfeit and pirated goods based on consumer knowledge, a distinction not used in this Note). 3 The Spread of Cournterfeiting:Knock-ofs Catch On, supra note 1. 4Id 5 See infra Part II.E. 6 Matthew Fornaro, A ParallelProbler: Gry Market Goods and the Internet, 8 J. TECH. (...truncated)