[a]ny person who, on or in connection with any goods or services … uses in commerce any work, term name, symbol or device … or any false designation of origin, false or misleading representation of fact which … is likely to deceive as to the affiliation, connection or association of such person with another person, or as to origin, sponsorship or approval of his or her goods, services, or commercial activities by another person … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a).

The anti-counterfeiting provisions in §32(1) of the Act are similarly silent as to secondary liability. That section provides:

(1) Any person who shall, without the consent of the registrant—

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive,

shall be liable in a civil action by the registrant for the remedies hereinafter provided. Under subsection (b) hereof, the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is intended to be used to cause confusion, or to cause mistake, or to deceive.

15 U.S.C. § 1114(1). As noted by the court in Am. Tel. & Tel. Co., supra, by referring to “any person” who infringes on a plaintiff’s rights, the Act is silent as to the existence and scope of secondary liability. See Am. Tel. & Tel. Co., supra (referring specifically to vicarious liability).

Consequently, the notion that a party who does not himself infringe another’s trademark may nevertheless be indirectly liable for such infringement, under a theory of either contributory or vicarious liability, has evolved in the courts. See generally John T. Cross, “Contributory Infringement and Related Theories of Secondary Liability for Trademark Infringement,” 80 Iowa Law Rev. 101, 109-129 (1994). And see Tiffany v. eBay, 600 F.3d 93, 103-104 (2d Cir. 2010) ( “[c]ontributory trademark infringement is a judicially created doctrine that derives from the common law of torts” ) , affirming in part and remanding in part, 576 F.Supp.2d 463, 502 (S.D.N.Y. 2008).  Courts considering the scope of liability for trademark infringement under the Lanham Act have recognized that the Act is derived from the common law tort of unfair competition and concluded that it is therefore appropriate to analogize to common law tort principles. See Am. Tel. & Tel. Co., supra at 1433 (“The Act federalizes a common law tort.”), citing Hard Rock Café Licensing Corp. v. Concession Services Inc., 955 F.2d 1143, 1148 (7^th Cir. 1992) (trademark infringement is a “species of tort” and “we have turned to the common law to guide our inquiry into the appropriate boundaries of liability”); David Berg and Co. v. Gatto Int’l Trading Co., Inc., 884 F.2d 306, 311(7^th Cir. 1989)(“unfair competition and  trademark infringement are tortious”).

The first theory of secondary liability to emerge in the courts was contributory liability. Contributory liability doctrine developed initially in the Supreme Court, which, prior to the enactment of the Lanham Act, relied on common law doctrines to determine the scope of liability. See William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924), discussed in AT & T, supra at 1432. Later on, after the Act was passed, the Supreme Court re-established the validity of contributory infringement theory in the case of Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982), which set out a two-part test for contributory infringement discussed herein.

Thereafter, courts determined that secondary liability based on agency principles is also often appropriate. See Am. Tel. & Tel. Co., supra at 1433; see also David Berg and Co. v. Gatto Int’l Trading Co., Inc., 884 F.2d 306, 311 (7^th Cir. 1989)(incorporating similar tests based on joint tortfeasor liability). In fact, the rationale for applying agency principles to the Lanham Act rested in part on the law that already established contributory liability for trademark infringement.  The contributory liability cases demonstrated to the court in Am. Tel. & Tel. Co. that “in certain instances, secondary, indirect liability is a legitimate basis for liability under the federal unfair competition statute.” Am. Tel. & Tel. Co., supra at 1433.

The organization of this treatise  reflects the development of the two secondary liability doctrines. First, contributory liability doctrine is discussed, beginning with the two-part test articulated by the Supreme Court in Inwood and then its application in various contexts. Vicarious liability for trademark infringement is discussed in the third section of this treatise, which also covers both the standards followed by the courts for finding such liability and the contexts in which it has been found to apply.

The standard for analyzing contributory liability claims was set forth by the Supreme Court in the case of Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 853-854 (1982). Although the Court had already recognized contributory trademark infringement years earlier in William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924), Cross, supra, has explained that Warner predated Erie R.R. v. Tompkins, 304 U.S. 64 (1938) which “cast into doubt the validity of all existing federal common-law rules.” Inwood is consequently “important primarily because it reaffirms the existence of the cause of action.” See Cross, supra at 101 and 101 n.3, and cases cited therein. And see Transdermal Products, Inc. v. Performance Contract Packaging, Inc., 943 F.Supp. 551 (E.D. Pa 1996) (Inwood “merely confirmed the continued vitality of contributory infringement under federal statutory law”), citing AT & T Co. v. Winback and Conserve Program, Inc., 42 F.3d 1421, 1432 (3d Cir. 1994). Modern courts therefore begin their analyses of contributory liability claims with the standard set forth in Inwood.  See e.g.  National Federation of the Blind, Inc. v. Loompanics Enterprises, Inc. 936 F.Supp. 1232, 1244 (D. Md. 1996)(noting same).  See also, Tiffany v. eBay, 576 F.Supp.2d 460, 502-503 (rejecting plaintiff’s argument that it apply a “reasonable anticipation” standard for contributory infringement as an alternative to the standard set forth in Inwood), affirmed in part and remanded in part, 600 F.3d 93, 110 n.15 (2d Cir. 2010); MetroPCS Wireless, Inc. v. Virgin Mobile USA, L.P., 2009 WL 3075205, *17 (N.D.Tex.)(citing Inwood for the proposition that “the standard is not whether defendant “could reasonably anticipate” possible infringement”).

Inwood involved a trademark violation claim brought by a prescription drug manufacturer, Ives Laboratories (“Ives”), against a number of generic drug manufacturers, including Inwood Laboratories (“Inwood”). Ives manufactured the patented drug cyclandelate, and sold it to wholesalers, retail pharmacists and hospitals in colored capsules under the registered trademark CYCLOSPASMOL. Inwood, supra at 844, 846-7. After the company’s patent expired, several generic drug manufacturers began marketing the drug, intentionally copying the appearance of the CYCLOSPASMOL capsules. Id. at 847.

Seeking injunctive relief and damages, Ives brought an action in federal district court against those companies. Id. at 849. It alleged that some pharmacists had dispensed generic drugs mislabeled as CYCLOSPASMOL. Id. Although Ives did not allege that the defendants themselves applied the Ives trademark to the capsules they sold, it contended that by virtue of their use of “look-alike capsules” and catalog entries comparing prices and revealing the colors of generic capsules, those companies contributed to the pharmacies’ infringing activities. Id. at 850. The district court denied Ives’s request for injunctive relief, and the Second Circuit affirmed, remanding the case back with trial guidelines as to finding secondary liability. Specifically, the Second Circuit court instructed that the companies would be liable if “they suggested, even by implication, that retailers fill bottles with [the generic drug] and label the bottle with Ives’ trademark or if the [generic drug companies] continued to sell [the drug] to retailers whom they knew or had reason to know were engaging in infringing practices.” Id. at 851-852 (citation omitted).

Applying those guidelines at trial on remand, the district court again entered judgment in favor of the generic drug companies. It found that the generic drug companies had not suggested, even by implication, that pharmacists should dispense generic drugs incorrectly identified as CYCLOSPASMOL. Id. at 852. And see MDT Corp. v. New York Stock Exchange, Inc. 858 F. Supp. 1028, 1033-1034 (C.D. Cal. 1994)(applying the same standard). It also found that the companies did not “continue to provide drugs to retailers whom they knew or should have known were engaging in trademark infringement.” Id. at 852, n.12. On appeal once again, the Second Circuit reversed the district court’s judgment, rejecting its findings and holding that it failed to give sufficient weight to evidence presented by the defendants. Id. at 852-853. The Court of Appeals then reviewed the evidence itself, and concluded that the evidence did establish a Lanham Act violation.  The defendants subsequently petitioned the Supreme Court for a writ of certiorari, which granted the petition and found that the Second Circuit had clearly erred in setting aside the lower court’s findings of fact and substituting that court’s review of the evidence with its own. Id. at 857-858.

In reaching its conclusion, the Supreme Court re-affirmed the basic principle that

“liability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another.”  Id. at 853. Thus, “[e]ven if a manufacturer does not directly control others in the chain of distribution, it can be held responsible for their infringing activities under certain circumstances.” Id. at 853-854.

Furthermore, the Court established a two-part test for evaluating contributory liability claims. Specifically,

if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit.

Id. at 854.

The two-part test articulated by the Supreme Court in Inwood has been consistently followed and expounded upon by subsequent courts. See, e.g. Perfect 10, Inc. v. Visa Int’l Service Ass’n, 494 F.3d 788, 807 (9^th Cir. 2007); Lockheed Martin Corp. v. Network Solutions, Inc. 194 F.3d 980, 983 (9^th Cir. 1999); Polymer Technology Corp. v. Mimran, 975 F.2d 58, 64 (2d Cir. 1992); David Berg and Co. v. Gatto Int’l Trading Co., Inc., 884 F.2d 306, 311  (7^th Cir. 1989); Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1381-1382 (9^th Cir. 1984); Tiffany v. eBay, 576 F.Supp.2d 463, 502 (S.D.N.Y. 2008), affirmed in part and remanded in part, 600 F.3d 93, 106 (2d Cir. 2010); Monotype Imaging, Inc. v. Bitstream Inc., 376 F.Supp.2d 877 , 2005 WL 1653604, *8 (N.D. Ill. 2005); Monsanto Co. v. Campuzano, 206 F.Supp.2d 1271, 1274 (S.D. Fla. 2002); Fare Deals, Ltd. v. World Choice Travel .com, Inc. 180 F.Supp.2d 678, 687 (D. Md. 2001); Medic Alert Foundation United States, Inc. v. Corel Corp. 43 F.Supp.2d  933, 940 (N.D. Ill. 1999);  National Basketball Association v. Sports Team Analysis and Tracking Systems, Inc., 939 F.Supp. 1071, 1108 (S.D.N.Y. 1996); MDT Corp. v. New York Stock Exchange, 858 F.Supp. 1028, 1033 (C.D. Cal. 1994).

For cases reciting the Inwood two-prong test but dismissing the contributory liability claim for failure to plead sufficient facts to support it,  see Too Marker Products, Inc. v. Shinhan Art Materials, Inc., 2010 WL 786041 *6 (D. Or.); and Guantanamera Cigar Co. v. Corporacion Habanos, S.A., 672 F.Supp.2d 106, 113 (D.D.C. 2009). And see, Coach Inc, v. Asia Pacific Trading Co., Inc., 676 F.Supp.2d 914, 927-928 (C.D.Cal. 2009) (C.D.Cal.)(granting defendants’ motion for summary judgment of no contributory liability where plaintiffs failed to show that the alleged direct and indirect infringers “worked in conjunction with one another” while engaging in conduct that violated plaintiff’s trademark rights).

More recently, the contributory liability doctrine articulated in Inwood has been expanded beyond the manufacturer-distributor context, to apply in situations where a party has not necessarily supplied a product, but may have provided a service or the like. See Tiffany v. eBay, 600 F.3d 93, 106 (2d Cir. 2010)(assuming without deciding that Inwood applied to the online auction site eBay), affirming in part and remanding in part, 576 F.Supp.2d 463, 502, 507 (S.D.N.Y. 2008). See also Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9^th Cir. 1999)(Inwood standard could be applied to the Internet if there were evidence of monitoring and control); Fonovisa, Inc. v. Cherry Auction, Inc. 76 F.3d 259, 264-265 (9^th Cir. 1994)(applying the Inwood standard to swap meet owners, holding that “Inwood …laid down no limiting principle that would require defendant to be a manufacturer or distributor.”); Hard Rock Café Licensing Corp. v. Concession Services Inc., 955 F.2d 1143, 1149 (7^th Cir. 1992)(finding that Inwood test extends to landlords and licensors); Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R. Accessories, Ltd., 2009 WL 4857605, *4 – *7 (S.D.N.Y)(applying Inwood as extended by Lockheed Martin and Hard Rock to dismiss contributory liability claim against licensor who supplied intellectual property rights to supplier alleged to have manufactured and distributed counterfeit jewelry bearing plaintiff’s mark).

The remainder of this section will discuss the elements of a contributory liability claim pursuant to Inwood. It will then explore the expansion of the “product” requirement as it has been applied by the courts outside the manufacturer-distributor context contemplated in Inwood. As will be seen, this expansion has had particular implications for trademark infringement over the Internet. The application of contributory liability doctrine to Internet activity, as well as in many other contexts, will be discussed in detail below.

A company that served as a “middleman” by setting up credit card processing for an online retailer of counterfeit handbags was subject to a contributory liability claim based on inducement in Gucci America, Inc. v. Frontline Processing Corp., 2010 WL 2541367 at *12 (S.D.N.Y). In reaching its decision, the court applied the standard used by the Ninth Circuit in Perfect 10, Inc. v. Visa Int’l Service Ass’n, 494 F.3d 788, 800-801, where that court considered inducement in a contributory copyright infringement context. The company’s profile on it website, coupled with its business practices as set forth in the pleadings, were sufficient support for the plaintiff’s inducement theory. Gucci, supra at*12.

Gucci v. Frontline arose out of successful trademark infringement litigation brought by Gucci, the well-known manufacturer of luxury goods, against an online merchant operator of a website called “TheBagAddiction.com,” in which the owners admitted to liability for selling counterfeit Gucci products. Gucci , supra at *1. Thereafter, Gucci turned to the three companies that had helped the merchant obtain credit card services, alleging, inter alia, both vicarious and contributory liability for trademark infringement. Id. One of the three defendants, Durango Merchant Services (“Durango”) acted as a middleman, while the other two, Frontline Processing Corporation (“Frontline”) and Woodforest National Bank (“Woodforest”), provided credit card processing services to the merchant. Id.

In rejecting the defendants’ motion to dismiss, the court allowed the contributory liability claims to go forward as to all three defendants, but on different legal theories in accordance with their roles. As to Frontline and Woodforest, the court found the pleadings sufficient to allege contributory trademark infringement, based on their knowledge and control over the infringing activity on the website. This aspect of the case is discussed below in Section II. D. 3. As to the middleman, Durango, the court found the pleadings sufficient to allege contributory infringement based on an inducement theory.

In doing so, the Gucci v. Frontline court relied on the Ninth Circuit’s language when that court analyzed the contributory copyright infringement claims in Perfect 10, derived from the Supreme Court decision in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). Namely, the court inquired into whether Gucci had alleged that Durango “communicated an inducing message to [its] …users[.]”Gucci, supra at *12. It looked further into whether Durango had allegedly created “advertisement[s] or solicitation[s] that broadcast[] a message designed to stimulate others to commit violations.” Id., citing Perfect 10, 494 F.3d at 801. Finally, the court considered whether Gucci’s allegations suggested Durango had taken “affirmative steps to foster infringement,” and “promoted their payment system as a means to infringe.”[sic] Id., citing Perfect 10, 494 F.3d at 800-801.

Durango’s internet marketing profile as well as its activities on behalf of the direct infringer prompted the court to find Gucci’s allegations of inducement sufficient. It likened Durango to companies that offer loans to customers with bad credit, noting that its “website reache[d] out to “high risk merchant accounts,” including those who sell “replica products.”  Id. at *12. More specifically, Gucci had pointed to discussions in which one of Durango’s representatives acknowledged the merchant was having trouble obtaining credit card services because it sold “replica[s,]” a euphemism, according to Gucci, for counterfeits. Citing the Ninth Circuit, the Gucci court concluded that Durango “communicated an inducing message to [its] users,” and that “Gucci [had] pled sufficient facts to infer that Durango crafted “advertisement[s] or solicitation[s] that broadcast[] a message designed to stimulate others to commit violations.” Id. at *12, citing Perfec10, 494 F.3d at 801. Finally, the court found that Durango had helped the online merchant set up a system to avoid “chargebacks” by requiring customers to acknowledge in writing that they were purchasing “replicas.”  This practice, the court concluded, indicated “affirmative steps taken to foster infringement” or “that Defendants promoted their payment system as a means to infringe.” [sic] Id., citing Perfect 10, 494 F.3d at 800-801.

Note that by contrast, the two other defendant companies in Gucci were not subject to a claim of inducement. Gucci, supra at *12. The court found that “[t]hough both companies allegedly advertised for high risk merchants, they did not bring [the direct infringer] to the table the way Durango allegedly did.” Id. The fact that they charged higher fees for processing high risk merchants and that Frontline was aware of customers’ written acknowledgement of purchasing “replicas” did not constitute “affirmative steps necessary to foster infringement.” Gucci, supra at *12.

Transdermal Products, Inc. v. Performance Contract Packaging, Inc. 943 F.Supp. 551 (E.D. Pa. 1996) presented an unusual factual paradigm, in that the direct infringer defendant sought to join another distributor as a contributory infringer, alleging it had induced infringement in its capacity as the defendant’s customer. The plaintiff, Transdermal Products, was the manufacturer of transdermal patches, a skin patch containing a drug that delivers the drug into a patient when placed onto the skin. It began marketing the patch with the mark, LEPATCH, and contracted with the defendant, Performance Contract Packaging, Inc. (“PCP”), to package and ship LEPATCH to its customers. Among these customers was Laboratorio Maver, S.A. (“Maver”), a Chilean distributor. Transdermal alleged that PCP had begun manufacturing and distributing its own version of LEPATCH to Maver. It sued PCP, but not Maver, alleging, inter alia, trademark infringement under both the Lanham Act and state law. Transdermal Products, 943 F.Supp. 551, 554. Thereafter PCP sought to join Maver as a third-party defendant. At issue therefore was whether Maver could he held contributorily liable for the infringement and thereby be joined as a party under Rule 14 of the Federal Rules of Civil Procedure. See id.

The Transdermal Products court held that it could, applying Inwood to the somewhat atypical facts of this case. It noted at the outset that this case differed from the “vast majority of contributory infringement cases” insofar as the defendants in this case had alleged that Maver, the distributor, encouraged PCP, in its capacity as manufacturer, to violate Transdermal’s trademark. Transdermal Products, supra at 553. Nevertheless, the court discerned that the express language of Inwood subjects “manufacturers or distributors” to liability. Id. at 553.  It noted that Maver distributed the allegedly infringing patches in Central and South America. Id. Furthermore, the defendants had claimed that Maver had “selected the mark in question and represented that it owned and had the authority to use the mark.” Id. at 552, 553.

Citing the first prong of Inwood, the court found that Maver could trigger contributory liability if it had “intentionally induce[d] … another to infringe a trademark.” Transdermal Products, supra at 553. The court further found that if “Maver selected the “LePatch” mark and encouraged PCP to copy the mark, knowing, as a Transdermal customer that it was Transdermal’s mark, a fair reading of [Inwood] would seem to impose liability on Maver.” Id. at 553-554.

Two main factors have influenced the courts’ determination of knowledge in this area: one is the extent to which the defendant was involved with the underlying direct infringement; the second is the likelihood and strength of the direct infringement claim. See Lockheed Martin Corp. v. Network Solutions, Inc. 985 F.Supp.949, 964-965 (C.D. Cal. 1997)(“Contributory infringement doctrine has always treated uncertainty of infringement as relevant to the question of an alleged contributory infringer’s knowledge[]”), aff’d, 194 F.3d 980 (9^th Cir. 1999), and cases cited therein. See also Tiffany v. eBay, 576 F.Supp.2d 463, 508 (S.D.N.Y. 2008)(noting that “courts have been reluctant to extend contributory trademark liability to defendants where there is some uncertainty as to the extent or the nature of the infringement”), affirmed in part and remanded in part, 600 F.3d 93 (2d Cir. 2010); RGS Labs Int’l, Inc.v. The Sherwin-Williams Co., 2010 WL 317778, *3 (S.D.Fla.)(“a contributory infringement claim requires, at a minimum, both an allegation of a direct infringement by a third party and an allegation of an intentional or knowing contribution to that infringement by the defendant”), citing Optimum Techs. Inc, v. Henkel Consumer Adhesives, Inc. 496 F.3d 1231.1245 (11^th Cir. 2007). The requirement to demonstrate direct trademark infringement is discussed in further detail, in Section II.B.5.

Thus, where the record was “grossly lacking” in evidence of either actual or constructive knowledge on the part of the defendants, the court, for purposes of granting a preliminary injunction, could not find a likelihood of prevailing on a contributory infringement claim as a matter of law. Sony Computer Entertainment America, Inc. v. Gamemasters, 87 F.Supp. 2d 976 (N.D.Cal. 1999).  Moreover, the questionable nature of the underlying direct infringement claim in this case significantly undermined the plaintiff’s argument for contributory liability based on knowledge. See id. at 986.

Sony Computer arose out of the sale of allegedly counterfeit video game accessories by a retail store, “GameMasters” and its owners. Sony Computer Entertainment America Inc. (“Sony”), the manufacturer of the PlayStation video game for which the accessories were designed, sued GameMasters, alleging both direct and indirect trademark and copyright infringement, including trademark counterfeiting. Sony sought a preliminary injunction in connection with both the direct and indirect liability claims. Id. at 977.

Among the accessories sold by the defendants in Sony Computer was the video “Game Enhancer.” As described by the court, the Game Enhancer was an external device that served at least two functions. One was to simply modify an existing video game according to the user’s wishes, e.g., to make it more or less challenging. The second function of the Game Enhancer was to permit players to play games sold in Japan or Europe and intended by Sony for use exclusively in those territories, i.e. “grey market” games. See Sony Computer, supra at 981.

Sony contended that the Game Enhancer also allowed users to play counterfeit copies of original PlayStation software. See id. at 982. By selling the Game Enhancer, Sony argued, the defendants contributed to others’ trademark and copyright infringement. Id. The defendants simply rejected the assertion that the Game Enhancer could be used to play counterfeit games. Id. The court noted that there was nothing in the instructions accompanying the Game Enhancer to support such a use. Id. Nor had Sony brought any evidence to suggest that the particular Game Enhancers sold by the defendant enabled users to play counterfeit games. See id.

The court denied the preliminary injunction, both because of the weakness of the direct infringement claim and the lack of evidence suggesting that the defendants had any knowledge or constructive knowledge of it. Sony Computer, supra at 986-987. Citing Inwood, the court stated that Sony was required to prove that GameMasters supplied a product to third parties with actual or constructive knowledge that its product was being used to infringe. Id. at 986. The court noted, however, that the “scant evidence and allegations” by Sony only suggest that the defendant supplied a product that “consumers could have used to engage in trademark infringement.” Id. Moreover, the court held, “[a] consumer’s choice to play the non-territorial game [by way of the Game Enhancer] cannot be the infringing activity,” because those games were authentic, Sony authorized games. Id., (citation omitted). Finally, the court noted that the record was “grossly lacking” in evidence of actual or constructive knowledge of infringement on the part of the defendants. Id. at 987. See also, David Berg and Co. v. Gatto Int’l Trading Co., Inc., 884 F.2d 306, 311 (7^th Cir. 1989)(affirming district court’s rejection of contributory infringement claim where plaintiff had presented no evidence that defendant had knowledge or any reason to know of any infringing sales); Cf. Power Test Petroleum Distributors, Inc. v. Manhattan & Queens Fuel Corp., 556 F.Supp. 392 (E.D.N.Y. 1982) (denying defendant’s motion to dismiss where factual question remained as to defendant’s awareness of potential infringement by subsequent parties in the chain of distribution).

By contrast, where the underlying infringement was patently obvious both from the design of the products and accompanying misleading advertising, the court readily found knowledge and intent. See Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1381-1382 (9^th Cir. 1984).  Sealy was a trademark dispute that arose out of the sale of sets of Sealy mattresses together with non-Sealy foundations by Danco, a bedding products company. The plaintiff, Sealy Incorporated, (“Sealy”) was an association of bedding manufacturers which owned and licensed the SEALY trademark.  Sealy, supra at 1380. Also involved in the dispute was Ohio-Sealy, a bedding manufacturer and Sealy licensee. Ohio-Sealy owned a subsidiary, Pacifica, which was not a Sealy licensee.

Danco acquired its genuine Sealy mattresses from an Ohio-Sealy subsidiary, and sold them together with non-Sealy foundations made by Pacifica. The unlabeled Pacifica foundations were covered in fabric or “ticking” that was identical to the Sealy mattress ticking. The mattress and foundation combination thus gave the impression of being a matched Sealy set.  Sealy supra at 1381.  Furthermore, at Danco’s suggestion, the items were advertised by some retailers as a “Sealy Back-Saver and matching foundation.” Sealy supra at 1381. Sealy brought a trademark infringement action in district court against both Danco and Pacifica, seeking, inter alia, an injunction against the sale of the Sealy-Pacifica bed sets. Id.  The court granted the injunction and the defendants appealed.

The Ninth Circuit affirmed, finding substantial evidence to support the district court’s findings that the defendants “foresaw and intended that the Pacifica foundations would be passed off as Sealy products.” Sealy, supra at 1382. It pointed specifically to the matching ticking on the Pacifica foundations and to the advertisements offering the product as a “matching foundation,” for the Sealy mattress. Id. It found further that remedial measures taken by the defendants during the course of litigation did not overcome the misleading impression conveyed by the identical ticking on the Pacifica foundation. Id. The effect of such measures is discussed in further detail infra.

Similarly, where the defendant “candidly admit[ted]” that it specifically designed its paper towel product for use in the plaintiff’s branded dispenser, the court found that the plaintiff had pleaded facts alleging contributory trademark infringement sufficient to survive a motion to dismiss on summary judgment. Georgia Pacific Consumer Products, LP, v. Von Drehle Corp., 2010 WL 3155646, *7 -*8. (4^th Cir.). In Georgia Pacific, the court determined that a reasonable jury could find that the defendant both induced infringement and continued to supply its product to distributors knowing that infringement was taking place, thereby satisfying Inwood under either of its two tests. Id. at *7.

The plaintiff in that case, Georgia Pacific, (“G-P”), was the manufacturer of paper products and dispensers for both the home and institutional use. It invented the first electronic, hands-free dispenser, the “enMotion,” a paper towel dispenser that enabled the customer to dry his hands with paper towel without having to touch the dispenser. Georgia Pacific, supra at *2. G-P also designed a related product, the enMotion paper toweling, a special, high-quality, non-standard-sized paper towel for use in its enMotion dispensers. Id. at *1.

To ensure that the enMotion dispenser would be used exclusively with the enMotion paper towels, G-P restricted the terms by which it sold the toweling and leased the dispensers. It sold the enMotion paper toweling to janitorial supply distributors, who in turn sold it to their respective end-user customers. Id. at *1.  It only leased its dispensers, however, to those distributors, who in turn, were permitted to sublease them to their respective end-user customers. Id. at *1. Both the leases and subleases provided that only the enMotion toweling was to be used in the enMotion dispensers, the inside of which bore stickers reiterating that requirement and the face of which bore Georgia-Pacific’s registered trademarks. Id.

Notwithstanding these efforts, one of G-P’s competitors, the Von Drehle Corporation, (“VD”), began marketing and selling to distributors a cheaper paper toweling specifically manufactured and designed by VD for use in the enMotion dispensers. Georgia Pacific, supra at *1. G-P thereafter sent VD a cease and desist letter, “informing it that its conduct constituted trademark infringement and tortious interference” with contract. Id. at *4. VD responded, rejecting G-P’s claims and insisting that “its conduct regarding its … [paper toweling was] legitimate competition.” Id.

G-P consequently sued VD, alleging inter alia unfair competition under the Lanham Act and state common law, tortious interference with contract, and contributory trademark infringement. Georgia Pacific, supra at *1. VD counterclaimed for violation of the state Unfair and Deceptive Trade Practices Act. Id. The district court granted summary judgment in favor of VD with respect to all of G-P’s claims and summary judgment in favor of G-P with respect to VD’s counterclaim, and both parties appealed. Id.

On de novo review, the Fourth Circuit found entirely in G-P’s favor, vacating and remanding the district court’s grant of summary judgment dismissing G-P’s claims, and affirming its grant of summary judgment in favor of G-P with respect to VD’s counterclaim. Georgia Pacific, supra at *1. Noting that all of G-P’s claims turned on whether G-P adduced evidence sufficient for a reasonable jury to find VD liable for contributory trademark infringement, the court began its inquiry there, applying the Inwood standard. Id. at *6.

The court noted at the outset that it would assume for the purposes of deciding the contributory liability claim that the “stuffing of [the enMotion] dispensers with VD’s [toweling] by end-user customers constitute[d] trademark infringement under the Lanham Act,” and indeed further on did find sufficient evidence in the record to sustain a claim of direct infringement by the end-user customers. Id. at *7, *13. It then readily found the record sufficient to demonstrate to a reasonable jury that “VD directly induced such infringement and continued to supply its product to distributors knowing such infringement was taking place.” Id. at *7.

Specifically, the court noted that “VD candidly admit[ted] that it developed its … toweling for the specific purpose of end-users stuffing enMotion dispensers, which dispensers were the only ones on the market  at the time to accept” the non-standard-ized toweling. Georgia Pacific, supra at *7 -*8. It found further that VD’s sales staff directly marketed its toweling as a cheaper alternative to G-P’s, making “in-person sales calls on distributors and end-user customers.” Id. at *8. Finally it noted that “leaving no doubt as to VD’s intentions,” VD’s president had testified, well after receiving the cease and desist letter from G-P, that it intended for “every roll” of its toweling to be used in G-P’s dispensers. Id.  These findings on the record were sufficient to satisfy the test for contributory trademark infringement under both prongs Inwood. See Id. at *7 -*8. For a discussion of the significance of defendants’ responses to cease and desist letters in the context of willful blindness, see Section II. B. 3 (c).

In another case, the court found the probability of direct infringement to be so obvious that it remanded the case back to the trial court to examine evidence of the defendant’s knowledge of it, notwithstanding his earlier denials. See Polymer Technology Corp. v. Mimran, 975 F.2d 58, 64 (2d Cir. 1992). In Mimran, the plaintiff, Polymer Technology Corp. (“Polymer”), manufactured and sold contact lens solutions under the registered BOSTON trademark. It distributed its various lens care solutions in two main lines of trade: one line was sent to distributors for resale to eye care professionals, while the other line was distributed in the retail market. Mimran, supra at 60. There were several basic differences between the retail line solutions, sold at a profit, and the professional line products, sold at a loss with an intention to boost retail sails. See id. The court noted, inter alia, that the retail solutions were packaged individually, and that the outer packaging contained various warnings, lists of ingredients and notices. Such labeling and packaging, the court further noted, was regulated by the Food and Drug Administration. Id. The various professional solutions were not so regulated because they were not intended for retail sale. Thus, some of the professional products contained labels such as “Not for Sale,” or “For Sale by an Eye Care Professional Only.” Id. at 60-61.  Furthermore, the outer packaging of those products did not contain lists of ingredients and the products themselves did not necessarily contain tamper-evident seals. Id.

The defendant, Mimran, owned a number of businesses that distributed contact lens care products. Mimran, supra at 60. Polymer alleged that Mimran had obtained its professional products and resold them in the retail market, a claim that Mimran did not deny. Mimran, supra at 61. It further alleged that Mimran broke down the professional products, which were packaged in kits, and sold them individually at retail. Id. The defendant denied tampering with the packaging. Id. However, among the parties to whom Mimran had sold such products was another defendant, Worldwide Scents, Inc., who admitted to breaking products out of their original packaging and selling them at retail with counterfeit packaging. Id. n.7.

Polymer sought a preliminary injunction against the defendant in district court, alleging various trademark infringement and counterfeiting claims, including contributory trademark infringement arising out of Mimran’s sales to Worldwide Scents. The district court denied the motion, and Polymer appealed.

On appeal, the Second Circuit vacated and remanded the case for a further review of the evidence relating to Polymer’s claims, including the contributory liability claim. Citing the Inwood standard, the court noted that although the defendant had denied knowledge of Worldwide’s counterfeiting scheme, “it would not have taken a great leap of imagination for Mimran to realize that, given their labeling, the professional kits would have to be repackaged before they could be sold at retail.” Mimran, supra at 64. Noting that the district court did not discuss this evidence, the Second Circuit remanded for further review. Id. at 64, 65. Regarding claims of willful blindness, see discussion infra.

The inevitability of the ultimate trademark infringement has not always led the courts to a finding of knowledge, however. By contrast with Sealy and Mimran, supra, in two other cases, the sale of generic replacement parts for Rolex watches has been held not to constitute contributory infringement, notwithstanding the fact that those parts fit only Rolex watches and therefore arguably gave the seller reason to know of their eventual infringing use. See Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704 (9^th Cir. 1999)(“Michel”) and Rolex Watch USA, Inc. v. Meece, 158 F.3d 816 (5^th Cir. 1998)(“Meece”).

In Michel, supra, the defendant was a jeweler who reconditioned used Rolex watches with parts that were not provided or authorized by the plaintiff, Rolex Watch U.S.A, (“Rolex”) the United States distributor for Rolex watches. He sold the reconditioned watches to jewelry dealers and retail jewelers. The reconditioned watches retained their original ROLEX trademarks on their dials and bracelets, except where the defendant had replaced the bracelet, in some of which cases there appeared an imitation of Rolex’s Crown Device logo, which depicts a crown. Michel, supra at 706, 707.  Additionally, the defendant specially reconditioned used Rolex watches for individual retail customers, by replacing their bezels, dials, and bracelets with parts that were not authorized or provided by Rolex. Finally, in addition to these activities, the defendant sold the generic replacement parts fitting the Rolex watches to retail jewelers and dealers as well. See id. at 706.

Rolex brought various trademark counterfeiting and infringement claims against the seller in district court, including a contributory trademark infringement claim arising out of the sale of the generic replacement parts. See Michel at 707, 712-713. Regarding the contributory liability claim, the district court found that none of the defendant’s sales of the non-Rolex replacement parts constituted contributory infringement. See id. at 708. Specifically, it found that the evidence was insufficient to show that the defendant had either intended to induce infringement by others or had knowledge of others’ infringing use of the non-Rolex replacement parts. Id. at 713.

On appeal to the Ninth Circuit, Rolex advanced several arguments to demonstrate that the lower court’s findings regarding the contributory liability claim were clearly erroneous. It contended that the defendant himself found it difficult to distinguish between genuine Rolex replacement parts and the non-Rolex parts he distributed. Rolex v. Michel, supra at 713. It argued further that the defendant had not provided any written disclosures on any of the generic replacement parts or documentation accompanying their sale. Finally, Rolex asserted that the defendant knew that the generic parts would be incorporated into the Rolex watches; in other words, he knew of the ultimate infringing activity. See id. at 713.

Notwithstanding these arguments, the Ninth Circuit upheld the findings of the district court, which it reviewed for clear error. Following Inwood, it noted that the district court explicitly found that there was insufficient evidence that the defendant “had either intended to induce infringement by others, or had knowledge of others’ infringing use of the replacement parts[.]” Michel, supra at 713. Among the evidence relied upon by the district court was the defendant’s testimony that it was his practice to disclose the source of his replacement parts to his customers. See id. It further relied on testimony from one of the defendant’s customers to the same effect. The Ninth Circuit noted further that there was no evidence that the defendant “continued to sell replacement parts to jewelers he knew or had reason to know were engaging in trademark infringement or counterfeiting.” Id.

A similar result was reached in Meece, 158 F.3d 816 (5^th Cir. 1998). In that case the defendant sold both new and used Rolex watches to which he affixed non-genuine Rolex parts, such as diamond bezels, thereby enhancing them to imitate more expensive Rolex watches. See Meece, supra at 820. As in Michel, supra, the defendant also separately sold non-genuine Rolex parts designed solely to fit genuine Rolex watches to other jewelers. The parts were marked only “Made in Italy.” Meece, supra at 819, 820. In addition to the claims of trademark infringement and trademark counterfeiting regarding the altered watches, Rolex brought a claim for contributory trademark infringement regarding the sale of the non-genuine replacement parts. The district court rejected the claim, finding no evidence to support the finding that Meece was “inducing others to infringe or that he knows that he [was] selling replacement parts to people who are using the parts to make reconstructed infringing watches.” Id. at 828.

On appeal to the Fifth Circuit, Rolex argued, as it had done in Michel, supra, that Meece himself had trouble distinguishing non-genuine from genuine Rolex replacement parts. It further pointed out that he had admitted that his replacement parts were specifically made to fit Rolex watches and that he knew of no other watch that they fit. It therefore contended that Meece had reason to know that his non-genuine parts would end up in infringing watches. Id. at 828-829.

The Fifth Circuit, citing the Inwood standard, found the district court had not clearly erred in finding no contributory infringement. Meece, supra at 829.  It noted that there was no evidence that Meece sold large quantities of parts to any single retailer, but rather sold a few parts at a time to numerous jewelers. Id. It noted further Meece’s testimony that there was no group of jewelers or any particular jeweler who purchased a large number of replacement parts. Id. Finally, the court observed although Meece had no control over what the jewelers did with the parts he supplied to them, there was no evidence that he continued to supply those parts knowing or having reason to know the jewelers were engaging in trademark infringement. Id.

Michel and Meece are noteworthy insofar as in both cases, the defendant was found to be a direct infringer, intimately involved with the infringing activity, and yet, the evidence apparently failed to support a finding that the defendant should have known of the ultimate infringing use for which the component parts were specifically designed.  Perhaps the fact that the purchasers of the non-genuine parts themselves were not parties in either case is relevant, in that it is to their infringing activity the defendants are alleged to have contributed. The posture of the cases may have affected the trial courts’ treatment of the evidence (although in Michel one of the customers’ testimonies was noted).

Indeed, where a contributory defendant was an integral part of the direct infringer’s counterfeiting operations, the court readily found actual knowledge. See A &M Records v. Abdallah, 948 F.Supp.1449 (C.D.Cal. 1996). A & M Records was a copyright and trademark counterfeiting case brought by a group of record companies against multiple defendants, including Mohammed Abdallah, the owner of General Audio Video Cassettes (“GAVC”), a company that sold blank audiotapes and duplicating equipment. The other defendants included customers of Abdallah who ran audiocassette counterfeiting businesses utilizing the tapes and equipment supplied to them by Abdallah and GAVC.

The defendant’s pivotal role in and undeniable knowledge of the counterfeiting process was demonstrated by overwhelming evidence, the court found, so much so that his handwriting was literally all over it. Specifically, in order to produce the counterfeit recording tapes, the other defendants needed special “time-loaded” tapes, i.e. blank cassettes whose time length was customized to accommodate the length of the sound recording the counterfeiters wished to duplicate. See A & M Records, supra at 1453-1454. The court found credible evidence that Abdallah had timed legitimate, i.e, authentic, tapes for his customers and then sent the tapes back with his handwritten notations to facilitate their ordering of the time-loaded tapes. See id. “This fact strongly indicate[d] that Mr. Abdallah knew what his counterfeiting customers were doing with the tapes that he sold them[,]” the court found.

The defendant’s role went “far beyond merely selling blank, time-loaded tapes,” the court observed further. A & M Records, supra at 1457.  For example, “[h]e acted as a contact between his customers and suppliers of other material necessary for counterfeiting, such as counterfeit insert cards; he sold duplicating machines to help his customers start up a counterfeiting operation or expand an existing one … and he helped to finance some of his customers when they were starting out or needed assistance after a police raid.” Id. (discussing defendant’s role in context of the contributory copyright infringement). Citing the Inwood test for contributory trademark infringement, the court concluded that the defendant had continued to supply the blank time-loaded tapes to his customers notwithstanding his knowledge that they used the tapes to engage in trademark infringement. See id. (referring to its discussion of the analogous copyright claim).

Individual officers who run the day-to-day business of their companies have been held contributorily liable for the infringing actions of those companies. In these cases, the courts readily find the element of knowledge, simply by virtue of the defendants’ inherent familiarity with and participation in their company’s activities. See, e.g., Microsoft Corp. v. Black Cat Computer Wholesale, Inc., 269 F.Supp.2d 118 (W.D.N.Y. 2002); Microsoft Corp. v. Grey Computer, 910 F.Supp. 1077, 1090-1091 (D. Md. 1995). And see L & L Wings, Inc. v. Marco-Destin, Inc., 676 F.Supp.2d 179 (S.D.N.Y. 2009) (imposing contributory liability based on actual knowledge where direct and indirect infringers were corporations both closely held by the same owner; shared nearly identical corporate officers, directors and main office employees; and had received the same cease and desist letter), discussed infra in Section II. D.I.(a); Symantec Corp. v. CD Micro, Inc., 286.F.Supp.2d 1278, 1283 (D. Or. 2003)(chief executive officer of company that sold counterfeit software held liable for contributory trademark infringement where he personally decided on purchase of counterfeit disks; he was warned by both the plaintiff and users and shareholders that the software was counterfeit but did not stop selling it).  Cf. McKay v. Mad Murphy’s, Inc. 899 F.Supp. 872, 876-877 (D. Conn. 1995)(rejecting contributory liability claim against individual defendant who filed a permit application on behalf of allegedly infringing restaurant corporation; defendant claimed she had no knowledge of trademark problem, she was neither an officer nor a shareholder and was not otherwise involved in the corporation’s business activities).

In Microsoft Corp. v. Grey Computer, supra, the court found that one of the defendant companies, Direct Wholesale, had distributed counterfeit copies of Microsoft software products to various other defendant companies, in violation of Microsoft’s copyrights and trademarks.  See id. at 1083-1090. Upon discovery of Direct Wholesale’s counterfeit operations, Microsoft sued both the company for its direct infringement and its two sole shareholders for contributory infringement. Microsoft argued, and the court agreed, that the two officers were each personally involved in acquiring and distributing the infringing software products.  See id. at 1090.

More fundamentally, the court found that the two individuals “knew about and participated in the infringing activities of Direct Wholesale because, for all intents and purposes, they were Direct Wholesale.” Microsoft Corp. v. Grey Computer, supra at 1090 (emphasis added). The court cited the general proposition that “[a] party who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another, will be held liable as a contributory infringer and is jointly and severally liable for the infringement.” See id., citing Polymer Technology Corp. v. Mimran, 975 F.2d at 64.  Note that the court in Polymer Technology actually cited the Inwood contributory trademark infringement standard; the Microsoft court here  incorporates the analogous copyright test. In any event, the court held that this general statement applied as well to trademark infringement and therefore held both individuals jointly and severally liable as contributory infringers. Furthermore, the court noted, even if the two officers had acted primarily for the benefit of Direct Wholesale, they could still be held personally liable. See id., (citation omitted). Compare Tiffany v. eBay, 576 F.Supp.2d 463, 501 (S.D.N.Y. 2008)(rejecting plaintiff’s joint and several liability claim because defendant never took possession of items sold on its website and did not directly sell counterfeit merchandise to buyers), affirmed in part and remanded in part, 600 F.3d 93 (2d Cir. 2010).

Thus, in Tiffany v. eBay, generalized knowledge that counterfeit goods might be sold on its website was insufficient to support a claim of contributory trademark infringement against the online marketplace company eBay. 576 F.Supp.2d 463, 470, 508- 510 (S.D.N.Y 2008), affirmed in part and remanded in part, 600 F.3d 93 (2d Cir. 2010). The Tiffany court stated that the law required “more specific knowledge as to which items [were] infringing and which seller [was] listing those items before requiring eBay to take action.” Tiffany, supra at 470.

In Tiffany,  the luxury jeweler, Tiffany, sued eBay, the online marketplace, asserting contributory liability for trademark infringement arising out of the sale of counterfeit Tiffany silver jewelry on its website. Tiffany, supra at 469. Tiffany alleged that hundreds of thousands of counterfeit silver jewelry items had been offered for sale on eBay’s website, and that eBay “facilitated and allowed these items to be sold” there. Id.

Specifically, Tiffany argued that “eBay was on notice that a problem existed” and that it was therefore obligated to “investigate and control the illegal activities” of its sellers. As to the question of which sellers eBay should investigate and control, Tiffany asserted that eBay should “preemptively refus[e] to post any listing offering five or more Tiffany items and … immediately suspend[] sellers upon learning of Tiffany’s belief that the seller had engaged in potentially infringing activity. Id.

In response, eBay asserted that it was under no such obligation under the circumstances. Instead, the responsibility lay with Tiffany “to monitor the eBay website for counterfeits and to bring counterfeits to eBay’s attention.” Id. at 469.  Its generalized knowledge, eBay contended, was insufficient to impose contributory liability; the law demanded “more specific knowledge of individual instances of infringement and infringing sellers before imposing the burden on eBay to remedy the problem.” Id. at 508.

The court agreed, applying the Inwood “know or reason to know” standard. At issue was whether, under Inwood, “eBay continued to provide its website to sellers when eBay knew or had reason to know that those sellers were using the website to traffic in counterfeit Tiffany jewelry.” Tiffany, supra at 470.

In examining the evidence as to eBay’s knowledge, the court found that Tiffany’s actions to protect its trademark had put eBay on “generalized notice that some portion of the Tiffany goods sold on its website might be counterfeit.” Tiffany, supra at 507. These actions included (1) sending demand letters to eBay stating its belief that large quantities of counterfeit Tiffany jewelry items were being sold, and that offerings of five or more pieces of purported Tiffany jewelry were “almost certainly” counterfeit; (2) apprising eBay that it had found, as a result of its own “Buying Program” study, that 73.1% of the Tiffany items purchased during a given time period were counterfeit; and (3) filing thousands of “NOCIs” (notices of claimed infringement) under eBay’s VeRO (Verified Rights Owner) program, a “notice-and-takedown” system discussed below, stating a good faith belief that certain listings were counterfeit or otherwise infringing on Tiffany’s marks. Id. Moreover, the court found that eBay had received “numerous complaints” from buyers complaining that they had purchased fake Tiffany jewelry on its website. Id.

All the foregoing evidence demonstrated only that “eBay had general knowledge of infringement by sellers using its website.” Tiffany, supra at 511. “Such general knowledge,” the court held, did not require eBay to “discontinue supplying its service to all those who might be engaged in counterfeiting.” Id.

The court based its decision both on legal precedent and policy considerations. Citing Inwood, the court noted that the Supreme Court’s language in that case focused on individual infringers, supporting a requirement of specific rather than generalized knowledge. Tiffany, supra at 509-510.  It further noted language in Gucci describing the plaintiff’s “high” burden to demonstrate knowledge. Gucci, 135 F.Supp.2d at 420, and in Mini Maid describing the inquiry into knowledge as a “contextual and fact-specific test.” 967 F.2d at1522.  Moreover, the uncertainty as to the extent and nature of the direct infringement also militated against ascribing knowledge to eBay, the court found. See Tiffany, supra at 508-509 and cases cited therein.

The presence of authentic Tiffany items for sale on eBay was a key factor in the case, because  the Tiffany court was especially concerned, as a  policy matter, with reaching a result that would tend to suppress otherwise non-infringing sales. See Tiffany, supra at 509-510. Citing Justice White’s concurring opinion in Inwood, the court stated that “the doctrine of contributory infringement should not be used to require defendants to refuse to provide a product or service to those who merely might infringe the trademark.” Tiffany, supra at 510, citing Inwood. The presence of authentic Tiffany goods on eBay precluded a finding that generalized knowledge of counterfeiting imputed knowledge to eBay of any specific acts of actual infringement. Tiffany, supra at 510, and cases cited therein. The imposition of contributory liability was therefore unjustified under the “knowledge” prong of Inwood.

On appeal, the Second Circuit agreed with the distinction drawn by the district court between generalized and specific knowledge, and upheld its ruling that eBay could not be held liable for contributory infringement regarding either the terminated or non-terminated listings on eBay. Tiffany v. eBay, 600 F.3d 93, 107-109 (2d Cir. 2010), affirming in part and remanding in part, 576 F.Supp.2d 463 (S.D.N.Y. 2008). Tiffany argued that the distinction was uncalled for, and that only relevant inquiry was “whether all of the knowledge, when taken together, puts [eBay] on notice that there is a substantial problem of trademark infringement.” Tiffany, 600 F.3d at 107.

Tiffany’s reading of Inwood was too broad, the court held. Id. It Although Inwood leaves the “knows or has reason to know” prong of the contributory liability test ill-defined, the court reasoned that the Supreme Court’s choice of words, conferring contributory liability on a defendant who “continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement” supported the district court’s interpretation. Id. at 108, citing Inwood, 456 U.S. at 854 (emphasis added).

For want of other Supreme Court guidance, the Second Circuit looked to the Betamax case, Sony Corp. of American v. Universal City Studios, Inc., the sole Supreme Court case discussing the Inwood test.  464 U.S. 417, 104 S.Ct. 774,78 L.Ed.2d 574 (1984). The Betamax case involved claims of contributory copyright infringement brought by Universal Studios and Walt Disney Productions against Sony, the manufacturer of home video recorders. The plaintiffs claimed that consumers were using Sony’s recorders to tape television shows to which they held the copyrights, and that such use was therefore copyright infringement. Tiffany, supra at 108 (citations omitted). Sony, they argued, should be held contributorily liable for its role in the alleged infringement. See Id. The Sony Court rejected their claim, observing that had Inwood applied, it’s “”narrow standard” would have required knowledge by Sony of “identified individuals” engaging in infringing conduct.” Id.

Acknowledging that the Supreme Court’s language regarding the “knows or has reason to know” prong of the contributory liability test set forth in Inwood was dicta, the Second Circuit concluded that it nevertheless supported the district court’s interpretation of the law. Tiffany, supra at 108-109. Applying Sony, the court agreed that Tiffany “failed to demonstrate that eBay was supplying its service to individuals who it knew or had reason to know were selling counterfeit goods.” Id. at 109. (Emphasis added.) Thus, ‘[f]or contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that is service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”  Id. at 107.

Similarly, where a plaintiff wireless telecommunications provider failed to allege or show any evidence of the defendant’s knowledge of particularized instances of direct trademark infringement by its customers, the court granted the defendant’s summary judgment motion and dismissed the plaintiff’s contributory liability claim. MetroPCS Wireless, Inc. v. Virgin Mobile USA, L.P., 2009 WL 3075205 (N.D. Tex. 2009). In doing so, it expressly rejected the “reasonable anticipation” standard for finding knowledge on the part of the defendant. Id. at *17.

The dispute  in MetroPCS arose out of MetroPCS’s “reflashing” service, in which it “unlocked” its customers’ cell phones so that they could be used over the wireless network offered by MetroPCS rather than the one sold to them by the original company together with the handset. See MetroPCS, supra, at *1 – *2. The declaratory judgment defendant and competitor, Virgin Mobile, contended that MetroPCS’s practice undermined its business model, targeted at low-income customers, which was to sell its handsets at well below market value and then recover its losses over time with the sale of airtime. Id. Thus, according to the defendant, “[i]f a customer purchase[ed] a Virgin Mobile-branded handset at an artificially low price and then reflashe[d] the handset for service on a competitor’s network, Virgin Mobile suffer[ed] financially.” Id.

Prior to the onset of litigation, Virgin Mobile sent cease and desist letters to MetroPCS demanding that it stop reflashing Virgin-branded handsets. MetroPCS, supra at *2. Metro PCS responded with a lawsuit seeking declaratory judgment that, among other things, it was not infringing on Virgin Mobile’s trademarks. Virgin Mobile asserted a number of counterclaims, including direct and contributory trademark infringement. Id.

Specifically, Virgin Mobile maintained that “when MetroPCS induce[d] customers to switch from Virgin Mobile to MetroPCS and, through the [reflashing] service, to alter their Virgin Mobile-branded handsets for use on the MetroPCS network” it infringed, both directly and contributorily on its trademarks. Id. Virgin Mobile based its counterclaims “on the fact that, after Virgin Mobile-branded handsets [were] reflashed to operate on the MetroPCS network, they still [bore] Virgin Mobile’s trademarks.” Id. Reflashing, Virgin Mobile argued, enabled MetroPCS to “free-ride on Virgin Mobile’s effort and investment in developing, marketing, and distributing its wireless products and services.”Id.  It argued further that, as noted above, this practice prevented Virgin Mobile from recovering its losses on the low-priced handsets. Id. It asserted that reflashing could lead to “decreased functionality” or the handsets and could damage them as well. Id.

For its part, MetroPCS maintained that it reflashed handsets only at the request of the handset owner and  that it required the customer to, among other things, represent that he did not have an agreement with any other service provider and would not “use the original provider’s trademarks in selling, offering for sale, distributing, or advertising” MetroPCS’s handsets. Id. at *2, n4.  MetroPCS consequently responded with a motion for partial summary judgment seeking dismissal of, among other things, the contributory trademark liability claim. Id.

To support its motion, MetroPCS advanced two arguments: first, that Virgin Mobile had neither alleged nor proved any direct acts of infringement by MetroPCS’s customers; and second, that because its customers pledged not to infringe Virgin Mobile’s trademarks, MetroPCS was insulated from liability. MetroPCS, supra at *15. In  granting the motion for dismissal, the court addressed both arguments, but ultimately based its decision on straightforward application of Inwood, finding that MetroPCS had neither induced any of its customers to infringe nor had it continued to sell reflashed handsets to customers whom it knew or had reason to know were reselling the handsets. Id. at *17. (As to the first argument regarding direct infringement, see Section II.B.5; the significance of the licensing pledge is discussed in Section II.B.c.i .)

Based on Inwood, the court stated that “to be held liable for contributory trademark infringement, MetroPCS must have either intentionally induced its [reflashing] customers to directly infringe the original wireless provider’s trademark or continued to offer its [reflashing] service to particular customers whom it knew were committing acts of infringement.” MetroPCS, supra at *17, citing Inwood, 456 U.S. at 854-855. (emphasis added). It found, as noted above, that Virgin Mobile had neither alleged nor offered any evidence of intentional inducement. Id. It also failed to allege or present evidence that MetroPCS “continue[d] to reflash handsets for those particular customers whom it kn[ew] [were] reselling their branded handsets.” Id.

At most, the court concluded, Virgin Mobile could show only that MetroPCS continued to offer it reflashing service “to the general public when it ha[d] reason to know that some past [reflashing] customers [had] resold their reflashed handsets.” MetroPCS, supra at *17. Such generalized knowledge, the court held, was insufficient under Inwood, citing that case for the proposition that the “standard is not whether [the] defendant “could reasonably anticipate” possible infringement.” MetroPCS, supra at *17, citing Inwood, supra at 854 n13. Cf. TracFone Wireless, Inc. v. SND Cellular, Inc. 2010 WL 2265152, *2, *4 (S.D.Fla.)(where defendants bought plaintiff wireless service provider’s phones in bulk, resold them “reflashed” and out of their original packaging and with the warranty removed, court upheld  plaintiff’s claims for both direct and contributory trademark infringement).

Note in this regard that the “reasonable anticipation” standard is often urged on the court by trademark plaintiffs who argue, based on the Restatement, that a party ought to be found liable for contributory trademark infringement where it “fails to take reasonable precautions against the occurrence of the third person’s infringing conduct in circumstances in which the infringing conduct can be reasonably anticipated.” See Tiffany v. eBay, 576 F.Supp.2d 463, 502 (S.D.N.Y. 2008), affirmed in part and remanded in part, 600 F.3d 93 (2d Cir. 2010), citing the Restatement (Third) of Unfair Competition Sec. 27 (1995). The Tiffany court expressly rejected the reasonable anticipation standard as “foreclosed by Inwood itself.” See Id., noting Justice White’s concurring opinion and the majority response. It noted that with the exception of cases in the Third Circuit, the majority of courts considering the question have rejected it as well. See Id. at 503 and cases cited therein.

Central to Tiffany’s argument was the “five-or-more” rule set forth in its demand letters to eBay, the “operative framework through which [according to Tiffany] eBay should have known that a listing was counterfeit.” Tiffany supra, at 512. Specifically, Tiffany argued that it had sent eBay demand letters “asserting that counterfeiting was rampant on eBay’s website and that any listing of five or more Tiffany items was presumptively counterfeit.” Tiffany, supra at 511. It argued further that these letters should not be dismissed as too general “because they provided detailed notice to eBay of the problem and included the fact that there [were] no authorized third-party vendors for Tiffany merchandise.” Once again, the court rejected Tiffany’s arguments, noting precedent that “mere assertions and demand letters are insufficient to impute knowledge as to instances not specifically identified in such notices, particularly where the activity at issue is not always infringing.” Tiffany, supra at 511 and see cases cited therein.

It found the “five-or-more” rule especially problematic, because the record showed that Tiffany itself dismissed its effectiveness and had been vague about how to define it and inconsistent in enforcing it.  See Tiffany, supra at 511. Moreover, the court noted, among other findings, that lots of five or more pieces of authentic new Tiffany silvery jewelry had been available on eBay. There was thus little support in the record for the claim that the “five-or-more” rule presumptively demonstrated the presence of infringing items. Id. at 512.  Under these circumstances, the court refused to “impute knowledge or a reason to know of counterfeiting based on Tiffany’s demand letters and its proposed five-or-more rule.” Id.

Here again, the court cautioned against using contributory liability law to suppress a legitimate secondary market.  “eBay was under no obligation,” the court concluded,

to credit the potentially self-serving assertions of a trademark owner, particularly when those assertions … were unfounded, and when the trademark owner’s demands, if met, clearly would have eliminated even legitimate sales on eBay. The doctrine of contributory liability cannot be used as a sword to cut off resale of authentic Tiffany items.

Tiffany, supra at 512, citing Polymer Tech. Corp., 975F.2d at 61-62.

In addition to the demand letters, Tiffany had presented eBay with the results of its own survey of Tiffany items listed on eBay’s website (known as the “Buying Programs”), revealing that “73% of the sterling silver Tiffany merchandise on eBay was counterfeit, and that only 5% was genuine.” Tiffany, supra at 482. It argued that these results “provided eBay with knowledge of any and all instances of counterfeiting” on its website. Tiffany, supra at 512.

The court found problems with the Buying Programs for many reasons, not the least of which was that Tiffany failed to provide eBay with its results until after it filed its complaint. Tiffany, supra at 512.  Before the litigation began, Tiffany had only told eBay about its Buying Programs results in a general way, and the court therefore concluded that eBay only had general notice that some counterfeit Tiffany goods were being sold on its website. Id. Even if Tiffany had presented its findings to eBay at an earlier date, though, the court rejected their probative value as to the “five-or-more” rule, described above.

More fundamentally, the Buying Programs were rejected by the court as “methodologically flawed and of questionable value in any event.” Tiffany, supra at 512. To make matters worse for Tiffany, the one thing the court did recognize about the Buying Programs was that they revealed that some quantity of the jewelry sold on eBay was in fact genuine. The court ultimately concluded that the Buying Programs, beset with flaws,  did not provide eBay with the requisite knowledge under Inwood, nor did they justify requiring eBay to ban all listings of five or more pieces as presumptively counterfeit. Id. at 513. There was simply no basis, pursuant to the Buying Programs, to require eBay to ban all Tiffany listings, especially because Tiffany had failed to demonstrate that eBay ever failed to remove a specific listing reported to it, as discussed below. Id.

Finally, Tiffany pointed to over a thousand NOCIs (notices of claimed infringement) it had filed, coupled with over a hundred emails sent to eBay from buyers during a six-week period complaining that they had purchased fake Tiffany jewelry. Tiffany, supra at 513.  It argued that these, together with NOCI’s from other rights owners, gave eBay both actual knowledge of specific infringing listings and “general knowledge that a counterfeiting problem existed on its website.” Id. Once again, the court was unpersuaded. “[E]vidence of general knowledge of infringement on its website was insufficient to impute knowledge to eBay of specific infringing items.” Id. As to the specific notices of infringing items, it concluded that eBay had responded appropriately. Id.

On appeal, the Second Circuit upheld the district court’s ruling that eBay could not be held liable for contributory infringement regarding either the terminated or non-terminated listings on eBay. Tiffany v. eBay, 600 F.3d 93, 107-109 (2d Cir. 2010), affirming in part and remanding in part, 576 F.Supp.2d 463 (S.D.N.Y. 2008).  In doing so, it focused on the distinction drawn by the district court between generalized and specific knowledge of infringement. See Tiffany, supra at 507. Tiffany argued that the distinction was uncalled for, and that only relevant inquiry was “whether all of the knowledge, when taken together puts [eBay] on notice that there is a substantial problem of trademark infringement.” Tiffany, 600 F.3d at 107.

Tiffany’s reading of Inwood was too broad, the court held. Id. It Although Inwood leaves the “knows or has reason to know” prong of the contributory liability test ill-defined, the court reasoned that the Supreme Court’s choice of words, conferring contributory liability on a defendant who “continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement” supported the district court’s interpretation. Id. at 108, citing Inwood, 456 U.S. at 854 (emphasis added).

For want of other Supreme Court guidance, the Second Circuit looked to the Betamax case, Sony Corp. of American v. Universal City Studios, Inc., the sole Supreme Court case discussing the Inwood test.  464 U.S. 417, 104 S.Ct. 774,78 L.Ed.2d 574 (1984). The Betamax case involved claims of contributory copyright infringement brought by Universal Studios and Walt Disney Productions against Sony, the manufacturer of home video recorders. The plaintiffs claimed that consumers were using Sony’s recorders to tape television shows to which they held the copyrights, and that such use was therefore copyright infringement. Tiffany, supra at 108 (citations omitted). Sony, they argued, should be held contributorily liable for its role in the alleged infringement. See Id. The Sony Court rejected their claim, observing that had Inwood applied, it’s “”narrow standard” would have required knowledge by Sony of “identified individuals” engaging in infringing conduct.” Id.

Acknowledging that the Supreme Court’s language regarding the “knows or has reason to know” prong of the contributory liability test set forth in Inwood was dicta, the Second Circuit concluded that it nevertheless supported the district court’s interpretation of the law. Tiffany, supra at 108-109. Applying Sony, the court agreed that Tiffany “failed to demonstrate that eBay was supplying its service to individuals who it knew or had reason to know were selling counterfeit goods.” Id. at 109. (Emphasis added.) Thus, ‘[f]or contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that is service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”  Id. at 107.

To be willfully blind, “a person must suspect wrongdoing and deliberately fail to investigate.” Hard Rock Café, supra. Accord, Monsanto Co. v. Campuzano, 206 F.Supp.2d 1271, 1275 (S.D. Fla. 2002); Medic Alert Found. v. Corel Corp., 43 F.Supp.2d 933, 940 (N.D. Ill. 1999).  And see Tiffany v. eBay, 576 F.Supp.2d 463, 513 (S.D.N.Y. 2008), affirmed in part and remanded in part, Tiffany v. eBay, 600 F.3d 93, 109-110 (2d Cir. 2010); Fare Deals, Ltd. v. World Choice Travel.com, Inc., 180 F.Supp.2d 678, 690-691 (D. Md. 2001), citing Hard Rock Café, supra at 1149.

The willful blindness test has been applied in contributory liability cases in both the “product” and “non-product” contexts, as discussed below. The doctrine is not applied without limitation, however, as courts have recognized that the “reason to know” part of the Inwood standard requires a defendant to “understand what a reasonably prudent person would understand” and does not impose any duty to seek out and prevent violations. Hard Rock Café, supra at 1149, citing Restatement (Second) of Torts. Sec 12(1) & cmt. A. This subsection will discuss how various actions taken by (or taken upon) defendants can affect the outcome of the court’s findings on willful blindness. It will further explore the limitations on the concept of willful blindness, as set forth by the courts.

The plaintiff in Medic Alert was the non-profit corporation, Medic Alert Foundation, which provided products and services to its members related to their non-apparent medical conditions for use in emergency situations. See Medic Alert, supra at 934. Such products included necklaces or bracelets and wallet cards, each of which bore the member’s individualized medical information, a telephone number for further details about the member’s condition, and the Medic Alert logo. The Medic Alert logo, which was registered along with its trademark and service mark, consisted of the words “MEDIC” and “ALERT” in all capital letters running from to bottom on either side of a caduceus (the symbol of medicine and healing depicting two snakes coiled around a staff). Id.

The defendant in Medic Alert, Corel Corporation (“Corel”), was a computer software company whose software packages included a library of “clipart” or graphic images from which a user could select and insert into a document. Id. at 934-935. Among these images, which Corel obtained by way of a licensing agreement with another company, “Techpool,” was one that resembled the Medic Alert logo. Techpool had represented to Corel that the image was licensed and did not infringe any third-party intellectual property rights. Id. Furthermore, purchasers of Corel software programs were required to enter into end-user licensing agreements that prohibited them from using “computer images related to identifiable individuals or entities in a manner which suggests their association with or endorsement of any product or service.” Id.

In apparent violation of the foregoing agreement, a health products company that had purchased the Corel software altered one of the images in question to read “Health Alert” and then used it on its mail solicitations for vitamins. See Medic Alert, supra at 935. Consequently, in addition to various trademark infringement claims against Corel, Medic Alert alleged contributory trademark infringement in connection with the alleged infringement of its logo in those mailings. Id. at 936, 939-940. It argued that upon being appraised of the alleged infringement some years prior to trial, Corel knew that Medic Alert had not licensed its images for use in its products, and should have immediately recalled all its software from distribution.  (Corel had, in fact, taken measures to remove the disputed images from it software, as discussed in greater detail, infra). Notwithstanding these measures, by continuing to sell its existing inventory containing the disputed images, Medic Alert argued, Corel committed contributory trademark infringement. Corel moved for summary judgment on both the direct and indirect trademark infringement claims.

The court granted Corel’s motion, finding the evidence insufficient as a matter of law to support a finding of contributory liability. Medic Alert, supra at 940.  In reaching its decision, the court relied on both Inwood and the willful blindness standard articulated in Hard Rock Cafe, discussed infra, noting specifically that “[a]ctual knowledge … is satisfied by a finding of willful blindness, which means a person must suspect wrongdoing and deliberately fail to investigate.” Id., citing Hard Rock Café Licensing Corp. v. Concession Serv., Inc. 955 F.2d 1143, 1149 (7^th Cir. 1992). Even assuming direct infringement had taken place, the court reasoned, “[i]n light of Corel’s end-user agreement, it had no reason to expect that one of its software users would violate the contract and use one of its images for commercial use, until it was provided with actual information that someone had done so.” Medic Alert, supra at 940.  The court further noted that there was no evidence that Corel was ever notified of the direct infringement until it was produced in the instant lawsuit. Id. Referring again to the end-user agreement, the court found that Corel had no reason to suspect any further infringement. Id. By the time the direct infringement came to the Medic Alert’s attention, the court noted, Corel had already taken remedial measures to remove the images in question. (This aspect of the case is discussed in further detail infra.)

A similar argument regarding customer agreements was advanced by the defendant wireless telecommunications company in MetroPCS Wireless, Inc. v. Virgin Mobile USA, L.P., 2009 WL 3075205 (N.D.Tex.), where MetroPCS argued, based on the court’s reasoning in Medic Alert, supra, that because its customers signed pledges not to infringe other companies’ trademarks, it should be insulated from contributory liability for such acts. Note that the MetroPCS court accepted the argument but ultimately based its decision on other grounds, discussed in detail here in Section II.B.3.

The dispute  in MetroPCS arose out of MetroPCS’s “reflashing” service, in which it “unlocked” its customers’ cell phones so that they could be used over the wireless network offered by MetroPCS rather than the one sold to them by the original company together with the handset. See MetroPCS, supra, at *1 – *2. The declaratory judgment defendant and competitor, Virgin Mobile, contended that MetroPCS’s practice undermined its business model, targeted at low-income customers, which was to sell its handsets at well below market value and then recover its losses over time with the sale of airtime. Id. Thus, according to the defendant, “[i]f a customer purchase[ed] a Virgin Mobile-branded handset at an artificially low price and then reflashe[d] the handset for service on a competitor’s network, Virgin Mobile suffer[ed] financially.” Id.

Prior to the onset of litigation, Virgin Mobile sent cease and desist letters to MetroPCS demanding that it stop reflashing Virgin-branded handsets. MetroPCS, supra at *2. Metro PCS responded with a lawsuit seeking declaratory judgment that, among other things, it was not infringing on Virgin Mobile’s trademarks. Virgin Mobile asserted a number of counterclaims, including direct and contributory trademark infringement. Id.

Specifically, Virgin Mobile maintained that “when MetroPCS induce[d] customers to switch from Virgin Mobile to MetroPCS and, through the [reflashing] service, to alter their Virgin Mobile-branded handsets for use on the MetroPCS network” it infringed, both directly and contributorily on its trademarks. Id. Virgin Mobile based its counterclaims “on the fact that, after Virgin Mobile-branded handsets [were] reflashed to operate on the MetroPCS network, they still [bore] Virgin Mobile’s trademarks.” Id. Reflashing, Virgin Mobile argued, enabled MetroPCS to “free-ride on Virgin Mobile’s effort and investment in developing, marketing, and distributing its wireless products and services.”Id.  It argued further that, as noted above, this practice prevented Virgin Mobile from recovering its losses on the low-priced handsets. Id. It asserted that reflashing could lead to “decreased functionality” or the handsets and could damage them as well. Id.

For its part, MetroPCS maintained that it reflashed handsets only at the request of the handset owner and  that it required the customer to, among other things, represent that he did not have an agreement with any other service provider and would not “use the original provider’s trademarks in selling, offering for sale, distributing, or advertising” MetroPCS’s handsets. Id. at *2, n4.  MetroPCS consequently responded with a motion for partial summary judgment seeking dismissal of, among other things, the contributory trademark liability claim. Id.

To support its motion, MetroPCS advanced two arguments: first, that Virgin Mobile had neither alleged nor proved any direct acts of infringement by MetroPCS’s customers; and second, that because its customers pledged not to infringe Virgin Mobile’s trademarks, MetroPCS was insulated from liability. MetroPCS, supra at *15. In  granting the motion for dismissal, the court addressed both arguments, but ultimately reached its decision based on straightforward application of Inwood, finding that MetroPCS had neither induced any of its customers to infringe nor had it continued to sell reflashed handsets to customers whom it knew or had reason to know were reselling the handsets. Id. at *17. See Section II.B.3 for a full discussion. As to the first argument regarding direct infringement, see Section II.B.5.

As to MetroPCS’s second argument, the court seemed to agree that a customer pledge not to infringe would insulate MetroPCS from contributory liability, though it rested its decision on Virgin Mobile’s failure to satisfy the Inwood test. MetroPCS likened its customer pledge to the licensing agreements at issue in Medic Alert, supra, arguing that it had “no reason to expect that any of its customers would commit direct infringement” because its customers signed a pledge to the same effect regarding their cell phones. See MetroPCS, supra at *16. Virgin Mobile argued that the customer pledges were not consistently required and did not prevent the infringing resale of its handsets, creating a genuine fact issue regarding the motion for summary judgment.  Id. The court concluded, however, that the fact issue was immaterial pursuant to its application of the Inwood test further on in the decision. Id.

Upon discovery of the counterfeit sales, Microsoft notified the defendants with a letter demanding that they cease and desist from their unauthorized use of Microsoft’s marks. Black Cat Computer, supra at 121. Notwithstanding this notice, the defendants continued to distribute the counterfeit software. Id. Microsoft followed with a second cease and desist letter, which was similarly ignored. Microsoft then filed suit and moved for summary judgment, seeking both a permanent injunction and damages based on trademark and copyright infringement.

In granting Microsoft’s motion, which was unopposed, the court considered whether the individual defendants could be held contributorily liable for the activities of the infringing company. Considering the copyright and trademark infringement liability issues together,  the court held that the two individual corporate officers involved in the case were both contributorily liable, simply based on their intimate involvement and awareness of the company’s activities. See id. at 123. Specifically, the court noted that each of the officers had received the one of the cease and desist letters and was therefore aware of the company’s infringing activities. Having concluded that these and other facts had established their “willful blindness,” see id., the court further found the individual defendants contributorily liable for their company’s infringing activities. Id. For a general discussion of the liability of corporate officers, see  supra. For a discussion of vicarious liability in this context, see infra.

The receipt of a cease and desist or demand letter does not necessarily compel a finding of willful blindness, however. See Fare Deals, Ltd. v. World Choice Travel.com, Inc. 180 F.Supp.2d 678, 690-691 (D.Md. 2001)(suspicion engendered solely by the allegation in plaintiff’s demand letter could not as a matter of law be deemed willful blindness). See also,   Gucci, 135 F.Supp.2d at 420; Lockheed Martin Corp. v. Network Solutions, Inc., 985 F.Supp. 949, 963-967 (C.D. Cal. 1997)(rejecting plaintiff’s contention that attorney’s demand letter should be sufficient to impute knowledge of infringement), aff’d on other grounds,194 F.3d 980, 984 (9^th Cir. 1999).  It bears noting that in Black Cat Computer, supra, the two cease and desist letters were among other factors leading to the court’s finding of willful blindness. Lockheed Martin and Fare Deals, supra are discussed in further detail, infra.