Secondary Trademark Infringement:
2010 – 2011 Overview
This website is dedicated to an examination of the law of secondary liability for trademark infringement – the idea that someone other than a direct infringer can be liable for infringing another’s trademark. Secondary liability for trademark infringement is a relatively recent development in the law, and it has evolved entirely in the courts.
The first theory of secondary liability to emerge was contributory liability. The 1982 Supreme Court case of Inwood v. Ives set forth the two-part standard for contributory infringement and is the starting point for analyzing a plaintiff’s claims. To establish contributory liability under Inwood, a plaintiff must show that the defendant either (1) “intentionally induce[d] another to infringe” his trademark or (2) “continue[d] to supply its product to one whom it knows or it ha[d] reason to know [was] engaging in trademark infringement.” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982).
In the years following Inwood, cases began to arise in which a defendant contributed in some way to trademark infringement, but not by supplying any particular product to the direct infringer. Thus, courts seeking to determine whether liability was appropriate in such cases found the standard application of the Inwood test inapposite. In these situations, i.e. where the plaintiff can neither allege intentional inducement nor point to a specific “product,” a modified version of the Inwood standard has evolved in which the court considers the extent of control the defendant has over the infringing activity. Specifically, courts have held that “[d]irect control and monitoring of the instrumentality used by a third party to infringe the plaintiff’s mark permits the expansion of Inwood Lab[oratories]’ ‘supplies a product’ requirement for contributory infringement.” Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir. 1999).
A second theory for secondary infringement recognized by the courts is vicarious liability. The Supreme Court has not articulated a standard for finding vicarious liability for trademark infringement, as it has done regarding contributory liability in the case of Inwood. Rather, vicarious liability has evolved in the federal courts under two main approaches: One is the application of agency principles to parties involved in trademark infringement. The second approach is derived from joint tortfeasor liability doctrine and incorporates elements of agency law as well. The ways in which vicarious liability can arise under these two standards are discussed in this treatise.
Of all the contexts in which secondary liability has been raised, whether contributory or vicarious, the Internet has by far generated the most interest and attention. The advent of Internet commerce has created new problems for the law to address. On the Internet, buying and selling take place among a seemingly infinite number of parties in a matter of moments, making it difficult both to police and remediate infringement. These issues came to light in Tiffany v. eBay, where the court observed that “more than six million new listings are posted on eBay daily, and at any given time, some 100 million listings appear on the website.” Tiffany v. eBay, 576 F.Supp.2d 463, 475 (S.D.N.Y. 2008), affirmed in part and remanded in part, 600 F.3d 93 (2d Cir. 2010). For application of secondary liability doctrine in a variety of specific Internet contexts, see the treatise outline.
Since the initial release of this treatise in September 2009, newsworthy developments have taken place in the following areas:
- Search Engines — Rosetta Stone v. Google. The court declined to extend contributory liability for trademark infringement to the search engine Google for supplying trademark-protected keywords to infringing websites, importing the court’s reasoning in Tiffany v. eBay.
- Credit Card Processing Services — Gucci v. Frontline Processing. The essential role played by credit card companies in online trademark infringement was recognized in Gucci v. Frontline Processing, where the court allowed contributory liability claims to go forward against companies that had established credit card processing for an online counterfeit merchant. The payment for the counterfeit goods sold on its website was part of the infringing process, the court reasoned, drawing on Judge Kozinski’s dissent in Perfect 10, and most of the infringing sales – of which the companies allegedly knew or should have known — were allegedly consummated using credit cards.
- Domain Name Registrars — Transamerica Corp. v. Moniker Online. Although domain name registrars have generally not been subject to contributory liability, in a case where the plaintiff’s allegations against the defendant domain name registrar made out a complex scheme of cybersquatting, the court allowed the contributory liability claim to proceed against it. Far from the “rote translation” involved in Lockheed, the facts alleged in Transamerica depicted a domain name registrar that acted in concert with other defendants to profit from the infringing activities of its customers.
More cases have been brought as contributory liability claims than as claims for vicarious infringement, though the law is certainly still evolving in this area. The key factor in determining the viability of a contributory liability claim is the defendant’s knowledge. Sometimes the knowledge requirement is readily met with direct evidence such as correspondence revealing a relationship between the direct and indirect infringers. At other times, however, plaintiffs are hard-pressed to meet the knowledge requirement under Inwood. Even where it has been met, it is often because the plaintiffs put the defendants on notice of the infringing activity, in which case the defendants may have taken remedial action, to which courts have been very sympathetic. In Tiffany v. eBay, for example, the court was satisfied that, notwithstanding the volume of complaints by Tiffany, eBay had taken “appropriate steps” through its notice-and-takedown system, the VeRO Program, to avoid liability.
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 and expansion 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.
One Response to “Secondary Trademark Infringement:
2010 – 2011 Overview”
Thanks so much for this site, Jane – I got here through Likelihood of Confusion and will be checking back frequently.
-Tom Galvani