B. The Elements of Contributory Liability under Inwood: 3. The Requirement of Actual or Constructive Knowledge: (c) Willful Blindness — (ii) 2. Cease and Desist or Demand Letter
The receipt by a defendant of a letter from the plaintiff demanding that he cease and desist from violating his marks may weigh in favor of a finding of willful blindness, particularly when accompanied by other compelling evidence. In one such case, the fact that the defendants had received a cease and desist letter regarding their sale of counterfeit computer software led the court to find willful blindness on their part. Microsoft Corp. v. Black Cat Computer Wholesale, Inc., 269 F.Supp.2d 118, 123 (W.D.N.Y. 2002). In that case, the plaintiff software manufacturer, Microsoft, sued a company that sold and distributed counterfeit software, also naming its owners, alleging both trademark and copyright infringement. Microsoft’s investigations and determinations that the defendants were engaged in the retail sales of counterfeit Microsoft software and hardware were undisputed. See Black Cat Computer, supra at 121. In addition, during the course of the litigation, the defendants pleaded guilty to state criminal counterfeiting charges filed against them. 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 (9th 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.
Conversely, in an unusual case, a jury found a web hosting company liable for secondary trademark infringement arising out of the infringing activities of one of its customers, even though the plaintiff golf club manufacturer and distributor had not sent notice, such as a cease and desist letter to that defendant. Roger Cleveland Golf Co., Inc. v. Price (sic), 2010 WL 5019260 (D. S.Carolina), discussed in detail in Sections II.D.2(d) and IV.A.1.