the presentation

“The New Frontier” of Brand
Enforcement on the Internet:
A U.S. Perspective
Steven J. Wadyka, Jr.
Shareholder
Greenberg Traurig, LLP
Washington, D.C. USA
(202) 331-3105
[email protected]
GREENBERG TRAURIG, LLP n ATTORNEYS AT LAW n WWW.GTLAW.COM
©2011. All rights reserved.
Overview of Internet Brand Enforcement
Ø  Challenges/costs/benefits
Ø  Internet marketing, search engines and
keyword advertising
Ø  Secondary liability for online service
providers
Ø  Brand enforcement in social media
Ø  Remedies against “rogue” websites
Ø  Conclusions and predictions
Challenges Facing Brand Owners in Internet
Enforcement
Ø  Potential IP rights violators
• 
Search engines selling trademarks as
“keywords” (Google, Yahoo!, Bing)
• 
Domain name registrars (GoDaddy)
• 
Social networking sites (Facebook, Twitter,
LinkedIn)
• 
“Rogue” websites/online counterfeiters
• 
Auction sites (eBay)
• 
Web hosting providers/ISPs
• 
Payment processors (PayPal)
Challenges Facing Brand Owners in Internet
Enforcement
Ø  Jurisdictional issues
• 
How to subject offshore (and often anonymous) IP
rights violator to the courts and laws of the U.S. and
obtain relief that can be enforced against the violator?
Ø  Cost considerations
• 
Private investigators
• 
Monitoring/watching services
• 
Legal fees
Ø  Efficiency and effectiveness
• 
Identify and choose targets wisely
Ø  Deterrence and Return on Investment
• 
Substantial relief may provide disincentive to would-be
violators and help brand owner recoup losses and cost
outlays
Challenges Facing Brand Owners in
Internet Enforcement
Ø  Secondary liability
• 
Hold online service providers responsible for the
infringing acts of others
• 
Hold brand owners responsible for the actions of
third parties
• 
Two theories:
–  Vicarious infringement: Principal liable for
acts of its agent
–  Contributory infringement: Analogous to
aiding and abetting
Search Engines & Keyword Advertising
Rosetta Stone v. Google, 676
F.3d 144 (4th Cir. 2012)
Ø Rosetta Stone sued Google for
trademark infringement based on
sale of keywords consisting of
Rosetta Stone’s trademark to
trigger ads for competitors’ and
counterfeit products
Ø District court granted summary
judgment for Google on Rosetta
Stone’s direct and contributory
infringement claims
Search Engines & Keyword Advertising
Rosetta Stone v. Google
Ø Direct trademark infringement
• 
Disputed issues of fact regarding Google’s intent;
evidence showed that Google expected uptick in
litigation due to AdWords policy change
• 
District court ignored evidence of actual confusion as
to sponsorship
• 
Sophistication of consumers – internal Google study
showed seasoned Internet users were confused by
Google’s sponsored links
• 
Functionality doctrine inapplicable – Irrelevant that
Google’s computer program functioned better by use of
Rosetta Stone’s mark
Search Engines & Keyword Advertising
Rosetta Stone v. Google
Ø Contributory trademark infringement
• 
Insufficient for service provider to have
general knowledge that some percentage of
purchasers use the service to engage in
infringing activities
• 
Must provide service to identified individuals
that it knows or has reason to know are
engaging in trademark infringement
• 
District court improperly weighed conflicting
evidence regarding Google’s allowance of
known counterfeiters to bid on Rosetta Stone
keywords
Search Engines & Keyword Advertising
Ø  1-800 CONTACTS, Inc. v.
Lens.com, Inc., 722 F.3d 1229
(10th Cir. 2013)
• 
Lens.com used an “affiliate
network,” managed through an
aggregator, to assist with
online marketing
• 
Affiliates purchased keywords
containing 1-800’s mark
• 
Some impressions displayed
1-800’s mark
• 
1-800 argued “initial interest
confusion”
• 
Sued Lens.com based on
theories of vicarious and
contributory infringement
Search Engines & Keyword Advertising
Ø  1-800 CONTACTS, Inc. v. Lens.com, Inc.
• 
Relevant issue for consumer confusion is not what
keyword was purchased, but what language was
used in the ad generated by keyword
• 
Likelihood of confusion existed as to impressions
containing plaintiff’s mark
• 
No vicarious liability
s  Affiliate had no authority to act on behalf of
defendant and thus was not an “agent”
• 
BUT, there was contributory liability
s  Lens.com could have stopped use of infringing ads by
requiring its aggregator to send e-mail blast to
affiliates forbidding such use
Domain Name Registrars
Ø  Petroliam Nasional Berhad (Petronas) v.
GoDaddy, 737 F.3d 546 (9th Cir. 2013)
• 
A third party registered “petronastower.net” and
“petronastowers.net” and used GoDaddy’s domain
forwarding service to direct users to a porn site
• 
Petronas sued GoDaddy for contributory cybersquatting
under the federal anti-cybersquatting statute (ACPA)
• 
Appeals court held that neither the plain text nor
purpose of the ACPA supports a claim for contributory
cybersquatting
• 
Would saddle registrars with nearly impossible task of
“divining the intent of their customers”
• 
Issue may soon be before US Supreme Court
Auction Sites & Online Marketplaces
Ø  Tiffany v. eBay, 600 F.3d 93 (2d Cir. 2010)
• 
First U.S. case to apply contributory trademark
infringement standard to online marketplace
• 
Tiffany claimed that eBay was liable for contributory
trademark infringement by supplying its services to
sellers of counterfeit Tiffany goods while knowing or
having reason to know that such sellers were infringing
Tiffany’s marks
• 
District court ruled in favor of eBay; Tiffany appealed
Auction Sites & Online Marketplaces
Ø  Tiffany v. eBay
• 
Affirms judgment in favor of eBay
• 
For contributory trademark infringement, a service
provider must have more than a general knowledge or
reason to know that its service is being used to sell
counterfeit goods
s  Some contemporary knowledge of which particular
listings are infringing or will infringe in the future is
necessary
s  Tiffany’s generalized allegations of counterfeiting
failed to provide eBay with the required knowledge
• 
eBay’s extensive anti-piracy efforts – Trust & Safety
Dept., fraud engine to detect listings for counterfeit
goods, VeRO Program providing rights owners with
“notice and takedown” remedies – all were critical to a
finding of no liability
Web Hosting Providers
Ø  Louis Vuitton v. Akanoc Solutions, 658
F.3d 936 (9th Cir. 2011)
• 
Defendants provided web hosting
services to sites that sold counterfeit
Louis Vuitton products
• 
LV made several demands that
defendants either remove infringing
content or require their customers to
do so; No response from defendants;
sites continued to operate
• 
LV sued for contributory trademark
infringement
s  Argued that defendants had actual
knowledge of sites’ activities, knowingly
avoided learning full extent of those
activities, and deliberately disregarded
LV’s demands, thereby knowingly enabling
the infringing conduct by hosting the sites
• 
Jury found for LV, awarded statutory
damages totaling $31.5 million
Web Hosting Providers
Ø  Louis Vuitton v. Akanoc Solutions
• 
Affirmed on appeal as to liability
• 
Issue: Whether defendants exercised direct control of third
party’s “means of infringement”
• 
Defendants: The websites selling counterfeit goods were to
sole means of infringement
• 
Appeals court held that defendants physically host websites
on their servers and route Internet traffic to and from those
sites
• 
“The Internet equivalent of leasing real estate.”
• 
Defendants had direct control over the “master switch” that
kept the sites online and available
• 
Reduced statutory damage award to $10.5 million
Payment Processors
Ø  Theory of liability
• 
Contributory infringement
s  Intentional inducement
s  Actual knowledge or willful blindness, while having sufficient
control over the instrumentality used to infringe
Ø  Divergent case holdings
• 
Perfect 10 v. Visa, 494 F.3d 788 (9th Cir. 2007)
s  allegation that credit card processors can decide to stop processing
payments to sites dealing in counterfeits was insufficient to state a
claim (Judge Kozinski dissenting)
• 
Gucci v. Frontline Processing, 721 F.Supp.2d 228 (SDNY 2010)
s  “control” sufficiently alleged because credit card processing
services are a necessary element for the transaction of counterfeit
goods online; “knowingly provide a financial bridge between
buyers and sellers of counterfeit products”
Social Media
Ø  Presents opportunities and challenges for brand
owners
• 
Opportunities:
s  Build brand strength/loyalty by creating official
company page and fan page
s  Register usernames consisting of your
company’s brands
s  Use social media pages commercially to provide
new ways to reach consumers
s  Spread branding message instantaneously across
numerous platforms
Social Media
• 
Challenges:
s  Improper suggestions of affiliation/sponsorship
–  Brand appears in usernames pointing to sites
containing false information about the
company’s products
s  Counterfeiting - Username points to sites selling
counterfeit goods
s  “Username squatting” - New FB account created
solely to take advantage of grabbing a username
s  Dilution - Blurring and tarnishment
s  Imposters - Possible parody defense; permissible on
Twitter provided parody is clear
Social Media
Ø  Enforcement strategies in social media sites
• 
Assessment of infringing activity
s  Balance the need for brand protection vs. potential
alienation of customers
–  Must always be mindful of duty to police your
marks
–  How much of an issue does the activity create
for your business?
–  Does it interfere with any ongoing advertising or
promotional campaigns?
–  Is it an isolated, ephemeral instance or a
concerted attack?
Social Media
Ø  Enforcement strategies in social media sites
• 
Consider free speech issues and potential public
backlash of enforcement effort
–  First Amendment to U.S. Constitution
grants broad protection to political speech/
commentary/criticism, less protection to
commercial speech
–  Keep in mind that cease and desist letter
may well be posted on social media sites to
generate negative exposure for the brand
»  Adjust tone of enforcement depending
on whether infringer is willful or
simply innocent or misguided
Social Media
Ø  Enforcement strategies in social media sites
• 
Become familiar with the site’s Complaint and
Takedown Policies, Community Guidelines, and Terms
of Use
• 
Develop takedown strategy and assess requirements
s  Copyright Infringement (DMCA)
s  Trademark Infringement
s  Unauthorized Impersonation
s  Repeat Offenders
s  Harassment, defamation, theft of confidential material
• 
Keep in mind that policies and requirements my change
over time
Social Media
Ø 
Enforcement strategies in social media sites
s  Expand your internal monitoring program to include
social media sites
s  Develop consistent monitoring and enforcement
procedures
s  Use search engines to find infringing/harmful content
–  Google.com/alerts (generates alerts for use of
company names and brands on the Web, blogs,
news, discussion groups)
s  Consider vendors and software tools with social
media monitoring capability
s  Keep tabs on what is being said about your brand in
“real time”
“Rogue” Websites
Ø  What is a “rogue” website?
• 
A site that traffics in stolen movies, TV shows and
music, or counterfeit goods
• 
Located throughout the world
• 
Appear legitimate by featuring brands and advertising
of reputable companies and accepting major credit
cards
• 
Enable site operators to profit from brands and other IP
they had no role in creating
• 
“A Web site that is set up to spread a virus, collect
names for spammers or for some other illicit or
repugnant purpose” (PC Magazine Encyclopedia)
“Rogue” Websites
Ø  What type of threat do they present to brands?
• 
The counterfeit business model is shifting toward use
of “rogue” websites
s  Seizures by U.S. Customs & Border Patrol jumped 24% in
2011, but overall value of goods seized decreased by 5%
from previous year
s  Proliferation of rogue sites in part responsible
s  Difficult to stop counterfeit goods from entering US if
purchased through rogue website
s  Hard to locate or identify operators of sites
s  Lack of any lasting remedy since sites are easily reestablished
A Rogue Website Case Study: Tory Burch
An example of how brand owners can
combat the sale and distribution of
counterfeit goods through “rogue” websites
under current U.S. laws
A Rogue Website Case Study: Tory Burch
Ø  Tory Burch brought suit in Dec. 2010 in SDNY against an
interrelated group of anonymous counterfeiters
Ø  Defendants established over 200 websites to sell
counterfeit Tory Burch products
Ø  The sites were in English, accept major credit cards, copy
Tory Burch marks, designs and photos
Ø  Sites established at URLs containing the Tory Burch marks
so they would rank highly web searches for “Tory Burch”
name
Ø  Defendants used multiple fake names and addresses and
submitted false WHOIS data to avoid detection
Ø  New sites quickly set up once existing sites disabled
A Rogue Website Case Study: Tory Burch
A Rogue Website Case Study: Tory Burch
Ø  Court granted Tory Burch’s motion for default judgment
and permanent injunction (Order dated May 13, 2011)
• 
Court had personal jurisdiction over the defendants based on
their operation of fully-interactive websites through which
they sold Tory Burch counterfeits
s  Recent 2d Cir. case upholding jurisdiction over nonresident
counterfeiter based on sale/shipment of at least 1 counterfeit
handbag into NY and its operation of highly-interactive website
(Chloe v. Queen Bee (2d Cir. 2010))
• 
Found that defendants “went to great lengths to conceal
themselves and their ill-gotten proceeds from Tory Burch’s
and this Court’s detection by using multiple false identities
and addresses as well as purposefully deceptive contact
information”
• 
Permanently enjoined 3rd party service providers (ISPs,
registries, registrars, online marketplaces) from providing any
services to defendants
• 
Awarded Tory Burch $164 million in damages
A Rogue Website Case Study: Tory Burch
Ø  Court also granted ongoing injunctive relief tailored to suit
the unique challenges presented by the anonymity of
defendants and ease by which they are able to establish
new sites
Ø  Order enables Tory Burch
• 
to disable additional rogue sites as they are established by
defendants and discovered by Tory Burch
• 
To freeze and recover any additional newly-discovered
financial accounts used in connection with defendants’
operation, such funds to be applied toward satisfaction of
$164 million judgment
• 
To obtain transfers of additional domain names associated
with any newly-discovered rogue sites
Ø  Ongoing mechanism avoids the need to institute a
separate action each time a new rogue site is established
Conclusions and Predictions
Ø  The legality of using trademarks in keyword advertising is
still unsettled
Ø  Greater challenges for brand owners in seeking to hold
online service providers liable for trademark
infringement, creating greater need for remedies against
direct infringers, wherever located
Ø  Competitors will become more aggressive in marketing
through social media sites, resulting in trademark disputes
that will test adequacy of traditional trademark law in the
social media context
Ø  Rogue websites will become more sophisticated in their
operation and more difficult to identify
Questions?
GREENBERG TRAURIG, LLP n ATTORNEYS AT LAW n WWW.GTLAW.COM
©2011. All rights reserved.
Thank You!
GREENBERG TRAURIG, LLP n ATTORNEYS AT LAW n WWW.GTLAW.COM
©2011. All rights reserved.