Background of Secondary Trademark Liability on the Internet

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While the law does not always evolve at the same speed as technology, today's law recognizes a number of ways companies and individuals can be found liable for inducing or contributing to another's trademark infringement online. This law provides brand owners with opportunities to stop infringement online by seeking to hold liable a third party that controls or provides the means of infringement.  While this law finds its roots in a U.S. Supreme Court case from 30 years ago, it applies to as a source of secondary trademark liability on the Internet.

The Genesis of Secondary Trademark Liability on the Internet

In Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 546 U.S. 844 (1982), the court wrestled with whether a third party could be held liable for trademark infringement of another. The court held liability may be imposed where a manufacturer or distributor (1) intentionally induces another to infringe a trademark, or (2) continues to supply a product to someone who the defendant knows or has reason to know is engaged in trademark infringement. This ruling sets the background law for secondary liability for trademark infringement. The Inwood doctrine has expanded to include not only products but also uses of trademarks on the Internet, in domain names, and in social media.

Applications of Secondary Liability to Online Trademark Use

Decades after the Inwood decision, other courts have analyzed whether liability can be imposed for online market places where users offer for sale counterfeit or infringing products. Similar to flea market cases, courts were required to determine what conduct was required by the market place operators for them to liable. In a series of cases in this area involving luxury brands, courts have held that if placed on notice of infringing or counterfeit goods being sold in the marketplace, or in some cases, there is reason to know the online operators could be held liable for trademark infringement if they fail to take action.  Thus, third parties can have secondary trademark liability on the Internet for such use.

The DMCA Is Not A Safe Harbor, But May Provide a Process

Under the Digital Millennium Copyright Act (DMCA), web site operators and advertisers that post unauthorized copyrighted works of others may be liable for copyright infringement. However, the DMCA provides a "safe harbor" for online services providers that take certain steps, such as establishing a notice and take down procedure, and also register a Copyright Agent that receives copyright infringement complaints. It's important to note that the DMCA safe harbor does not provide protection from claims of trademark infringement. Despite that, some Internet operators provide DMCA-like take down procedures for trademark disputes. If available, such processes should be used.

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