In one of the stranger stories I’ve seen, Cleveland Golf has won a trademark infringement case against a website that blatantly advertised the fact that it was offering counterfeit clubs: http://www.copycatclubs.com. Cleveland also named and won a judgment against the web host and seo company, Bright Builders.
The site openly boasted: “Your one stop shop for the best copied golf clubs on the Internet.
The judgment included $770,750 in damages against Bright Builders and $28,250 in damages against the owner of copycatclubs, Christopher Prince. Note that the web host was ordered to pay far more than the guy who actually ran the site.
It seems unusual to me that the web host would be sued—after all, an office building owner typically is not responsible if one of the tenants commits a crime. The jury, however, apparently agreed with Cleveland lawyer Christopher Finnerty.
“The jury found that web hosts and SEO’s cannot rely solely on third parties to police their web sites and provide actual notice of counterfeit sales from the brand owners. Even prior to notification from a third party, Internet intermediaries must be proactive to stop infringing sales when they knew or should have known that these illegal sales were occurring through one of the web sites they host.”
Bright Builders apparently exposed themselves to liability because they helped Prince build the site, providing SEO services and helping him to get set up.
In any case, I think the precedent will be a bit of a game changer for web hosts. HostGator, for example, hosts five million sites. It’s inconceivable to me that they could monitor the activities of every site. I fear that the end result of this won’t be to discourage counterfeiting—there’s plenty of that beyond the reach of the US court system—but to drive up the costs of web hosting—and perhaps even drive more of them offshore.