United States: And The Winner Is? Digital Platform Liability For Trademark Infringement

Much has been made of the question of liability for the operation or furnishing of digital platforms in the copyright context. Since the U.S. Supreme Court ruling that the provider of the Betamax recorder did not itself infringe copyright in the movies some users illegally copied on it (because the Betamax was capable of substantial non-infringing uses), courts have struggled with the extent to which developers of new technologies, services, or business models that may facilitate copyright infringement cross or don't cross the direct infringement, contributory infringement, or vicarious liability line. It was against this background, and, of course, in the new digital age, that Congress enacted the Digital Millennium Copyright Act (DMCA), providing digital platform providers a safe harbor against most remedies so long as they comply with delineated takedown procedures for challenged content on their sites and meet other conditions.

Trademark law has lagged behind copyright in this context, and there is no equivalent to the safe harbor and notice and takedown process of the DMCA. But, as is typical of jurisprudential development involving the birth and evolution of disruptive new industries, case law develops over time – though not as quickly as some litigants and enterprises might like – ultimately proving guideposts for what is permissible behavior and what crosses the line. Not surprisingly, this organic progression is now evident in connection with trademarks and digital platform liability.

At this writing, the court has just heard closing argument in Academy of Motion Picture Arts and Sciences (AMPAS) v. GoDaddy, a five year old case challenging domain registrar GoDaddy's practice of essentially turning a blind eye to registration of arguably infringing domains, which were then "parked" by the registrants who benefited financially from advertisements displayed on the sites (GoDaddy receiving a small fraction of the purportedly misdirected advertising revenue). At issue is whether GoDaddy's behavior violates the Anticybersquatting Consumer Protection Act (ACPA), federal law intended to prevent cyberpiracy of domain names (15 U.S. C. §1125(d)).

In facilitating the registration and parking of over 200 domain names, each in some way playing off of the Academy Awards (i.e., 2011oscars.com, each in some way playing off of the Academy Awards (i.e., 2011oscars.com, betacademyawards.com), did GoDaddy demonstrate the requisite "bad faith intent to profit" from AMPAS' marks when it registered domains that were confusingly similar to those marks? By the time you read this, the case may have been decided and could be headed for appeal. A win for the Academy would shake up the domain industry – AMPAS has asked for U.S. $30 million in statutory damages – while a win for GoDaddy would signal business as usual. But, regardless of which side wins, the case will add to the growing, if not entirely consistent jurisprudence on platform liability for brand "infringement".

The definitive case in the area is Tiffany, Inc. v. eBay, Inc., 600 F. 3d 93 (2d Cir. 2010), where the court blessed eBay's homegrown takedown policy, holding that Tiffany had an affirmative duty to notify eBay of specific alleged infringements (counterfeit jewelry) on eBay's auction site before eBay was required to act, and eBay was not liable for infringement, either direct or contributory, so long as eBay took down the challenged auction within a reasonable period of time. In closing argument in the AMPAS trial, the Academy's counsel acknowledged that, like eBay, domain registrars may be entitled to safe harbor protection, but GoDaddy crossed the line by monetizing domains via parking services, a scheme which he condemned as "overwhelming evidence of bad faith" under the ACPA.

Platform liability was also at the heart of the flurry of keyword cases over the past decade, culminating in Rosetta Stone v. Google, 676 F.3d 144 (4th Cir. 2012). In that case, the district court had ruled that summary judgment for Google was proper on direct and contributory infringement claims, because Google's use of the brand (the keyword) was essentially functional and therefore there could be no consumer confusion. On appeal, the 4th Circuit reversed, holding that there was sufficient evidence, essentially overlooked by the lower court, such as Google's trademark-specific keyword suggestion tool and the fact that Google could have done more to block serial counterfeiters of Rosetta Stone software from engaging in keyword advertising, to suggest that Google could be liable for both direct and contributory infringement, but not for vicarious infringement. The case settled, so these platform liability issues, not entirely unlike those before the AMPAS court today, or previously before theTiffany court, were never fully resolved.

Beyond domain names and keyword advertising, we now see the issue playing out, on both sides of the pond, in the context of internal website search engines. Last month, the 9th Circuit reversed summary judgment for Amazon inMulti Time Machine, Inc. v. Amazon.com, Inc., 13-55575 (9th Cir. 2015). Multi Time Machine, whose MTM military-style watches were not sold on the Amazon platform, took issue with the fact that searching "MTM" on Amazon delivered search results for arguably competing watches. The lower court found for Amazon, on the basis that the search results clearly identified the watches displayed so there was no potential for consumer confusion. Splitting 2-1, the Ninth Circuit disagreed, holding that summary judgment was improper because there was enough evidence to suggest consumers could be confused based on initial interest confusion.

The Ninth Circuit's decision is consistent with the UK High Court's 2014 decision in Cosmetic Warriors Ltd. v. Amazon.co.uk Ltd., [2014] EWHC 181 (Ch), where a shopper searching for "lush" on the site would encounter multiple references to Cosmetic Warriors' LUSH mark for bath bombs and soaps, and competitive products, but none of plaintiff's products. In fact, Cosmetic Warriors actually shunned the Amazon platform because it disagreed with Amazon's business practices. The Court concluded that the average consumer would think LUSH products were, in fact, sold on the site, and that Amazon did not avoid liability simply because it provided a marketplace bringing buyers and sellers together and not engaging in the transactions itself.

Cosmetic Warriors celebrated its win by threatening to market a shower gel named after the head of the Amazon UK operation; Cosmetic Warriors described the gel as "rich, thick and full of it". Though the issue of platform liability for trademark infringement is far from being fully resolved, it is heartening to see that humor continues to play a key role in development of the relevant law, a tradition honed from the early days of the domain wars when Princeton Review offered to return the kaplan.com domain to its erstwhile competitor, Kaplan, for a case of beer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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