Liability for Trademark Infringment for Internet Service Providers

Abstract

At the wake of the millennium and the rise of the internet, legislative action was taken to shelter internet service providers (ISPs) from various forms of legal action. In the turmoil of chartering new and unregulated territory, such a safe harbor was deemed necessary to protect up-starting businesses. Today, these internet actors e.g. Google, Amazon and eBay have grown strong and powerful. Thus, intellectual property holders have started to challenge this privilege in court. Increasingly, owners of famous marks seek liability and damages for direct and indirect trademark infringement in courts around the globe. I focus on liability for ISPs, when a third party sells counterfeit merchandise on the service provider’s site. Courts have reacted differently. Three theoretical approaches have emerged. One, e.g. some courts in France, imposes full liability for willful trademark infringement, if the sale of counterfeit goods is shown. Another, e.g. the German Federal Supreme Court, approaches the question as one of interference with property rights. If ISPs knowingly allow continued sale of counterfeit merchandise they can be found liable for damages. Yet another, e.g. in the United States, approaches the question from the perspective of what the ISP can reasonably be required to do in order to prevent the sale of counterfeit goods on their site. This article compares the approaches above and considers what possible other considerations are relevant in determining ISP liability. It argues that trademark law today, is ill-equipped to handle questions of secondary liability or contributory infringement and concludes that the safe harbor for ISPs, as tailored in the European E-Commerce Directive, should be given a broad reading and the prohibition against imposing a general duty to monitor or actively seek facts in Article 15 remain absolute until the defects are remedied. In response to trademark owners’ legitimate concerns, it further argues that trademark owners should pool their resources, akin to that of Copyright Collective Societies, and form an agency, which, by cooperating with – instead of forcing – ISPs, could more efficiently and legitimately weed out infringing uses on the internet.