Wednesday, July 21, 2010

Use of Trademarks by Online Hosts OK

Recent federal cases point out that online hosts such as eBay and Google are not responsible for their users’ trademark infringements.  A Second Circuit case, Tiffany v. eBay and Google v. Louis Vuitton Malletier, related to the identification of jewelry on-line as being from Tiffany, however, many of the items sold were counterfeit items.  To the extent companies like Tiffany want to prevent such users from using their mark for false goods, they must track down each user and then take steps to prevent the infringement.  This is extremely costly to those companies.

On the one side, it is important to note that not all uses of trademarks are infringing.  Marks can be used to properly identify products such as a car dealer advertising that it has Ford Mustangs for sale, a church stating it provides Starbuck’s coffee to attendees before services, or an individual stating that they only use Apple computers.  Therefore, users who are actually re-selling Tiffany products on eBay can state that the products are from Tiffany so long as they do not indicate that they are endorsed by or are affiliated with Tiffany.  Accordingly, online hosts can note that they have users who are re-selling Tiffany, or other trademarked, products.

On the other side, there is such a thing as secondary liability for trademark infringement which is a lot like conspiracy or aiding and abetting.  In the copyright context, Napster cannot provide a means for others to engage in widespread infringement knowing that this is what is going on, and then avoid liability by asserting that it is not the one actually engaging in the illegal copying.  In the trademark context, an online host cannot ignore specific infringement taking place on its site, turn a blind eye to infringement about which it should know, or otherwise facilitate infringement.

The recent case law continues to place the burden on trademark owners to enforce their marks.  Online hosting companies do not have to do this job for them.  However, they do have to respond and engage appropriately when infringement is brought to their attention.  Accordingly, companies with valuable trademarks have to continue to spend time policing their marks, one user at a time.  One can easily imagine the almost impossible task this can be given how any individual user on Facebook, Myspace, Twitter, eBay, Google, personal blogs, and so on, might be infringing at any given time.

This is another example of how the case law demonstrates the drastic changes taking place.  What is interesting is that the traditional models focus on control as held by the corporate entities, when it is the various consumers and small sellers who’s activities, in aggregate, are beginning to rival those of the corporate entities. 

Trademark law is about protecting consumers.  The traditional model is that the government gives the person with the most incentive the power to protect the consumers, i.e., the seller who wants to build their brand and convince consumers to buy their products.  Companies have traditionally ignored the consumers themselves and focused on the distribution chain as well as their competitors.  Perhaps trademark owners need to start using the technology that is causing them such a hard time to start to engage their customers more directly.  Perhaps a re-seller registration system focused on consumers rather than sellers where potential buyers could quickly communicate with the trademark owner to verify the authenticity of the product in question.  I’d be interested to know if that has been tried….

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