Most Internet service providers are well versed in their obligations with regard to copyrighted content posted by their users. Sophisticated vendors know that the Digital Millennium Copyright Act (DMCA) gives them an important shield against claims of contributory copyright infringement resulting from their users’ actions, as long as the providers have a registered agent to receive claims from content owners and take prompt action to remove infringing content brought to their attention.
However, ISPs’ exposure to IP-related claims does not end there, as a recent judgment in a federal lawsuit demonstrates. On March 14, 2011, the U.S. District Court for the District of South Carolina entered judgment against a search engine optimization firm based on the company’s role in helping to create and host a website used to market counterfeit golf clubs. The plaintiff in the case, Roger Cleveland Golf Company, had alleged that the SEO defendant in question, Bright Builders, knew or should have known that it was hosting and otherwise helping to market a site (under the not-so-subtle domain www.copycatclubs.com) that was being used illegally to infringe the plaintiff’s trademarks. The jury in the case agreed and determined that Bright Builders should be held liable for damages, even though it never received actual notice of infringement from the plaintiff prior to the filing of the lawsuit.
SEO companies and web hosts need to pay close attention to the outcome in this case. There is no equivalent under U.S. trademark law to the safe harbor provisions of the DMCA. This means that aggrieved trademark owners do not have to make ISPs aware of trademark infringements before filing suit and that ISPs therefore have an affirmative duty to take steps to address hosted content that clearly infringes third-party trademarks. The disparate damages awards in this case ($770,750 against Bright Builders, compared to $28,250 against the site owner) should serve as strong incentive for ISPs to maintain a reasonable level of awareness regarding how their services are being used and, ideally, to implement policies allowing trademark owners to easily bring infringing content to the ISPs’ attention.