Akanoc Solutions, Inc. (“Akanoc”) provided web-hosting services to the purveyors of websites selling counterfeit Louis Vuitton (“LV”) goods. In 2006 and 2007, LV sent Akanoc 18 notices documenting trademark and copyright infringement on Akanoc-hosted sites that sold counterfeit LV goods, demanding that Akanoc remove the infringing content. Akanoc neither responded nor removed the infringing content. That was a mistake.

LV sued Akanoc in federal district court for contributory trademark infringement, counterfeiting, and copyright infringement. The jury found Akanoc liable for willful contributory trademark and copyright infringement, awarding $10,500,000 to LV. Two other defendants were hit with the same award, for an aggregate total of $31,500,000. Akanoc, of course, appealed. In that proceeding, the Ninth Circuit (centered in California) affirmed the jury’s findings, but Akanoc caught a small break when the court interpreted the applicable statute as permitting “an” award and not “multiple awards,” thus assessing $10,500,000 as the total award across all defendants.

The primary lesson: if you are aware, or have reason to be aware, that a party to whom you are providing services is engaging in trademark (or other kinds of) infringement, you cannot continue to supply services to them without being found liable for contributing to the infringement. This is particularly the case if you have “direct control and monitoring of the instrumentality” used to infringe (in this case, the counterfeiting websites), because that is the Internet equivalent of holding a “master switch” that can either stop the infringing activity or allow it to continue. In this situation, it doesn’t matter whether you, yourself, infringed or intended to infringe another party’s intellectual property rights. You can be on the hook, regardless.

Here is the opinion of the Appeals Court.

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