Secondary Liability for Trademark Infringement in the United States

Abstract

The Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications ("SCLT") of the World Intellectual Property Organization ("WIPO") adopted a Joint Recommendation on the protection of trademarks on the Internet in 2001. It generally stated that there must be liability for uses of a sign on the Internet, but at the same time countries must apply the exceptions to liability and the limitations to the scope of the rights that exist under various national trademark laws. In order for the use of a sign on the Internet to be infringing under Article 6 of the Joint Recommendation it must have commercial effect. The Joint Recommendation, does not specify any conditions for determining whether the use is infringing and does not address the issue of liability for Internet intermediaries. The SCLT met in November 2010 to discuss the revision and expansion of the Joint Recommendation. Of particular concern was the liability of Internet auction sites, search engines, and the hosts of virtual worlds and social networking sites. The WIPO Secretariat highlighted two legal questions, one of policy and one of passivity. The policy question centers around which party should bear the burden of policing the mark. While the WIPO Secretariat focuses on Internet auction sites, this question is relevant to all categories of Internet intermediaries. The same is true for the question of passivity; whether and when intermediaries can be liable for failure to act.

This Article reviews the discussion in a sample of the relevant case law on these questions in the United States and argues that both questions should presumptively be resolved in favor of the Internet intermediary, unless the trademark owner can overcome the high burden of proving a positive act directly attributable to the intermediary that amounts to contributory infringement. This Article also highlights the problems involved in using technical ability or technical standards for deciding issues of contributory trademark infringement on the Internet.

The WIPO Secretariat focuses on reasons why there should or should not be liability. Although focusing on the core issue is often advisable, this Article argues that such an approach oversimplifies an inherently complicated question, fixes a dynamic question into a static solution, and disconnects decision making from reality on the national level. On the other hand, overly fact-based decision making on this question fails on the same ground, since the key argument against liability for Internet intermediaries is neither intermediary-specific nor backward looking. Instead, decision making should reach a higher level of abstraction, i.e., consider the overall effects on the particular intermediary, the overall effect on the particular electronic market, and the analogous consequences of the ruling. After all, the Internet intermediary does not fail to act in relation to only one trademark or one trademark owner as an established duty to act favors all trademarks and all trademark owners. Only based on such a general inquiry may the decision maker reach the question of policy, and accurately reflect the societal counterweight to the vested interests of trademark owners. Diminishing the question to one of whether trademark use has occurred, whether there is commercial effect, or whether the intermediary has failed to act, inherently favors the trademark owner and should not be disguised as deciding a question of policy and performing a legitimate weighing of the interests at hand.

Keywords: Internet Service Providers, trademark infringement, third party liability

JEL Classification: K 20, K33, O31, K10, K13