Tag: counterfeit

December 28, 2023 Copyright, Trademarks

Online platforms will have to answer for sales of alleged counterfeit products

 

A federal court in New York has denied the motion to dismiss filed by Chinese online platforms Alibaba and AliExpress in a lawsuit brought by a toymaker alleging that these companies’ merchant customers were engaged in contributory trademark and copyright infringement through the online sale of counterfeit products.

Background of the Case

Plaintiff toymaker accused the Alibaba defendants of facilitating the sale of counterfeit products on their platforms. The lawsuit stemmed from the activities of around 90 e-commerce merchants who were reportedly using the platforms to sell to sell fake goods.

The Court’s Rationale

The court’s decision to deny the motion to dismiss turned on several allegations that suggest the Alibaba defendants played a more complicit role than that of a passive service provider. These allegations included:

  1. Specific Awareness of Infringement: The Alibaba defendants were allegedly well-informed about the infringing activities of several merchants, including some named in the lawsuit. The Alibaba defendants should have known of these instances from orders in six separate lawsuits against sellers on the platforms.
  2. Continued Proliferation of Infringing Listings: Despite this awareness, the platforms reportedly allowed the continued presence and proliferation of infringing listings. This included listings from merchants already flagged under Alibaba’s “three-strike policy” for repeat offenders.
  3. Promotion of Infringing Listings: Plaintiff alleged the Alibaba defendants actively promoted infringing listings. The Alibaba defendants reportedly granted “Gold Supplier” and “Verified” statuses to infringing merchants, sold related keywords, and even promoted these listings through Google and promotional emails.
  4. Financial Gains from Infringements: Crucially, plaintiff argued that the Alibaba defendants financially benefited from these activities by attracting more customers, encouraging merchants to purchase additional services, and earning commissions on transactions involving counterfeit goods.

DMCA Safe Harbor Provisions Not Applicable

The court rejected the Alibaba defendants’ argument that safe harbor provisions under the Digital Millennium Copyright Act (DMCA) applied at this stage of the litigation. The DMCA safe harbor is typically an affirmative defense to liability, and for it to apply at the motion to dismiss stage, such defense must be evident on the face of the complaint. The court found that in this case, it was not.

Implications of the Ruling

This decision is relevant to purveyors of online products who face the persistent challenges of online enforcement of intellectual property rights. Remedies against overseas companies in situations such as this are often elusive. The case provides a roadmap of sorts concerning the types of facts that must be asserted to support a claim against an online provider in the position of the Alibaba defendants.

Kelly Toys Holdings, LLC v. 19885566 Store et al., 2023 WL 8936307 (S.D.N.Y. December 27, 2023)

January 20, 2012 Copyright

If you critique SOPA, read the text. If you read the text, read it right.

Earlier this week Eriq Gardner speculated in a tweet that less than one tenth of one percent of folks have actually read the SOPA legislation. I bet he’s right. It’s good to read the statute. But what might be worse than not reading it is reading it wrongly and thereafter propagating misunderstanding.

One of the motifs that has permeated the SOPA discussion is this idea that evil (usually corporate) interests could shut down entire, innocent sites based on one piece of user generated content on that site that is, or links to, infringing material.

Some commentators, such as the usually astute Khan Academy in the video embedded below, have gone so far as to say that one little transgression by one user could bring down all of Facebook, YouTube, or Vimeo. (That discussion begins at about the 5:00 mark where the narrator purports to parse the language of Section 103 of SOPA.)

We are fortunate to have the means and motivation to rally around an issue like SOPA and make it a topic of worldwide discussion. But it turns unfortunate when some of the loudest criticism is based on misinformation. That’s happening now.

It is silly to think that one person could bring down Facebook and leave its almost a billion users in the dark. It is silly to think that Congress would enact legislation making that possible. Those thoughts are silly because they are not based on reality. One user could not cause Facebook to be shut down, and SOPA does provide content owners with a way to accomplish that.

If you take a close look at SOPA, (and of course you should) you see that this “one person taking down Facebook” conclusion is not supported by the language of the statute.

If a federal judge is convinced that a site is “dedicated to the theft of U.S. property,” then he or she can enter an injunction (according to the Federal Rules of Civil Procedure and all the case law attendant thereto) shutting down that site’s domain name.

The present misunderstanding comes from a reading of SOPA’s definition in Section 103 of what it means for a site to be “dedicated to the theft of U.S. property.” That definition is much narrower than what other commentators would have you believe. Among other things, the site has to be:

  • primarily designed or operated for the purpose of offering goods or services in a manner that engages in, enables, or facilitates infringement, circumvention or counterfeiting,
  • have only limited purpose or use other than offering goods or services in a manner that engages in, enables, or facilitates infringement, circumvention or counterfeiting, or
  • be marketed by its operator or another acting in concert with that operator for use in offering goods or services in a manner that engages in, enables, or facilitates infringement, circumvention or counterfeiting.

A less-than-careful reading leads one to think that the definition brings in any site that enables or facilitates infringement, circumvention or counterfeiting. Read the definition again. Is Facebook primarily designed to rip off US property? Is it used for only a little more (i.e., does it have a limited purpose) other than to enable or promote piracy? Does Mark Zuckerberg say that is what it is for? Because the answers to these questions are no, no and no, a federal judge would not conclude that Facebook is a site dedicated to the theft of U.S. property.

If that federal judge were to so conclude, then he would likely be smoking dope. And if that is the state of affairs, then our problem is not SOPA, but federal judges smoking dope.

The fervent opposition to SOPA leads one to be reminded, like David Newhoff was in this piece, of the “death panel” hyperbole that surrounded the healthcare debate. It might be the same part of the brain at work that caused all the irrationality in Vancouver after the Stanley Cup. I’m just sayin’.

Principled and reasonable debate is awesome. Misguided arguments waste everyone’s time.

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