Secondary Liability For Trademark and Copyright Infringement


As intellectual property owners attempt to enforce their trademarks and copyrights against Internet-based infringers, they are increasingly seeking to impose liability on parties other than the direct infringers. The direct infringers can be hard to catch. Direct infringers that sell counterfeit or other infringing products on the Internet can easily avoid liability. They can easily mask their identities. They can conduct business worldwide from a distant country. They can shut down and reopen under a different domain name with ease. They move their sites to different hosting services in different countries throughout the world. Moreover, the sheer number of such sites can make it impractical or extraordinarily expensive to attempt to shut them down. As a result, intellectual property owners have turned to attempting to impose liability on other parties that have some involvement in transactions involving counterfeit or infringing products, such as search engines involved in selling key words used by the direct infringers, auction sites that facilitate transactions involving infringing products, and credit card companies involved in processing payments for such products.

In an effort to impose liability on these participants in ecommerce, intellectual property owners rely on common law tort principles of secondary liability: vicarious liability and contributory liability. Vicarious liability imposes strict liability on a party because of the party’s relationship with the direct infringer. At common law, vicarious liability is established when: (1) the third party has the right and ability to control the actions of the direct infringer; and (2) the third party derives a direct financial benefit from the infringement. One example of strict liability is the liability of an employer for the tortious conduct of its employee. In contrast, contributory liability imposes liability on a third party that acts in concert with or provides assistance or encouragement to the direct infringer. At common law, contributory liability is established when: (1) the defendant knows of the infringement; and (2) the defendant materially contributes to or induces the infringement. Contributory infringement is based on tort law principles of enterprise liability and imputed intent, while vicarious infringement is based on agency principles of respondeat superior. Both forms of liability require proof of an underlying direct infringement claim.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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