Liability for Trademark Infringement for Internet Service Providers

I. Introduction II. ISPs in Action A. ISPs in the Market Context B. online Auction Sites: eBay C. Search Engines: Google III. LEGISLATIVE BASIS A. The E-Commerce Directive B. European Trademark Law 1. Harmonization in Practice: Trademark-Specific Legislation 2. Harmonization in Practice: General Rules That Apply to Trademarks C. Summary IV. THE CONFLICT IN PRACTICE: THREE APPROACHES A. Property Rules and Contributory Infringement B. Liability Rules: Duty to Act C. Liability Rules and Safe Harbors V. Analysis and Proposals A. Liability for ISPs 1. Intellectual Property Rights and Trademark Protection 2. Protecting Trademarks With Property or Liability Rules 3. Protecting ISPs With Property or Liability Rules B. Pooling Resources and Enhancing Cooperation VI. Conclusion I. Introduction The rise of the internet made two things apparent: (1) borderless, wireless, and classless communication challenges traditional societal and legislative structures; and (2) the advantages of the internet also benefit criminal actors and organized crime, and disproportionally so when legislation lags behind. (1) It is commonly known that members of organized crime groups use both technological hijacking of personal computers as well as ISPs to further their own goals. ISPs may serve as mere [technological] conduits of data, but nonetheless allow illegal activity. In addition, ISPs may also serve as hosts of illegal material or allow illegal transactions on their sites. Unlike in the case of copyright piracy, there are no sites or ISPs that trade exclusively in counterfeit goods. Instead, fake goods are mixed with legitimate trade in the primary or secondary markets. Illegitimate trade, by which trademarks are exploited, are commonly referred to as trademark piracy and trademark counterfeiting. The World Intellectual Property Organization, WIPO, defines trademark piracy as "the registration or use of a generally well-known foreign trademark that is not registered in the country or is invalid as a result of non-use."2 Trademark piracy targets the trademark itself and hijacks the trademark's value in order to sell the pirate's own products. (3) Article 6bis of the Paris Convention offers a remedy for holders of globally well-known marks who are victims of trademark piracy and allows them to prevent registration and use of identical or similar marks for identical or similar products, despite the mark not being used or registered in the country in question. (4) Counterfeiting, a second form of illegitimate trade, can be defined as "the unlawful forgery, copying, or imitation of an item, ... or the unauthorized possession of such an item, with the intent to deceive or defraud by claiming or passing the item as genuine." (5) While trademark counterfeiting often involves copying of the trademark itself, the primary object of copying is the product that is sold under a particular brand. (6) An element of deceit is present because the goal of the counterfeiter is to tap into the market of the brand and, to some extent, pass off the fakes as the real merchandise. (7) Unlike traditional trademark infringement and trademark dilution, which are sanctioned by civil remedies, trademark counterfeiting and piracy are universally criminally sanctioned. (8) For purposes of discussion in this article, reference to illegitimate trade refers solely to instances of trademark counterfeiting. Illegal trade such as the buying, selling, soliciting, or trading in material depicting child pornography is relatively easy to deal with in legislative terms, although enforcement in practice remains difficult. Infringement of trademark rights presents a more difficult legal conundrum because the sale of counterfeit goods is criminalized, but buying counterfeit goods may not be. …