Opinion ID: 1425915
Heading Depth: 3
Heading Rank: 1

Heading: Contributory Trademark Infringement

Text: To be liable for contributory trademark infringement, a defendant must have (1) intentionally induced the primary infringer to infringe, or (2) continued to supply an infringing product to an infringer with knowledge that the infringer is mislabeling the particular product supplied. Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 855, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982). When the alleged direct infringer supplies a service rather than a product, under the second prong of this test, the court must consider the extent of control exercised by the defendant over the third party's means of infringement. Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir.1999). For liability to attach, there must be [d]irect control and monitoring of the instrumentality used by a third party to infringe the plaintiff's mark. Id. Perfect 10 has failed to plead a viable claim under either prong of Inwood Labs  and, by extension, Lockheed Martin. First, it has not pled facts showing that Defendants intentionally induced infringement of Perfect 10's mark. Perfect 10 has alleged that Defendants are providing critical support to websites that are using the PERFECT 10 mark in a manner that is likely to cause the public to believe that they are authorized by Perfect 10. Its factual allegations in support of this claim are identical to those it made in support of its copyright claims. These allegations, however, cite no affirmative acts by Defendants suggesting that third parties infringe Perfect 10's mark, much less induce them to do so. Second, Perfect 10 has failed to allege facts sufficient to show [d]irect control and monitoring of the instrumentality used by a third party to infringe the plaintiff's mark. Lockheed Martin, 194 F.3d at 984. Perfect 10 claims that the product or instrumentality at issue here is the credit card payment network through which Defendants process payments for infringing material. Appellant's Opening Brief at 39. As discussed at length above, this network is not the instrument used to infringe Perfect 10's trademarks; that infringement occurs without any involvement of Defendants and their payment systems. Perfect 10 has not alleged that Defendants have the power to remove infringing material from these websites or directly stop their distribution over the Internet. At most, Perfect 10 alleges that Defendants can choose to stop processing payments to these websites, and that this refusal might have the practical effect of stopping or reducing the infringing activity. This, without more, does not constitute direct control. See Lockheed Martin, 194 F.3d at 985 (While the landlord of a flea market might reasonably be expected to monitor the merchandise sold on his premises, [defendant] NSI cannot reasonably be expected to monitor the Internet.) (citation omitted).