This Ninth Circuit Court has ruled on Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011). In terms of some background, Plaintiff Louis Vuitton Malletier S.A. sells luxury goods under the mark LV. Defendant Akanoc Solutions, Inc. provided web-hosting services. From 2006 to 2007, LV sent eighteen notices of infringement to Akanoc documenting trademark and copyright infringement on websites hosted by Akanoc that sold counterfeit LV goods and demanding that Akanoc remove the infringing content. Akanoc neither responded to these notices nor removed the infringing content. LV sued for contributory trademark infringement/counterfeiting and copyright infringement. The jury returned a verdict for LV, holding Akanoc liable for willful contributory trademark and copyright infringement. The jury awarded $10,500,000 for contributory trademark infringement/counterfeiting against each of the defendants for a total of $31,500,000. The district court denied Akanoc’s motion to set aside the jury verdict and Akanoc appealed.
The Ninth Circuit affirmed the jury’s finding of liability, holding that Akanoc “continued to supply its services to one who it knew, or had reason to know, was engaging in trademark infringement.” Akanoc also had “direct control and monitoring of the instrumentality used by a third party to infringe” LV's marks. Akanoc argued that the jury instructions failed to differentiate between Akanoc’s web-hosting services on one hand and the websites operated by Akanoc’s customers that were the “means of infringement” on the other hand. The Ninth Circuit, however, agreed with the district court that Akanoc “physically host[ed] websites on [its] servers and route[d] internet traffic to and from those websites,” the internet equivalent of “leasing real estate.” According to the Ninth Circuit, Akanoc had control over the “services and servers” provided to its customers and had “direct control” over the “master switch” that “kept the websites online and available.”
Akanoc also argued that the jury instructions were erroneous because its contribution to the infringement had to be “intentional” to be actionable. The Ninth Circuit disagreed, holding that LV had to prove only that Akanoc “provided [its] services with actual or constructive knowledge that the users of their services were engaging in trademark infringement.” In short, there was no requirement of an “express finding of intent.”
Turning to damages, Akanoc argued that 15 U.S.C. § 1117(c) does not authorize statutory damages for counterfeiting against contributory infringers because it required defendants to actually “use . . . [the] counterfeit mark.” The Ninth Circuit disagreed, holding that Section 1117(c) expressly applies to any cases “involving the use of a counterfeit mark” (emphasis added). In calculating damages, the jury awarded $10,500,000 in statutory damages per defendant for the infringement of thirteen of LV’s trademarks for a total of $31,500,000 in damages. The Ninth Circuit, however, vacated the judgment, finding “no legal basis for multiplying the award by the number of defendants.” According to the court, Section 1117(c) “entitles a plaintiff to an award, not multiple awards.” Accordingly, the Ninth Circuit remanded the case to the district court with instructions to award total damages in the amount of $10,500,00 for contributory trademark damages.