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Knows or Has Reason to Know from Willful Blindness

Posted by James Juo | Jul 29, 2023 | 0 Comments

A party that “intentionally induces another to infringe a trademark” or who “continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement” is “contributorially responsible for any harm done as a result of the deceit.” Inwood Lab'ys, Inc. v. Ives Lab'ys, Inc., 456 U.S. 844, 854 (1982). For example, a party “knows or has reason to know” if it is willfully blind to infringement. See Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 265 (9th Cir. 1996).

In the Tenth Circuit, potential liability was recognized as possible where a party had knowledge of specific instances of infringement but failed to take reasonable steps to stop the infringement. 1-800 Contacts, Inc. v., Inc., 722 F.3d 1229, 1235 (10th Cir. 2013). After discovering that Google searches for its own mark resulted in paid ads for websites, 1-800 Contacts sued for trademark infringement. Discovery revealed that two affiliates (third parties who publish ads on its behalf) had bid on the keyword “1800Contacts” and its close variants. Id. at 1237. The Tenth Circuit concluded, on summary judgment, that “a rational juror could find that knew that at least one of its affiliates was using 1-800's service mark in its ads yet did not make reasonable efforts to halt the affiliate's practice.” Id. at 1252. The identity of the affiliate did not matter because did not need to “know the identity of the infringer to stop the allegedly infringing practice without affecting legitimate conduct[.]” Id. at 1254. Rather, once “learned that one of its affiliates had used 1-800's mark in the content of an ad,” sending an email blast to all affiliates forbidding such use would stop infringement without interfering with lawful conduct. Id. That said, the court recognized that the defendant “has no obligation under contributory-infringement doctrine to stop a practice . . . simply because the practice might be exploited by infringers.” Id. at 1253–54. But it was a triable issue because actual knowledge of specific instances of infringement or specific infringers, and the failure to take reasonable action. could give rise contributory liability. General knowledge was not enough.

Similarly, in a case involving counterfeit Tiffany jewelry being sold on eBay, the Second Circuit held that “a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods” to be liable for contributory trademark infringement. Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 107 (2d Cir. 2010). Instead, defendants must have “contemporary knowledge of which particular listings are infringing or will infringe in the future.” Id. (emphasis added); see also Omega SA v. 375 Canal, LLC, 984 F.3d 244, 255 (2d Cir. 2021) (“[C]ontributory trademark infringement based on willful blindness does not create liability simply because of a defendant's ‘general knowledge as to counterfeiting on its' property . . . or because a defendant ‘fail[ed] to anticipate that others would use its service to infringe a protected mark.'” (quoting Tiffany, 600 F.3d at 107, 110 n.15)). Because Tiffany “did not identify particular sellers” who were offering counterfeit goods and eBay removed counterfeit listings identified by other sources, eBay was not liable for contributory trademark infringement. Tiffany, 600 F.3d at 109.

In the Fourth Circuit, “general knowledge that some percentage of the purchasers of a product or service is using it to engage in infringing activities” is insufficient for contributory trademark infringement because “the defendant must supply its product or service to ‘identified individuals' that it knows or has reason to know are engaging in trademark infringement.” Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 163 (4th Cir. 2012). There, the plaintiff survived summary judgment with evidence of “the dates when Rosetta Stone advised Google that a Sponsored Link was fraudulent, the domain names associated with each such Sponsored Link, the text of each Sponsored Link, and the date and substance of Google's response.” Id. (citation omitted). This amounted to over 200 instances of infringement, and Google apparently allowed the same advertisers to use the Rosetta Stone mark after these notices. Id. This evidence precluded summary judgment because it established a question of fact as to whether Google refused to act upon specific knowledge. Id. at 165.

In the Ninth Circuit, willful blindness requires (1) subjective belief that infringement was likely occurring and (2) “deliberate actions to avoid learning about the infringement.” Luvdarts, LLC v. AT&T Mobility, LLC, 710 F.3d 1068, 1073 (9th Cir. 2013). (with respect to contributory copyright infringement, the defendant lacked specific knowledge despite receiving notices that were “150-page-long lists of titles” that the plaintiff had copyrighted because the notices did not “identify which of these titles were infringed, who infringed them, or when the infringement occurred”).

Willful Blindness and the Duty to Look After Gaining Specific Knowledge

The Ninth Circuit recently held that there is no duty to look for infringement “until [a party] gains the specific knowledge necessary to trigger liability.” Y.Y.G.M. SA v. Redbubble, Inc., No. 21-56150, 2023 WL 4697350 (9th Cir. July 24, 2023). Willful blindness arises when a defendant was made aware of infringement on its site but ignored that fact. See Omega SA v. 375 Canal, LLC, 984 F.3d 244, 255 (2d Cir. 2021); Tiffany, 600 F.3d at 110 n.15).

          Once a defendant knows about specific instances of infringement, “bona fide efforts to root out infringement” could “support a verdict finding no liability, even if the defendant was not fully successful in stopping infringement.” Id. The duty to stop (or root out) infringement does not kick in, however, until the defendant has that specific knowledge. And, again, that duty only covers specific instances of infringement the defendant knows or has reason to know about. See Tiffany, 600 F.3d at 109–10 (holding that addressing specific notices of counterfeit Tiffany products was sufficient, even though eBay “knew as a general matter that counterfeit Tiffany products were listed and sold through its website.”).

          What constitutes bona fide efforts will vary based on the context. For instance, a reasonable response for a flea market might not be reasonable for an online marketplace with millions of listings. Cf. Coach, Inc. v. Goodfellow, 717 F.3d 498, 504 (6th Cir. 2013) (affirming contributory liability where defendant, the owner and operator of a flea market, “had actual knowledge that the infringing activity was occurring” and knew of “particular vendors” that were infringing yet failed to “deny access to offending vendors or take other reasonable measures”). Removing infringing listings and taking appropriate action against repeat infringers in response to specific notices may well be sufficient to show that a large online marketplace was not willfully blind. See Tiffany, 600 F.3d at 109 (“[A]lthough [notices of claimed infringement] and buyer complaints gave eBay reason to know that certain sellers had been selling counterfeits, those sellers' listings were removed and repeat offenders were suspended from the eBay site.”).

In Y.Y.G.M., the defendant Redbubble provided an online marketplace for print-on-demand items that outsourced everything but the marketing and payment processing functions. Third-party user-merchants would upload the images. Third-party contract manufacturers and other vendors would make and ship the ordered items.

Professor Goldman noted that the willful blindness doctrine “implies that rightsowners must send takedown notices to defendants” to establish actual knowledge of specific infringement, but other aspects such as the “bona fide” qualifier to efforts against repeat infringers “sounds like a jury question.”

Thomas P. Howard, LLC is experienced in trademarks nationwide including in Colorado.

About the Author

James Juo

James Juo is an experienced intellectual property attorney. He has successfully litigated various intellectual property disputes involving patents, trademarks, copyrights, and trade secrets. He also has counseled clients on the scope and validity of patent and trademark rights.


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