Innovative Enforcement of Trademark and Copyright Infringement by LVMH

What to do when the trademarks and copyrights of your luxury products are infringed by Chinese companies that sell these products online to, for example, U.S. consumers. You can go after the source: using Chinese customs, the administrative, criminal or litigation routes. Another innovative way is to go also after the U.S. company that leases packages of server space, bandwidth and IP addresses to the infringing companies for contributory trademark and copyright infringement.


Global Challenge, Local Solutions

Exactly this is what Louis Vuitton Malletier did and confirms once again that this company is one of the most innovative companies in regard to the protection and enforcement of its intellectual property rights. The company takes it zero-tolerance principle and self-sustained protection/enforcement system serious.

Louis Vuitton versus Akanoc Solutions United States Court of Appeals for the Ninth Circuit, filed September 9, 2011, see here. Louis Vuitton Malletier was the plaintiff, and Managed Solutions Group (MSG), Akanoc Solutions and Steven Chen the defendants (San Jose, California, U.S.).

The Ninth Circuit instructs the District Court to award damages of 10,500,000 US dollar for contributory trademark infringement and 300,000 US dollar for contributory copyright infringement, for which Akanoc and Chen shall be jointly and severally liable.

One can question the validity of the decision by the Ninth Circuit to not instruct the District Court to order Managed Solutions Group to pay damages too, because of an alleged lack of "substantial evidence" to the jury. The Ninth Circuit: "We agree with the district court that no evidence presented at trial showed that MSG operated the servers that hosted the direct infringers’ websites. Even assuming that the direct infringers could be construed as MSG’s customers, Louis Vuitton presented no evidence that MSG had reasonable means to withdraw services to the direct infringers."

However, after Louis Vuitton discovered that the websites were using IP addresses assigned to defendants MSG and Akanoc, I am sure that they both received Notices of Infringements. So both had an actual or constructive knowledge about the infringements. Plus Chen managed both MSG and Akanoc. According to the defendants, MSG leased servers, bandwidth, and some IP addresses to Akanoc. So the means to withdraw seem self-evident, because MSG could simply have severed the bandwidth or stopped the functionality of the server, once it knew what was happening on the severs it was leasing to Akanoc.

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Also So Much to Do in IP in the USA! Happy World IP Day To All!

Keith Johnson reports today in the Wall Street Journal that:

- Last Christmas the US seized 26 million US dollar worth of counterfeit goods.
- Now the National Intellectual Property Rights Coordination Center confiscated 40 million US dollar worth of couterfeit goods in more than 30 US cities. This operation was called: Spring Cleaning. Seems that the US is copying China's gusto for fancy names for enforcement operations.
- And as part of a separate and long running investigation at the port of Baltimore another 200 million US dollar worth of fake goods were seized.

Mr Johnson wrote: "Chinese criminal gangs are the biggest purveyors of fake goods in the U.S., accounting for about 80%, by value, of the counterfeit goods seized last year, according to U.S. government data."

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China and ACTA: Why Is The Problem Not Made Part Of The Solution?

Medio December 2008 IP Dragon wrote about the controversial genesis of the China-less Anti-Counterfeiting Trade Agreement (ACTA) by Japan and the US (joined by Australia, Canada, the European Union, Mexico, Morocco, New Zealand, Republic of Korea, Singapore and Switzerland) whose goal it is to stem the tide of counterfeit and pirated goods that originate for the lion share from China, read here.

ACTA is not only controversial because it was born in darkness (then again out of darkness beautiful flowers grow), but also because:

- Why start a new multilateral trade agreement when the international community has already the World Trade Organization (WTO)'s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Then again it is hard to reform TRIPs because there are many WTO members. So the way of least resistance is to start a new trade agreement with pre-selected countries that think the same about a TRIPs plus level of IPR enforcement;

- If the People's Republic of China causes the initiators of ACTA such headaches, should they not involve this country in some way with ACTA? In the philosophy of Yin and Yang, the problem (China's lack of IPR enforcement) is existent in the solution (multilateral trade agreement) and vice versa;

- ACTA's content is unknown, so this opens the gates to speculations.

Now the United States Trade Representative has posted ACTA's 'Summary of Key Elements Under Discussion' (Summary) which gives the countours of the draft structure:

• Chapter 1. Initial Provisions and Definitions;

• Chapter 2. Legal Framework for Enforcement of Intellectual Property Rights;

Section 1. Civil Enforcement

Section 2. Border Measures:

Under discussion is whether border measures should apply not only to importations (as TRIPs prescribes) but also to export and transit of goods;

Another possible point of contention is whether travelers can import counterfeit or pirated goods for their personal use (de minimis exception);

It is no surprise that ACTA tries to solve some of the points, which especially has frustrated the US (which among other reasons brought a claim against China at the WTO: DS 362): measures to ensure that infringing goods are not released into free circulation and the destruction of goods that have been determined to infringe intellectual property rights.

Section 3. Criminal Enforcement; the holy grail (overestimated to my taste) remains criminal enforcement of IPR. In the leaked out version of the ACTA proposal of 2007, see below on page 2 here, it was proposed to apply criminal sanctions to IPR infringements on a commercial scale "IPR infringements for purposes of commercial advantage or financial gain. This sentence that I could not find back in the Summary was a bit unclear, because either you apply criminal sanctions if a commercial threshold of the infringed goods is reached (problem: which threshold is not arbitrary and what to do with infringers that keep their activities just under the threshold) or you sanction the intention of commercial advantage/financial gain plus the infringement of minimal one product.

Section 4. Intellectual Property Rights Enforcement in the Digital Environment: surprisingly no draft proposal has been tabled yet.

• Chapter 3. International Cooperation;
• Chapter 4. Enforcement Practices; I cannot stress the importance of the exchange of best practices enough. Transparence of IPR enforcement information, including statistics is key;
• Chapter 5. Institutional Arrangements;
• Chapter 6. Final Provisions.

Expect a lot more discussion when the first draft provisions are disclosed (or leaked).

UPDATE: First draft leaked; read 'Do ACTA Member Countries Want to Confront China With A Fait Accompli?'

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