December 10, 2010
SEO/Web Design Consultant Faces Contributory Trademark Liability for "Copycat" E-Commerce Site--Roger Cleveland Golf v. Price
By Eric Goldman
Roger Cleveland Golf Co. v. Price, 2010 WL 5019260 (D. S.C. Dec. 3, 2010). [Note: the case captioning is probably wrong. Apparently, it should have been Roger Cleveland Golf Co. v. Prince]
Online contributory trademark infringement liability remains a key underdeveloped area of Cyberlaw. This year, we've seen a strong defense win in Tiffany v. eBay, but we've also seen some puzzling and troubling defense losses, including the Louis Vuitton v. Akanoc ruling against a web host and the Gucci v. Frontline ruling against various payment service providers.
This ruling is another puzzling defense loss, but the outcome may be attributable in part to the defendant's procedural choices, not the substantive merits of its legal position. The defendant sought summary judgment using an unusually laconic motion of 1.5 pages that lacked legal citations or supporting evidence. The judge did not respond well to this approach.
Substantively, this case involves the domain names copycatclubs.com, worldtimegolf.com and legacygolfclubs.com, all of which led to a store that described itself as “your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet.” Starting with the copycatclubs.com domain, a Roger Cleveland "mystery shopper" ordered counterfeit Roger Cleveland golf clubs through the site. In response, the TM owner sued a number of folks involved with the website.
This ruling involved the defendant Bright Builders, which allegedly provided several secondary support services to the website operators. Specifically, the TM owner asserted that Bright Builders played the following roles:
Bright Builders participated in the design, building, marketing, and support of the business model and websites through which Plaintiff’s trademarks were infringed, including but not limited to instructing Defendants on search engine optimization and methods of embedding keywords, such as Plaintiff’s federally registered trademarks, into metadata within Defendants’ websites and providing Defendants with a complete “Bright Builder Help Team” which, among other things, located vendors to supply the counterfeit products sold through Defendants’ websites . . . . Bright Builders . . . knew or should have known from the name of one of Defendants’ websites, “copycatclubs.com”, from the text contained thereon claiming to be a leading website for “copied” clubs, from the use of Chinese wholesalers to provide clubs for resale on Defendants’ websites, and from the use of Plaintiff’s trademarks as metatags for those websites that it was participating in trademark infringement.
Elsewhere, the TM owner asserted:
that, upon Bright Builders’ assurance that Prince would make at least $300 per month from operating his online store, Prince paid Bright Builders $10,000 to provide “coaching and mentoring” services to assist him in building his online business...Bright Builders provided Prince with a Project Advisor that had one-on-one discussions with him about developing copycatclubs.com; Prince specifically discussed his ideas about selling golf clubs with his Bright Builders team, at least one member of which encouraged Prince to do so...; under Bright Builders’ tutelage, Prince opted to “drop ship” his merchandise, a method of doing business that Prince’s Project Advisor seemed to acknowledge would not be a profitable way to sell name brand products without “massive” mark ups...; Bright Builders helped Prince design and build the website copycatclubs.com, whose name alone Plaintiff argues should have put Bright Builders on notice of Prince’s intention to sell counterfeit (or “copycat”) golf equipment; similarly, Plaintiff argues that the site’s content, which expressly anoints itself “your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet,” should have put Bright Builders on notice of Price’s intention to sell counterfeit golf equipment.
These factual recitations were more than enough to defeat the defendant's 1.5 page summary judgment motion.
What's stunning to me is how many of the plaintiff's asserted facts seem facially irrelevant to Bright Builder's contributory trademark liability. Of what relevance is it that Bright Builders provided coaching/mentoring services? Or that a Bright Builders employee discussed selling golf clubs via the website? These and most of the other asserted facts don’t seem responsive to any relevant legal doctrine. I want to drill down more deeply on two of the asserted facts:
1) the plaintiff repeatedly harps on the domain name "copycatclubs.com." There are two problems with this. First, unless the golf clubs are protected by some industrial design doctrine (which will be true in some but not all cases), making "copycat" versions is a completely legitimate activity so long as they aren't marketed as the original goods. Second, the domain name, by itself, does not automatically set off red flags. For example, in Perfect 10 v. ccBill, the court said that the domain names "illegal.net" and "stolencelebritypics.com" did not confer "red flags" of copyright infringement because it could just be marketing hype. Although that case involved copyright, not trademarks, its reasoning seems highly analogous--ESPECIALLY when combined with the first fact that "copycat goods" aren't per se illegal.
2) the facts don’t specify what metatags were used, but we know that (a) Google ignores keyword metatags and (b) judges mistakenly think that keyword metatags are the holy grail of SEO. If you're an SEO who continues to believe that keyword metatags might help and can't hurt, you are 100% wrong from a legal standpoint.
Although the defense's procedural defects may overwhelm the substantive lessons we might take away from this case, I want to highlight three possible implications:
A) SEOs and web designers should not just assume they will avoid legal liability if they deal with shady businesses. I'm not saying the websites here were shady. However, if the court decides they were, Bright Builders might share legal liability with the client. Website service providers, pick your clients wisely. Not every paycheck is a good deal. Sarah Bird recaps some other examples of potential secondary liability for SEOs and web designers/hosts.
B) This case reminded me a lot of the Gucci v. Frontline case. In both cases, the judges seemed to have strong allergic reactions to sites selling "copycats" or "replicas"--strong enough to sweep in service providers who were a few steps removed from the bad action. As Venkat told me as we were discussing this case, a domain name like "copycatclubs" will almost certainly rub judges the wrong way. At minimum, judges are going to require lots of evidence showing good faith and legitimate activity at a site like "copycatclubs" to help them overcome their initial strongly negative reaction to such a domain name.
C) If you are an online business defending a secondary trademark claim, never treat contributory trademark claims lightly. Retain the most trademark-savvy litigators you can afford. The stakes are high for any litigation missteps. See, e.g., the $32M jury award against Akanoc.
Note: I sent an email requesting comment to Bright Builder's lawyer, Paul J. Doolittle of the Jekel-Doolittle, LLC firm in Mt. Pleasant, South Carolina, with a home page title of "South Carolina Nursing Home Negligence | Nursing Home Abuse Law Firm." He acknowledged my email but did not provide a public comment before my deadline.
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