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Gucci America, Inc. v. Hall & Associates

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

Plaintiff Gucci America Inc. ("Gucci") is the owner of the trademark and tradename "Gucci," which it utilizes in connection with its marketing of various articles of jewelry, fashion accessories, wearing apparel and related services. Defendants Hall & Associates and Denise Hall operate a website at www.goldhaus.com at which they purportedly advertise for sale jewelry bearing the Gucci mark that infringes plaintiff's mark.

Defendants' website is hosted by defendant Mindspring Enterprises, Inc. ("Mindspring"). Plaintiff sent two e-mails informing Mindspring of defendants' allegedly infringing activities. When Mindspring failed to take any action in response to these e-mails, plaintiff commenced this suit, charging Mindspring with direct and contributory trademark infringement in violation of Section 32(1) of the Lanham Act, false designation of origin in violation of Section 43(a) of the Lanham Act, as well as trademark infringement and unfair competition under New York law.

Mindspring moved to dismiss on the grounds that (1) it was immunized from liability for plaintiff's claims by the Communications Decency Act and (2) such claims were barred by operation of the First Amendment. The court rejected these arguments, and denied defendant Mindspring's motion.

Section 230(c)(1) of the Communications Decency Act provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

However section 230(e)(2) further provides that "nothing in this section shall be construed to limit or expand any law pertaining to intellectual property." Relying on this section, the court held that Section 230(c)(1) could not be held to grant Mindspring immunity from the claims plaintiff brought under the Lanham Act, because to do so would be to limit a law pertaining to intellectual property, which was prohibited by Section 230(e)(2). The court accordingly denied this branch of defendant Mindspring's motion.

In so holding, the court rejected defendant's argument that it was entitled to such immunity by virtue of the courts' holdings in Zeran v. America Online Inc., 129 F.3d 327 (4th Cir. 1997) or Lockheed Martin Corp. v. Network Solutions Inc., 985 F. Supp. 949 (C.D.Cal. 1997) aff'd. 194 F.3d 980 (9th Cir. 1999). Zeran only addressed the immunity available to an ISP faced with "defamation or other forms of tort liability," while Lockheed focused only on the liabilities faced by a domain name registrar when registering allegedly infringing domain names. Neither, in the court's opinion, addressed the situation it faced, in which an ISP was accused of violating the Lanham Act as a result of its hosting activities. Indeed, noted the court, the district court in Lockheed noted that a domain name registrar was not in the same position as an ISP.

[Network Solutions, Inc.'s] role in the Internet is distinguishable from that of an Internet service provider whose computers provide the actual storage and communications for infringing material, and who therefore might be more accurately compared to the flea market vendors in [Fonovisa Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996) and [Hard Rock Café Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143 (7th Cir. 1992).

The court also rejected defendant's First Amendment defense. As stated by the court "plaintiff's trademark claims against Mindspring are not 'barred' by the First Amendment because they challenge allegedly infringing commercial speech used to identify the source of a product." While defendant's use of another's mark as part of a communicative message is protected under the First Amendment, such protection does not extend to the use of the mark as a source identifier.

Such a holding does not, as Mindspring contends, permit a trademark holder to prevent the use by third parties of its mark on the Internet simply by informing that parties' hosting service that such use constitutes trademark infringement.

The 'innocent infringer defense,' codified in Section 32(2) of the Lanham Act, "limits trademark plaintiffs' remedies against printers and publishers or distributors "for others" of "electronic communication[s]" who are "innocent infringers" to (prospective) injunctions against future printings or transmissions of the infringement material." As explained by the court, a party is an "innocent infringer" unless "it acted either (1) with knowledge of the infringement or (2) with reckless disregard as to whether the material infringed the trademark owner's rights." The "mere assertion," in a "demand letter" or otherwise, that a mark holder's rights were being infringed, would not be sufficient to overcome this defense. Accordingly, the court held that no First Amendment rights would be violated by permitting the case to proceed.