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Abstract

In the wake of the millennium and the rise of the internet, legislative action was taken to shelter internet service providers (ISPs) from various forms of legal action. In the turmoil of chartering new and unregulated territory, such a safe harbor was deemed necessary to protect startup businesses. Today, these internet actors (e.g. Google, Amazon, and eBay) have grown strong and powerful. Thus, intellectual property holders have started to challenge this privilege in court. Increasingly, owners of famous marks seek liability and damages for direct and indirect trademark infringement in courts around the globe. This Article will focus on liability for ISPs when a third party sells counterfeit merchandise on the ISP’s site.

Courts have reacted differently and consequently, three general theoretical approaches have emerged. Examples of each can be presented by looking at courts in France, Germany, and the United States. Courts in France impose full liability for willful trademark infringement if the sale of counterfeit goods is shown. The German Federal Supreme Court approaches the question as one of interference with property rights; if ISPs knowingly allow continued sale of counterfeit merchandise they can be found liable for damages. Lastly, courts in the United States approach the question from the perspective of what the ISP can reasonably be required to do in order to prevent the sale of counterfeit goods on its site.

This Article compares these three theoretical approaches and considers other possible considerations in determining ISP liability. It argues that trademark law today is ill-equipped to handle questions of secondary liability or contributory infringement, and concludes that the safe harbor for ISPs, as tailored in the European E-Commerce Directive, should be given a broad reading and that the prohibition against imposing a general duty to monitor or actively seek facts in Article 15 remain absolute until the defects are remedied. In response to trademark owners’ legitimate concerns, it further argues that trademark owners should pool their resources, in a manner akin to that of Copyright Collective Societies, and form an agency that, by cooperating with, instead of forcing ISPs, could more efficiently and legitimately weed out infringing uses on the internet.

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