Federal Court Says No ISP Immunity for Contributory Trademark Infringement

by Hillel I. Parness[1]

            One of the most significant legal issues to arise out of the growth of the Internet has been whether Internet Service Providers may be liable for the actions of third parties.  Both the Communications Decency Act of 1996, and the Digital Millennium Copyright Act of 1999, included provisions granting immunity to ISPs under certain circumstances.  The CDA, which was instituted to address online defamation and obscenity, includes a Good Samaritan provision, which provides that “Interactive Computer Services” will not be treated as the publishers or speakers of information provided by “Information Content Providers.”

The CDA, however, explicitly states that this provision does not “limit or expand any law pertaining to intellectual property.”[2]  To a certain extent, the DMCA fills this gap, immunizing “Service Providers” from liability for contributory or vicarious copyright infringement under a defined set of Safe Harbors.[3]  With all of the attention that the CDA Good Samaritan provision has received, in cases such as Zeran v. America Online, Inc.[4] and Blumenthal v. Drudge,[5] and the DMCA has received, in cases such as A&M Records v. Napster and MP3Board, Inc. v. Recording Industry Association of America,[6] a major gap in the coverage of these provisions has, until recently, gone relatively unnoticed – ISP liability for other forms of intellectual property violations, such as trademark infringement.  In February, in a case of first impression, Judge Berman of the Federal District Court for the Southern District of New York explicitly affirmed that the CDA Good Samaritan provision does not create broad intellectual property immunity, and that neither the CDA nor the DMCA protects ISPs from contributory trademark infringement liability, in his decision in Gucci America, Inc. v. Hall & Associates.[7]

Gucci America, Inc. v. Hall & Associates

            Gucci, the owner of the GUCCI trademark, brought this action against Hall & Associates and Denise Hall for trademark infringement, among other claims.  Gucci also named as a defendant Mindspring Enterprises, Inc., which provided web hosting services to the Hall defendants,[8] alleging that Mindspring was liable for direct and contributory trademark infringement arising from the Hall defendants’ alleged violations.[9]  Mindspring moved to dismiss the claims against it on the theory that Mindspring was immune from trademark liability for the Hall defendants’ actions, under Section 230 of the Communications Decency Act (the “Good Samaritan” provision).[10]

            The court recognized that immunity for trademark liability under the CDA was a case of “first impression.”[11]  The court began its analysis by noting that the parties were in agreement that Defendant Mindspring was an “interactive computer service,” and that Defendant Hall was an “information content provider.”[12]  The court noted, however, that plaintiff had argued that the Good Samaritan provision was out of Mindspring’s reach, because the provision specifically states that it does not “limit or expand” any intellectual property law.[13]  Turning to the plain language of this provision of the CDA, the court wrote that “[u]nder existing intellectual property law, publishers may, under certain circumstances, be held liable for [trademark] infringement,” concluding that “[t]he plain language of Section 230(e)(2) precludes Mindspring’s claim of immunity.”[14]  The court also considered, and rejected, Mindspring’s arguments that immunity under the Good Samaritan provision “would not ‘limit’ any law pertaining to intellectual property, since liability for trademark infringement has never previously been imposed on an ISP in this situation,”[15] or that the language of the Good Samaritan provision is ambiguous.[16]

            In the course of the court’s survey of the caselaw interpreting and applying the Good Samaritan provision of the CDA,[17] the court considered the importance of the passage of the DMCA and its safe harbor provisions.[18]  Mindspring argued that “Congress, having had the opportunity (when enacting the DMCA) to alter the extent to which ISPs may assert statutory immunity from trademark infringement, ‘has not done so.’”[19]  The court disagreed, finding “that Congress’ enactment of the DMCA – pertaining only to copyright infringement – two years after Section 230 was passed, lend[ing] further support to the proposition that Section 230 does not automatically immunize ISPs from all intellectual property infringement claims.  To find otherwise would render the immunities created by the DMCA from copyright infringement actions superfluous.”[20]

            The court likewise rejected Mindspring’s argument that the legislative history of the CDA – which admittedly did not address the intellectual property limitation – demonstrates an overreaching purpose “to immunize online service providers from liability for content that they did not produce.”[21]  Instead, the court found that “[t]he legislative history cited by Mindspring indicates only that Section 230(c) immunizes ISPs from defamation and other, non-intellectual property, state law claims arising from third-party content.”[22]

Conclusion

            As this author noted previously,[23] recent decisions have significantly expanded the scope of application of the CDA’s Good Samaritan provision from ISP immunity for online defamation and obscenity (for which Congress explicitly enacted the provision). The plain language of the CDA’s Good Samaritan provision halts this expansion, however, at the border between “intellectual property” and non-“intellectual property,” defined not so much by the actions of the defendant “service provider” (or “interactive computer service”), but rather by the cause of action asserted by the plaintiff, leading to immunity for eBay, Inc. for the auction of counterfeit sports memorabilia,[24] or bootleg digital music,[25] and liability for Napster, Inc. for facilitating the transfer of copyright-infringing digital music recordings.[26]

As much as the subject matter of some of these cases continues to converge, however, the Gucci decision demonstrates unequivocally that the limitations of the CDA (against affecting intellectual property laws) and the DMCA (to copyright) are still there, leaving ISPs without any potential statutory immunity for other forms of intellectual property violations by their customers.