A South Carolina jury has sided with the Roger Cleveland Golf Company Inc. in what the company’s lawyers are calling a “landmark legal victory.”
Based on the jury’s verdict, Judge Margaret B. Seymour of the United States District Court for South Carolina, entered judgment against Search Engine Optimization (SEO) and web-hosting firm Bright Builders Inc. on counts for contributory trademark infringement and unfair trade practices for assisting with the construction and hosting of the website www.copycatclubs.com, an online business that allegedly sold counterfeit Cleveland golf clubs.
The judgment included an award of $770,750 in statutory damages against Bright Builders and $28,250 in statutory damages against Christopher Prince, who owned the website.
The Nelson Mullins Online Brand Equity and Strategic Distribution Group, with a trial team lead by Jeffrey Patterson, Christopher Finnerty, John McElwaine, and Morgan Nickerson from its Boston and Washington, D.C. offices, suggested that the decision represented “the first time that a SEO/Web Host or other Internet Intermediary was found liable for contributory infringement without having first received actual notification of the counterfeit sales from a third party.”
The lawsuit was filed after Huntington Beach, Calif.-based Cleveland® Golf/Srixon® learned counterfeit golf clubs bearing Cleveland® Trademarks were being sold online by Copycat and its principals, Christopher Prince, and Prince Distribution LLC (“Prince”). The homepage of copycatclubs.com went so far as to boast, “Your one stop shop for the best copied golf clubs on the Internet.” During discovery, it became apparent that Prince had received assistance in creating the website from the SEO/Web Host Bright Builders. As a result, the complaint was amended to include claims against Bright Builders for contributory infringement and unfair trade practices.
Donald Reino, vice president of Legal Affairs for Cleveland® Golf/Srixon®, said the manufacturer was compelled to act. “The brazen nature of this website’s sale of counterfeit Cleveland golf clubs as well as the web host’s refusal to take any steps to prevent this type of illegal sale forced us to take immediate action to protect our brand name, our authorized dealers, and our customers. Our customers and dealers are our most valuable assets, and they can count on Cleveland®Golf and Srixon® to work tirelessly to protect them and the marketplace. ”
Cleveland’s allegation centered on the theory that “Bright Builders knew or should have known of the infringing conduct based on the name of the website, the content of the website, and certain discussions Bright Builders had with Prince regarding his website.”
The jury, apparently, accepted the theory, finding Bright Builders was liable for contributory trademark infringement of 11 of Cleveland Golf’s registered trademarks.
“For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning,” said Christopher Finnerty, a partner at Nelson Mullins. “The jury found that web hosts and SEO’s cannot rely solely on third parties to police their websites and provide actual notice of counterfeit sales from the brand owners. Even prior to notification from a third party, Internet Intermediaries must be pro-active to stop infringing sales when they knew or should have known that these illegal sales were occurring through one of the websites they host.”
Roger Cleveland® Golf Company, Inc. v. Prince et al.; D.S.C.; 3/14/11
