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A website builder and SEO firm has been held liable in federal court in a case in which it was accused of enabling the sale of counterfeit goods. Bright Builders faces a $770,000 fine for damages in the judgment, handed down in U.S. District Court in South Carolina last week, while its client was only fined $28,000.
The lawsuit was filed by the Roger Cleveland Golf Company, which makes golf clubs and related products, accusing Christopher Prince, the owner of the copycatclubs.com web site, of selling counterfeit Cleveland clubs. It also contended that Bright Builders helped Prince, and his company, Prince Distribution, to build a web site. This included helping with search engine optimization (SEO) — so that the site would come up on searches for Cleveland’s trademarked terms. Bright Builders denied the charges in a written motion, and hadn’t responded to a request for comment by publication time.
According to the plaintiffs, Bright — like many site hosting companies — provided SEO services, including review of the sites for search engine visibility, a “quick start” for marketing, keyword research, a “tune up” including a “keyword rich title and description,” along with submission of the site to more than 2,500 search engines and directories. The word “Cleveland” was embedded within the site metadata, the plaintiffs say, and the online store featured marketing copy advertising that, “we are your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet.”
Additionally, the plaintiffs said that Bright Builders helped Prince find drop-shippers to provide products to the business. Because of its activities, Cleveland contended that Bright Builders should have known about the counterfeiting activities, and therefore contributed to the liability.
“For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning,” wrote Christopher Finnerty, a partner at Nelson Mullins Law Firm in Boston who represented Cleveland Golf and its parent company, Srixon. “The jury found that web hosts and SEO’s cannot rely solely on third parties to police their web sites and provide actual notice of counterfeit sales from the brand owners. Even prior to notification from a third party, Internet intermediaries must be proactive to stop infringing sales when they knew or should have known that these illegal sales were occurring through one of the web sites they host.”
Though Bright Builders, along with Prince, have been found liable in a jury trial, it’s unclear exactly what implications this case has for other SEOs or website hosts, in part because of the seeming lack of a vigorous defense. The attorney for Bright Builders submitted a very vague motion arguing that it be dropped as a defendant from the case, denying everything but failing to cite legal principles or provide supporting evidence.
“We don’t have a good sense of how likely it is that other web designers or SEOs/hosts will be sucked into the same liability trap,” writes intellectual property attorney Eric Goldman on his Technology & Marketing blog. “I do think we have some good reason to believe that courts are allergic to the entire ‘copycat’/’replica’ business. Those code-words aren’t fooling anyone.”