Professional Documents
Culture Documents
v.
v.
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TABLE OF CONTENTS
ARGUMENT ON APPEAL
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1. Defendants Are Jointly and Severally Liable for Damages with the
Underlying Direct Infringers ..................................................................42
2. The Jury’s Assessment as to Each Defendant Was Supported by the
Record and is Entitled to Great Deference .............................................44
3. An Increased Award of Statutory Damages Based on Defendants’
Willfulness Was Amply Supported by the Record ................................49
4. The Jury’s Verdict Was Consistent With Due Process ..........................51
ARGUMENT ON CROSS-APPEAL
CONCLUSION ...........................................................................................................62
STATEMENT OF RELATED CASES ......................................................................64
CERTIFICATE OF COMPLIANCE ..........................................................................64
CERTIFICATE OF SERVICE ...................................................................................65
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TABLE OF AUTHORITIES
CASES
Academy of Motion Picture Arts & Sciences v. Creative House Promotions, Inc.,
944 F.2d 1446, 1456 (9th Cir. 1991) ........................................................................33
Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1087 (9th Cir. 2005) ....................28
AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-54 (9th Cir. 1979) ........................33
Bell v. Clackamas County, 341 F.3d 858, 865 (9th Cir. 2003) ...................................21
Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1216 (9th Cir. 1983).............................44
Chalmers v. City of Los Angeles, 762 F.2d 753, 760 (9th Cir. 1985) .......................44
Douglas v. Cunningham,
294 U.S. 207, 210, 79 L. Ed. 862, 55 S. Ct. 365 (1935)....................................44, 54
Dream Games of Ariz., Inc. v. PC Onsite, 561 F.3d 983, 992 (9th Cir. 2009) ..... 51-52
F.W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 223 (1952)....................52
Gilbrook v. City of Westminster, 177 F.3d 839, 847-48 (9th Cir. 1999) ....... 21, 55-56
Guebara v. Allstate Ins. Co., 237 F.3d 987, 992 (9th Cir. 2001)................................21
Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 1297 (9th Cir. 1984) .....................44
Hard Rock Café Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143,
1149 (7th Cir. 1992) .................................................................................................25
Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984) ........................52
Henry v. Lehman Commer. Paper, Inc., 471 F.3d 977, 1001 (9th Cir. 2006) .............45
In re Aimster Copyright Litigation, 334 F.3d 643, 650 (7th Cir. 2003). .....................37
International Union of Bricklayers & Allied Craftsman Local Union No. 20, AFL-
CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir. 1985) .............................63
Inwood Labs., Inc. v. Ives Labs. Inc., 456 U.S. 844, 854, 102 S. Ct. 2182, 72 L. Ed.
2d 606 (1982)......................................................................................... 22-23, 27, 35
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Josephs v. Pacific Bell, 443 F.3d 1050, 1062 (9th Cir. 2006) ....................................55
Kopczynski v. The Jacqueline, 742 F.2d 555, 560 (9th Cir. 1984) ............................63
Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir. 1980) .................33
Lindy Pen Co. v. Bic Pen Corp., 796 F.2d 254, 256-57 (9th Cir. 1986) ..............31, 50
Masson v. New Yorker Magazine, Inc., 85 F.3d 1394, 1397 (9th Cir. 1996) ............ 21
MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 934, 125 S. Ct. 2764, 162 L.
Ed. 2d 781 (2005) (“Grokster”) ........................................................ 23, 27, 29,37-38
Novell, Inc. v. Unicom Sales, Inc., et al., No. C-03-2785 MMC, 2004 WL
1839117, at *17 (N.D. Cal. Aug. 17, 2004) ............................................................48
Ostad v. Oregon Health Scis. Univ., 327 F.3d 876, 881 (9th Cir. 2003). ..................21
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Phillip Morris USA Inc. v. Felizardo, 2004 U.S. Dist. LEXIS 11154, at *18
(S.D.N.Y. June 18, 2004) ........................................................................................31
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 120 S. Ct. 2097, 2110,
147 L. Ed. 2d 105 (2000).........................................................................................56
Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1382 (9th Cir. 1984) ........................23
Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488
(4th Cir. 1996) .........................................................................................................52
Swinton v. Potomac Corp., 270 F.3d 794, 805 (9th Cir. 2001) ...................................21
Tiffany Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010) ...............................................28
Theme Promotions, Inc. v. News Am. Marketing FSI, 546 F.3d 991, 999 (9th Cir.
2008) ........................................................................................................................ 55
Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.
1985) ........................................................................................................................ 48
United States v. Candelaria, 704 F.2d 1129, 1132 (9th Cir. 1983) ......................22, 32
United States v. Marabelles, 724 F.2d 1374, 1382-83 (9th Cir. 1984).......................22
STATUTES
RULES
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JURISDICTIONAL STATEMENT
Malletier, S.A. timely filed its Notice of Cross Appeal of the award of Judgment as
Awarding Statutory Damages and Permanent Injunction, both filed on March 19,
2010.1 This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.
copyrights where it has repeatedly been given notice of the underlying direct
infringements?
2. Was the jury’s award of damages within the statutory scheme provided by
infringement proper?
1
Supplemental Excerpt of Record (“SER”) LV1-3.
1
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under both trademark and copyright claims, was it proper for the District
Louis Vuitton Malletier, S.A. (“Louis Vuitton”) filed suit on August 1, 2007,
websites selling counterfeit Louis Vuitton products from servers they owned and
five of Defendants’ 1,500 servers were copied and examined by a forensic expert
In December 2008, the District Court ruled that Louis Vuitton’s contributory
infringement claims raised disputed issues of fact, denying Defendants’ motion for
In August, 2009, the jury trial proceeded before Judge James Ware. Louis
Vuitton moved for judgment as a matter of law at the close of all evidence as to all
2
SER LV452-491, 576-596, 614-625, 642-655.
3
SER LV38-44.
2
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Defendants.4 The motion was made moot by the jury verdict finding liability and
Defendants’ Rule 50(b) and 59 motions, the District Court set aside the jury’s
notice of appeal, and Louis Vuitton timely filed its notice of cross-appeal on the
STATEMENT OF FACTS
materials, unique designs and attention to detail, Louis Vuitton’s products are
not only its well-known lines of hand bags and luggage, but also clothing, shoes,
4
SER LV450:21-451:4.
5
ER AKA00041-00054.
6
ER AKA00001-00005.
7
SER LV55:23-57:19.
8
SER LV80:5-25, ER AKA00397:1-000398:9.
9
SER LV55:23-56:6.
3
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commitment to producing high quality product has endured. To ensure that its
exacting quality controls are maintained,11 Louis Vuitton manufactures its finished
products only in its own facilities employing highly skilled workers in France,
Spain, Switzerland and the United States.12 Similarly, Louis Vuitton distributes
and sells its products exclusively through owned and operated channels staffed
Vuitton owns some of the most recognizable and valuable trademarks and
copyrights in the world.14 Louis Vuitton’s very success in creating its iconic
1905.16 The story is no different today as the premium associated with Louis
Vuitton product serves as a magnet for counterfeiters who offer, distribute, market
10
SER LV56:7-57:19.
11
SER LV70:10-71:8, 80:2-25, ER AKA00397:1-3.
12
SER LV76:25-77:10.
13
SER LV77:22-80:1.
14
SER LV16:16-19:7, 968-1012.
15
SER LV50:23-51:18.
16
SER LV57:20-59:2.
4
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and sell poor quality knock-offs, often manufactured in sweat shops using harsh
To protect its intellectual property rights, preserve the integrity of its brand
fighting this insidious form of theft.18 Particularly with the emergence of the
The websites that were the subject of Louis Vuitton’s numerous notices in this
action were virtual stores in which the infringers offered unauthorized low-
quality copies of a full range of Louis Vuitton’s legally protected products for
sale.20 In many cases, these stores offered products in several different classes of
separate classes of goods.21 For the public to have access to these websites or
“web stores,” the services and facilities of a specific kind of ISP capable of
17
SER LV57:21-58:10, 73:16-75:14, 80:2-25, ER AKA00397:1-00398:13.
18
ER AKA00397:22-00398:9, 00398:14-25, SER LV81:1-8.
19
SER LV51:7-18.
20
See, for example, SER LV656-665, 674-725, 838, 864-866, 1048-1050.
21
Id.; see also, for example, SER LV1089-1112.
5
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physically store the content and provide customer access.22 A single server can be
assigned numerous Internet Protocol (“IP”) addresses, and a single IP address can
(“NOI”) to web hosts, obtaining near 100% success in removal of the offending
content. 24 Such cooperation occurs even where legitimate ISPs do not stand in a
Defendants were the one notable exception: they chose to ignore every one
22
SER LV1113.
23
IP addresses are numeric addresses assigned by regional internet registries and,
in the case of the United States based ISPs, by the American Registry for Internet
Numbers (“ARIN”). ER AKA00263:4-14. Website content is usually accessed
using domain names. The domain name system administered by the Internet
Corporation for Assigned Names and Numbers is responsible for registering
domain names and insuring that Internet inquiries based on the domain name
system are routed to the correct IP address. Defendants received a delegation of
several thousand IP addresses from ARIN. SER LV247:23-25; ER AKA00263:4-
18.
24
SER LV104:4-14.
25
SER LV104:15-106:11.
6
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Akanoc and MSG are ISPs, specifically web hosts, located in San Jose and
manager.27 Although Chen testified that MSG merely owned the hardware and
email accounts to handle abuse complaints, including NOI, in the same fashion as
the abuse email accounts owned by Akanoc.28 The IP addresses assigned to MSG
did not reflect any delegation or sub-assignment to Akanoc (or any other alleged
agreement.30 The compensation paid by Akanoc for this alleged “lease” agreement
was vague and uncorroborated.31 Defendants each had a specific and necessary
which to store the infringing content, (ii) Internet access through assignment of an
IP address at which the content could be accessed, (iii) Internet routing that
ensured that queries for content hosted on Defendants’ servers are routed to the
26
SER LV331:11-17, 332:4-12, 336:9-12, 1183-1191; ER AKA00261:17-21.
27
ER AKA00359:3-20, 00364:3-10; SER LV262:10-15.
28
SER LV199:1-8, 303:4-8, 307:16-308:5.
29
SER LV388:3-389:4, 604-610 at ¶ 5(b).
30
ER AKA00365:25-00366:2.
31
ER AKA00365:25-00366:10.
7
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correct location of that content, (iv) bandwidth through which traffic could travel
to and from the websites hosted on Defendants’ servers, (v) close proximity to the
Internet “backbone” in their highly specialized facility, 32 and (vi) most valuably,
Companies that operate such server “farms” have a critical and large-scale
impact when those systems are used for counterfeiting and piracy. Illustrating the
point, the court-ordered inspection of just five (5) of Defendants’ 1,500 servers
counterfeiters with the means through which they offered their illegal merchandise
with impunity.34 The result of Defendants’ undisturbed business practices was that
the same infringing websites operated by the same handful of customers remained
undisturbed on Defendants’ servers for years.35 It is not surprising that some of the
32
SER LV332:20-25, ER AKA00259:19-25, LV333:1-334:25, ER AKA00261:1-
00262:19; see also SER LV1041-1042.
33
SER LV325:11-18, 446:24-447:25, 1121-1137, 1143-1163.
34
See footnote 2; SER LV492-495, 496-575, 611-612, 626-639, 1014-1030, 1032-
1040, 1114-1116, 1121-1137, 1143-1182; ER AKA 00788-00807.
35
SER LV379:15-382:6, 384:23-385:1 (bag925.com), 407:11-408:1, 408:9-
409:12, 446:24-447:25, 1121-1137, 1180-1181.
8
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customers.36
Between the fall of 2006 and the spring of 2007, Louis Vuitton transmitted
no fewer than eighteen (18) NOI to Defendants about websites dedicated to the
mail.38 None of these NOI resulted in the removal or disabling of access to the
assigned to them.
to send them these NOI.39 Before the lawsuit Defendants had no registered agent
with the United States Copyright Office for the receipt of NOI.40 Defendants failed
to post accurate and/or current contact information on their website even up to the
date of the trial;41 and failed to update addresses in the ARIN WHOIS which they
36
SER LV299:3-19, 371:12-374:11, 397:2-401:17.
37
See footnote 2; SER LV165:15-166:1.
38
Id.; SER LV95:20-97:1, 98:14-99:11.
39
SER LV127:2-128:24, 137:11-138:8, 169:4-22.
40
SER LV362:19-363:22.
41
SER LV384:2-14, 1181.
42
SER LV388:3-389:4, 604-610 at ¶ 5(b), 1182.
9
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contacting the correct Defendant was the tendency for websites to jump between
MSG’s and Akanoc’s IP address allocations.43 Defendants did not contradict Louis
Vuitton’s evidence that the NOI were sent, received and ignored. Their sole
“defense” was a mysterious email server “crash” about the time litigation was filed
From at least fall 2006 to spring 2007, Defendants “handled” hard copy
unmanned desk.45 Even one NOI sent to Chen’s residence, and received by him,
was taken to the office and added to the pile of abandoned mail.46 Defendants took
no action.
with respect to Louis Vuitton’s emailed NOI.47 Their standard operating procedure
for email NOI, however, was not much more effective than the treatment they
accorded the abandoned hard copy NOI. Accordingly, in either event, websites
Defendants’ servers.48
The corporate Defendants had only one employee between them, Juliana
Luk (“Luk”), responsible for handling all abuse complaints, including NOI, for
both corporate Defendants.49 Luk was part-time and located in another city.50 She
almost always treated the same way as initial complaints. 53 Amazingly, the only
record Luk had of complaints received was what she could remember “in her
brain.”54 Occasionally, and irregularly, Luk called upon Chen for help. There was
complaints between them. Nothing other than the “unbolding” feature built into
the Defendants’ email program indicated that a particular piece of mail had been
47
SER LV274:15-276:4.
48
See footnote 34.
49
SER LV196:15-24, 197:20-198:4.
50
SER LV195:12-17, 196:15-24.
51
SER LV195:10-11.
52
SER LV197:11-19, 254:9-13.
53
SER LV201:7-15, 207:12-208:14, 223:10-224:16, 225:22-25.
54
SER LV208:12-14.
11
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opened. Based on nothing more than that an email was so identified as having
been “read,” Luk assumed that that particular piece of correspondence, once
Chen was also of the view that intellectual property infringement reports
were in the nature of private business disputes that should be resolved between the
rights owners and the direct infringers and concerning which Defendants had no
contemptuous of Louis Vuitton’s claim and, even on the stand, asserted the
had an arsenal of tools with which to control the abuse and to secure the removal
55
SER LV210:23-211:9.
56
ER AKA00303:15-00305:1.
57
Id.; SER LV376:11-378:11, see also SER LV1031 (“stupid LV, instead of suit
ape168 they suit us”).
58
SER LV413:2-9.
59
SER LV201:16-25, 202:7-203:2, 230:17-231:15.
12
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of the infringing content. Defendants chose not to apply any of them. Defendants
had the technical means: since Defendants had physical control over the server,
they could, for example, manually unplug the server’s power supply or
logical means: Defendants had control over the routers and over software
routing Internet traffic to a specified server; thus, Defendants could have disabled
an IP address so that an Internet user would not “resolve” a domain name query to
content hosted on the server for example.60 Most importantly, Defendants had the
contractual means: Defendants’ own policy, expressly set forth in their contracts
with their customers, clearly evidences that they had the ability and the right to do
illegal content from their websites.62 In response to NOI, Defendants were entitled
time after being notified of the NOI: (i) temporarily “unplug” the server on which
the infringing content was located, (ii) impose a monetary penalty; (iii) suspend the
60
SER LV437:4-438:15.
61
ER AKA00526-00531.
62
Id.
13
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customer’s account, or (vi) terminate the contract with the customer in response to
repeated violations.63
of Service against their infringing customers, except for the occasional and very
their customers.65
Since Defendants’ conduct signaled that infringers did not have to fear
any of the more severe measures, the “unplugging” predictably had no deterrent
effect on the counterfeiters operating the websites infringing on LV’s rights: The
infringing content that was the subject of LV’s notices to Defendants continued to
infringing content was assigned to the same customer and sometimes on the same
63
Id.
64
ER AKA00360:5-00361:15; SER LV328:2-8, 358:1-360:23, 371:12-374:11,
397:2-401:17; ER AKA00526-00531.
65
ER AKA00360:5-00361:15; SER LV328:2-8; 371:12-374:11, 397:2-401:17,
430:5-431:6.
66
See footnotes 34, 64, and 65; SER LV379:5-382:6.
67
For example, Louis Vuitton transmitted a notice in July 2008. Approximately
100 sites were hosted at one IP address and, given the volume, Chen elected to
dispense with notice and simply temporarily unplug the server. SER LV407:11-
14
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liability, the record was to the contrary. Chen testified he did not know what their
customers did and that the customers could in fact be the operators of the
websites.69 Defendants claimed that their customers were engaged in other non-
however, Defendants claimed ignorance on this same issue when it served them,70
and it was clear that each IP address was assigned only to one customer at a time71
so that only the offending customer would be affected. The fact is, contrasted with
abundant evidence of illegal activity using Defendants’ goods and services, there
was no evidence adduced at trial of any legitimate use being made of those same
Expert testimony, offered by both sides, confirmed that even the mere
408:1. Although this might be thought to evidence greater responsiveness, 45 of
those websites were up, operating and located at the same IP address in February,
2009. SER LV408:9-409:12. While the server was again temporarily unplugged,
Defendants never took any of the other steps to enforce their own Terms of Service
as a result of this recurring conduct. ER AKA00360:5-00361:15; SER LV373:24-
374:11; 399:18-401:17.
68
Opening Brief, p. 4.
69
SER LV372:19-373:1, 385:24-386:24
70
Id.
71
SER LV422:7-10.
15
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Defendants’ own expert, several of these websites, which were the subject of prior
notices from Louis Vuitton, were active months after Louis Vuitton’s
counterfeiting or piracy.74
SUMMARY OF ARGUMENT
such a way as to avoid liability for known, persistent and widespread direct
repeated notices of such infringing activity. The jury said no, finding evidence
that led not only to findings of contributory infringement, but findings of willful
infringement by Defendants.
anonymity offered by the Internet and global reach of those online offers pose
infringing content.
secure cooperation from Defendants through numerous NOI, both in email and by
hard copy, none of which had any impact on the infringing activity that was the
subject of those NOI. Louis Vuitton demonstrated those NOI were intentionally
ignored by the Defendants and, even when express delivery notifications were sent
to Chen’s home, they were taken to the office and left unattended with other
Louis Vuitton showed that the Defendants had at their disposal a panoply of
tools they could have used to address Louis Vuitton’s notices, tools that stemmed
unplugging – the server), from their logical control over the software routing
Internet traffic to and from the servers on which the infringing content was located
17
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transmitted to them before litigation was filed by Louis Vuitton and no use of the
more meaningful tools, either before or after the litigation was filed.
NOI provided to Defendants and the control Defendants had over the means of
infringement. The fact that the infringing conduct continued unabated even after
the litigation was filed, even until the time of trial, combined with the sheer
quantity of infringing activity, led the jury to assess substantial statutory damages
at or near the statutory limits for willful infringement. The magnitude, persistence
conduct when confronted with LV’s repeated NOI amply support an award of the
This record, the overwhelming weight of case law and the Congressional
intent codified in the DMCA demonstrate that all Defendants were properly held
safe harbor for a variety of illegal conduct, not limited to product counterfeiting: it
18
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would allow ISPs to structure their enterprises in such a way as to facilitate illegal
conduct while simultaneously avoiding liability for the illegal conduct so enabled.
issues asserted in the Appellants’ Opening Brief are entirely outside the scope of
this appeal. These include (i) vicarious liability, which did not go to trial, (ii)
intentional inducement, which was not alleged, (iii) direct control and monitoring,
since Defendants provided both goods and services, (iv) constructive knowledge,
since there was sufficient actual notice, (v) content filtering, since Defendants had
statutory damages are not vulnerable to such scrutiny, (vii) actual damage
instructions and standards, since Louis Vuitton elected statutory damages, and
(viii) joint and several liability as among the Defendants, since Defendants waived
The record shows that the Defendants had ample actual notice (in addition to
constructive notice) and had ample means of control over the means of
infringement, none of which were ever effectively used by them – all of which
supports the jury’s verdict and the Court’s judgment of liability. Given
19
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substantial statutory damages against each Defendant was appropriate. There was
ample evidence to support the jury’s finding of liability as against MSG. MSG had
its own servers and infringing websites, its own email addresses for abuse, and
ruling upon the Defendants’ post-trial motions, the District Court apparently
concluded that Chen’s testimony that MSG owned the assets and Akanoc operated
the business was sufficient to exonerate MSG. This finding was contradicted by
the record of how Defendants’ businesses operated and ignored the active
involvement of each of the ISP defendants. The Court should not have substituted
its judgment about Chen’s testimony on this point for that of the jury.
the control that it enjoyed by virtue of that ownership is sufficient control for
purposes of contributory liability. MSG still had responsibility over its alleged
lessee (Akanoc) to do what was required and failed to do it. For these reasons,
The jury correctly found all Defendants independently responsible for their
acts of contributory infringement and the jury’s decision regarding MSG should be
injustice.
20
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ARGUMENT ON APPEAL
The jury verdict was amply supported by the record, outlined above, by
applicable case law and by the District Court’s carefully crafted jury instructions.
The Court can “overturn the jury’s verdict only if there is no legally
sufficient basis for a reasonable jury to find in favor” of Louis Vuitton. Bell v.
Clackamas County, 341 F.3d 858, 865 (9th Cir. 2003) (emphasis added).76 When
the error is said to arise from the formulation of the instructions, “the instructions
determine if they are misleading or inadequate.” Guebara v. Allstate Ins. Co., 237
F.3d 987, 992 (9th Cir. 2001) citing Masson v. New Yorker Magazine, Inc., 85
F.3d 1394, 1397 (9th Cir. 1996). The harmless error standard applied in civil cases
is “less stringent” than that applied in the criminal context. See Swinton v.
76
“We review the denial of a motion for a judgment as a matter of law de novo.”
Ostad v. Oregon Health Scis. Univ., 327 F.3d 876, 881 (9th Cir. 2003). “We view
the evidence in the light most favorable to the party in whose favor the jury
returned a verdict and draw all reasonable inferences in its favor.” Id.; Gilbrook v.
City of Westminster, 177 F.3d 839, 847-48 (9th Cir. 1999).
21
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instructions so long as they fairly and adequately cover the issues presented” when
“evaluated in the context of the whole trial.” Los Angeles Memorial Coliseum
Comm’n v. National Football League, 791 F.2d 1356, 1360 (9th Cir. 1984) citing
United States v. Marabelles, 724 F.2d 1374, 1382-83 (9th Cir. 1984). “A party is
not entitled to an instruction on its theory of the case if that theory lacks support
either in law or in the record.” Los Angeles Memorial Coliseum Comm’n, 791
F.2d at 1360 citing e.g., Los Angeles Memorial Coliseum Comm’n v. National
Football League, 726 F.2d 1381, 1398 (9th Cir. 1981); United States v. Candelaria,
trademark infringement and upon which the Court instructed the jury.
infringement” (emphasis added). Inwood Labs., Inc. v. Ives Labs. Inc. (“Inwood”),
456 U.S. 844, 854, 102 S. Ct. 2182, 72 L. Ed. 2d 606 (1982) (manufacturer of
generic drugs found not liable for inducing pharmacists to mislabel their generic
product); see also Fonovisa, Inc. v. Cherry Auction, Inc. (“Fonovisa”), 76 F.3d
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259, 264-265 (9th Cir. 1996) (applying Inwood test for contributory trademark
194 F.3d 980, 983 (9th Cir. 1999) (“consider the extent of control exercised by the
defendant over the third party’s means of infringement.”); see also Sealy, Inc. v.
Easy Living, Inc., 743 F.2d 1378, 1382 (9th Cir. 1984) (knowing or having reason
claim are, therefore, two-fold: (i) knowledge and (ii) continuing to supply goods or
The verdict is consistent with this Court’s precedents finding liability where
defendants had sufficient control over the “means of infringement.” Indeed, the
Court has upheld claims involving an electronic file sharing system on a central
server, A&M Records v. Napster, Inc. (“Napster”), 239 F.3d 1004, 1021 (9th Cir.
2001), free software not on a central server, MGM Studios Inc. v. Grokster,
Ltd.(“Grokster”), 545 U.S. 913, 919 (2005), and an electronic bulletin board,
Perfect 10, Inc. v. Amazon.com, Inc. (“Amazon”), 508 F.3d 1146, 1171-72 (9th
Services, Inc. (“Netcom”), 907 F. Supp. 1361, 1374 (N.D. Cal. 1995).
Even in Perfect 10, Inc. v. Visa Int’l Serv. Ass’n (“Visa”), 494 F.3d 788,
807 (9th Cir. 2007), where liability was not found, this Court specifically
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contrasted Visa, reasoning that Visa did not maintain the servers on which
infringing websites resided and implying that such involvement would result in a
finding of liability. Id. at 800 (emphasis added). In contrast, Defendants not only
maintained the servers on which infringing websites resided and provided access to
the Internet for content on those servers, they shielded the infringers from any
environment.
showed Defendants had extensive control over their goods and services that were
shield against take-down notices, despite prior notices and a multitude of unused
but available tools to stop the infringement and exercise control over their systems
77
Such analysis is, accordingly, unnecessary, to the extent that Defendants
provided a package of goods and services, not services alone, as implied by their
own assertion that the staple article of commerce doctrine applies, addressed
below.
24
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and procedures.78 Appellants agree in their Opening Brief that what they supplied
were servers and web-hosting services.79 The infringing websites could not have
operated but for the servers and services provided by Defendants. The trial court
fallacy of Defendants’ argument that Defendants lack sufficient control over those
shops and stalls selling counterfeit wares are the means of infringement and the
swap meet itself is too far removed from control over those means to be held liable
– a conclusion utterly at odds with the result in Fonovisa. The District Court’s
Appellants’ attempt to align this case with Lockheed fails, since this case is
Services, Inc., 955 F.2d 1143 (7th Cir. 1992) and Fonovisa (both cases upon which
Appellants admit Lockheed relied), Defendants had control over the site and
facilities of infringement, specifically physical control over their servers where the
infringing material resided and was protected, and traffic was routed to and from
78
See footnotes 32, 34, 66.
79
Opening Brief, p. 26 (“i.e., Internet servers and web-hosting services”).
25
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and cannot be compared to the service at issue in Lockheed that involved merely
NOI transmitted to Defendants before the Complaint was filed, including multiple
upon Defendants after the litigation was served and the fact of these NOI was also
the Defendants with actual knowledge, but the systematic hosting and evidence of
many of the sites that were the subject of these NOI continued to be hosted on
Defendants’ servers after service of these NOI; in some cases, they were hosted on
Defendants’ servers even at the time of trial.84 Not only did the content remain in
80
See footnote 32; see also SER LV422:15-19.
81
See also ER AKA00115:14-AKA00116:5.
82
See footnote 2.
83
ER AKA00788-00807.
84
See footnote 66.
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governing law and Defendants’ own Terms of Service – even pending their
Fonovisa, Napster and Grokster, cited above, makes clear that the actual notice
the underlying direct infringement support the jury’s finding of liability and the
Court’s Judgment.
5. The District Court Did Not Abuse Its Discretion in Presenting the
Case to the Jury.
The Court appropriately described the issues and asked the jury to decide
upon settled principles articulated in the cases outlined above. Regardless whether
reviewed for abuse of discretion or de novo, the District Court correctly instructed
Appellants object to the District Court’s jury instructions for suggesting that
the jury look to the degree of control Defendants exercised over their “servers or
85
Id.
27
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infringement. Appellants suggest that Defendants lacked control over the means of
routers and Internet bandwidth. This impermissibly narrows the scope of potential
Appellants strive to salvage their argument that they had insufficient control
from an Australian statute not present here and applies its inapplicable statutory
different from the facts of this case, (ii) standards for vicarious infringement, even
though no vicarious claims were tried,87 (iii) Tiffany Inc. v. eBay, Inc., 600 F.3d 93
(2d Cir. 2010), a case that did not involve, as this one did, defendants that
86
Appellants complain about the Court’s presentation of the facts, an instruction
which is reviewed for an abuse of discretion rather than de novo. See Altera Corp.
v. Clear Logic, Inc., 424 F.3d 1079, 1087 (9th Cir. 2005).
87
Opening Brief, pp. 17-18.
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infringing content about which they had been given undisputed actual notice,88 and
observed by the U.S. Supreme Court: “When a widely shared service or product is
protected work effectively against all direct infringers, the only practical
alternative being to go against the distributor of the copying device for secondary
at 929-930. The Ninth Circuit also recognized that “services or products that
facilitate access to websites throughout the world can significantly magnify the
from providers may be the only meaningful way for copyright holders to protect
their rights. Amazon, 508 F.3d at 1172. As this Court noted in Visa, maintaining
the servers upon which the infringing websites reside is precisely the type of
control envisaged by this Court’s earlier authority in Napster and Fonovisa. Here,
the District Court properly instructed the jury as a result of which the jury arrived
88
See footnotes 34 and 66.
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Even if the jury instruction had been incorrect, the error would have been
had been the “means of infringement” as Defendants assert, they were not the only
addresses were also means by which the infringement was allowed to occur and to
Internet by refusing to take them down and keep them down despite numerous
specific NOI from Louis Vuitton.90 Defendants’ servers and services were the sole
reason infringing websites were left accessible and undisturbed to continue their
complaints. Even under the de novo standard cited by Appellants, the same
outcome would follow and Appellants’ appeal should be denied. The jury was
Appellants also take issue with the Court’s lack of instruction on the
definition of counterfeit mark, even though it was uncontested that the infringing
89
See footnote 64. Defendants’ arguments on lack of “control” are inconsistent
with the record.
90
See footnotes 34 and 66.
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product was counterfeit.91 In the instant case, Defendants hosted and protected
websites engaged in the offer for sale, importation, distribution and sale of
to look like the real thing. The law presumes confusion where counterfeit product
is involved and it was not necessary for the jury to engage in a more
marks in the same class of goods or services as the registered infringed-upon mark
Corp., 174 F.3d 1036, 1056 (9th Cir. 1999) (“In light of the virtual identity of
marks, if they were used with identical products or services likelihood of confusion
would follow as a matter of course.”); see Lindy Pen Co. v. Bic Pen Corp., 796
F.2d 254, 256-57 (9th Cir. 1986) (reversing a district court’s finding of no
likelihood of confusion even though the six other likelihood of confusion factors
all weighed against a finding of likelihood of confusion); Phillip Morris USA Inc.
v. Shalabi, 352 F. Supp. 2d 1067, 1073 (C.D. Cal. 2004) citing Phillip Morris USA
Inc. v. Felizardo, 2004 U.S. Dist. LEXIS 11154, at *18 (S.D.N.Y. June 18, 2004)
91
Opening Brief, pp. 32-34.
92
See footnotes 34 and 66; SER LV325:11-18, 328:2-8, 371:12-374:11, 397:2-
401:17, 430:5-431:6, 446:24-447:25.
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Louis Vuitton introduced voluminous exhibits evidencing the offer and sale
of knock-off merchandise the entire object of which was to mimic authentic Louis
the contrary.
counterfeit mark, especially when they did not dispute that the infringing marks
were counterfeit. “A party is not entitled to an instruction on its theory of the case
if that theory lacks support either in law or in the record.” Los Angeles Memorial
Coliseum Comm’n, 791 F.2d at 1360 citing e.g., Los Angeles Memorial Coliseum
Comm’n, 726 F.2d at 1398; Candelaria, 704 F.2d at 1132. It was clear in the trial
record that the fake products and offers did not originate from Louis Vuitton.
was obvious that the knock-offs offered on sites hosted by Defendants were likely
to confuse. Appellants cannot now claim error for the District Court’s decision not
counterfeit mark, the error was harmless as the jury was able to find likelihood of
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above, the jury was instructed on the Sleekcraft factors which were largely
satisfied through the jury’s own visual comparison.93 The jury was not required to
rely on any presumption of a likelihood of confusion alone. The Court did instruct
the jury on the Sleekcraft factors,94 and the jury was well equipped to make the
almost identical nature of the copies and the authentic goods, the jury’s finding
93
AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979) (In
determining likelihood of confusion the following factors must be balanced: (1)
strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4)
evidence of actual confusion; (5) marketing channels used; (6) type of goods and
degree of care consumers are likely to exercise in purchasing them; (7) intent of
the defendant in selecting the mark; and (8) likelihood that the parties will expand
their product lines.) Given the nature of counterfeit product, several of these
factors weigh strongly in favor of confusion, not limited to (1), (2), (3), (5) and (6)
– most of which are also satisfied through visual comparison of the counterfeit
goods with authentic merchandise.
94
ER AKA00075-00076.
95
Karl Storz Endoscopy-Am., Inc., 285 F.3d 848, 854 (9th Cir. 2002). Though
unnecessary in light of the uncontested and obvious copying at issue here, a jury
determination based on observation is clearly contemplated by Sleekcraft, 599 F.2d
at 348-49. “The law in the Ninth Circuit is clear that “post-purchase confusion,”
i.e., confusion on the part of someone other than the purchaser who, for example,
simply sees the item after it has been purchased, can establish the required
likelihood of confusion under the Lanham Act.” Karl Storz Endoscopy-Am., Inc.,
285 F.3d at 854 citing Academy of Motion Picture Arts & Sciences v. Creative
House Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir. 1991); Levi Strauss & Co. v.
Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir. 1980). Confusion of non-purchasers
observing the infringing item is “no less injurious to the trademark
owner’s reputation than confusion on the part of the purchaser at the time of sale.”
Karl Storz Endoscopy-Am., Inc., 285 F.3d at 854 citing Payless Shoesource, Inc. v.
Reebok Int’l Ltd., 998 F.2d 985, 989-90 (Fed. Cir. 1993).
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was soundly supported by the evidence. The error raised by Appellants simply did
Defendants’ assertion that the record does not evidence the use of certain
trademarks in specified classes of goods does a disservice to the hard work of the
questions raised during deliberations demonstrate the jury carefully combed the
record as careful as that done by the jury: For example, (1) see SER LV673, 798
headgear; (3) SER LV860, 863, 878-879 for examples of mark 1,990,760 in
watches. Examples of other uses the Defendants could not locate but the jury
Applying the settled law of the Ninth Circuit, and applying it to the business
of Internet web-hosting, the Court correctly instructed the jury and the jury arrived
96
Other Exhibits which evidence use in specific classes overlooked by the
Defendants include SER LV661, 754, 789, 797, 798, 805, 851, 859, 863, 865, 954,
1084-1112 .
34
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Appellants claim that the Court should have instructed the jury on intent, in
addition to the well-settled elements described in the cases cited above. In doing
so, Appellants confuse distinct legal claims governing secondary liability. Louis
unambiguously used the word “or” to separate the two bases for contributory
trademark infringement, with only inducement requiring intent. Inwood, 456 U.S.
at 854.
Further, the Court did not require the contributory infringer to supply its
service to the direct infringer but to one who “is engaging in trademark
infringement occurs when the defendant … supplies a product to a third party with
actual or constructive knowledge that the product is being used to infringe the
97
Moreover, in view of the jury’s separate finding of willfulness in finding
heightened statutory damages under both Trademark Act and Copyright Act, any
error in instructing on intent was clearly harmless insofar as such intent was found
by the jury in awarding statutory damages.
35
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Defendants were, nonetheless, providing the means by which the direct infringers
confusing the issue,99 arguing that “[e]very appellate decision finding contributory
infringement.”100
This is wrong. In Napster, for example, this Court noted that knowledge, not
intent, was required for contributory liability. 239 F.3d at 1020 (“Contributory
liability requires that the secondary infringer ‘know or have reason to know’ of
Prods., Inc. (“Cable/Home”), 902 F.2d 829, 845 & 846 n.29 (11th Cir. 1990);
Netcom, 907 F. Supp. at 1373-74 (framing the issue as “whether Netcom knew or
Like Napster, Defendants had actual knowledge; they were given repeated
notice of numerous websites, many of which were available long after notification
98
These cases clearly show there is no requirement of a “direct” relationship
between the contributory infringer and the underlying direct infringer, and the facts
of this case illustrate why it would be wrong to do so. Defendants cannot purport
to create an imaginary “middleman” to avoid liability.
99
Opening Brief, pp. 23-24.
100
Opening Brief, p. 23.
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by Louis Vuitton, and in some instances, still accessible at the time of trial.101
Litigation, 334 F.3d 643, 650 (7th Cir. 2003). Here, the evidence was that
Defendants were more than willfully blind, and certainly not less so.
specifically noted that it did not address liability under all contributory theories but
only under the plaintiff’s inducement claim, which is irrelevant here. Grokster,
545 U.S. at 934. There was, therefore, no error as the jury was correctly instructed
101
See footnote 66.
102
“We also reject Aimster’s argument that because the Court said in Sony that
mere ‘constructive knowledge’ of infringing uses is not enough for contributory
infringement, and the encryption feature of Aimster’s service prevented Deep from
knowing what songs were being copied by the users of his system, he lacked the
knowledge of infringing uses that liability for contributory infringement requires.
Willful blindness is knowledge, in copyright law (where indeed it may be enough
that the defendant should have known of the direct infringement).” In re Aimster
Copyright Litigation, 334 F.3d at 650 (internal citations omitted).
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requires intent only when knowledge is absent, e.g. where one sells an item with
substantial lawful as well as unlawful uses. It has never been applied in the
infringement claims, it would not be applicable here, since Defendants had actual
U.S. at 934-935.
safe harbor does not shield a defendant. Id.; see also Napster, supra, 239 F.3d at
1021) (citing Netcom, 907 F. Supp. at 1374 (N.D. Cal. 1995); Arista Records LLC
v. USENET.com, 633 F. Supp. 2d 124, 158 (S.D.N.Y. 2009) (“The Court need not
resolve this apparently difficult question, as it has already been determined that
This Court has also expressly rejected application of the doctrine to cases
involvement consistent with the reasoning of this Court in Napster. Because of the
its system, and can take simple measures to prevent further damage to copyrighted
works, yet continues to provide access to infringing works.” Amazon, 508 F.3d at
1172 (citations omitted); see also Napster, 239 F.3d at 1021 (9th Cir. 2001) (in the
learns of specific infringing material available on his system and fails to purge
such material from the system, the operator knows of and contributes to direct
access to infringing content); see also Netcom, 907 F. Supp. at 1374 (finding
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infringing post).
conduct of another. Amazon., 508 F.3d at 1171. To satisfy the first element,
requires that the secondary infringer ‘know or have reason to know’ of direct
infringement.”) (citing Cable/Home, 902 F.2d at 845 & 846 n.29); Netcom, 907 F.
Supp. at 1373-74 (framing issues as “whether Netcom knew or should have known
of” the infringing activities). The trial court instructed on both knowledge and
material contribution.
On its face, there was no error on the instruction of knowledge. The Ninth
Circuit Model Civil Jury Instruction includes the “knew or should have known”
105
Ninth Circuit Manual of Model Jury Instructions, Instruction No. 17.21
Derivative Liability - Contributory Infringement.
106
ER AKA00079:16-18.
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contribution to describe the Defendants’ goods and services consistent with the
examples from controlling authority and common sense.107 The finding of liability
finding of liability in the case of one who knowingly provides the “site and
facilities” for the underlying infringement. Visa, 494 F.3d at 798-99. Thus, it
upheld liability in Fonovisa, 76 F.3d at 264, where the flea market proprietor
provided the environment for sales to thrive. Likewise, in Napster, 239 F.3d at
infringement by providing “site and facilities” for that infringement. As for Visa
itself, this Court noted that (unlike Defendants here) Visa did not maintain the
servers on which infringing websites reside. 494 F.3d at 800. Instead, it merely
Defendants did maintain the servers and the trial court’s instructions were tailored
to those facts.
copyright liability satisfy the applicable law. Based on the evidence, the jury
found that the websites used Defendants’ goods and services to infringe and were
107
ER AKA00079:11-22.
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appropriately reflected the circumstances of this case, and a contrary verdict was
possible if the jury had believed the Defendants’ presentation. They simply did
not.
the Defendants is jointly and severally liable with each of the underlying direct
infringers whose conduct they each enabled. The jury was appropriately instructed
They found the Defendants’ conduct willful and rendered a verdict well within
appeal.
1. Defendants Are Jointly and Severally Liable for Damages with the
Underlying Direct Infringers.
A defendant who is contributorily liable is jointly and severally liable for the
is “jointly and severally liable with the prime tortfeasor”); Crystal Semiconductor
Corp. v. Tritech Microelectronics Int’l, 246 F.3d 1336, 1361 (Fed. Cir. 2001)
Inc., 909 F.2d 1464, 1469, 15 U.S.P.Q.2D (BNA) 1525, 1528 (Fed. Cir. 1990).
defendant’s profits and collection of any damages sustained by the plaintiff as well
involving the use of a counterfeit mark…in connection with the sale, offering for
instead of actual damages and profits under subsection (a), an award of statutory
damages for any such use in connection with the sale, offering for sale, or
statutory damages.
and Louis Vuitton elected to pursue statutory damages for its claims. Thus,
Defendants are jointly and severally liable for the direct infringement with the
statutory damages were not proved are unconvincing and contrary to controlling
43
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Lehman Commer. Paper, Inc., 471 F.3d 977, 1001 (9th Cir. 2006). The applicable
standard when “reviewing an award of statutory damages within the allowed range
is even more deferential than abuse of discretion.” Broadcast Music, Inc. v. Star
Amusements, Inc., 44 F.3d 485, 487 (7th Cir. 1995). “The employment of the
statutory yardstick, within set limits, is committed solely to the court which hears
the case, and this fact takes the matter out of the ordinary rule with respect to abuse
guesswork.’” Los Angeles Memorial Coliseum Comm’n, 791 F.2d at 1360 citing
Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 1297 (9th Cir. 1984) (quoting
Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1216 (9th Cir. 1983). “An otherwise
or ‘shocking to the conscience.’” Chalmers v. City of Los Angeles, 762 F.2d 753,
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action was taken to remove or disable access to any infringing offers that were the
purportedly made changes to their protocol for handling infringement notices after
they were served with process, the end result was no different as the infringing
model by avoiding and evading Louis Vuitton’s NOI by, among other things,
rotating infringing sites among different servers and/or between servers controlled
Defendants’ servers a magnet for hundreds of such websites and amply justified
the jury’s conclusion that the Defendants’ actions were in bad faith, done with a
deliberate disregard for Louis Vuitton’s valuable rights and with intent that
offshore scofflaws.
108
See footnote 2.
109
See footnote 66; ER AKA 00788-00807.
110
See footnote 43.
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the jury to award damages “per type of goods or services sold, offered for sale, or
that follows the language of the governing statutes are properly rejected.
The jury did not award statutory damages beyond the statutory limits. As
stated in instructions and special verdict form (and in a format consistent with that
proposed by Defendants), the jury was asked to calculate the damages for which
each Defendant was liable. The jury awarded $700,000 for each of fifteen (15)
trademarks against each of the three Defendants, for a total award of $31,500,000
($700,000 x 15 x 3). This is below the $1,000,000 permitted by statute for each
trademark infringement upon which the jury was instructed and as admitted by
Appellants in their brief.111 The jury applied the same math to its $150,000 award
as to each of the two copyrights also infringed. The $150,000 awarded for
violation of each of two copyrights was also within the statutory parameters about
Defendants and by incorrectly asserting that the jury awarded the equivalent of
111
Opening Brief, p. 39.
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$2,100,000 for each of the fifteen (15) trademark infringements and $450,000 for
each of the two copyrights. This is not what the jury did. On the contrary, the
verdict is consistent with the law, the facts, the instructions and the special verdict
merely assessed a separate award within statutory limits as against each Defendant.
For Defendants to object to the format they themselves proposed should not
be countenanced. Defendants have at no time argued, let alone proved, that the
there was ample evidence that each was engaged in assigning IP addresses to the
times.113 Based on this evidence the jury could properly conclude that the
Chen. Even apart from Chen’s interest as sole owner, sole officer and general
his active involvement in the acts and omissions that contributed to the underlying
112
The Special Verdict form, modeled upon Defendants’ own draft Special
Verdict form in certain key respects (SER LV1211-1214, Docket No. 220, et.
seq.), provided separate spaces for each Defendant, and each Defendant having
been found liable by the jury, was assessed a damages sum against it within the
statutory scheme (regarding trademarks within the prior statutory scheme).
113
See footnote 43.
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general, personally liable for all torts which he authorizes or directs or in which he
on his own behalf.” The Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d
814, 823 (9th Cir. 1996) (quoting Transgo, Inc. v. Ajac Transmission Parts Corp.,
768 F.2d 1001, 1021 (9th Cir. 1985)); see also Novell, Inc. v. Unicom Sales, Inc., et
al., No. C-03-2785 MMC, 2004 WL 1839117, at *17 (N.D. Cal. Aug. 17, 2004)
(applying this principle to copyright claim). Thus, the jury award of $32,400,000
was consistent with statutory standards, the jury instructions and the verdict form
potentially have accounted for a separate award and Defendants ought to be jointly
and severally liable for those hundreds, if not thousands, of independent instances
of infringement.115 The result of this interpretation of the law would have been
114
Chen was not only the General Manager and sole owner of the ISP Defendants,
ER AKA00359:3-20, 00364:3-10, SER LV262:10-15, he was primarily
responsible for handling abuse complaints and for instructing and overseeing his
part-time employee who also handled abuse complaints. SER LV196:25-197:4,
234:19-235:20, 253:16-254:13, 258:7-10, 346:7-25, ER AKA00313:1-24. Chen
was the principal decision maker as to enforcement (or lack thereof) of the ISP
Defendants’ abuse policy and he rarely, if ever, imposed any fees on violators, ER
AKA00360:5-00361:15, and also refused to terminate recidivist infringing
customers. SER LV371:12-374:11, 397:2-401:17.
115
For example, each infringing website listed on Exhibit 1598, included
infringement of at least two (and usually many more) trademarks. To the extent
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significantly more than the $32,400,000.00 awarded. Therefore, the alleged error
about which the Appellants object is harmless (to Appellants) and insufficient to
Under the facts of this case, there was no error in the jury’s verdict or in the
damages for willful infringement. If the size of the award alone were reason to
established by Congress.
Appellants’ argument that the District Court equated willfulness with intent
known”) governs liability. The Appellants argue that the trial court instructed that
each infringement in each class of goods on each website constituted a separate act
of infringement for which statutory damages could be assessed, the total potential
award far exceeds the award for the fifteen (15) infringements, due to multiple
classes, upon which the jury was instructed.
49
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The Court separately instructed the jury on notice (an element required to
establish liability) and willfulness (an element required to assess the appropriate
level of statutory damages). In neither case is intent an issue nor was any
instruction required. The jury instructions on the range of damages set forth
acted in bad faith, 2) Defendants acted with deliberate disregard for Plaintiff’s
Lindy Pen Co., 982 F.2d at 1406. The trial court’s instruction was at least
consistent with controlling authority and the jury was properly instructed.
For copyright damages, the Court was thorough, instructing the jury on both
excerpts of the instructions conflate the actual instructions used with what
Unlike punitive damages, the statutory damages at issue are subject to specified
statutory limits on the applicable award. The jury awarded damages within the
applicable range of statutory damages provided by both the Lanham Act and the
Copyright Act. Congress has provided clear standards to help a jury arrive at a just
ranges of damages that correspond with higher levels of culpability. See, e.g., 17
damages may also serve a punitive purpose, “[s]tatutory damages further [both]
‘compensatory and punitive purposes,’ and help ‘sanction and vindicate the
PC Onsite (“Dream Games”), 561 F.3d 983, 992 (9th Cir. 2009) quoting L.A.
News Serv. v. Reuters Television Int’l, 149 F.3d 987, 996 (9th Cir. 1998).
Within the ranges of statutory damages the jury has considerable discretion.
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Dream Games, 561 at 992 quoting Peer Int’l Corp. v. Pausa Records, Inc., 909
F.2d 1332, 1336 (9th Cir. 1990). As long as the amount awarded is within the
Broadcasting of Birmingham, Inc., 259 F.3d 1186, 1194-95 (9th Cir. 2001);
Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488,
Jury awards of statutory damages are constitutional, and the “jury has wide
discretion in setting the award” while “the district court maintains its role as the
evidentiary gatekeeper.” Dream Games, 561 F.3d at 993. Statutory damages are
awarded fall “within statutory limits to sanction and vindicate the statutory
policy.” F.W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 223 (1952).
This Court has consistently held that statutory damages are recoverable without
regard to any actual damages and the amount of statutory damages awarded is
“constrained only by the specified maxima and minima.” L.A. News Serv., 149
F.3d at 996 quoting Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir.
1984); see also Columbia Pictures Television, Inc., 259 F.3d at 1194); Peer Int’l
Corp., 909 F.2d at 1337. Appellants’ assertion that statutory damages can be
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awarded only with reference to proved actual damages ignores both the record
place even during the trial in the summer of 2009, yet the Parties agreed to use the
old statutory framework for determining trademark damages, even though statutory
damages for trademark violations had been doubled by statute during the litigation.
15 U.S.C. 1117. At the outset, therefore, the maximum damages possible were
reduced by about half.118 Thus, the jury’s final determination was fully within the
bounds of reasonableness and the end award more than appropriate in light of the
In the present case, the jury asked the trial court for further clarification on
consideration the jury gave to assessing the Defendants’ conduct, the number of
infringed rights at issue and the damages award to attach to each of the trademarks
and copyrights. The jury’s careful deliberation in this case amply justifies the
Music, Inc., 44 F.3d at 487 (“even more deferential than abuse of discretion”)
There was nothing grossly excessive about an award that fell squarely within
the congressionally mandated damages regime for the number of properties and
defendants at issue.
damages under the Copyright and Trademark Acts. See, e.g., Peer Int’l Corp.,
909 F.2d 1332 (copyright award of then maximum of $50,000 for each of 80
copyrights); Columbia Pictures Industries, Inc., 259 F.3d 1186 (copyright award
of $72,000 for each of 440 infringements). The jury’s verdict was wholly in line
with due process, the statutes enacted by Congress, and the circumstances of this
case.
ARGUMENT ON CROSS-APPEAL
MSG was more than a mere owner of servers run by Akanoc and Chen. The
trial record made clear the involvement of all three Defendants in the running of
their infringing operations, supporting the verdict and a separate award of damages
against each.120
120
This court reviews the district court’s grant or denial of a renewed motion for
judgment as a matter of law de novo. See Theme Promotions, Inc. v. News Am.
Marketing FSI, 546 F.3d 991, 999 (9th Cir. 2008); Josephs v. Pacific Bell, 443
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testimony that MSG merely owned the means of infringement (the servers, router,
IP addresses and bandwidth) and that these assets had been leased to Akanoc
which operated the means of infringement. In doing so, however, the Court
improperly substituted its view about the credibility of Chen’s testimony for the
view of the jury, which had ample reason to discount his testimony.
improperly set aside. Johnson v. Paradise Valley Unified Sch. Dist., 251 F.3d
1222, 1227 (9th Cir. 2001) citing Gilbrook, 177 F.3d at 856 (“A jury’s verdict
draw a contrary conclusion from the same evidence.” Id. “Thus, ‘although the
court should review the record as a whole, it must disregard all evidence favorable
to the moving party that the jury is not required to believe,’ Johnson, 251 F.3d at
1227 citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 120 S. Ct.
2097, 2110, 147 L. Ed. 2d 105 (2000), and may not substitute its view of the
evidence for that of the jury.” Johnson, 251 F.3d at 1227 citing Gilbrook, 177 F.3d
at 856. The reviewing court “may not assess the credibility of witnesses in
evidence, and the drawing of legitimate inferences from the facts are jury
functions, not those of a judge.” Reeves, 530 U.S. at 150 citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505; 91 L. Ed. 2d 202 (1986).
Given the trial record and under these standards, the jury’s verdict must be
reinstated.
The court stated that “[t]here was no evidence that Defendant Managed
Solutions Group, Inc. sold domain names or operated the servers.”121 The trial
record speaks loudly to the contrary. MSG was an actively participating web host
and willfully blind operator of servers used in the systematic counterfeiting and
• Chen was owner and general manager of both MSG and Akanoc and at
• Chen testified that MSG was a host in the same business as Akanoc;123
• Chen testified that both MSG and Akanoc are Internet service
providers.124
121
Louis Vuitton has not at any time asserted the Defendants are liable on account
of any domain name registration services. SER AKA00015:7-12.
122
SER LV248:24-25, 303:4-25; ER AKA00359:1-5, 00364:3-10.
123
SER LV260:8-262:9, 332:4-12.
124
SER LV336:9-12.
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• MSG was the owner of its own allocation of Internet Protocol (“IP”)
Addresses.125
copyright infringement (albeit untimely, after the complaint was filed and
served).127
complaints.130
125
SER LV613, 1182.
126
Id.; SER LV422:20-23.
127
SER LV362:4-363:22, 640.
128
SER LV199:1-8, 364:12-21.
129
SER LV260:3-7.
130
SER LV303:4-25, 307:16-308:5.
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Vuitton.131
allocations.132
upon which the Court relied to dismiss MSG, existed only after April,
2007 and would have had no bearing upon MSG’s liability for conduct
that MSG’s role was limited and its liability should be reversed. To the contrary,
during trial only further supported the finding of the jury that both MSG and
Akanoc were web hosts and both key to the Defendants’ ongoing enterprise.134
131
SER LV118:15-20, 121:5-7, 121:13-18, 122:7-12, 126:2-8, 129:18-21, 133:23-
134:4, 136:20-24, 141:23 -142:1, 143:3-14, 153:14-19, 243:20-24, 244:24-245:6,
576-596, 614, 621-625, 642-650, 666, 670, 726, 730, 736, 739-753, 755-787, 792,
799-804, 807-812, 816, 826, 844, 867-877, 948-953, 957-968, 1046, 1077, 1180.
132
SER LV143:3-14, 153:14-19, 345:5-20.
133
ER AKA00365:6-00366:22; SER LV576-596, 614-625.
134
SER LV332:4-5, 336:9-11, 344:1-3, 347:2-5, 355:19-356:1, 419:24-25, 420:3-
4, 421:8; ER AKA00265:20-22, 00278:19-21, 00300:23-25; 00493:3-7, 00494:12-
16.
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The evidence at trial was more than sufficient for the jury to find MSG liable
company relationship between Akanoc and MSG from April 2007 forward and in
the absence of any distinction by the Defendants between their activities, the Court
relied solely upon the testimony of Chen to conclude that the verdict should be
the jury was entitled to disregard his testimony.136 Chen was repeatedly impeached
135
ER AKA00365:25-00366:2.
136
Compare ER AKA00321:11-00322:18, 00326:20-25 (websites listed in the
complaint were either not hosted by Defendants or were dead when he “first”
checked, including ape168.com) and SER LV376:11-378:11, 1030 (email from
Chen to his customer dated 8/8/07 re Louis Vuitton and Defendants’ hosting of
website ape168.com); compare also SER LV394:6-396:8 (unplugging of
lovernike.com after a complaint contrary to Defendants’ Exhibit 1598 which
suggests it was “not functional” or not on Defendants’ servers at that time);
compare also SER LV405:14-407:10 (Defendants sent a letter indicating that none
of the websites that were the subject of a complaint were on Defendants’ servers,
yet their own Exhibit 1598 showed that they were in fact hosted by Defendants and
notifications to Defendants’ customers were sent out in response).
137
ER AKA00320:15-00321:23 (stating he was served on 8/20/07, as reflected in
Exhibit 1598 and that this was his first knowledge of Louis Vuitton’s claims) and
SER LV375:6-376:1 (proof of service showing service date of 8/15/07); SER
LV1117-1120, 1031 (email showing he had notice of the action as of 8/8/07).
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• what Defendants knew about whether their customers were in fact the
website was located on their servers, even though the website was
publicly accessible.141
role was understandably and appropriately disregarded by the jury. The District
testimony offered at trial to set aside the jury’s verdict on liability and damages
against MSG.
138
Compare ER AKA00305:8-17 (describing their “general procedure”) and SER
LV279:14-281:22 (even registered mail, including notices of infringement to
Defendants, was piled, unopened, on an unoccupied desk for about eight months),
SER LV282:18-283:3 (no one handled these letter complaints), SER LV284:19-
286:13 (even a letter Chen received at his home was simply added to the pile at the
office, there was no mechanism for handling letter complaints), SER LV305:12-23
(MSG had the same procedure as Akanoc regarding adding of unopened
complaints to the empty desk).
139
See footnote 137.
140
Compare SER LV385:24-386:9 (his customers have nothing to do with the
websites and are just resellers) and ER AKA00298:4-13 (he does not know what
his “reseller” customers do with a deployment), SER LV386:5-24 (his customers
could be the website operators).
141
Compare SER LV165:7-12 and SER LV393:18-24 (websites are publicly
available).
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The evidence shows that Akanoc and MSG were separate web hosts and that
each Defendant had a specific role in their common goal of protecting their
businesses and the infringers whose underlying business depended upon both
light of the roles played by Defendants, it was inappropriate to reverse the jury’s
finding of liability as against MSG, even if MSG was the owner of the servers,
because its level of participation was sufficient to support the jury’s findings.143
conclusions. This is illustrated in Appellants’ Opening Brief where they argue that
no Defendant is liable for activity occurring on MSG’s servers, not even Akanoc,
142
SER LV245:1-10, 299:3-19, 325:11-18, 371:12-374:11, 397:2-401:17, 407:11-
409:12, 446:24-447:25, 1121-1137, 1143-1163; ER AKA00788-00807.
143
See footnotes 123-134.
144
For example, Appellants’ argue that “Akanoc did not host website with use in
class 14”, or that there was “no evidence this website was ever hosted on Akanoc’s
servers”. This shows that Defendants believe they avoid liability for underlying
direct infringement as a result of the District Court’s finding that MSG’s bare
ownership is insufficient to confer liability. In other words if MSG is not liable,
neither is Akanoc. Opening Brief, pp. 36 (re watchnreplica.net), 38 (re LOUIS
VUITTON ‘760’ mark).
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counterfeiting, something Chen admitted was “wrong” and “against the law,”145 yet
Defendants’ underlying theme: that they can evade compliance with accepted
industry norms and United States legal standards by schemes designed to protect
underlying illegal activity enabled by their goods and services through irrelevant
Even if the District Court were correct about the legal relationship between
Akanoc and MSG, MSG still had sufficient participation, control over and
underlying direct infringement. The jury correctly found both MSG and Akanoc
CONCLUSION
The trial court applied the correct legal standards, and the jury properly
found Defendants liable. This was such a case where, despite all kinds of
opportunity and notice, these web hosts and their principal continued to look the
other way, leaving Louis Vuitton with no other choice but to pursue compliance
through litigation. The court’s instructions were appropriately tailored to the case,
145
SER LV357:18-22.
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and the jury’s findings supported by the evidence. The Court’s post-trial rulings146
were correct in sustaining the verdict as to Akanoc and Chen, but should be
requests that this Court deny Appellants’ Appeal in its entirety and reinstate the
146
To the extent Appellants purport to reserve arguments asserted on those motions
but not addressed in their Opening Brief (at p. 50), such arguments should be
considered waived. Arguments not raised in the Opening Brief should be deemed
waived and rejected by this Court. Appellants cannot be permitted to incorporate
broad and amorphous “catchall” arguments “by reference” to the pleadings below,
including their post-trial motions, if they have not been set forth in the Opening
Brief. See International Union of Bricklayers & Allied Craftsman Local Union
No. 20, AFL-CIO v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir. 1985) citing
Kopczynski v. The Jacqueline, 742 F.2d 555, 560 (9th Cir. 1984) (claims of error
on appeal “must be specific”).
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RELATED CASES
Pursuant to Circuit Rule 28-2.6, there are no known related cases pending
CERTIFICATE OF COMPLIANCE
attached principal and response brief of Appellee Louis Vuitton Malletier, S.A.
32(a)(7)(B)(iii).
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CERTIFICATE OF SERVICE
I am a resident of the State of California and over the age of eighteen years.
A Prof. Corp., 517 East Wilson Avenue, Suite 202, Glendale, California 91206.
PLAINTIFF, with the Clerk of the Court for the United States Court of Appeals
for the Ninth Circuit by using the appellate CM/ECF system on October 12, 2010.
I certify that all participants in the case are registered CM/ECF users and that
I am informed and believe that my office served the requisite paper copies of
CROSS-APPELLANT/APPELLEE/PLAINTIFF’S SUPPLEMENTAL
EXCERPTS OF RECORD VOL. 1-6 on all participants in this case, via FedEx
I declare under penalty of perjury under the laws of the United States that
the foregoing is true and correct, and I am employed in the office of a member of
the Bar of this Court at whose direction this service was made.
65