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Gucci's Suit Against Mindspring to Proceed

A federal judge issued a ruling last Wednesday which could spell bad news for Internet Service Providers by holding them liable for content they don't produce.

Judge Richard M. Berman of the United States District Court for the Southern District of New York said he would not dismiss the suit leveled against EarthLink Inc. subsidiary Mindspring Enterprises Inc. by Gucci America Inc. Gucci America, a unit of Amsterdam-based Gucci, brought suit against Mindspring for hosting www.goldhaus.com, an online jewelry merchant which allegedly violated the Gucci trademark.

The goldhaus Web site is owned by Hall & Associates.

"By e-mail communications dated March 26, 1999 and March 27, 1999, Mindspring allegedly was twice notified by [Gucci] that Hall was using Mindspring's services to aid in acts of trademark infringement and unfair competition, including the advertising of jewelry on the goldhaus Web site which bore (and infringed) the Gucci Trademark," Berman wrote in his decision. "[Gucci] alleges that, despite the e-mails, Mindspring continued to permit Hall to use Mindspring's Internet services to infringe [Gucci's] trademark rights, with actual knowledge of, or in reckless disregard of, [Gucci's] rights and Hall's infringement."

Mindspring argued that the Communications Decency Act of 1996 "immunizes [it] from liability for information posted [on the goldhaus Web site] by [Hall]."

The act says, "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." But Berman said that language does not immunize Mindspring from Gucci's suit because the section goes on to say, "Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property."

"Under existing intellectual property law, publishers may, under certain circumstances, be held liable for infringement," Berman wrote. "Moreover, the United States Supreme Court has held, under the doctrine of contributory infringement, that "if a manufacturer or distributor...continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement," the manufacturer or distributor itself may be held liable for infringement."

David Loundy, an Internet law expert with Masuda, Funai, Eifert & Mitchell, said the judge's ruling will likely cause ISPs to remove content first and ask questions later.

"As far as what it means for service providers and the precautions they have to take, the message couldn't be clearer and I tend to think it's not likely that it will be overturned in a later court," Loundy told InternetNews Radio. "It's essentially saying, 'If you get a complaint you have to address it. If you don't address it, you may find yourself liable for it." If the service provider decides to leave something up, on the other hand, it has to risk suit from a trademark holder. It is going to cost the service provider more money to defend the suit -- even if the service provider is right -- than the potential revenue stream the service provider might be getting from the user whose Web site just got taken down."

Brian McWilliams of InternetNews Radio contributed to this report.



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