CLEVELAND® GOLF SECURES VERDICT AGAINST COUNTERFEITER AND WEB HOST / SEO COMPANY
CLEVELAND® GOLF SECURES VERDICT AGAINST COUNTERFEITER AND WEB HOST / SEO COMPANY March 14, 2011
HUNTINGTON BEACH, CA – Roger Cleveland® Golf Company, Inc. ("Cleveland® Golf/Srixon®") won a landmark legal victory with a jury verdict last week and entry of judgment today in South Carolina federal district court in a first-of-its kind trademark infringement case. (Roger Cleveland® Golf Company, Inc. v. Prince (et al.), March 14, 2011)
Based on the jury's verdict, Judge Margaret B. Seymour of the United States District Court for South Carolina, entered judgment today 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 web site www.copycatclubs.com (“Copycat”), an online business that 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 web site.
This represents 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 case was presented and pursued by Cleveland® Golf/Srixon® based on a 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 web site. The jury accepted this theory finding Bright Builders was liable for contributory trademark infringement of eleven of Cleveland® Golf's registered trademarks.
“For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning," says Christopher Finnerty, a partner at Nelson Mullins Law Firm in Boston who represented Cleveland® Golf/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 pro-active 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."
The lawsuit was filed after Huntington Beach, CA-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 web site 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."
This action by Cleveland® Golf is part of a broader global effort by Cleveland® Golf/Srixon® in the ongoing fight against counterfeiting. "While individuals who sell counterfeits pose major problems for the manufacturer, companies like Bright Builders who can amplify the impact and scope of this problem are even more dangerous.” said Stephen Gingrich, Vice President of Global Legal Enforcement and HR for Cleveland® Golf/Srixon®. “Counterfeiting has existed for thousands of years but has been a localized issue. The Internet, ease of global shipping and payments, combined with SEO's and web hosts injecting steroids into the situation has brought the issue into every consumer's living room."
Cleveland® Golf/Srixon® was represented by 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.