Circuit Shaves $20 Mil. Off Louis Vuitton Award

     (CN) – The 9th Circuit on Monday upheld fashion giant Louis Vuitton’s victory over a web-hosting firm that provided support to Chinese copyright and trademark pirates, but knocked about 60 percent off of a jury’s $32.7 million award.
     The federal appeals court in San Francisco found that the verdict form in Louis Vuitton Malletier’s contributory-copyright and trademark-infringement trial against Managed Solutions Group, Akanoc Solutions and Steven Chen had improperly “invited the jury to specify a separate statutory damage award against each defendant.”
     But there was “no legal basis” for an award against each defendant, as “statutory damages reach a maximum based on the number of protected works, not the number of defendants,” according to the ruling.
     A three-judge panel of the 9th Circuit reversed the award and ordered Akanoc and Chen to jointly pay Louis Vuitton $10.8 million.
     Luis Vuitton sued Akanoc, Chen and Managed Solutions Group four years ago in California. The fashion company claimed that San Jose-based Managed Solutions and Akanoc, both managed by Chen, had leased servers, bandwidth and Internet addresses to customers in China that ultimately infringed on its trademarks and copyrights.
     A jury found that the defendants knew about their customers’ infringement but provided support to them anyway, and handed down the $32.7 million award to Luis Vuitton. Later, Chief U.S. District Judge James Ware set aside the verdict against Managed Solutions, concluding that it had merely owned and leased the hardware operated by Akanoc and Chen.
     The three-judge panel unanimously agreed with Ware as to Managed Solutions. Aside from cutting the award significantly, the court rejected most of Akanoc and Chen’s various claims on appeal.
     Akanoc and Chen claimed, among other things, that the District Court in its jury instructions had failed to address the “proper scope of the ‘means of infringement.'” The defendants contended that the websites selling the infringing products were the only means of infringement, and that the trial court neglected to distinguish between the defendants and their customers in that respect.
     The appellate panel disagreed, likening Akanoc and Chen to cyberspace landlords.
     “Websites are not ethereal; while they exist, virtually, in cyberspace, they would not exist at all without physical roots in servers and Internet services,” Judge Ronald Gould wrote for the panel. “As the District Court held, appellants ‘physically host websites on their servers and route Internet traffic to and from those websites. This service is the Internet equivalent of leasing real estate.’ Appellants had control over the services and servers provided to the websites. Stated another way, appellants had direct control over the ‘master switch’ that kept the websites online and available. The District Court did not abuse its discretion by formulating jury instructions that referred to the servers and services provided by appellants.”

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