Reconsidering the Willful Blindness Doctrine in Contributory Trademark Infringement

• Publication year: 2022

Reconsidering the Willful Blindness Doctrine in Contributory Trademark Infringement

Andrew Ligon Fant
University of Georgia School of Law

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RECONSIDERING THE WILLFUL BLINDNESS DOCTRINE IN CONTRIBUTORY TRADEMARK INFRINGEMENT

Andrew Ligon Fant^*

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TABLE OF CONTENTS

I. Introduction...........................................................................................320

II. Background.............................................................................................322

A. The Lanham Act Provides a Cause of Action for Trademark Infringement..........................................................322
B. Contributory Trademark Infringement Imported from Tort Common Law.........................................................................324

1. Contributory Trademark Infringement Generally..................324
2. Contributory Trademark Infringement Liability for Service Providers........................................................................................326

C. The Willful Blindness Doctrine Imported from Criminal Law to Civil Law.............................................................................329

III. Analysis......................................................................................................334

A. The Modern Trend is to Shift the Duty to Police Trademarks to Marketplaces..................................................334

1. The Restatement's Approach is Incompatible with the Cases 334
2. Legislative Proposals Fall Short of Solving the Problem.......335

B. The Way Forward is to Step Back...........................................337

1. A Narrower Willful Blindness Doctrine is More Consistent with Tort Law...............................................................................338
2. Courts Should Use the Global-Tech Willful Blindness Standard in Contributory Trademark Infringement Cases.....................339

IV. Conclusion................................................................................................342

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I. INTRODUCTION

When Jacqui Rogers bought high-end Weiss butterfly brooches on eBay, her excitement about the bargain price may have overpowered any skepticism about their authenticity.¹ She knew they were fakes as soon as she opened the box.² Jacqui confronted the seller and got her money back,³ but many people in Jacqui's position are not so fortunate. Who is responsible for this variety of trademark infringement: the vendor who-knowingly or unknowingly-directly infringed Weiss' trademark, Weiss for failing to police its trademark, or eBay for failing to prevent trademark infringement from proliferating on its platform? What if Weiss had notified eBay that those specific brooches were counterfeits? Or if Weiss had told eBay that the vendor was selling fakes? What if Weiss had given eBay a more general notice that there were counterfeit brooches sold on its platform? Was eBay required to investigate and stop counterfeiting of trademarks on its platform? What exactly was eBay required to do to avoid liability, and when was that duty triggered?

The answers to these questions need to be clear, but they are far from that. The answers depend on the circuit in which the lawsuit is heard. A clear answer is critical to allow both trademark registrants and online marketplace operators to plan, weigh risks, and allocate resources to protect intellectual property rights and consumers cost-efficiently.

The Lanham Act is silent on the issue. The Supreme Court has never decided a contributory trademark infringement case outside the context of manufacturing, much less one in the context of an online marketplace. The circuit courts have developed divergent standards for liability both between circuits and even, apparently, within the Second Circuit, particularly as to the specificity of information required for liability under a theory of willful blindness.⁴

The Second Circuit decided a case in the last year that increased uncertainty for both trademark registrants and online marketplace operators.⁵ For the last decade, many practitioners and scholars believed that Tiffany v. eBay⁶ stood for

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the following proposition: an online marketplace cannot be contributorily liable for trademark infringement unless it (1) failed to remove from its platform infringing goods or vendors that repeatedly sold infringing goods (2) of which the marketplace had specific knowledge.⁷ But not all circuits have adopted the Tiffany standard.⁸ The Second Circuit—the same court that decided Tiffany—seemingly expanded Tiffany in 2021. In Omega v. 375 Canal, the Second Circuit held a building owner liable for infringement on their property despite their lack of any specific knowledge of the infringement.⁹

The tension created by the Second Circuit's application of the willful blindness doctrine, together with already-divergent standards amongst the circuit courts of appeal, causes confusion for all parties that play a role in trademark enforcement.¹⁰ This confusion increases costs, which the parties pass on to consumers.¹¹ The lack of a clear and uniform liability standard, from either the legislature or judiciary, clouds the decision-making of both trademark registrants and online marketplace operators.¹² The lack of clarity makes it difficult for companies to make decisions as to their obligations to each other, their obligations to consumers, and the resources they are each obligated or willing to devote to policing trademark infringement.¹³

This Note argues that the willful blindness doctrine—as applied by the Second Circuit in Omega in particular—should be restricted or eliminated as an end-run around traditional contributory trademark infringement liability. The willful blindness doctrine undermines the traditional rule against an affirmative duty to root out infringement, creates uncertainty where business enterprises need clarity, and makes even less sense in the online context than it might elsewhere. Trademark registrants—not online marketplace operators—should bear the burden of policing online marketplaces for trademark infringement.

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This Note explores the background of contributory trademark infringement in Section II to lay the groundwork for understanding the problem presented in online marketplaces. Section III analyzes modern contributory trademark infringement jurisprudence and the willful blindness doctrine, followed by an analysis of potential solutions to the problem. Ultimately, this Note argues that trademark registrants should bear the burden of policing their trademarks and that the willful blindness doctrine should be eliminated or significantly limited in this context.

II. BACKGROUND

A. THE LANHAM ACT PROVIDES A CAUSE OF ACTION FOR TRADEMARK INFRINGEMENT

A trademark is "a device used by a merchant to identify its goods or services and distinguish them from those of others."¹⁴ Trademarks are the bricks with which a brand name is built. Though the exact origin of trademarks is lost to the fog of history, merchants have placed distinctive marks on their goods since ancient times.¹⁵ Trade expanded as the world emerged from the Dark Ages, and merchants began to mark their goods so that customers in distant markets could identify the source of otherwise-generic products.¹⁶ Identifying the source of a product was critical to enabling repeat purchases of goods customers liked.¹⁷

One age-old debate in American trademark law is whether trademarks are meant to protect producers or consumers.¹⁸ Some scholars argue that the main goal of trademark law is best understood as protecting producers' "property right in the mark and only secondarily on protecting consumers from confusion."¹⁹ Other scholars tend to view trademark law as a form of consumer protection at its core.²⁰

The United States Congress first codified a federal trademark protection system in the act of July 8, 1870.²¹ The statute allowed for trademark registration with the Patent Office and created a civil cause of action for trademark

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infringement.²² Less than a decade later, in 1876, Congress created a criminal statute that penalized trademark infringement and counterfeiting with a fine and imprisonment.²³

The Supreme Court overturned both statutes as unconstitutional.²⁴ The Court consolidated three cases, now collectively known as "The Trademark Cases" to resolve a circuit split and review the constitutionality of Congress' trademark protection scheme.²⁵ The Court held that the regulation of trademarks fell outside of Congress' Copyright and Patent Clause²⁶ powers.²⁷ Thus, the Court reasoned that they must have been an exercise of Commerce Clause powers and held them unconstitutional as such.²⁸

Congress responded to The Trademark Cases by passing a new trademark statute under its Commerce Clause powers in the Act of March 3, 1881.²⁹ The 1881 Act proved inadequate since it provided no trademark protection for domestic interstate commerce.³⁰ In 1905, Congress passed the first "modern" federal trademark statute.³¹ The 1905 Act did not allow the registration of descriptive marks—geographical terms, personal names of individuals, names of firms, or names of corporations—and proved insufficient to deal with the realities of 20th century global trade even after several amendments.³²

The American Bar Association approved a draft bill in 1920 to replace the 1905 Act.³³ Nearly two decades later, in 1937, Edward Rogers, the author of the draft bill, gave his personal draft to Congressman Fritz Lanham.³⁴ Congressman Lanham introduced the draft as a house resolution the next year.³⁵ World War II shifted Congress' focus to more pressing problems, but Congress eventually passed the Lanham Act in 1946, which continues to govern American trademark law today.³⁶

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The Lanham Act includes a civil cause of action for trademark infringement.³⁷ The fundamental test of infringement—under both common law and statutory law—is "likelihood...