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A South Carolina jury’s recent $770,750 verdict against Bright Builders Inc. marks the first time a Web-hosting company has been found liable for contributory infringement without actual notice that a customer’s Web site lists fake products for sale. South Carolina District Judge Margaret Seymour’s March 14 judgment in Roger Cleveland Golf Company Inc. v. Prince followed the jury’s March 10 verdict. The jury returned a $28,250 statutory damages verdict against Web site owners Christopher Prince and Prince Distribution LLC for trademark counterfeiting and infringement. The verdict included damages against both sets of defendants for violating the South Carolina Unfair Trade Practices Act. Here’s the jury’s verdict form. The jury found that Bright Builders and Prince were both liable for Prince’s copycatclubs.com Web site, which sold counterfeit Cleveland Golf clubs. The total judgment was based on the Prince defendants’ infringement of 11 Cleveland Golf registered trademarks, plus post-judgment interest. According to court papers, Prince’s Web site claimed to be “your one stop shop for the best copied golf clubs on the Internet.” Cleveland Golf originally filed suit against the Prince defendants because the Web site name and its claims were so brazen, said Christopher Finnerty, a Boston partner at Columbia, S.C.-based Nelson Mullins Riley & Scarborough and lead counsel on the case. “Usually, there’s a little cloak and dagger when counterfeit goods are sold online,” Finnerty said. “Their Web sites don’t usually advertise that they’re selling counterfeit goods.” The plaintiffs discovered Bright Builders’ role during its deposition of Prince and filed an amended complaint naming the company as a defendant, Finnerty said. For other Internet intermediaries, the ruling means that once they know or should have known that their customers are selling infringing goods, “they can’t remain willfully blind and wait for the brand owner to provide notice,” Finnerty said. A Web-hosting company’s obligation is similar to that of a landlord’s, he said. “A landlord doesn’t have the obligation to act as an investigator against his tenants to find out they are doing anything illegal, but once they knew or should have known, they have to act,” Finnerty said. “How is that any different online?” Douglas Matthew Fraser, one of Bright Builders’ lawyers at Mt. Pleasant, S.C.-based Jekel-Doolittle, declined to comment. Bright Builders did not return a call. Prince’s lawyer Christopher Lizzi, a solo practitioner in North Charleston, S.C., said he “thought the verdict was very proper under the circumstances.” “The defendant Bright Builders basically had a heightened duty and they didn’t comply with it,” Lizzi said. “The jury came back knowing my client acknowledged his fault in this in the beginning and was trying to be lenient on him.” Sheri Qualters can be contacted at [email protected].

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