by Claudia Bruemmer

A lawsuit filed by the Roger Cleveland Golf Company, a manufacturer of golf clubs and related goods, accused Christopher Prince, owner of the copycatclubs.com website, of selling counterfeit Cleveland clubs. Also named in the suit was Bright Builders, a web design, hosting and SEO provider. The suit alleged the design/hosting company helped the retailer build the website, which included SEO services that resulted in top search rankings for Cleveland’s trademarked terms.

The design-SEO firm was held liable in federal court for enabling the sale of counterfeit goods. Bright Builders was hit with a $770,000 fine for damages in the judgment, handed down in U.S. District Court in South Carolina last week. Interestingly, the retailer was only fined $28,000.

The plaintiffs contended Bright Builders helped Prince Distribution build a website, which included SEO services that helped it rank for Cleveland’s trademarked terms – charges that were denied by Bright Builders. However, according to the plaintiffs, providing SEO services, which included submission of the website to 2,500+ search engines and directories, made the design firm culpable. The plaintiffs said the word “Cleveland” was embedded within the site’s metadata, and the site contained marketing copy stating, “we are your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet.”

The plaintiffs also said Bright Builders helped Prince find dropshippers to provide products to customers. Because of these activities, the plaintiffs contended that Bright Builders should have known about the counterfeiting activities, contributing to the liability.

Christopher Finnerty of Nelson Mullins Law Firm, who represented Cleveland Golf and parent company Srixon, wrote, “For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning.” In addition, Finnerty added, “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 proactive 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.”

Because Bright Builders and Prince were found liable in a jury trial, this case may have implications for other design-SEO firms or website hosts. However, because of the brief legal defense by the defendant’s attorney, it is unclear what the implications will be. Bright Builders’ attorney submitted a 1.5 page summary judgment brief arguing that the design firm be dropped as a defendant from the case, denying the charges but failing to include any citations or supporting evidence.

Eric Goldman remarked in his Technology & Marketing blog, “That ruling was a puzzling head-scratcher holding that a web design/SEO/host firm working with an alleged online retailer of counterfeit goods could be liable for contributory trademark infringement.” He further added, “We don’t have a good sense of how likely it is that other web designers or SEOs/hosts will be sucked into the same liability trap.”