Gucci Case Spells Trouble for ISPs

The fashion empire is hauling Mindspring into court for copyright infringement.

ISPs beware.

If the enervated economy and crumbling stock market haven’t already cast enough uncertainty on the Internet service provider industry, a recent lawsuit might tip it over the edge.

The case involves the Gucci fashion empire vs. Hall & Associates (owners of www.goldhaus.com, a jewelry e-commerce site) and Mindspring (an ISP now owned by EarthLink). Gucci claimed in federal court that Hall is guilty of trademark infringement for improperly using the Gucci logo on the Goldhaus site, and that Mindspring is also liable (as an accessory) simply for hosting the site. Actually, it’s a little more complicated than that. Before filing the lawsuit, Gucci sent Mindspring a couple of e-mails asking them to take the Goldhaus site down (it’s not hard to imagine where those e-mails went — let’s just say the site stayed up).

Mindspring thought it was protected by the law. In court, the ISP argued that it was immune to Gucci’s claims under a “safe harbor” provision of a federal statute passed as part of the Communications Decency Act of 1996. Specifically, section 230(c)(1) of this law states that “no provider or user of an interactive computer service [an ISP] shall be treated as the publisher or speaker of any information provided by another information content provider.” This means that if someone defames you on a website, you can sue the person who wrote it but not the ISP. Phone companies benefit from a similar policy: They’re considered conduits of information and not responsible for the content passing over their networks (which is why we don’t hold telecoms liable when people use phones in the course of committing a crime).

But that defense (which Mindspring offered in a pretrial motion to dismiss the case) didn’t work. The judge relied on another section of the law to rule that Gucci may proceed to trial with its claims. Just a couple of paragraphs below the safe-harbor provision, section 230(e)(2) states that “nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.” In other words, ISPs have nothing to worry about — unless they’re sued for copyright, patent, or trademark infringement (it shouldn’t be a surprise that the owners of those rights had something to say about ISP immunity when the Communications Decency Act was passed).

Losing this motion doesn’t mean that Mindspring will necessarily lose the case. At trial, the company can rely on traditional trademark law, which provides what is called an “innocent infringer” defense, initially crafted for newspapers or periodicals that might unknowingly publish an infringing mark. To win its case, Gucci will have to show that Mindspring “knew” about the illegal activities on Goldhaus.com, and the question will be whether the two e-mails sent by Gucci were enough to tip off Mindspring.

Still, even if Mindspring wins, the case is an unsettling development for ISPs. The court’s interpretation of the statute means that ISPs could get dragged into court as an accessory anytime there’s an infringement claim based on a website’s activity. And that could add up to a lot of wasted time that ISPs would rather spend on more pressing problems, like making money.

Posted by on March 27, 2001
Deborah Swan