Akanoc Solutions Inc., Managed Solutions Group Inc., and Steven Chen, the owner of the two companies learned the hard way that being a web host doesn't make you automatically free from liability for copyright and trademark infringement committed by your customers. The ISPs involved hosted websites that sold knock-off Louis Vuitton goods, and they were made aware of that fact. A jury found that they knew, or should have known, that their customers were using their services for this purpose, and tagged the web hosting company for a $32 million verdict.
Chen's lawyers argued that he and his companies were protected from being assessed damages under the DMCA, which generally does protect online service providers from these kinds of suits. However, given that Chen's companies both provided the infrastructure for the infringement scheme and that they were made well aware of the activity, but turned a blind eye to it, they lost their immunity. See Computerworld.
The case is Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., U.S.D.C., Northern District of California, Case5:07-cv-03952-JW. The complete case file is available here, on Justia. Important case documents:
