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LVMH Infringement Ruling Upheld in Appeal

Court affirms Akanoc decision holding third parties accountable for counterfeiting.

THE Ninth Circuit Court of Appeals in the U.S. affirmed a landmark ruling in favor of LVMH Moët Hennessy Louis Vuitton, which held Web hosts and other third parties accountable for the sale of counterfeit products.

The 2007 case was filed in the Northern District of California and was appealed following a jury ruling in favor of LVMH in 2009. The company was awarded damages of $32.4 million.

Central to the lawsuit was LVMH’s claim that Web host Akanoc Solutions Inc., Managed Brands Solutions Group Inc. and the companies’ owner, Steven Chen, knowingly permitted several sites to sell goods that infringed on the luxury house’s copyrights and trademarks. Each defendant had been ordered to pay $10.8 million, but after the trial, Managed Brands was dropped from the suit, reducing the judgment to $21.6 million.

The most recent ruling, which was delivered in mid-September, confirmed the original decision but further reduced the judgment to $10.8 million to be paid collectively by Chen and Akanoc.

Legal sources said the initial judgment threatened to put Akanoc out of business. Akanoc’s Web site no longer exists and its lawyers did not respond to calls requesting comment.

“[The] defendants’ business model, designed to shelter illegal online conduct, was properly condemned by the jury whose hard work was recognized and affirmed by the Court of Appeals,” said Valérie Sonnier, global intellectual property director of Louis Vuitton. “It is of utmost importance for the stability and reliability of [the] Internet, that online intermediaries effectively contribute to the fight against illicit behavior and share responsibilities.”

But the Akanoc saga may not be over. The Ninth Circuit’s ruling may be petitioned for reconsideration, or the case could be brought to the Supreme Court.