Two webhosting companies based in California have been demanded to pay $32 million to Louis Vuitton company for an alleged “trademark and copyright infringement” arising from the plaintiffs’ hosting of websites that sell counterfeit goods, particular those of Louis Vuitton products.

In a landmark decision handed down by a federal jury in California, Akanoc Solutions, Inc. and Managed Group Solutions, Inc., all based in Fremont, California and owned by Steve Chen (is he the same Steve Chen that co-founded the Youtube site that was eventually bought by Google?), have been found guilty as charged by Louis Vuitton company.

The report says: In awarding the damages, the jury agreed with Paris-based Louis Vuitton Malletier S.A.’s claims that the defendants knowingly allowed several Web sites they hosted to sell products that infringed Louis Vuitton’s copyrights and trademarks.

The report adds: Attorneys for the luxury goods maker said in a statement that the case is the first successful application on the Internet of the theory of contributory liability for trademark infringement.

What is the moral lesson of the story? I feel that from now on webhosts must not tolerate any content uploaded by its client website if it is deemed illegal or does violate copyright laws.

How about if a webhosting company is not aware of an existing copyright law or is not aware of the existence of an illegal content uploaded into its server? Monitoring contents of a webhost’s client’s website entails more work for a webhosting company.

The jury’s decision, a landmark one, may change how a webhosting company treats the reputation of each of its client. Who will host a torrent website?

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