Counterfeits, Copyrights, and Digital Dysfunction

Now that the holiday shopping season is officially underway, it seems like a good time to talk about counterfeit products; and it may surprise some readers to know that consumers have almost no meaningful protection against the tens of thousands of counterfeiters operating online.  At best, a counterfeit product will merely be disappointing; at worst, it will set the house on fire or maim someone; but a recent copyright lawsuit filed against the service provider CloudFlare demonstrates just how insufficient the mechanisms for addressing this problem really are.  

Though the subject of this litigation is wedding dresses and other formalwear, keep in mind that it can just as easily be a product that plugs in, a medical device, or a child’s toy with toxic properties. 

Mon Cheri Bridals and Maggie Sottero Designs are suing CloudFlare for contributory copyright infringement pursuant to the platform’s failure to comply with the terms of the DMCA.  As designer/manufacturers of bridal and formalwear, the plaintiffs see their works copied all the time by China-based counterfeiters, who then sell the knockoffs via websites featuring the plaintiffs’ own marketing photographs.  

The photographs are copyrighted works, and so the plaintiffs have filed hundreds of DMCA takedown notices requesting removal of their images from the various sites engaged in marketing counterfeits of their products.  Then, because the target sites have–not surprisingly–refused to remove the photographs, plaintiffs allege that this makes them “repeat infringers,” which then implicates CloudFlare’s obligation under DMCA to terminate their accounts.  Because CloudFlare has not taken action to terminate these accounts, plaintiffs allege the platform is liable for contributory infringement.

CloudFlare is already a deeply problematic service provider—a prime example of everything wrong with the kind of internet idealism that has for too long tolerated (and even celebrated) companies that hold themselves above the law while protecting the identities and maintaining the operations of criminal enterprises.  As a favorite provider of anonymous hosting for major pirate sites like ThePirateBay, CloudFlare is probably only still in business because, as Devlin Hartline notes in this 2016 post, “the DMCA is such a mess.”  “Courts have set the bar so high that CloudFlare wouldn’t likely be found to have red flag knowledge of the massive amounts of infringement it certainly knows its service enables for globally-infamous criminal infringers…,” Hartline writes.

It’s bad enough for creators that the DMCA is woefully inadequate for mitigating online infringement where copyrighted works are the central subject of a complaint.  But in this case for Mon Cheri and Sottereo, the copyright infringement is, of course, ancillary to the larger crime of counterfeiting; and it is truly unfortunate that the DMCA is the plaintiffs’ best—let alone only—means of targeting these foreign-based websites used to hijack their enterprises and defraud consumers.

While the plaintiffs are certainly correct that their marketing photographs are protected by copyright and the counterfeiters’ infringing uses are properly the subject of DMCA, both legitimate product-makers and consumers deserve a more robust mechanism for protection from this kind of online predation.  

If your kid wound up playing with a toy that scalded her (or worse), you’d want the counterfeit website selling that product to be shut down.  End of discussion.  And the American-based hosting provider shrugging at you while taking the counterfeiters’ money would provoke a justifiable pitchfork-and-torch moment for parents everywhere.  The fact that the counterfeiters also happened to be infringing the photographic marketing materials of the real manufacturers would reasonably be viewed as secondary to the fact that consumers ended up with dangerous products in their homes.  And DMCA is no way to address that problem.

The DMCA is in serious need of overhaul, if it is ever going to meaningfully address online copyright infringement.  But a matter of even greater urgency is perhaps new legislation that can provide legitimate businesses with a reliable and expeditious means of shutting down websites that intentionally traffic in counterfeit goods.

On this topic, readers may not remember that the SOPA/PIPA bills included provisions designed to keep counterfeit products out of the military supply chain (so soldiers wouldn’t end up wearing fake kevlar or something);  and that proposed legislation still remains every fool’s battle cry for defending the alleged sovereignty of “the internet.”  Of course, “the internet” is not even a weak sovereign.  If you end up with a foreign-made, counterfeit product that rips you off or kills someone, the service provider that helped you buy that product is free to KNOWINGLY continue hosting the fraudulent website and respond with a smug grin while he cashes the counterfeiter’s check.   

As any regular reader knows, I have never understood believing the premise that the major internet companies are squarely on the side of the angels—that Facebook is an unqualified good for democracy, that YouTube is an unqualified good for artists, or that Amazon is an unqualified good for all commerce, etc.  Yet, despite mounting evidence that such generalizations are far from accurate, we are presently watching yet another variation of the anti-SOPA campaign play out in Europe over the proposed Article 13 legislation to mitigate copyright infringement on major platforms like YouTube.  As Neil Turkewitz writes in a recent post on the topic

“They have enjoyed the freedom of wolves without regard to the safety of sheep, and are naturally opposed to the restraints imposed by fences. But our interdependence makes fences essential for the functioning of democratic societies. By eliminating fear, we create freedom and enable the pursuit of happiness.”

The time to correct this level of dysfunction is long past due.  Both of the current liability shields protecting online service providers—as established in Section 230 of the CDA and in Section 512 of the DMCA—were based on an assumption of good faith and good-samaritan behavior.  But CloudFlare is just one extreme example that demonstrates why this expectation of good faith is, and always was, utter folly.  Limiting the liability of these companies has made them arrogant, predatory, and ominously powerful with the amount of wealth and information they wield.  If there is profit to be found within legal loopholes, it is the rare exceptions whose personal ethics will forego such an opportunity.  It is time to start writing internet policy based on the rule rather than the exception.


See also Consumer Guide to Counterfeit and Copyright-Infrigement Free Holiday Shopping from Copyright Alliance.

© 2018, David Newhoff. All rights reserved.

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2 comments

  • David, Sadly Cloudflare seems to exist in some kind of gray area that makes it difficult to pursue them under 17 USC. My legal team tried last spring but at a certain point it isn’t worth sinking the resources into it with so uncertain an outcome. Another litigant (ALS Scan, Inc) followed us last summer and seemed to make it further than we did before they got shut down. They may or may not have an appeal pending.

    • Thanks for writing, Christopher. As a host provider, it is in a gray area, as this particular case indicates. They could, like Cox, lose their safe harbor for failure to implement a repeat infringer policy, but that alone won’t demonstrate contributory infringement, which this plaintiff would probably have a harder time proving than BMG did against Cox. As I say in the post, the copyright infringement of plaintiff’s photos isn’t even the central problem being addressed; and of course these plaintiffs cannot seek removal of the counterfeiting websites as relief from Cloudflare as an unnamed party since the actual infringers cannot be sued.

      ALS and Cloudflare settled in June of this year. It seems the only way to bring these sites out of the gray is new legislation, which will probably only happen when somebody gets hurt by counterfeit goods, or if some eager lawmaker can sufficiently demonstrate the need for a legitimate hedge against foreign theft of American trade.

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