Cleveland Golf Secures Verdict against Counterfeiter

Roger ClevelandŽ Golf Company, Inc. ("ClevelandŽ Golf/SrixonŽ") has won a landmark legal victory with a jury verdict last week and entry of judgment today in South Carolina federal district court in a first-of-its kind trademark infringement case (Roger ClevelandŽ Golf Company, Inc. v. Prince [et al.], March 14, 2011).

Based on the jury's verdict, Judge Margaret B. Seymour of the U.S. District Court for South Carolina, entered judgment against Search Engine Optimization ("SEO") and web-hosting firm Bright Builders Inc. on counts for contributory trademark infringement and unfair trade practices for assisting with the construction and hosting of the website ("Copycat"), an online business that sold counterfeit ClevelandŽ golf clubs. The judgment included an award of $770,750 in statutory damages against Bright Builders and $28,250 in statutory damages against Christopher Prince who owned the website.

This represents the first time that a SEO/Web Host or other Internet Intermediary was found liable for contributory infringement without having first received actual notification of the counterfeit sales from a third party.

The case was presented and pursued by ClevelandŽ Golf/SrixonŽ based on a theory that Bright Builders knew or should have known of the infringing conduct based on the name of the website, the content of the website, and certain discussions Bright Builders had with Prince regarding his website. The jury accepted this theory finding Bright Builders was liable for contributory trademark infringement of 11 of ClevelandŽ Golf's registered trademarks.

"For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning," says Christopher Finnerty, a partner at Nelson Mullins Law Firm in Boston who represented ClevelandŽ Golf/SrixonŽ. "The jury found that web hosts and SEO's cannot rely solely on third parties to police their websites and provide actual notice of counterfeit sales from the brand owners. Even prior to notification from a third party, Internet Intermediaries must be proactive to stop infringing sales when they knew or should have known that these illegal sales were occurring through one of the websites they host."

The lawsuit was filed after Huntington Beach, Calif.-based ClevelandŽ Golf/SrixonŽ learned counterfeit golf clubs bearing ClevelandŽ Trademarks were being sold online by Copycat and its principals, Christopher Prince, and Prince Distribution LLC ("Prince"). The homepage of went so far as to boast, "Your one-stop shop for the best copied golf clubs on the Internet." During discovery, it became apparent that Prince had received assistance in creating the website from the SEO/Web Host Bright Builders. As a result, the complaint was amended to include claims against Bright Builders for contributory infringement and unfair trade practices.

Donald Reino, Vice President of Legal Affairs for ClevelandŽ Golf/SrixonŽ, said the manufacturer was compelled to act. "The brazen nature of this website's sale of counterfeit Cleveland golf clubs as well as the web host's refusal to take any steps to prevent this type of illegal sale forced us to take immediate action to protect our brand name, our authorized dealers, and our customers. Our Customers and Dealers are our most valuable assets, and they can count on ClevelandŽGolf and SrixonŽ to work tirelessly to protect them and the marketplace. "

This action by ClevelandŽ Golf is part of a broader global effort by ClevelandŽ Golf/SrixonŽ in the ongoing fight against counterfeiting.

"While individuals who sell counterfeits pose major problems for the manufacturer, companies like Bright Builders who can amplify the impact and scope of this problem are even more dangerous." said Stephen Gingrich, Vice President of Global Legal Enforcement and HR for ClevelandŽ Golf/SrixonŽ. "Counterfeiting has existed for thousands of years but has been a localized issue. The Internet, ease of global shipping and payments, combined with SEO's and web hosts injecting steroids into the situation has brought the issue into every consumer's living room."