Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Jury Exacts $32M Penalty From ISPs For Supporting Criminal Websites

'Landmark case' indicates that ISPs may be held liable if they know about criminal activity on their customers' Websites and fail to act

A federal jury in California this week levied a total of $32 million in damages from two Internet service providers that knowingly supported Websites that were running illegal operations.

In a lawsuit brought by fashion company Louis Vuitton, a jury ruled that two ISPs -- Akanoc Solutions and Managed Solutions Group -- knew about counterfeit Vuitton goods that were being sold on their customers' sites, but didn't act quickly to pull the plug on those sites. The decision was first reported on Tuesday.

The ruling has been called a landmark decision by some legal experts, who note that ISPs historically have been protected by the Digital Millennium Copyright Act, which limits service providers' liability for criminal actions that take place on their networks.

In the Louis Vuitton case, the jury took advantage of language in the DMCA that states ISPs' liability in criminal activity is limited only if the ISP doesn't know that the activity is occurring. Louis Vuitton's lawyers produced evidence that the ISPs in this case did know about the criminal activity and, in fact, had warned the site operators to stop what they were doing.

The jury sided with Louis Vuitton and levied damages of $10.5 million on each of the two ISPs and another $10.5 million on Steven Chen, who owns both of the ISPs.

Legal experts say the case could set an important precedent if companies can prove that an ISP knowingly supports criminal Websites -- such as those used to commit fraud or copyright infringement -- but does not take them offline.

"The takeaway for digital media companies that provide services to third-party sellers is that it is critical to set up and maintain a system for appropriately responding to notices of trademark and copyright infringement," says David Johnson, a lawyer for Jeffer, Mangels, Butler, and Marmaro, in his blog. "Ignoring this area of compliance could cost you your business."

It was not clear whether the decision would extend to other forms of crime, such as online fraud or distribution of malware. A number of ISPs have been shut down during the past year after carrying high volumes of malicious traffic.

Interestingly, the decision went the opposite way from an earlier decision in which Tiffany and Co. sued eBay for carrying knockoff versions of Tiffany products on its auction site. In that case, a judge ruled that although eBay had general knowledge of the fraud, it did not have specific knowledge of any specific auctions that were carrying counterfeit Tiffany merchandise.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message. Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
When It Comes To Security Tools, More Isn't More
Lamont Orange, Chief Information Security Officer at Netskope,  1/11/2021
US Capitol Attack a Wake-up Call for the Integration of Physical & IT Security
Seth Rosenblatt, Contributing Writer,  1/11/2021
IoT Vendor Ubiquiti Suffers Data Breach
Dark Reading Staff 1/11/2021
Register for Dark Reading Newsletters
White Papers
Current Issue
2020: The Year in Security
Download this Tech Digest for a look at the biggest security stories that - so far - have shaped a very strange and stressful year.
Flash Poll
Assessing Cybersecurity Risk in Today's Enterprises
Assessing Cybersecurity Risk in Today's Enterprises
COVID-19 has created a new IT paradigm in the enterprise -- and a new level of cybersecurity risk. This report offers a look at how enterprises are assessing and managing cyber-risk under the new normal.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
PUBLISHED: 2021-01-17
Netsia SEBA+ through 0.16.1 build 70-e669dcd7 allows remote attackers to discover session cookies via a direct /session/list/allActiveSession request. For example, the attacker can discover the admin's cookie if the admin account happens to be logged in when the allActiveSession request occurs, and ...
PUBLISHED: 2021-01-15
An issue was discovered in Malwarebytes before 4.0 on macOS. A malicious application was able to perform a privileged action within the Malwarebytes launch daemon. The privileged service improperly validated XPC connections by relying on the PID instead of the audit token. An attacker can construct ...
PUBLISHED: 2021-01-15
Docker Desktop Community before on macOS mishandles certificate checking, leading to local privilege escalation.
PUBLISHED: 2021-01-15
OneDev is an all-in-one devops platform. In OneDev before version 4.0.3, there is a critical vulnerability which can lead to pre-auth remote code execution. AttachmentUploadServlet deserializes untrusted data from the `Attachment-Support` header. This Servlet does not enforce any authentication or a...
PUBLISHED: 2021-01-15
OneDev is an all-in-one devops platform. In OneDev before version 4.0.3, AttachmentUploadServlet also saves user controlled data (`request.getInputStream()`) to a user specified location (`request.getHeader("File-Name")`). This issue may lead to arbitrary file upload which can be used to u...