SEO Firm To Pay $770,000 For Client Selling Counterfeit Goods

Mar 17, 2011 • 8:48 am | comments (14) by twitter Google+ | Filed Under Legal Issues in Search

The Internet Retailer magazine reports Court holds SEO firm responsible for online sales of counterfeit golf clubs.

An SEO firm was ordered to pay $770,750 in statutory damages because his client sold counterfeit golf clubs. The client was only ordered to pay $28,250. Got that?

Here is an excerpt from the article:

A federal court has ruled that a firm that provided marketing and web hosting services was financially responsible for the sale of counterfeit golf clubs by a client e-retailer.

A federal judge in South Carolina entered a judgment against Bright Builders Inc. on counts of contributory trademark infringement and unfair trade practices for allegedly assisting in the construction and hosting of the e-commerce site Judge Margaret B. Seymour of the U.S. District Court for South Carolina ordered Bright Builders to pay $770,750 in statutory damages and Christopher Prince, owner of the web site, $28,250, according to lawyers for the plaintiff, Cleveland Golf Company Inc.

“For Internet Intermediaries like SEOs and web hosts, this should be a cautionary warning," says Christopher Finnerty, one of the lawyers for Cleveland Golf. “The jury found that web hosts and SEO's cannot rely solely on third parties to police their web sites 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 web sites they host."

There is a WebmasterWorld discussion around this ruling. Some say that the SEO company should have been more careful and deserves what they got, while others find it crazy that an SEO firm can be held liable for their client's web sites.

One moderator said:

That's stretching it a bit to me. Go down the slippery slope a bit more and sue: - the web hosting company's Internet backbone provider for providing the conduit for people to access the site - the web hosting company's electric company for providing the electricity to run the site - Google, Yahoo, and Bing for sending people to the site - the company's merchant processor for processing the transactions (especially since THEY definitely should have known about the products being sold)

While others said:

They were doomed from the moment they chose CopyCatClubs as a domain. You know, put a sign on your back that reads "Kick Me!".

Everyone knew what they were doing. As they say, it comes with the territory.

I am a bit shocked by this ruling but I didn't review all the details. Did the SEO company offer a revenue share model? There are a lot of questions but honestly, I just did not dig into the case.

Forum discussion at WebmasterWorld.

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03/17/2011 02:18 pm

only in america!

Mark the Webalyst

03/17/2011 02:31 pm

Crazy - even if marketing companies and hosts are aware they are helping a dodgy practice how can they be any /more/ responsible than the guy who set up and runs the dodgy business itself!? An 770k to 28k more responsible! Strange. Mark

Amelia Vargo

03/17/2011 02:35 pm

This is insane! I can't see that the SEO company could be held more responsible than the actual company. Presumably they were just doing what they were hired to do... None of this makes any sense!

Ryan Bradley

03/17/2011 02:58 pm

I think where they got into trouble was with the actual hosting part rather than the seo.

Syed Khaled Hussaini

03/17/2011 03:49 pm

Beyond ridiculous. How would the SEO know if the products are genuine or not? Was the SEO firm supposed to take the golf clubs to a specialist and see if its real or meet up with brand names and confirm its authenticity? If the SEO firm is aware of counterfeit products and they're still providing a service, that's a different story - but their awareness and intention should be proved before fining them to possible bankruptcy


03/17/2011 04:24 pm

This is an SEO Blog, but that doesn't sound like an SEO company. That sounds like an integrated Internet solutions company. They did the site design, hosting, and marketing. Maybe it was their version of a "Yahoo" store. They're stupid, of course, if their user agreement did not include any indemnity clause. The probable situation is that the company had far more cash than the website owner, possibly even insurance to cover this sort of thing. Which is why the judgements are so disparate. I do wonder if they have any grounds for appeal under the DMCA's safe harbor provision.


03/17/2011 04:33 pm

Looks like they aren't exactly the good guys either: Probably hard to feel sorry for them.

Michael Martinez

03/17/2011 05:12 pm

Hm. Well, this is a good example of why everyone needs to keep their liability insurance up to date.


03/17/2011 05:32 pm

I'm sorry but based on the name of the site they should have been suspicious. Good SEO companies can choose their customers and would most likely never take on a customer like this.

2012 Corvette

03/18/2011 10:30 am

It is very good . It has set an example for others

wayne strong

03/19/2011 12:24 am

I expect an appeal. Imagine how many counterfeit sites/trademark infringing sites use godaddy to host their websites or even just buy domains. Where does culpability end?

SEO company

06/08/2011 09:20 am

A probable situation is that the company had significantly more cash than the website user, possibly sometimes insurance to cover this sort of thing. Which is why the judgements are hence disparate.

Davis Delaney

10/25/2012 12:07 pm

If the actual hosting would have been up to the expected level..they wouldn't have have into this much trouble....


04/08/2013 12:42 pm

Wouldn't pay a dime. Simply dissolve the company and spend $50 for a new business license. Silly that they even attended the court hearings. I have personally dissolved 19 internet companies with outstanding judgements of $9m +. I still earn more revenue than Barack Obama...albeit that isn't saying much.

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