Contributory trademark infringement occurs when a person or corporation is held liable for secondary infringement of a trademark, copyright, or patent without having directly engaged in activities that legally constitute infringement.

Contributory Infringement

Counterfeit goods are ubiquitous, and it is difficult to enforce laws against the creation and distribution of these goods. Contributory infringement of a patent is defined by federal United States law as the knowing sale or offer to sell goods that have been made specifically to infringe a patent. Direct infringement must exist, and the individual or business must be aware of the direct infringement in order for prosecution to occur. The goods in question must be unsuitable for any commercial use that does not infringe on the patent in question. 

Contributory infringement is not specifically outlawed under the U.S. Copyright Act. The Supreme Court, however, notes that contributory copyright infringement can be prosecuted even in the absence of this specific language. As with a patent, the individual or business in question must have contributed to known copyright infringement.

As with copyright, contributory trademark infringement is not expressly prohibited but can still be prosecuted if a manufacturer or distributor supplies a product to a company that is knowingly engaged in trademark infringement. Secondary liability for infringement has evolved over the last century through case law and will continue to do so.

Secondary Liability for Trademark and Copyright Infringement

The owners of intellectual property are more likely to enforce secondary infringement of their copyrights and trademarks than ever before, especially as many of these infringers are based online. Direct infringers can easily hide their identities when selling products online that infringe on intellectual property ownership, which means they can be difficult to catch. They may conduct business from a far-flung international location or open a new store with a new domain name if suspicion arises. A staggering number of these sites are hosted throughout the world, making it difficult and very expensive to stop them from distributing counterfeit goods.

Because of these challenges, copyright, trademark, and patent owners are more likely to prosecute indirect infringers, such as those who sell search engine keywords used by the direct infringers, auction sites that host these transactions, and credit card companies that process payments for counterfeit goods. IP owners use the common law tort concepts of vicarious liability and contributory liability. Vicarious liability relies on the relationship between the direct and indirect infringer. It is established when the following is true:

  • The contributory infringer can control the actions of the direct infringer
  • He or she receives direct financial benefit from the illegal infringement

For example, an employer may be found to have vicarious liability for the infringing actions of its employee.

Contributory liability occurs when the third party in question acts in concert with, assists, or encourages the direct infringer. This third party must know about and contribute to or induce the infringing action. This crime is based on the tort law concepts of imputed intent and enterprise liability. Like vicarious liability, prosecuting contributory liability requires proof of direct infringement.

In a direct copyright infringement case, the plaintiff must show that he or she owns a valid copyright that has been violated under federal copyright law. Direct trademark infringement requires the plaintiff to prove valid trademark ownership and an occurrence of infringement that is likely to cause marketplace confusion. 

Common law standards for secondary liability are not strictly enforced by the courts, as they have evolved over time to keep up with new business models, methods, and technologies. The tests applied by the courts for trademark infringement are narrower than those for copyright infringement. Contributory liability is more common than vicarious liability.

Vicarious Infringement

Prosecution of vicarious infringement relies on the party's relationship with the direct infringer and his or her financial benefit from the infringing act. The plaintiff must show that a partnership exists between the direct and vicarious infringer. In cases of vicarious copyright infringement, the plaintiff must also show that the party in question had the ability and right to oversee the infringing activity. Trademark cases require evidence of a principal-agent relationship between the direct and indirect parties as well as financial benefit on behalf of both.

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