27
Jun/10

Important Decision: Gucci Pleads Good Contributory Infringement Action Against Credit-Card Processors


This is an important SDNY decision. Gucci sued companies that process credit card transactions for ‘replica’ websites. On 12(B)(6) motion, Court holds:

Gucci can proceed with its action against Defendants if it can show that they (1) intentionally induced the website to infringe through the sale of counterfeit goods or (2) knowingly supplied services to websites and had sufficient control over infringing activity to merit liability.

Gucci fails to allege inducement but sufficiently pleads ‘knowledge’ or ‘willful blindness.’ Interesting fact: one credit card processor conducted reviews of ‘charge-backs’, instances where the customer demands a refund. Some customers demanded refunds because the goods were counterfeit (see page 19 of decision).
The idea of going against credit card processors has been previously explored under California state unfair competition law.
Decision Gucci v Frontline (Credit Card)