Utah company, Charleston site owners violated law in fake golf clubs case, federal jury decides

In what was described as a landmark ruling, a South Carolina federal jury has determined that a Web-hosting company is liable for a customer's Internet site that listed fake products for sale.

The jury in Columbia this week awarded nearly $800,000 in damages to California-based Cleveland Golf Co. in a first-of-its-kind trademark infringement case after determining Utah-based web-hosting firm Bright Builders Inc. and website owners Christopher Prince and Prince Distribution LLC of Charleston violated the state's Unfair Trade Practices Act.

The jurors determined that Bright Builders helped construct Prince's website -- www.copycatclubs.com, an online business that sold counterfeit Cleveland golf clubs -- and contributed to infringement of 11 Cleveland Golf registered trademarks. The website has since been dismantled.

The judgment included $770,750 in damages against Bright Builders and $28,250 in damages against Prince.

Cleveland originally sued the Prince defendants after a mystery shopper working for the golf club manufacturer bought several brand name clubs from Prince's store and determined they were fake.

The site openly boasted: "Your one stop shop for the best copied golf clubs on the Internet."

Bright Builders was added as a defendant after a deposition from Prince found the Web-building company assisted him in creating the website.

"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," Donald Reino, Cleveland's vice president of legal affairs, said in a statement.

Attorney John McElwaine with Nelson Mullins Riley & Scarborough in Charleston called Prince a novice website entrepreneur who was looking to make extra money on the side and looked to Bright Builders for mentoring, coaching and training to build an online business.

"Prince admitted that he was wrong to the jury and that it was the wrong thing to do," McElwaine said.

But he said Bright Builders officials refused to accept responsibility.

"They argued that had they known they would not have done anything," he said. "They thought they didn't have a duty to police websites they should have known or had reason to know were engaging in unlawful behavior. You can't be willfully blind and harm a company's brand by allowing counterfeiting to go on."

Nelson Mullins attorney Christopher Finnerty called the jury's decision a cautionary warning for Internet intermediaries and said, even prior to being notified by a third party, they have a duty to be proactive to stop infringing sales through websites they host.

Doug Fraser, a Bright Builders attorney at Mount Pleasant-based Jekel-Doolittle law firm, did not respond to a request for comment Friday, nor did Bright Builders.

Prince's lawyer, Christopher Lizzi, of North Charleston told The National Law Journal this week that he "thought the verdict was proper under the circumstances."

"The defendant Bright Builders basically had a heightened duty, and they didn't comply with it," Lizzi said. "The jury came back knowing my client acknowledged his fault in this in the beginning and was trying to be lenient on him."

The case was filed in Charleston. U.S. District Judge Margaret Seymour heard it in Columbia.