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Legislation regarding contributory liability for online marketplaces should address Tiffany's knowledge requirement. Courts are not new to interpreting existing law and adding heightened standards into statutes when they are not explicitly addressed. For example, Congress codified the willful infringement standard in 35 U.S.C. § 298 when it enacted the 2012 American Invents Act ("AIA").218 Courts have changed this standard over the years by first applying a two-prong "objectively reckless" standard,219 to declining an imposition of an affirmative obligation to obtain outside counsel, 220 only later to agree the opinion of counsel may be relevant. 221 The latest discussion from courts for determining willfulness is changing the standard from a question of law to de novo review. 222 If new legislation does not address the Tiffany knowledge standard, there is a chance courts may react similarly for contributory trademark liability by determining a knowledge requirement is necessary. As a result, rightsholders would be unable to meet the heightened standards.

As I noted in the Introduction, even though the courts have adopted the test that the Supreme Court elaborated in Inwood in a variety of contexts, the analysis of judicial decisions on contributory trademark infringement indicates that the outcome of each case remains essentially driven by the facts at issue.127 In particular, the analysis of judicial precedents illustrates that the presumed legitimacy of the intermediaries, their responsiveness to trademark owners’ complaints, and the type of activities that potential direct infringers engage in play a very relevant role in the final decision of the courts. Still, uncertainty dominates with respect to the definition of the element of “knowledge” and that of “control” under the Inwood test and its variations. As a result, intermediaries are left without bright-line rules to follow, which could lead to a finding of contributory trademark infringement.

In contrast, the only certainty that one can derive from judicial decisions with respect to the element of “knowledge” under the second prong of the Inwood test is that the courts have converged toward a narrow interpretation of “specific knowledge” rather than “generalized knowledge.” As I elaborated in Part II, the Ninth Circuit initially ruled, in Fonovisa, that liability attached to the defendant’s action because it had a “generalized” knowledge of the sale of counterfeit products on its premises.128 In the following years, the courts reduced the breadth of this interpretation of “knowledge.” The most recent leading case in this respect is Tiffany v. eBay, in which the Second Circuit rejected the idea that “generalized” knowledge could satisfy the Inwood test,129 and stated that a finding of liability required “specific knowledge” of the direct infringement.130 Post-Tiffany v. eBay, the courts have continued to hold that knowledge of “specific instances of infringement” is required for a finding of contributory infringement.131 Still, how specific this “specific knowledge” should be, and how many specific instances of infringement intermediaries should be aware of, remain unclear. What is clear is that the courts will assess this knowledge on a case-by-case basis.

With the counterfeit epidemic being such a pressing problem, a judicial approach is not a viable solution. While the logic behind the Cartier case exists within the judicial forum, if enforcement is kept to the judiciary and not extended to the legislature, the costs may prove unworkable. 230 Further, with the current standards, "the jurisdiction where a case is filed can dictate whether a claim for contributory infringement will be successful," because each jurisdiction 231 has differing common law. This is why harmonization is both appropriate and necessary. Therefore, if enforcement is kept to the judiciary, it will likely not be effective because the interpretation of the law will vary, and maximum harmonization can only be achieved through legislative means. 232

(footnote 232)

Despite the opportunity for judicial action, trademark owners and ecommerce platforms’ interests would ultimately be better served by Congressional actions. Additionally, Congressional actions would fall in line with the purposes of trademark law to provide a national system that protects the owner of a federally registered mark.183 This is true for multiple reasons. First, it is unlikely that the Supreme Court will adopt any standard or test that would be clearer and more instructive than specific legislation because of the inherent limitation of a judicial ruling that it will only entertain the scope and facts for the specific issues presented by a particular case. Moreover, as with most common law doctrines not rooted in specific legislation, even if the Supreme Court clarifies the Inwood test, different standards or interpretations would still likely appear in the district and circuit courts across the country. Therefore, out of all the possible solutions proposed above, amending the Lanham Act with a safe harbor provision similar to section 512 of the Copyright Act would likely serve the interests of trademark owners and e-commerce platforms most effectively.

the University of Maryland Carey School of Law “Debugging the Trademark Laws: The Lanham Act and Counterfeit

Microelectronics,” 31 TEX. INTELL. PROP. L.J. 211 (2023). Hein Online. Accessed via University of Michigan //DH

Instead, Congress must enact legislation that more generally addresses the level of knowledge required for a finding of contributory infringement by any party that facilitates acts of counterfeiting and trademark infringement; it should not be limited to e-commerce platforms. The new legislation should overturn the Tiffany requirement (the de facto standard throughout the U.S.) whereby a service provider must have contemporary knowledge of which particular listings are infringing before contributory infringement can be found.418 Constructive knowledge of infringement should be sufficient to give rise to a duty to investigate and stop the infringing conduct.

In Luxottica Group, SPA v. Airport Mini Mall, LLC, the Eleventh Circuit recently affirmed a jury verdict finding defendants liable for contributory trademark infringement where they knowingly facilitated infringement by others. Luxottica and its subsidiary Oakley alleged that the defendants operated a shopping mall in Georgia containing approximately 130 booths leased to vendors, many of which sold counterfeit products including the plaintiff's sunglasses. 4 19 Despite three law enforcement raids, two letters from Luxottica, and a meeting with local police, the defendants took no steps to determine which tenants were selling counterfeit sunglasses or to evict the infringing tenants.420 The district court found the defendants liable for contributory infringement and awarded $1.9 million in damages, and the Eleventh Circuit affirmed. The court determined that contributory infringement could be found where "the defendant ([a]) supplies a product to the direct infringer whom it 'knows' is directly infringing (actual knowledge); or ([b]) supplies a 'product' to a direct infringer whom it 'has reason to know' is directly infringing (constructive knowledge)." 42 1

The environmental costs of counterfeiting are often understated, but cannot be ignored. Counterfeit products are often accompanied by environmentally-damaging consequences, either at the time of manufacture, the time of use, or the time of disposal. With respect to counterfeit manufacturing practices, the United Nations Office on Drugs and Crime (UNODC) has reported that while responsible manufacturers try to improve their environmental impact standards, “counterfeiters enjoy the cost savings of dirty production. In short, anywhere that the international community attempts to establish good practice standards for industry, counterfeiters undercut them.”110

Furthermore, the use of counterfeit agrochemical products appear to be significant and on the rise.111 Unregulated fertilizers or pesticides have destroyed harvests and poisoned farmland.112 These products pose serious environmental risks, including infecting food chains and harming ecosystems. For example, counterfeit fertilizers have been reported to have caused serious damage and destruction of harvests in large areas in China, Russia, Ukraine, and Italy.

Yet, the threat of nuclear terrorism is neither distant nor theoretical in the current security landscape that is defined by intensifying geopolitical conflicts, regional instabilities, and diminishing nuclear security efforts worldwide. Simultaneously, interest in and the development of nuclear and radiological technologies for energy production or other applications is increasing around the globe and could potentially heighten the feasibility and, thereby, the threat of nuclear terrorism.

While the human and environmental consequences of a terrorist attack with nuclear or radiological materials are barely imaginable, the threat of nuclear terrorism is real. Several terrorist groups – including Al Qaeda, North Caucasian terrorists, and the so-called Islamic State (IS) – have demonstrated their nuclear ambitions as a means of communicating with and targeting their “enemies.” Al Qaeda generally targets “the West”; North Caucasian terrorists have chosen Russia as a less abstract enemy. As a more recent example, the perpetrators of the 2015 attacks in Paris gathered information about nuclear research facilities in Belgium and Germany. Generally, European countries that engage in international counterterrorism campaigns and operate nuclear power or research programs, such as France and Germany, present high-risk targets for potential nuclear terrorist attacks.

Assessing the Feasibility of Nuclear Terrorism

FINDING 3-4: Examples of new types of millenarian groups - the type of terrorist group most likely to ignore anti-nuclear norms – are emerging. There is also increasing evidence that extreme-right wing accelerationist groups are recruiting U.S. military personnel. If those personnel have insider knowledge about or access to nuclear facilities, materials, or intelligence, they may be in a position to compromise current U.S. nuclear security safeguards.

Millenarianism is the belief that after a major cataclysm, society will be dramatically changed or “cleansed”. For secular millenarians, the kind of fundamental change they are pursuing arises by taking actions that have the potential to generate a political crisis to include sparking revolution. For example, there are contemporary domestic accelerationists who are actively seeking to incite a “second revolutionary war” in the United States. Since religious millenarians often believe that a savior or Messiah appear following a period of tribulation, they seek to participate in bringing on the cataclysmic events that will cleanse the world in preparation for the Messiah. The threat of retaliation would presumably not deter these kinds of millenarian groups from extreme acts of violence to include nuclear or radiological devices, as they believe that cataclysmic events presage positive transformative change in society and in themselves. These are groups that want, not a seat at the table, but to blow up the table (Lemann 2001; National Commission on Terrorism 1998).

There is also the ongoing risk that nuclear states may lose control of the weapons in their possession. This is not only a risk for states such as Pakistan and North Korea. During the Cold War, the United States lost six nuclear weapons or components prior to 1968 that have never been recovered (Suciu 2021; Roza 2022), and the Soviet Union may have lost more (Federation of American Scientists 2023).

Fifteen years have passed since the WMD Commission’s report was completed, and there has been no known terrorist acquisition of a nuclear weapon, improvised nuclear device or radiological dispersal device. Still, Al Qaeda showed interest in nuclear terrorism to include conducting inert-material implosion testing in Afghanistan, undertaking efforts to steal materials and recruit scientists (Albright 2010; Mowatt-Larssen 2020, 2010). On August 4, 2014, the Doel 4 nuclear power plant in Belgium was shut down automatically as a result of an act of sabotage by an unidentified organization. Notwithstanding the many changes in the international security environment, the risk of nuclear terrorism remains significant.

With the demise of the Soviet Union, the U.S. government instituted very effective cooperative programs with the Russian Federation to dismantle Soviet weapons and weapon infrastructure and improve the security of components and materials of concern. Programs (among them U.S.-FSU science cooperation, the DOE Nuclear Cities Initiative, the U.S. Civilian Research and Development Foundation, and the “Lab to Lab” program) also were established to engage Soviet weapon scientists in non-weapon work, with the intent of reducing the potential their skills might be procured by nefarious entities (National Research Council 1996; Rotblatt 1998). In addition, the United States and Russia completed the “Megatons to Megawatts” program, which eliminated 500 metric tons of HEU by blending it down to low-enriched uranium fuel for civilian nuclear reactors.

//DH

Global money laundering and terrorist financing (ML/TF) risks just keep on rising, according to the 2023 Public Edition of the Basel AML Index.

Observable trends add weight to these officials’ concerns. Most important is the growing number of both successful and foiled attacks. According to the Global Terrorism Index, deaths from terrorism increased by 22 percent from 2022 to 2023. This year has already seen the two large ISIS-K attacks in Iran and Russia. And were it not for the outstanding work of German intelligence and police, the list of successful acts of terrorism in the past few months would have been longer. German authorities arrested foreign nationals who were allegedly planning attacks on the Cologne Cathedral late last year and the Swedish parliament building in Stockholm in March.

Foiled plots inside the United States should be the ultimate wake-up call. In April 2022, the Justice Department charged an Iranian government official based in Tehran with attempting to hire a hit man to assassinate former U.S. National Security Adviser John Bolton. The following month, the FBI reported that it had thwarted the plans of an Iraqi national living in Ohio to smuggle four people across the southern border to assassinate former President George W. Bush. Most recently, the FBI—as part of the Biden administration’s effort to convince Congress to reauthorize Section 702 of the Foreign Intelligence Surveillance Act—shared declassified intelligence with Politico showing that the agency had stopped a plot to attack critical infrastructure in the United States last fall. According to the FBI, the organizer inside the United States was in regular contact with a foreign terrorist group, had identified specific targets, and had made sufficient preparations to put the plan into motion.

Two and a half decades later, Christopher Wray, the director of the FBI, is sounding similar alarms. His discussions within the Biden administration are private, but his testimony to Congress and other public statements could not be more explicit. Testifying in December to members of the Senate Intelligence Committee, Wray said, “When I sat here last year, I walked through how we were already in a heightened threat environment.” Yet after Hamas attacked Israel on October 7, “we’ve seen the threat from foreign terrorists rise to a whole nother level,” he added. In speaking about those threats, Wray has repeatedly drawn attention to security gaps at the United States’ southern border, where thousands of people each week enter the country undetected.

Wray is not the only senior official issuing warnings. Since he became commander of United States Central Command (CENTCOM) in 2022, General Erik Kurilla has been pointing out the worrying capabilities of the terrorist groups his forces are fighting in the Middle East and South Asia. These include al Qaeda, the Islamic State (also known as ISIS), and especially Islamic State Khorasan (ISIS-K), the ISIS affiliate that operates in Afghanistan and Pakistan. Christine Abizaid, the outgoing director of the National Counterterrorism Center, described “an elevated global threat environment” while speaking at a conference in Doha last month. And in testimony before the House Judiciary Committee just last week, U.S. Attorney General Merrick Garland, speaking about the possibility of a terrorist attack on the United States, said that the “threat level . . . has gone up enormously.”

You can see why stopping the explosion of counterfeits remains one of our top priorities.

Counterfeiters have a different view of the world. Their entire business model is based on stealing somebody else’s innovation and identity, so it is with little remorse that they exploit workers, engage in wage theft, employ shoddy factories, dump hazardous waste into rivers and lakes, and use dangerous chemicals.8 When they lure folks into buying their fake products, they often dabble in more thievery, exposing consumers to financial scams.9 The fact that authentic brands invest so much in social and ethical effort only widens the profit margins of counterfeiters since they are often able to score a sale, without paying for any of the compliance that they are duping customers into believing has occurred. What happens to the profit of these ill-gotten gains? They become the seed capital for organized crime, terrorist activities, and yet more counterfeit activity.10 This is exactly why the U.S. Department of Homeland Security under former President Trump issued the “Combating Trafficking in Counterfeit and Pirated Goods” report11 and why President Biden has called for more to be done to verify third-party sellers’ information and to impose liability on online marketplaces.12 Protecting consumers, businesses, and American jobs has been – and should be – a bipartisan issue.

As illustrated in the previous section, the trade in counterfeit products appears to be particularly suitable for terrorism financing, both for structured groups seeking large incomes and for individuals or local/decentralised cells in the need of relatively small budgets. In the last decade, several studies acknowledged the existence of this nexus (e.g. Basra et al., 2016; Bindner, 2016; FICCI & EY, 2014; Schneider, 2016; Sullivan et al., 2014; Treverton, 2009; UNIFAB, 2016). Despite this, the topic is still understudied, and there is a lack of empirical research aimed at acquiring in-depth and sound-methodological knowledge (Sullivan et al., 2014). As pointed out by Spink (2017), several reasons lie behind this gap, such as important challenges linked to data gathering and analysis (lack of information and historical data, information uncertainty, absence of widely shared definitions, etc.), and difficulties in distinguishing cases in which terrorists commit crimes to support their activities from those in which criminals support terrorist groups. Indeed, even if terrorist groups may not be directly involved, there exists an array of sympathisers, supporters, militants, and profit-oriented collaborators who are involved in illicit trade and remit a portion of their revenues to the terrorist organisations to allow them to accomplish their ideological objectives (Sullivan et al., 2014).

Notwithstanding the existing limitations in the state of the art, several cases demonstrate that the proceeds of the trade in counterfeit products are used to finance terrorism, as illustrated by the examples below.5

Global illicit economies now combine to soak up trillions of dollars in commerce across the globe. This siphoning off of vast resources from the more transparent and beneficial legal economies have enormous human, economic, societal and security costs. The consequences are the continual undermining of the rule law, while serving as primary drivers of endemic poverty, crushing corruption, instability, migrations and violence. On a global level, illicit economies enable kleptocrats to loot their countries, criminal organizations to co-opt states and export violence and terrorist groups to finance their operations.

Illicit economies are pervasive and persistent threats that undermine democracy, erode the rule of law, fuel impunity, imperil the sustainability of economic development strategies, contribute to human rights abuses and enflame conflicts. Across today's global threat environment, criminals and bad actors exploit natural disasters, human misery and market shocks for illicit enrichment. The United Nations has estimated that the illicit funds from crime, tax evasion and money laundering constitutes up to 5 percent of global gross domestic product, or $4 trillion.

In numerous parts of the world, kleptocrats continue to “use political power to appropriate the wealth of their nation”.2 Such great illicit wealth through corruption and criminality acts as a threat multiplier and is financing an array of conflicts, violence, market chaos, and global instability. Kleptocracy remains a pervasive threat to democracy, corroding the rule of law, fueling impunity, imperiling effective implementation of national sustainability, undermining poverty alleviation and economic development strategies, contributing to human rights abuses, and enflaming insecurity in many regions.

“When government officials abuse public power for private gain, they do more than simply appropriate illicit wealth. Corruption robs citizens of equal access to vital services, denying the right to quality healthcare, public safety, and education. It degrades the business environment, subverts economic opportunity, and exacerbates inequality. It often contributes to human rights violations and abuses, and can drive migration. As a fundamental threat to the rule of law, corruption hollows out institutions, corrodes public trust, and fuels popular cynicism toward effective, accountable governance.”3

I will focus my statement on the urgent need to sharpen our understanding of the interconnections between illicit commerce and money laundering across licit and illicit communities through a prism of convergence crime. Money laundering and trade-based money laundering are threat multipliers that help to finance greater harms that impact all Americans. The reality is that dirty money derived from illicit commerce remains the lifeblood of today’s kleptocrats, criminal organizations, and terrorist groups. Trade-based money laundering and other illicit financial vehicles and methods enable these bad actors to disguise and clean the dirty money. By purchasing trade goods licit and illicit, moving such merchandise across borders, falsifying its value, quality and quantity in misinvoicing or misrepresenting trade-related financial transactions. A snapshot of the current global illegal economy brings into clearer focus the magnitude of illicit trade, and why following the money and following the value are critical if you’re to successfully expose illicit activities, and to disrupt and dismantle the webs of corruption and criminality behind threat networks that are harming U.S. national security and our global interest.

Make no mistake, the global illegal economy is booming. According to a 2015 report from the World Economic Forum, the global value of illicit trade and transnational criminal activities is estimated between 8 to 15 percent of gross domestic product. In 2017, the World Bank projected the world at U.S. $80 trillion. Even if you take the conservative 8 percent estimate from the cited WEF report, it is fair to assume that today’s global illicit markets generate several trillion dollars in every year for numerous threat networks.