Many industries face unique legal questions where responsibility for customer actions are concerned; in many places a bartender is responsible for the safety of exiting patrons and landlords are often put to task for the illegal actions of their tenants, for example. The hosting sector is no stranger to the legal questions involved in providing service to less-than scrupulous clients and a landmark civil award earlier this week highlighted that fact better than ever before.

The well-known French fashion company Louis Vuitton won a staggering $32.4 million USD award from a federal jury in California in a case against the hosting provider of a network of sites that had been selling counterfeit merchandise in the company’s name. The host involved in the suit was Akanoc Solutions Inc and it’s parent company Managed Solutions Group Inc, both owned by Fremont, California-based Steven Chen.

As the story unfolded in court it was revealed that attorneys representing Louis Vuitton Malletier first filed suit in 2007 when it found that a network of several sites, all pointing to the same IP addresses, was selling replica merchandise online, infringing on copyrights held by the company. The suit was intended to obtain not only an injunction against the sellers but also a monetary award from the host. After a drawn-out process, the jury returned with a winning verdict for the plaintiff in finding Steven Chen and his companies liable for contributory trademark and copyright infringement in the case. The judge presiding over the trial stated that the defendants had reasonable means to withdraw their services from the counterfeiters and either knew or should have known that the actions of their customers were illegal.

While this particular award signifies a landmark in Louis Vuitton’s battle against counterfeiters, the favourable verdict in this case is not the first for the high-end clothing giant. Earlier this year, in conjunction with fashion rival Chanel, attorneys for both companies were granted a permanent injunction by a Florida judge against another online counterfeiting network; following a period of non-response from the site owners, the same judge ordered domain registrar Verisign to transfer the domains in question to the companies for their use.

While observers on both sides are free to speculate on the objectivity and fairness in a ruling like this, one thing is being made very clear: service providers will continue to be held responsible for the content hosted on their servers and a general awareness of the sites you’re hosting could save you large amounts in damages down the road.

Check back next Tuesday as I review methods for staying in the loop where your customers’ online activity is concerned without the fear of manually surfing from site to site on your servers.