Are Companies Responsible For Actions Of Affiliates?

from the lawsuits-galore dept

Back in May we wrote about how shoe store DSW was suing Zappos over potential trademark infringement done by an affiliate -- and now we've got another similar story. The company NameSafe is suing competitor LifeLock over Google ads that make use of NameSafe's name. While we've seen plenty of lawsuits where Google was incorrectly sued over ads based on competitor search terms, this case actually does seem a little more reasonable on those points: rather than suing Google, NameSafe is suing LifeLock, and NameSafe can probably make a half-decent case that the ads could be seen as confusing or deceptive.

However, where this case gets more interesting is on the question of whether LifeLock is to blame -- or if it's the fault of an affiliate marketer, as LifeLock claims. LifeLock says that it terminated the affiliate's account and also reminded all of its affiliates that this type of activity goes against their reseller agreements. That seems like a reasonable response, but for now the lawsuit against LifeLock continues, which will inevitably raise questions about whether or not a company is responsible for the actions of its affiliates and resellers. It seems like common sense to say no -- that the liability should remain with those who actually did the action -- but we've seen stranger decisions from courts before, so it may not be clear cut here.

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  1. identicon
    Joel Coehoorn, 30 Jun 2008 @ 7:04am

    It depends.

    If you have a good affiliate program and an affiliate does something dumb as part of that program, than certainly hold the affiliate liable rather than the main company.

    However, I think certainly there are circumstances where a company should be held accountable for the actions of it's affiliates. Specifically, I can see company setting up "affilate programs" and then shell companies as affiliates specifically to do their dirty work form them and limit the main company's liability. The affiliate is caught and then just files for bankruptcy so nothing ever comes back to the main company.

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