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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Corbis Corporation v. Amazon.com, Inc., et al.

351 F.Supp. 2d 1090 (W.D. Wash., December 21, 2004)

Digital Millennium Copyright Act and Communications Decency Act Immunize Amazon From Copyright Infringement And Other Claims Arising Out Of Unauthorized Sale By Nonaffilated Vendors Of Copyrighted Images

Court holds that the Digital Millennium Copyright Act ("DMCA") immunizes Amazon.com, Inc. ("Amazon") from copyright infringement damage claims arising out of the sale by nonaffiliated vendors on Amazon.com of photographs in which plaintiff claims a copyright.  In reaching this result, the Court held that Amazon qualified for protection under 17 U.S.C. § 512(c), which protects service providers from liability for copyright infringement by reason of their storage of infringing materials at the direction of a third party.

The Court further held that the Communications Decency Act immunizes Amazon from Washington State law Consumer Protection Act and tortious interference with business relations claims arising from such sales.  The Court also dismissed plaintiff's Lanham Act claim, finding that it was the Copyright Act, and not the Lanham Act, that provided any remedy for the alleged wrongs at issue.

Finally, the Court held that issues of fact precluded dismissal of copyright infringement claims plaintiff asserted arising out of the alleged use of one of its copyrighted images in an advertisement on a separate website owned by Amazon.

Amazon's zShops Program Permits Third Parties To Sell Goods On Amazon.com    

Amazon operates a website at the URL Amazon.com.  Amazon allows nonaffiliated third parties to sell products on its website through its zShops program.  This program allows such third parties ("Vendors") to create web pages called "listings" advertising particular products.    Amazon profits from this venture both by charging a fee to each vendor for use of its site, as well as an additional fee based on the price of goods sold.

To be permitted to sell goods on the zShops platform, Vendors must agree to abide by the terms of Amazon's Participation Agreement.  Among other things, this agreement prohibits Vendors from offering any item for sale that infringes the intellectual property rights of another.  The Participation Agreement also obligates Vendors to abide by Amazon's Community Rules which, in turn, prohibit the sale of "recopied media [that] infringes upon copyrights."  The Participation Agreement goes on to apprise Vendors that Amazon can take any action it deems appropriate, including denying access to its zShops service, for a violation of the Agreement.  Indeed, under the Agreement, Amazon can terminate a Vendor's privileges for any reason at all, at its sole discretion. 

When Amazon receives notice that a particular listing may infringe another's copyright, Amazon's practice is to cancel the listing and send an email to the responsible Vendor advising that "repeated violations of our Community Rules could result in permanent suspension from . . . zShops . . .".

Amazon has cancelled a large number of zShops listings for violation of its Participation Agreement.  It has also terminated a significant number of Vendors for repeat or egregious violations of either the Participation Agreement or Community Rules.

Unauthorized Sale Of Copyrighted Photos By Third Pary Vendors On Amazon.com

Plaintiff Corbis Corporation ("Corbis") is in the business of licensing art images and photographs, including those of celebrities.  Corbis licenses both photographs in which it, and others, hold the copyright.  Corbis identified 230 such photographs that were copied, displayed and sold by Vendors through their Amazon.com zShops sites without Corbis' permission.  Corbis identified one additional copyrighted photograph which was displayed, again without its permission, in an advertisement found on IMDB.com, another website owned by Amazon.  This ad was linked to the zShops site.

Without giving Amazon advance notice of such allegedly infringing activities, Corbis commenced this suit.  The Complaint charged that, as a result of such activities, Amazon and fifteen vendors were guilty of copyright infringement and unfair competition in violation of the Lanham Act.  The Complaint also asserted claims of tortious interference with Corbis' business relations, as well as violations of Washington's Consumer Protection Act.

Digital Millennium Copyright Act Protects Amazon From Liability For Copyright Infringment

Upon receipt of the Complaint, Amazon terminated the accounts of each of the named Vendors, and cancelled the allegedly infringing listings.  After Corbis settled with each of these Vendors, Amazon moved for summary judgment.  As explained below, this motion was, in the main, granted by the Court.

Amazon argued that the DMCA protected it from liability for damages for copyright infringement.  The Court agreed and, because Corbis did not seek any injunctive relief available under the DMCA, dismissed Corbis' copyright infringement claims.

Amazon Adopts And Implements User Policy Providing For Termination Of Repeat Infringers

To be entitled to the protections of the DMCA, an Internet "service provider" must demonstrate that it "has adopted and reasonably implemented," and "inform[ed] [its] subscribers and account holders" of "a policy that provides for termination in appropriate circumstances of subscribers and account holders" "who are repeat infringers . . .".   The Service Provider must also accommodate and not interfere with standard technical measures designed to protect copyrighted works.  17 U.S.C. § 512(i).  If the "service provider," defined in 17 U.S.C. § 512(k)(1)(B) as "a provider of online service or network access or the operator of facilities therefor," meets these threshold conditions, it must then meet the conditions applicable to one of the four "safe harbors" provided for "service providers" in the DMCA.  In the case at bar, Amazon sought protection under 17 U.S.C. § 512(c), which provides protection to service providers from copyright infringement claims arising out of infringing materials residing on their system or network at the direction of users.

To be eligible for protection under 512(c), the service provider must show:

(1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement;

(2) it receives no financial benefit directly attributable to infringing activity; and

(3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving from the copyright holder a notification conforming with requirements of § 512(c)(3).

The Court started its analysis by holding that Amazon was a "service provider" within the meaning of 17 U.S.C. § 512 because it "operates web sites, provides retail and third party selling services to Internet users, and maintains computers to give access to its web sites."

Corbis argued that Amazon was not entitled to the protections of the DMCA because it had neither adopted, implemented nor informed its Vendors that the access of repeat infringers to Amazon's services would be terminated in appropriate circumstances.  In making this argument, Corbis noted that neither Amazon's Participation Agreement nor its Community Rules contained the term "repeat infringer," let alone described what would happen to repeat infringers, or under what circumstances.

The Court rejected this argument, finding that Amazon had a DMCA compliant policy.  In reaching this result, the Court relied heavily on an e-mail warning routinely sent by Amazon to Vendors accused of infringing activities, advising them that repeated violation of Amazon's Community Rules could result in permanent suspension of their access to zShops.  Said the Court:

The language of § 512(i) and the overall structure of the DMCA indicate that the user policy need not be as specific as Corbis suggests.

*  *  *

[I]t is clear that a properly adopted infringement policy must convey to users that "those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others . . . know that there is a realistic threat of losing that access." Ellison.  Amazon's policies convey this message.  Each vendor must agree to the terms of the Participation Agreement before selling on the zShops platform.  The Participation Agreement prohibits the listing, linking or posting of any material that violates copyright laws, and makes it clear that those who violate Amazon's policies may face a variety of penalties, including restricting access to Amazon's sites and suspension or termination of service.  Finally, and perhaps most importantly, those accused of copyright infringement are informed that repeated violations could result in "permanent suspension" from Amazon sites.  Although Amazon does use the term "repeat infringer" or precisely track the language of the DMCA, the evidence shows that Amazon has adopted a termination policy as required under § 512(i).

The Court further held that Amazon had reasonably implemented this policy.  As stated above, Amazon promptly cancels a listing once it receives adequate notice that the listing violates another's copyright.  It also gives notice to the Vendors of such products that repeated violations may result in permanent suspension from Amazon's site.  Finally, Amazon has terminated numerous Vendors for egregious or repeated violations of its user policies.  This evidence "indicates that Amazon has properly implemented a procedure for addressing copyright complaints and enforcing violations of its policies."

Even if such a procedure has been implemented, a "service provider" can be denied the protections of the DMCA if it "nonetheless …. tolerates flagrant, or blatant copyright infringement by its users."  This cannot be proven simply by showing that the service provider failed to act after receiving notice of infringement from a copyright owner.  Rather, as explained by the Court, it requires a showing that the infringing nature of the Vendor's activities be obvious from a cursory review of  the Vendor's site:

Amazon need not conduct active investigation of possible infringement or make a decision regarding difficult infringement issues.  Because it does not have an affirmative duty to police its users, failure to properly implement an infringement policy requires a showing of instances where a service provider fails to terminate a user even though it has sufficient evidence to create actual knowledge of that user's blatant, repeat infringement of a willful and commercial nature.

*   *  *

Although efforts to pin down exactly what amounts to knowledge of blatant copyright infringement may be difficult, it requires, at a minimum, that a service provider who receives notice of a copyright violation to be able to tell merely from looking at the user's activities, statements, or conduct that copyright infringement is occurring.  Examples of such blatant infringement may include statements from the vendor that a product is bootlegged or pirated, chat rooms hosted by the service provider in which users discuss how the service can be used to circumvent copyright laws, or offering of hundreds of audio files in a single day for peer to peer copying.

The Court found that no such evidence of a tolerance for flagrant infringement was presented here.

Amazon Qualifies For Protection Under 512(c) Of The Digital Millennium Copyright Act

Having found that Amazon met the threshold requirements for protection under the DMCA, the Court turned its attention to the prerequisites of  the safe harbor provisions of 512(c).

The Court held that Amazon met these requirement as well.  As noted above, to obtain protection under 502(c) the service provider must demonstrate:  (1) it has neither actual nor apparent knowledge that its system contains infringing materials or, if it has such knowledge, that it expeditiously removes/disables such materials upon learning of their infringing nature; (2) receives no financial benefits directly attributable to the infringing activity; and (3) responds expeditiously to DMCA take-down notices by removing/disabling infringing materials.  There was no dispute that Amazon acts expeditiously to remove or disable infringing materials, meeting the third requirement of 512(c). 

The Court also found that Amazon had neither actual nor apparent knowledge of the infringing activities in question.  Amazon had no actual knowledge, in large part, because Corbis had elected to commence suit without giving Amazon prior notice of its claims of infringement. 

To establish that Amazon had apparent knowledge of the infringing activity, Corbis had to show "as articulated by Congress … evidence that a service provider 'turned a blind eye to 'red flags' of obvious infringement.'"  This required a showing similar to that necessary to show that the service provider tolerated flagrant infringement by its users, namely that the infringing nature of the vendor's activities was obvious from a cursory review of the vendor's site.  Said the Court:

Absent evidence of its own efforts to notify a service provider, a copyright owner could establish apparent knowledge if she could show that an online location at which her copyrighted material was available was clearly a "pirate site."  Pirate sites are ones that are "obviously infringing because they typically use words such as 'pirate,' 'bootleg' or slang terms in their URL and header information to make their illegal purpose obvious."   Congress described the advertisement of illegal copyright activity through such slang words as a "red flag' of obvious infringement," and indicated that the infringing nature of sites containing such red flags would be apparent from even a "brief and casual viewing."  Thus, once a service provider is aware of a site containing such "red flags," the service provider would have apparent knowledge of the infringing activity. 

Because the Vendor listings in question did not contain such 'red flags,' the Court held that Amazon had neither actual nor apparent knowledge of the infringing activity, and thus met the second requirement of 512(c).

Finally, the Court held that Amazon met the third requirement of 512(c) because it did not receive a financial benefit directly attributable to the infringing activity.  As explained by the Court, Amazon can satisfy this prong either if it does not have the ability to control the infringing activity or it does not receive a financial benefit directly attributable to that activity.  Here, the Court held that Amazon did not have the right and ability to control the infringing activity - namely, the posting on its website of offers by nonaffiliated vendors to sell infringing products.

In reaching this result, the Court noted that "the right and ability to control infringing activity 'as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored on its system."  While Amazon does provide the platform through which its Vendors make their products available, it does not possess the goods sold by the Vendors, nor preview or edit the listings offering them for sale.  As a result, held the Court, Amazon had met the third requirement for protection under 512(c), and thus was entitled to dismissal of the damage claims asserted by Corbis under the Copyright Act.

Communications Decency Act Immunizes Amazon From State Law Claims

The Court went on to dismiss the Washington State law claims Corbis asserted against Amazon for violation of the Washington Consumer Protection Act and for tortious interference with business relationships, finding they were barred by the Communications Decency Act, 47 U.S.C. §230.  According to the Court, the CDA "creates a federal immunity to any cause of action that would make service providers liable for information originating with a third party user of the service" (excluding laws pertaining to intellectual property).  Because these claims arose out of the publication of the copyrighted images on Amazon's site, they fall within the ambit of the CDA.  Said the Court:

"[S]o long as a third party willingly provides the essential published content, the interactive service provider receives full immunity regardless of the specific editing or selection process."  Here, it is undisputed that the zShops vendors provided the images that were displayed on the zShops sites.  Although Amazon may have encouraged third parties to use the zShops platform and provided tools to assist them, that does not disqualify it from immunity under § 230 because the zShops vendor ultimately decided what information to put on its site.

Court Dismisses Lanham Act Claims

The Court also dismissed the reverse passing off claims plaintiff asserted under the Lanham Act as a result of the display of the images in question without noting the rights of Corbis or the photographers therein.  Relief for this conduct was available, if at all, under the Copyright Act.  Said the Court:

Courts have been reluctant to allow an overlap between claims involving the Lanham Act and copyright law and have dismissed Lanham Act claims where the copyright laws provided an adequate remedy.

IMDB.com Claim Survives

Finally, the Court denied so much of Amazon's summary judgment motion which sought to dismiss copyright infringement claims asserted as a result of the display of a photograph in which Corbis' claimed copyright in an ad appearing on IMDB.com, a website owned by Amazon.  Issues of fact existed, among other things, as to whether Corbis possessed a copyright registration in this photo, which precluded a grant of summary judgment.

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