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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...

Randall Stoner v. Ebay Inc., et al.

2000 WL 1705637, Civ. No. 305666 (Sup. Ct. Ca., November 7, 2000)

Court holds that Section 230 of the Communications Decency Act ("CDA") renders Ebay immune from a suit charging that the use by third parties of Ebay's web site to sell "bootleg" musical recordings violates Cal. Bus. and Professions Code Section 17200.

Ebay operates a web site at which its customers sell goods to the public via auction. Ebay facilitates these sales by providing payment, insurance and escrow services that can be used to complete the transaction, as well as various notices to the prospective buyer and seller concerning the ongoing and completed auction. Ebay receives fees for its involvement in this process.

Among the many goods sold on Ebay's web site are musical recordings. These include, according to plaintiff, a number of recordings that infringe the rights of the holders of the copyright in that musical work, including recordings described on Ebay's site as "bootlegs." A "bootleg" recording is typically a recording of a live musical performance that the owner of the work has not authorized for sale. "Bootleg" is defined in Webster's dictionary as "to produce, reproduce, or distribute illicitly or without authorization...".

Charging that its involvement in these sales violated California Bus. and Professions Code Section 17200, plaintiff, apparently a lawyer who did not hold the copyright to any of the works in question, brought suit. Importantly, plaintiff did not assert claims under the federal Copyright Act. Finding that Ebay was immune under the CDA from the Section 17200 claim plaintiff did assert, the court granted defendant summary judgment and dismissed the suit.

According to the Court, the CDA renders a defendant immune from a particular claim if (i) the defendant is an interactive service provider, (ii) the defendant is not a content provider with respect to the disputed activity giving rise to the claim, and (iii) the claim seeks to hold defendant liable for information originated by third-party users of defendant's interactive service. As each criteria was present in the case at bar, the Court held defendant immune from the suit under the CDA.

The plaintiff did not contest Ebay's assertion that it was an interactive service provider. The Court further held that because the information concerning the various items offered for sale on its site came from third party users, Ebay was not a content provider with respect to this information.Finally, the Court held that plaintiff was seeking to hold Ebay liable for content provided by third parties -- their communication on Ebay's web site of offers to sell illicit goods. The Court reached this conclusion despite the fact that plaintiff contended that "this suit does not seek to hold Ebay responsible for publication of information provided by others, but for Ebay's own participation in selling contraband musical recordings."

As a result of these determinations, the Court held that Ebay was entitled to immunity under the CDA. The Court's decision was grounded on its view of Congress's intent in enacting the CDA. Said the Court:

A principal objective of the immunity provision [of the CDA] is to encourage commerce over the Internet by ensuring that interactive computer service providers are not held responsible for how third parties use their services.

To achieve this goal, held the Court, interactive computer service providers must be immune from suits like those at bar. Said the Court:

At bottom, plaintiff's contention is that Ebay should be held responsible for failing to monitor the products auctioned over its service. Ebay must know, plaintiff asserts, that illicit recordings are being auctioned over its service. The very description of some recordings (e.g., "bootleg" tapes) identifies some as contraband so that, plaintiff contends, Ebay must be deemed to have notice that these may not lawfully be sold, and by failing to intervene must be deemed to have to knowingly joined in the unlawful sale. However, cases decided under the CDA uniformly have held that notice of postings which indicate illegality does not defeat immunity. . . .
However many of these products may be contraband, and however many it might be possible for defendant to identify as such, Congress intended to remove any legal obligation of interactive computer service providers to attempt to identify or monitor the sale of such products. While such a service may be aware that a fraction of the large volume of data exchanged over its facilities involves unlawful activity, and might be able to detect a certain portion of those, the threat of liability for failing to monitor effectively would, in the judgment of Congress, deter companies such as Ebay from making their service available as widely and as freely as possible. Moreover, removing any legal obligation to monitor was thought to encourage voluntary efforts to screen out offensive or unlawful materials that might not be made by service providers if the failure to detect an inappropriate use of their system could be a predicate for liability.

There are some limits to the immunity afforded under the CDA. Said the Court:

In order for liability to arise and the immunity to be lost, it would be necessary to show actual, rather than constructive, knowledge of illegal sales, and some affirmative action by the computer service, beyond making its facilities available in the normal manner, designed to accomplish the illegal sales.

It must be stressed that the plaintiff in this case did not assert claims under the federal Copyright Act. It remains to be seen whether a court will extend the CDA to cover such claims as well, particularly in light of Section 230(e) of the Act, which provides that "nothing in this Section shall be construed to limit or expand any law pertaining to intellectual property."

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