Last week, we explored how Amazon, which is quickly becoming America’s dominant retailer of just about all things, was able to convince the courts that it was no more than a simple purveyor of “online services” and thus entitled to safe harbor immunity from intellectual property infringement damages.
But, lo, Amazon establishing that it was like an online bulletin board host and unlike an online Wal-Mart was but one piece of the immunity puzzle. To reach the finish line, Amazon also had to convince the courts that its activities — marketing, entering into contracts, getting paid for, and shipping physical products — do not result in Amazon making “sales,” and that the putative sales made on its site are acts beyond Amazon’s ability to control.
Amazon, of course, registers its sellers, regulates the products it allows in its marketplace, markets the product to buyers, enters into sales contracts with buyers, and exchanges products for money. For Amazon to have successfully argued that it does not make the sales made on its site and that it does not have the right and ability to control what is sold on its site, is quite the feat.
The Law Firm’s Guide To Trust Accounting And Three-Way Reconciliation
Proper trust accounting and three-way reconciliation are essential for protecting client funds and avoiding serious compliance risks. In this guide, we break down these critical processes and show how legal-specific software can help your firm stay accurate, efficient, and audit-ready.
It took some pretty amazing semantical wrangling: the company, which sells literally millions of products to millions of buyers, argued that it didn’t legally “sell” the disputed products at issue in its infringement cases. One of the most recent cases, Milo & Gabby LLC v. Amazon.com, Inc. (even the case name has a David v. Goliath vibe), concerned adorable animal-shaped pillowcases that Milo & Gabby created and later discovered to be offered for sale, in knockoff form, on Amazon.
Despite the fact that it was Amazon that offered this product for sale, entered into click-agreements with buyers shopping on its site, and, in one instance, packaged and shipped the product to the buyer, Amazon convinced the court that its pillowcase sales were not really sales because Amazon “was not responsible for the actual listing of the product for sale, consummating the sale, or transferring title.”
This fact-finding is a bit of a head-scratcher. While a third-party seller may submit the product or post to Amazon, it is Amazon that hosts, publishes, and markets the post that offers the product for sale. Huge Amazon branding is included in these posts, while the “actual” seller’s name is included in much smaller font. It is also Amazon that “consummates” the sale, which takes place once the buyer clicks a link that says “buy” that is hosted on Amazon’s site. And Amazon then processes that sale, receiving some pretty righteous dough for its efforts. But, a sale is not a sale when a court says so.
Even with this finding, Amazon would still be ushered out of the safe harbor were it to be shown that Amazon could control the acts of these rascally third-party vendors who were — this is where Amazon gasps and drops its monocle into its martini — selling loads of knockoffs right there on Amazon’s site.
Why Law Firms Are Moving Beyond The Billable Hour
Explore 5 expert-backed reasons law firms are rethinking the billable hour and how legal billing software is leading the way.
Amazon, though, made quick work of this enormous obstacle as well, arguing that it sells so many items that it could not possibly police all of them to ensure that its marketplace does not become a haven for knockoffs. Yet, Amazon has in place one of the most impressive logistics and data management systems in the universe, capable of knowing which type of toilet paper a buyer in Des Moines is likely to buy and shipping it to that buyer in a day or two. And, as noted above, Amazon registers its users, maintains control over their accounts, reviews their product offerings, and, importantly, handles payment. For Amazon to argue that it is helpless in the face of those of its registered sellers that repeatedly post wide swaths of infringing material is an exercise in Jimmy Fallon-esque giggle suppressing.
Amazon’s policies are already having an effect. As recently reported, Amazon’s marketplace has been colonized by knockoffs sold by overseas entities trafficking in all manner of illicit product (even, supposedly, sex toys of dubious provenance and quality). Given Amazon’s legal victories, and the fact that a large chunk of the Amazon sellers dealing in knockoffs are overseas in places where pursuit is not feasible, artists are left with no recourse when copies of their work are offered for sale on Amazon. Sure, they can ask Amazon to remove the infringing work, but this is only a temporary fix, as the infringing material often goes right back up on the site.
Recently, though, courts have pushed back against this blanket immunity for all things online and rendered decisions that more accurately reflect the language and policy behind the copyright laws. Coincidentally or not, these cases do not include big dogs like Amazon as defendants. For example, R&R Auction Co., claimed that it should be excused from liability for selling infringing items on the basis “that it does not take title to the items it sells.” Echos of Amazon claiming that it was a simple conduit through which the knockoff product passed. The R&R court roundly rejected this position, though, and rightfully found infringement because R&R makes money via the infringement and had the ability to control it.
And the court took one look at “online service provider” Zazzle, whose users upload artwork for Zazzle to print on shirts and other ephemera, and found that the “safe harbor” didn’t apply to Zazzle’s manufacture and sale of infringing products simply because a third party used a computer to upload the infringing material as opposed to walking into a shop and handing it to the clerk. Similarly, when Disney brought a case against “online service provider” Hotfile, the court swatted away the “safe harbor” defense, finding that “[c]opyright holders cannot protect their rights in a meaningful way unless they can hold providers of such services or products accountable for their actions.”
Copyright law generally puts the onus of controlling infringement on the person making money from the infringement (as opposed to the artist). Even operators of swap meets are held responsible for the acts of knockoff merchants that ply their wares from within whatever parking lot is hosting the swap. It is hard to tell why the swap meet owners have liability and Amazon doesn’t. Or maybe it isn’t and the answer is relatively simple: good lawyers, and their ability to convince the courts that a law written to protect a web board operator whose site displayed an illicitly uploaded photograph should be expanded to shield no less than a massive online marketplace.
Earlier: The Amazon Advantage
Scott Alan Burroughs, Esq. practices with Doniger / Burroughs, an art law firm based in Venice, California. He represents artists and content creators of all stripes and writes and speaks regularly on copyright issues. He can be reached at [email protected], and you can follow his law firm on Instagram: @veniceartlaw.