Zazzle injunction reversed: irreparable harm is hard to show

Greg Young Pub’g, Inc. v. Zazzle, Inc., No. 16-cv-04587 (C.D. Cal. Feb. 8, 2018)

After a jury trial finding Zazzle liable for copyright infringement for producing goods with user-uploaded images, the court granted a preliminary injunction. Here, it vacates that injunction for failure to consider material facts and to provide a sufficient record on the multifactor test.

Irreparable harm: Plaintiff alleged harm to its “competitive position” because Zazzle sold “unauthorized products,” and alleging “actual loss of market share,” as well as “harm by loss of reputation.” But there was no such evidence.  A conclusory declaration from plaintiff’s owner was insufficient.  Although they alleged direct competition, no evidence showed plaintiff’s products or those of licensees.  The fact of infringing sales and allegedly poor quality of images weren’t sufficient alone to show loss of reputation attributable to Zazzle without evidence about the quality of both parties’ images or a causal connection between the quality and a loss of reputation.

Irreparable harm from “lost control” of copyrights was equally insufficient. “After eBay, Plaintiffs cannot rely on the pure fact of infringement in order to establish irreparable harm.”  Grokster, involving similar arguments, had evidence of infringement on a huge scale, more than Grokster could ever possibly redress with damages, as well as evidence that plaintiffs’ copyrights were particularly vulnerable to repeat infringement. No such evidence existed here.

Plaintiff argued irreparable harm from the threat of future infringement and additional lawsuits, but the “mere likelihood of future infringement by a defendant does not by itself allow for an inference of irreparable harm.” There was no indication here that Zazzle would be unable to pay statutory damages, or that any infringements would require dozens or hundreds of future lawsuits. “The facts were uncontested that Zazzle promptly removed any infringements brought to its attention.”

Nor did plaintiff show lack of adequate remedies at law. The jury’s statutory damage award was more than adequate compensation: $351,100, compared to licensing revenues for the artworks at issue of approximately $21,489 and Zazzle’s sales of $5,622.  Nor was Zazzle likely to repeat its infringement in bad faith, given the court’s previous ruling that Zazzle wasn’t a wilful infringer and the de minimis infringing sales since the lawsuit was filed.  Only about $100 of infringing sales since the litigation began were to third parties; more than 75% of the sales were to plaintiff/its straw buyers.  “Considering that Zazzle reviews millions of images in a given year, Plaintiff has not been able to demonstrate that Zazzle is likely to allow infringement to continue in bad faith. And even if some infringement does continue, Plaintiff has not been able to show why the statutory damages award would not adequately compensate for that injury.”

The proposed injunction was also too broad. The court never decided whether Zazzle had a viable DMCA defense as to images only displayed on Zazzle’s website and never physically manufactured, because the plaintiffs withdrew its claims before trial. Thus, it was unclear whether the injunction covered mere display, or required Zazzle to take “reasonable” steps to address the display of images on its website as well as its manufacture of products.

Bye-bye injunction.