Friday, March 22, 2019

Amazon case shows profound difference between DMCA safe harbor & 230 immunity

Kangaroo Mfg. Inc. v. Inc., No. CV-17-01806-PHX-SPL, 2019 WL 1280945 (D. Ariz. Mar. 20, 2019)

The Amazon Chronicles often asks “what is Amazon?”  An interesting question to build a law school course around might be “what can Amazon do?”  Here, the DMCA doesn’t let it avoid an infringement claim on a motion to dismiss or partial summary judgment, suggesting that Eric Goldman has a point when he says the DMCA is useless in actual litigation, whereas §230 gets rid of other claims about Amazon’s alleged practice of merging counterfeit and legitimate listings for the same product.

Kangaroo sells emoji beach balls. On Amazon, third-party sellers create their own listing for a product that they plan to sell, including uploading their own images of the product, and set their own prices for the product.

Each product is identified with a universal product code (“UPC code”) and an Amazon Standard Identification Number, and each product also receives its own product detail page (“PDP”). Multiple sellers can list the same product for sale on the same PDP. However, only one seller may be awarded the “Buy Box” on a PDP, which makes the seller’s item the default for a customer’s purchase. When a seller signs up to sell products on the Defendant’s website, it agrees to the terms of the Amazon Services Business Solutions Agreement (the “BSA”) and the policies incorporated by the BSA.

Kangaroo alleged that Amazon, and third party sellers, sold unauthorized/counterfeit products in violation of Kangaroo’s trademark and copyright, including reselling some of the counterfeit product that it re-purchased from Kangaroo as reimbursement for unauthorized sales.

Amazon didn’t seek summary judgment on the trademark infringement claim or counterfeiting claim to the extent that Kangaroo alleged that Amazon itself sold the accused products.

Copyright infringement: Amazon argued that third parties uploaded the accused images and that it had a license to use Kangaroo’s images—the court doesn’t address the licensing argument.  For the DMCA, the court found genuine disputes “on when and whether the Defendant knew of the infringing material on its website and whether the Defendant took reasonable steps to quickly remove that content” because Kangaroo alleged that it filed several complaints, while Amazon stated that Kangaroo “never submitted an infringement report regarding the images used” for the emoji beach balls. [Can’t both of these be true? Kangaroo complained generally, which isn’t enough, but didn’t file a complaint about images?  This seems like a sloppy treatment of the evidence for summary judgment; the court is clearly annoyed that Amazon isn’t specific enough about when it’s seeking summary judgment and when dismissal in its papers.]  Further, Amazon contended that it removed infringing content “usually within days” of Kangaroo’s complaints, but Kangaroo disagreed.  [I don’t understand this.  Did Kangaroo submit evidence that content remained past “days”?  There are cases finding that a period of days is expeditious as a matter of law.]  Amazon also allegedly continued to use the protected images to sell counterfeit products after the notifications of infringement.  This created disputed issues of fact. 

Negligence: dismissed because of §230. The negligence allegedly stemmed from Amazon’s improper merger of the UPC code assigned to Kangaroo’s product with the code assigned to a competitor’s product. Amazon argued that any content listed on a PDP is provided by third-party sellers, but the court looked to Amazon’s contract, which made it clear that Amazon “had full control over the content displayed on its websites. The Defendant’s pleadings demonstrate that it took the responsibility of managing and cultivating the content provided to it. Therefore, the issue is not the content that was provided to the Defendant, but the Defendant’s alleged mismanagement of the content through conflating UPC codes in a manner that harmed the Plaintiff.”  Nonetheless, Amazon was acting as an interactive computer service under §230 when it took the challenged acts and was immune.

Unjust enrichment: unavailable because of the contract between the parties.

Unfair competition: not dismissed to the extent it was an infringement/counterfeiting claim. But dismissed to the extent it was based on allegations that Amazon harmed Kangaroo by earning fees related to sales made by unauthorized competitors and counterfeiters.

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