Kevorkian v. The Sports Mall LLC, 2021 WL 6804246, No. CV 21-2747-DMG (MRWx) (C.D. Cal. Nov. 30, 2021)
This interesting dispute suggests that sellers might have
some paths to challenge online arbitrage—where a seller relies on a buyer’s use
of one platform instead of searching for cheaper versions of the same product
elsewhere, and thus lists items that it plans to order from those cheaper
sources if anyone in fact buys on the platform. This is easier when there’s a
potential copyright claim (which is not subject to §113(c), which very few
people remember).
The case is captioned “Kevorkian” in Westlaw but plaintiff’s
last name is apparently Krikor. Anyway, Krikor owns online eBay stores that
sell sports memorabilia and collectibles. She publishes photos of her products
on eBay, and has registered some copyrights in the photos.
Sports Mall operates its own website.
In August 2020, Krikor discovered
that Sports Mall had posted at least six of her photographs on its website and
advertised the depicted items for sale on its site…. Sports Mall listed the
products for sale on its site at a higher price than Krikor did on her site. Whenever
Krikor raised the price of items sold on her site, Sports Mall correspondingly
increased the price of the same items on its site. Sports Mall also included
the serial numbers for the items belonging to Krikor in its listing.
Although Sports Mall initially removed allegedly infringing
content, it allegedly reposted two of the images as well as three new Krikor
images; didn’t comply with demands to remove those; and continued to add Krikor’s
product photos.
Sports Mall’s FAQ includes: “Why can I, when searching, find the same item
for a lower price on Ebay?” The response:
You might find the same item or one
very similar for various reasons. Most of our leading competitors buy their
collectibles in bulk and resell them on their site. SportsCollectibles.com
deals directly with the athletes at signings along with their agents and our
highly reputable vendors, therefore our products are 100% authentic. We would
never sacrifice the quality or authenticity of your collectibles for a lower
price. Anyone can sell their items on eBay, so unless you personally know the
vendor you should be cautious when purchasing.
This alleged chutzpah triggered the false advertising
element of the case. “[T]he gravamen of the FAC appears to be that Sports Mall
advertises Krikor’s products on its own site for a higher price, with the
intent of buying the product from her and passing it on to its customer
whenever the customer completes the purchase on its site.” [I’m not sure that’s
the gravamen so much as the underlying situation, because that conduct alone
doesn’t seem capable of triggering legal liability—it’s the nature and quality
of the associated advertising that is the problem. If Sports Mall didn’t use
the pictures and didn’t say what it said, I find it hard to see what the claim would
be—though see the court’s discussion of implied “in stock” representations. I’ve
encountered arbitrageurs on eBay who do similar things—I had a problem with one
who advertised the large size of a puzzle and bought me the small size, which is
fraud of a different kind.]
Copyright: Sustained as to specific images whose
registration was alleged; dismissed as to unnamed and unregistered images. Query:
are there actual damages? How would they be assessed?
False advertising under the Lanham Act: The court identified
two theories. (1) The listings on Sports Mall’s site of items that belonged to
and were being sold by Krikor allegedly falsely implied that Sports Mall had
the items in stock; (2) Sports Mall’s response to the “frequently asked
question” regarding eBay sellers was disparaging.
Although (1) didn’t come from a specific written statement, “false
advertising is not limited to statements made through words. It can be
comprised of ‘any word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading description of
fact, or false or misleading representation of fact.’” Whether Sports Mall
owned or possessed the items was itself a falsifiable statement of fact. It was
plausible that the advertising falsely implied that Sports Mall owned or
possessed the items it offered, though this would require proof of consumer
reception of that message. This was a question of fact that couldn’t be
resolved on a motion to dismiss. So was materiality: “It is also plausible that
a consumer’s decision to buy the unique item from Sports Mall may change if he
or she knew that Sports Mall first had to purchase it from a non-exclusive
third-party seller.” Question: does state and federal law about advertising
items with intent not to sell them, “rain check” provisions, etc. bear on this
question? That is, assuming Sports Mall complies with those general rules, is
there anything wrong with Sports Mall’s assumption that it could buy from an
unrelated entity?
(2): Sports Mall argued that its FAQ was not false and was puffery.
While none of the particular, individual statements were literally false on
their face—Krikor didn’t allege that Sports Mall’s items weren’t “100%
authentic” or that no eBay items were inauthentic, nor that buyers didn’t need
to use caution on eBay. But misleadingness was still possible, given the
context of the question posed: “Why can I, when searching, find the same item
for a lower price on eBay?” “Based on the allegations in the FAC, the accurate
answer should be something to the effect of, ‘because we buy some of our items
from eBay and resell them here,’” but Sports Mall instead suggested that
customers should be wary of eBay. In context, this misleadingly implied that “eBay
sellers of ‘the same’ merchandise are inauthentic, when in fact, those are the
very sellers from which Sports Mall sources at least some of its ‘100%
authentic’ products.” For the same reason, this wasn’t puffery: The
“authenticity” of an autographed collectible item that is “the same” as the one
that Sports Mall advertises was “a quantifiable, specific characterization.”
Sports Mall might be right that consumers would understand that there were also
unrelated, inauthentic items on eBay—which Sports Mall presumably purports to
exclude from its arbitrage program—but that’s a fact question.
State law unfair competition claims survived copyright
preemption because the false advertising claim did.
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