INFORM ACT Signed into Law

The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the INFORM Act) was signed into law by President Biden on December 29, 2022. A positive step in the fight against online counterfeiting, the Act supports consumers and brand owners by increasing the accountability of online marketplaces. It will also create greater transparency by requiring online marketplaces to disclose key information about their third-party sellers.

INFORM Act Highlights

High-volume third-party sellers are defined in the Act as vendors who have made at least 200 sales totaling at least $5,000 over a 1-year period.

Online marketplaces will now be required to:

Collect, verify, and disclose certain information from high-volume, third-party sellers including bank account information, government-issued identification, tax identification numbers; online marketplaces must also annually certify any changes to the information Make certain information (e.g., sellers’ names and contact information) available to consumers through the sellers’ product listings Suspend further sales by individuals or businesses who fail to provide the required information, or to update it upon request Provide consumers with methods to report electronically and by telephone any suspicious activity on the marketplace.

What This Means for Brand Owners

As we previously reported, the INFORM Act is the latest in a series of efforts to combat online counterfeiting. As more brands increasingly transition from traditional brick and mortar to online retail, consumers will continue to see an increase in the sale of counterfeits goods online. While e-commerce platforms have started to implement policies to manage counterfeit sales, contributory liability puts the burden of responsibility on the both the counterfeit seller and the platform. These practices will begin to create incentives for online retailers to be more diligent and proactive.

What to Expect Next

The bill provides the Federal Trade Commission (FTC) and State Attorneys General with the authority to enforce these requirements. Requirements are set to take effect in late-June 2023. Prior to June, it is likely FTC will continue to provide more details on these regulations.

01-02-2019--

California Court Grants Nonsuit in Website Accessibility Trial

A California court has dismissed a website accessibility case shortly after commencing trial, issuing a sua sponte nonsuit on grounds that the defendant credit union’s website is not subject to the ADA.

Martinez v. San Diego Credit Union, San Diego Superior Court Case No. 37-2017-00024673, would have been the only known website accessibility lawsuit to go to trial in the state of California. Instead, after commencing trial, the Court ordered the parties to submit trial briefs, inquired whether the parties would object to the Court issuing a sua sponte ruling at the outset of the case, and then granted the nonsuit. In so ruling, the Court advised the parties that it agreed with the defendant credit union’s position that the complaint failed to state facts sufficient to constitute a cause of action, and that it wished to save plaintiff’s counsel the expense of flying its expert witness from the East Coast.

Plaintiff had alleged violation of California’s Unruh Act, which incorporates Title III of the Americans with Disabilities Act (“ADA”). Title III provides that:

“No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation."

42 U.S.C. § 12182(a). Title III defines the term “public accommodation” by listing twelve specific categories of private businesses that are covered. 42 U.S.C. § 12181(7).

The implementing regulations issued by the Department of Justice define the term “public accommodation” to mean “a facility, operated by a private entity, whose operations affect commerce and fall within at least one of the” categories specifically listed in § 12181(7). 28 C.F.R. § 36.104.

Judge Ronald F. Frazier held that “to constitute a ‘place of public accommodation’ under Title III and its implementing regulations, a location must be (1) a facility that (2) falls within at least one of the twelve specifically enumerated categories. Importantly, a location must meet both of these requirements to be a place of public accommodation.”

In holding that defendant’s website is not subject to the ADA, Judge Frazier noted that the Third, Sixth, Ninth, and Eleventh Circuits have held that the term “public accommodation” applies only to physical structures. Judge Frazier also noted that the Ninth Circuit, as the only Circuit Court to address whether websites are subject to the ADA, held in Earll v. eBay, Inc., that the term “place of public accommodation” requires “‘some connection between the good or service complained of and an actual physical place.’” (quoting Weyer v. Twentieth Century Fox Film Corp.) The Ninth Circuit concluded that “[b]ecause eBay’s services are not connected to any ‘actual, physical place[],” eBay is not subject to the ADA.”

The plaintiff in the case against San Diego Credit Union, Roy Martinez, was represented by Pacific Trial Attorneys.

IP Address Subscriber Not Liable for Copyright Infringement

In a case involving the infringing download and distribution of plaintiff’s film through peer-to-peer BitTorrent networks, the US Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of plaintiff’s infringement claim under the Copyright Act, holding that the bare allegation that the defendant was the registrant of an Internet Protocol (IP) address associated with infringing downloads was insufficient to state a claim for direct or contributory infringement. Cobbler Nevada, LLC v. Thomas Gonzales, Case No. 17-35041 (9th Cir. Aug. 27, 2019) (McKeown, J).

Cobbler Nevada traced infringing downloads of its copyrighted film, The Cobbler, to the IP address of an adult foster care home. During its investigation of the downloads, Cobbler learned that the foster home’s internet service provided through its IP address is available to both residents and visitors. Yet Cobbler filed suit against the foster home’s operator, Thomas Gonzales, as the listed registrant of the IP address.

The district court dismissed Cobbler’s claims, holding that Gonzales’s status as a registered subscriber of an infringing IP address did not alone create a reasonable inference that he was also the infringer, since multiple devices and individuals were able to connect via the single IP address. The district court also rejected Cobbler’s claims of contributory infringement because there were no allegations of intentional encouragement or inducement of infringement.

On appeal, in holding that the district court properly dismissed Cobbler’s claim of direct copyright infringement, the Ninth Circuit affirmed that simply establishing an account for an IP address does not mean the subscriber is even accessing the internet. The Court stated that it recognized Cobbler’s challenge in naming the correct defendant, but this did not change Cobbler’s burden to plead facts that created a reasonable inference that Gonzales was the infringer. The Court further noted that this outcome should not come as a surprise to Cobbler, since Cobbler acknowledged that its independent investigation did not identify a specific party likely to be the infringer.

As to Cobbler’s claim of contributory infringement, the court observed that the claim was improperly premised on a “bare allegation” that Gonzales failed to police his internet service. The Court then outlined its jurisprudence on the issue of contributory infringement through its decisions in the Sony and Grokster cases, and explained that in the absence of evidence of intent, it could not find liability for contributory infringement based only on the failure to prevent infringement if the device at issue was otherwise capable of “substantial noninfringing uses.”

On the first prong of the test, the Court found that Cobbler’s complaint did not show that Gonzales actively encouraged or induced infringement through intentional acts. For the second prong, the court held that providing internet access does not equate to distribution of a product or service that is “not capable of substantial . . . or commercially significant noninfringing uses.” Thus, the court refused to impose a precedent that creates an affirmative duty for internet subscribers to actively monitor their internet service for infringement.

Finally, the Ninth Circuit found that the district court did not abuse its discretion by awarding attorneys’ fees for Gonzales, noting that Cobbler’s decision to name Gonzales in the complaint even after concluding that he was not a regular occupant of the foster home residence or a likely infringer was unreasonable and therefore justified the imposition of the fees. Thus, the copyright infringement complaint was dismissed and the fee award upheld.

Nuclear Marshmallows are synonymous with passive bad faith(09-22-15) -- . The ICANN Uniform Dispute Resolution Policy (UDRP) for disputed domain names went into effect on December 1, 1999. Under the new process, a party could force the transfer of a domain name from the registrant if it could show that the domain had been both registered in bad faith and used in bad faith.

One of the first cases subject to the process was brought by the Telstra Corporation, which was attempting to wrestle telstra.org away from a registrant identified as “Nuclear Marshmallows.” Nuclear Marshmallows had not made use of the domain (i.e., it did not put up a website), never responded to the UDRP complaint, and basically didn’t appear to exist at all other than as the mysterious registrant of telstra.org. The UDRP arbitration panel had no trouble finding that the domain had been registered in bad faith, but how could they find that it had been used in bad faith when it wasn’t really being used at all? In a precedent-setting decision, the panel decided that passivity could amount to bad faith use. Here, Nuclear Marshmallows’ passive holding of a domain name containing the trademark of a well-known company (at least in Australia), combined with the lack of evdience of good faith and the concealment of Nuclear Marshmallows’ true identity, was sufficient for a determination of use in bad faith. Passive bad faith turned out to be an important concept in the domain name dispute arena, where registrants frequently conceal their identity and fail to answer the complaint, and consequently Telstra v. Nuclear Marshmallows has become the most cited case in the history of the UDRP process.

P.S. Did you know that a sandwich of peanut butter and marshmallow creme is called a Fluffernutter? If you are from Massachusetts you know what I am talking about. Personally I think it sounds somewhat obscene.

Judge awards WordPress owner damages in false DMCA takedown case

USA July 28 2015

For the first time, a magistrate judge has awarded money damages in a case involving the filing of a DMCA takedown notice with material misrepresentations. See Automattic Inc. v. Steiner, 2014 U.S. Dist. LEXIS 182295 (N.D. Cal. Oct. 6, 2014).

The blog post spurring the takedown was uploaded to WordPress.com-a web-publishing platform owned by plaintiff Automattic- and included information student journalist and plaintiff Oliver Hotham received after reaching out to question Straight Pride UK. In response to his questions, Hotham received a PDF reply entitled “Press Statement,” by defendant who identified himself as press officer of Straight Pride UK. Hotham’s blog post identified Straight Pride as an organization deeply troubled by acceptance of homosexuality, and included quotes from Straight Pride’s statement that “coming out as straight or heterosexual… evokes emotions of fear, relief, pride and embarrassment.”

On the day of the posting, defendant sent Hotman and Automattic a DMCA takedown notice claiming the blog infringed the organization’s copyrights. Automattic removed the initial posting, and investigated additional notices sent by the defendant. Plaintiffs alleged Hotham spent time and money corresponding with Automattic about the takedown notice, and that Automattic expended resources reviewing the notices, disabling the posts, handling press requests, and on the instant action. Plaintiffs sought a motion for default judgment, claiming that the defendant “knowingly and materially misrepresented” that copyright infringement occurred, that Automattic “relied” on such misrepresentations, and that Plaintiffs had been “injured” as a result.

The U.S. District Court for the Northern District of California granted Plaintiffs’ motion for default judgment and awarded $960 in damages for Hotham’s lost work and time, $1860 for time spent by Automattic’s employees, and $22,264 for attorneys’ fees incurred by Automattic. “[T]he Court finds that Defendant knowingly misrepresented that Hotham violated his copyright because Defendant could not have reasonably believed that the Press Release he sent to Hotham was protected under copyright.

Moreover, there can be no dispute that Defendant knew, and indeed, specifically intended, that the takedown notice would result in the disabling of Hotham’s article[,]” Magistrate judge Joseph Spero wrote in the opinion. In relying on Lenz v. Universal Music Corp., previously decided by the Northern District of California and currently pending before the Ninth Circuit, the court also recognized that use of “any damage” in § 512(f) prompts the court to construe the statute broadly, and “suggests strong Congressional intent that recovery be available for damages even if they do not amount to… substantial economic damages.” Although the court awarded damages for the costs of suit and the expenditure of resources dealing with the takedown notice, the Northern District denied monetary relief for Plaintiffs’ alleged damages to reputational harm, Hotham’s alleged emotional distress, and Hotham’s alleged chilled speech.

The oral argument in Lenz v. Universal Music Corp. was held on July 7, 2015. The court should soon offer additional guidance regarding a copyright owners responsibilities with respect to the content of DMCA notices.

U.S. Dept. of Commerce DMCA Guidelines

Court Holds That DMCA Safe Harbors Do Not Extend to Infringement Prior to Designation of Agent

(06-26-14) -- The safe harbor provisions in § 512(c) of the Digital Millennium Copyright Act (DMCA) provide a mechanism that insulates online service providers from monetary damages for infringing materials posted or stored by their users. To receive this protection, service providers must designate an agent to receive notice of claims of infringement with the Copyright Office and publicly post the agent’s contact information on the website. A recent case in the Northern District of California, Oppenheimer v. Allvoices, Inc., examined whether service providers can avail themselves of the DMCA safe harbors for infringing acts that precede designation of such an agent.

Allvoices is an online service provider that maintains a community-driven platform for the exchange of ideas as well as graphical, written, and audio content. Allvoices provides users with financial incentives to upload content to the site, and treats such users as “citizen journalists” and independent contractors. While it began providing access to contributor content in 2008, Allvoices did not designate its DMCA agent until March 2011.

The plaintiff, David Oppenheimer, is a professional photographer whose photographs were posted on Allvoices’s website by contributors in January 2011. Oppenheimer learned that his photographs had been posted on the Allvoices website in February 2011, prior to Allvoices’s DMCA agent designation. Oppenheimer sent a cease and desist letter to Allvoices in August 2011, several months after Allvoices designated its DMCA agent. While Allvoices eventually removed the photographs, Oppenheimer alleged that Allvoices failed to reply to his cease and desist letter and failed to terminate the accounts of repeat infringers, as required by the DMCA. Allvoices argued that it was entitled to the protection of the DMCA safe harbors for all alleged infringements, not just infringement occurring after it had designated its DMCA agent. Allvoices did not cite any authority for this position, but maintained that, because the DMCA does not expressly carve out or preserve liability for pre-designation infringement, Congress had intended for the DMCA safe harbors to apply to such infringement.

The court rejected Allvoices’s argument and held that, under the plain language of the DMCA, an online service provider may invoke the DMCA safe harbors only if it has registered a DMCA agent with the Copyright Office. According to the court, designation of an agent is a “predicate, express condition” for application of the safe harbors, so Allvoices could not avail itself of the safe harbors with respect to infringement that occurred prior to designation. The court cited two previous Northern District of California cases that came to similar conclusions, Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. and Nat’l Photo Group, LLC v. Allvoices, Inc. (note that Allvoices was also a defendant in the latter case). On the merits, the court held that Oppenheimer sufficiently alleged claims of direct, contributory, and vicarious infringement to overcome Allvoices’s motion to dismiss those claims.

A question remains regarding the period of time during which Allvoices may be liable for infringement of Oppenheimer’s photographs. Specifically, the court did not address whether Allvoices’s potential liability is limited to the period during which the photographs were posted on Allvoices’s website prior to the date that Allvoices designated its DMCA agent with the Copyright Office. Regardless, the message is clear: online service providers should designate a DMCA agent with the Copyright Office as early as possible in order to obtain the protection of the DMCA safe harbors.

DMCA Not for Trademarks

(03-14-14) -- Keep in mind that the DMCA is not for takedown notices for trademark infringement. It is for copyright infringement only. Although I don't have the info in front of me, one large company did that with Twitter, and later filed suit against the alleged infringer. They are now facing a counterclaim for a DMCA violation. They argued that it was okay with Twitter, but that didn't hold any water with the court and they lost summary judgment on the counterclaim.

MPAA Joins Digitus Impudicus DMCA Takedown Notice Action

From DuetsBlog/JD Supra Law News

(10-03-13) -- As we all know, The Motion Picture Association of America (MPAA) has long taken an active role in the debate regarding the advantages and disadvantages of traditional midwifery and modern medical views regarding childbirth. That’s what Rosemary’s Baby was all about, right? Well, the MPAA filed an amicus brief yet again in a lawsuit between a doctor and a midwife, Tuteur v. Crosley-Corcoran, a pending case in the District of Massachusetts.

Tuteur is a former physician and Crosley-Corcoran is a midwife. They are also both avid bloggers, and it also appears that they do not think highly of each other of nor each other’s views. The two exchanged criticism of each other’s opinions on their respective blogs, The Skeptical OB and The Feminist Breeder. The exchange resulted in Crosley-Corcoran posting a picture of herself giving Tuteur a hand signal, or as the court described it, the digitus impudicus. Obviously the only appropriate response at that point was for Tuteur to repost the image on her own blog. Crosley-Corcoran then filed a takedown notice pursuant to the Digital Millennium Copyright Act (DMCA) claiming infringement. Thus, the other explanation for the MPAA’s involvement becomes clear. Tuteur sued, alleging that Crosley-Corcoran had made material misrepresentations in her DMCA take-down notices, exposing her to liabililty under Section 512(f) of the DMCA. The MPAA would like to make sure that the subjective test for material misrepresentatives remains as subjective as possible.

I’ve previously discussed potential liability under the provision here. The crux of the debate is whether an individual or entity must consider ifa particular use is protected under the fair use doctrine prior to filing a DMCA takedown notice. The Massachussetts district court joined those courts that have answered in the negative, although the court ultimately denied the Motion to Dismiss. A number of other commentators have provided thoughtful analysis on the case. The legal issues surrounding liability under 512(f) are likely to stay in the news thanks to an Australian record company’s failure to google the name of their target. Lawrence Lessig, professor and author of many books on copyright law, filed a lawsuit under 512(f) after the company filed a DMCA takedown notice over Lessig’s video lecture discussing fair use.

Certainly there are a lot of interesting legal issues in these cases. Most sides also agree that the process can be (and often is) abused by some individuals and entities. One of the important lessons to take away though is that the rules we enact affect everyone – not just Universal Music Group and Sony Records. The rules will apply to both David and Goliath. Do we really except Ms. Crosley-Corcoran to consider all potential affirmative defenses prior to filing a takedown notice? We can expect individuals to view the work, but I’m not sure we can expect everyone to have an understanding of the often malleable concept of fair use. While we might all cheer when Lessig sues the Australian record company, or when the single mom sues Universal Music Group, how should we feel when it is David suing David?

The lesson applies equally to legislation and other attempts to curb perceived abuses of trademark law, or “trademark bullying.” The proposed legislation for Minnesota (discussed here) defined trademark bullying as: “The practice of a trademark holder using litigation tactics in an attempt to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark holder.” While people may have the best intentions to encourage small businesses and individuals not to back down from bullying tactics, it is difficult to craft legislation that only applies when it feels right. Any laws need to be written carefully because not only will David use them against David, but Goliath can use them against David, too.

DMCA Requires Specific Knowledge Of Copyright Violation For Service Provider Liability

Wed, Jan 11, 2013

David M. Silverman

The U.S. Court of Appeals for the Ninth Circuit has refused to hold a site operator liable for copyright infringement based solely on its general knowledge that some of the third party content on its site may be infringing.

In an important decision on the issue of website operators' copyright liability for user-generated content, the U.S. Court of Appeals for the Ninth Circuit has refused to hold a site operator liable for copyright infringement based solely on its general knowledge that some of the third party content on its site may be infringing.

The Ninth Circuit's opinion in the case of UMG Recordings v. Shelter Capital Partners concerned the potential liability of video-sharing website operator, Veoh Networks, under one of the so-called "safe harbors" of the Digital Millennium Copyright Act (DMCA). Veoh operates a publicly accessible website that enables users to share videos with other users. The particular safe harbor Veoh invoked protects website operators and other "service providers" from liability for the copyright infringement of others who provide content on their sites when the provider "expeditiously" takes down the allegedly infringing content residing on its servers in response to a notice from a copyright owner that the content is infringing. In this case, UMG argued that Veoh's general knowledge that infringing content resided on its servers was sufficient to deprive Veoh of the protections of the DMCA's safe harbor for infringing content. The Ninth Circuit disagreed and affirmed the district court in upholding summary judgment for Veoh.

There was no question that Veoh acted expeditiously to remove allegedly infringing content from its servers upon receipt of a DMCA notice alleging that specific content on its site was infringing. However, UMG claimed that Veoh's actions were "too little, too late" due to Veoh's late adoption of filtering technology to detect infringing material and Veoh's takedown of only the specific videos identified in DMCA takedown notices.

In finding that Veoh was entitled to the DMCA safe harbor, the Court first found that Veoh's functions in connection with video uploads by users fell within the safe harbor requirement that the uploaded content was on Veoh's website was "by reason of the storage at the direction of the user." In so holding, the Court found that Veoh's automatic processes of creating Flash files and/or "chunks" of videos to facilitate streaming and downloading did not deprive Veoh of the safe harbor for "storage at the direction of the user." The Court reasoned that such a narrow interpretation of that language would render the safe harbor meaningless. The Court also noted that, by contrast, the DMCA safe harbor for providing transient (peer-to-peer or P2P) communications in Section 512(a) requires that the third party material not be modified in any way. That restriction does not apply to DMCA Section 512(c) (Information Residing on Systems or Networks at Direction of Users) at issue here.

The Court then addressed UMG's claim that Veoh had "actual knowledge" of the infringing activity, which would deprive Veoh of the DMCA safe harbor, if true. UMG raised numerous factors that could have tipped off Veoh to the presence of infringing content on its servers, such as the presence of music videos without any license from a rights holder. As the Court pointed out, however, many music videos do not require licenses, such as originally created music or music provided with permission of the rights holder. On this point, the Court followed the Supreme Court's 1984 Sony decision, holding that a product "capable of substantial noninfringing uses" (like a VCR in that case) does not violate copyright law just because it is capable of being used for copyright infringement. As the Court noted, the safe harbor provisions of the DMCA presume that websites such as Veoh's may be used for infringing purposes. Accordingly, "the general knowledge that one's services could be used to share infringing material [ ] is insufficient to meet the actual knowledge requirement . . . ."

The Court reached the same conclusion regarding the safe harbor condition that, "in the absence of [actual] knowledge, [the service provider] is not aware of facts or circumstances from which infringing activity is apparent." Ultimately, the Court refused to shift the safe harbor burden from the copyright owner to the service provider. The Court noted that shifting the burden could violate other DMCA provisions that specifically exempt service providers from having to monitor or investigate content and could result in the removal of noninfringing content.

Finally, the Court addressed UMG's claim that Veoh violated the safe harbor condition that it not "receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity." The Court followed its reasoning in the knowledge provisions discussed above, i.e., a service provider "must be aware of specific infringing material to have the ability to control that infringing activity within the meaning of" the safe harbor provision of the DMCA.

This is the first case decided by a U.S. Court of Appeals on the obligations of a service provider claiming protection under the DMCA safe harbor where the service provider has general knowledge that there may be infringing material on its website. So long as the service provider acts expeditiously to remove allegedly infringing materials when statutorily compliant and specific takedown notices are received, the safe harbor will not be lost. It will be interesting to see whether other appellate courts—including the Second Circuit, where the issue is on appeal in the Viacom v. YouTube case with a decision expected soon—follow the Ninth Circuit or whether a split in the circuits arises that could merit Supreme Court review.