eBay Wins Key Copyright Suit

eBay Wins Key Copyright Suit on Summary Judgment

09/08/01 - SAN JOSE, Calif. (Reuters) - Online auction company eBay on Friday hailed a federal judge's ruling that it was not liable for copyright infringement because bootlegged films were sold over its site.

eBay said the ruling was a key victory in its effort to operate as a digital clearinghouse between independent buyers and sellers, not as a traditional auction house such as Christie's or Sotheby's.

"We obviously feel this is an extremely important ruling," said Michael Richter, eBay's senior intellectual property counsel. "It essentially provides us immunity under copyright and trademark law for listings posted on our site offering potentially infringing items."

Los Angeles film producer Robert Hendrickson had launched several multimillion dollar suits against eBay after the site sold what he said were illegal DVD copies of his 1970's documentary about mass murderer Charles Manson.

Federal Judge Robert Kelleher, in a ruling on Thursday, rejected Hendrickson's claim, saying that eBay has neither the ability nor the obligation to verify the provenance of each and every item sold through its service.

"Unlike a traditional auction house, eBay is not actively involved in the listing, bidding, sale and delivery of any item offered for sale on its Web site," Kelleher wrote.

"All arrangements to consummate the transaction are made directly between the buyer and seller," he said, rejecting the notion that eBay had secondary liability for copyright or trademark infringements.

"eBay has no involvement in the final exchange, and generally has no knowledge of whether a sale is actually completed," he said.

The "Manson" victory follows the dismissal in January of another lawsuit against eBay which had sought to hold it liable for sales of bootlegged musical recordings by the rock band the Grateful Dead and others.

In that case, a San Francisco County judge said the online auction company was not liable because the federal Communications Decency Act (CDA) says providers of interactive computer services cannot be considered "publishers" of information provided by users of their services.

Separately, a San Diego judge torpedoed efforts to hold eBay accountable for the sale of fake celebrity memorabilia, saying lawyers for plaintiffs had failed to demonstrate eBay's liability under California law.

Richter said the new ruling was particularly important because it limited eBay's liability under the terms of the new federal Digital Millennium Copyright Act (DMCA), which Congress passed in 1998 in an effort to codify copyright protection in the Internet age.

"This is essentially the first case to ever find a Web site is immune under the DMCA," Richter said, adding that the ruling also absolved eBay of responsibility under the Lanham Act governing trademark rights.

Another key element of the ruling, Richter said, was Kelleher's finding that eBay was not itself required to monitor listings for potential copyright infringements, and bore no liability for infringements even if it did so.

"We obviously prohibit people from listing infringing or illegal items and we also strongly discourage it," Richter said. "But this case raised what our potential liability was for it if they did that anyway. It has found us not liable."

For a 2nd take on this

eBay Cleared in copyright and trademark suit

By Miguel Helft
September 10, 2001

A FEDERAL JUDGE has thrown out a lawsuit against online auctioneer eBay, a ruling the company said would immunize it against other copyright and trademark infringement claims.

U.S. District Judge Robert Keller on Thursday granted eBay's request for summary judgment in a lawsuit brought by filmmaker Robert Hendrickson, who claimed eBay infringed on copyrights and trademarks he held by allowing the sale of pirated copies of a movie he produced. Between January and April, Hendrickson filed three separate lawsuits against eBay, CEO Meg Whitman and company lawyer Michael Richter, alleging that unauthorized copies of his movie "Manson," a documentary film about cult killer Charles Manson, were being sold on eBay in DVD format. The three suits were later consolidated.

The ruling, in Los Angeles District Court, clears eBay from liability as a venue where pirated items are sometimes bought and sold. The company successfully argued that under the Digital Millennium Copyright Act it should be viewed essentially as an Internet service provider that is protected from liability from claims brought by copyright owners for the sale by third parties of pirated items such as software, movies and songs.

"It is an extremely important ruling for us," said Richter, eBay's senior intellectual property counsel. "It provides us immunity under copyright and trademark law for listings offering potentially infringing items."

Richter said the ruling vindicated eBay's so-called verified rights owner, or VERO, program, a policy the company has been using to minimize the sale of infringing items on the auction site. Under the program, eBay encourages owners of intellectual property to report and request the removal of items listed for sale that allegedly infringe their rights.

The ruling also vindicates a practice eBay began late last year, when it began monitoring the site to search for items that appeared to be counterfeit or pirated. At the time, the company feared the monitoring could disqualify it from protection under the DMCA.

"The ruling confirms that although monitoring is not required, we can do so without any liability," Richter said.