ISP fails to dismiss (c) and CMI claims based on watermarked photo

Goldstein v. Metropolitan Regional Information Systems,
Inc., 2016 WL 4257457, No. TDC-15-2400 (D. Md. Aug. 11, 2016)
Goldstein is a professional photographer who registered a
copyright in a 2007 photograph he took of the Silver Spring Metro Station,
which appears on his website with the watermark “©”
centered at the bottom of the image.  Defendant
MRIS runs an online real estate listing service that allows subscribers, mainly
real estate brokers, to post listings for available properties for a fee.
Subscribers agree to assign to MRIS the copyright in any photograph they upload
to the database.  In 2014, Goldstein
learned that his Metro Photograph had been uploaded to the MRIS database, still
with Goldstein’s original watermark, but also the additional watermark “© 2013
MRIS” or “© 2014 MRIS,” depending on the year the image was uploaded.  Despite notice from Goldstein’s attorney, the
photo allegedly continued to be displayed on/uploaded to the MRIS site during
2014 and continuing into 2015, at which point the MRIS watermark was updated to
“© 2015 MRIS.” Goldstein alleged that, as a result, the Metro Photograph was
uploaded to additional real estate websites and used in additional real estate
promotional materials without his permission.
Goldstein sued for infringement, contributory infringement,
violation of the DMCA’s CMI provisions, and violation of the Lanham Act.
Easiest bit first: Goldstein alleged that MRIS’s addition of its own copyright
watermark to the Metro Photograph was a false representation under the Lanham
Act. Although this sounds like a false advertising claim, the court found it Dastar-barred: Dastar held that “claims of false advertising and trademark
infringement under the Lanham Act do not overlap with copyright claims” because
“origin” means physical origin, and because otherwise plaintiffs could create a
kind of perpetual copyright or patent. 
“Thus, ‘creative’ works, those artistic creations that fall within the
ambit of copyright law, necessarily fall outside the scope of the Lanham Act.”  This is overstated in some significant ways,
but query whether anyone’s found a way to say it better.
Direct infringement: MRIS argued that Goldstein didn’t allege
“volitional conduct” by MRIS, relying on Costar Group, Inc. v. LoopNet, Inc.,
373 F.3d 544 (4th Cir. 2004). Direct infringement requires “actual infringing
conduct with a nexus sufficiently close and causal to the illegal copying that
one could conclude that the machine owner himself trespassed on the exclusive
domain of the copyright owner.”  In Costar, LoopNet was a passive ISP that
could not be held liable for direct infringement of Costar’s copyright when
Costar’s unmarked photographs appeared on its website, even though it engaged
in cursory screening of photos.  The
court here, however, distinguished Costar
as having been decided on summary judgment. 
Goldstein alleged that MRIS or an agent of MRIS uploaded the Metro
Photograph.   In one exhibit, the photo appears in a slide
in a slideshow that was available on the MRIS website, which didn’t contain any
reference to a particular real estate agent or broker, or to a particular
property. “Drawing all inferences in Goldstein’s favor, this Exhibit, particularly
with the markings added by MRIS, supports the reasonable inference that MRIS or
its agent, rather than an outside user of MRIS, engaged in direct infringement
by copying Goldstein’s copyrighted photograph to its website.”
So far, so good, but the court goes on to say more things
that ought to be disturbing.  The court
also distinguished Costar because “(1)
when MRIS received it, the Metro Photograph, on its face, was marked as
copyrighted by Goldstein; (2) MRIS, unlike LoopNet, took the affirmative step
of marking the Metro Photograph as subject to its own copyright; and (3) MRIS
then copyrighted its entire website, including the Metro Photograph.”  [The court here means “registered” for (3),
and this conflation pervades the opinion, including the treatment of (1)—after
1978, all original works are “born” copyrighted, so if you see a modern photo
you know it’s “copyrighted,” though you may not know who owns the copyright or
whether it has been licensed or whether a fair use is being made.]   (2) is probably bad business practice, but
it’s likely as automatic as many other activities that have been held not to
strip ISPs of the DMCA safe harbor, when the court gets around to that.  Anyway, I’m not sure why any of these three
facts makes MRIS’s conduct “volitional” if Loopnet’s wasn’t.  The court said that “MRIS doubly asserted a
copyright in the Metro Photograph by stamping that facially copyrighted
photograph with its own copyright markings and then copyrighting the entire
website containing that photograph,” but that’s still not “volitional” conduct implicating the rights protected by
, under Costar.
Further comment: It seems really, really unlikely that MRIS
uploaded the photos, as opposed to a MRIS user. 
Should my prediction prove true, should MRIS get its attorneys’ fees for
defending the direct infringement claim?
Contributory/vicarious infringement: contributory
sufficiently pled; vicarious not.  MRIS
knew or had reason to know of Goldstein’s copyright, because “[w]here works
contain copyright notices within them, as here, it is difficult to argue that a
defendant did not know that the works were copyrighted,” and when MRIS got
Goldstein’s C&D, it knew or had reason to know of the infringing use.  And
MRIS’s practice of adding its own
copyright to the Metro Photograph, a practice it continued even after being
placed on notice that the Metro Photograph was being used on its website
without Goldstein’s permission, can reasonably be considered ‘conduct that
encourages or assists the infringement.’ For example, the addition of the MRIS
copyright markings could lead MRIS users to believe that they had a license to
use the Metro Photograph in their listings as part of their subscription to the
MRIS service.
Though MRIS asserted that it promptly removed each
reappearance of the photo, that wasn’t enough on a motion to dismiss, and its
continued reappearance was enough for contributory infringement [in the absence
of the DMCA].
Vicarious infringement/inducement: MRIS likely had the right
and ability to control the infringing activity and charged a fee to post
listings on its website, “the website has as its main purpose the posting of
real estate listings, a purpose distinct from trafficking in infringing
material. It is therefore not reasonable to conclude that the availability of
infringing photographs such as the Metro Photograph drew customers to subscribe
to the MRIS service.” The inducement claim failed for similar reasons.
Compliance with the DMCA, the court further held, was an
affirmative defense not suitable for resolution on a motion to dismiss.  And here it gets even worse, though
presumably the court could at least fix this on summary judgment: the court
suggests that the copyright notice on the photo might trigger actual knowledge
that using the photo would infringe “a copyright.”  How is that actual notice, especially given
an automated upload?  Moreover, the
statutory provision that noncompliant DMCA notices don’t give actual knowledge
would seem to preclude this reasoning, since a watermark is a far cry from a
DMCA notice with all the relevant information. 
And again, the court suggested that MRIS’s addition of its own watermark
went beyond “storage at the direction of a user of material that resides on a
system or network” to “affirmative appropriation of another’s copyright.”
CMI violations: Goldstein alleged violations of § 1202(a) and
(b). §1202(a)  makes it unlawful for a
person to “knowingly and with the intent to induce, enable, facilitate or conceal
infringement provide copyright management information that is false.” §1202(b)
prohibits a person, “without the authority of the copyright owner or the law,”
either to “intentionally remove or alter any copyright management information”
or to “distribute” work “knowing that copyright management information has been
removed or altered …knowing or … having reasonable grounds to know that it
will induce, enable, facilitate, or conceal an infringement.”  Again, the complaint adequately stated a
claim, though the court commented that Goldstein could only recover once for a
§1202 violation.
MRIS unconvincingly argued that the watermark wasn’t CMI
because it didn’t meet the requirements for a full copyright “notice.” §1202
doesn’t require that.  §1202(a)’s
requirements were satisfied because MRIS allegedly added its own copyright
watermark to the photo without owning the copyright.  MRIS argued that it had a copyright in the
database as a whole, thus had a good faith belief that its watermark wasn’t
false.  That didn’t work because of (1)
Goldstein’s watermark and (2) the procedural posture of a motion to
dismiss.  MRIS argued that its watermark
wasn’t added knowingly and with the intent to facilitate infringement, because
it was added “automatically” to all images uploaded to their site, but again
that’s not an argument that works on a motion to dismiss, and anyway
Goldstein’s C&D provided actual knowledge.

§1202(b): MRIS argued that it didn’t “intentionally remove
or alter any copyright management information,” since Goldstein’s watermark was
left intact.  The court, however,
declined to dismiss Goldstein’s claim that adding CMI was “constructive”
alteration of his own CMI, since it had “more visual impact” and “undercut[]”
the message that Goldstein owned the copyright. There was no case law either
way on constructive alteration of CMI, but, “[p]articularly where MRIS’s
copyright mark was placed immediately before Goldstein’s copyright mark and
used more recent dates, that mark could be construed as trumping, diluting, or
superseding, and thus altering, Goldstein’s CMI.”

from Blogger

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1 Response to ISP fails to dismiss (c) and CMI claims based on watermarked photo

  1. Very interesting. I’m the Alan Goldstein who owns Alan Goldstein Photography

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