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

Kangaroo Mfg. Inc. v. Amazon.com 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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