Court orders company to stop sending bogus DMCA notices to eBay

Design Furnishings, Inc. v. Zen Path LLC, No. 10-2765, 2010 WL 4321568 (E.D. Cal. October 21, 2010)

Decision shows court’s willingness to crack down on overreaching rights holders and abusive DMCA takedown practices.

Plaintiff and defendant both sell wicker furniture on eBay. Defendant sent 63 notices to eBay complaining that plaintiffs auctions infringed on defendant’s purported copyright in the furniture.

So plaintiff filed a lawsuit over the barrage of DMCA takedown notices, claiming, among other things, that defendant violated 17 U.S.C. 512(f) by knowingly and materially misrepresenting that plaintiff’s eBay auctions contained infringing material. Plaintiff asked the court to grant a temporary restraining order (TRO), stopping defendant from sending the notices to eBay. The court granted the motion.

The court found that plaintiff would likely succeed on its Section 512(f) claim because of the strong inference that defendant knew it did not have a valid copyright claim. On this point, the court found that the defendant appeared to be claiming copyright protection in the industrial design of the wicker furniture. But the Copyright Act excludes “useful articles” from the scope of copyright protection.

The court also found plaintiff might suffer irreparable harm if defendant were permitted to keep sending the bogus DMCA takedown notices. If eBay were to suspend plaintiff’s account, plaintiff might lose prospective customers and goodwill. This sort of harm was intangible and not capable of measurement. Because of the risk of harm, the court also found that the balance of equities tipped in plaintiff’s favor.

Finally, the court found that the TRO would serve the public interest. On this point the court made the intriguing observation that eBay’s policies of taking down content upon the mere allegations of infringement reverses the ordinary burden of proof in copyright infringement matters. The court granted the TRO to prevent defendant from “effectively shut[ting] down a competitor’s business on eBay simply by filing the notice that the seller’s product allegedly infringes on the complaining party’s copyright.”

Pro-DRM decision under DMCA

Actuate Corp. v. IBM Corp., No. 09-5892 (N.D. Cal. April 5, 2010) [Scroll down for opinion]

Distribution of software license keys on the internet may constitute trafficking in circumvention technology, which is prohibited under the Digital Millennium Copyright Act (“DMCA”)

Plaintiff software licensor sued defendant for, among other things, violation of the anticircumvention provisions of the DMCA found at 17 USC 1201. Plaintiff alleged that defendant posted license keys on the internet, which purportedly would enable plaintiff’s software to be “installed on an unlimited basis.”

Defendant moved to dismiss, pointing to a line of cases including I.M.S. Inquiry Management Systems, Ltd. v. Berkshire Information Systems, Inc. and Egilman v. Keller & Heckman, LLP [see this old blog post about Egilman].

The I.M.S. line of cases hold that the use of a password issued by the copyright holder does not amount to “circumvention” under the DMCA. Under this thinking, the use of an issued password, even if done without authority, does not result in the “avoiding, bypassing, removing, deactivating, or otherwise impairing [of] a technological measure.”

But another line of cases, headed by 321 Studios v. MGM Studios, Inc. suggests differently. The court in 321 Studios reasoned that unauthorized use of a decryption code (the same one issued by the manufacturer) to bypass the encryption on a DVD served to avoid and bypass the encryption.

In this case, despite both parties’ attempts to show the compatibility of the lines of cases, the court found them to be irreconcilable. It sided with the thinking behind the 321 Studios line, finding no support for a distinction between passwords and other types of code that might be used for decryption.

Here’s the opinion:

Skeleton key photo courtesy Flickr user theogeo under this Creative Commons license.