Defining “seller” for copyright infringement liability

January 15, 2018
Patterson Thuente IP

What’s a copyright holder to do when counterfeit products show up on the massive online marketplace Amazon.com? Well, one thing it will have trouble doing is successfully suing Amazon for infringement, as seen in Milo & Gabby LLC v. Amazon.com, Inc.

Pillow fight lands in court

Milo & Gabby LLC holds copyright registrations on animal-shaped pillowcases, its website and various other marketing images. It discovered knockoff pillowcases being sold on Amazon by third-party sellers, although Amazon didn’t directly sell any of the pillowcases. The depictions of the pillowcases on Amazon showed Milo & Gabby products.

The company sued Amazon for copyright infringement. The district court dismissed the copyright claims before trial, and Milo & Gabby appealed.

Copyright owner takes a hard blow

Under the federal Copyright Act, a party can’t be held liable for infringement unless it has distributed copies of the copyrighted work to the public “by sale or other transfer of ownership.” Milo & Gabby asserted that the district court shouldn’t have focused on whether Amazon ever took legal title to the products sold on its website.

The Federal Circuit Court of Appeals agreed that passage of title isn’t of “talismanic significance” when determining whether a sale has occurred, but wasn’t persuaded that this case warranted abandoning its general insistence on transfer of title. And, while a court might consider a party to be a seller even when that party doesn’t hold and transfer title in some situations (for example, when the party engaged in consignment sales), Milo & Gabby failed to show that any of those situations applied to Amazon.

Milo & Gabby acknowledged that, if direct passage of title from Amazon to the buyers of the knockoff pillowcases were required for Amazon to be liable, Amazon wouldn’t qualify as a seller in most instances. According to the court, most of the products offered for sale on the Amazon website are offered by third-party sellers.

It claimed, though, that Amazon was a seller where it provided one of the third-party sellers of the pillowcases with fulfillment services. The third party shipped its product to an Amazon warehouse for storage, and Amazon boxed up and shipped the product to the buyer when a sale on the website took place.

That wasn’t enough for the court. It noted that Amazon never held title, so it couldn’t sell the product on its own, even if done on behalf of the third-party seller. Amazon also didn’t control the information or photos posted on the product detail page or the sale price. It made it easier for third parties to make a sale, but the third parties remained the sellers.

A caveat

It’s important to note that the court’s ruling applies only to circumstances in which products are sold on Amazon by third-party sellers. When Amazon sells products itself, it likely would qualify as a seller. 

Milo & Gabby LLC v. Amazon.com, Inc., No. 2016-1290, May 23, 2017 (U.S.)

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