Zazzle Loses Copyright Jury Verdict, and That’s Bad News for Print-on-Demand Publishers–Greg Young Publishing v. Zazzle

November 27, 2017 · by Eric Goldman · in Copyright, Derivative Liability, E-Commerce

Greg Young Publishing licenses images for posters, many of which are beach- or surfing-themed. Zazzle users posted item listings that included the copyrighted images. Greg Young Publishing sued Zazzle. In a prior ruling, the court held that Section 512(c) applied to the photos in the online product listings, but not to the manufacture of goods bearing the image. Without Section 512 protection for the latter, the case proceeded to a jury trial.

The trial did not go well for Zazzle. It lost on all 35 counts of copyright infringement, and the jury awarded over $460,000 in statutory damages in amounts ranging from $200 to $66,800 per work. Five of the statutory damage awards were more than $30,000 per work, which is allowed only for willful infringement. In post-trial motions, Zazzle moved to limit those 5 statutory damages awards to $30,000 each because the plaintiff didn’t prove willfulness. The judge agreed, knocking those 5 awards down to $30,000 each.

What is Willfulness? Normally, willfulness is a rigorous scienter requirement. However, the Ninth Circuit has relaxed it substantially. The court recaps:

a copyright defendant may be liable for willful infringement if it fails to make any “attempt to check or inquire into” the copyright status of a design when it “has a general awareness” that the design might be unauthorized, or if the defendant uses “an approval process that never explicitly asks about copyrights at all,” or if the defendant deliberately sells infringing products after receiving a cease-and-desist notice.

Adapting this rule to UGC services, the court says:

receiving a takedown request for a specific unauthorized copy of a copyrighted work does not, without more, impute an objective suspicion that other instances of that same work exist on the service and are likewise unauthorized…Absent a takedown notice from a copyright owner identifying specific infringing copy, the service provider cannot know whether every particular copy is authorized or not

Zazzle Lacks Willfulness. The court observed that “Zazzle (1) adopted a policy against copyright infringement, (2) required its users to contractually warrant that each design’s use was authorized, (3) employed a large team to help enforce its policy, (4) responded to every one of Plaintiff’s takedown requests, and (5) made an effort to try to locate and remove additional infringements from Plaintiff’s catalogue.” Thus,

Drawing reasonable inferences in Planitiff’s favor, Zazzle’s conduct cannot be considered reckless or willfully blind. Whenever Plaintiff gave Zazzle notice of infringement, Zazzle responded. Planitiff’s closing arguments acknowledged Zazzle had a working anti-infringement system. Dkt. 147 at 116:8-11 (“[GYPI is] asking you to get Zazzle to do a better job.”) While that system admittedly could not address future infringement, it did have the ability to remove infringing material upon receipt of a takedown notice. And the Ninth Circuit does not set the willfulness bar so low that it requires active monitoring for infringement in the online platform context.

Even in the light most favorable to Planitiff, the undisputed facts do not show recklessness. Zazzle indisputably reviewed product orders and employed dozens of people to combat infringement. Nor was there evidence to support “willful blindness.” Plaintiff elicited no testimony that Zazzle “believed that there is a high probability” of infringement of Plaintiff’s copyrights, and Plaintiff showed no “deliberate actions” by Zazzle “to avoid learning” about infringement. Both elements are required; Plaintiff showed neither at trial.

No caselaw supports a willfulness standard so low that a company with an active anti-infringement policy that took action against any alleged infringement—albeit upon receiving notice—is deemed to have acted recklessly or been willfully blind. This Court enters judgment as a matter of law that any infringement found by the jury was not “willful.”

The Injunction. Separately, the court issued a permanent injunction against further infringement of any copyrighted works enumerated on the joint trial exhibit list. Like I recently pondered in the context of a similar injunction against Sunfrog, a T-shirt print-on-demand publisher, how exactly will Zazzle operationally implement the injunction?

Because the copyrighted works are identified on the exhibit list, Zazzle can use the works to train image filters. Perhaps image-filtering technology has gotten good enough that it will find all subsequent instances of the works. Certainly filters are more likely to work here than in the Sunfrog case, where the injunction extended to “substantially similar” variations of the trademarked logos and phrases.

If the image filters can’t solve this problem, Zazzle will have to deploy humans against this problem, and they will have to prescreen Zazzle’s entire corpus of images, not some subset related only to the Greg Young Publishing images. Even so, throwing bodies at the problem does not ensure 100% compliance, no matter how much money Zazzle spends.

The injunction explicitly says Zazzle doesn’t need to be perfect. Quoting other cases, it says “absolutely perfect compliance is unattainable” and “If a violating party has taken ‘all reasonable steps’ to comply with the court order, technical or inadvert[e]nt violations of the order will not support a finding of civil contempt.” That’s nice, but what are “all reasonable steps” here, and how many “technical or inadvertent” mulligans will Zazzle be allowed before it’s in contempt? These are questions that Zazzle hopes it won’t have to answer, and certainly not in the context of a “show cause” hearing.

By way of comparison, the DMCA online safe harbor (17 USC 512(j)) explicitly limits the possible injunctions for user-generated content. However, 512 only protects Zazzle’s online listings, not its offline printing, so it doesn’t help Zazzle. Eventually, the print-on-demand industry may require its own legislative solution.

Implications. While the no-willfulness ruling nominally is good news for Zazzle, this case has produced both tactical and strategic losses for Zazzle. Zazzle must pay over $350,000 in damages plus attorneys’ fees and costs (the plaintiff is asking for $700k+ more). Implementing the injunction could be even more costly. Zazzle may need to buy new (or better) image filtering software and hire many new employees/contractors.

It bears reiterating that Zazzle must incur these costs and obligations despite all of the efforts it was already taking. The court recaps:

“Plaintiff did not argue that Zazzle had actual knowledge that it was infringing the works at issue.”
“Nor did Plaintiff present any evidence to show that ignored any infringement”
“Zazzle had an express policy against infringing activity.”
“Plaintiff presented no evidence of deviation from that policy.”
“Zazzle also required its users to contractually warrant and verify that they had the right to use each individual image.”
“Zazzle also employed 30 and 50 people to help Zazzle enforce its policy.”
“Plaintiff agreed that every time it brought potential infringements to Zazzle’s attention, Zazzle swiftly removed the alleged infringements.”
“Zazzle made a specific effort to try to remove all products that might potentially infringe Plaintiff’s copyrights by using keyword searches to try to find those products and remove them.”

These multitudinous efforts were not enough to defeat this lawsuit. So exactly what steps must Zazzle take to avoid future copyright lawsuits based on this plaintiff’s other works or other plaintiffs’ works? This ruling suggests that Zazzle must bat 1.000 or write substantial checks. That means the issues underlying this case are not only operational; they are potentially existential. Zazzle will probably figure something out, but I’m glad I’m not a Zazzle stockholder.

The docket activity suggests Zazzle plans to appeal. Given how bad this loss is, an appeal makes sense. But I sure hope they have some great arguments on appeal, or the appeal could lock in some really bad doctrines for the entire print-on-demand industry.

Reminder: we’ll be discussing operational issues related to this case at the Content Moderation and Removal at Scale Conference, Feb. 2, 2018, at Santa Clara University. We expect to run out of tickets, so if you plan to come, make sure to register ASAP.

UPDATE: In a shocking development, in early February, Judge Wilson reversed himself and vacated the permanent injunction. An appeal is surely forthcoming, but this time it will be from the plaintiff, not Zazzle.

Case citation: Greg Young Publishing, Inc. v. Zazzle, Inc., 2017 WL 5004719 (N.D. Cal. Oct. 27, 2017)

Case library:

* Plaintiff’s request for attorneys’ fees
* October 2017 post-jury verdict injunction
* October 2017 ruling following jury verdict
* Jury verdict
* May 2017 ruling on DMCA safe harbor. My blog post.

Zazzle Loses Copyright Jury Verdict, and That’s Bad News for Print-on-Demand Publishers–Greg Young Publishing v. Zazzle

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