Copyright Owner Can Proceed with Vicarious Infringement Claim Against eBay–Okolita v. eBay

Ellen Okolita developed bird costumes for children, took photos of her children wearing the costumes, and used the photos to sell about 8,000 costumes on Etsy (at her “Tree and Vine” store). Read a profile of her. (Sorry, I’m not showing any items at issue because I don’t have time to be the next defendant, even if I have a strong fair use defense).

Okolita claims that Chinese “counterfeiters” knocked off her designs and sold inferior versions on eBay with the help of her photos. She doesn’t yet have copyright registrations for her costumes, so this lawsuit is solely about the photos. She sent takedown notices to eBay, which eBay honored. However, she really wanted staydowns, which she did not get. Thus, she sued eBay for direct, contributory, and vicarious copyright infringement. The lawsuit goes about as well as you would expect….until the surprise twist at the end.

Direct Infringement. Okolita did not adequately allege volitional conduct by eBay. Cites to CoStar, BWP v. Polyvore, Parker v. Google, and more.

Contributory Infringement. The court invokes the Sony “substantial noninfringing uses” defense to the standard contributory copyright infringement claim:

Concerning’s technological capabilities, the only plausible inference is that it is capable of being used for and is generally used for noninfringing uses. Furthermore, there is no plausible basis to infer from the facts alleged that eBay preauthorized the use of Ms. Okolita’s copyrighted works. Its conduct is in fact characterized by reaction to the infringing acts of third parties, not preauthorization of those acts.

The court also addresses the Grokster inducement argument, but Okolita only alleged that eBay “aided and abetted” the infringers. (I wonder if the Taamneh ruling casts a shadow on those allegations?). The court says:

She has not alleged facts involving statements or actions that plausibly suggest that eBay promotes copyright infringement on the part of third parties using its marketplace. Moreover, eBay’s “mere knowledge of infringing potential or of actual infringing uses” is not enough to subject it to contributory liability. This extends to eBay’s knowledge (precipitated by takedown requests) that third party merchants were infringing Ms. Okolita’s copyrights.

To overcome the scienter problem, Okolita alleged that eBay was in a partnership with its vendors. The Grokster decision foreclosed this move, because “‘ordinary acts incident to product distribution, such as offering customers technical support or product updates’ will not afford a basis for liability.”

The fact that eBay takes a cut of each deal’s transactional revenue doesn’t overcome the scienter deficiency either.

In a footnote, the court rejects Okolita’s willful blindness arguments because “the circumstances associated with eBay’s knowledge of infringement involve eBay’s general awareness that some of its users infringe copyrights with their listings. That knowledge is not actionable.” Plus, Okolita alleged specific knowledge on eBay’s part, conferred by the takedown notices.

Vicarious Infringement. So far this opinion is going pretty well for eBay, but we’ve  reached the record-scratch portion of the opinion.

Using the Grokster bastardized articulation of the doctrine (i.e., profiting from direct infringement while “declining to exercise a right to stop or limit it”), the court says the vicarious infringement claim survives eBay’s motion to dismiss:

the law suggests the need for consideration of the qualitative nature of eBay’s response to Ms. Okolita’s takedown requests and eBay’s knowledge and understanding of the infringers’ conduct on its online marketplace. In the context of a motion to dismiss, a plausible claim is viable and an examination of the quality of eBay’s response to Ms. Okolita’s takedown requests is suited for a summary judgment record or trial. Moreover, to the extent eBay premises its motion to dismiss on the copyright safe harbor found in § 512(c), that entails a separate inquiry that arises in the context of an affirmative defense. Although the current record establishes that eBay has a § 512(c) policy (on paper) and that eBay did remove content that infringed Ms. Okolita’s copyright(s), I am not persuaded that a review of Ms. Okolita’s FAC and its attachments makes it obvious that eBay is sheltered by the safe harbor.

Say what? eBay has been defending vicarious copyright infringement claims for a quarter-century, and this judge thinks Okolita has alleged something novel that needs more careful consideration? Ugh.

It’s understandable that the judge punted on the DMCA safe harbor as an affirmative defense, but 512(c) casts a long shadow over the vicarious infringement claim. Until the judge addresses the DMCA, plaintiffs ought not to get too excited about this ruling.

Case citation: Okolita v., Inc., 2:22-cv-00284-LEW (D. Me. July 28. 2023)