Contributory Trademark Infringement Claim Against Amazon Unlikely to Succeed on Merits: CA Appellate Court
In an unpublished decision, a California appellate court affirmed the denial of a preliminary injunction against Amazon.com, Inc. The court found that Tre Milano, LLC was unlikely to succeed on the merits of its claims against Amazon for direct and contributory trademark infringement for allowing third parties to sell counterfeits of its product through Amazon's website.
A California appellate court affirmed the denial of a preliminary injunction against Amazon.com, Inc. The plaintiff, Tre Milano LLC, claimed that Amazon was liable for direct and contributory trademark infringement for third party sales through Amazon's site of counterfeit versions of Tre Milano's InStyler hot iron products.
Although unpublished, the August 22, 2012 decision is notable given the few cases discussing online service provider liability for contributory trademark infringement. The decision largely relies on the US Court of Appeals for the Second Circuit's analysis in Tiffany (NJ) Inc. v. eBay, Inc. Tre Milano attempted to distinguish eBay by arguing that Amazon's failure to immediately remove listings on receipt of a trademark owner's notice of claimed infringement supported a finding of contributory infringement. The court disagreed, finding that Amazon was not required to remove a listing merely in response to notice of infringement unsupported by evidence.Close speedread
Key Litigated Issues
The key litigated issue in Tre Milano, LLC v. Amazon.com, Inc. is whether Amazon is liable for direct and contributory trademark infringement arising out of third parties's sales of counterfeit versions of Tre Milano's hair straighteners through Amazon's website.
Tre Milano owns and markets the InStyler Rotating Hot Iron Hair Straightener. Amazon offers InStyler products for sale on its website, some of which are sold by third parties and are counterfeit.
Amazon's policies for policing counterfeit goods require trademark owners who have identified suspected counterfeit goods being sold through Amazon's site to send Amazon a Notice of Claimed Infringement (NOCI). If the NOCI appears sufficient and legitimate, Amazon's copyright compliance officer sends it to Amazon's investigators to remove the listing and take action against the seller, which varies from warning the seller to blocking the seller. However, if a particular NOCI does not provide sufficient evidence, Amazon requests the sender to supply evidence to substantiate its claims, including an Amazon.com Order ID of a test buy that confirms the violation. Over time, Tre Milano sent many NOCIs to Amazon concerning suspected counterfeits. Amazon found that the majority of Tre Milano's notices failed to provide evidence concerning the alleged infringement.
Tre Milano sued Amazon and the third party sellers in California state court for direct and contributory trademark infringement under the Lanham Act, and for violations of state trademark and unfair competition law. It sought damages and an injunction barring Amazon and the third party sellers from selling, offering for sale or advertising purported InStyler products in California. The trial court denied Tre Milano's request for a preliminary injunction against Amazon. Relying on eBay, the trial court noted that a service provider's generalized notice of counterfeit goods being sold on its site is insufficient to impose an affirmative duty to remedy the problem. The trial court also found that Tre Milano failed to show that Amazon has been willfully blind to counterfeit sales on its site.
In an unpublished August 22, 2012 opinion, a California appellate court affirmed the denial of a preliminary injunction against Amazon. The court generally endorsed the trial court's reliance on the framework set up by the US Court of Appeals for the Second Circuit in its opinion in Tiffany (NJ) Inc. v. eBay, Inc holding that eBay was not liable for contributory infringement arising out of the sale of counterfeit Tiffany merchandise on eBay by third parties. For more on Tiffany v. eBay, see Practice Note, Internet Brand Protection: Contributory Trademark Infringement and Online Service Providers (www.practicallaw.com/6-503-4780).
Tre Milano emphasized key differences between Amazon's policies and procedures and the eBay policies that the Second Circuit found sufficient. For example, Tre Milano noted that eBay takes infringing listings down almost immediately after Tre Milano sends an infringement notice. According to Tre Milano, Amazon typically takes one to two weeks to respond to NOCIs, and sometimes months to respond.
However, the court noted that the majority of NOCIs Tre Milano sent to Amazon contained a statement that the product was counterfeit with no supporting evidence. Amazon had previously explained to Tre Milano that without evidence, Amazon would not remove a listing until it had conducted an investigation. The court held that nothing in the Second Circuit's eBay decision supported a conclusion that a listing must be removed on notice that it is likely for a counterfeit product. The appellate court found that when presented with evidence of infringement, Amazon took action to remove the infringing listings.
Although unpublished, the California appellate court decision is notable given the little case law addressing contributory trademark infringement by online service providers. Perhaps unsurprisingly, the California court largely adopted the Second Circuit's reasoning in Tiffany (NJ) Inc. v. eBay, Inc. The court's decision suggests that online service providers may not have to go as far as eBay does to protect trademark owners. The court found that Amazon's policies concerning trademark infringement were sufficient because Amazon took steps to remove listings once presented with evidence of infringement.
For general information on trademark counterfeiting claims and remedies, see Practice Note, Protecting Against Counterfeit Trademarks and Gray Market Goods (www.practicallaw.com/2-503-4782).