RealTime IT News

eBay Wins Infringement Case

In a significant case for online auction operations, a federal judge has ruled that eBay Inc. is not liable for copyright infringement in an incident in which bootleg copies of a movie were sold on the auction site.

The lawsuit, brought by filmmaker Robert Hendrickson, is one of the first to test whether a Web site company has a "safe harbor" if people use the site to sell items that infringe on copyrights.

"This is a decision on a single suit brought against eBay, but we believe it to be a very important ruling," eBay spokesman Kevin Pursglove told InternetNews.com Friday.

Curtis E. A. Karnow, a lawyer and author, vouched for Pursglove's view.

"The ruling makes sense and it followed the law," said Karnow, a partner in the e-business group of the nationwide law firm Sonneneschein Nath & Rosenthal, and author of the book, "Future Codes: Essays In Advanced Computer Technology & The Law."

Hendrickson sued San Jose, Calif.-based eBay in federal court in Los Angeles last year, alleging that the company would not halt the sale of DVDs and videotapes of his 1972 documentary "Manson." Hendrickson said the DVDs and tapes were pirated.

According to an Associated Press report, eBay asked Hendrickson to submit a sworn statement detailing his claim through its Verified Rights Owner Program, which lets copyright holders request that eBay remove an infringing item. Hendrickson refused, contending his initial complaint should have been enough.

The verified rights policy states that "eBay does not and cannot verify that sellers have the right or ability to sell or distribute their listed items. However, we are committed to removing infringing or unlicensed items once an authorized representative of the rights owner properly reports them to us."

Judge Robert Kelleher dismissed Hendrickson's request for damages from eBay and its top execs, saying among other things that the copyright infringement actually occurred off-line. Although it may facilitate the sale of pirated material, "eBay does not have the right and ability to control such activity," the judge was quoted as saying.

Sonneneschein Nath & Rosenthal's Karnow discussed the court's decision with InternetNews.com: "It makes sense because it recognized that if network service providers follow their safe harbor procedures, there should be no liability for the bad acts of customers-- injured parties can, and should, go directly after those who actually committed the bad act," Karnow said in an e-mail exchange. "It is a reasonable decision, because it recognizes that Internet companies such as eBay cannot be expected to actively monitor the actions of the millions of people who use their services. The practicalities matter, and the ... decision recognizes that."

eBay historically has taken the position that it is immune from copyright infringement claims under the Digital Millennium Copyright Act, a law aimed at protecting "qualifying Internet-services providers" from infringement claims based on the actions of users of the service.

Meanwhile, eBay stock was down $1.65 to $53.44 in early trading today after it filed with U.S. regulators to sell $1 billion of common stock in various offerings, with the proceeds to be used for general corporate purposes, including capital expenditures.