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.

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