Amazon May Face Supreme Court Pillow Fight

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By Alexis Kramer

A case involving Amazon.com Inc. and alleged animal-shaped pillowcase knockoffs could lead the U.S. Supreme Court to clarify the extent of e-commerce companies’ liability for products sold on their platforms that infringe intellectual property.

The high court will decide in its new term whether to grant a petition from pillowcase maker Milo & Gabby LLC to review a lower court ruling that Amazon can’t be held liable for the pillowcases because it didn’t actually sell or offer to sell them ( Milo & Gabby LLC v. Amazon.com Inc. , No. 17-287, 8/21/17 ). Milo & Gabby said the ruling gave online marketplaces an “enormous loophole” for escaping liability.

If the court hears the case, it will have a chance to weigh in on the sale of infringing goods in online marketplaces—and the legal responsibilities of platforms in combating them. The court is scheduled to consider the petition at an Oct. 6 conference.

The central question in the case is when Amazon’s involvement in third-party sales transforms it from a mere platform for distributing goods to a seller of those goods, Eric Perrott, a trademark and copyright attorney at Gerben Law Firm PLLC in Washington, told Bloomberg BNA. Developing a bright-line rule would be difficult, he said.

If the high court ultimately hears the case, and sends it back down to the U.S. Court of Appeals for the Federal Circuit, it could “open the door to figuring out where that line is,” Perrott said.

William Mosher, an intellectual property attorney at Novian & Novian LLP in Los Angeles, told Bloomberg BNA that courts have struggled to find ways to “translate laws that govern physical actions into laws that govern digital actions.”

The Digital Millennium Copyright Act covers online service providers’ liability under copyright law for infringing digital content appearing on their platforms. If the Supreme Court takes the case, it could be a first step towards addressing online platforms’ liability for digital goods under patent and trademark law, Mosher said.

Title Needed?

Milo & Gabby brought copyright and patent infringement claims against Amazon because third-party merchants sold knock-off versions of Milo & Gabby’s “Cozy Companion” pillowcases. The Federal Circuit held that Amazon wasn’t liable under federal copyright law for the allegedly infringing pillowcases because it didn’t hold title to the products—and, therefore, couldn’t sell them. It rejected Milo & Gabby’s patent claim on procedural grounds.

Milo & Gabby has now asked the Supreme Court to determine if retailers must hold legal title to a product in order to “sell” or “offer to sell” them under provisions of copyright law, 17 U.S.C. § 106, and patent law, 35 U.S.C. § 271.

“For the better part of a century, the meaning of terms such as, ‘sell,’ ‘sale,’ ‘offer to sell,’ ‘transfer of ownership,’ ‘distribute,’ etc., were well understood by both the courts and lay public,” Milo & Gabby said in an Aug. 21 Supreme Court petition. “Today, with the Federal Circuit’s ruling, these words have been so distorted and corrupted that it is now possible for those publicly known and identified as ‘the world’s largest retailers’ to claim, with a straight face, that they do not actually sell anything or offer anything for sale.”

Amazon waived its right to respond to Milo & Gabby’s petition. An Amazon spokesman declined a Bloomberg BNA request for comment.

Mann Law Group is representing Milo & Gabby. Bartlit Beck Herman Palenchar & Scott LLP is representing Amazon.

To contact the reporter on this story: Alexis Kramer in Washington at aKramer@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

Full text of the cert. petition at http://src.bna.com/sTw.

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