Defendant Pixels operates an online marketplace that enables artists to sell "print on demand" merchandise on which their artwork is reproduced, such as tee shirts, coffee mugs, duvet covers, yoga mats, and (of course) face masks. Been wondering where you could pick up a set of Ruth Bader Ginsburg beach towels, an Antonin Scalia weekend tote bag, or a Lindsey Graham shower curtain? Look no further.
How could one site provide so many marvelous things? Crowdsourcing! This is how Pixels - which boasts that it is "the world's largest art marketplace and print-on-demand technology company" - describes the process:
With just a few clicks, artists and photographers can upload their images to Pixels.com, set their prices for hundreds of different print-on-demand products, and then instantly sell those products to a global audience of online, mobile, and real-world buyers. Pixels fulfills each order on behalf of the artists - taking care of the printing, framing, matting, packaging, shipping, collecting payments from the buyers, and sending profits to the artists. Each product is manufactured at one of our 16 global production facilities and delivered "ready-to-hang" with a 30-day money-back guarantee.
During the 1950’s and 60’s, Sid Avery took iconic photographs of Frank Sinatra, Paul Newman, Nat King Cole, Marlon Brando, James Dean and other celebrities of the day. Plaintiff, the copyright owner of many of Avery's works, alleges that the Pixels infringed upon the copyright in six of Avery's photos when contributors (who are not parties to the lawsuit) sold merchandise embodying those photos on Pixel's website. Following a three-day bench trial, the district court issued findings of fact and conclusions of law, ultimately ruling that Pixels had not infringed upon plaintiff's copyrights because (1) Pixels had not engaged in sufficient volitional conduct to be liable as a direct infringer, and (2) Pixels was protected under the DMCA safe harbor.
To prove direct copyright infringement, a plaintiff must demonstrate that the (1) it owns valid copyrights, and (2) the defendant copied original elements from the copyrighted works. The contributors who, without permission from the plaintiff, uploaded the plaintiff's photos to Pixels' website in order to sell print-on-demand products likely (almost certainly) were liable for direct infringement. (Footnote: a contributor who makes a transformative use of the photos could have a viable fair use argument.) The question here was whether Pixels had engaged in sufficient volitional conduct such that it (also) could be found liable as a direct infringer. The court looked to the Ninth Circuit's decision in VHT, Inc. v. Zillow Group., Inc.,918 F.3d 723, 731 (9th Cir.), cert. denied, 140 S. Ct. 122 (2019), for guidance regarding what level of active conduct a website owner, like Pixels, must engage in to be held directly liable for infringement that occurs on its website. In Zillow, the Ninth Circuit held that routine website activities - such as automatic copying, storage, and transmission of copyrighted materials, "when instigated by others" - were too "passive" and typically would not cross the threshold. By contrast, where the website operator "exercised control (other than by general operation of its website); selected any material for upload, download, transmission, or storage; or instigated any copying, storage, or distribution’ of its photos," there is a stronger nexus between the website's conduct and the infringement, making it more likely that the website can found liable as a direct infringer
Based on this standard, the court held that Pixel's volitional conduct was insufficient to hold it accountable as a direct infringer. Contributors, not Pixels, select the images to be uploaded to Pixel's website. Contributors and buyers, not Pixels, direct what is bought, created, and sold through the site. Pixels "controls only the code that facilitates transactions between vendors, contributors, and buyers." In other words, Pixels is a middleman. Moreover, Pixels has implemented policies and procedures to remove from its site infringing content and infringing contributors. Indeed, when plaintiff complained about infringing activity occurring on its site, Pixels' promptly addressed those concerns by removing the infringing content.
The court also found that Pixels would not liable for the monetary relief because of the DMCA safe harbor. The key question regarding whether Pixels qualified for the safe harbor was whether it could demonstrate, under 17 U.S.C. § 512(c)(1)(B), that it did "not receive a financial benefit directly attributable to the infringing activity, in a case in which [it] has the right and ability to control such activity." The right or ability to control infringing activity requires “something more than the ability to remove or block access to materials posted on a service provider’s website." That “something more” exists where a service provider exerts “substantial influence on the activities of users,” such as when the service provider is “actively involved in the listing, bidding, sale and delivery of items offered for sale ... or otherwise controls vendor sales by previewing products prior to their listing, editing product descriptions, or suggesting prices."
Here, the court was persuaded that Pixels did not exert substantial influence over the content that is made available on its site. Pixels does not encourage or incentivize the uploading of any particular content. Pixels does not alter the uploaded images. Nor does Pixels take any part in the manner in which the images are described or classified. All that is handled by the contributors themselves. The court also found that Pixels does not exert substantial influence over the sales activities occurring on its site. The final pricing and product selection are determined by contributors. In the court's view, the activities in which Pixels engages -- such as processing payments, transmitting order information to manufacturers, and updating its code to set minimum pricing - do not demonstrate "control" of the infringing activity; instead, these actions "show only that it controls its operations as a service provider." And while Pixels does contract with the manufacturers that produce the goods sold, Pixels has no control over the employees, materials, prices, or products that manufacturers make or how they are labeled or shipped, Pixels’ only involvement in a sales transaction occurs when a Pixels employee does a cursory inspection of prints for pixilation or cropping issues. (Because the court concluded that Pixels did not have the right and ability to control the alleged infringing activity, it did not need to address the “financial benefit” prong of § 512(c)(1)(B) in order to conclude that Pixels established that it is protected by the DMCA safe harbor.)
CV 18-10232-CJC(JEMx), 2021 WL 736258 (C.D. Cal. Feb 24, 202