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Ninth Circuit:
Walmart Properly Held Liable for Copyright Abuses by Vendor
Opinion Says Jury Verdict Holding Company Responsible for Sale of Infringing Lamps by Third-Party Seller Was Supported Where Items Were Listed on Retailer’s Website as Being Sold, Shipped by Superstore Giant
By Kimber Cooley, associate editor
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Depicted is a screenshot from plaintiff’s complaint depicting an artist’s work next to an item sold on Walmart.com. The Ninth U.S. Circuit Court of Appeals on Wednesday affirmed a judgment against Walmart for copyright infringement based on that defendant’s active role in the violation. |
The Ninth U.S. Circuit Court of Appeals has upheld a jury verdict against Walmart for copyright infringement based on a third-party merchant’s offerings, saying that the judgment against the company for selling lamps that infringed on a Pasadena-area artist’s work was supported where evidence was presented at trial that the superstore giant exerted some control over the vendor and the items were listed as being sold by the retailer.
However, the panel vacated a portion of the judgment holding the retail giant liable for the posting of copyrighted photographs of the lamps, saying the plaintiff failed to show that Walmart played an active role in the selection and distribution of the images.
Wednesday’s decision comes by way of a memorandum opinion signed by Circuit Judges Eric D. Miller and Kenneth K. Lee. Circuit Judge Roopali H. Desai wrote separately to argue that the verdict should be upheld in its entirety.
Plaintiff Roxana Russell filed a complaint against Walmart Inc. and Wal-Mart.com USA, LLC in June 2019, after discovering that the retailer’s online store was offering lamps for sale that she says are substantially similar to her protected works. Her company, Roxy Russell Design (“RRD”), holds copyrights to the pendant designs and offers each one for sale at a price point ranging from $375 to $475.
Walmart was purportedly offering the allegedly infringing lamps for $49.31 per unit.
Allegations in Complaint
In her complaint, Russell alleged:
“Roxana Towry Russell is a renowned sculptural artist and small business owner based in Pasadena, California. Through her company Roxy Russell Design, Ms. Russell designs, manufactures, and sells various original and innovative pendant lamps. These lamps have garnered attention and acclaim all over the world, having been featured in some of the most prominent design magazines and purchased by luxury hotels, museums, aquariums, art galleries, and private collectors. RRD has enjoyed significant commercial success.
“Defendants Walmart Inc. and Wal-Mart.com USA, LLC…have willfully and brazenly copied RRD’s pendant lamps, leading to a significant decline in RRD’s revenue and profits.”
Russell continued:
“Indeed, Walmart has even shamelessly and wantonly copied RRD’s copyrighted images of its copyrighted pendant lamps to sell its own cheap, counterfeit goods on www.walmart.com.”
She asserted claims for copyright infringement under 17 U.S.C. §501 and other causes of action. A jury found in her favor as to her copyright infringement claims relating to three of the “sculptural works” and two registered images.
The panel rejected Walmart’s assertion that it was protected from liability under the Digital Millennium Copyright Act, which protects online service providers from copyright claims based on the infringing behaviors of third parties using their platform if, among other things, a retailer adopts a policy to refuse to host repeat offenders.
Judgment was entered in Russell’s favor as to the copyright claims, and she was awarded statutory damages in the amount of $75,000.
Motion for Judgment
Following the verdict, Walmart filed a renewed motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), arguing that there was insufficient evidence that the company caused the infringement when the lamps were offered for sale by a third-party vendor, Sunsea Grocery. District Court Judge Michael W. Fitzgerald of the Central District of California denied the motion, saying:
“[T]here was sufficient evidence for a jury to conclude that Walmart ‘caused’ the copyright [infringement] of the photographs and sculptures. Walmart’s arguments to the contrary require the Court…to disregard the differences between two types of sellers that participate on Walmart’s online marketplace: Marketplace Sellers and Direct Ship Vendors (“DSVs”)….While Marketplace Sellers act as third parties, operating independently from Walmart, according to Walmart’s own policies and certain testimony,…Walmart is actively involved with, and has ‘final say’ as to what is displayed and sold pursuant to…DSV listings. Because there was evidence that the Product Listings undisputedly indicated that the Replica Products were ‘Sold and shipped by Walmart,’ the jury was free to conclude that the relevant Product Listings were subject to Walmart’s DSV policies and procedures.”
As to the company’s Digital Millennium Copyright Act defense, he wrote:
“[T]he jury could reasonably conclude that Walmart failed to prove each of the elements required to establish the…defense, most evidently that Walmart reasonably implemented a policy to terminate repeat copyright infringers as applied to DSVs and that it did not financially benefit from the infringing activity while having the right and ability to control the infringing activity.”
Walmart appealed the judgment against it and the denial of its motion for judgment as a matter of law, as well as the court’s order awarding the plaintiff $1.5 million in attorney fees.
Ninth Circuit’s View
Miller and Lee noted that Walmart argued that it did not cause the infringement because it “hosted the website through which a third-party vendor, Sunsea Grocery (“Sunsea”), sold the infringing lamps.” Rejecting this view, the jurists wrote:
“At trial, Russell introduced the product listings into evidence. The listings did not contain Sunsea’s name; instead, they stated that the lamps were ‘[s]old & shipped by Walmart.’ Russell also introduced Walmart’s merchandise agreement with Sunsea, which stated that Walmart ‘assumes title to the Merchandise at the time the Merchandise is received by the shipping carrier.’ Additionally, she presented evidence that Walmart designates the shipping carrier used by third-party [DSVs] like Sunsea, and that those DSVs—unlike other third-party vendors who sell in their own name—ship products sold on Walmart.com using Walmart’s carrier account. Walmart also handles returns of products sold by DSVs. And buyers of those products pay Walmart directly, not the DSVs.”
Under these circumstances, they opined:
“This evidence provides more than adequate support for the jury’s verdict as to the lamps. Even if the jury believed that Sunsea produced the infringing lamps, it could reasonably believe that Walmart took legal title to the lamps and actively controlled their sale, shipment, and return. Although Walmart introduced some evidence that Sunsea shipped the infringing lamps without its involvement, the jury was not required to believe Walmart over Russell.”
Causation Disputed
As to the photographs, they pointed out that Russell was required to provide some evidence showing an exercise of control beyond the general operation of the website. Declaring that she failed to meet this burden, they remarked:
“To be sure, Russell presented evidence that Walmart had the ability to control the listings of DSVs like Sunsea. But ‘the possibility that images might be moderated and tagged…is not sufficient to transform [Walmart] from a passive host to a direct cause of the display of [Russell’s] images.’…Indeed, Walmart referenced internal records at trial to demonstrate that it did not approve, monitor, or otherwise change Sunsea’s listings…. In other words, Walmart did not play an active role in the selection and distribution of the copyrighted photographs.”
The jurists added:
“Russell fails to satisfy the substantial-evidence standard not because we find Walmart’s evidence to be more convincing than hers, but because she presented no evidence from which we can draw the reasonable inference that Walmart posted or controlled the listings at issue. The jury’s verdict that Walmart directly infringed on Russell’s copyrights therefore cannot stand.”
As to attorney fees, they remanded the matter to the district court for reconsideration in light of Russell’s partial victory.
Desai’s View
Desai wrote:
“I part ways with the majority’s decision to set aside the jury’s verdict against Walmart for copyright infringement as to Russell’s copyrighted photographs. Because our review of jury verdicts is highly deferential, and Russell presented adequate evidence for the jury to find Walmart liable for infringement of the photographs, I would affirm.”
The jurist argued:
“Even if the jury believed that Sunsea posted the listings, Russell also presented substantial evidence that Walmart exercised control over the listings. Sunsea had to provide Walmart with the photographs used in the listings before they could be posted. Additionally, Russell introduced evidence that Walmart employees can edit the content of listings posted by third-party vendors and have done so in the past, retaining ‘final’ say over the content.”
Under those circumstances, he said that “the jury could reasonably infer that Walmart posted or controlled the listings that infringed on Russell’s photographs” and accused the majority of “erroneously reanalyz[ing] Russell’s evidence with a fine-toothed comb” and “lower[ing] our high standard for overturning jury verdicts.”
The case is Russell v. Walmart Inc., 23-55542.
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