In 1998, Congress updated the copyright laws by passing the Digital Millennium Copyright Act (DMCA). Congress’s stated intent in passing the law was to ensure that creative producers embraced the Internet to distribute their works without fear of losing their intellectual property rights or getting sued for copyright infringement.
Safe Harbor Provisions
In order to encourage an active consumer marketplace for protected artistic works, Congress built four “Safe Harbor” provisions into the DMCA. These safe harbors provisions substantially limit the liability of a “service provider” for copyright infringement claims. To claim protection under one of the most commonly used provisions (and the one at issue in this article), an entity must show it is, in fact, a “service provider” under the terms of the law and that it meets each criterion of the specific safe harbor provision (i.e., they cannot be mixed-and-matched). “Service provider” means “a provider of online services or network access, or the operator of facilities therefor,” which is, as the US District Court for the Southern District of California noted, “defined so broadly that we have trouble imagining the existence of an online service that would not fall under the definition.”
The safe harbor provisions do not preclude a finding that a provider has infringed on or violated a claimant’s copyrights. Rather, the provisions afford the provider protection from monetary liability and limit the injunctive or equitable relief that a court can order to certain specified directives.
“User Uploaded Content”: When Does Safe Harbor Apply?
A commonly invoked safe harbor provision, set forth in Section 512(c), applies to websites that act as third-party intermediaries between copyright holders and users. This section provides relief to a service provider if it infringes on someone’s copyright merely by storing material, at the direction of a user, on a system or network it controls or operates.
In order to enjoy the protection of this safe harbor provision, the service provider’s storage of that material must meet certain criteria. These are:
- the service provider does not have actual knowledge of infringement or of facts making infringement apparent;
- where the service provider has the “right and ability to control” the activity of its users, the service provider “does not receive a financial benefit directly attributable to the infringing activity”;
- upon receipt of a statutorily compliant notice of claimed infringement, the service provider “responds expeditiously to remove, or disable access to, the material”; and
- the service provider has designated an agent to receive statutorily compliant notices of claimed infringement.
Websites like eBay, for example, meet the requirements to qualify for this protection. eBay is not “actively involved in the listing, bidding, sale and delivery of any item offered for sale on its website”; it does not set prices, accept offers, create listings, ship products, or otherwise actively engage in the sale of anything. Although it has the right and ability to control its listings, eBay acts only as an intermediary, providing a virtual directory connecting buyers and sellers and taking a commission on completed transactions or a fee for listing an item. Courts have determined that service providers in this situation are not required to monitor the listings to ensure they comply with copyright protections provided that they do not “receive a financial benefit directly attributable to the infringing activity.”
Conversely, if a service provider takes an active role in modifying listings or facilitating sales and profits directly from that involvement, its actions may prevent it from successfully claiming the safe harbor protection. This makes sense: When a provider is merely providing a forum for other (potentially problematic) transactions, it’s at worst turning a blind eye to wrongdoing. (For example, purchasing a bicycle on CraigsList – the owners of the site don’t know where it came from or if the seller has the rights to sell it; the site merely provides a forum to find a potential buyer.) When a provider takes active steps to obscure copyright information and then actively assists in the marketing of products that it willfully ignores might have copyrights, it no longer can claim the protection of this safe harbor provision. (Contrast the CraigsList bicycle listing with a dealer who files off the serial numbers of each bike he acquires and re-finishes them with a new paint job before advertising them for sale in his own shop.)
In the case of Gardner v. CafePress, the Southern District of California examined the distinction between service provider activity that falls within the safe harbor boundaries and that which does not.
CafePress: Direct Financial Gain = No Safe Harbor
CafePress is a website that allows users to upload images of their artwork, slogans, photos, and designs to create custom-printed items including shirts, bags, and mugs. When a user uploads an image, the CafePress system automatically removes metadata contained in the image, including any copyright information, before storing the image on its servers. The system also automatically optimizes images for printing in various ways; the owners of CafePress do not oversee this process.
Once an image is uploaded to CafePress’s server, not only can a user purchase customized products for his own use, but unless he opts out, his design will be made available for purchase by other users. This catalog, called the “CafePress Marketplace,” is monitored and overseen closely by the site, which CafePress,”in its sole and absolute discretion . . . determine[s] what designs and products will be available” and “may automatically modify designs (e.g., cleaning up JPG artifacting, adjusting colors for different printers and products, and adjusting design placement on products).” CafePress determines the retail price for each product sold in its Marketplace, collects payment from buyers, and pays the original uploading user a commission.
Some of these Marketplace products are also advertised for purchase on Amazon and eBay; those retailers take payment from buyers (keeping a percentage), and CafePress fulfills the orders and pays the original user a commission. Other than the 5-10% commissions to the original uploading user, CafePress keeps the profits from sales generated by its Marketplace. In the Gardner case, there was no allegation that CafePress knew that any images infringed any copyrights (requirement number one to claim safe harbor under the four-pronged test of 512(c)), and CafePress did take down those items that allegedly infringed immediately upon request (requirement number three).
However, unlike eBay’s “hands off” approach, CafePress was actively involved in monitoring and interacting with its product listings – and received direct financial benefits from the sale of the copyrighted items. It modified images, set pricing, and promoted certain products with targeted eBay and Amazon listings. Because of this extra involvement, the Court found that it was not eligible to claim the safe harbor protection of 512(c).
The Takeaway: Best Practices
If you are a service provider operating an online marketplace that allows users to upload their own images and designs, court decisions indicate that you have two options:
1. You can be minimally involved, like eBay, allowing users to post at their own risk and taking, essentially, a “referral fee”-style commission. However, if you receive notice of an alleged violation, you must follow the appropriate takedown procedures set out in the DMCA before restoring any image to your website; or
2. If you allow users to upload content that you, as the owner/operator of the site, are going to advertise, market and sell, you must take a more active role in monitoring the uploaded content and in ensuring that copyrights are respected and preserved. The Gardner v. CafePress decision indicates that not doing so may well expose you to liability and prevent you from claiming a safe harbor defense.
Whether you are concerned about preserving your own copyright or ensuring that your business remains compliant with the law, an experienced intellectual property attorney can help. Contact us today for a consultation about your situation.
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Written with the assistance of attorney Jamie Pfeiffer.
 “Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation… provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. Sen. Rep. No. 105-190 at 8.
 Gardner v. CafePress, 2014 U.S. Dist. LEXIS 25405 (S.D. Cal., Feb. 26, 2014).
 Id., citing 17 U.S.C. §§ 512(c)(1) & (2).
 Henrickson v. eBay, Inc., 165 F. Supp. 2d 1082, 1094 (C.D. Cal. 2001).
 Gardner v. CafePress, 2014 U.S. Dist. LEXIS 25405, *10, 14. (S.D. Cal., Feb. 26, 2014).