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Judge Rules in Favor of eBook Retailer in Copyright Claim Brought by Publishers

Ipod_5th_Generation_white.jpgAn eBook retailer did not commit copyright infringement, a judge ruled late last year, when it published information about software that can be used to strip digital rights management (DRM) from eBooks purchased through its online store. The dispute originated with an antitrust lawsuit filed by the retailer against numerous publishers, Abbey House Media, Inc. v. Apple, Inc., et al, No. 1:14-cv-02000, complaint (S.D.N.Y., Mar. 21, 2014). Two defendants filed counterclaims for copyright infringement, based on the plaintiff’s notice to its customers. The Digital Millennium Copyright Act (DMCA) generally prohibits removal or circumvention of copyright protection technology. 17 U.S.C. ยง 1201. The court held that the uses made possible by DRM removal in this case, however, were all non-infringing, and that the plaintiff therefore was not liable for infringement.

The plaintiff operated an online eBook retail store called BooksOnBoard from 2006 until 2013. It had contracts with numerous publishers to sell digital versions of their books, but it closed the online store in 2013. The company’s owner said at the time that his company was “collateral damage in the publishers’ war against Amazon,” referring to the dispute over “agency pricing” between publishers and both large and small online retailers. He stated that the publishers’ new pricing models made it impossible for him to compete with the giant online retailers like Amazon, Barnes & Noble, and Apple.

Contracts between Abbey House and several publishers required the eBooks it sold to have DRM technology. DRM is a system of copyright protection intended to prevent theft or piracy. In practice, it sometimes prevents a user from transferring a digital music track, movie, or eBook from one device to another. Some DRM systems prevent users from accessing files on unapproved devices. A file purchased through one company’s store, for example, might only be accessible with that company’s hardware. If that company stops supporting that type of hardware, the user risks losing the media they legally purchased. This makes a user’s “purchase” of a song, film, or book seem more like a lease.

In a notice to customers posted on its website after the store shut down, the plaintiff noted that DRM may prevent customers from transferring eBooks if they switch reading devices. It advised them to make backup copies of their purchases and pointed them to software available online that strips DRM from legally obtained media, so they could continue to use the media on a different device.

The plaintiff filed an antitrust lawsuit in March 2014 in a New York federal court against Apple, Simon & Schuster, the Penguin Group, and several other publishers. Simon & Schuster and Penguin filed counterclaims for contributory copyright infringement and inducement of infringement in July 2014, claiming that the plaintiff should be held liable for copyright infringement committed as a result of its publication of DRM-stripping information.

The court granted the plaintiff’s motion to dismiss the copyright claims. It held that the defendants failed to plead a required element of contributory infringement, which was that the plaintiff “materially contributed” to another person’s infringement. Abbey House, order at 10 (Nov. 21, 2014), citing Arista Records v. Doe, 604 F.3d 110, 117 (2nd Cir. 2010). It further held that they failed to demonstrate “purposeful, culpable expression and conduct” by the plaintiff to support an inducement claim. Abbey House, order at 13, citing Metro-Goldwyn-Mayer Studios v. Grokster, Ltd., 545 U.S. 913, 937 (2005).

Business law and commercial law attorney James G. Schwartz has represented businesses and business owners in the Bay Area since 1976. To schedule a free and confidential consultation with a knowledgeable and experienced advocate, contact us today online or at (925) 463-1073.

More Blog Posts:

Use of a DMCA Takedown Notice to Enforce a Trademark Could Expose California Business to Sanctions, Pleasanton Business & Commercial Law Blog, July 15, 2014

Typeface Designer’s Lawsuit against Former Business Partner Raises Questions of Business Formation, Intellectual Property Rights, Pleasanton Business & Commercial Law Blog, May 15, 2014

Ninth Circuit Grants Preliminary Injunction in Copyright Suit Against Google, YouTube, Pleasanton Business & Commercial Law Blog, March 17, 2014

Photo credit: By Stahlkocher (Own work) [GFDL, CC-BY-SA-3.0, GFDL or CC-BY-SA-3.0], via Wikimedia Commons.