Sandy Routt v. amazon.com

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT AUG 29 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
SANDY ROUTT, DBA No. 13-35237
Sandybeachgifts.com, DBA Sandys Beach,
D.C. No. 2:12-cv-01307-JLR
Plaintiff - Appellant,
v. MEMORANDUM*
AMAZON.COM, INC.,
Defendant - Appellee.
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, District Judge, Presiding
Argued and Submitted July 9, 2014
Seattle, Washington
Before: ALARCÓN, KLEINFELD, and MURGUIA, Circuit Judges.
Sandy Routt appeals from the district court’s dismissal of her first amended
complaint against Amazon.com (“Amazon”). We review de novo the district
court’s decision to grant a motion to dismiss under Rule 12(b)(6) of the Federal
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Rules of Civil Procedure. Henry A. v. Willden, 678 F.3d 991, 998 (9th Cir. 2012).
We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
Routt alleges that certain “Amazon Associates” (“Associates”), participants
in Amazon’s affiliate-marketing program (the “Associate Program”), used her
copyrighted photographs on their websites without her permission. Routt sued
Amazon for copyright infringement and for false designation of origin under the
Lanham Act, 15 U.S.C. § 1125(a), on the theory that Amazon should be held liable
for the conduct of its Associates. The district court dismissed Routt’s first amended
complaint after concluding that she had not alleged facts sufficient to establish that
Amazon could be directly, contributorily, or vicariously liable for its Associates’
conduct. In this appeal, Routt challenges only the district court’s vicarious liability
analysis.
I
“To state a claim for vicarious copyright infringement, a plaintiff must
allege that the defendant has (1) the right and ability to supervise the infringing
conduct and (2) a direct financial interest in the infringing activity.” Perfect 10,
Inc. v. Visa Int’l Serv., Ass’n, 494 F.3d 788, 802 (9th Cir. 2007) (footnote omitted).
Routt alleges, and Amazon acknowledges, that Amazon’s relationships with
its Associates are governed by an operating agreement. This agreement contains a
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provision that prohibits Associates from infringing on another’s copyright or
trademark. The agreement also gives Amazon the right to “monitor[], crawl[], and
otherwise investigat[e]” an Associate’s website to ensure its compliance with the
terms of the agreement. Amazon reserves the right to terminate noncompliant
Associates.
This operating agreement gives Amazon some ability to affect the conduct
of its Associates, at least to the extent that its Associates wish to remain in the
Associate Program. “For vicarious liability to attach, however, the defendant must
have the right and ability to supervise and control the infringement, not just affect
it . . . .” Id. at 805.
A defendant has control over a third party’s infringing conduct when the
defendant can directly put an end to that conduct. For instance, in Fonovisa, Inc. v.
Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996), this court held that a swap meet
operator could control a vendor’s sale of pirated goods because the operator could
exclude the vendor from the swap meet, thereby putting an immediate end to
infringing sales taking place at the swap meet. Id. at 261–62. Similarly, in A&M
Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), this court found a
software operator could control its users’ transmission of pirated music because it
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had the ability block access to its software, thus ending the users’ ability to
transmit the infringing files. Id. at 1023–24.
Fonovisa and Napster stand in contrast to two cases involving Perfect 10, an
adult magazine whose copyrighted photographs were widely infringed on the
Internet. In the first, Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir.
2007), this court affirmed the district court’s denial of a preliminary injunction that
would have prevented Google from linking to third-party websites displaying
Perfect 10’s copyrighted images. We concluded that Perfect 10 was unlikely to
prevail on its vicarious liability claim because it could not show that Google had
the legal right to stop the direct infringement by third-party websites. Id. at 1175.
Perfect 10 had argued that because the third-party websites participated in
Google’s AdSense program—an affiliate-advertising program similar to Amazon’s
Associate Program—Google had a contractual right to “monitor and terminate
partnerships with entities that violate others’ copyright[s].” Id. at 1173 (alteration
in original) (quoting Perfect 10 v. Google, Inc., 416 F. Supp. 2d 828, 858 (C.D.
Cal. 2006)). This court rejected the argument, concluding that Google’s “right to
terminate an AdSense partnership does not give Google the right to stop direct
infringement by third-party websites.” Id. at 1173–74. As we noted, “An infringing
third-party website can continue to reproduce, display, and distribute its infringing
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copies of Perfect 10 images after its participation in the AdSense program has
ended.” Id. at 1174.
In the second case, Perfect 10, Inc. v. Visa International Services Ass’n, this
court determined that Visa, Mastercard, and several affiliated banks were not
vicariously liable for copyright infringement for processing payments to websites
that misappropriated Perfect 10’s photographs. 494 F.3d at 802. The credit card
companies had a contractual right to stop processing payments to merchants that
engaged in illegal conduct. Id. at 802. Perfect 10 argued that this right to terminate
services amounted to a right and ability to supervise the infringing conduct. Id. at
804. This court disagreed, reasoning that “the mere ability to withdraw a financial
‘carrot’ does not create the ‘stick’ of ‘right and ability to control’ that vicarious
infringement requires.” Id. at 803.
Routt provides no basis for us to distinguish her case from the Perfect 10
cases. Accepting the allegations in her complaint as true, Routt has pleaded that
Amazon has a right to monitor its Associates’ websites and that it may terminate
the account of any Associate who has infringed on another’s copyright. Routt,
however, has not alleged that termination would put an immediate end to the
Associates’ infringement. As it was in the Perfect 10 cases, the infringing conduct
in this case occurs on third-party websites. Routt has alleged nothing to suggest
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that an infringing Associate could not “continue to reproduce, display, and
distribute its infringing copies of [Routt’s] images after its participation in the
[Amazon Associates] program has ended.” Amazon.com, 508 F.3d at 1174. Thus,
while Amazon may have had the right and ability to terminate the accounts of the
infringing Associates, Routt has not adequately alleged that Amazon exercises any
direct control over those Associates’ activities. In the absence of such allegations,
Amazon cannot be held vicariously liable for its Associates’ conduct.
II
Vicarious liability under the Lanham Act requires “a finding that the
defendant and the infringer have an apparent or actual partnership, have authority
to bind one another in transactions with third parties[,] or exercise joint ownership
or control over the infringing product.” Visa, 494 F.3d at 807 (quoting Hard Rock
Café Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1150 (7th
Cir.1992)). For the same reasons Amazon lacks the ability to supervise its
Associates’ conduct, it likewise lacks joint ownership or control over its
Associates’ infringing websites. Moreover, Amazon’s operating agreement with its
Associates expressly disclaims the existence of any actual partnership and states
that neither party shall have the ability to make or accept any offers or
representations on the other’s behalf. Routt has not alleged any facts that would
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establish an apparent partnership or demonstrate that the infringing Associates had
apparent authority to bind Amazon. See Unif. P’ship Act § 308 (1997) (“If a
person, by words or conduct, purports to be a partner, or consents to being
represented by another as a partner, in a partnership or with one or more persons
not partners, the purported partner is liable to a person to whom the representation
is made, if that person, relying on the representation, enters into a transaction with
the actual or purported partnership.”); NLRB v. Dist. Council of Iron Workers, 124
F.3d 1094, 1099 (9th Cir. 1997) (“Apparent authority arises from the principal’s
manifestations to a third party that supplies a reasonable basis for that party to
believe that the principal has authorized the alleged agent to do the act in
question.”). Routt therefore has failed to state a claim for vicarious liability under
the Lanham Act.
AFFIRMED.
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