eBay Strikes Back, Sues for Frivolous DMCA Takedowns

by Greg Beck

A while back I wrote about a case in which an eBay seller sued a company called Innovate! Technology for wrongly invoking the Digital Millennium Copyright Act to cancel his eBay auctions. Although the company claimed that the eBay sales infringed its intellectual property rights, its real complaint was that the sales did not comply with its minimum pricing policy. In other words, the company claimed that its intellectual property rights were violated because its products were priced too low.

Innovate Technology! responded to the suit with what seems to have been a huge tactical blunder: it impleaded eBay, asserting that, if it were held liable to the eBay seller, it would be entitled to indemnification from the auction company. Probably not a good move. eBay generally stays out of DMCA disputes and simply follows the DMCA's statutory takedown provisions, which provide it with immunity from damages. But it could not ignore a lawsuit, and yesterday filed an answer and counterclaim against Innovate! for abuse of the DMCA process, seeking damages, attorneys' fees, and an injunction prohibiting Innovate! from filing any more DMCA notices.

From eBay's countersuit:

Innovate has repeatedly filed notices of claimed infringement ("NOCI") alleging that the sale . . . of Innovate products infringes Innovate’s intellectual property rights when in fact Innovate does not have a good faith belief that its intellectual property rights have been violated.

* * *

Instead, [the NOCI] are an effort by Innovate to impede the legitimate re-sale of Innovate product by bona fide purchasers . . . by knowingly misrepresenting itsintellectual property rights in an attempt to manipulate the secondary product market/s through artificially higher prices. Upon information and belief, to date, Innovate’s conduct has improperly caused the removal of more than 100 listings from the eBay website.

* * *

Innovate’s practices prevent buyers from purchasing genuine items at the best prices the market will bear.

Other cases like this have been brought before (some by Public Citizen), but as far as I know this is the first time that eBay has itself asserted a claim for abuse of the DMCA. It looks like eBay is using this case to make an example out of one of the many companies that are abusing the process at the expense of eBay sellers, consumers, and eBay itself. I think eBay has a strong case.

Comments

[Arborlaw]

It's about time eBay gets serious about DMCA takedowns. Unfortunately, eBay's NOCI process just about guarantees that the average complainant will fail to comply with the real requirements of the DMCA, and the only basis for takedown under the DMCA: copyright infringement. Creating a category of complaint for "intellectual property" and then rigging up a procedure which looks and feels like, but is not a DMCA takedown, seriously muddies the water.

DMCA takedowns just as frequently backfire on the honest rights holder, as they succeed. For those interested in more information, I have an article about the very real dangers of making defective DMCA claims at my blog at arborlaw.biz (sorry, I can't place a direct link here):

"DMCA Takedowns and C&Ds: Enforcing Rights Against Online Infringers," February 5, 2008

Carol Shepherd
Arborlaw PLC