Court Opinion

ID: 2722851
Source: CourtListenerOpinion
Date Created: 2014-09-02 21:00:32.945339+00
Date Added: 2024-06-11T15:40:08.718546
License: Public Domain

NOT FOR PUBLICATION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

                                            5
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

                                           6
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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