Court Mistakenly Thinks Copyright Owners Have a Duty to Police Infringement–Sunny Factory v. Chen

Fuxi, the putative copyright owner, has a registration for an image of printed sage leaves (the left image):

The alleged infringer, the Sunny Factory, sells the candles on the right on Amazon. Fuxi’s lawyer, Haoyi Chen of Arch & Lake, allegedly sent multiple takedown notices to Amazon, which caused Amazon to suspend the Sunny Factory. The suspension allegedly cost Sunny Factory $500k/month of sales (that’s a lot of candles). After getting no relief from Amazon, the Sunny Factory sued Fuxi and its lawyers. Fuxi defaulted. This opinion rejects the potential liability of Fuxi’s lawyers.

Defamation. The court says the takedown notices are covered by the litigation privilege: “Since the statements at issue here were made to Amazon during the notice and takedown period, they are absolutely privileged. Both parties recognize that the notice and takedown period may result in litigation if either party disagrees with Amazon’s…It is clear these proceedings are communications preliminary to a proposed judicial proceeding.”

This is clearly wrong. 99%+ of takedown notices never lead to court proceedings because the extra-judicial remedies suffice. That’s by design–the DMCA was designed to resolve matters outside of court. So extending the litigation privilege to DMCA takedown notices seems like an overreach. I’d welcome further thoughts about the implications of this interpretation of the litigation privilege.

A reminder that we would benefit from a “threats action” that would impose liability for improperly sending C&Ds and related demands, like takedown notices.

Tortious Interference. Sunny Factory didn’t plead sufficient malice. Plus, the court says Fuxi had a legitimate motivation to send takedown notices because “Copyright holders have an obligation to police the field where their marks may be used and to give notice to potential infringers in order to preserve their rights.”

Copyright owners don’t have any policing duty. See, e.g.,Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014) (“It is hardly incumbent on copyright owners, however, to challenge each and every actionable infringement”). By conflating copyrights and trademarks, the court made a very embarrassing mistake. Even if the court meant trademarks (which was not the case), this claim would have been overstated–the policing “duty” comes into play only in exceptional circumstances.

512(f). The court, citing Rossi, says Sunny Factory didn’t adequately plead a knowing misrepresentation. Sunny Factory argued that Fuxi’s failure to bring an actual lawsuit shows Fuxi’s bad faith. The court responds that Sunny Factory misunderstands 512(g), which only “provides an exception to liability for a service provider’s good faith disabling of access to material.”

Another obvious gaffe: the court didn’t address the caselaw saying that 512(f) preempts state law claims like tortious interference, which would have cleaned up its other errors.

Implications. This case previews what e-commerce might look like in a post-SHOP SAFE Act world. Looking at the reference images, the copyright owner appears to be overclaiming its rights to depict green sage leaves. Now, imagine the rightsowner also overclaimed trade dress protection for its sage leave design. Under SHOP SAFE, that also would be enough to drive the candles offline. Proponents of the SHOP SAFE Act might note it has a 512(f)-equivalent provision, but based on the long list of unsuccessful 512(f) cases, we know that provision will be worthless. So if you think this case provides some evidence of injustice to the candle vendor, wait until you see what the SHOP SAFE Act does.

Case citation: The Sunny Factory, LLC v. Chen, 2022 WL 742429 (N.D. Ill. March 11, 2022)

Prior Posts on Section 512(f)

* Another 512(f) Claim Fails–Moonbug v. Babybus * A 512(f) Plaintiff Wins at Trial! –Alper Automotive v. Day to Day Imports * Satirical Depiction in YouTube Video Gets Rough Treatment in Court * 512(f) Preempts Tortious Interference Claim–Copy Me That v. This Old Gal * 512(f) Claim Against Robo-Notice Sender Can Proceed–Enttech v. Okularity * Copyright Plaintiffs Can’t Figure Out What Copyrights They Own, Court Says ¯\_(ツ)_/¯ * A 512(f) Case Leads to a Rare Damages Award (on a Default Judgment)–California Beach v. Du * 512(f) Claim Survives Motion to Dismiss–Brandyn Love v. Nuclear Blast America * 512(f) Claim Fails in the 11th Circuit–Johnson v. New Destiny Christian Center * Court Orders Rightsowner to Withdraw DMCA Takedown Notices Sent to Amazon–Beyond Blond v. Heldman * Another 512(f) Claim Fails–Ningbo Mizhihe v Doe * Video Excerpts Qualify as Fair Use (and Another 512(f) Claim Fails)–Hughes v. Benjamin * How Have Section 512(f) Cases Fared Since 2017? (Spoiler: Not Well) * Another Section 512(f) Case Fails–ISE v. Longarzo * Another 512(f) Case Fails–Handshoe v. Perret * A DMCA Section 512(f) Case Survives Dismissal–ISE v. Longarzo * DMCA’s Unhelpful 512(f) Preempts Helpful State Law Claims–Stevens v. Vodka and Milk * Section 512(f) Complaint Survives Motion to Dismiss–Johnson v. New Destiny Church * ‘Reaction’ Video Protected By Fair Use–Hosseinzadeh v. Klein * 9th Circuit Sides With Fair Use in Dancing Baby Takedown Case–Lenz v. Universal * Two 512(f) Rulings Where The Litigants Dispute Copyright Ownership * It Takes a Default Judgment to Win a 17 USC 512(f) Case–Automattic v. Steiner * Vague Takedown Notice Targeting Facebook Page Results in Possible Liability–CrossFit v. Alvies * Another 512(f) Claim Fails–Tuteur v. Crosley-Corcoran * 17 USC 512(f) Is Dead–Lenz v. Universal Music * 512(f) Plaintiff Can’t Get Discovery to Back Up His Allegations of Bogus Takedowns–Ouellette v. Viacom * Updates on Transborder Copyright Enforcement Over “Grandma Got Run Over by a Reindeer”–Shropshire v. Canning * 17 USC 512(f) Preempts State Law Claims Over Bogus Copyright Takedown Notices–Amaretto v. Ozimals * 17 USC 512(f) Claim Against “Twilight” Studio Survives Motion to Dismiss–Smith v. Summit Entertainment * Cease & Desist Letter to iTunes Isn’t Covered by 17 USC 512(f)–Red Rock v. UMG * Copyright Takedown Notice Isn’t Actionable Unless There’s an Actual Takedown–Amaretto v. Ozimals * Second Life Ordered to Stop Honoring a Copyright Owner’s Takedown Notices–Amaretto Ranch Breedables v. Ozimals * Another Copyright Owner Sent a Defective Takedown Notice and Faced 512(f) Liability–Rosen v. HSI * Furniture Retailer Enjoined from Sending eBay VeRO Notices–Design Furnishings v. Zen Path * Disclosure of the Substance of Privileged Communications via Email, Blog, and Chat Results in Waiver — Lenz v. Universal * YouTube Uploader Can’t Sue Sender of Mistaken Takedown Notice–Cabell v. Zimmerman * Rare Ruling on Damages for Sending Bogus Copyright Takedown Notice–Lenz v. Universal * 512(f) Claim Dismissed on Jurisdictional Grounds–Project DoD v. Federici * Biosafe-One v. Hawks Dismissed * Michael Savage Takedown Letter Might Violate 512(f)–Brave New Media v. Weiner * Fair Use – It’s the Law (for what it’s worth)–Lenz v. Universal * Copyright Owner Enjoined from Sending DMCA Takedown Notices–Biosafe-One v. Hawks * New(ish) Report on 512 Takedown Notices * Can 512(f) Support an Injunction? Novotny v. Chapman * Allegedly Wrong VeRO Notice of Claimed Infringement Not Actionable–Dudnikov v. MGA Entertainment

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