IP Law Daily, COPYRIGHT—D. Conn.: Both parties’ claims involving breach of settlement over beach ball image lacked merit, (Sep 12, 2019)

By Robert B. Barnett Jr., J.D.

The court resolved the case by granting summary judgment to the defendant Kangaroo Manufacturing and then granting summary judgment to the plaintiff IF Merchandise on Kangaroo’s counterclaims.

In a dispute between Kangaroo Manufacturing, the maker of, among other things, an inflatable emoji beach ball sold on Amazon, and IF Merchandise, an Amazon seller whose name appeared on an Amazon page containing an unauthorized photo of the Kangaroo beach ball, the federal district court in Hartford, Connecticut, has ruled as a matter of law that no evidence existed that IF Manufacturing caused the offending photo to appear on the Amazon page and that no evidence existed that Kangaroo’s request that Amazon take down the photo was made in bad faith. As a result, the court completely resolved the lawsuit, granting summary judgment on all claims and counterclaims made by both parties (IF Merchandise, LLC v. Kangaroo Manufacturing, Inc., September 11, 2019, Bryant, V.).

Background. Kangaroo manufactures various consumer products, including an inflatable emoji beach ball. Apparently, IF Merchandise also sells a product that looks much like the Kangaroo beach ball. Both parties sell their products on Amazon. In early 2016, Kangaroo sued IF Merchandise in California federal court, alleging that IF Merchandise infringed Kangaroo’s copyright by its sales listings on Amazon. The parties settled the lawsuit in late 2016, by signing a settlement agreement that sought to resolve future conflicts by an agreement not to have their products display on the same Amazon page. The agreement also contained a forum selection clause stating that all future lawsuits would be filed in Connecticut federal court.

In 2017, Kangaroo found out that several Amazon product detail pages for non-Kangaroo products were using Kangaroo’s copyrighted photographs of its emoji beach balls. A seller on the page was identified as "Assortmart." Kangaroo’s lawyer sent a letter to Amazon notifying Amazon of the copyright infringement and asked Amazon to order the sellers to remove the photograph. Amazon agreed, deactivated the page, and sent take-down notices to all sellers listed under the pages. IF Merchandise was one of the companies that received the take-down notice.

Angry that its sales were being thwarted by Amazon and frustrated that Kangaroo would not respond to requests for more information, IF Merchandise sued Kangaroo in Connecticut federal court, asserting that Kangaroo had breached their settlement agreement. The complaint also alleged multiple claims for making false and malicious copyright complaints to Amazon in violation of California state law. Kangaroo then counterclaimed, asserting that IF Merchandise, as a recipient of the take-down letter, infringed Kangaroo’s copyright in the image and breached the settlement agreement. Both parties then filed motions for summary judgment on both the original claims and the counterclaims.

IF Merchandise’s complaint. Of IF Merchandise’s 10 claims, seven involved malicious complaints to Amazon. All seven claims, the court said, should be dismissed because IF Merchandise never cited any specific statute that was alleged to have been violated. Even so, the court went and found one, citing Section 512(f) of the Digital Millennium Copyright Act, and it analyzed IF Merchandise’s claim on that basis. IF Merchandise could support its claim only if it could establish that Kangaroo had no evidence of copyright infringement. The facts, however, established that Kangaroo had every reason to believe that its copyright had been infringed. It thus had every right to make the take-down request to Amazon, and IF Merchandise’s malicious complaint claims had no merit.

Another of IF Merchandise’s claims involved an allegation of fraudulent business practices, which arose out of the same facts as the malicious complaint claims. Once again, however, the evidence indicated that Kangaroo’s attorney made the take-down request to Amazon in good faith and that, as a matter of law, no fraud occurred. IF Merchandise’s final two claims involved breach of the settlement agreement, specifically, that Kangaroo breached the agreement by filing the take-down request even though IF Merchandise did not post the offending photo. Nothing in the agreement, however, prevented a party from reporting copyright violations to Amazon. Kangaroo lodged no complaint against IF Merchandise. It merely asked Amazon to remove the copyrighted photo. Amazon made the decision to send the take-down letter to IF Merchandise. As a result, the two breach of contract claims failed because the settlement agreement never established any duty that IF Merchandise alleges was breached. For example, there was no general duty to avoid all conflicts. The court, therefore, granted summary to Kangaroo on all of IF Merchandise’s claims.

Kangaroo’s counterclaim. Kangaroo’s copyright infringement counterclaim also failed as a matter of law because no evidence existed that IF Merchandise had anything to do with the offending photo. Amazon made the decision to put IF Merchandise on the page with the offending photo. No evidence existed that IF Merchandise was "Assortmart" or that it had any connection with Assortmart. IF Merchandise contended that Assortmart was a separate corporation. If Kangaroo had a copyright infringement claim, IF Merchandise argued, it was with Assortmart. The court concluded that IF Merchandise could not be held responsible for copyright infringement vicariously. It was not liable simply because it received the take-down letter. It was not guilty unless evidence could be produced that it copied the copyrighted picture to the page. In the absence of any evidence that IF Merchandise was involved in the copying, the counterclaim failed as a matter of law.

Kangaroo also asserted a claim for breach of the settlement agreement. As mentioned previously, the agreement sought to reduce future disputes without creating any new rights. Thus, even if IF Merchandise infringed Kangaroo’s copyright, it did not breach the contract because the contract created no duty that IF Merchandise breached, beyond those required of the copyright protection laws. As a result, IF Merchandise was entitled to summary judgment on the breach of contract claim. The final matter was Kangaroo’s claim for declaratory relief. Kangaroo sought a declaration that Kangaroo abided by all settlement agreement terms. The court refused to allow Kangaroo to pursue the relief, calling the declaration "inappropriate." In any event, the claim as it applied to copyright infringement was duplicative of the copyright infringement claim itself, which rendered the declaratory relief superfluous because the copyright infringement remedy would have provided Kangaroo with complete relief. The court, therefore, granted summary judgment to IF Merchandise on all of Kangaroo’s counterclaims.

This case is No. 3:17-cv-01230-VLB.

Attorneys: David Fink (Fink & Johnson) for IF Merchandise, LLC a/k/a IM Merchandise. Julia M. Williams (Law Offices of Julia M. Williams APC) for Kangaroo Manufacturing, Inc.

Companies: IF Merchandise, LLC a/k/a IM Merchandise; Kangaroo Manufacturing, Inc.

Cases: Copyright TechnologyInternet ConnecticutNews