IP Law Daily, COPYRIGHT—N.D. Ill.: An infringing video at the bottom of an Amazon storefront does not trigger infringers’ profits as a matter of law, (Jan 8, 2025)

By Matthew Hersh, J.D.

A jury would have to decide whether the video was used prominently enough to constitute advertising.

A retailer that purloined a Chinese company’s video of a fire extinguisher and used it on its own Amazon storefront for a competing product would not be required to pay over a share of its profits to the copyright owner because the use of the video was not prominently featured in the storefront website, the federal court for Chicago has held. The court, in refusing to grant the video-maker summary judgment on her entitlement to profits, also awarded a lower amount of statutory damages than she had requested (Zhao v. BABIQIU, No. 1:23-cv-04507 (N.D. Ill. Jan. 6, 2025)).

The lawsuit was brought by Zhao XiaoQian, the creator of a 59 second video for a fire extinguisher sold under the name SHAR POTS. The video portrays a person spraying themselves with a fire extinguisher labeled “SHAR POTS” while Chinese subtitles across the bottom explain the fire extinguisher's safety features. Zhao brought this complaint against four different entities—BABIQIU, EasyFunny, NewO2, shanglan, and SW-WORLDER—that operate online Amazon storefronts that sell a competing brand of fire extinguishers. The complaint alleged that the four entities took a substantial portion of Zhao’s video, translated the subtitles from Chinese to English, and used their derivative (along with an accompanying snapshot from the same video) to promote their own brand.

Zhao moved for summary judgment on the complaint, leading to this ruling.

Copyright infringement. The court easily found that the four Amazon retailers committed copyright infringement. They admitted that they downloaded the video from a website and made only small changes to the video. And while they argued that changing the subtitles “differentiate[d]” their videos and snapshot, the court noted, “no ordinary reasonable person would find their works meaningfully distinct from Zhao's original.” There was clearly infringement in this case.

Fair use. Nor could the storefront operators take advantage of the fair use defense. They made a commercial use of the video and their modest changes—shortening it and changing the language of subtitles—could not be characterized as transformative. “Whether subtitled in Chinese or English, the purpose of the video is the same: to sell fire extinguishers,” the court noted. The remaining factors all easily tilted against fair use in this case, the court found, as the video was creative, the storefront operators took a substantial part of it, and their use undercut a potential licensing market for the original.

Laches and estoppel. The court also easily rejected these defenses as well. Because the lawsuit was filed within the three-year copyright statute of limitations, the court noted, it was well established in law that the laches defense could not apply. As to estoppel, this defense also failed. The storefront operators argued that Zhao allowed the video to be freely used without objection by users of a Chinese website known as 1688.com. But they did not provide any evidence that Zhao was aware of her video's accessibility on 1688.com, the court noted—and even if she was, “inaction alone cannot support an inference of Zhao's awareness of the infringing conduct or her intent to waive her copyright claims.”

Infringers profits. But while the video-maker prevailed on the merits of her claim, she would not get all of the damages that she wished—at least at the summary judgment stage. To begin with, the court noted, she would not be entitled to any share of the storefront operators’ profits from their own sales of fire extinguishers. “Proving that indirect profits from noninfringing goods are attributable to copyright infringement is difficult,” the court said—and the burden was not met here. Importantly, the court noted, while the video was indeed used on the defendants’ Amazon storefront, it was not prominently displayed—indeed, a customer would have to click through the listings’ photo section or scroll to the bottom of the listings’ product description to see the video. Thus, “to say [Zhao’s] video advertised the defendants’ products is a stretch,” the court reasoned. The video-maker would be free to try to persuade a jury of this fact, but it would not be entitled to summary judgment on it.

Statutory damages. The court also declined to give the video-maker all of the statutory damages that she sought. In light of the difficulty of proving actual damages and the size and scope of the defendants’ operations, the court found, the video-maker was entitled to statutory damages of $30,000—the maximum allowable absent a finding of willful infringement. But the court declined to go beyond that. Three of the defendants tendered evidence that “they made a reasonable intellectual property rights search before taking Zhao’s video,” the court noted. A jury might find them willful, but the court would not do so on summary judgment. As to the fourth defendant, SW-WORLDER, it simply took the video with no further effort to determine ownership, so it indeed acted willfully as a matter of law. But the $30,000 damages already awarded to Zhao against that company, the court nonetheless concluded, “is sufficient to fulfill all of the purposes of statutory damages in this particular case and [] a higher award is not called for.”

The Case is No. 1:23-cv-04507.

Judge: Kennelly, M.

Attorneys: Brian Swift (Au LLC) for XiaoQian Zhao. Jiyuan Zhang (J. Zhang and Associates, P. C.) for BABIQIU.

Companies: BABIQIU; CCelegant; EasyFunny; NewO2; shanglan; SW-WORLDER

Cases: Copyright TechnologyInternet IllinoisNews