IP Law Daily, COPYRIGHT—W.D.N.Y.: Walmart and JD E-Commerce immune under DMCA safe harbor for ISPs, avoid liability for sale of counterfeit products, (Apr 2, 2025)

By Robert Margolis, J.D.

Court grants summary judgment in four consolidated cases asserting copyright infringement; also finds lack of evidence to support trademark infringement claims.

Both Wal-Mart.com USA, LLC, and JD E-Commerce America, alleged to operate online marketplaces where third parties marketed and sold counterfeit products that infringed the copyrights of four different plaintiffs asserting claims in four different lawsuits, qualify for “safe harbor immunity” under the Digital Millennium Copyright Act (“DMCA”) as Internet Service Providers (“ISPs”), a federal district court in Rochester, New York has held. The court granted the defendants summary judgment, denied the plaintiffs’ cross-motions, and dismissed all copyright infringement claims asserted in the four lawsuits, which had been consolidated. The court also found insufficient evidence to support direct and contributory trademark infringement claims, and granted summary judgment for defendants on those claims as well. The court directed that judgment be entered for defendants in all four cases (Omnia Studios, LLC v. JD E-Commerce America Ltd., Nos. 23-cv-06186; 23-cv-06187; 23-cv-06188; 23-cv-06189 (W.D.N.Y. Mar. 31, 2025)).

Counterfeit products. The plaintiffs are several businesses selling products online through their own websites or on platforms such as Walmart.com. An IP agent service detected that their intellectual property was allegedly being infringed by the sale of counterfeit products on Walmart.com by sellers using labels such as JOYBUY. While the parties agree that the sellers (collectively, “Joybuy”) have some connection to JD, the nature of that connection is in dispute. While the plaintiffs assert JD is a direct seller, JD and Walmart provided evidence it is merely an intermediary operating Joybuy as a marketplace where third-party sellers create listings.

The plaintiffs sued Wal-Mart and JD in four separate lawsuits. Each brought claims for (1) copyright infringement, and (2) contributory copyright infringement. Two also brought Lanham Act claims for false designation of origin and common law trademark infringement. The parties cross-moved for summary judgment on all claims.

DMCA immunity. The court granted summary judgment to Wal-Mart and JD, finding that each should be granted immunity as ISPs under the “safe harbor immunity” provisions of the DMCA. The elements for establishing immunity are that a defendant: (1) must be an ISP as defined by the DMCA; (2) must have adopted and “reasonably implemented” a policy to terminate repeat infringers who use the defendant’s platform; and (3) must not interfere with standard technical measures that copyright owners use to identify or protect their copyrighted works. The first two of these elements were at issue in the cross-motions, and the court found that the defendants established both of them.

ISPs. The DMCA includes definitions of “service provider,” which include entities “offering the transmission, routing, or providing of connections for digital online transmissions …,” including providers “of online services or network access, or the operator of facilities therefor …” 17 U.S.C. § 512(k)(1)(a) and (B). As to JD, the plaintiffs contended they are not ISPs, but rather direct sellers, citing provisions in the agreement between JD and Wal-Mart that provides several policy requirements for sales, shipping, and delivery. But the court noted that just because those terms are found in the agreement, it does not mean that JD performed those functions. In fact, JD established otherwise, through uncontradicted affidavits attesting to the fact that the products were provided by third-party sellers, and JD was not performing any of those functions.

Wal-Mart. The plaintiffs made three arguments for disqualifying Wal-Mart from safe harbor immunity. First, they contended Wal-Mart received financial benefits from the infringing sales, which can preclude such immunity. 17 U.S.C. § 512(c)(1)(B). But that provision requires not only the receipt of some benefits, but that the entity receiving the benefits has the right and ability to control the activity from which the benefits are received. Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 36 (2d Cir. 2012). This requires something more than the ability to remove or block access to the materials posted on an ISPs website. Rather, the entity must exert substantial influence over the activities of the infringing users. Because there was no evidence that Wal-Mart had any such influence, and only had the ability to block access, the court rejected the plaintiffs’ “substantial benefit” argument.

Next, the plaintiffs argued that Wal-Mart’s “willful blindness” disqualifies it from immunity. They argued that some infringing products remained on the platform for long periods. The safe harbor immunity provision requires that an ISP lack actual knowledge or awareness of facts that make infringement apparent. 17 U.S.C. § 512(c)(1)(A)(ii). A defendant cannot contend it lacks the requisite knowledge by shielding itself from facts. Here, even if Wal-Mart had knowledge of facts of infringement, the plaintiffs did not show that Wal-Mart failed to take down infringing products expeditiously. Though there were a small number of product listings that remained active for longer periods, the defendants produced evidence that these resulted from technical glitches rather than turning a blind eye to the infringements.

Finally, the plaintiffs contended that Wal-Mart did not meet the requirement of having implemented a policy to block repeat infringers. 17 U.S.C. § 512(c)(1)(A)(iii). There is a high bar for plaintiffs to show a service provider as a matter of policy did not implement a repeat infringer policy, and the plaintiffs did not meet that bar here. First, there was disputed evidence as to whether all of the Joybuy-connected products in fact were sold by the same infringing third-parties. Second, Wal-Mart’s failure to terminate its relationship with JD could not support the plaintiffs’ argument because Wal-Mart knew that JD was not the source of the infringing products. Further, JD had a relatively low number of infringement complaints relative to the volume of products sold through it.

Trademark claims. The court also granted summary judgment dismissing the trademark infringement claims. It was far from clear to the court if the plaintiffs were asserting direct infringement by Wal-Mart and JD, and there was no evidence that those defendants themselves placed the infringing marks on products. The court therefore dismissed any direct infringement claims.

As for contributory infringement, there was no evidence the defendants intentionally induced the product sellers to infringe, and plaintiffs did not advance that argument. Instead, they argued the defendants were on notice of the infringements due to the plaintiffs’ repeated complaints. But as noted above, the defendants took down most of the infringing products expeditiously, and terminating JD was not necessary to avoid liability.

The Cases are Nos. 23-cv-06186; 23-cv-06187; 23-cv-06188; 23-cv-06189.

Judge: Geraci, Jr., F.

Attorneys: Joel B. Rothman (SRipLaw, P.A.) for Omnia Studios, LLC. Jonathan M. Korn (Blank Rome LLP) for JD E-Commerce America Ltd.

Companies: Omnia Studios, LLC; Collis Ecommerce Ltd.; Turkey Merck, Ltd.; JD E-Commerce America Ltd.; Jingdong E-Commerce (Trade) Hong Kong Corp.; Wal-Mart.com USA, LLC; Walmart Inc.

Cases: Copyright TechnologyInternet Trademark NewYorkNews GCNNews