Honorable Competitors Should Avoid Zen Path's Way

March 2011

This article originally appeared in the Maryland State Bar Association's Bar Bulletin.

The law of unintended consequences meets the DMCA in Design Furnishings, Inc. v. Zen Path, LLC. The Digital Millennium Copyright Act (DMCA) amended U.S. copyright law to better address and protect rights in digital works. Zen Path is a recent example of an unfortunate trend in DMCA cases. The trend involves the use of takedown notices to block materials that are more offensive to the copyright owner than actually copyright infringing. Such notices may actually be intended to intimidate competitors. The DMCA requires a good faith basis for claims of infringement, yet misleading takedown notices often go unchallenged. Zen Path may encourage wrongly accused parties to file misrepresentation suits under §512(f) of the Copyright Act which provides for damages and attorneys fees arising from resulting injuries.

Zen Path and Design Furnishings, Inc. (DFI) both sell wicker furniture — including furniture by the same Chinese manufacturer. Zen Path contacted DFI claiming that its photographs and auction sales on eBay violated Zen Path's copyrights. DFI removed the photographs but demanded proof of Zen Path's intellectual property rights before it would stop selling the furniture. Zen Path filed copyright applications identifying four sets of wicker furniture as "sculpture/3-D artwork, Ornamental Design" and sent eBay DMCA takedown notices requesting removal of certain of DFI's auction items alleged to fall within the scope of Zen Path's pending copyright applications. Pursuant to its copyright policy, eBay terminated 35 auctions and blocked Design Furnishing from posting new items for sale.

While DFI ran to file a temporary restraining order (TRO) in state court, Zen Path sent 65 additional takedown notices to eBay. DFI's eBay rating plummeted from "high" to "very low." DFI's petition stated that if Zen Path was not stopped from repeatedly submitting notices of claimed infringement without basis, then under its policy eBay will permanently suspend DFI's account. Because the eBay account represents 95 percent of DFI's business, DFI will be out of business and forced to lay off its employees.

The Copyright Office refused registration of Zen Path's furniture, explaining: "registration for the work must be refused because it is a ‘useful article' which does not contain any separable authorship needed to sustain a claim to copyright…because all of the elements you deposited are either related to the utilitarian aspects of function, or are subsumed within the overall shape, contour, or configuration of the article, there is no separable authorship as such."

The reasoning is that copyright only protects works that contain original creative expression. The scope of copyright does not extend to "useful articles" (like furniture) that have an intrinsic utilitarian function. "Pictorial, graphic and sculptural works" include two-dimensional and three-dimensional works of fine, graphic and applied art, including artistic craftsmanship but not mechanical or utilitarian aspects. A useful article that incorporates artistic expression that is separable from the utilitarian aspects of the article, the feature may be protected by copyright.

If Zen Path's furniture employed a decorative design on seat backs for no utilitarian purpose, Zen Path's applications would not have been refused registration. But no such decorative element appeared in photos deposited with the applications and Zen Path does not own a copyright in the furniture collections. At the time of the TRO, the court did not know of the Copyright Office's refusal to register the furniture; but the court determined that Zen Path knew when it sent takedown notices that it had no copyright because Zen Path's copyright applications identified its claim of authorship as "sculpture/3-D artwork, Ornamental Design." Under §512(f), Zen Path knowingly misrepresented its claim to copyright, entitling DFI not only to injunctive relief but damages and attorneys fees for its injuries arising from the misrepresentations in takedown notices, the blocking and restoration of materials.

The DMCA takedown procedure is not intended to be used to stifle competition. It is intended to provide ISPs like eBay with a safe harbor from vicarious liability for users' copyright infringement. The safe harbor is essential to the vitality of the Internet because ISPs cannot police the tens of millions of items transmitted between websites hourly. Accordingly, the procedure in §512 employs threats of perjury and damages for misrepresentations in takedown notices to pressure copyright owners and users to provide truthful disclosures in DMCA notices. The best way to prevent against misuse of the DMCA and defend against misrepresentations in DMCA takedown notices is to provide careful counsel to copyright owners and users in DMCA matters.