Posted on

Publishers sue Shopify for harboring book pirates

In December of last year, five major textbook publishers filed a lawsuit against Shopify in federal district court in the Eastern District of Virginia claiming that Shopify wrongfully facilitated infringement of their copyrighted textbooks and registered trademarks by maintaining an ecommerce platform it knew to be hosting repeat textbook pirates and frustrating the publishers’ attempts to get them taken down.

The publishers are Macmillan Learning, Cengage Learning, Elsevier, McGraw-Hill, and Pearson Education. Their complaint lists more than 3,400 copyrighted works and 20 registered trademarks that have been infringed and asks for an injunction barring Shopify from further facilitating the claimed infringements, statutory damages of more than half a billion dollars, and reimbursement of plaintiffs’ attorney fees.

The defendant, Shopify Inc., is a Canadian company, but has a number of connections in the US that provide US Courts with jurisdiction over it. It is a publicly traded company on the New York Stock Exchange, it has three US subsidiaries, maintains at least one physical location in the US, and it operates computer servers located in Ashburn, Virginia, where it stores, and from which it delivers, pirated digital copies of the publishers’ works.

Under other circumstances, an internet service provider (ISP) like Shopify would have safe harbor immunity from infringement claims that result from the activity of users of its services. This safe harbor was established by the Digital Millennium Copyright Act (DMCA) in 1998 in part to foster the growth of ecommerce by providing ISPs with a safe harbor for the bad acts of their subscribers in the same way that the telephone companies are not held responsible for the things said by their customers over the phone merely because they provided the infrastructure and the services that made those communications possible. But in order to qualify for safe harbor protection, an ISP must do certain things: it must identify an agent to receive “takedown demands” (notices from copyright owners to take down content that infringes the copyright owner’s works); it must register that agent with the copyright office and post contact information on its website; it must takedown the accused content when it receives a sufficient notice; and it must take steps to disable service to repeat offenders.

In this case, the publishers accuse Shopify of burying its contact information and notice forms in places on its website that are difficult to find, ignoring repeated takedown demands (up to 41 separate notices over a 13-month period in the case of one accused pirate merchant), and allowing repeat offenders to remain on its website.

With respect to the latter, the DMCA does not define what constitutes a “repeat offender” and courts have generally permitted ISPs to set their own thresholds and policies for terminating them. The problem for Shopify, allege the publishers, is that it did not comply with its own policies, failed to act on legally sufficient notices, and failed to terminate repeat offenders.

For its part, Shopify has filed an answer denying the publishers’ allegations and claiming that it has offered more than diligent responses to the publishers’ notices and that fewer than 2% of the Shopify merchants targeted by the publishers are still active on the platform. In fairness, scale can be a problem for ISPs. Google, for example, has claimed that it receives 3 billion takedown demands every year (equal to 6,000 per minute). Thus, compliance is not always a simple matter.

This will be a case worth following for book authors who have been frustrated by their publisher’s lackluster pirate policing efforts. We can expect that Shopify will vigorously defend the case. It has a market capitalization reportedly in the range of $100 billion dollars. If the publishers are successful, the next question of interest will be whether and how they share any of the proceeds with their affected authors.

Stephen E. GillenSteve Gillen worked for nearly 20 years in publishing prior to entering private practice in the middle 1990’s. He concentrates his practice on publishing, media, and copyright matters. His most recent book is Guide to Rights Clearance & Permissions.