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Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Batesville Services, Inc., et al. v. Funeral Depot

2004 WL 2750253, Case No. 1:02-cv-1011-DFH-TAB (S. D. Ind., November 10, 2004)

Linking To Infringing Images May Give Rise To Copyright Infringement

Court holds that defendant Funeral Depot Inc. ("Funeral Depot") may be infringing plaintiffs' copyright in advertising materials consisting, inter alia, of lithographs of caskets, by placing small thumbnail images of those copyrighted materials on defendant's website which are linked to allegedly infringing full size copies of those same materials that defendant arranged to have placed on the website of a third party.  While this third party website is owned by one of plaintiffs' authorized dealers, visitors to the web pages containing the challenged images view defendant Funeral Depot's contact information, as well as prices for these caskets set by defendant.  Because issues of fact existed as to whether the third party dealer had an implied license to use the advertising materials in this fashion, the Court could not determine if defendant was infringing plaintiff's copyright on the parties' respective summary judgment motions.  The Court did reject a number of defenses advanced by Funeral Depot to plaintiff's copyright infringement claims, including its fair use, copyright misuse and antitrust defenses.

Defendant Links From Thumbnails Of Plaintiff's Copyrighted Materials To Full Size Images Defendant Had Placed On Third Party Website

Plaintiff Batesville Casket Company ("Batesville") manufactures and sells caskets.  To aid it in these endeavors, plaintiff created a series of lithographs which contained both a photograph and description of plaintiff's products.

Defendant Funeral Depot sells caskets manufactured both by Batesville and third parties at its web site, Funeral  Prior to July 2001, defendant's website displayed copies of the photographs of caskets contained in plaintiff's lithographs, which it used to market plaintiff's caskets. 

Plaintiff objected to this practice in a cease and desist letter.  Funeral Depot responded by removing the images from its website, and placing them instead on other websites to which it linked its Funeral website.

Thereafter, in or about 2002, Funeral Depot came up with another plan for using plaintiff's marketing materials.  Defendant arranged for plaintiff's images to be placed on a website owned by the Veterans Cremation Burial Society ("Veterans Society"), an authorized reseller of Batesville caskets.  Prior to this addition, the Veterans Society website did not contain plaintiff's marketing materials.  While the web pages on which these images were displayed apprised the reader that the website was owned by the Veterans Society, they contained contact information for Funeral Depot.  In addition, the advertised prices for the caskets on these web pages were set by Funeral Depot.  Indeed, Funeral Depot set up the Veteran Society's web pages in question at its own expense, and controlled all changes thereto.

Defendant placed low resolution "thumbnail" versions of plaintiff's images on its Funeral website, which were linked to the Veteran Society's webpages.  Clicking on the thumbnail took the user to a full size image of the same picture on the Veterans Society site.  Users could return to the Funeral Depot website by clicking a "Back to Main Gallery" icon found on the Veterans Society site.

Issues Of Fact As To Scope Of Third Party Implied License

Claiming defendant's activities infringed its copyright in its advertising materials, Batesville commenced suit.  Both sides moved for summary judgment.  As discussed more fully below, the Court held that issues of fact precluded it from determining the validity of plaintiff's infringement claim.  The Court did, however, reject a number of the defenses advanced by defendant, including its claim that linking could never give rise to a claim of copyright infringement.

The Court held that issues of fact precluded it from determining whether the Veterans Society had been granted an implied license by Batesville to use the advertising materials in the manner in question.  Batesville supplies those materials free of charge to authorized resellers such as the Veterans Society for their use in marketing Batesville caskets.  Batesville claimed that the license granted an authorized reseller was limited to using these materials to promote the reseller's own business activities.  Funeral Depot countered that the license was broader, and permitted the reseller to use the materials to promote the sale of plaintiff's caskets, a license which encompassed the use at issue. 

The Court held that it could not resolve this issue on a summary judgment motion, in part because the license was not in writing, and because Batesville had not sent a cease and desist letter to the Veterans Society instructing it to discontinue this use of Batesville's advertising materials.  Because the use may be authorized, the Court could not resolve those of plaintiff's infringement claims which were grounded on Funeral Depot's involvement in the display of these images on the Veteran Society's website, either on theories of direct, contributory, or vicarious copyright infringement. 

Linking Can Give Rise To Copyright Infringement  

The Court did reject a number of the defenses advanced by Funeral Depot to plaintiff's infringement claim, most notably Funeral Depot's contention that linking can never give rise to a claim of copyright infringement.  While recognizing "that it may be difficult to prove copyright infringement or contributory infringement from the use of hyperlinks" the Court, relying on Intellectual Reserve v. Utah Lighthouse Ministry, 75 F.Supp.2d 1290 (D. Utah 1999), held such a claim could be established "in extreme cases."  Said the Court:

The Intellectual Reserve decision shows that in extreme cases, even encouraging browsing of infringing websites can violate the copyright laws.  From that conclusion, it is easy to allow room for liability for defendants who deliberately encourage use of infringing websites by establishing links to those sites.  This is not a case where Funeral Depot merely found some useful material elsewhere on the internet and encouraged its shoppers to link to those sites.  Instead, Funeral Depot actively secured control of the contents of the Veterans Society website and modified the website to use for its own purposes.  Viewed in the light reasonably most favorable to plaintiffs, the evidence shows Funeral Depot's extensive involvement in the display of plaintiffs' photographs.

The so-called "casket gallery" on the Veterans Society website did not exist until Funeral Depot created those pages.  Funeral Depot designed the allegedly infringing web pages.  It paid for those web pages.  And it still controls those infringing web pages and changes to them.  The casket web pages display Funeral Depot's phone number rather than Veterans Society's number.  Funeral Depot's control over the casket web pages is so complete that the owner of the Veterans Society was not aware of any changes to the casket portion of the website.  These facts are unusual enough to take this case out of the general principle that linking does not amount to copying.  These facts indicate a sufficient involvement by Funeral Depot that could allow a reasonable jury to hold Funeral Depot liable for copyright infringement or contributory infringement, if infringement it is.  The possibility of copyright infringement liability on these unusual facts showing such extensive involvement in the allegedly infringing display should not pose any broad threat to the use of hyperlinks on the Internet.
(Footnote omitted).

No Fair Use Or Copyright Misuse

The Court also rejected defendant's claim that this was a "fair use" of plaintiff's advertising materials.  In reaching this result, the Court relied on the fact that: (i) the images in question, though used for advertising, were protectable by copyright; (ii) defendant had used them for its own commercial purposes, and (iii) defendant had not made any transformative use thereof, using the images instead in their entirety for the same purpose for which they were intended by plaintiff, to sell caskets. 

The Court was unpersuaded by Funeral Depot's argument that this use of plaintiff's materials served the greater public good by helping consumers buy caskets more cheaply.  The Court held that defendant could achieve that end by reselling Batesville caskets at a lower price than plaintiff's authorized resellers, a practice in which it was allowed to, and was in fact engaged.  However, held the Court, "[i]t is not entitled to copy plaintiffs' copyrighted materials wholesale merely to save itself the trouble of preparing its own advertising materials, even if consumers might benefit from its activities.  They would benefit equally if Funeral Depot avoided copying and simply created its own advertising materials."

In addition, the Court rejected Funeral Depot's claim of "copyright misuse."  Plaintiff here was seeking nothing more than to protect its rights in its copyrighted images.  Plaintiff was not seeking to use that right to prevent defendant from doing something it was otherwise permitted to do, such as sell Batesville caskets, or use marketing materials created by Funeral Depot in that endeavor.  Accordingly, this defense too failed.

Finally, the Court rejected defendant's contention that plaintiff's claims were barred because of a defect in the registration of its copyrights, or by the doctrine of accord and satisfaction.

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