An Alibaba unit failed to convince a California federal court to give it an early win over artist Michel Keck’s vicarious copyright claim.

Keck sufficiently alleged the Chinese e-commerce giant had enough control over third parties allegedly ripping off her work and financially benefited from the illicit sales, the U.S. District Court for the Northern District of California said in a Feb. 21 ruling. Although some of Alibaba.com Hong Kong Ltd.'s arguments were “compelling,” the court said, they are more appropriate for the later summary judgment or trial stages.

The ruling probes intricacies facing web platforms that may host intellectual property-infringing content uploaded by users, and what they must do to avoid liability. Despite a recent uptick in efforts by China and companies like Alibaba, the country remains the global leader in counterfeit goods, according to the U.S. Trade Representative. Even in the U.S., the case law contours are newer and less robust compared with other areas of law.

Keck, an Indiana-based mixed media and abstract artist, sued a slew of Alibaba entities and vendors in 2017, alleging they used the online platform to sell items that infringed her copyright- and trademark-protected work. Some of the defendants secured dismissals for lack of jurisdiction.

Keck accuses the merchants of directly infringing, and Alibaba of contributory copyright and trademark infringement and vicarious copyright infringement. Alibaba’s denied motion focused on vicarious copyright infringement, which requires control of infringing activities and direct financial benefit.

Control and Benefit

Alibaba compared its position to Google’s in a 2009 U.S. Court of Appeals for the Ninth Circuit opinion in Perfect 10, Inc. v. Amazon.com. That court vacated an injunction against Google because Perfect 10 hadn’t demonstrated a likelihood it could establish Google’s ability to halt or impair the alleged infringement.

But U.S. District Judge Beth Labson Freeman noted that the Ninth Circuit had contrasted Google’s available options—terminate an AdSense partnership—with those of entities like internet music host Napster, which could suspend infringing accounts. Alibaba’s position more closely resembled Napster’s, the court said, because Google couldn’t actually stop the infringement by yanking AdSense.

Keck “alleges that defendants have the right and ability to terminate the membership of merchants who repeatedly infringe, the right to remove, modify, or reject unlawful content on the websites/marketplaces, and the discretionary right to suspend access to the websites/marketplaces,” the court said. “In sum, plaintiff sufficiently alleges ‘a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.’”

Vicarious infringement also requires “direct financial benefit from the infringement,” the court said, quoting the Amazon.com ruling.

Alibaba said Keck hadn’t established causation. But the court said Alibaba cited a precedent involving summary judgment and not a motion on the pleadings, which carries a lower standard for the case to proceed. At this stage, it said, allegations that Alibaba received commissions and drew traffic to its site by selling works that infringed Keck and others were enough to let Keck keep building her case.

Walkup Melodia Kelly & Schoenberger, Bradley Arant Boult Cummings LLP and Hare Wynn Newell & Newton LLP represent Keck. Weil Gotshal & Manges LLP represent Alibaba.

The case is Keck v. Alibaba.com Hong Kong Ltd., N.D. Cal., No. 17-5672, 2/21/19