EcommerceBytes-NewsFlash, Number 3008 - February 25, 2013     1 of 5

Warner Bros Brings Fresh Assault on Amazon Sellers

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Warner Bros. is continuing its crackdown on counterfeit DVDs after its first spate of lawsuits against third-party Amazon.com sellers received media attention last summer. One longtime eBay and Amazon media seller was caught in the crosshairs in October and says he has no money to hire lawyers to fight the case. His plight is catching the attention of other online sellers.

In July, Warner Bros. filed copyright lawsuits against North Carolina-based Amazon seller Todd Beckham, California-based Thomas Vaanlewen and other third-party sellers for copyright infringement over their sales of DVDs. And since then, the lawsuits just keep coming, as EcommerceBytes reported in September.

Kevin Harmon, who uses Fulfillment By Amazon (FBA) to sell DVDs, recently wrote on an online forum about the lawsuit Warner Bros brought against him in the fall. The former CEO of Inflatable Madness, at one time one of eBay's biggest media sellers, said the problem stemmed from the fact that his inventory is commingled with the inventory from other sellers in Amazon's distribution centers.

While Amazon does allow commingling in some categories, it prohibits commingling in the media category. However, the online marketplace had grandfathered in some longtime sellers to allow them to send "stickerless" inventory in the media categories to its distribution centers.

Amazon explains on its website, "Commingling your inventory allows Amazon to treat your inventory as being combined with the inventory that Amazon or other sellers have of the same kind and condition. When someone purchases an item from your inventory we won't physically distinguish your inventory from that of other sellers. This enables us to process customer orders more efficiently."

Harmon said that when Warner Bros ordered one of his products through Amazon.com, the Amazon warehouse worker picked an item from commingled inventory that could have been from up to 20 different FBA sellers - or from Amazon itself - to fulfill his order.

But because he only responded to Warner Bros and did not answer the complaint, the judge is set to enter a default judgement and permanent injunction against Kevin Harmon, his company, and his wife on March 4th. Included in the judgement: the defendants are restrained and enjoined from selling pirated or unauthorized Warner Bros works; are ordered to deliver for destruction all pirated product; and are ordered to pay damages of $50,000 to Warner Bros, with interest.

Sellers are wondering what Amazon's liability is in this case and wonder if it will lead to an end of commingled inventory at its fulfillment centers. Some sellers criticized Amazon for not helping sellers facing such lawsuits, with a few noting that Amazon has done content deals with Warner Bros. for its Amazon Instant Prime Video service.

A search of Amazon.com finds the marketplace continues to allow third-party sellers to list Warner Bros titles, though it does restrict the sale of some DVD titles, at least periodically and perhaps seasonally. In this December blog post, FBA sellers complained that Amazon was letting them send DVD titles to its warehouses without letting them know about restricted titles until they tried to list them, costing sellers money and tying up their inventory.

Warner Bros. has continued filing lawsuits against online sellers since July - it filed a fresh batch of lawsuits on February 7, 2013. Pietz law firm, which has represented defendants in BitTorrent copyright cases, has posted on its website that it would like to talk to defendants in Warner Bros cases.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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