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Smith v. Barnesandnoble.Com, LLC

United States Court of Appeals, Second Circuit

October 6, 2016

CHERYL SMITH, Plaintiff-Appellant,
v.
BARNESANDNOBLE.COM, LLC, Defendant-Appellee.

          Argued: May 20, 2016

         Plaintiff Cheryl Smith appeals from the judgment of the United States District Court for the Southern District of New York (Carter, J.), dismissing her complaint, alleging direct and contributory copyright infringement, on summary judgment.

          Carlos A. Leyva, Digital Business Law Group, P.A., Largo, FL, for Appellant.

          ELIZABETH ROGERS BRANNEN, Stris & Maher LLP, Los Angeles, CA (with Peter K. Stris, Brendan S. Maher, Dana Berkowitz, and Victor O'Connell on the brief), for Appellee.

          Before: KEARSE, WINTER, and JACOBS, Circuit Judges. [1]

          DENNIS JACOBS, Circuit Judge

         Plaintiff Cheryl Smith appeals from the judgment of the United States District Court for the Southern District of New York (Carter, J.), dismissing her complaint on summary judgment. Smith alleged direct and contributory copyright infringement by defendant Barnesandnoble.com, LLC ("Barnes & Noble" or "defendant"). The defendant, under license, uploads books and book samples to digital "lockers" that the defendant maintains for its individual customers. When the license granted by Smith was terminated, the defendant did not delete a sample of Smith's book. Because the allegedly infringing conduct was authorized by the contracts at issue, we affirm the district court.

         BACKGROUND

         The plaintiff is the widow of Louis K. Smith, who authored and copyrighted a book entitled The Hardscrabble Zone ("Hardscrabble"). In 2009, Mr. Smith contracted with Smashwords, Inc. ("Smashwords"), an online ebook distributor, to market his book. One relevant term of the agreement provided:

6d. Promotional Rights. Smashwords shall have the right to distribute samples of the Work in any form of media, including printed media, in order to promote (a) the author or author's Work and/or (b) the Smashwords service. These samples will be licensed for free, non-commercial use, duplication and sharing, and will comply with the sample percentage authorized by the Author.

App'x at 28. The agreement contemplated robust rights in digital samples: it recognized that "uninhibited sampling and sharing" had the potential to "dramatically increase" an author's "total audience and sales opportunities." App'x at 30. At the same time, the contract provided that end-users who acquired a "free work" (defined to include "sample works") had a license to "duplicate, share and reproduce" the sample, but only for "non-commercial purposes" and only "during the time the price is set at zero." App'x at 29. While these arrangements contemplate that a customer's right to share and duplicate a free sample could be terminated, the agreement did not provide that a customer's right to use a validly obtained sample (or the entire work) would terminate, even if the entire distribution agreement was canceled.[2] The agreement gave notice that "Smashwords does not publish works containing digital rights management schemes that limit the customer's ability to consume Author's Work as they see fit." App'x at 30.

         In accordance with this contract (and with Mr. Smith's permission), Smashwords provided Hardscrabble for sale and sampling to its retail partners, including Barnes & Noble, which listed the book for sale on bn.com and made free samples available.

         Apparently disappointed with the sales figures (none were sold), Mr. Smith terminated his agreement with Smashwords in October 2011. Despite the termination, the book erroneously remained listed by Barnes & Noble on bn.com. The book was de-listed on April 20, 2012, and the dispositive issue is whether any customers acquired a sample while it was listed without a distribution agreement in place. Prior to termination of the agreement, a single customer of Barnes & Noble acquired a digital sample of Mr. Smith's book. No other customer bought a copy or obtained a sample, before or after the distribution agreement was cancelled.

         The sample was stored through Barnes & Noble's digital locker system. When a Barnes & Noble customer downloads a free sample (or purchases an ebook) the content is stored through a digital locker associated with the customer's account. The system, effectively the user's bookshelf for digital products, is cloud-based. Cloud computing uses remote servers and networks for data ...


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