Navigating OSP Responsibilities in Copyright Infringement: A Case Study of eBay and the Inwood Test


In the rapidly evolving landscape of online commerce, the interaction between intellectual property rights and the role of online service providers (OSPs) has become a crucial legal and ethical concern. The Inwood test, derived from the landmark case Inwood Laboratories, Inc. v. Ives Laboratories, Inc., establishes the criteria for determining whether a product’s similarity to an established trademark constitutes trademark infringement. This essay delves into how the elements of the Inwood test apply to eBay’s actions, particularly in light of two questions: Why eBay wasn’t held liable for the infringing sales made by users, and to whom eBay owes the greater duty as an OSP – its customers seeking cheaper, imitation products, or unrelated businesses whose intellectual property rights are violated on the platform.

eBay’s Limited Liability for User Sales

eBay, as an OSP, has largely avoided legal liability for infringing sales made by its users through the application of the Digital Millennium Copyright Act (DMCA) safe harbor provisions. The DMCA’s Section 512 protects OSPs from copyright infringement claims based on user-generated content if certain conditions are met. These conditions include the OSP not having actual knowledge of the infringement, not receiving a direct financial benefit from the infringing activity, and promptly removing or disabling access to the infringing content upon notice.

The application of the Inwood test to eBay’s case becomes relevant here. eBay does not produce or sell the infringing products itself; rather, it provides a platform where third-party sellers can list and sell products. The Inwood test focuses on whether a reasonable consumer would be confused by the similarities between two products (Jones, 2021). In eBay’s context, the test’s elements might not fully align with the platform’s role as an intermediary. The OSP’s primary function is to connect buyers and sellers rather than to create and market products. As a result, the likelihood of confusion between eBay as a platform and the infringing products is arguably lower, contributing to eBay’s limited liability.

Balancing Duty to Customers and Intellectual Property Holders

The question of to whom eBay owes the greater duty – its customers or unrelated businesses with violated intellectual property – presents a complex ethical dilemma. OSPs like eBay must navigate between ensuring a seamless shopping experience for their customers while also protecting the rights of intellectual property holders (Johnson & Anderson, 2022). This challenge is analogous to the balancing act presented by the Inwood test, which aims to strike a balance between protecting trademark holders and allowing legitimate competition.

On one hand, eBay’s customers seeking cheaper, imitation products might argue that they are aware of the products’ nature and are making an informed choice. From this perspective, eBay’s duty to its customers lies in providing a transparent platform that accurately represents the nature of the products being sold. On the other hand, unrelated businesses with violated intellectual property contend that eBay has a responsibility to prevent the proliferation of counterfeit and infringing products on its platform, as these activities diminish the value of their intellectual property and infringe upon their rights.

Precautions Beyond Legal Requirements

In the case study on pages 164-166 of the textbook, OSPs like Amazon are discussed in the context of hosting content uploaded by others. A parallel can be drawn between Amazon and eBay, both of which serve as platforms for third-party sellers. While OSPs are not required to actively police their websites to detect and prevent copyright infringement, there is an ethical imperative to take precautions beyond what the law mandates (Cohen, 2020). This approach aligns with the principles of corporate social responsibility and can contribute to fostering a healthier online marketplace.

Considering eBay’s case, implementing measures that proactively identify and address infringing sales can enhance the company’s reputation and integrity. These measures might involve employing advanced algorithms and machine learning to identify patterns of infringement, setting up stricter onboarding processes for sellers, and ensuring prompt responses to valid infringement notices. Such precautions align with the notion of eBay assuming a higher duty, not only to its customers but also to intellectual property holders whose rights are threatened by counterfeit products.

Duty of OSPs and Policing Responsibilities

Establishing a Dual Responsibility
The duty that online service providers (OSPs) like Amazon owe to copyright holders is a multifaceted obligation. Firstly, OSPs have a responsibility to promptly respond to valid copyright infringement notices and expeditiously remove or disable access to infringing content (Smith, 2023). This duty aligns with the Digital Millennium Copyright Act’s (DMCA) safe harbor provisions, which grant OSPs immunity from liability if they comply with these requirements. The DMCA’s intent is to strike a balance between protecting copyright holders’ rights and fostering the growth of the internet as a platform for innovation and expression. By engaging in a swift and efficient response to copyright infringement notices, OSPs demonstrate their commitment to respecting intellectual property rights while avoiding undue legal entanglements.

Proactive Prevention: Striving for a Higher Standard
Secondly, OSPs should aspire to go beyond mere compliance with legal mandates and proactively prevent copyright infringement on their platforms. This entails implementing reasonable measures to identify and mitigate infringing content before it becomes a point of contention (Cohen, 2020). The practical implementation of such measures, however, is complex. OSPs often host vast amounts of user-generated content, making comprehensive monitoring a resource-intensive task. This challenge underscores the importance of striking a balance between protecting intellectual property and maintaining the accessibility and vibrancy of the online marketplace.

Navigating the Concept of Policing
The notion of requiring OSPs to “police” their platforms is a contentious issue. Some argue that imposing stringent policing requirements could stifle the growth of digital innovation and creativity. Mandating constant surveillance could lead to the removal of legitimate content due to overzealous enforcement efforts. Moreover, this approach could disproportionately burden OSPs, particularly smaller ones with limited resources, and could even lead to the chilling of free expression (Johnson & Anderson, 2022).

Conversely, supporters of more active policing contend that OSPs, as intermediaries facilitating large-scale commercial activities, should take a more hands-on role in curbing copyright infringement. They point to the role OSPs play in facilitating transactions and generating revenue, asserting that these platforms should bear a heightened responsibility for ensuring the legality of the content they host. Such proponents advocate for regular audits, robust content screening mechanisms, and stricter seller onboarding processes to deter infringing activities (Jones, 2021).

A Pragmatic Approach: Collaborative Solutions
The complexities surrounding OSPs’ policing responsibilities underscore the need for a pragmatic and collaborative approach. OSPs, copyright holders, legal experts, and policymakers should engage in a meaningful dialogue to strike a balance that respects both intellectual property rights and the growth of the digital economy. Collaborative efforts could yield innovative solutions, such as the development of advanced algorithms that can identify patterns of infringement without stifling legitimate content or adopting a tiered approach to policing based on the scale and resources of OSPs.


In the age of e-commerce, the application of the Inwood test to eBay’s actions highlights the complexities of OSPs’ legal and ethical responsibilities in the realm of copyright infringement. The interplay between eBay’s limited liability for user sales, its duty to customers seeking cheaper products, and its obligation to intellectual property holders necessitates a careful balance. While eBay’s legal liability might be mitigated by the DMCA’s safe harbor provisions, the company’s ethical obligation to take precautions beyond legal requirements is pivotal in cultivating a responsible online marketplace. As OSPs continue to evolve, finding the equilibrium between customer interests and intellectual property protection remains an ongoing challenge that demands continuous assessment and adaptation.


Cohen, D. K. (2020). Copyright Law and E-Commerce: OSPs’ Responsibilities in a Digital Landscape. Harvard Journal of Law & Technology, 33(1), 134-156.

Johnson, M. E., & Anderson, R. D. (2022). Duty and Liability of Online Service Providers in Copyright Infringement Cases. Journal of Internet Law, 35(4), 12-34.

Jones, S. L. (2021). Copyright Infringement and Online Marketplaces: Navigating the Inwood Test. Business Ethics Quarterly, 31(3), 421-438.

Smith, A. J. (2023). Online Service Providers and Copyright Infringement: Balancing Responsibilities. Journal of Intellectual Property Law, 25(2), 245-268.

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