IT Law Week 5 Notes

Copyright Infringement: Secondary Liability

Why would we want to attach liability to this third party?

 Hard to find the actual infringer
 Actual infringer cannot afford to pay
 Easier to get rid of more individual cases of infringement by
going after this one, large actor

Arguments that we shouldn’t hold these parties liable:

 Not fair to hold someone liable for something they are very
indirectly involved in/have no idea is happening
 Too much imposition of liability will result in a stifling of
technological advances

Background Case Law

A) RTC v. Netcom (1995)

 Disgruntled former minister of church of scientology takes
writings of Church and posts them on a bulletin board that is
made available by Netcom
 Church demands materials be taken down
o Netcom says they don't have control over the info
posted in the newsgroup so they can’t do anything
about it; minister himself refuses to take it down
 Church sues both parties  sues Netcom under theories of
contributory liability and vicarious liability
o In order to hold Netcom liable under one of these
secondary liability theories, there must first be a direct
infringer
 Easy case of direct infringement here by minister:
copies are definitely being made, displayed, etc.
 but Netcom isn’t the one initiating this action
(it’s just an automatic action done by Netcom’s
system) so they aren’t directly liable
o Contributory liability? Need to show:
 1) Knowledge of infringing activity
 Here: material issue of fact as to whether
Netcom had knowledge
 2) They take some act to induce, cause, or
materially contribute to the infringing activity
(substantial participation)
  Here: if there is an easy way for Netcom to
police its system and take down the
materials then there would be substantial
participation  material issue of fact
o Vicarious liability? Need to show:
 1) Defendant has the right and ability to control
the activities of the infringer
 Here: material issue of fact  Netcom’s
terms of service are enforceable and may
be enough to say Netcom has control
 2) Direct financial benefit from the infringement
 Here: no evidence that Netcom directly
benefits from having this material on their
system
 So there cannot be vicarious liability

B) Intellectual Reserve v. Utah Lighthouse Ministry (1999)

 Mormon Church owns writings, and disgruntled former
member took the writings and put them on bulletin board
service run by defendant ULM
 Church sues; court orders defendant to take materials down
o Defendant took the materials down. However,
defendant subsequently linked users to a page where
someone else had the writings still available
 Does this create secondary liability for the ISP or ULM? (When
a user clinks on the link and enters the page with the
infringing material, they constitute the direct infringer)
o ULM contributorily liable?
 Yes, notice had been given to them to take down
the links, and when third party clicked on links it
took them to infringing material
o Open question: does this holding pose a problem for
search engines like Google?

Secondary Liability & the DMCA

In response to this open question after ULM, Congress brings us the

DMCA. The aspect of the DMCA that we will focus on is Title 2. This
establishes limitations of liability for online copyright infringement for
online service providers. It sets ‘safe harbors” for them in 4 areas (17
U.S.C. §512):
 a) Transitory communications
 b) System caching (we aren’t going to learn this one)
  c) Storage of information on systems or networks at direction
of users
 d) Information location tools

Who is eligible for these safe harbors? Who counts as a service

provider?
 Two different definitions:
o For 17 U.S.C. §512a  an entity that offers
transmission, routing, or providing of connections for
digital online communications, between or among points
specified by a user, of material of the user’s choosing,
without modification to the content of the material as
sent or received
o For 17 U.S.C. §512b-d  a provider of online services
or network access, or the operator of facilities therefor
 In additional to fitting one of the two above definitions, you
must also:
o 1) Adopt and reasonably implement a policy of
terminating, in appropriate circumstances, the accounts
of subscribers who are repeat infringers; and
o 2) It must accommodate and not interfere with
“standard technical measures” that copyright owners
will use and are generally accepted in the industry to
identify or protect copyrighted works
 *Note that a provider can qualify for 17 U.S.C. §512(a) but
not (b-d) and vice versa

Ellison v. Robertson
 Copyright owners sends notice to AOL, saying that under
DMCA owner was providing notice of infringing material
 However, AOL had changed their notice email address without
telling anyone, so they never saw this notice email from
plaintiff
o Q: During this time were they actually eligible for the
safe harbor provisions under DMCA?
 District court says yes  they had a policy in
place to deal with infringers so they technically
met the requirements
 On appeal  district court erred. AOL did not
reasonably implement their notice policy so they
are not eligible for DMCA safe harbor (they
effectively had no procedure in place)
 A more functional view of safe harbor
requirements
What protections do parties get from the safe harbors?
 Complete bar on monetary damages for qualifying service
provider
 Also restrictions on availability of injunctive relief against
qualifying service provider
 Note: Failure to qualify for these safe harbors does not
automatically make the provider liable  it just means the
provider is eligible for suit

17 U.S.C. §512(a)

17 U.S.C. §512(a) requirements:

 service provider acts as a “conduit” of data. To qualify:
o initiated by a person other than the provider
o carried out by an automatic technical process without
selection of material
o service provider must not determine the recipients
o intermediate copies not ordinarily accessible and not
retained for longer than reasonably necessary
o no modification to content

A&M Records v. Napster

 Napster was a peer-to-peer (P2P) file sharing service  many
files shared were infringing
o Napster claims that its is protected by 17 U.S.C.
§512(a); claims it is a party not actually involved in the
infringing transactions
 Court said no: the system actually has to be the
host that the material is being sent though;
Napster’s servers never actually saw the material
so they don’t qualify for 17 U.S.C. §512(a)

17 U.S.C. §512(c)

17 U.S.C. §512(c) requirements:

 Service provider hosts infringing materials on system and
store at direction of user. To qualify:
o Must not have knowledge of the infringing activity
 o If the provider has the right and ability to control the
infringing activity, it must not receive direct financial
benefit
o Upon receiving proper notification of claimed
infringement, must expeditiously take down or block
access to the material
 Service provider must designate agent with Copyright office
for service of complaints
 With respect to the knowledge standard, what does it mean
to have knowledge?
o Actual knowledge
o Aware of facts/circumstances from which infringing
activity is apparent, or
o Upon gaining such knowledge or awareness, responds
expeditiously to take the material down or block access
to it
 Notice and counternotice provisions

17 U.S.C. §512(d)

17 U.S.C. §512(d) requirements:

 Limitation for information location tools
o Provider must not have the requisite level of knowledge
that the material is infringing
o If the provider has the right had ability to control the
infringing activity, the provider must not receive a
direct financial benefit
o Upon receiving a notification of claimed infringement,
the provider must expeditiously take down or block
access to the material

ALS Scan v. Remarq

 Notice given was not very specific; it just said there were
infringing materials using defendant’s service, but it didn’t say
exactly what/where those materials were
o Court said there was sufficient notice to put the service
provider on notice to find the materials and take them
down
o *So notice needs to be specific enough to point
someone in the right direction

Hendrickson v. Amazon
  Hendrickson owned rights to a movie; sends notice to
Amazon saying “if anyone ever offers for sale a DVD of this
movie it is infringing”
 10 months after he sends this notice, DVDs of this movie
start getting sold on Amazon  was this notice sufficient?
o Court says no: no evidence of Congressional intent;
there needs to be notice of present infringement
o *So notice needs to be timely

Liability for Technology/Devices Used to Assist Infringement

Sony v. Universal
 Sony’s Betamax was a device that could record live TV so
users could watch later
 Movie/TV studios sued Sony for copyright infringement
o District court: no infringement because time-shifting of
TV programs is a fair use (it’s private non-commercial
copying)
 Plus even if it was infringing, Sony was not liable
because there was no direct relationship between
Sony and its customers after the sale
o On appeal, court said this was not fair use  the
cumulative effect of everybody recording shows like this
could have a negative impact on the market for VHS,
etc. of the copyright owners
o SCOTUS: (good law) In order to win, the studios
needed to show that the Sony customers infringed the
copyrights and Sony was somehow responsible.
 Looks for vicarious liability:
 Here no: Sony is not in a position to control
the users of the Betamax
 Looks for contributory infringement:
 Here no: This device is not capable of only
infringing uses; it has a substantial non-
infringing use (principle adopted from
patent law)
 In addition, private commercial time-shifting is
fair use, anyways

MGM Studios v. Grokster

 Grokster was another P2P file sharing service
o Are they liable for third party infringement after Sony?
Their service can be used for non-infringing purposes
(sharing non-copyrighted files)
 District court: Grokster had no specific knowledge
of the infringing activities so Grokster is protected
by Sony
 On appeal, court agreed
 SCOTUS: Sony does not create an absolute bar
on imposing liability on producers of products that
had non-infringing purposes; we also need to look
at the facts specific to the case
 Here there was actually a connection
between Grokster and the direct infringers
 Grokster marketed specifically to an
infringing market
 Grokster did not try to limit or account
for infringement at all