Copyright Law Ronald W. Staudt

Class 26November 26, 2013

Facilitation of Infringement by End Users

Sony Abdallah

Cartoon Network

Napster

Grokster

Sony

Facts Dance halls v. landlords, again

Patent anology- 271(b)- active inducement 271(c)- contributory infringers AND staple article of

commerce defense (“unsuited for any commercial noninfringing use”)

“Capable of substantial noninfringing uses” Search for a “commercially significant noninfringing use:

Private noncommercial time shifting in the home • Of the works of other copyright holders who authorize

the use• Even P’s work though unauthorized is legitimate fair

use

Staple Article of Commerce Rule as applied by Sony to copyright cases involving the sale of copying equipment:

Widely used for legitimate unobjectionable purposes—merely capable of substantial noninfringing uses

Capable of commercially significant noninfringing uses

A significant number of potential uses of the machine would be non-infringing

No need to give precise content to the question of how much use is commercially significant because:Private noncommercial time shifting

satisfies standard

Applying Sony

AbdallahTime loaded cassettes and Sony

• “staple article or commodity?” • Substantial? non-infringing use• Additional actions

Cartoon Network Would Sony defense work?

A & M Records, Inc. v. Napster, Inc.Napster’s operations

Contributory InfringementKnowledge

Sony and imputed v. actual knowledge

DC focused too much on current rather than potential uses

BUT evidence shows D had actual knowledge of specific infringing

material, that it could block and failed to remove

ContributionFonovisa“site & facilities”

Vicarious InfringementDirect Financial Interest

Right and Ability to Supervise

“right to police must be exercised to the maximum extent…”

no “blind eye” cf Aimster

How Napster Worked

                                                                   Source of this graphic is: http://www.limewire.com/english/content/development.shtml

How a Gnutella client finds a song

How a Gnutella client finds a song

Given that there is no central server to store the names and locations of all the available files, how does the Gnutella software on your machine find a song on someone else's machine? The process goes something like this:

You type in the name of the song or file you want to find.

Your machine knows of at least one other Gnutella machine somewhere on the network. It knows this because you've told it the location of the machine by typing in the IP address, or because the software has an IP address for a Gnutella host pre-programmed in. Your machine sends the song name you typed in to the Gnutella machine(s) it knows about.

MGM v. Grokster (9th Cir.) Indirect liability requires direct infringement

by end users Like Napster, evidence establishes direct

reproduction and distribution Contributory Infringement-

Knowledge- if product is capable of substantial noninfringing use, then reasonable knowledge of specific infringement needed, not constructive or generic knowledge

• Evidence of Wilco success, public domain searches, Project Guttenberg, the Prelinger Archive etc

• ( Aimster variation about probability of infringing uses)

• Specific knowledge at a time when Ds contribute and failed to act on the information.

Grokster’s reasonable knowledge of specific infringement (9th Cir.)

As the district court correctly observed, … “Plaintiffs’ notices of infringing conduct are irrelevant,” because “they arrive when Defendants do nothing to facilitate, and cannot do anything to stop, the alleged infringement” of specific copyrighted content. Id. at 1037. See Napster II, 284 F.3d at 1096 (“[P]laintiffs bear the burden to provide notice to Napster of copyrighted works and files containing such works available on the Napster system before Napster has the duty to disable access to the offending content.”)

MGM v. Grokster (9th Cir.)

Material Contribution Does Grokster contribute like Napster or an ISP or

a swap meet?Need “personal conduct that assists or encourages”

FonovisaNapster was the axis of the file sharing wheel- when it

closed the network disappeared. Netcom had similar power to stop…

Grokster distributes code – no source access no network, not even a supernode

“When users search…using Grokster…[no] information [is] being transmitted to or through any computers owned or controlled by Grokster…”

Grokster’s material contribution (9th Cir.)

[I]t is the users of the software who, by connecting to each other over the internet, create the network and provide the access.

“Failure” to alter software located on another’s computer is simply not akin to the failure to delete a filename from one’s own computer, to the failure to cancel the registration name and password of a particular user from one’s user list, or to the failure to make modifications to software on one’s own computer.

MGM v. Grokster- Supreme Ct.

Facts stressed by the Supreme Court Value of peer to peer and legitimate uses 90% of downloads are © materials Staggering number of copies Ds have notice –MGM notice of 8 million files Ds’ objective and active steps

OpenNap Swaptor and name of DPromotion marketing intention to promoteBusiness model based on volume driven by ©

worksNo blocking, no monitoring

Grokster --Supreme Court

9-0 “Majority” opinion Sony does not preclude liability for intentional

inducement.

Concur by Ginsburg, Rehnquist & Kennedy 9th Circuit wrong on Sony. More evidence needed

to establish “capable of substantial noninfringing use.”

Concur by Breyer, Stevens & O’Connor Sony’s balance aimed at protecting technology

development is working and 9th Cir.decision on Sony has “adequate legal support.”

Grokster - Supreme Court Majority In sum, this case is significantly different from Sony

and reliance on that case to rule in favor of StreamCast and Grokster was error. Sony dealt with a claim of liability based solely on distributing a product with alternative lawful and unlawful uses, with knowledge that some users would follow the unlawful course. ***

MGM's evidence in this case most obviously addresses a different basis of liability for distributing a product open to alternative uses. Here, evidence of the distributors' words and deeds going beyond distribution as such shows a purpose to cause and profit from third-party acts of copyright infringement. If liability for inducing infringement is ultimately found, it will not be on the basis of presuming or imputing fault, but from inferring a patently illegal objective from statements and actions showing what that objective was.

The Grokster Inducement Rule

We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did not find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.

Grokster Inducement Evidence

Aiming to satisfy Napster market

Failure to develop filtering mechanism But see Footnote 12

Business Model based on infringement

Ginsburg v. Breyer

JUSTICE BREYER finds in Sony a "clear" rule permitting contributory liability for copyright infringement based on distribution of a product only when the product "will be used almost exclusively to infringe copyrights." Post, at 9-10. But cf. Sony, (recognizing "copyright holder's legitimate demand for effective -- not merely symbolic -- protection").

JUSTICE GINSBURG—”Sony, as I read it, contains no clear, near-exclusivity test. Nor have Courts of Appeals unanimously recognized Justice Breyer's clear rule. …Justice Breyer finds support for summary judgment in this motley collection of declarations and in a survey conducted by an expert retained by MGM.

Ginsburg’s conclusion

In sum, when the record in this case was developed, there was evidence that Grokster's and StreamCast's products were, and had been for some time, overwhelmingly used to infringe,…, and that this infringement was the overwhelming source of revenue from the products. Fairly appraised, the evidence was insufficient to demonstrate, beyond genuine debate, a reasonable prospect that substantial or commercially significant noninfringing uses were likely to develop over time. On this record, the District Court should not have ruled dispositively on the contributory infringement charge by granting summary judgment to Grokster and StreamCast.

Breyer’s Conclusion

There may be other now-unforeseen noninfringing uses that develop for peer-to-peer software, just as the home-video rental industry (unmentioned in Sony) developed for the VCR. But the foreseeable development of such uses, when taken together with an estimated 10% noninfringing material, is sufficient to meet Sony's standard.

Of course, Grokster itself may not want to develop these other noninfringing uses. But Sony's standard seeks to protect not the Groksters of this world (which in any event may well be liable under today's holding), but the development of technology more generally. And Grokster's desires in this respect are beside the point.

Breyer’s Take on Sony

Sony’s rule is Clear Strongly technology protecting Forward looking Mindful of the limitations facing judges where

matters of technology are concerned

Modified rule would weaken the law’s ability to protect new technology

Positive © impact may not outweigh technology related loss