Understanding Copyright Liability in Cyberspace:  A Primer

By: Mitchell D. Kamarck

Periodical: Cyberspace Lawyer

Date: December 1996

Introduction

In the world of cyberspace, three major groups create the Internet world: the system operators for the individual bulletin boards, otherwise known as sysops; the access or service providers such as American Online or Netcom, otherwise known as ISPs, and the individual users. In each category there are numerous derivations in size, form and function. Moreover, each one of these groups may have some responsibility for material posted on the Internet; therefore exposing them to potential copyright infringement liability. Though there is some sentiment to clarify (and reduce) the potential copyright infringement liability for the various groups through legislative action, the Clinton Administration's Information Infrastructure Task Force, in The Report of the Working Group on Intellectual Property Rights (the White Paper), stated that “[c]ircumstances . . . vary greatly among service providers"1  and that “different service providers play different roles - and those roles are changing and being created every day."2 Thus, at this time in the players and roles it is not feasible to identify a priori those circumstances or situations under which a service provider should have reduced liability.  However, it is reasonable to assume that such situations could and should be identified through discussion and negotiation among the service providers, the content owners ant the government.3

“Sysops, and to a lesser degree ISPs, must be aware that a court could hold them liable simply due to the repeated copying of a copyrighted work from their BBS or computer.”

Therefore, the White Paper adopted a wait and see attitude toward the Internet, and implicitly endorsed the continued application of traditional copyright infringement liability theories in the cases of the ISPs and sysops; namely, (1) direct infringement liability, (2) vicarious infringement liability and (3) contributory infringement liability.

Direct Infringement

Direct infringement exist whenever someone exercises any of the exclusive rights of a copyright owner without authorization.4  As stated recently in Religious Technology Center and Bridge Publications, Inc. v. Netcom On-line Communication Services, Inc., 907 F. Supp. 1361, 1367(N.D.Cal. 1995): “[d]irect infringement does not require intent or any particular state of mind, although willfulness is relevant to the award of statutory damages."  A prima facie case requires only a finding of (1) ownership of a valid copyright, and (2) the copying of constituent elements of the works that are original.5

In Religious Technology, the court dealt with the rare case where a copyright owner sought to hold the user, the sysop and the ISP liable for copyright infringement.  In Religious Technology, defendant Dennis Erlich posted on the Internet various writings of L. Ron Hubbard.  Erlich was able to post such writings through the use of defendant Thomas Klemesrud's BBS, which, in turn gained access to the Internet through defendant Netcom, an Internet access provider.   In essence, Erlich uploaded the copyrighted material onto Klemesrud's BBS, where it was automatically briefly stored prior to being copied and passed on automatically to Netcom's computer and ultimately to the particularly Internet sites chosen by Erlich.

As will usually be the case, the court found Erlich liable for direct infringement because he copied the copyrighted works nearly verbatim when posting them on the Internet through the BBS and ISP.  In comparison, the court found Netcom, the ISP, and Klemesrud, the sysop, not liable for direct copyright infringement because neither Netcom or Klemesrud "initiated the copying."  According to the court, the copying and displaying in Religious Technology  was automatic and "missing the volitional or causal elements necessary to hold a BBS operator directly liable...."6 Thus, the Religious Technology court created a requirement hat the act of infringement be volitional on the part of the direct infringer.

In creating the volitional requirement, the court attempted to distinguish the decision in Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993).  In Frena, the court found a sysop liable for direct copyright infringement even through the sysop did not upload the material onto the bulletin board until after served with the summons in the case.7  Despite Frena's purported lack of knowledge regarding the copyright infringements occurring on his BBS, the court held that Frena had directly infringed Playboy's ownership rights in certain pictures taken from the magazine.  The Religious Technology court distinguished Frena on the ground that, in Religious Technology, no one directly downloaded the infringing material form the sysop or access provider's computers (and, therefore, there was no "public" distribution of the infringing work).8

Ultimately, the courts will create a test for direct liability in the context of sysops and ISPs that will fall somewhere between the Religious Technology court's volitional requirement and the Frena court's strict liability approach.  Until then, sysops, and to a lesser degree ISPs, must be aware that a court could hold them liable simply due to the repeated copying of a copyrighted work from their BBS or computer.

Contributory Infringement

The doctrine of contributory copyright infringement provided that "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another" can be held liable for the copyright infringement.9

Thus, the doctrine requires both a finding of knowledge10 and contribution.11

“[F]or a sysop or ISP to be held as a vicarious infringer, it must have received a financial benefit attributable directly to the posting of the infringing work.”

In Religious Technology, the court considered the application of the doctrine of contributory infringement to the sysop and ISP.  Following the Ninth Circuit’s ruling in Fonovisa v. Cherry Auction, Inc.,12 the court concluded that the sysop and ISP could be held liable for contributory copyright infringement.  On the knowledge element, the fact that the sysop and ISP were notified by the Church of Scientololgy about the copyright infringement and failed to act satisfied the knowledge requirement.  The court opined that, once notified, the crucial question was whether the sysop or ISP could quickly and reasonably verify a claim of infringement.13  On the contribution element, the court cited Fonovisa and ruled that both the sysop and ISP could have taken measures to stop the distributions of the infringing work.14

In Sega Enterprises Ltd. v. MAPHIA,15 the court issued a preliminary injunction against a sysop that both sold devices used to copy Sega games and maintained a bulletin board where copies of the Sega games could be uploaded and downloaded, based upon findings of both direct and contributory copyright infringement.  The court based its finding of contributory infringement on MAPHIA’s “role in copying [Sega’s games], including the provision of facilities, direction, knowledge and encouragement.”  In essence, MAPHIA was a contributory infringer because it knowingly provided the means to copy SEGA’s copyrighted games and encouraged such copying.16

“[S]ysops and ISPs must take every claim of copyright infringement seriously and must reasonably and quickly assess such claims.”

Vicarious Liability

Unlike contributory liability that focuses on the connection between the contributory infringer and the infringing activity, vicarious liability focuses on the vicarious infringer.17  Thus, proof of vicarious copyright infringement requires a finding that the purported vicarious infringer: (1) had the right and ability to control the direct infringer’s activity and (2) a direct financial interest in the infringing activity.18

The court in Religious Technology dismissed the application of vicarious liability when applied to a sysop or ISP.  The court held that a sysop or ISP might have sufficient “control” to be a vicarious infringer if it was able to take appropriate actions “such as by deleting infringing postings.”19  However, on the “direct financial benefit” element, the court held that the sysop or ISP would need to derive a direct financial benefit from the particular infringer’s use of the bulletin board or access services, not just a content neutral subscription fee.20  Thus, for a sysop or ISP to be held as a vicarious infringer, it must receive a financial benefit attributable directly to the posting of the infringing work.

Conclusion

As the Clinton Administration and the courts have indicated that traditional notions of copyright liability will be applied to cyberspace, sysops and ISPs must learn from cases such as Religious Technology.  The critical lesson from Religious Technology is that sysops and ISPs must take every claim or copyright infringement seriously and must reasonably and quickly assess such claims.  To ignore such claims does not insure that the sysop or ISP will be held liable for copyright liability, but it increases the likelihood that they will be included in such a lawsuit under a theory of contributory infringement.21

Mitchell D. Kamarck, of counsel to Rosenfeld, Meyer & Susman, LLP, in Beverly Hills, California, specializing in intellectual property and entertainment-related litigation. Mitchell also teaches a course entitled Television Law & Practice and Policy at California State University - Los Angeles. He can be reached by email at mkamarck@rmslaw. com.

Our Litigation Department specializes in civil litigation at all levels of the judiciary, and has wide-ranging experience in litigating business, commercial and entertainment-industry related matters. We have extensive experience in accounting and partnership, antitrust, and securities and corporate litigation. Additional areas of emphasis include copyright and intellectual property, real estate and products liability litigation as well as in the appellate practice.

Rosenfeld, Meyer & Susman was founded in 1957.  The Firm’s areas of expertise include: Labor and Employment Law, Litigation, Corporate, Entertainment, Trusts and Estates, Taxation, Family Law, Insurance Coverage and Defense, Real Estate and Employee Benefits.

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