Copyright Law Ronald W. Staudt Class 26 November 26, 2013

Facilitation of Infringement by End Users zSony yAbdallah xCartoon Network zNapster zGrokster

Sony zFacts zDance halls v. landlords, again zPatent anology- y271(b)- active inducement y271(c)- contributory infringers AND staple article of commerce defense (“unsuited for any commercial noninfringing use”) z“Capable of substantial noninfringing uses” ySearch for a “commercially significant noninfringing use: xPrivate 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: yWidely used for legitimate unobjectionable purposes—merely capable of substantial noninfringing uses yCapable of commercially significant noninfringing uses yA significant number of potential uses of the machine would be non-infringing yNo need to give precise content to the question of how much use is commercially significant because: xPrivate noncommercial time shifting satisfies standard

Applying Sony yAbdallah xTime loaded cassettes and Sony “staple article or commodity?” Substantial? non-infringing use Additional actions yCartoon Network Would Sony defense work?

A & M Records, Inc. v. Napster, Inc. Napster’s operations Contributory Infringement Knowledge 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 Contribution Fonovisa“site & facilities” Vicarious Infringement Direct 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: h/content/development.shtml

How a Gnutella client finds a song

zGiven 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: yYou type in the name of the song or file you want to find. yYour 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.IP address

MGM v. Grokster (9 th Cir.) yIndirect liability requires direct infringement by end users xLike Napster, evidence establishes direct reproduction and distribution yContributory Infringement- xKnowledge- 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 (9 th 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 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 (9 th Cir.) zMaterial Contribution yDoes Grokster contribute like Napster or an ISP or a swap meet? xNeed “personal conduct that assists or encourages” Fonovisa xNapster was the axis of the file sharing wheel- when it closed the network disappeared. Netcom had similar power to stop… yGrokster distributes code – no source access no network, not even a supernode y“When users search…using Grokster…[no] information [is] being transmitted to or through any computers owned or controlled by Grokster…”

Grokster’s material contribution (9 th 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. zFacts stressed by the Supreme Court yValue of peer to peer and legitimate uses y90% of downloads are © materials yStaggering number of copies yDs have notice –MGM notice of 8 million files yDs’ objective and active steps xOpenNap Swaptor and name of D xPromotion marketing intention to promote xBusiness model based on volume driven by © works xNo blocking, no monitoring

Grokster --Supreme Court z9-0 “Majority” opinion ySony does not preclude liability for intentional inducement. zConcur by Ginsburg, Rehnquist & Kennedy y9 th Circuit wrong on Sony. More evidence needed to establish “capable of substantial noninfringing use.” zConcur by Breyer, Stevens & O’Connor ySony’s balance aimed at protecting technology development is working and 9 th Cir.decision on Sony has “adequate legal support.”

Grokster - Supreme Court Majority zIn 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. Sony

The Grokster Inducement Rule zWe 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 zAiming to satisfy Napster market zFailure to develop filtering mechanism yBut see Footnote 12 zBusiness Model based on infringement

Ginsburg v. Breyer zJUSTICE 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 But cf. Sony, (recognizing "copyright holder's legitimate demand for effective -- not merely symbolic -- protection").Sony Sony, zJUSTICE 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 zIn 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 zThere 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. zOf 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 zSony’s rule is yClear yStrongly technology protecting yForward looking yMindful of the limitations facing judges where matters of technology are concerned zModified rule would weaken the law’s ability to protect new technology zPositive © impact may not outweigh technology related loss