Copyright and Technology 2011: Hillel Parness Presentation

© 2011 Robins, Kaplan, Miller & Ciresi L.L.P.rkmc.com
Liability and Immunity in the
Face of Technological Limitations
Hillel I. Parness
hiparness@rkmc.com
Copyright & Technology 2011 Conference
November 30, 2011

Shapiro, Bernstein and Co. v. H.L. Green Co.,
316 F.2d 304 (2d Cir.1963)
• “Green has the power to police carefully the
conduct of its concessionaire Jalen; our
judgment will simply encourage it to do so,
thus placing responsibility where it can and
should be effectively exercised. Green’s
burden will not be unlike that quite commonly
imposed upon publishers, printers, and vendors
of copyrighted materials….in many cases, the
party found strictly liable is in a position to
police the conduct of the ‘primary’ infringer.”

Shapiro, Bernstein and Co. v. H.L. Green Co.,
316 F.2d 304 (2d Cir.1963)
• “Even if a fairly constant system of surveillance is
thought too burdensome, Green is in the position to
safeguard itself in a less arduous manner against
liability resulting from the conduct of its
concessionaires. It has in fact done so, by
incorporating a save-harmless provision in its
licensing agreements with Jalen….Surely the
beneficent purposes of the copyright law would be
advanced by placing the jeopardy of Jalen’s
insolvency upon Green rather than upon the
proprietor of the copyright.”

Sony Corp. of America v. Universal City
Studios, Inc., 464 U.S. 417 (1984)
• “In such cases, as in other situations in which the imposition of
vicarious liability is manifestly just, the ‘contributory’
infringer was in a position to control the use of copyrighted
works by others and had authorized the use without permission
from the copyright owner. This case, however, plainly does
not fall in that category. The only contact between Sony and
the users of the Betamax that is disclosed by this record
occurred at the moment of sale.”
• “If vicarious liability is to be imposed on petitioners in this
case, it must rest on the fact that they have sold equipment
with constructive knowledge of the fact that their customers
may use that equipment to make unauthorized copies of
copyrighted material.”

Cubby, Inc. v. Compuserve, Inc.,
776 F. Supp. 135 (S.D.N.Y. 1991)
• “CompuServe has no opportunity to review
Rumorville’s contents before DFA uploads it into
CompuServe’s computer banks, from which it is
immediately available to approved CIS subscribers.”
• “CompuServe has no more editorial control over such
a publication than does a public library, book store, or
newsstand, and it would be no more feasible for
CompuServe to examine every publication it carries
for potentially defamatory statements than it would be
for any other distributor to do so.”

Stratton-Oakmont, Inc. v. Prodigy Services Co.,
1995 WL 323710 (N.Y. Sup. 1995)
• “Let it be clear that this Court is in full
agreement with Cubby and Auvil. Computer
bulletin boards should generally be regarded in
the same context as bookstores, libraries and
network affiliates. It is PRODIGY’s own
policies, technology and staffing decisions
which have altered the scenario and mandated
the finding that it is a publisher.”

Information Infrastructure Task Force, Intellectual Property
and the National Information Infrastructure (Sept. 1995)
• “It is estimated by some that trillions of bits representing millions of
messages and files travel through networks each day. Of course,
only a percentage of those appear on any given service provider’s
system. Nevertheless, it is still virtually impossible for operators of
large systems to contemporaneously review every message
transmitted or file uploaded. On-line service providers are not alone
in this position. Millions of photographs are taken to photo finishers
each day by individual consumers. It is virtually impossible for
these service providers to view any of those works before they are
reproduced from the undeveloped film. Yet, they operate under
strict liability standards. Likewise, book sellers, record stores,
newsstands and computer software retailers cannot possibly read all
the books, listen to all the records, review all the newspapers and
magazines or analyze all the computer programs that pass through
their establishments for possible infringements. Yet, they may be
held strictly liable as distributors if the works or copies they deal in
are infringing.”

Zeran v. America Online, Inc.,
129 F.3d 327 (4th Cir.1997)
• “‘The Internet is an international network of interconnected
computers,’ currently used by approximately 40 million people
worldwide.”
• “Zeran seeks to hold AOL liable for defamatory speech initiated by a
third party. He argued to the district court that once he notified AOL of
the unidentified third party’s hoax, AOL had a duty to remove the
defamatory posting promptly, to notify its subscribers of the message’s
false nature, and to effectively screen future defamatory material.”
• “The amount of information communicated via interactive computer
services is therefore staggering….It would be impossible for service
providers to screen each of their millions of postings for possible
problems. Faced with potential liability for each message republished
by their services, interactive computer service providers might choose
to severely restrict the number and type of messages posted. Congress
considered the weight of the speech interests implicated and chose to
immunize service providers to avoid any such restrictive effect.”

Barrett v. Rosenthal,
40 Cal.4th 33 (Cal. Sup. Ct. 2006)
• “We share the concerns of those who have expressed
reservations about the Zeran court’s broad interpretation of
section 230 immunity. The prospect of blanket immunity for
those who intentionally redistribute defamatory statements on
the Internet has disturbing implications. Nevertheless, by its
terms section 230 exempts Internet intermediaries from
defamation liability for republication. The statutory immunity
serves to protect online freedom of expression and to
encourage self-regulation, as Congress intended. Section 230
has been interpreted literally. It does not permit Internet
service providers or users to be sued as ‘distributors,’ nor does
it expose ‘active users’ to liability.”

Religious Technology Ctr. v. Netcom On-Line Communic.
Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995)
• “The court is not persuaded by plaintiffs’ argument that
Netcom is directly liable for the copies that are made and
stored on its computer. Where the infringing subscriber is
clearly directly liable for the same act, it does not make sense
to adopt a rule that could lead to the liability of countless
parties whose role in the infringement is nothing more than
setting up and operating a system that is necessary for the
functioning of the Internet.”
• “The court does not find workable a theory of infringement
that would hold the entire Internet liable for activities that
cannot reasonably be deterred. Billions of bits of data flow
through the Internet and are necessarily stored on servers
throughout the network and it is thus practically impossible to
screen out infringing bits from noninfringing bits.”

Fonovisa v. Cherry Auction, Inc., 76 F.3d 259
(9th Cir. 1996)
• “This analogy to absentee landlord is not in accord with the
facts as alleged in the district court and which we, for purposes
of appeal, must accept. The allegations below were that
vendors occupied small booths within premises that Cherry
Auction controlled and patrolled. According to the complaint,
Cherry Auction had the right to terminate vendors for any
reason whatsoever and through that right had the ability to
control the activities of vendors on the premises. In addition,
Cherry Auction promoted the swap meet and controlled the
access of customers to the swap meet area. In terms of
control, the allegations before us are strikingly similar to those
in Shapiro and Gershwin.”

Academy of Motion Picture Arts and Sciences v. Network
Solutions, Inc., 989 F.Supp.1276 (C.D. Cal. 1997)
• “The hardship to Network Solutions of
implementing a massive pre-screening process
would drastically change the nature of their
business. Network Solutions’ evidence leads
the Court to believe that such a change in the
process would likely drive the cost of
registration up and slow the process down.”

Lockheed Martin Corp. v. Network Solutions,
Inc., 985 F. Supp. 949 (C.D. Cal. 1997)
• “The flea market operators directly controlled and monitored
their premises. NSI neither controls nor monitors the Internet.
A domain name, once registered, can be used in connection
with thousands of pages of constantly changing information.
While the landlord of a flea market might reasonably be
expected to monitor the merchandise sold on his premises, NSI
cannot reasonably be expected to monitor the Internet.”
• “Nor can NSI be compared to the flea market operators who
provide space, parking, food service and advertising to
vendors selling infringing merchandise.”

A&M Records, Inc. v. Napster, Inc.,
239 F.3d 1004 (9th Cir. 2001)
• “The district court, however, failed to recognize that the
boundaries of the premises that Napster ‘controls and patrols’
are limited….Put differently, Napster’s reserved ‘right and
ability’ to police is cabined by the system’s current
architecture. As shown by the record, the Napster system does
not ‘read’ the content of indexed files, other than to check that
they are in the proper MP3 format. Napster, however, has the
ability to locate infringing material listed on its search indices,
and the right to terminate users’ access to the system. The file
name indices, therefore, are within the ‘premises’ that Napster
has the ability to police.”

In re Aimster Copyright Litigation,
334 F.3d 643 (7th Cir. 2003)
• “Our point is only that a service provider that would otherwise be a
contributory infringer does not obtain immunity by using encryption
to shield itself from actual knowledge of the unlawful purposes for
which the service is being used.”
• “Aimster hampered its search for evidence by providing encryption.
It must take responsibility for that self-inflicted wound.”
• “[Vicarious liability] could conceivably have been applied in the
Sony case itself, on the theory that while it was infeasible for the
producers of copyrighted television fare to sue the viewers who used
the fast-forward button on Sony’s video recorder to delete the
commercials and thus reduce the copyright holders’ income, Sony
could have reduced the likelihood of infringement, as we noted
earlier, by a design change.…By eliminating the encryption feature
and monitoring the use being made of its system, Aimster could like
Sony have limited the amount of infringement.”

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd.,
259 F.Supp.2d 1029 (C.D. Cal. 2003)
• “However, Defendants correctly point out that in order to be liable
under a theory of contributory infringement, they must have actual
knowledge of infringement at a time when they can use that
knowledge to stop the particular infringement. In other words,
Plaintiffs' notices of infringing conduct are irrelevant if they arrive
when Defendants do nothing to facilitate, and cannot do anything to
stop, the alleged infringement.”
• “While the parties dispute what Defendants feasibly could do to
alter their software, here, unlike in Napster, there is no admissible
evidence before the Court indicating that Defendants have the
ability to supervise and control the infringing conduct (all of which
occurs after the product has passed to endusers). The doctrine of
vicarious infringement does not contemplate liability based upon the
fact that a product could be made such that it is less susceptible to
unlawful use, where no control over the user of the product exists.”

259 F.Supp.2d 1029 (C.D. Cal. 2003)
• “The Court is not blind to the possibility that
Defendants may have intentionally structured their
businesses to avoid secondary liability for copyright
infringement, while benefitting financially from the
illicit draw of their wares. While the Court need not
decide whether steps could be taken to reduce the
susceptibility of such software to unlawful use,
assuming such steps could be taken, additional
legislative guidance may be well-counseled.”

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd.,
380 F.3d 1154 (9th Cir. 2004)
• “In the context of this case, the software
design is of great import.”
• “Indeed, at present, neither StreamCast nor
Grokster maintains control over index files. As
the district court observed, even if the
Software Distributors ‘closed their doors and
deactivated all computers within their control,
users of their products could continue sharing
files with little or no interruption.’”

125 S.Ct. 2764 (2005)
• “Second, this evidence of unlawful objective is given added
significance by MGM’s showing that neither company
attempted to develop filtering tools or other mechanisms to
diminish the infringing activity using their software. While the
Ninth Circuit treated the defendants’ failure to develop such
tools as irrelevant because they lacked an independent duty to
monitor their users’activity, we think this evidence
underscores Grokster’s and StreamCast’s intentional
facilitation of their users’ infringement.”
• “FN: Of course, in the absence of other evidence of intent, a
court would be unable to find contributory infringement
liability merely based on a failure to take affirmative steps to
prevent infringement, if the device otherwise was capable of
substantial noninfringing uses. Such a holding would tread too
close to the Sony safe harbor.”

UMG Recordings, Inc. v. Veoh Networks Inc.,
665 F. Supp. 2d 1099 (C.D. Cal. 2009)
• “UMG contends that Veoh had knowledge of infringing material that it did
not act expeditiously to remove. But Veoh has shown that when it did
acquire knowledge of allegedly infringing material – whether from DMCA
notices, informal notices, or other means – it expeditiously removed such
material, and UMG has failed to rebut that showing.”
• “Perfect 10 contended that CCBill was aware of several ‘red flags,’
including that it provided services to websites with such ‘come hither’
names as ‘illegal.net’ and ‘stolencelebritypictures.com.’….CCBill teaches
that if investigation of ‘facts and circumstances’ is required to identify
material as infringing, then those facts and circumstances are not ‘red
flags.’”
• “In light of the principles articulated in CCBill that the burden is on the
copyright holder to provide notice of allegedly infringing material, and that
it takes willful ignorance of readily apparent infringement to find a ‘red
flag,’ Veoh has provided substantial evidence that it fulfilled the
requirements of section 512(c)(1)(A). UMG has provided no material
evidence to the contrary.”

Viacom Int’l Inc. v. YouTube, Inc.,
95 U.S.P.Q.2D 1766 (S.D.N.Y. 2010)
• “That observation [by the UMG v. Veoh court] captures the reason why
awareness of pervasive copyright-infringing, however flagrant and blatant,
does not impose liability on the service provider. It furnishes at most a
statistical estimate of the chance any particular posting is infringing – and
that is not a ‘red flag’ marking any particular work.”
• “Plaintiffs complain that YouTube removes only the specific clips
identified in DMCA notices, and not other clips which infringe the same
works. They point to the provision in § 512(c)(3)(A)(ii) that a notification
must include ‘Identification of the copyrighted work claimed to have been
infringed, or, if multiple copyrighted works at a single online site are
covered by a single notification, a representative list of such works at that
site.’ This ‘representative list’ reference would eviscerate the required
specificity of notice [] if it were construed to mean a merely generic
description (‘all works by Gershwin’) without also giving the works’
locations at the site, and would put the provider to the factual search
forbidden by § 512(m).”

Capitol Records v. MP3tunes,
2011 U.S. Dist. LEXIS 93351 (S.D.N.Y. 2011)
• “Undoubtedly, MP3tunes is aware that some level of infringement occurs.
But, there is no genuine dispute that MP3tunes did not have specific ‘red
flag’ knowledge with respect to any particular link on Sideload.com, other
than the URLs noticed by EMGNA and EEW.”
• “As to the issue of control, EMI contends that MP3tunes can prevent the
infringing activity of its users and has physical possession of its systems
and servers. Specifically, MP3tunes can monitor songs downloaded by
users and the third-party sites listed on Sideload.com and remove those
songs and sites at will. However, ‘control of infringing activity’ under the
DMCA requires something more than the ability to remove or block access
to materials posted on a service provider’s website.”
• “At worst, MP3tunes set up a fully automated system where users can
choose to download infringing content. If enabling a party to download
infringing material was sufficient to create liability, then even search
engines like Google or Yahoo! would be without DMCA protection. In that
case, the DMCA’s purpose –innovation and growth of internet services –
would be undermined.”

Arista Records LLC v. Usenet.com, Inc.,
633 F.Supp.2d 124 (S.D.N.Y. 2009)
• “[I]f Defendants were aware of such red flags, or worse yet, if they
encouraged or fostered such infringement, they would be ineligible for the
DMCA’s safe harbor provisions…. Defendants’ bad faith spoliation of
documents and other evasive discovery tactics have prevented Plaintiffs
from ascertaining the extent to which they have been prejudiced with
respect to their own claims or their arguments in opposition to Defendants'
affirmative defense. [T]he appropriate sanction in this case is to preclude
Defendants from asserting their affirmative defense of protection under the
DMCA’s safe harbor provision.”
• “[W]hile Defendants had in place various tools and mechanisms that could
be used to block access to infringing articles or newsgroups, Defendants
never used them to limit copyright infringement on its servers….
Defendants had developed such tools, but declined to use them when to do
so would have harmed their business model and customer base….
Defendants’ failure to exercise their clear ability to filter and limit
infringement under such circumstances is strong circumstantial evidence of
their intent to foster copyright infringement by their users.”

Tiffany Inc. v. eBay Inc.,
600 F.3d 93 (2d Cir. 2010)
• “eBay, Inc., through its eponymous online marketplace, has
revolutionized the online sale of goods....”
• “eBay has been enormously successful. More than six million
new listings are posted on its site daily. At any given time it
contains some 100 million listings.”
• “To impose [direct] liability because eBay cannot guarantee
the genuineness of all of the purported Tiffany products
offered on its website would unduly inhibit the lawful resale of
genuine Tiffany goods.”
• “Tiffany’s reliance on the ‘flea market’ cases, Hard Rock Café
and Fonovisa, is unavailing. eBay’s efforts to combat
counterfeiting far exceeded the efforts made by the defendants
in those cases.”

Viacom Int’l Inc. v. YouTube, Inc.,
95 U.S.P.Q.2D 1766 (S.D.N.Y. 2010)
• “Tiffany alleged that eBay knew, or had reason to know, that
counterfeit Tiffany goods were being sold ‘ubiquitously’ on eBay,
and the District Court had found that eBay indeed ‘had generalized
notice that some portion of the Tiffany goods sold on its website
might be counterfeit’. Nevertheless, the District Court dismissed,
holding that such generalized knowledge was insufficient to impose
upon eBay an affirmative duty to remedy the problem…. Although
by a different technique, the DMCA applies the same principle, and
its establishment of a safe harbor is clear and practical: if a service
provider knows (from notice from the owner, or a ‘red flag’) of
specific instances of infringement, the provider must promptly
remove the infringing material. If not, the burden is on the owner to
identify the infringement. General knowledge that infringement is
‘ubiquitous’ does not impose a duty on the service provider to
monitor or search its service for infringements.”

Copyright and Technology 2011: Hillel Parness Presentation

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Copyright and Technology 2011: Hillel Parness Presentation

Similar to Copyright and Technology 2011: Hillel Parness Presentation (20)

More from GiantSteps Media Technology Strategies

More from GiantSteps Media Technology Strategies (20)

Copyright and Technology 2011: Hillel Parness Presentation