ADVANCED COPYRIGHT ISSUES ON THE INTERNET
David L. Hayes, Esq.*
FENWICK & WEST LLP
Partner and past Chairman of the Intellectual Property Practice Group, Fenwick & West LLP, Mountain View
& San Francisco, California. B.S.E.E. (Summa Cum Laude), Rice University (1978); M.S.E.E., Stanford University (1980); J.D. (Cum Laude), Harvard Law School (1984). An early version of this work appeared in David L. Hayes, “Advanced Copyright Issues on the Internet,” 7 Tex. Intell. Prop. L.J. 1 (Fall 1998). The author expresses appreciation to Matthew Becker for significant contributions to Section III.E (“Streaming and Downloading”).
© 1997-2014 David L. Hayes. All Rights Reserved. (Updated as of February 2014)
TABLE OF CONTENTS
I.
INTRODUCTION
13
II.
RIGHTS IMPLICATED BY TRANSMISSION AND USE OF WORKS ON THE INTERNET
14
The Right of Reproduction 14
The Ubiquitous Nature of “Copies” on the Internet 15 Whether Images of Data Stored in RAM Qualify as “Copies” 15 The WIPO Treaties & the European Copyright Directive Are Unclear With
Respect to Interim “Copies” 22
Introduction to the WIPO Treaties & the European Copyright
Directive 22
The WIPO Copyright Treaty 24 The WIPO Performances and Phonograms Treaty 27 The Requirement of Volition for Direct Liability 29
The Netcom Case 30 The MAPHIA Case 32 The Sabella Case 33 The Frena Case 34 The Webbworld Case 35 The Sanfilippo Case 36 The Free Republic Case 37 The MP3.com Cases 39 The CoStar Case 42 The Ellison Case 43 Perfect 10 v. Cybernet Ventures 43 Field v. Google 44 Parker v. Google 45 The Cablevision Case 45 Arista Records v. Usenet.com 48 Quantum Systems v. Sprint Nextel 49 Arista Records v. Myxer 50 Disney Enterprises v. Hotfile 51 Perfect 10 v. Megaupload 52 Wolk v. Kodak Imaging Network 54 Fox Broadcasting v. Dish Network 54 Perfect 10 v. Giganews 58 Capitol Records v. ReDigi 60 Summary of Case Law 62
The Reproduction Right Under WIPO Implementing Legislation 63
United States Legislation 63
The Digital Millennium Copyright Act 64 Legislation Not Adopted 64
The European Copyright Directive 65 Peer-to-Peer File Sharing 71
BMG Music v. Gonzalez 71 Columbia Pictures v. Bunnell 72 Sony BMG Music Entertainment v. Tenenbaum 72 Capitol Records v. Thomas-Rasset 77
The Immunity of the Audio Home Recording Act (AHRA) 80
The Napster Cases 80 The Aimster Case 81 Atlantic Recording Corp. v. XM Satellite Radio 81
The Right of Public Performance 84
Isochronous Versus Asynchronous Transmissions 85 The Meaning of “Publicly” 86 Live Nation Motor Sports v. Davis 86 United States v. ASCAP 87 The Cablevision Case 89 Ringtones – In re Application of Cellco Partnership 90 Arista Records v. Myxer 92 Warner Bros. v. WTV Systems 92 Capitol Records v. MP3tunes 95 The Aereo Case 96 The BarryDriller Case 104 The FilmOn Case 106
The Right of Public Display 107
1.
The Frena, Marobie-FL, Hardenburgh and Webbworld Cases
108
2.
Kelly v. Arriba Soft
109
3.
Ticketmaster v. Tickets.com
113
4.
Perfect 10 v. Google (aka Perfect 10 v. Amazon)
113
5.
Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey
125
6.
ICG-Internet Commerce Group, Inc. v. Wolf
126
D.
7.
The
Perfect 10 v. Yandex
Right of Public Distribution
126
128
The Requirement of a “Copy” 129
Cases Addressing Whether Mere Posting Is a Distribution 129
(1) Cases Holding That Mere Posting Is a Distribution
130
(2) Cases Holding That Mere Posting Is Not a Distribution
135
(3) Cases Refusing To Decide the Issue
143
2.
The Requirement of a “Public” Distribution
144
3.
The Requirement of a Rental or Transfer of Ownership
144
4.
The Right of Distribution Under the WIPO Treaties
145
5.
The Right of Distribution Under WIPO Implementing Legislation
146
(a) United States Legislation
146
E.
The
(b) The European Copyright Directive
Right of Importation
146
147
The New Right of Transmission and Access Under the WIPO Treaties 148
The Right of Communication to the Public in the WIPO Copyright Treaty 148 The Right of Making Available to the Public in the WIPO Performances
and Phonograms Treaty 150
The Right of Transmission and Access Under WIPO Implementing
Legislation 151
United States Legislation 151 The European Copyright Directive 152
New Rights and Provisions Under The Digital Millennium Copyright Act, the European Copyright Directive & Legislation That Did Not Pass 154
Circumvention of Technological Measures and Rights Management
Information Under the DMCA 154
Circumvention of Technological Protection Measures 155
Prohibition on Conduct 155
Exemptions Adopted by the Librarian of Congress 156
Scope of the Network Connection Exemption – The
TracFone Cases 166
Epic Games v. Altmeyer 169 Facebook v. Power Ventures 169 Bose v. Zavala 170 MGE UPS Systems v. GE 170 Granger v. One Call Lender Services 171 Eyepartner v. Kor Media Group 171 Prohibition on Devices 172
Sony Computer Entertainment America v. Gamemasters 173 The DirecTV Cases 173
DirecTV, Inc. v. Borow 173 DirecTV, Inc. v. Carrillo 174
Sony Computer Entertainment America v. Divineo 174 Ticketmaster L.L.C. v. RMG Technologies, Inc. 175 The Tracfone Cases 176 Movida Communications, Inc. v. Haifa 176 Microsoft Corp. v. EEE Business Inc. 177 MDY Industries v. Blizzard Entertainment 177 Coupons, Inc. v. Stottlemire 182 CoxCom, Inc. v. Chafee 183 The DISH Network Cases 184
Dish Network v. Sonicview 184 Dish Network v. SatFTA 184 Dish Network v. Dimarco 185 Dish Network v. Sonicview 186 Dish Network v. Alejandri 186
Realnetworks v. DVD Copy Control Association. 187 Apple v. Psystar 189
Blizzard Entertainment v. Reeves 191 The Craigslist Cases 192
Craigslist v. Naturemarket 192 Craigslist v. Mesiab 192 Craigslist v. Hubert 193 Craigslist v. Branley 194 Craigslist v. Kerbel 194
Echostar v. Viewtech 194 Adobe Systems v. Feather 195 What Constitutes an Effective Technological Measure 195
Auto Inspection Services v. Flint Auto Auction 195 Healthcare Advocates, Inc. v. Harding, Earley, Follmer &
Frailey 196
Apple v. Psystar 198 No Requirements With Respect to Design of a Product 198 Other Rights Not Affected 199 Exemption for Nonprofit Organizations and Law Enforcement 200 Reverse Engineering for Interoperability 200
Universal City Studios Inc. v. Reimerdes 205 Storage Technology Corporation v. Custom Hardware
Engineering & Consulting 206
Chamberlain Group, Inc. v. Skylink Technologies, Inc. 206 Lexmark International, Inc. v. Static Control Components,
Inc. 207
Davidson Assocs. v. Internet Gateway 207 Sony Computer Entertainment America v. Divineo 212 Encryption Research 212 Protection of Minors 212 Protection of Personally Identifying Information 212 Security Testing 213 Copy Restrictions To Be Built Into VCRs and Camcorders 213 Other Cases Filed Under the Anti-Circumvention Provisions 214
Sony Computer Entertainment, Inc. v. Connectix, Inc. 214 RealNetworks, Inc. v. Streambox Inc. 215 Universal City Studios, Inc. v. Reimerdes 219 A Related DVD Case Involving Trade Secret Claims –
DVD Copy Control Association, Inc. v. McLaughlin (the Bunner case) 224
A Related DVD Case – Norwegian Prosecution of Jon
Johansen 227
Another Challenge to the DMCA – The Felten Case. 227 Pearl Investments, LLC v. Standard I/O, Inc. 228 321 Studios v. Metro Goldwyn Mayer Studios, Inc. 229 I.M.S. Inquiry Management Systems, Ltd. v. Berkshire
Information Systems, Inc. 231
(x)
Paramount Pictures Corp. v. 321 Studios.
231
(xi)
Macrovision Corp. v. 321 Studios
232
(xii)
Comcast of Illinois X v. Hightech Electronics, Inc.
232
(xiii)
Davidson & Assocs. v. Internet Gateway
233
(xiv)
Agfa Monotype Corp. v. Adobe Sys.
233
(xv)
Egilman v. Keller & Heckman
235
(xvi)
Macrovision v. Sima Products Corp.
236
(xvii)
Nordstrom Consulting, Inc. v. M&S Technologies, Inc.
237
(xviii)
R.C. Olmstead v. CU Interface
237
(xix)
Avaya v. Telecom Labs
238
(xx)
Actuate v. IBM
238
(xxi)
Navistar v. New Baltimore Garage
239
(xxii)
Dice Corp. v. Bold Technologies
240
Criminal Prosecutions Under the DMCA 240
(i)
The Sklyarov/Elcomsoft Case
240
(ii)
Other Criminal Prosecutions Under the DMCA
241
Other Uses of the Anti-Circumvention Provisions as a Sword 242
(i)
Lexmark International, Inc. v. Static Control Components,
Inc.
243
(ii)
Chamberlain Group, Inc. v. Skylink Technologies, Inc.
249
(iii)
In re Certain Universal Transmitters for Garage Door
Openers
255
(iv)
Storage Technology Corporation v. Custom Hardware
Engineering & Consulting
255
(14)
(15)
Integrity of Copyright Management Information 260
Definition of CMI 260
Cases Requiring CMI to be Part of a Technological
System or Process 261
The IQ Group, Ltd. v. Wiesner Publishing, LLC 261 Textile Secrets Int’l, Inc. v. Ya-Ya Brand Inc. 263 Jacobsen v. Katzer 264 Silver v. Lavadeira 265 Cases Not Requiring CMI to be Part of a Technological
System or Process 266
McClatchey v. The Associated Press 266 Associated Press v. All Headline News Corp. 266 Fox v. Hildebrand 267 Faulkner Press v. Class Notes 267 Agence France Presse v. Morel 268 Murphy v. Millennium Radio 270 William Wade Waller Co. v. Nexstar Broadcasting 271 Prohibitions on False CMI and Removal/Alteration of CMI 271
Cases re Removal or Alteration of CMI 272
Kelly v. Arriba Soft Corp. 272 Thron v. Harper Collins Publishers 273
Gordon v. Nextel Communications 273 Monotype Imaging, Inc. v. Bitstream Inc. 274 Keogh v. Big Lots Corp. 276 Goldman v. Healthcare Management Systems 277 Thomas M Gilbert Architects v. Accent Builders 277 Banxcorp v. Costco 277 Agence France Presse v. Morel 278 Scholz Design v. Custom Homes 279 Personal Keepsakes v. PersonalizationMall.com 279 Cases re False CMI 280
Schiffer Publishing, Ltd. v. Chronicle Books, LLC 280 Agence France Presse v. Morel 281 Personal Keepsakes v. PersonalizationMall.com 282
Exceptions and Limitations 282 Remedies for Violations of Sections 1201 and 1202 282
Statutory Damages and Disgorgement of Profits for Violations of
(i)
Sony Computer Entertainment America v. Filipiak
283
(ii)
Sony Computer Entertainment v. Divineo
284
(iii)
Stockwire Research Group v. Lebed
284
(iv)
MDY Industries, LLC v. Blizzard Entertainment, Inc.
285
(v)
Nexon America v. Kumar
285
(vi)
Point 4 Data Corp. v. Tri-State Surgical Supply
285
Section 1201 283
(i)
McClatchey v. The Associated Press
289
(ii)
Goldman v. Healthcare Management Systems
290
(iii)
Stockwire Research Group v. Lebed
290
(iv)
Stockart.com v. Engle
290
(v)
Granger v. One Call Lender Services
291
(vi)
Pacific Stock v. MacArthur & Co.
292
(vii)
Agence France Presse v. Morel
292
Statutory Damages and Disgorgement of Profits for Violations of Section 1202 289
Jurisdictional Issues – Blueport Co. v. United States 293 Alternative Approaches to the DMCA That Did Not Pass 293 The Battle Between Content Owners and Technology Companies Over
Built-In Technological Measures 294
Anticircumvention Provisions Under the European Copyright Directive 295 Anti-Circumvention Provisions in Other Foreign Countries 298 Fair Use 299
United States Legislation That Did Not Pass 299 The European Copyright Directive 299
Expansion of Library/Archives Exemptions 300 Distance Education 301 Copying in the Course of Computer Maintenance or Repair 301 Other Provisions of the DMCA 302
(a)
Evaluation of Impact of Copyright Law on Electronic Commerce
302
(b)
Clarification of the Authority of the Copyright Office
303
(c)
(d)
Ephemeral Recordings
Statutory Licenses With Respect to Performances of Sound
303
(e)
Recordings
Assumption of Contractual Obligations Related to Transfers of Rights
304
in Motion Pictures
304
(f)
Protection of Certain Industrial Designs
305
Protection of Designs Embodied in Useful Articles 305 Originality 306 Exclusions from Protection 306 Adaptations of Unprotectable Elements 307 Duration of Protection and Design Notice 307 Rights of a Design Owner and Limitations 307 Standard of Infringement 308 Benefit of Foreign Filing Date 308 Vesting and Transfer of Ownership 308 Remedies of Injunctive Relief, Damages, Attorneys’ Fees and
Destruction 309
Private Rights of Action Against Pirated Designs 309 Relation to Design Patents and Retroactive Effect 309
Limitation of Liability of Online Service Providers 309 Subpoenas to Service Providers 309
Jurisdictional Issues 310 RIAA v. Verizon Internet Services 311 The Charter Communications Litigation 314 Fatwallet v. Best Buy 315 In re Subpoena to University of North Carolina at Chapel Hill 315 Subpoenas in John Doe Actions 316 Interscope Records v. Does 1-7 316 In re Maximized Living 317
Proposed Limitation of Scope of Shrinkwrap and Clickwrap Licenses That
Did Not Pass 317
APPLICATION OF COPYRIGHT RIGHTS TO SPECIFIC ACTS ON THE
INTERNET 318
Browsing 318 Caching 321
Types of Caching 321 The Detriments of Caching 322 The Netcom Case and Application of the Fair Use Doctrine 323
Purpose and Character of the Use 324 Nature of the Copyrighted Work 325 Amount and Substantiality of the Portion Used 325 Effect of Use on the Potential Market 326
Cases Adjudicating Caching Under the Fair Use and Implied License
Doctrines 327
Field v. Google 327 Perfect 10 v. Google (aka Perfect 10 v. Amazon) 331 Ticketmaster L.L.C. v. RMG Technologies, Inc. 332 Parker v. Yahoo!, Inc. 333
5. Other Caching Cases 334
Facebook v. Power Ventures 334
C. Liability of Online Service Providers 334
Direct Liability 334
Louis Vuitton v. Akanoc Solutions 336 Flava Works v. Gunter 336
2. Contributory Liability 337
The Netcom Case 338 The MAPHIA Case 339 The Peer-to-Peer Filing Sharing Cases 340
(1) The Napster Cases 340
The Scour.com Lawsuit 375
(3) The Aimster/Madster Lawsuits 376
The StreamCast/Kazaa/Grokster Lawsuits 382
(5) The Supreme Court’s Grokster Decision 389
The Grokster Decision on Remand 404
The Ruling on Liability 404 The Permanent Injunction 408
(7) The Audiogalaxy Case 411
The Hummer Winblad/Bertelsmann Litigation 412
(9) Arista Records v. Lime Group 415
The CoStar Case 415 Ellison v. Robertson 416 Perfect 10 v. Cybernet Ventures 417 Perfect 10 v. Visa International 418 Parker v. Google 420 MDY Industries v. Blizzard Entertainment 420 Louis Vuitton v. Akanoc Solutions, Inc. 423 Arista Records v. Usenet.com 426 Hermeris v. Brandenburg 426 Flava Works v. Gunter 428 Perfect 10 v. Giganews 430 Masck v. Sports Illustrated 432 Summary 432
3. Vicarious Liability 434
The Netcom Case and its Progeny 434 The Napster Cases 435 Ellison v. Robertson 435 Perfect 10 v. Cybernet Ventures 435
(e)
The Aimster/Madster Lawsuits
436
(f)
The StreamCast/Kazaa/Grokster Lawsuits
437
(g)
Perfect 10 v. Visa International
439
(h)
Parker v. Google
441
(i)
Louis Vuitton v. Akanoc Solutions
441
(j)
Live Face on Web v. Howard Stern Productions
442
(k)
Arista Records v. Usenet.com
442
(l)
Corbis v. Starr
443
(m)
Arista Records v. Lime Group
444
(n)
Hermeris v. Brandenburg
444
(o)
Luvdarts v. AT&T Mobility
444
(p)
Flava Works v. Gunter
445
(q)
Perfect 10 v. Giganews
446
(r)
Masck v. Sports Illustrated
446
(s)
Disney Enterprises v. Hotfile
446
Inducement Liability 447
The Supreme Court’s Grokster Decision 447 Arista Records v. Usenet.com 447 Columbia Pictures v. Fung 448 Arista Records v. Lime Group 454 Flava Works v. Gunter 459 Disney Enterprises v. Hotfile 459 Adequacy of Pleadings of Secondary Liability Against Service Providers 461
Miller v. Facebook 461 Williams v. Scribd 462
Limitations of Liability of Online Service Providers in the DMCA 463
History of the Various Legislative Efforts 463 The OSP Liability Provisions of the DMCA 464
Safe Harbors – Definition of a “Service Provider” 465
Acting as a Mere Conduit for Infringing Information –
Section 512(a) 466
The Napster Case 467 Ellison v. Robertson 469 The Aimster/Madster Lawsuits 474 Perfect 10 v. CCBill 475 Columbia Pictures v. Fung 483 Caching – Section 512(b) 484
Field v. Google 486 Parker v. Google 487 Perfect 10 v. Google 487
Innocent Storage of Infringing Information – Section
512(c) 492
The ALS Scan Case – What Constitutes a
“Substantially” Compliant Notice 494
Hendrickson v. eBay 498
c.
CoStar v. LoopNet
502
d.
Perfect 10 v. Cybernet Ventures
510
e.
The Aimster/Madster Lawsuits
513
f.
Hendrickson v. Amazon.com
513
g.
Rossi v. MPAA
515
h.
Perfect 10 v. CCBill
516
i.
Corbis Corp. v. Amazon.com, Inc.
518
j.
Tur v. YouTube, Inc.
524
k.
Io Group v. Veoh Networks
524
l.
UMG Recordings v. Veoh Networks
529
m.
Perfect 10 v. Amazon
543
n.
Louis Vuitton v. Akanoc Solutions
545
o.
Viacom v. YouTube
545
p.
Perfect 10 v. Google
556
q.
Wolk v. Kodak Imaging Network
557
r.
Arista Records v. Myxer
560
s.
Flava Works v. Gunter
563
t.
Capitol Records v. MP3tunes
564
u.
Obodai v. Demand Media
571
v.
Agence France Presse v. Morel
572
w.
Columbia Pictures v. Fung
577
x.
Disney Enterprises v. Hotfile
580
y.
Capitol Records v. Vimeo
582
Referral or Linking to Infringing Material (Information
Location Tools) – Section 512(d) 588
The Napster Case 589 Perfect 10 v. Cybernet Ventures 591 The MP3Board Case 591 The Aimster/Madster Lawsuits 591 The Diebold Lawsuit 592 Perfect 10 v. CCBill 594 Columbia Pictures v. Fung 595 Perfect 10 v. Google 596 Perfect 10 v. Yandex 596 General Requirements for Limitations of Liability 598 Special Provisions for Nonprofit Educational Institutions 598 Filing of False DMCA Notices – Section 512(f) 599
(i)
Rossi v. MPAA
599
(ii)
Online Policy Group v. Diebold, Inc.
600
(iii)
Dudnikov v. MGA Entertainment
600
(iv)
Novotny v. Chapman
600
(v)
BioSafe-One, Inc. v. Hawks
601
(vi)
Lenz v. Universal Music Corp.
601
(vii)
UMG Recordings v. Augusto
607
(viii)
Capitol Records v. MP3tunes
608
(ix)
Brave New Films v. Weiner
609
(x)
Design Furnishings v. Zen Path
610
(xi)
Amaretto Ranch Breedables v. Ozimals
610
(xii)
Shropshire v. Canning
610
(xiii)
Rock River Communications v. Universal Music Group
611
(xiv)
Smith v. Summit Entertainment
612
(xv)
Ouellette v. Viacom
613
(xvi)
Tuteur v. Crosley-Corcoran
614
(xvii)
Flava Works v. Gunter
615
(xviii)
Disney Enterprises v. Hotfile
616
(xix)
Flynn v. Siren-Bookstrand
617
Other Provisions 617 Injunctions Against Service Providers 618 Designation of Agent to Receive Notification of Claimed
Infringement 618
CoStar v. Loopnet 619 Wolk v. Kodak Imaging Network 620 Perfect 10 v. Yandex 620 Whether the Safe Harbors Apply to Pre-1972 Sound Recordings 621 Limitations of Liability of Online Service Providers under the
Communications Decency Act 623
Stoner v. eBay 623 Perfect 10 v. CCBill 625 Secondary Liability of Investors 625
The Hummer Winblad/Bertelsmann Litigation 625 UMG Recordings v. Veoh Networks 625
Class Actions 627 Linking and Framing 627
The Shetland Times Case 630 The Total News Case 631 The Seattle Sidewalk Case 633 The Futuredontics Case 634 The Bernstein Case 635 The Intellectual Reserve Case 636 Ticketmaster v. Tickets.com 637 The MP3Board Case 640 Kelly v. Arriba Soft 643 Batesville Services, Inc. v. Funeral Depot, Inc. 643 Live Nation Sports v. Davis 645 Perfect 10 v. Google (aka Perfect 10 v. Amazon) 645 Pearson Education v. Ishayev 645
Streaming and Downloading 646
The Digital Performance Right – The Section 114(d)(1) Exemption and
Streaming by FCC-Licensed Broadcasters 647
The Digital Performance Right – Statutory Licenses Under Section 114 for
Certain Nonsubscription and Subscription Services 650
Preexisting Subscription Services 653 Eligible Nonsubscription Services (Webcasters) 656 New Subscription Services 665 The Digital Performance Right – What Constitutes an “Interactive” Service 669
Arista Records v. Launch Media 671
The Reproduction Right – Mechanical Licenses and
Streaming/Downloading 673
Applicability of the Section 115 Compulsory License to Streaming 675 The Copyright Office’s Position – The 2001 DMCA Report and
Comment Proceedings 676
The NMPA/HFA/RIAA Agreement of 2001 679 The Interactive Streaming and Limited Download Agreement of 2008 681 2008 Interim Regulation re Compulsory DPD License 682 Applicability of the Section 115 Compulsory License to Ringtones 683 The Section 111 Compulsory License for Cable Systems 684
WPIX v. ivi 684
International Licensing Efforts 685 First Sales in Electronic Commerce 685
Capitol Records v. ReDigi 688
Pop-Up Advertising 689
The Gator Litigations 689 The WhenU Litigations 690
U-Haul v. WhenU.com 691 Wells Fargo v. WhenU.com 692 1-800 Contacts v. WhenU.com 694
The MetroGuide Litigation 697 The D Squared Litigation 697 International Decisions 698
Harvesting of Web Data 698
The FatWallet Dispute 698 Nautical Solutions Marketing v. Boats.com 698 Craigslist v. 3Taps 699
CONCLUSION
I. INTRODUCTION
Over the years, the Internet has become the basic foundational infrastructure for the
global movement of data of all kinds. With continued growth at a phenomenal rate, the Internet
has moved from a quiet means of communication among academic and scientific research circles
into ubiquity in both the commercial arena and private homes. The Internet is now a major
global data pipeline through which large amounts of intellectual property are moved. As this
pipeline is increasingly used in the mainstream of commerce to sell and deliver creative content
and information across transnational borders, issues of intellectual property protection for the
material available on and through the Internet have taken on great importance.
Copyright law provides one of the most important forms of intellectual property
protection on the Internet for at least two reasons. First, much of the material that moves in
commerce on the Internet is works of authorship, such as musical works, multimedia works,
audiovisual works, movies, software, database information and the like, which are within the
usual subject matter of copyright. Second, because the very nature of an electronic online
medium requires that data be “copied” as it is transmitted through the various nodes of the
network, copyright rights are obviously at issue.
Traditional copyright law was designed to deal primarily with the creation, distribution
and sale of protected works in tangible copies.1 In a world of tangible distribution, it is generally
easy to know when a “copy” has been made. The nature of the Internet, however, is such that it
is often difficult to know precisely whether a “copy” of a work has been made and, if so, where it
resides at any given time within the network. As described further below, information is sent
through the Internet using a technology known as “packet switching,” in which data is broken up
into smaller units, or “packets,” and the packets are sent as discrete units. As these packets pass
through the random access memory (RAM) of each interim computer node on the network, are
“copies” of the work being made?
The case of MAI Systems Corp. v. Peak Computer2 held that loading a computer program
into the RAM of a computer constituted the making of a “copy” within the purview of copyright
law. This case has been followed by a number of other courts. Under the rationale of this case, a
“copy” may be created under United States law at each stage of transmission of a work through
the Internet. The language of two treaties discussed extensively in this paper – the WIPO
Copyright Treaty3 and the WIPO Performances and Phonograms Treaty4 – leave unclear the
1 For example, under United States law, copyright protection subsists only in “works of authorship fixed in any
tangible medium of expression, now known or later developed, from which they can be perceived, reproduced,
or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 102(a).
2 991 F.2d 511 (9th Cir. 1993), cert. dismissed, 114 S. Ct. 672 (1994).
3 World Intellectual Property Organization Copyright Treaty, Apr. 12, 1997, S. Treaty Doc. No. 105-17 (1997).
- 14 -
crucial question whether the MAI approach will be internationalized. In any event, these two
treaties would strengthen copyright holders’ rights of “distribution” and would create new rights
of “making available to the public” a copyrighted work, both of which are implicated by
transmissions through the Internet nearly as broadly as the right of reproduction.
The ubiquitous nature of “copying” in the course of physical transmission gives the
copyright owner potentially very strong rights with respect to the movement of copyrighted
material through the Internet, and has moved copyright to the center of attention as a form of
intellectual property on the Internet. If the law categorizes all interim and received transmissions
as “copies” for copyright law purposes, or treats all such transmissions as falling within the right
of distribution of the copyright owner, then activities that have been permissible with respect to
traditional tangible copies of works, such as browsing and transfer, may now fall within the
control of the copyright holder.
This work discusses the multitude of areas in which copyright issues arise in an online
context. Although the issues will, for simplicity of reference, be discussed in the context of the
Internet, the analysis applies to any form of online usage of copyrighted works. Part II of this
work discusses the various copyright rights that may be implicated by transmissions and use of
works on the Internet, including new rights and remedies, as well as certain limitations on
liability for online service providers afforded under federal statutes. Part III then analyzes the
application of those rights to various activities on the Internet, such as browsing, caching,
operation of an online service or bulletin board, linking to other sites, creation of derivative
works, and resale or subsequent transfer of works downloaded from the Internet. Part III also
analyzes the application of the fair use doctrine and the implied license doctrine to various
Internet activities. Because the law is still developing with respect to many of these issues,
considerable uncertainty is likely to exist as the issues are worked out over time through the
courts and the various relevant legislative bodies and industry organizations.
II. RIGHTS IMPLICATED BY TRANSMISSION AND USE
OF WORKS ON THE INTERNET
This Part discusses the various rights of the copyright holder – the right of reproduction,
the right of public performance, the right of public display, the right of public distribution, the
right of importation, and the new rights of transmission and access – that are implicated by the
transmission and use of works on the Internet.
A. The Right of Reproduction
The single most important copyright right implicated by the transmission and use of
works on the Internet is the right of reproduction. As elaborated below, if the law categorizes all
interim and received transmissions as “copies” for copyright law purposes, then a broad range of
4 World Intellectual Property Organization Performances and Phonograms Treaty, Apr. 12, 1997, S. Treaty Doc.
No. 105-17 (1997).
- 15 -
ordinary activities on the Internet, such as browsing, caching, and access of information, may fall
within the copyright holder’s monopoly rights.
1. The Ubiquitous Nature of “Copies” on the Internet
Under current technology, information is transmitted through the Internet using a
technique known broadly as “packet switching.” Specifically, data to be transmitted through the
network is broken up into smaller units or “packets” of information, which are in effect labeled
as to their proper order. The packets are then sent through the network as discrete units, often
through multiple different paths and often at different times. As the packets are released and
forwarded through the network, each “router” computer makes a temporary (ephemeral) copy of
each packet and transmits it to the next router according to the best path available at that instant,
until it arrives at its destination. The packets, which frequently do not arrive in sequential order,
are then “reassembled” at the receiving end into proper order to reconstruct the data that was
sent.5 Thus, only certain subsets (packets) of the data being transmitted are passing through the
RAM of a node computer at any given time, although a complete copy of the transmitted data
may be created and/or stored at the ultimate destination computer, either in the destination
computer’s RAM, on its hard disk, or in portions of both.
To illustrate the number of interim “copies,” in whole or in part, that may be made when
transmitting a work through the Internet, consider the example of downloading a picture from a
website. During the course of such transmission, no less than seven interim copies of the picture
may be made: the modem at the receiving and transmitting computers will buffer each byte of
data, as will the router, the receiving computer itself (in RAM), the Web browser, the video
decompression chip, and the video display board.6 These copies are in addition to the one that
may be stored on the recipient computer’s hard disk.7
2. Whether Images of Data Stored in RAM Qualify as “Copies”
Do these interim and final copies of a work (many of which are only partial) being
transmitted through the Internet qualify as “copies” within the meaning of United States
copyright law? The copyright statute defines “copies” as:
material objects, other than phonorecords, in which a work is fixed by any method
now known or later developed, and from which the work can be perceived,
reproduced, or otherwise communicated, either directly or with the aid of a
5 If any packet is lost along the way, the originating computer automatically resends it, likely along a different
path than the lost packet was originally sent.
6 Mark A. Lemley, “Dealing with Overlapping Copyrights on the Internet,” 22 U. Dayton L. Rev. 547, 555
(1997).
7 Even if a complete copy of the picture is not intentionally stored on the recipient computer’s hard disk, most
computers enhance performance of their memory by swapping certain data loaded in RAM onto the hard disk to
free up RAM for other data, and retrieving the swapped data from the hard disk when it is needed again. Some
of this swapped data may be left on the hard disk when the computer is turned off, even though the copy in
RAM has been destroyed.
- 16 -
machine or device. The term “copies” includes the material object, other than a
phonorecord, in which the work is first fixed.8
The language of the definition raises two issues concerning whether images9 of
transmitted data in RAM qualify as “copies.” First, depending upon where the data is in transit
through the Internet, only a few packets – or indeed perhaps only a single byte – of the data may
reside in a given RAM at a given time. For example, the modem at the receiving and
transmitting computers may buffer only one or a few bytes of data at a time. A node computer
may receive only a few packets of the total data, the other packets being passed through a
different route and therefore a different node computer’s RAM. Should the law consider these
partial images a “copy” of the work? Should the outcome turn on whether all or most of the
packets of data comprising the work pass through a given RAM, or only a portion? How can
interim partial images of data stored in RAM be deemed a “copy” of a work, in the case where
there is no point in time at which the entire work is available in a single RAM?
The White Paper published by the Working Group on Intellectual Property Rights of
President Clinton’s Information Infrastructure Task Force (referred to herein as the “NII White
Paper”) implicitly suggests that at least interim, partial copies of a work created in RAM in
interim node computers during transmission may not themselves constitute a “fixed” copy:
A transmission, in and of itself, is not a fixation. While a transmission may result
in a fixation, a work is not fixed by virtue of the transmission alone. Therefore,
“live” transmissions via the NII [National Information Infrastructure] will not
meet the fixation requirement, and will be unprotected by the Copyright Act,
unless the work is being fixed at the same time as it is being transmitted.10
The second general issue raised by the definition of “copies” is whether images of data
stored in RAM are sufficiently “permanent” to be deemed “copies” for copyright purposes. The
definition of “copies” speaks of “material objects,” suggesting an enduring, tangible embodying
medium for a work. With respect to an image of data stored in RAM, is the RAM itself to be
considered the “material object”? The image of the data in RAM disappears when the computer
is turned off. In addition, most RAM is “dynamic” (DRAM), meaning that even while the
computer is on, the data must be continually refreshed in order to remain readable. So the data is
in every sense “fleeting.” Is its embodiment in RAM sufficiently permanent to be deemed a
“copy”?
The legislative history of the Copyright Act of 1976 would suggest that data stored in
RAM is not a “copy.” As noted above, a “copy” is defined as a material object in which a work
is “fixed.” The statute defines a work to be “fixed in a tangible medium of expression when its
8 17 U.S.C. § 101.
9 The word “image” is being used here to refer to an image of data stored in RAM to avoid use of the word
“copy,” which is a legal term of art. Whether an image of data in RAM should be deemed a “copy” for
copyright law purposes is the question at issue.
10 Information Infrastructure Task Force, “Intellectual Property and the National Information Infrastructure: The
Report of the Working Group on Intellectual Property Rights” at 27 (1995).
- 17 -
embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently
permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a
period of more than transitory duration.”11 The legislative history states:
[T]he definition of “fixation” would exclude from the concept purely evanescent
or transient reproductions such as those projected briefly on a screen, shown
electronically on a television or other cathode ray tube, or captured momentarily
in the “memory” of a computer.12
This language suggests that images of data temporarily stored in RAM do not constitute
“copies.”13
Several cases, however, have held to the contrary. The leading case is MAI Systems
Corp. v. Peak Computer, Inc.,14 which held that loading an operating system into RAM for
maintenance purposes by an unlicensed third party maintenance organization created an illegal
“copy” of the program fixed in RAM.15 When the MAI decision first came down, it was unclear
whether that decision would support a legal principle that any storage of a copyrighted work in
RAM, no matter how transiently, constituted a “copy” within the purview of copyright law, for
the Ninth Circuit’s opinion in MAI seemed somewhat qualified. The court in MAI noted that the
“copy” of the operating system was stored in RAM for several minutes (rather than only a few
seconds). In addition, the court emphasized that while in RAM, output of the program was
viewed by the user, which confirmed the conclusion that the RAM “copy” was capable of being
perceived with the aid of a machine:
[B]y showing that Peak loads the software into the RAM and is then able to view
the system error log and diagnose the problem with the computer, MAI has
adequately shown that the representation created in the RAM is “sufficiently
permanent or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.”16
In addition, a decision from the Seventh Circuit handed down shortly after MAI, NLFC,
Inc. v. Devcom Mid-Am., Inc.,17 although somewhat unclear on both the facts involved in the
case and whether the court really understood the issue, contains language that may suggest that
11 17 U.S.C. § 101 (definition of “fixed in a tangible medium of expression”).
12 H.R. Rep. No. 94-1476, at 53 (1976), reprinted in U.S.C.C.A.N. 5659, 5666.
13 But see R. Nimmer, Information Law ¶ 4.02[2], at 4-6 (2001) (“This language refers to subject matter
protection and not whether particular acts create an infringing copy. The exclusion of transient works refers to
the work itself, not a copy. It presumes that there was no copy of the work other than the transient display or
memory.”)
14 991 F.2d 511 (9th Cir. 1993), cert. dismissed, 114 S. Ct. 672 (1994).
15 Id. at 518.
16 991 F.2d at 518.
17 45 F.3d 231 (7th Cir. 1995).
- 18 -
merely proving that the defendant has remotely accessed the plaintiff’s software through a
terminal emulation program is not sufficient to prove that a “copy” has been made.18 Moreover,
an earlier Ninth Circuit decision in the case of Lewis Galoob Toys, Inc. v. Nintendo of America,
Inc.19 implied that an image of data stored in RAM may not qualify as a “copy.” At issue in that
case was whether a device that altered certain bytes of data of a video game “on the fly” as such
information passed through RAM created an infringing derivative work. The court held that it
did not, because although a derivative work need not be fixed, it must have some “form” or
“permanence,” which were lacking in the enhanced displays created by the device. The court
stated, however, that even if a derivative work did have to be fixed, the changes in the displayed
images wrought on the fly by the accused device did not constitute a fixation because the
transitory images it created were not “embodied” in any form.
Notwithstanding these earlier decisions, however, a great many courts have now followed
MAI,20 and some earlier decisions also support its conclusion.21 Although the opinion in one of
18 Id. at 236.
19 964 F.2d 965 (9th Cir. 1992).
20 See Carson v. Verismart Software, 2012 U.S. Dist. LEXIS 4166 at *8-9 (N.D. Cal. Mar. 27, 2012) (pleading
alleging that defendants were “using” plaintiff’s software without authorization was sufficient to state a
copyright claim because the software had to be loaded into RAM to run, which constitutes the making of a fixed
copy under MAI); Costar Realty Information, Inc. v. Field, 2010 U.S. Dist. LEXIS 135016 at *19 (D. Md. Dec.
20, 2010) (copies of web pages stored automatically in a computer’s cache or RAM upon a viewing of the web
page fall within the definition of “copy”); DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1148 (N.D. Cal.
2010) (unauthorized loading of software into RAM constitutes an act of copying and thus of infringement);
Apple, Inc. v. Psystar Corp., 673 F. Supp. 2d 931, 935 (N.D. Cal. 2009) (turning on computers that loaded into
RAM copies of Apple’s Mac OS X operating system containing unauthorized modifications constitute direct
infringement of Apple’s reproduction right); Quantum Sys. Integrators, Inc. v. Sprint Nextel Corp., 2009 U.S.
App. LEXIS 14766 at *18-19 (4th Cir. July 7, 2009) (loading of software into RAM from unauthorized copies
on hard disk was sufficiently fixed for purposes of copyright infringement); SimplexGrinnell LP v. Integrated
Sys. & Power, Inc., 2009 U.S. Dist. LEXIS 30657 at *42 (S.D.N.Y. Apr. 8, 2009) (embodiment requirement is
satisfied when a program is loaded for use into a computer’s RAM and the duration requirement is satisfied
when the program remains in RAM for several minutes or until the computer is shut off); MDY Industries, LLC
v. Blizzard Entertainment, Inc., 2008 U.S. Dist. LEXIS 53988 (D. Ariz. July 14, 2008) (under MAI, copying
software into RAM constitutes making a “copy” within the purview of copyright law, so that if a person is not
authorized by the copyright holder through a license or by law (e.g. Section 117) to copy the software to RAM,
the person commits copyright infringement when using the software in an unauthorized way); Ticketmaster
L.L.C. v. RMG Technologies, Inc., 507 F. Supp. 2d 1096, 1005 (C.D. Cal. 2007) (copies of web pages stored in
a computer’s cache or RAM upon a viewing of the web page fall within the Copyright Act’s definition of a
“copy”); Storage Technology Corp. v. Custom Hardware Engineering & Consulting, Inc., 2004 U.S. Dist.
LEXIS 12391 at *11-12 (D. Mass. July 2, 2004) (unauthorized copying of a program into RAM for use of the
program infringes the copyright in the program); Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d
737, 745 (D. Md. 2003) (“Unauthorized electronic transmission of copyrighted text, from the memory of one
computer into the memory of another, creates an infringing ‘copy’ under the Copyright Act.”); Stenograph
L.L.C. v. Bossard Assocs., 144 F.3d 96 (D.C. Cir. 1998) (holding that an infringing copy of a computer
program was made when that program was loaded into RAM upon boot up and used for its principal purposes);
Triad Sys. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995), cert. denied, 116 S. Ct. 1015 (1996);
Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., 53 U.S.P.Q.2d 1425 (D. Utah 1999); Tiffany
Design, Inc. v. Reno-Tahoe Specialty, Inc., 55 F. Supp. 1113 (D. Nev. 1999); Marobie-FL Inc. v. National
Association of Fire Equipment Distributors, 45 U.S.P.Q.2d 1236 (N.D. Ill. 1997); Advanced Computer Servs. v.
- 19 -
these decisions suggests that only copies that exist for several minutes should constitute a “copy”
within the purview of copyright law,22 the others appear not to focus on how transitorily an
image may be stored in RAM in ruling that such an image constitutes a “copy” for purposes of
copyright law.
One of these decisions, Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc.,23 was
the first decision to focus on whether the act of browsing on the Internet involves the creation of
“copies” that implicate the copyright owner’s rights. In that case, the court, citing the MAI
decision, flatly stated, “When a person browses a website, and by so doing displays the
[copyrighted material], a copy of the [copyrighted material] is made in the computer’s random
access memory (RAM), to permit viewing of the material. And in making a copy, even a
temporary one, the person who browsed infringes the copyright.”24 This decision, although quite
direct in its holding, appears to address only the final “copy” that is made in the RAM of a Web
surfer’s computer in conjunction with viewing a Web page through a browser. It does not
address the trickier issue of whether whole or partial interim copies made in RAM of node
computers during the course of transmission through the Internet also constitute “copies” within
the purview of a copyright owner’s copyright rights.
However, a 2004 decision from the Fourth Circuit, CoStar v. Loopnet,25 held that
transient copies made by an OSP acting merely as a conduit to transmit information at the
instigation of others does not create fixed copies sufficient to make it a direct infringer of
copyright. “While temporary electronic copies may be made in this transmission process, they
would appear not to be ‘fixed’ in the sense that they are ‘of more than transitory duration,’ and
the ISP therefore would not be a ‘copier’ to make it directly liable under the Copyright Act.”26
The court drew a distinction between the final copy of a work made in the RAM of the ultimate
user’s computer, and the transient copies made by an OSP in the course of transmitting such
copies:
In concluding that an ISP has not itself fixed a copy in its system of more than
transitory duration when it provides an Internet hosting service to its subscribers,
we do not hold that a computer owner who downloads copyrighted software onto
a computer cannot infringe the software’s copyright. See, e.g., MAI Systems
MAI Sys., 845 F. Supp. 356 (E.D. Va. 1994); see also 2 M. Nimmer & D. Nimmer, Nimmer on Copyright §
8.08[A][1], at 8-114 (1999) (suggesting that RAM copies are fixed).
21 See Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 260 (5th Cir. 1988) (“the act of loading a program from
a medium of storage into a computer’s memory creates a copy of the program”); Apple Computer, Inc. v.
Formula Int’l, 594 F. Supp. 617, 621 (C.D. Cal. 1984) (noting that copying a program into RAM creates a
fixation, albeit a temporary one); Telerate Sys. v. Caro, 8 U.S.P.Q.2d 1740 (S.D.N.Y. 1988) (holding that the
receipt of data in a local computer constituted an infringing copy).
22 Advanced Computer Services v. MAI Systems, 845 F. Supp. 356, 363 (E.D. Va. 1994).
23 53 U.S.P.Q.2d 1425 (D. Utah 1999).
24 Id. at 1428.
25 373 F.3d 544 (4th Cir. 2004).
26 Id. at 551.
- 20 -
Corp. v. Peak Computer, Inc., 991 F.2d 511, 518-19 (9th Cir. 1993). When the
computer owner downloads copyrighted software, it possesses the software,
which then functions in the service of the computer or its owner, and the copying
is no longer of a transitory nature. See, e.g., Vault Corp. v. Quaid Software, Ltd.,
847 F.2d 255, 260 (5th Cir. 1988). “Transitory duration” is thus both a qualitative
and quantitative characterization. It is quantitative insofar as it describes the
period during which the function occurs, and it is qualitative in the sense that it
describes the status of transition. Thus, when the copyrighted software is
downloaded onto the computer, because it may be used to serve the computer or
the computer owner, it no longer remains transitory. This, however, is unlike an
ISP, which provides a system that automatically receives a subscriber’s infringing
material and transmits it to the Internet at the instigation of the subscriber.27
A 2008 decision of the Second Circuit, The Cartoon Network LP v. CSC Holdings,
Inc.,28 addressed the issue of RAM copying in considerable detail, ruling that buffer copies in
RAM made by Cablevision Systems Corp. in the course of converting channels of cable
programming from the head end feed into a format suitable for storage of individual programs by
a network digital video recording service upon customer demand were not fixed for sufficient
duration to constitute “copies.”29 Cablevision made the buffer copies in conjunction with
offering its “Remote Storage” Digital Video Recorder (RS-DVR) service that enabled
Cablevision customers to record copies of particular programs, like a normal DVR, but to store
the recorded programs on Cablevision’s servers rather than on a DVR device at their homes.
Cablevision created buffer copies, one small piece at a time, of the head end programming in two
buffers – a primary ingest buffer and a Broadband Media Router (BMR) buffer – even if no
customer requested that a copy of particular programming be stored on its behalf in the RS-DVR
service. The primary ingest buffer held no more than 0.1 seconds of each incoming channel’s
programming at any moment. The data buffer in the BMR held no more than 1.2 seconds of
programming at any time. The plaintiffs argued that these buffer copies made Cablevision a
direct infringer of their copyrights.30
The lower court found Cablevision a direct infringer largely in reliance on MAI and cases
following it.31 The Second Circuit, however, reversed. The court noted that to satisfy the
statutory definition of “copies,” two requirements must be met – an “embodiment” requirement
(embodiment in a tangible medium from which it can be perceived or reproduced) and a
“duration” requirement (embodiment for a period of more than transitory duration). The Second
27 Id.
28 536 F.3d 121 (2d Cir. 2008), cert. denied sub nom. CNN, Inc. v. CSC Holdings, Inc., 557 U.S. 946 (2009).
29 Id. at 129-30.
30 Id. at 123-24, 127.
31 Twentieth Century Fox Film Corp. v. Cablevision Sys. Corp., 478 F. Supp. 2d 607, 621-22 (S.D.N.Y. 2007).
- 21 -
Circuit found that the district court had mistakenly limited its analysis to the embodiment
requirement, and that its reliance on MAI and cases following it was misplaced.32
In general, those cases conclude that an alleged copy is fixed without addressing
the duration requirement; it does not follow, however, that those cases assume,
much less establish, that such a requirement does not exist. Indeed, the duration
requirement, by itself, was not at issue in MAI Systems and its progeny.…
Accordingly, we construe MAI Systems and its progeny as holding that loading a
program into a computer’s RAM can result in copying that program. We do not
read MAI Systems as holding that, as a matter of law, loading a program into a
form of RAM always results in copying.33
Turning to the facts of the case at hand, the Second Circuit ruled that, although the
embodiment requirement was satisfied by the buffers because the copyrighted works could be
copied from them,34 the duration requirement had not been satisfied. The court noted that no bit
of data remained in any buffer for more than a fleeting 1.2 seconds, unlike the data in cases like
MAI, which remained embodied in the computer’s RAM until the user turned the computer off.35
“While our inquiry is necessarily fact-specific, and other factors not present here may alter the
duration analysis significantly, these facts strongly suggest that the works in this case are
embodied in the buffer for only a ‘transitory’ period, thus failing the duration requirement.”36
Accordingly, the acts of buffering in the operation the RS-DVR did not create “copies” for which
Cablevision could have direct liability.37
The court in Costar Realty Information, Inc. v. Field38 ruled that an allegation that the
defendant accessed a password-protected database without authorization, which contained the
plaintiff’s copyrighted photographic images, raised a genuine dispute of material fact as to
whether the defendant engaged in direct copyright infringement when he viewed the copyrighted
work on a website that he did not have proper authorization to enter.39 Citing the Intellectual
Reserve case, the court ruled that “simply browsing a website that contains copyrighted material
32 Cartoon Network, 536 F.3d 121 at 127.
33 Id.
34 Id. at 129. “The result might be different if only a single second of a much longer work was placed in the buffer
in isolation. In such a situation, it might be reasonable to conclude that only a minuscule portion of a work,
rather than ‘a work’ was embodied in the buffer. Here, however, where every second of an entire work is
placed, one second at a time, in the buffer, we conclude that the work is embodied in the buffer.” Id.
35 Id.
36 Id.
37 Id. at 130.
38 2010 U.S. Dist. LEXIS 86567 (D. Md. Aug. 23, 2010).
39 Id. at *37-38.
- 22 -
is sufficient to constitute copyright infringement because a copy of the work is made in the
computer’s RAM to enable the images to display on the computer monitor.”40
3. The WIPO Treaties & the European Copyright Directive Are Unclear
With Respect to Interim “Copies”
The language of two copyright treaties adopted during 1996 by the World Intellectual
Property Organization (WIPO)41 leaves open the issue of whether transitory images of data
stored in RAM constitute “copies.”42
(a) Introduction to the WIPO Treaties & the European Copyright
Directive
The WIPO treaties were adopted as a result of the Diplomatic Conference on Certain
Copyright and Neighboring Rights Questions hosted by WIPO in Geneva on December 2-20,
1996. More than 700 delegates from approximately 160 countries attended this Conference,
which was aimed at tightening international copyright law to respond to issues arising from
worldwide use of the Internet. The Conference was also designed to bring existing legislation on
copyrights more in line with the provisions of the Trade Related Intellectual Property (TRIPS)
sections of the Uruguay Round trade agreement, which in 1994 set up the World Trade
Organization (WTO).43
Three new treaties were considered, only two of which were adopted: the “WIPO
Copyright Treaty” and the “WIPO Performances and Phonograms Treaty.”44 The WIPO
Copyright Treaty strengthens the Berne Convention for the Protection of Literary and Artistic
Works (the “Berne Convention”),45 established in 1886, which was the first international
copyright treaty. The WIPO Performances and Phonograms Treaty strengthens the International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, completed in Rome in 1961 (the “Rome Convention”).46
40 Id. at *38
41 WIPO is a United Nations organization which handles questions of copyrights and trademarks.
42 The treaties enter into force three months after 30 instruments of ratification or accession by member States
have been deposited with the Director General of WIPO.
43 Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1C, Legal Instruments – Results of the Uruguay Round vol.
31; 33 I.L.M. 81 (1994).
44 The proposed WIPO Treaty on Intellectual Property in Respect of Databases generated huge controversy, and
was not adopted at the Conference. “WIPO Delegates Agree on Two Treaties,” 2 BNA’s Electronic Info. Pol’y
& L. Rep. 22, 22 (1997).
45 Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, 828 U.N.T.S. 221.
46 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, Oct. 26, 1961, 496 U.N.T.X. 43.
- 23 -
Each of the treaties required 30 nations to accede to it before it would enter into force.
On Dec. 5, 2001, Gabon became the 30th nation to accede to the WIPO Copyright Treaty, and on
Feb. 20, 2002, Honduras became the 30th nation to accede to the WIPO Performances and
Phonograms Treaty. Accordingly, each of those treaties entered into force ninety days thereafter,
on March 6, 2002 and May 20, 2002, respectively.47 The treaties are not self executing under
United States law, and implementing legislation will have to be passed by Congress.
The two adopted treaties will effect important substantive changes in international
copyright law that have potentially far reaching implications for the Internet, and the relevant
provisions of these treaties will be discussed throughout this paper. The legislative history to the
WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty took the form of
several “Agreed Statements.” Under the Vienna Convention, an Agreed Statement is evidence
of the scope and meaning of the treaty language.48 Relevant portions of the Agreed Statements
will also be discussed in this paper.
Each of the signatories to the WIPO treaties was required to adopt implementing
legislation to conform to the requirements of the treaties. The scope of legislation required in
any particular country depends upon the substantive extent of that country’s copyright law
existing at the time of the treaty, as well the country’s own views concerning whether its existing
laws already conform to the requirements of the treaties. As discussed in detail below, WIPO
implementation legislation in the United States took a largely minimalist view of the changes to
United States copyright law required to conform to the WIPO treaties. It is curious that all the
implementing legislation introduced in Congress implicitly took the position that U.S. law
already contains most of the rights required under the WIPO treaties, in view of the fact that, as
analyzed below, much of the language describing mandatory copyright rights in the WIPO
treaties appears to go beyond the correlative rights in current United States law or to set up new
rights entirely. The possibility that other countries would adopt legislation implementing the
WIPO treaty rights in their seemingly broader form raises the prospect of varying scopes of
rights in different countries, a situation that the WIPO treaties were intended to avoid in the first
place.49
In contrast to the United States implementing legislation, the European Commission’s
“European Copyright Directive on the Harmonization of Certain Aspects of Copyright and
Related Rights in the Information Society”50 to update and harmonize member state copyright
laws (which will be referred to herein as the “European Copyright Directive”) seems to take a
more expansive view, although individual member states are free to interpret the extent to which
47 “WIPO Copyright Treaty Enters Into Force As Gabon Becomes 30th Nation to Accede,” BNA’s Electronic
Commerce & Law Report (Dec. 12, 2001) at 1224; “U.N. Announces Music Piracy Pact” (Feb. 21, 2002),
available as of Feb. 21, 2002 at http://news.com.com/2100-1023-842169.html.
48 Vienna Convention on the Law of Treaties, May 23, 1969, art. 31(2), 1155 U.N.T.S. 331.
49 WIPO Copyright Treaty, Preamble, at 4; WIPO Performances and Phonograms Treaty, Preamble, at 22.
50 The text of the European Copyright Directive may be found at
http://europa.eu.int/servlet/portail/RenderServlet?search=DocNumber&lg=en&nb_docs=25&domain=Legislati
on&coll=&in_force=NO&an_doc=2001&nu_doc=29&type_doc=Directive (available as of January 1, 2002).
- 24 -
their own copyright laws already conform to the dictates of the European Copyright Directive in
adopting legislation in response to it.51 The WIPO implementation legislation in the United
States and the European Copyright Directive will be discussed at length throughout this paper as
they relate to the various issues treated herein.
(b) The WIPO Copyright Treaty
Article 7 of an earlier draft of the WIPO Copyright Treaty would apparently have
adopted the approach of MAI to the question of whether RAM copies fall within the
reproduction right of the copyright holder.52 The proposed Article 7(1) provided:
(1) The exclusive right accorded to authors of literary and artistic works in
Article 9(1) of the Berne Convention of authorizing the reproduction of their
51 The European Copyright Directive was first circulated for comments among European legal experts. It was
then officially published at the end of 1997 for a more public debate of its provisions. The European Parliament
approved a final draft of the Directive on February 14, 2001. The European Commission, acting through the
European Union ministers, accepted the final draft of the Directive on April 9, 2001.
52 The WIPO Copyright Treaty contains a number of important provisions relevant to the Internet that are not
discussed elsewhere in this paper. Article 2 codifies the idea/expression dichotomy of copyright law:
“Copyright protection extends to expressions and not to ideas, procedures, methods of operation or
mathematical concepts as such.” Article 4 expressly extends copyright protection to computer programs in all
forms as literary works: “Computer programs are protected as literary works within the meaning of Article 2 of
the Berne Convention. Such protection applies to computer programs, whatever may be the mode or form of
their expression.”
Article 5 adopts the approach of the Supreme Court’s decision in Feist Publications, Inc. v. Rural Telephone
Serv., 499 U.S. 340 (1991), which held that only the selection or arrangement of a compilation of facts such as a
database, and not the facts themselves, can be protected under copyright. Article 5 provides: “Compilations of
data or other material, in any form, which by reason of the selection or arrangement of their contents constitute
intellectual creations, are protected as such. This protection does not extend to the data or the material itself and
is without prejudice to any copyright subsisting in the data or material contained in the compilation.” The
proposed WIPO Treaty on Intellectual Property in Respect of Databases would have extended protection to the
information itself in a database where such database was the fruit of substantial labor to compile. Basic
Proposal for the Substantive Provisions of the Treaty on Intellectual Property in Respect of Databases to be
Considered by the Diplomatic Conference, art. 1(1), WIPO Doc. CRNR/DC/6 (Aug. 30, 1996)
<www.wipo.org/eng/diplconf/6dc_all.htm>. The controversy generated by this Treaty precluded its adoption
by WIPO.
Article 7(1) provides that authors of computer programs, cinematographic works, and works embodied in
phonograms shall enjoy the exclusive right of authorizing commercial rental to the public of the originals or
copies of their works. Under Article 7(2), this rental right does not apply “in the case of computer programs
where the program itself is not the essential object of the rental” or “in the case of cinematographic works,
unless such commercial rental has led to widespread copying of such works materially impairing the exclusive
right of reproduction.” The Agreed Statement for Articles 6 and 7 notes that the expressions “copies” and
“original and copies,” being subject to the right of rental, “refer exclusively to fixed copies that can be put into
circulation as tangible copies.”
Article 6 of an earlier draft of the treaty would have required Contracting Parties to abolish non-voluntary
broadcasting licenses within seven years of ratifying or acceding to the Treaty. This Article was deleted in the
final adopted version.
- 25 -
works, in any manner or form, includes direct and indirect reproduction of their
works, whether permanent or temporary.
The reference to “temporary” reproductions would have seemed to cover copies in RAM.
The reference to “indirect” reproductions, particularly when coupled with the inclusion of
“temporary” reproductions, might have been broad enough to cover interim, partial
reproductions in RAM in the course of transmission of a work through the Internet, as well as
complete copies of a work made in RAM and/or on a hard disk at the receiving computer.
In addition, proposed Article 7(2) of the treaty seemed to recognize the possibility that
the language of Article 7(1) might be read to cover interim, partial reproductions during
transmission, for it would have allowed signatory members (referred to as “Contracting Parties”
in the treaty) to limit the right of reproduction in those instances:
(2) Subject to the conditions under, and without prejudice to the scope of
applicability of, Article 9(2) of the Berne Convention, it shall be a matter for
legislation in Contracting Parties to limit the right of reproduction in cases where
a temporary reproduction has the sole purpose of making the work perceptible or
where a temporary reproduction is of a transient or incidental nature, provided
that such reproduction takes place in the course of use of the work that is
authorized by the author or permitted by law in accordance with the Berne
Convention and this Treaty.53
53 Although this provision apparently was designed to ameliorate the potential mischief that might result from
deeming all interim copies of a work in the course of transmission to be within the copyright owner’s rights, it
suffered from a number of potential problems. First, it would have left the issue up to the individual
Contracting Parties whether to legislate exemptions. Thus, some Contracting Parties could have legislated such
exemptions, while others did not, and the scope of the exemptions could have varied from country to country.
As a result, whether interim copies during the course of transmission constitute infringement could have turned
on the countries through which the transmission path passes, which is arbitrary under the current transmission
technology of the Internet.
Second, Article 7(2) stated that the exemptions would apply only to transient or incidental reproductions taking
place in the course of an authorized use of a work. Thus, if the transmission itself is unauthorized, the
exemptions would not have applied, and there could still have been potential liability for the interim
reproductions. Yet the operators of the node computers in which the interim copies are made would have no
way of knowing whether any particular packet passing through the node is part of an authorized transmission.
Article 7(2) therefore was flawed.
Article 10(1) of the adopted version affords a more generic vehicle for the adoption of exemptions or exceptions
to rights conferred in the Treaty: “Contracting Parties may, in their national legislation, provide for limitations
of or exceptions to the rights granted to authors of literary and artistic works under this Treaty to an extent
consistent with exceptions or limitations provided for in the Berne Convention in certain special cases that do
not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of
the author.”
The requirement that exceptions “not unreasonably prejudice the legitimate interests of the author” provides
little guidance as to where the boundaries should lie around exceptions that Contracting Parties may wish to
adopt in implementing legislation. The Agreed Statement concerning Article 10 does nothing to clarify the
uncertainty: “It is understood that the provisions of Article 10 permit Contracting Parties to carry forward and
appropriately extend into the digital environment limitations and exceptions in their national laws which have
- 26 -
The proposed Article 7, and the subject of interim transmission copies in general,
generated a lot of controversy at the Conference. Telecommunications companies and Internet
providers particularly objected to Article 7 because they feared that protection for temporary
copying would impose liability for the interim copying that inherently occurs in computer
networks. On the other hand, content providers such as the software, publishing and sound
recording industries, opposed any open-ended approach that would permit all temporary
copying.54
To resolve the controversy, the proposed Article 7 was ultimately simply deleted entirely
from the adopted version of the treaty.55 The Agreed Statement pertaining to the right of
reproduction (Previous Article 7) provides:
The reproduction right, as set out in Article 9 of the Berne Convention, and the
exceptions permitted thereunder,56 fully apply in the digital environment, in
particular to the use of works in digital form. It is understood that the storage of a
protected work in digital form in an electronic medium constitutes a reproduction
within the meaning of Article 9 of the Berne Convention.
The Assistant Secretary of Commerce and Commissioner of Patents and Trademarks at
the time, Bruce Lehman, who headed the U.S. delegation to the Conference, stated at the end of
the Conference that the Agreed Statement was intended to make clear that the reproduction right
includes the right to make digital copies, but also that certain copying, e.g., for temporary digital
storage, will be permitted. Commissioner Lehman further expressed the view that the treaty
language is broad enough to permit domestic legislation that would remove any liability on the
part of network providers where the copying is simply the result of their functioning as a conduit
for network services.57 However, the Agreed Statement itself does nothing more than reference
Article 9 of the Berne Convention, which of course was adopted long before digital copies were
an issue under copyright law, and makes no explicit reference to “temporary digital storage.” In
addition, the phrase “storage of a protected work in digital form in an electronic medium” could
potentially include temporary digital storage in a node computer during transmission. It is
therefore difficult to agree with Commissioner Lehman that the Agreed Statement makes
anything “clear.”
been considered acceptable under the Berne Convention. Similarly, these provisions should be understood to
permit Contracting Parties to devise new exceptions and limitations that are appropriate in the digital network
environment.”
54 “WIPO Delegates Agree on Two Treaties,” 2 BNA’s Electronic Info. Pol’y & L. Rep. 22, 22 (1997).
55Id.
56 Article 9(2) of the Berne Convention provides, “It shall be a matter for legislation in the countries of the Union
to permit the reproduction of such works in certain special cases, provided that such reproduction does not
conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of
the author.”
57 “WIPO Delegates Agree on Two Treaties,” 2 BNA’s Electronic Info. Pol’y & L. Rep. 22, 22-23 (1997).
- 27 -
Rather, the Agreed Statement seems to leave virtually open ended the question of
whether temporary images in RAM will be treated as falling within the copyright owner’s right
of reproduction. The uncertainty surrounding the scope of the reproduction right in a digital
environment that, at least early on, seemed to divide U.S. courts therefore appears destined to
replicate itself in the international arena. The uncertainty is heightened by the fact that Article 9
of the Berne Convention allows signatories to adopt certain exceptions to the reproduction right,
raising the prospect of inconsistent exceptions being adopted from country to country. As a
result, whether interim copies made during the course of transmission constitute infringement
may turn on the countries through which the transmission path passes, which is arbitrary under
the current transmission technology of the Internet. The issue ignited debate in the United States
in connection with the federal legislation to implement the treaty.
(c) The WIPO Performances and Phonograms Treaty
Curiously, despite the focus on and ultimate removal of the proposed Article 7 of the
WIPO Copyright Treaty, Article 7 as adopted in the WIPO Performances and Phonograms
Treaty appears to come closer to adopting the approach of MAI. Article 7 gives performers the
exclusive right of “authorizing the direct or indirect reproduction of their performances fixed in
phonograms” (emphasis added). As originally proposed, Article 7 contained language even
closer to the MAI logic, for it expressed the reproduction right of performers as one of
“authorizing the direct or indirect reproduction, whether permanent or temporary, of their
performances fixed in phonograms” (emphasis added). The use of the phrase “permanent or
temporary” would more strongly have suggested that temporary interim reproductions of
performances would be within the performer’s right of reproduction.
In addition, Article 7(2) in an earlier draft was also deleted, which made reference to
transient copies as follows:
Subject to the conditions under, and without prejudice to the scope of
applicability of, Article 19(2), it shall be a matter for legislation in Contracting
Parties to limit the right of reproduction in cases where a temporary reproduction
has the sole purpose of making the fixed performance perceptible or where a
temporary reproduction is of a transient or incidental nature, provided that such
reproduction takes place in the course of use of the fixed performance that is
authorized by the performer or permitted by law in accordance with this Treaty.
The Agreed Statement that was issued with respect to the right of reproduction in the
WIPO Performances and Phonograms Treaty is very similar to the Agreed Statement on the
same subject that was issued with the WIPO Copyright Treaty. The Agreed Statement issued
with the WIPO Performances and Phonograms Treaty provides:
The reproduction right, as set out in Articles 7 and 11, and the exceptions
permitted thereunder through Article 16, fully apply in the digital environment, in
particular to the use of performances and phonograms in digital form. It is
understood that the storage of a protected performance or phonogram in digital
- 28 -
form in an electronic medium constitutes a reproduction within the meaning of
these Articles.
Thus, the Agreed Statement for the WIPO Performances and Phonograms Treaty contains the
same ambiguities noted above with respect to the Agreed Statement for the WIPO Copyright
Treaty.
Similar to Article 7, Article 11 gives producers of phonograms the “exclusive right of
authorizing the direct or indirect reproduction of their phonograms, in any manner or form.” As
in the case of Article 7, an earlier proposed version of Article 11 contained the phrase “whether
permanent or temporary,” but this phrase was deleted in the final adopted version.58
Both Articles 7 and 11 define the rights recited therein in terms of “phonograms.”
“Phonogram” is defined in Article 2(b) as any “fixation” of the sounds of a performance or of
other sounds other than incorporated in a cinematographic or other audiovisual work.
“Fixation” is defined broadly in Article 2(c) as “the embodiment of sounds or the
representations thereof, from which they can be perceived, reproduced or communicated through
a device.” Storage in RAM would seem to satisfy this definition of fixation. Thus, any
unauthorized transmission of a performance, or of the sounds embodied in a phonogram fixing
such performance, to RAM memory would potentially violate the rights of both the owner of the
performance and of the phonogram.59
58 Article 11(2) in an earlier draft, similar to the proposed and later deleted Article 7(2), was also deleted. Article
11(2) would have provided: “Subject to the conditions under, and without prejudice to the scope of
applicability of, Article 19(2), it shall be a matter for legislation in Contracting Parties to limit the right of
reproduction in cases where a temporary reproduction has the sole purpose of making the phonogram audible or
where a temporary reproduction is of a transient or incidental nature, provided that such reproduction takes
place in the course of use of the phonogram that is authorized by the producer of the phonogram or permitted by
law in accordance with this Treaty.”
59 The WIPO Performances and Phonograms Treaty contains a number of important provisions relevant to the
Internet that are not discussed elsewhere in this paper. Article 4 requires Contracting Parties to afford national
treatment to nationals of other Contracting Parties. Article 5(1) affords moral rights to performers:
“Independently of a performer’s economic rights, and even after the transfer of those rights, the performer shall,
as regards his live aural performances or performances fixed in phonograms, have the right to claim to be
identified as the performer of his performances, except where omission is dictated by the manner of the use of
the performance, and to object to any distortion, mutilation or other modification of his performances that
would be prejudicial to his reputation.” A proposed Article 5(4), which was deleted in the final version, would
have allowed any Contracting Party to declare in a notification deposited with the Director General of WIPO
that it will not apply the provisions of Article 5.
Article 6 grants performers the exclusive right of authorizing the broadcasting and communication to the public
of their unfixed performances (except where the performance is already a broadcast performance) and the
fixation of their unfixed performances. Articles 9 and 13 grant performers and producers of phonograms,
respectively, the exclusive right of authorizing the commercial rental to the public of the original and copies of
their performances fixed in phonograms and of their phonograms.
Article 15 provides that “[p]erformers and producers of phonograms shall enjoy the right to a single equitable
remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting
or for any communication to the public.” The Agreed Statement for Article 15 provides: “It is understood that
- 29 -
Thus, the WIPO Performances and Phonograms Treaty replicates the same uncertainty as
the WIPO Copyright Treaty with respect to the issue of whether transient “copies” of
performances and phonograms will fall within the copyright owner’s right of reproduction.60
Indeed, the definition of the right of reproduction in Article 7 and Article 11 to include “direct or
indirect” reproductions, together with the broad definition of “fixation” in Article 2(c), arguably
adopt an approach that is closer to the MAI decision than the WIPO Copyright Treaty.
4. The Requirement of Volition for Direct Liability
Even assuming the rationale of the MAI case and the provisions of the WIPO Treaties are
applied to deem all reproductions during transmission of a work through the Internet to be
“copies” within the copyright owner’s rights, a difficult issue arises as to who should be
responsible for the making of such copies. Multiple actors may be potentially connected with a
particular copy or copies of a work on the Internet, such as a work posted to a bulletin board
service (BBS) – the original poster of the work, the BBS operator, the Online Service Provider
(OSP) through which the BBS is offered, a user downloading a copy of the work from the BBS,
and perhaps the operators of node computers through which a copy of the work may pass during
the course of such downloading. Which one or more of these actors should be deemed to have
made the copy or copies?
The most difficult aspect of the issue of which actors should be liable for copies made in
the course of the downloading, viewing or other transmission of a work through the Internet
stems from the fact that many such copies will typically be made automatically. For example,
“copies” of the work (in whole or in part) will automatically be made in the RAM (and possibly
in temporary hard disk storage) of each interim node computer within the transmission path of
the work through the Internet. And the modems on the initiating and receiving ends of the
transmission will buffer the data to be transmitted. Internet search engine services may use
Article 15 does not represent a complete resolution of the level of rights of broadcasting and communication to
the public that should be enjoyed by performers and phonogram producers in the digital age. Delegations were
unable to achieve consensus on differing proposals for aspects of exclusivity to be provided in certain
circumstances or for rights to be provided without the possibility of reservations, and have therefore left the
issue to future resolution.”
Under Article 17(1), the term of protection to be granted to performers under the Treaty is at least 50 years from
the end of the year in which the performance was fixed in a phonogram. Under Article 17(2), the term of
protection to be granted to producers of phonograms under the Treaty is at least 50 years from the end of the
year in which the phonogram was published, or failing such publication within 50 years from fixation of the
phonogram, 50 years from the end of the year in which the fixation was made.
60 Article 16 affords a generic vehicle for the adoption of exemptions or exceptions to rights conferred in the
Treaty. Article 16(1) provides that “Contracting Parties may, in their national legislation, provide for the same
kinds of limitations or exceptions with regard to the protection of performers and producers of phonograms as
they provide for in their national legislation, in connection with the protection of copyright in literary and
artistic works.” Article 16(2) provides, however, similar to the WIPO Copyright Treaty, that “Contracting
Parties shall confine any limitations of or exceptions to rights provided for in this Treaty to certain special cases
which do not conflict with a normal exploitation of the phonogram and do not unreasonably prejudice the
legitimate interests of the performer or of the producer of phonograms.”
- 30 -
“spiders” to “crawl” through the Internet and make copies in RAM of materials on websites in
the course of creating an index of that material.
Should a volitional act be required on the part of a third party to be liable for a copy made
during transmission? If so, is a direct volitional act to cause the copy to be made required (as in
the case of the original poster or the ultimate recipient of the copy), or is it sufficient if there was
a volitional act in setting up the automatic process that ultimately causes the copy to be made (as
in the case of the BBS operator, the OSP or the search engine service)? In view of the fact that
copyright law has traditionally imposed a standard of strict liability for infringement,61 one could
argue that a direct volitional act may not be required.62
In addition to copies made automatically on the Internet, many infringing copies may be
made innocently. For example, one may innocently receive an e-mail message that infringes the
copyright rights of another and print that message out. Or one may innocently encounter (and
copy into the RAM of one’s computer or print out) infringing material in the course of browsing.
Several cases have addressed the issue of direct liability on the part of OSPs, BBS
operators, and others for infringement of the reproduction right by users of the service, and in
particular how much of a volitional act is required for direct infringement liability:63
(a) The Netcom Case
The well known case of Religious Technology Center v. Netcom On-Line
Communication Services64 refused to impose direct infringement liability on an OSP for copies
made through its service, at least where the OSP had no knowledge of such infringements. In
that case the plaintiffs sought to hold liable the OSP (Netcom) and the operator of a BBS which
gained its Internet access through the OSP for postings of the plaintiffs’ copyrighted works on
the bulletin board. The works in question were posted by an individual named Erlich65 to the
BBS’s computer for use through Usenet.66 The BBS’s computer automatically briefly stored
them. The OSP then automatically copied the posted works onto its computer and onto other
61 Religious Technology Center v. Netcom On-Line Communications Servs., 907 F. Supp. 1361, 1367 & n.10
(N.D. Cal. 1995); R. Nimmer, Information Law ¶ 4.06, at 4-25 (2001). Intent can, however, affect statutory
damages to be awarded to the plaintiff. Netcom, 907 F. Supp. at 1367.
62 But cf. R. Nimmer, Information Law ¶ 4.06, at S4-50 (2001 Cum. Supp. No. 2) (“Although copyright is a strict
liability statute, there should be some [sort] of volition or causation which is lacking where a defendant’s
system is merely used to create a copy by a third party.”).
63 See also cases discussed in Section III.C.1 below pertaining to direct liability of online service providers.
64 907 F. Supp. 1361 (N.D. Cal. 1995).
65 In an earlier order, the court had entered a preliminary injunction against Erlich himself.
66 The Usenet is “a worldwide community of electronic BBSs that is closely associated with the Internet and with
the Internet community. The messages in Usenet are organized into thousands of topical groups, or
‘Newsgroups’ .... As a Usenet user, you read and contribute (‘post’) to your local Usenet site. Each Usenet site
distributes its users’ postings to other Usenet sites based on various implicit and explicit configuration settings,
and in turn receives postings from other sites.” Daniel P. Dern, The Internet Guide for New Users 196-97
(1994).
- 31 -
computers on the Usenet. In accordance with usual Usenet procedures, Usenet servers
maintained the posted works for a short period of time – eleven days on Netcom’s computer and
three days on the BBS’s computer.67 The OSP neither created nor controlled the content of the
information available to its subscribers, nor did it take any action after being told by the plaintiffs
that Erlich had posted infringing messages through its system.68
The court cast the issue of direct liability as “whether possessors of computers are liable
for incidental copies automatically made on their computers using their software as part of a
process initiated by a third party.”69 The court distinguished MAI, noting that “unlike MAI, the
mere fact that Netcom’s system incidentally makes temporary copies of plaintiffs’ works does
not mean that Netcom has caused the copying. The court believes that Netcom’s act of
designing or implementing a system that automatically and uniformly creates temporary copies
of all data sent through it is not unlike that of the owner of a copying machine who lets the public
make copies with it.”70 The court held that, absent any volitional act on the part of the OSP or
the BBS operator other than the initial setting up of the system, the plaintiffs’ theory of liability,
carried to its natural extreme, would lead to unreasonable liability:
Although copyright is a strict liability statute, there should still be some element
of volition or causation which is lacking where a defendant’s system is merely
used to create a copy by a third party.71
Accordingly, the court refused to hold the OSP liable for direct infringement. The court
also refused to hold the BBS operator liable for direct infringement. “[T]his court holds that the
storage on a defendant’s system of infringing copies and retransmission to other servers is not a
direct infringement by the BBS operator of the exclusive right to reproduce the work where such
copies are uploaded by an infringing user.”72 The court further held that the warning of the
presence of infringing material the plaintiffs had given did not alter the outcome with respect to
direct infringement liability:
Whether a defendant makes a direct copy that constitutes infringement cannot
depend on whether it received a warning to delete the message. This distinction
may be relevant to contributory infringement, however, where knowledge is an
element.73
The result of the Netcom case with respect to liability for direct infringement for the
transmission and intermediate storage of copyrighted materials by an OSP was codified in the
67 Netcom, 907 F. Supp. at 1367.
68 Id. at 1368.
69Id.
70 Id. at 1369.
71 Id. at 1370.
72 Id. at 1370-71 (emphasis in original).
73 Id. at 1370.
- 32 -
first safe harbor for OSPs set forth in Section 512(a)(1) of the Digital Millennium Copyright
Act,74 discussed in detail in Section III.C below.
(b) The MAPHIA Case
Another well known case, Sega Enterprises Ltd. v. MAPHIA,75 adopted the logic of the
Netcom case and refused to hold a BBS and its system operator directly liable for the uploading
and downloading of unauthorized copies of Sega’s video games, even though the defendants
participated in encouraging the unauthorized copying, which was not true in Netcom. (As
discussed below, the court did, however, find contributory liability.) The evidence established
that the system operator had knowledge that the infringing activity was going on through the
bulletin board, and indeed that he had specifically solicited the uploading of the games for
downloading by users of the bulletin board.76 The system operator also sold video game
“copiers,” known as “Super Magic Drives,” through the MAPHIA BBS, which enabled
subscribers to the BBS to play games which had been downloaded from the BBS.77
In granting a motion by Sega seeking summary judgment and a permanent injunction, the
court refused to impose direct liability for copyright infringement on the BBS and its system
operator, Chad Sherman. The court cited the Netcom case for the proposition that, although
copyright is a strict liability statute, there should be some element of volition or causation which
is lacking where a defendant’s system is merely used to create a copy by a third party.78 The
court further stated:
While Sherman’s actions in this case are more participatory than those of the
defendants in Netcom, the Court finds Netcom persuasive. Sega has not shown
that Sherman himself uploaded or downloaded the files, or directly caused such
uploading or downloading to occur. The most Sega has shown is that Sherman
operated his BBS, that he knew infringing activity was occurring, and that he
solicited others to upload games. However, whether Sherman knew his BBS
users were infringing on Sega’s copyright, or encouraged them to do so, has no
bearing on whether Sherman directly caused the copying to occur. Furthermore,
Sherman’s actions as a BBS operator and copier seller are more appropriately
analyzed under contributory or vicarious liability theories. Therefore, because
74 H.R. Rep. No. 105-551 Part 1, at 11, 24 (1998).
75 948 F. Supp. 923 (N.D. Cal. 1996).
76 Id. at 928.
77 Id. at 929. The Super Magic Drive consisted of a connector which plugged into the video game console, a
receptacle which accepted video game cartridges, a main unit having a RAM to store games, and a floppy disk
drive. “A MAPHIA BBS user can download video programs through his or her computer onto a floppy disk
and make copies with his or her computer or play those game programs through the adaptor drive. To play a
downloaded game, the user places the floppy disk into the video game copier. The user can choose the ‘run
program’ option and run the video game program from the floppy disk without a video game cartridge. The
adaptor drive also allows the user to copy the contents of a game cartridge onto a floppy disk.”Id.
78 Id. at 932.
- 33 -
Sega has not shown that Sherman directly caused the copying, Sherman cannot be
liable for direct infringement.79
(c) The Sabella Case
Similarly, in Sega Enterprises Ltd. v. Sabella,80 the court refused to hold a BBS operator
liable for direct infringement of the reproduction right where there was no evidence that the
operator did any unauthorized copying herself. The defendant, Sabella, was the system operator
of a BBS called “The Sewer Line,” which contained a directory called “Genesis,” into which
were uploaded and downloaded infringing copies of Sega’s video games by subscribers to the
BBS. The defendant also sold copiers that enabled users to play Sega games directly from
floppy disks without the need for a Sega game cartridge, and allowed purchasers of her copiers
to download files from her BBS without charge for a certain time period.
Although the court agreed that the defendant’s activities were more participatory than
those of the defendant in Netcom, the court nevertheless found the Netcom court’s logic
persuasive. “Sega has not shown that Sabella herself uploaded or downloaded the files, or
directly caused such uploading or downloading to occur. The most Sega has shown is that
Sabella should have known such activity was occurring, that she sold copiers that played games
such as those on her BBS, and that she gave her copier customers downloading privileges on her
BBS.”81 Citing Netcom, the court concluded that “whether Sabella knew her BBS users were
79 Id. (citations to Netcom omitted). An earlier opinion in the case, issued in conjunction with the granting of a
preliminary injunction to Sega, although somewhat unclear in its holding, seemed to suggest that the defendants
could be held liable for direct infringement, at least for the unauthorized copies being uploaded through the
bulletin board, although not for the subsequent downloading of copies by user of the bulletin board. See Sega
Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679, 683 (N.D. Cal. 1994). The court in the later opinion, however,
disavowed this interpretation of its earlier opinion. With respect to its earlier order granting a preliminary
injunction, the court stated, “To the extent that order can be read to suggest that Sherman may be liable for
direct copyright infringement, it is clarified and superseded by this order.” Sega Enterprises Ltd. v. MAPHIA,
948 F. Supp. 923, 932 n.5 (N.D. Cal. 1996).
The court also rejected a fair use defense raised by Sherman. With respect to the first fair use factor, the
purpose and character of the use, the court found that Sherman’s activities in encouraging the uploading and
downloading of Sega’s games was clearly commercial. “Sherman intended to profit directly from the content of
the information made available on his BBS because his copier customers could use the game files to play the
games rather than purchase Sega game cartridges. This distinguishes Sherman from the Internet provider in
Netcom who did not gain anything from the content of the information available to subscribers.” Id. at 934.
With respect to the second fair use factor, the nature of the copyrighted work, the court noted that the Sega
video games were for entertainment uses and involved fiction and fantasy, so that the second factor weighed
against fair use. Id. The court found that the third factor, the extent of the work copied, weighed against fair
use because BBS users copied virtually entire copyrighted works, and Sherman had not shown any public
benefit or explanation for the complete copying. Id. at 935. Finally, the court found that the fourth factor, the
effect of the use upon the market, also weighed against fair use. “Even if the users are only playing the games
in their own homes and even if there are currently only a limited number of users that have copiers, unrestricted
and widespread conduct of this sort would result in a substantial adverse impact on the market for the Sega
games.”Id.
80 1997 Copyr. Law. Dec. ¶ 27,648 (N.D. Cal. Dec. 18, 1996).
81 Id. at 29,847-48.
- 34 -
infringing on Sega’s copyright or encouraged them to do so, has no bearing on whether Sabella
directly caused the copying to occur.”82
The court did rule, however, that Sabella was liable for contributory infringement. The
court cited the Ninth Circuit’s holding in Fonovisa, Inc. v. Cherry Auction, Inc. that “providing
the site and facilities for known infringing activity is sufficient to establish contributory
liability.” 83 The court noted that Sabella provided the BBS as a central depository site for the
unauthorized copies of games, and allowed subsequent distribution of the games by user
downloads. “She provided the facilities for copying the games by providing, monitoring, and
operating the BBS software, hardware, and phone lines necessary for the users to upload and
download games.”84 Accordingly, she was liable for contributory infringement under the
Fonovisa standard.85
The court went further, however, holding that even an alternative and higher standard of
“substantial participation,” Sabella was liable. “Sabella did more than provide the site and
facilities for the known infringing conduct. She provided a road map on the BBS for easy
identification of Sega games available for downloading.”86 The court also rejected Sabella’s fair
use defense, issued a permanent injunction against Sabella, and awarded Sega statutory damages
of $5,000 per infringed work.
In contrast to the preceding cases, several cases have held that where a defendant BBS
operator has a more direct participation in the acts of infringement of its subscribers or users,
there can be direct infringement liability for those acts:
(d) The Frena Case
Playboy Enterprises, Inc. v. Frena,87 decided before Netcom, MAPHIA and Sabella, goes
further than those cases and established liability for the acts of subscribers without a direct
volitional act on the part of the operator. In that case, the court held the operator of a BBS,
Frena, responsible for infringement of the rights of distribution and display (although curiously
not the right of reproduction) with respect to the plaintiff’s copyrighted photographs, which were
distributed and displayed through the bulletin board by subscribers, despite evidence that the
operator never himself uploaded any of the photographs onto the bulletin board and removed the
82 Id. at 29,848.
83 76 F.3d 259, 264 (9th Cir. 1996).
84 Sabella, 1997 Copyr. Law. Dec. ¶ 27,648 at 29,849.
85 Another recent case applied the Fonovisa standard to hold the defendant Cyrix Corporation liable for
contributory infringement for posting on its website some copyrighted applet software of the plaintiff from
which it could be downloaded for use with the defendant’s sound boards. “Cyrix is probably also contributorily
liable because it encouraged and provided the resources for known infringing activity, i.e. the copying by others
of the applet software that Cyrix made available on its website.” Creative Labs, Inc. v. Cyrix Corp., 42
U.S.P.Q.2d 1872, 1875-76 (N.D. Cal. 1997).
86 Sabella, 1997 Copyr. Law. Dec. ¶ 27,648 at 29,849.
87 839 F. Supp. 1552 (M.D. Fla. 1993).
- 35 -
photographs as soon as he was made aware of them. 88 “There is no dispute that Defendant
Frena supplied a product containing unauthorized copies of a copyrighted work. It does not
matter that Defendant Frena claims he did not make the copies [himself].” 89 Although the case
did not generate a finding of liability with respect to the right of reproduction, the court’s logic
with respect to finding infringement of the rights of distribution and display would seem to apply
to the reproduction right as well.
The reach of Frena may be limited, however, because the BBS was apparently one
devoted to photographs, much of it of adult subject matter, and subscribers routinely uploaded
and downloaded images therefrom. Thus, the court may have viewed Frena as a more direct
participant in the infringement, having set up a bulletin board that was devoted to the kind of
activity that would foreseeably lead to infringement. The undisputed evidence of the presence
on the bulletin board of the plaintiff’s photographs, some of which had been edited to remove the
plaintiff’s trademarks and to add Frena’s advertisements, was apparently evidence of sufficient
involvement for the court to find direct infringement of the public distribution right. Similarly,
Frena’s selection of the infringing content for inclusion in the bulletin board was apparently
sufficient involvement to find direct infringement of the public display right.90
In addition, as discussed in detail below, the legislative history of the Digital Millennium
Copyright Act, which contains a number of safe harbors that address the issue of OSP liability,
states that it was intended to overrule the Frena case, at least to the extent Frena suggested that
passive, automatic acts engaged in through a technological process initiated by another through
the facilities of an OSP could constitute direct infringement on the part of the OSP.91 In a case
decided in 2001, the Fourth Circuit held that the Digital Millennium Copyright Act had indeed
overruled Frena “insofar as that case suggests that [passive, automatic acts engaged in through a
technological process initiated by another] could constitute direct infringement.”92
(e) The Webbworld Case
In a case factually similar to Frena, a company operating a website was held directly
liable for the posting of copyrighted material on its site which could be downloaded by
subscribers. In Playboy Enterprises, Inc. v. Webbworld, Inc.,93 the defendant Webbworld, Inc.
operated a website called Neptics, which made adult images available to subscribers who paid
$11.95 per month. Over a period of several months, images became available through the
Neptics website which were originally created by or for the plaintiff Playboy Enterprises, Inc.
88 Id. at 1554.
89 Id. at 1556.
90 K. Stuckey, Internet and Online Law § 6.10[1][b], at 6-88 – 6-89 (2008).
91 H.R. Rep. No. 105-551 Part 1, at 11 (1998).
92 ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 622 (4th Cir. 2001). A subsequent district court
cited with approval the Fourth Circuit’s decision on this point. See Costar Group Inc. v. Loopnet, Inc., 164 F.
Supp. 2d 688, 695-96 (D. Md. 2001), aff’d, 373 F.3d 544 (4th Cir. 2004).
93 968 F. Supp. 1171 (N.D. Tex. 1997).
- 36 -
The court rejected the defendant’s argument that it could not be held directly liable for
infringement under the logic of the Netcom case. The court distinguished the Netcom case on
the ground that Netcom did not create or control the content of the information available to its
subscribers, but rather merely provided access to the Internet. In contrast, the court noted that
Neptics was receiving payment selling the images it stored on its computers, and therefore was
acting as more than merely an information conduit.94
The defendant also argued that it could not be held liable for direct infringement because
it had no control over the persons who posted the infringing images to the adult newsgroups from
which Neptics obtained its material. The court rejected this argument: “While this may be true,
Neptics surely has control over the images it chooses to sell on the Neptics’ website. Even the
absence of the ability to exercise such control, however, is no defense to liability. If a business
cannot be operated within the bounds of the Copyright Act, then perhaps the question of its
legitimate existence needs to be addressed.”95
(f) The Sanfilippo Case
In Playboy Enterprises, Inc. v. Sanfilippo,96 the court found the defendant operator of a
website through which 7475 of the plaintiff’s copyrighted images were available directly liable
for infringement. The defendant admitted copying 16 files containing a great many of the
images from a third party source onto his hard drive and CD-ROM. He also admitted that 11
other files containing such images were uploaded to his hard drive by a third party. The court
found that, because the defendant had authorized the third party to upload such files to his site,
the defendant was directly liable for such upload as a violation of the exclusive right under
Section 106 of the copyright statute to “authorize” others to reproduce a copyrighted work. The
court also found that the defendant had willfully infringed 1699 of the copyrighted images.
One of the most interesting aspects of the Sanfilippo case is the amount of damages the
court awarded. The plaintiff sought statutory damages, and argued that a statutory damages
award should be made for each individual image that was infringed. The defendant argued that,
in awarding damages, the court should consider the fact that the copied images were taken from
compilations and, therefore, an award should be made only with respect to each particular
94 Id. at 1175.
95 Id. The court also held that the principals of Webbworld could be held vicariously liable for the infringements.
Although the principals had no control over those responsible for originally uploading the infringing images
onto the Internet sites from which Webbworld drew its images, the principals had the right and ability to control
what occurred on the Neptics website. The court ruled that the $11.95 subscription fee gave the principals a
sufficient direct financial benefit from the infringing activity to hold them vicariously liable. Id. at 1177.
The court made its rulings in the context of a motion for summary judgment by the plaintiff. The court granted
summary judgment of infringement with respect to sixty-two copyrighted images, but denied summary
judgment with respect to sixteen additional images because of the presence of material issues of fact. In a
subsequent ruling, the court found the defendants directly and vicariously liable with respect to these sixteen
additional images based on a similar legal analysis of liability. See Playboy Enterprises, Inc. v. Webbworld,
Inc., 45 U.S.P.Q.2d 1641 (N.D. Tex. 1997).
96 1998 U.S. Dist. LEXIS 5125 (S.D. Cal. 1998).
- 37 -
magazine’s copyright from which the images were taken. The court rejected this argument and
allowed a statutory damage award for each image on the grounds that each image had an
independent economic value on its own, each image represented “a singular and copyrightable
effort concerning a particular model, photographer, and location,”97 and the defendant marketed
each one of the images separately. The court awarded statutory damages of $500 per image, for
a total damage award of $3,737,500.98
(g) The Free Republic Case
Even where there is a direct volitional act on the part of a website operator in copying
copyrighted material onto its site, difficult questions relating to First Amendment and fair use
rights may arise, particularly where the Web is used to facilitate free ranging discussion among
participants. For example, in 1998, the Los Angeles Times and The Washington Post filed a
copyright infringement lawsuit against the operator of a website called the Free Republic. The
site contained news stories from dozens of sources (including the plaintiffs), posted both by the
operator of the site and its users, and users were allowed to attach comments to the stories.99 The
plaintiffs argued that, because verbatim complete copies of their news stories were often posted
on the website, it was reducing traffic to their own websites on which the articles were posted,
and was harming their ability to license their articles and to sell online copies of archived
articles.100 The defendants raised defenses under the fair use doctrine and under the First
Amendment.101 The defendants moved for summary judgment on all claims and the plaintiffs
cross moved for summary judgment on the defendants’ defense of fair use.
The court rejected the defendants’ fair use argument and ruled that the defendants might
be liable for infringement.102 The court ruled that the first fair use factor (purpose and character
of the use) favored the plaintiffs, noting there was little transformative about copying the entirety
or portions of the articles, since the articles on the defendants’ site served the same purpose as
that for which one would normally seek to obtain the original – for ready reference if and when
websites visitors needed to look at it.103 The court also rejected the addition of commentary to
the articles as favoring the defendants under the first factor, noting that the first posting of an
article to the site often contained little or no transforming commentary, and in most cases it was
not necessary to copy verbatim the entire article in order for users to be able to comment on the
97 Id. at *18-19.
98 The plaintiff requested an astronomical $285,420,000 in statutory damages ($20,000/image for 5776 images
that were not willfully infringed, and $100,000/image for 1699 images that were willfully infringed).
99 Los Angeles Times v. Free Republic, 54 U.S.P.Q.2d 1453, 1455-56 (C.D. Cal. 2000).
100 Id. at 1457.
101 Id. at 1454-55.
102 The court limited its opinion to the availability of the defenses on which the defendants had moved for summary
judgment. The court stated it was expressing no opinion as to whether, “given that the ‘copying’ of news
articles at issue in this case is to a large extent copying by third-party users,” the plaintiffs could prove a claim
against the defendants for copyright infringement. Id. at 1458.
103 Id. at 1460-61.
- 38 -
article.104 Finally, the court noted that the Free Republic site was a for-profit site, for which the
copying enhanced the defendants’ ability to solicit donations and generate goodwill for their
website operation and other businesses of the website operator.105
The second fair use factor (nature of the copyrighted work) favored the defendants,
because the copied news articles were predominantly factual in nature.106 The third fair use
factor (amount and substantiality of the portion used in relation to the copyrighted work as a
whole) favored the plaintiffs, because in many cases exact copies of the entire article were made
and the court had previously found that copying of the entire article was not necessary to
comment on it.107 Finally, the fourth fair use factor (effect of the use on the potential market for
or value of the copyrighted work) favored the plaintiffs, because the court found that the
availability of complete copies of the articles on the Free Republic site fulfilled at least to some
extent demand for the original works and diminished the plaintiffs’ ability to sell and license
their articles.108 On balance, then, the court concluded that the defendants could not establish a
fair use defense.109
The court also rejected the defendants’ First Amendment defense on the ground that the
defendants had failed to show that copying entire news articles was essential to convey the
opinions and criticisms of visitors to the site. The court noted that visitors’ critiques could be
attached to a summary of the article, or Free Republic could have provided a link to the
plaintiffs’ websites where the articles could be found.110
The parties subsequently settled the case, pursuant to which the court entered a stipulated
final judgment enjoining the defendants from copying, posting, uploading, downloading,
distributing or archiving any of the plaintiffs’ works, or encouraging others to do so, or operating
any website or other online service that accomplished or permitted any of the foregoing, except
as otherwise permitted by the plaintiffs in writing or by the fair use doctrine. The defendants
agreed to pay $1,000,000 in statutory damages for past infringing acts.111
104 Id. at 1461 & 1463-64. The most telling fact on the latter point was that the Free Republic provided a hypertext
link to Jewish World Review’s website at its request, and asked that Free Republic visitors no longer copy the
publication’s articles verbatim. Id. at 1463.
105 Id. at 1464-66.
106 Id. at 1467.
107 Id. at 1468.
108 Id. at 1470-71. The court rejected the defendants’ argument that its site was increasing hits to the plaintiffs’
sites through referrals off its own site, noting that the defendants had not addressed how many hits to the
plaintiffs’ sites were diverted away as a consequence of the posting of articles to the Free Republic. The court
also cited several cases rejecting the argument that a use is fair because it increases demand for the plaintiff’s
copyrighted work. Id. at 1471.
109 Id. at 1472.
110 Id. at 1472-73.
111 Los Angeles Times v. Free Republic, 56 U.S.P.Q. 2d 1862 (C.D. Cal. 2000).
- 39 -
(h) The MP3.com Cases
In 2000, the Recording Industry Association of America, Inc. (RIAA), on behalf of 10 of
its members, filed a complaint in federal court in the Southern District of New York for willful
copyright infringement against MP3.com, based on MP3.com’s new “My.MP3” service.112
According to the complaint, this service allowed users to gain access through the Internet, and
download digital copies of, commercial CDs, using one of two component services:
“Instant Listening Service” – Under this service, a user could place an order for a commercial
CD through one of several online CD retailers cooperating with MP3.com, and then immediately
have access to the song tracks on that CD stored on an MP3.com server, before arrival of the
shipment of the physical CD ordered by the user.113
“Beam-it” – Under this service, a user could insert a commercial CD or a copy thereof
(authorized or unauthorized) into his or her computer CD-ROM drive. If the MP3.com server
was able to recognize the CD, the user was then given access to the song tracks contained on the
CD stored on an MP3.com server.114
In order to offer the My.MP3 service, MP3.com purchased and copied the tracks from
several tens of thousands of commercial CDs onto its servers.115 When users accessed sound
recordings through My.MP3, it was these reproductions made by MP3.com that were accessed,
and not any copies made from the users’ own CD.116 The plaintiffs sought a ruling that the
copying of the commercial CDs onto the MP3.com servers constituted willful infringement of
the copyright rights of the plaintiffs.
The case raised the very interesting issue of whether, assuming that users who are the
owners of a lawful copy of a CD could lawfully upload a copy thereof to an MP3.com server for
their own private use under Section 1008117 of the Audio Home Recording Act of 1992118 or
under the fair use doctrine, it should be lawful for MP3.com to assist users in accomplishing that,
and, if so, whether it should be permissible to do so by advance copying of tracks in anticipation
of a user ordering or already owning a CD containing those tracks.
112 Complaint for Copyright Infringement, UMG Recordings, Inc. v. MP3.com, Inc., No. 00 Civ. 0472 (S.D.N.Y.
Jan. 21, 2000).
113 Id. ¶ 4 & App. A.
114 Id.
115 UMG Recordings Inc. v. MP3.com Inc., 92 F. Supp. 2d 349, 350 (S.D.N.Y. 2000).
116 Id.
117 Section 1008 provides: “No action may be brought under this title alleging infringement of copyright based on
the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording
medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a
consumer of such a device or medium for making digital musical recordings or analog musical recordings.” 17
U.S.C. § 1008.
118 Pub. L. No. 102-563, 106 Stat. 4244 (1992).
- 40 -
The court ruled that the copying by MP3.com of the commercial CDs made out a prima
facie case of direct copyright infringement,119 and rejected the defendant’s assertion that such
copying was a fair use. The court ruled that the first fair use factor (purpose and character of the
use) weighed against the defendant because the defendant’s purpose for the use was commercial
– although defendant was not charging users a fee for the service, “defendant seeks to attract a
sufficiently large subscription base to draw advertising and otherwise make a profit.”120 The
court rejected the defendant’s argument that the copying was transformative because it allowed
users to “space shift” their CDs into another format in which they could enjoy their sound
recordings without lugging around physical CDs, ruling that the argument was “simply another
way of saying that the unauthorized copies are being retransmitted in another medium – an
insufficient basis for any legitimate claim of transformation.”121
With respect to the second factor (nature of the copyrighted work), the court held that,
because the copyrighted works at issue were creative musical works, this factor weighed against
defendant.122 The third factor (amount and substantiality of the copyrighted work used) also
weighed against the defendant because the defendant had copied, and the My.MP3 service
replayed, the copyrighted works in their entirety.123
Finally, with respect to the fourth factor (effect of the use upon the potential market for or
value of the copyrighted work), the court noted that the defendant’s activities “on their face
invade plaintiffs’ statutory right to license their copyrighted sound recordings to others for
reproduction.”124 The defendant argued that its activities enhanced the plaintiffs’ sales, since
subscribers could not gain access to recordings through MP3.com unless had already purchased,
or agreed to purchase, their own CD copies of those recordings. The court rejected this argument
on the following rationale:
Any allegedly positive impact of defendant’s activities on plaintiffs’ prior market
in no way frees defendant to usurp a further market that directly derives from
reproduction of the plaintiffs’ copyrighted works. This would be so even if the
copyrightholder had not yet entered the new market in issue, for a
copyrightholder’s “exclusive” rights, derived from the Constitution and the
119 “Thus, although defendant seeks to portray its service as the ‘functional equivalent’ of storing its subscribers’
CDs, in actuality defendant is re-playing for the subscribers converted versions of the recordings it copied,
without authorization, from plaintiffs’ copyrighted CDs. On its face, this makes out a presumptive case of
infringement under the Copyright Act of 1976 ….” 92 F. Supp. 2d at 350.
120 Id. at 351.
121 Id. Contrast this holding with the Ninth Circuit’s statement in RIAA v. Diamond Multimedia Sys., 180 F.3d
1072, 1079 (9th Cir. 1999), in which the Ninth Circuit found space shifting of a recording from a CD onto the
“Rio” portable MP3 player device (through a process known as “ripping,” or re-encoding of music data encoded
in CD format into the MP3 file format) to be “paradigmatic noncommercial personal use entirely consistent
with the purposes of the [Audio Home Recording Act].”
122 UMG, 92 F. Supp. 2d at 351-52.
123 Id. at 352.
124Id.
- 41 -
Copyright Act, include the right, within broad limits, to curb the development of
such a derivative market by refusing to license a copyrighted work or by doing so
only on terms the copyright owner finds acceptable.125
The court therefore ruled that the defendant was not entitled to a fair use defense as a
matter of law, and entered partial summary judgment holding the defendant to have infringed the
plaintiffs’ copyrights.126 Subsequent to the court’s ruling of infringement, the defendant settled
with all but one of the plaintiff record companies (Universal Music Group) by taking a license to
reproduce the plaintiffs’ recordings on its servers and to stream them over the Internet to its
subscribers, for which MP3.com reportedly paid $20 million to each of the record companies and
agreed to pay a few pennies each time a user placed a CD in his or her locker, plus a smaller
amount each time a track was played.127
Universal Music Group pursued a claim of statutory damages against MP3.com. The
court concluded that MP3.com’s infringement was willful, and awarded statutory damages of
$25,000 per CD illegally copied by MP3.com.128 Even based on the defendant’s assertion that
there were no more than 4,700 CDs for which the plaintiffs qualified for statutory damages (an
issue that was to have been the subject of a separate trial), the statutory damages award would
have come to $118,000,000.129 On the eve of trial, the defendant settled with Universal Music
Group by agreeing to pay the plaintiff $53.4 million and to take a license to Universal’s entire
music catalog in exchange for unspecified royalty payments.130
MP3.com’s legal troubles did not end with the settlements with the RIAA plaintiffs. On
Aug. 8, 2001, a group of over 50 music publishers and songwriters filed suit against MP3.com on
claims of copyright infringement very similar to those asserted by the RIAA plaintiffs. The
plaintiffs sought to hold MP3.com liable for the copies of their works made in connection with
the My.MP3.com service, as well as for the subsequent “viral distribution” of copies of their
works allegedly done through services such as Napster, Gnutella, Aimster, and Music City by
MP3.com users after they download digital copies through MP3.com.131 Numerous other suits
125 Id. (citations omitted).
126 Id. at 353.
127 See Jon Healey, “MP3.com Settles with BMG, Warner,” San Jose Mercury News (June 10, 2000), at 1A; Chris
O’Brien, “MP3 Sets Final Pact: Universal Music Group Will Get $53.4 Million,” San Jose Mercury News (Nov.
15, 2000) at 1C, 14C.
128 UMG Recordings Inc. v. MP3.com, Inc., 56 U.S.P.Q.2d 1376, 1379, 1381 (S.D.N.Y. 2000). The court rejected
the plaintiffs’ argument that a statutory damages award should be made for each song copied, rather than each
CD. The court cited 17 U.S.C. § 504(c)(1), which provides that a statutory damages award may be recovered in
a specified range “with respect to any one work,” and further provides that “all parts of a compilation or
derivative work constitute one work.” UMG Recordings Inc. v. MP3.com Inc., 109 F. Supp. 2d 223, 224-25
(S.D.N.Y. 2000).
129 56 U.S.P.Q.2d at 1381.
130 O’Brien, supra note 127, at 1C.
131 “Music Publishers, Songwriters Sue MP3.com for ‘Viral Distribution’ of Copyrighted Works,” BNA’s
Electronic Commerce & Law Report (Aug. 29, 2001) at 933. In late August of 2001, MP3.com was acquired by
media company Vivendi Universal.
- 42 -
were brought against MP3.com as well. For example, in Sept. of 2001, Isaac, Taylor & Zachary
Hanson also sued MP3.com for copying of their copyrighted songs on My.MP3.com.132
Numerous opinions have been issued as a result of these lawsuits, holding MP3.com
liable for willful copyright infringement and ruling it collaterally estopped from denying that it
willfully infringed the plaintiffs’ various copyrighted works when it created the “server copies”
of thousands of CDs in late 1999 and early 2000.133
(i) The CoStar Case
In CoStar Group Inc. v. LoopNet, Inc.,134 the plaintiff CoStar maintained a copyrighted
commercial real estate database that included photographs. The defendant LoopNet offered a
service through which a user, usually a real estate broker, could post a listing of commercial real
estate available for lease. The user would access, fill out, and submit a form for the property
available. To include a photograph of the property, the user was required to fill out another
form. The photograph would initially be uploaded into a separate folder on LoopNet’s system,
where it would first be reviewed by a LoopNet employee to determine that it was in fact a
photograph of commercial property and that there was no obvious indication the photograph was
submitted in violation of LoopNet’s terms and conditions. If the photograph met LoopNet’s
criteria, the employee would accept it and post it along with the property listing. CoStar claimed
that over 300 of its copyrighted photographs had been posted on LoopNet’s site, and sued
LoopNet for both direct and contributory copyright liability.135
CoStar argued that LoopNet should be directly liable for copyright infringement because,
acting through its employees’ review and subsequent posting of the photographs, LoopNet was
directly copying and distributing the photographs, citing the Frena case discussed above in
Section II.A.4(d). The district court rejected this argument, noting that the Fourth Circuit in the
ALS Scan case had concluded that the legislative history of the DMCA indicated Congress’
intent to overrule the Frena case and to follow the Netcom case, under which an OSP’s liability
for postings by its users must be judged under the contributory infringement doctrine.136
The Fourth Circuit affirmed this ruling on appeal.137 Citing its own decision in the ALS
Scan case, the Fourth Circuit noted that it had already held that the copyright statute implies a
requirement of volition or causation, as evidenced by specific conduct by the purported infringer,
132 Steven Bonisteel, “Hanson Sues Music Locker Service Over Copyright” (Sept. 26, 2001), available as of Jan. 6,
2002 at www.newsbytes.com/news/01/170530.html.
133 See, e.g., Country Road Music, Inc. v. MP3.com, Inc., 279 F.Supp.2d 325 (S.D.N.Y. 2003); Zomba Enters., Inc.
MP3.com, Inc., No. 00 Civ. 6833 (S.D.N.Y. Jun. 8, 2001); Teevee Toons, Inc. v. MP3.com, Inc., 134 F. Supp.
2d 546 (S.D.N.Y. 2001); UMG Recordings, Inc. v. MP3.com, Inc., No. 00 Civ. 472, 200 WL 1262568
(S.D.N.Y. 2000).
134 164 F. Supp. 2d 688 (D. Md. 2001).
135 Id. at 691-92.
136 Id. at 695-96.
137 CoStar v. LoopNet, 373 F.3d 544 (4th Cir. 2004).
- 43 -
for direct liability.138 Mere ownership of an electronic facility by an OSP that responds
automatically to users’ input is not sufficient volition for direct liability. “There are thousands of
owners, contractors, servers, and users involved in the Internet whose role involves the storage
and transmission of data in the establishment and maintenance of an Internet facility. Yet their
conduct is not truly ‘copying’ as understood by the Act; rather, they are conduits from or to
would-be copiers and have no interest in the copy itself.”139
The court also inferred a requirement of volition from the statute’s concept of “copying,”
which requires the making of “fixed” copies. For the reasons discussed in Section II.A.2 above,
the court concluded that transient copies made by an OSP acting merely as a conduit to transmit
information at the instigation of others does not create sufficiently fixed copies to make it a
direct infringer of copyright.140 Accordingly, the court concluded, “[a]greeing with the analysis
in Netcom, we hold that the automatic copying, storage and transmission of copyrighted
materials, when instigated by others, does not render an ISP strictly liable for copyright
infringement under §§ 501 and 106 of the Copyright Act.”141 The court also affirmed the district
court’s ruling that the quick review of photographs performed by LoopNet’s employees before
allowing them to be posted on the site did not amount to “copying,” nor did it add volition to
LoopNet’s involvement in storing the copy.142
(j) The Ellison Case
The case of Ellison v. Robertson,143 discussed in detail in Section III.C.6(b)(1)(i) below,
refused to hold an OSP liable for direct infringement based on infringing materials posted on its
service by users without its knowledge on Usenet servers hosted by AOL (infringing copies of
fictional works).
(k) Perfect 10 v. Cybernet Ventures
In Perfect 10, Inc. v. Cybernet Ventures, Inc.,144 the court refused to hold the defendant
Cybernet, an “age verification service” that enrolled subscribers, after verifying their age as an
adult, to a service that would enable them to gain access for a monthly fee to a large number of
member sites displaying pornographic pictures, liable as a direct copyright infringer based on the
unauthorized presence of the plaintiffs’ copyrighted photographs on several of the member sites.
The court discussed the Netcom, MAPHIA, and Hardenburgh cases (the Hardenburgh case is
discussed in Section II.C below), then concluded as follows:
138 Id. at 549.
139 Id. at 551.
140 Id..
141 Id. at 555.
142 Id. at 556.
143 189 F. Supp. 2d 1051 (C.D. Cal. 2002), aff’d in part and rev’d in part, 357 F.3d 1072 (9th Cir. 2004) (district
court’s ruling of no direct infringement not challenged on appeal).
144 213 F. Supp. 2d 1146 (C.D. Cal. 2002).
- 44 -
The principle distilled from these cases is a requirement that defendants must
actively engage in one of the activities recognized in the Copyright Act. Based on
the evidence before the Court it appears that Cybernet does not use its hardware to
either store the infringing images or move them from one location to another for
display. This technical separation between its facilities and those of its
webmasters prevents Cybernet from engaging in reproduction or distribution, and
makes it doubtful that Cybernet publicly displays the works. Further, there is
currently no evidence that Cybernet has prepared works based upon Perfect 10’s
copyrighted material. The Court therefore concludes that there is little likelihood
that Perfect 10 will succeed on its direct infringement theory.145
(l) Field v. Google
In Field v. Google,146 discussed in greater detail in Section III.B.4(a) below, the court
ruled that Google should not be liable as a direct infringer for serving up through its search
engine, in response to user search queries, copies of the plaintiff’s copyrighted materials that had
been cached by Google’s automated crawler, the Googlebot. Citing the Netcom and CoStar
cases, the court noted that a plaintiff must “show volitional conduct on the part of the defendant
in order to support a finding of direct copyright infringement.”147 For some unknown reason, the
plaintiff did not allege that Google committed infringement when its Googlebot made the initial
copies of the plaintiff’s Web pages on which his copyrighted materials had been placed and
stored those copies in the Google cache, nor did the plaintiff assert claims for contributory or
vicarious liability. Instead, the plaintiff alleged that Google directly infringed his copyrights
when a Google user clicked on a link on a Google search results page to the Web pages
containing his copyrighted materials and downloaded a cached copy of those pages from
Google’s computers.148
The court rejected this argument:
According to Field, Google itself is creating and distributing copies of his works.
But when a user requests a Web page contained in the Google cache by clicking
on a “Cached” link, it is the user, not Google, who creates and downloads a copy
of the cached Web page. Google is passive in this process. Google’s computers
respond automatically to the user’s request. Without the user’s request, the copy
would not be created and sent to the user, and the alleged infringement at issue in
this case would not occur. The automated, non-volitional conduct by Google in
response to a user’s request does not constitute direct infringement under the
Copyright Act.149
145 Id. at 1168-69.
146 412 F. Supp. 2d 1106 (D. Nev. 2006).
147 Id. at 1115.
148 Id.
149 Id.
- 45 -
(m) Parker v. Google
In Parker v. Google,150 pro se plaintiff Gordon Parker was the owner of copyright in an ebook
titled “29 Reasons Not To Be A Nice Guy.” He posted Reason # 6 on USENET. Parker
asserted that Google’s automatic archiving of this USENET posting constituted a direct
infringement of his copyright. He also claimed that when Google produced a list of hyperlinks
in response to a user’s query and excerpted his web site in that list, Google again directly
infringed his copyrighted work.151
The district court rejected these claims. Citing the Costar and Netcom cases, the district
court held that “when an ISP automatically and temporarily stores data without human
intervention so that the system can operate and transmit data to its users, the necessary element
of volition is missing. The automatic activity of Google’s search engine is analogous. It is clear
that Google’s automatic archiving of USENET postings and excerpting of websites in its results
to users’ search queries do not include the necessary volitional element to constitute direct
copyright infringement.”152
On appeal, the Third Circuit affirmed in an unpublished decision.153 The court noted that,
“to state a direct copyright infringement claim, a plaintiff must allege volitional conduct on the
part of the defendant,” and Parker’s allegations failed to allege any volitional conduct on the part
of Google.154
(n) The Cablevision Case
In Twentieth Century Fox Film Corp. v. Cablevision Sys.,155 the district court ruled that
Cablevision was liable for direct copyright infringement based on the offering of a network
digital video recording system known as the “Remote-Storage DVR System” (RS-DVR), which
permitted customers to record cable programs on central servers at Cablevision’s facilities and
play the programs back for viewing at home. The technology underlying the RS-DVR worked as
follows. Cablevision took the linear programming signal feed received at its head end and
reconfigured it by splitting the feed into a second stream, which was then reformatted through a
process known as “clamping” to convert the bitrate of the stream into one that was more
efficient. In the process of clamping, portions of programming were placed into buffer memory.
The stream was then converted into a number of single program transport streams, one channel
per stream. The converted streams were then fed into a special set of “Arroyo” servers, which at
any given moment in time, stored in a buffer three frames of video from each of the linear
150 422 F. Supp. 2d 492 (E.D. Pa. 2006), aff’d, 2007 U.S. App. LEXIS 16370 (3d Cir. July 10, 2007).
151 Id. at 496.
152 Id. at 497.
153 Parker v. Google, 2007 U.S. App. LEXIS 16370 (3d Cir. July 10, 2007).
154 Id. at *6, 8.
155 478 F. Supp. 2d 607 (S.D.N.Y. 2007), rev’d, 536 F.3d 121 (2d Cir. 2008), cert. denied sub nom. CNN, Inc. v.
CSC Holdings, Inc., 557 U.S. 946 (2009).
- 46 -
channels carried by Cablevision, so that if a customer requested that a particular program be
recorded, the appropriate packets could be retrieved from the buffer memory and copied to the
customer’s designated hard drive storage space on the Arroyo server.156
The RS-DVR service allowed customers to request that a program be recorded in one of
two ways. The customer could navigate an on-screen program guide and select a future program
to record, or while watching a program, the customer could press a “record” button on a remote
control. In response, the Arroyo server would receive a list of recording requests, find the
packets for the particular programs requested for recording, then make a copy of the relevant
program for each customer that requested it be recorded. A separate copy would be stored in
each customer’s designated hard drive storage space on the Arroyo server. If no customer
requested that a particular program be recorded, no copy of that program was made on the hard
drives of the Arroyo server. When the customer selected a recorded program for playback, the
Arroyo server would locate the copy of the desired program stored on the customer’s designated
hard drive storage space, then cause the program to be streamed out. The stream containing the
program would be transmitted to every home in the node where the requesting customer was
located, but only the requesting set-top box would be provided the key for decrypting the stream
for viewing.157
The plaintiffs alleged direct copyright infringement based on Cablevision’s creation of
the copies on the hard drives of the Arroyo servers and of the buffer copies. Although
Cablevision did not deny that these copies were being made, it argued that it was entirely passive
in the process and the copies were being made by its customers. It also argued, based on the
Sony case, that it could not be liable for copyright infringement for merely providing customers
with the machinery to make the copies.158
The court rejected these arguments, ruling that the RS-DVR was not merely a device, but
rather a service, and that, by providing the service, it was Cablevision doing the copying. In
particular, the court found the relationship between Cablevision and RS-DVR customers to be
significantly different from the relationship between Sony and VCR users. Unlike a VCR, the
RS-DVR did not have a stand-alone quality. Cablevision retained ownership of the RS-DVR
set-top box, and the RS-DVR required a continuing relationship between Cablevision and its
customers. Cablevision not only supplied the set-top box for the customer’s home, but also
decided which programming channels to make available for recording, and housed, operated, and
maintained the rest of the equipment that made the RS-DVR’s recording process possible.
Cablevision also determined how much memory to allot to each customer and reserved storage
capacity for each customer on a hard drive at its facility. Customers were offered the option of
acquiring additional capacity for a fee.159
156 Id. at 613-14.
157 Id. at 614-16.
158 Id. at 617-18.
159 Id. at 618-19.
- 47 -
In sum, the court concluded that the RS-DVR was more akin to a video-on-demand
(VOD) service than to a VCR or other time-shifting device. The court noted that the RS-DVR
service was in fact based on a modified VOD platform. With both systems, Cablevision decided
what content to make available to customers for on-demand viewing. As in VOD, the number of
available pathways for programming delivery was limited; if there were none available, the
customer would get an error message or busy signal. Thus, in its architecture and delivery
method, the court concluded that the RS-DVR bore a striking resemblance to a VOD service – a
service that Cablevision provided pursuant to licenses negotiated with programming owners.160
Accordingly, the court ruled that a reasonable fact finder could conclude only that the copying at
issues was being done not by the customers, but by Cablevision itself.161
With respect to the buffer copies, Cablevision argued that the buffer copies were not
sufficiently fixed to be cognizable as “copies” under copyright law. The court rejected this
argument, noting that the buffer copies were sufficiently permanent to make the Arroyo hard
disk copies from, and were therefore capable of being reproduced, as required by the definition
of “fixation.” The court also cited the numerous court decisions, and the Copyright Office’s
August 2001 report on the DMCA, concluding that RAM copies are “copies” for purposes of the
copyright act. Accordingly, the court concluded that summary judgment of direct infringement
was warranted with respect to both the Arroyo server copies and the buffer copies.162
Finally, the court ruled, based on similar logic, that Cablevision was engaged in
infringing transmissions and public performances to its customers.163 The court noted that,
“where the relationship between the party sending a transmission and party receiving it is
commercial, as would be the relationship between Cablevision and potential RS-DVR customers,
courts have determined that the transmission is one made ‘to the public.’”164
On appeal, the Second Circuit reversed in The Cartoon Network LP v. CSC Holdings,
Inc.165 The Second Circuit’s rulings with respect to the issue of buffer copies are discussed in
Section II.A.2 above. With respect to the copies created on the hard drives of the Arroyo
servers, the court noted that Netcom and its progeny direct attention to the volitional conduct that
causes the copy to be made. In the case of an ordinary VCR, the court noted that it seemed clear
that the operator of the VCR – the person actually pressing the button to make the recording,
supplies the necessary element of volition, not the manufacturer of the device. The court
concluded that the RS-DVR customer was not sufficiently distinguishable from a VCR user to
impose liability as a direct infringer on a different party for copies that were made automatically
upon that customer’s command. The court distinguished cases holding liable a copy shop
making course packs for college professors, finding a significant difference between making a
160 Id. at 619.
161 Id. at 621.
162 Id. at 621-22.
163 Id. at 622-23.
164 Id. at 623.
165 536 F.3d 121 (2d Cir. 2008), cert. denied sub nom. CNN, Inc. v. CSC Holdings, Inc., 557 U.S. 946 (2009).
- 48 -
request to a human employee, who then voluntarily operates the copying system to make the
copy, and issuing a command directly to a system, which automatically obeys commands and
engages in no volitional conduct.166 “Here, by selling access to a system that automatically
produces copies on command, Cablevision more closely resembles a store proprietor who
charges customers to use a photocopier on his premises, and it seems incorrect to say, without
more, that such a proprietary ‘makes’ any copies when his machines are actually operated by his
customers.”167
Nor was Cablevision’s discretion in selecting the programming that it would make
available for recording sufficiently proximate to the copying to displace the customer as the
person who “made” the copies. Cablevision’s control was limited to the channels of
programming available to a customer and not to the programs themselves. Cablevision had no
control over what programs were made available on individual channels or when those programs
would air, if at all. In that respect, Cablevision possessed far less control over recordable content
that it did in the VOD context, where it actively selected and made available beforehand the
individual programs available for viewing. Thus, Cablevision could not have direct liability for
the acts of its customers, and any liability on its part would have to be based on contributory
liability. The district court’s noted “continuing relationship” with its RS-DVR customers, its
control over recordable content, and the instrumentality of copying would be relevant to
contributory liability, but not direct liability.168
With respect to the issue of direct liability, the Second Circuit concluded: “We need not
decide today whether one’s contribution to the creation of an infringing copy may be so great
that it warrants holding that party directly liable for the infringement, even though another party
has actually made the copy. We conclude only that on the facts of this case, copies produced by
the RS-DVR system are ‘made’ by the RS-DVR customer, and Cablevision’s contribution to this
reproduction by providing the system does not warrant the imposition of direct liability.”169
The Second Circuit’s rulings with respect whether Cablevision was engaged in
unauthorized public performances through the playback of the RS-DVR copies are discussed in
Section II.B.5 below.
(o) Arista Records v. Usenet.com
In Arista Records LLC. V. Usenet.com, Inc.,170 the defendants operated a Napster-like
Usenet service that advertised to and targeted users who wanted to download music files. Unlike
peer-to-peer filing sharing networks, the files were stored on “spool” news servers operated by
166 Id. at 131.
167 Id. at 132.
168 Id. at 132-33.
169 Id. at 133.
170 633 F. Supp. 2d 124 (S.D.N.Y. 2009).
- 49 -
the defendants. The defendants created designated servers for newsgroups containing music
binary files to increase their retention time over other types of Usenet files.171
The plaintiffs contended that the defendants directly infringed their copyrights by
engaging in unauthorized distribution of copies of their musical works to subscribers who
requested them for download. The court, relying on the Netcom and Cablevision cases, ruled
that a finding of direct infringement of the distribution right required a showing that the
defendants engaged in some volitional conduct sufficient to show that they actively participated
in distribution of copies of the plaintiffs’ copyrighted sound recordings. The court found
sufficient volitional conduct from the following facts. The defendants were well aware that
digital music files were among the most popular files on their service, and took active measures
to create spool servers dedicated to MP3 files and to increase the retention times of newsgroups
containing digital music files. They took additional active steps, including both automated
filtering and human review, to remove access to certain categories of content (such as
pornography), while at the same time actively targeting young people familiar with other filesharing
programs to try their services as a supposedly safe alternative to peer-to-peer music file
sharing programs that were getting shut down for infringement. From these facts, the court ruled
that the defendants’ service was not merely a passive conduit that facilitated the exchange of
content between users who uploaded infringing content and users who downloaded such content,
but rather the defendants had so actively engaged in the distribution process so as to satisfy the
volitional conduct requirement. Accordingly, the court granted the plaintiffs’ motion for
summary judgment on their claim for direct infringement of the distribution right.172
(p) Quantum Systems v. Sprint Nextel
In Quantum Sys. Integrators, Inc. v. Sprint Nextel Corp.,173 Quantum sued Sprint for
copyright infringement based on the automated loading of Quantum’s software into the RAM of
13 Sprint computers from unauthorized copies on the hard disk when those computers were
turned on or rebooted. The jury found liability and Sprint argued on appeal that the district court
erred in denying its JMOL motion and sustaining the jury’s finding of infringement because
there was no evidence that Sprint engaged in volitional copying, since the RAM copies were
automatically generated when the computers containing unauthorized, but unutilized, copies of
the software on the hard disk were turned on. The court rejected this argument, distinguishing its
Costar decision, which involved an ISP that merely provided electronic infrastructure for
copying, storage, and transmission of material at the behest of its users. By contrast, in the
instant case the copying was instigated by the volitional acts of Sprint’s own employees who
171 Id. at 130-31.
172 Id. at 132, 146-49. As a sanction for litigation misconduct, including spoliation of evidence and sending key
employees out of the country on paid vacations so they could not be deposed, the court precluded the
defendants from asserting an affirmative defense of protection under the DMCA’s safe harbor provisions. Id. at
137-42.
173 2009 U.S. App. LEXIS 14766 (4th Cir. July 7, 2009).
- 50 -
loaded the original copies of the software onto Sprint computers and then rebooted the
computers, thereby causing the RAM copies.174
(q) Arista Records v. Myxer
In Arista Records LLC v. Myxer Inc.,175 the defendant Myxer operated a website that
enabled registered users to upload recorded music to the site and then, through the use of
Myxer’s software, to transcode the music into a format to create and download ringtones. Users
could make ringtones they had created available for download to other users. In addition to
uploading and downloading ringtones, Myxer users could play portions of any of the sound
recordings on Myxer’s site. Users could also select a sound recording on Myxer’s site and share
it on certain third party websites such as Facebook. Finally, users could select a sound recording
on Myxer’s site, often a full-length recording, and “Customize It” (using editing tools provided
by Myxer) by selecting a desired start and stop point for a ringtone. UMG Records, a competitor
in the ringtone market, contended that, by storing copies of UMG’s sound recordings on its
servers, allowing users to download copies of its sound recordings to users’ cell phones, and
allowing users to preview its sound recordings on either the Myxer site or on users’ cell phones,
Myxer was a direct infringer of UMG’s reproduction, distribution and digital public performance
rights, as well as a secondary infringer under theories of contributory and vicarious liability.176
UMG moved for summary judgment on its direct infringement claim. Myxer opposed
such motion based on the volitional requirement for direct liability under Netcom and other
cases, arguing that the user, not Myxer, engaged in the acts of direct copying, distribution, and
public performance (if any). The court found that the undisputed facts in the case established a
prima facie case that Myxer had directly infringed at least one of UMG’s exclusive rights.177
The court noted that it was “well-established that copyright infringement is a strict liability tort:
there is no need to prove the defendant’s mental state to establish copyright infringement.” 178
Given that fact, and the fact that the Ninth Circuit had never expressly adopted a volitional
conduct requirement as an element of direct liability, the court concluded that it was not inclined
to adopt such a requirement absent clear instruction from the Ninth Circuit.179 Nevertheless, the
court denied UMG’s motion for summary judgment because of genuine issues of material fact
pertaining to Myxer’s assertion of the safe harbor of Section 512(c), as discussed in Section
III.C.6(b)(1)(iii).r below.180
The court also denied UMG’s motion for summary judgment with respect to its claims of
contributory and vicarious liability. With respect to contributory liability, the court noted that
174 Id. at *1-3 & 15-18.
175 2011 U.S. Dist. LEXIS 109668 (C.D. Cal. Apr. 1, 2011).
176 Id. at *2, 15-18.
177 Id. at *37-39.
178 Id. at *45.
179 Id. at *46-49.
180 Id. at *3.
- 51 -
there were substantial noninfringing uses of the Myxer site, because many of the ringtones and
recordings available were directly authorized by their copyright holder or users had certified that
they controlled the rights. Nevertheless, the court found summary judgment to be inappropriate
because contributory infringement requires a showing of direct copyright infringement, which
had not yet been definitively established. With respect to vicarious liability, the court noted that,
to the extent Myxer used the Audible Magic filtering technology to keep infringing material from
being uploaded onto its site, as well as other means to stop or limit the alleged copyright
infringement, there were genuine issues of material fact as to whether Myxer sufficiently
exercised a right to stop or limit the alleged copyright infringement. And, as in the case of
contributory infringement, it remained unclear whether there was an underlying claim of direct
infringement.181
(r) Disney Enterprises v. Hotfile
In Disney Enterprises, Inc. v. Hotfile Corp.,182 the defendant operated the web site
www.hotfile.com, at which users could upload electronic files to Hotfile’s servers. Upon upload,
the user received a unique link to the file. The Hotfile servers would then automatically make
five additional copies of the uploaded files and assign each copy a unique link. Each link acted
as a locator, allowing anyone with the link to click it or plug it into a web browser in order to
download the file. Third party sites, not Hotfile, catalogued, allowed searching of, and/or spread
the links that allowed persons to download the files.183
Hotfile made a profit in two ways. First, although anyone could use a link to download a
file, Hotfile charged members a fee that enabled them to download files much faster than nonmembers.
Second, Hotfile sold “hotlinks” that allowed third party sites to post a link that, when
clicked, automatically began to download the file, without ever directing the person clicking the
link to hotfile.com. To increase its number of members, Hotfile paid users to upload the most
popular content to its servers and asked that the users promote their links. Hotfile’s affiliate
program, for example, paid those uploading files cash when the file was downloaded 1000 times.
The complaint alleged that, as a result of their popularity, copyright-infringing files constituted
the bulk of files downloaded through Hotfile, Hotfile’s business encouraged persons to upload
material with copyright protection, and Hotfile understood the consequences of its business
model.184
The defendants filed a motion to dismiss the plaintiff’s claims for direct and secondary
liability for copyright infringement. The court granted the motion as to direct infringement,
invoking the requirement of Netcom that there must be some volitional act on the part of the
defendant in making the copies in order to establish direct liability. Here the hotfile.com web
site merely allowed users to upload and download copyrighted material without volitional
181 Id. at *137-141. The court also concluded that as a matter of law, Myxer’s use of UMG’s works did not qualify
as fair use. See id. at *109-135.
182 798 F. Supp. 2d 1303 (S.D. Fla. 2011).
183 Id. at 1306.
184 Id. at 1306-07.
- 52 -
conduct on the part of the defendants.185 The court found unpersuasive two cases relied on by
the plaintiffs, the Mp3Tunes186 and Usenet.com187 cases, to support their argument that the
defendants, by creating a plan that induced infringement, were liable for direct infringement.
Although the court noted that the two cases supported the plaintiffs’ argument, the court stated
that it believed the cases were not correctly decided. The court also rejected the plaintiffs’
attempt to distinguish Netcom on the ground that it applied only where a defendant violated a
copyright holder’s right to reproduce – but not to distribute. The court noted that the Netcom
court stated it considered the copyright holder’s right to distribute in its analysis. The court also
rejected the plaintiffs’ argument that they had alleged a volitional act in the form of Hotfile’s
making of additional copies once the copyrighted material was uploaded to its server, because
courts had repeatedly held that the automatic conduct of software, unaided by human
intervention, is not volitional.188
The court found, however, that the plaintiffs had adequately pled claims for inducement,
contributory, and vicarious liability. Inducement and contributory infringement were adequately
pled by allegations that hotfile.com was a web site that Hotfile used to promote copyright
infringement and that Hotfile took affirmative steps to foster the infringement by creating a
structured business model that encouraged users to commit copyright infringement. Vicarious
liability was adequately pled by allegations that Hotfile had complete control over the servers
that users employed to infringe, had the technology necessary to stop the infringement, refused to
stop the massive infringement, and actually encouraged the infringement because the
infringement increased its profits.189
The court’s subsequent rulings upon various motions for summary judgment with respect
to the DMCA safe harbors and secondary liability are discussed in Sections III.C.3(s), III.C.4(f)
and III.C.6(b)(1)(iii).x below.
(s) Perfect 10 v. Megaupload
In Perfect 10, Inc. v. Megaupload Limited,190 the defendant operated a file storage service
through the “Megaupload” web site (among others), which allowed users to upload files. After
upload, the web site created a unique URL to the file, and anyone with the URL could then
download the file from Megaupload’s servers. Both Megaupload and its users disseminated
URLs for various files throughout the Internet. In order to view, copy, or download files from
185 Id. at 1307-08.
186 Capitol Records, Inc. v. Mp3Tunes, LLC, 2009 U.S. Dist. LEXIS 96521 (S.D.N.Y. Oct. 16, 2009), which held,
without much analysis, that a company’s knowledge of massive infringement plausibly alleged volitional
conduct.
187 Arista Records LLC v. Usenet.com, Inc. 633 F. Supp. 2d 124 (S.D.N.Y. 2009), which held that a company,
having a policy encouraging infringement plus the ability to stop that infringement, was liable for direct
copyright infringement.
188 Hotfile, 798 F. Supp. 2d at 1307-09.
189 Id. at 1301.
190 2011 U.S. Dist. LEXIS 81931 (S.D. Cal. July 27, 2011).
- 53 -
the web sites without a waiting period, users were required to pay a membership fee. The
plaintiff sued the defendants for direct and secondary copyright infringement because thousands
of its copyrighted photographs were uploaded to Megaupload and available for downloading.
Those photos contained copyright notices and were labeled “Perfect 10” or “Perfect-10.” The
complaint alleged that Megaupload depended on, and provided substantial payouts to, affiliate
web sites who catalogued the URLs providing access to a mass of pirated content on
Megaupload’s servers, and that Megaupload encouraged its users to upload materials through a
rewards program. The defendant moved to dismiss the direct and secondary liability claims.191
With respect to the direct infringement claim, the court noted that under Netcom, an
important element of direct infringement is volitional conduct, and the element of volitional
conduct applies to all exclusive rights under the copyright act.192 Drawing all reasonable
inferences in the plaintiff’s favor, the court found that the plaintiff had adequately pled a claim
for direct infringement:
Megaupload serves as more than a passive conduit, and more than a mere “file
storage” company: it has created distinct websites, presumably in an effort to
streamline users’ access to different types of media (e.g., megaporn.com,
megavideo.com); it encourages and, in some cases pays, its users to upload vast
amounts of popular media through its Rewards Programs; it disseminates URLs
for various files throughout the internet; it provides payouts to affiliate websites
who maintain a catalogue of all available files; and, last, at a minimum, it is
plausibly aware of the ongoing, rampant infringement taking place on its
websites. Taken together, Perfect 10 has adequately alleged Megaupload has
engaged in volitional conduct sufficient to hold it liable for direct infringement.193
The court also concluded that claims of contributory infringement were adequately pled.
Knowledge of infringement had been adequately pled because, in addition to takedown notices
(which the court noted doubt as to whether takedown notices automatically imply knowledge),
many of the allegations giving rise to direct infringement also gave rise to knowledge. The
plaintiff had also adequately pled a material contribution to infringement in that Megaupload
encouraged, and in some cases, paid its users to upload vast amounts of popular media through
its rewards programs, disseminated URLs that provided access to such media, and provided
payouts to affiliates who catalogued the URLs for all available media.194
The court concluded, however, that the plaintiff had not adequately pled claims of
vicarious liability, because it did not allege facts suggesting that Megaupload had the right and
191 Id. at *3-5.
192 Id. at *10.
193 Id. at *11-12 (citations to the complaint omitted).
194 Id. at *16-17.
- 54 -
ability to supervise infringing conduct of its third party users. Accordingly, the court dismissed
the claim for vicarious liability without prejudice.195
(t) Wolk v. Kodak Imaging Network
This case, which refused to find direct liability on the part of Kodak Imaging Network for
lack of volitional conduct, is discussed in Section III.C.6(b)(1)(iii).q below.
(u) Fox Broadcasting v. Dish Network
Fox sought a preliminary injunction against Dish Network, which had a contract with Fox
granting it the right to retransmit Fox broadcast material to its subscribers, for offering a high
definition digital video recorder called the “Hopper” and two associated services called
“PrimeTime Anywhere” (PTAT) and “AutoHop.” Because the Hopper was designed to service
multiple televisions, it had three tuners and a two-terabyte hard drive, which allowed Hopper
users to watch or record on three different television stations at once. The Hopper had the
additional unique capability of streaming all four of the major television networks on a single
satellite transponder, which allowed a user to watch or record all four network broadcasts while
leaving the other two tuners available for recording non-network programs or watching them on
other television sets equipped with additional set top boxes. The PTAT feature allowed
subscribers to set a single timer on the Hopper to record all primetime programming on any of
the four major broadcast networks each night of the week. Dish determined the start and end
time of the primetime block each night. In order to use PTAT, the user had to specifically enable
it from the main menu. Once enabled, a screen appeared allowing the user to choose to disable
recordings of certain networks on certain days of the week. If the user did not select otherwise,
the default settings caused the Hopper to record the entire primetime window on all four of the
major networks every day of the week. A user could begin watching the recorded programs
immediately after PTAT started recording, and could cancel a particular PTAT recording on a
given day up until 20 minutes before primetime programming began. All PTAT recordings were
stored locally on the Hopper in users’ homes. Unless the user selected otherwise, PTAT
recordings were automatically deleted after eight days. The Hopper also worked with the “Sling
Adapter,” which allowed subscribers to view Hopper content on their computers and mobile
devices via the Internet.196
AutoHop was a feature that allowed users to skip commercials in PTAT recordings with
the click of their remote control. If AutoHop was available for a particular PTAT program, the
user was given the option to enable it for that show. If the user enabled AutoHop, the Hopper
would automatically skip commercial breaks during that program. Markers inserted into the
PTAT recordings to mark the beginning and end of the commercials were checked manually by
technicians who viewed a separate quality assurance (“QA”) copy of the recording made by Dish
and stored on its servers. The technician would view the QA recording, fast-forwarding through
195 Id. at *19.
196 Fox Broadcasting Co. v. Dish Network, L.C.C., 905 F. Supp. 2d 1088, 1093-95 (C.D. Cal. 2012), aff’d, 723
F.3d 1067 (9th Cir. 2013).
- 55 -
the program itself to the commercial breaks, to ensure that the markings were accurate and no
portion of the program was cut off. If the QA copies revealed an error in the marking process,
technicians could correct the error on a later broadcast to ensure that AutoHop functioned
properly for users who enabled it. If there was not enough time to correct a marking error before
the last broadcast ended, then AutoHop would not be available for that particular show.197
Fox sought a preliminary injunction against the PTAT and AutoHop functions on
grounds of copyright infringement. The court turned first to whether Fox could have secondary
liability for any infringing acts of its subscribers. Applying the Supreme Court’s Sony case, the
court noted that nothing suggested Hopper users were using the PTAT copies for anything other
than time-shifting in their homes or on mobile devices, an activity determined to be a fair use in
Sony. Because there was therefore no direct infringement on the part of PTAT users, Dish could
not have secondary copyright liability.198
The court then turned to whether Dish could have liability for direct copyright
infringement for the making of the PTAT copies or the QA copies of Fox’s programming.
Citing the Netcom and Cablevision cases, the court concluded that it was Dish’s subscribers, and
not Dish itself, who were making the copies. The court considered the various ways in which
Fox attempted to distinguish the facts at hand from the Cablevision case:
– Dish decided which networks were available on PTAT and defaulted the PTAT
settings to record all four networks. Those decisions, while undoubtedly discretionary authority
that Dish maintained, were similar to Cablevision’s unfettered discretion in selecting the
programming available for recording. But Dish had no control over what programs Fox and the
other networks chose to make available during primetime, and Dish recorded the programs only
if the user made the initial decision to enable PTAT. The court concluded that the default
settings did not support Fox’s contention that Dish, rather than its users, made the copies.
– Dish decided the length of time each copy was available for viewing before automatic
deletion after a certain number of days and a user could neither delete nor preserve the original
PTAT copy before that time. The court was not convinced, however, that this control, being
exercised after the creation of the copies, was relevant to whether Dish caused the copies to be
made in the first place, which were created only upon the users choosing to enable PTAT.
– Dish decided when primetime recordings started and ended each night and the user
could not stop a copy from being made during the copying process, but had to wait until the
recording ended before disabling the link to it on the hard drive. The court acknowledged that
these limitations on user choice evinced Dish’s greater participation in the copying process, but
nevertheless found that such involvement was not materially different from an Internet service
provider that copied a file in automatic response to a user’s request, as in the Loopnet case.
Although Dish defined some of the parameters of copyright for time-shifting purposes, it was
ultimately the user who caused the copy to be made by enabling PTAT.
197 Id. at 1096.
198 Id. at 1097-98.
- 56 -
Accordingly, the court ruled that it was the user, not Dish, who was the most significant
and important cause of the copy, and Fox had therefore not established a likelihood of success on
the merits of its claim that by Dish directly infringed on its exclusive right to reproduction
through PTAT.199
The court next ruled that Dish’s making of the QA copies did not constitute a fair use
under the application of the four statutory fair use factors. Under the first factor, while the QA
copies themselves were not sold or otherwise monetized, they were made for the commercial
purpose of providing a high quality commercial skipping product that more users would want to
activate. The copies were not transformative because they did not alter their originals with new
expression, meaning or message. The first factor therefore weighed against fair use. The
creative nature of the copyrighted works copied entitled them to heightened protection and cut
against fair use under the second factor. The third factor also weighed against Dish because the
entire works were copied, although the court noted that the third factor was of considerably less
weight than the other factors due to the limited nature of the ultimate use.200
Turning to the fourth factor, the court noted that the QA copies were used to perfect the
functioning of AutoHop, a service that, standing alone, did not infringe. However, the record
showed that a market existed for the right to copy and use Fox programs, given that Fox licensed
copies of its programs to companies including Hulu, Netflix, iTunes, and Amazon to offer
viewers the Fox programs in various formats. In fact, the record suggested that Dish chose to
offer AutoHop to its subscribers in order to compete with other providers who paid for the rights
to use copies of the Fox programs through licensing agreements. By making an unauthorized
copy for which it had not paid and using it for AutoHop, Dish harmed Fox’s opportunity to
negotiate a value for those copies and also inhibited Fox’s ability to enter into similar licensing
agreements with others in the future by making the copies less valuable. Therefore, the fourth
factor also cut against Dish, and the court ruled that the QA copies did not constitute a fair use.
The fact that consumers ultimately used AutoHop in conjunction with PTAT for private home
use, a fair use under Sony, did not render the intermediate copies themselves a fair use as well.201
The court then considered whether Dish was liable for violation of Fox’s distribution
right and found that it was not. Citing the Perfect 10 v. Amazon case,202 the court noted that
infringement of the distribution right requires actual dissemination of a copy by sale or other
transfer of ownership, or by rental, lease, or lending. Here, a PTAT-enabled Hopper recorded
primetime programming locally and, at most that local copy was disseminated within a single
household. PTAT and AutoHop therefore did not involve any actual distribution of unauthorized
copies, so the court concluded that Fox had not established a likelihood of success on the merits
of its distribution claim.203
199 Id. at *1099-1102.
200 Id. at 1104.
201 Id. at 1105-06.
202 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1162 (9th Cir. 2007).
203 Fox Broadcasting, 905 F. Supp. 2d at 1106.
- 57 -
Lastly, the court turned to a consideration of whether a preliminary injunction should
issue based on the court’s finding that the QA copies were infringing.204 The court concluded
that no preliminary injunction should issue because Fox had not established a likelihood of
irreparable harm if Dish were not enjoined from making and using the QA copies. The record
suggested that the extent of harmed caused by the QA copies was calculable in money damages.
The fact that Fox had licensing agreements with other companies showed that copies of the Fox
programs had a market value that other companies already paid in exchange for the right to use
the copies. Although Fox had submitted evidence that some irreparable harms, such as loss of
control over its copyrighted works and loss of advertising revenue, might stem from the adskipping
use to which the QA copies were put, the record did not show that those harms flowed
from the QA copies themselves. Rather, if those harms were to materialize, they would be a
result of the ad-skipping itself, which did not constitute copyright infringement. The court
therefore concluded that any injury was compensable with money damages and did not support a
finding of irreparable harm.205
On appeal, the Ninth Circuit affirmed.206 It found that the district court did not abuse its
discretion in determining that Fox was unlikely to succeed on its claim of direct copyright
infringement regarding PTAT.207 “[O]perating a system used to make copies at the user’s
command does not mean that the system operator, rather than the user, caused copies to be made.
Here, Dish’s program creates the copy only in response to the user’s command. Therefore, the
district court did not err in concluding that the user, not Dish, makes the copy.”208 Citing
Cablevision, the court noted the facts that Dish decided how long copies are available for
viewing, modified the start and end times of the prime-time block, and prevented a user from
stopping a recording might be relevant to a secondary or perhaps even a direct infringement
claim, but they did not establish that Dish made the copies.209
The Ninth Circuit also determined that the district court did not abuse its discretion in
concluding that Fox was unlikely to succeed on its claim of secondary copyright infringement for
the PTAT and AutoHop programs because the activities of Dish’s users in making copies of
Fox’s shows constituted fair use. The Ninth Circuit noted, as the district court held, that
commercial skipping did not implicate Fox’s copyright interest because Fox owned the
copyrights to the television programs, not to the ads aired in the commercial breaks.210 “If
recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads
not copyrighted by Fox cannot transform the recording into a copyright violation. … Thus, any
204 The court observed that “neither the marking announcements nor the ad-skipping effect of AutoHop implicates
any copyright interest ….” Id. at 1110.
205 Id. at 1109-11.
206 Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (9th Cir. 2013).
207 Id. at 1073.
208 Id. at 1074.
209 Id.
210 Id. at 1074-75.
- 58 -
analysis of the market harm should exclude consideration of AutoHop because ad-skipping does
not implicate Fox’s copyright interests.”211
The Ninth Circuit found that Dish had demonstrated a likelihood of success on its
customers’ fair use defense. With respect to the first factor, the court noted that Dish customers’
home viewing was noncommercial under Sony. Sony also governed the analysis of the second
and third factors, by virtue of its holding that because time-shifting merely enables a viewer to
see a work the viewer had been invited to witness in its entirety free of charge, the fact that the
entire work is reproduced does not have its ordinary effect of militating against a finding of fair
use. With respect to the fourth factor, the court noted that because Fox licenses its programs to
distributors such as Hulu and Apple, the market harm analysis was somewhat different than in
Sony, where no such secondary market existed for the copyright holders’ programs. However,
the court noted that the record before the district court established that the alleged market harm
raised by Fox resulted from the automatic commercial skipping, not the recording of programs
through PTAT. Specifically, it was the ease of skipping commercials, rather than the on-demand
availability of Fox programs, that caused any market harm.212
Finally, turning to the issue of Dish’s direct infringement by making the QA copies, the
Ninth Circuit ruled that the district court did not err in concluding that the QA copies were not a
cause of Fox’s alleged harm. That Dish used the copies in the process of implementing AutoHop
did not suggest that those copies were integral to AutoHop’s functioning. Rather, the record
demonstrated that the AutoHop files containing the marking of commercials, which were the
files distributed to users, were created using an entirely separate manual process and the QA
copies were used only to test whether the marking process was working correctly. The Ninth
Circuit also determined that the district court did not err in holding that monetary damages could
compensate Fox for any losses from the QA copies. Accordingly, the Ninth Circuit concluded
that the district court did not abuse its discretion in declining to grant Fox a preliminary
injunction.213
In Mar. 2014 Dish reached a settlement with the plaintiff Walt Disney Co. under which it
agreed to disable the AutoHop function for ABC programming during the first three days after
shows aired. In return Dish received the rights to stream content from ABC, ESPN and other
Disney properties through a new, Internet-based TV service.214
(v) Perfect 10 v. Giganews
In Perfect 10, Inc. v. Giganews, Inc.215 the defendants were providers of access to
USENET for a monthly fee starting at $4.99 per month. The content posted by the defendants’
211 Id. at 1075.
212 Id. at 1075-76.
213 Id. at 1079.
214 Bill Donahue, “Dish, ABC Settle Ad-Skipping Fight with Broad TV Deal,” Law360 (Mar. 7, 2014), available as
of Mar. 7, 2014 at www.law360.com/articles/515052/print?section=IP.
215 2013 U.S. Dist. LEXIS 71349 (C.D. Cal. Mar. 8, 2013).
- 59 -
subscribers and other USENET users, including infringing content, was stored on the defendants’
servers. Before filing its complaint, the plaintiff sent a letter to one of the defendants, Giganews,
notifying that it was infringing the plaintiff’s copyrights, and included a DVD containing
hundreds of Perfect 10 images, characterizing them as a sampling of its copyrighted materials
that Giganews’ site had offered for sale without authorization. Giganews responded by stating
that each article posted on USENET has a unique message identification numbers, and if the
plaintiff provided the identification numbers of the articles containing the infringing content,
Giganews would be able to find the specific infringing material and remove it. The plaintiff did
not do so. The plaintiff then filed a complaint for direct, contributory and vicarious copyright
infringement and the defendants moved to dismiss all claims.216
With respect to the claims of copyright infringement, the court noted that the plaintiff’s
complaint was unclear as to the facts supporting those claims, but it appeared to be basing them
on the following allegations: “(1) that Defendants are USENET providers who charge their
subscribers a fee; (2) that Defendants program their computers to copy USENET content from
other USENET servers and make this content available to their subscribers; (3) that USENET is
now primarily used by its subscribers or visitors to exchange pirated content; (4) that Defendants
are not only aware of the rampant piracy committed by USENET users but rely on the piracy as
part of their business model; and (5) that Plaintiff has found at least 165,000 unauthorized
Perfect 10 images on Defendants’ USENET service.”217
The court then considered the volitional conduct requirement for direct infringement,
noting that although the Ninth Circuit had not spoken on the issue, the Netcom principle that
volitional conduct is required for direct liability had been widely accepted. The court noted,
however, that the concept of “volitional” can be confusing, sometimes meaning “intentional,”
and yet no showing of intent is required for direct infringement liability.218 “In this Court’s
view, the key to understanding the so-called ‘volitional conduct’ requirement is to equate it with
the requirement of causation, not intent. ‘Just who caused the copyright material to be
infringed?’ The Second Circuit’s opinion in Cartoon Network is particularly helpful in this
regard. In the words of that court, ‘the question is who made this copy.”219 The court cited the
Cybernet Ventures and MAPHIA cases approvingly for their descriptions of the volitional
conduct requirement as requiring that the defendant must “actively engage” or “directly cause”
the infringing activity in order to be held liable for direct infringement.220
Applying these standards to the facts of the case, the court found that the plaintiff had not
alleged that the defendants were the direct cause of, or actively engaged in, direct infringement.
The plaintiff had alleged that the defendants copied all of the material on their servers from
content uploaded onto USENET, stored these materials, most of which were infringing, on their
216 Id. at *1-7.
217 Id. at *12-13.
218 Id. at *16-17.
219 Id. at *17 (citations omitted).
220 Id. at *18.
- 60 -
servers, programmed their servers to distribute and download the infringing content, and
controlled which materials were distributed to and copied from other third party servers. The
court ruled that these facts did not indicate that it was the defendants themselves that committed
the acts of copying, displaying or distributing the plaintiff’s copyrighted content and, as in
Netcom, the defendants had merely engaged in the act of designing or implementing a system
that automatically and uniformly created temporary copies of all data sent through it. Such
conduct did not constitute a volitional act.221
Nor did the plaintiff’s allegations regarding the defendants’ knowledge of the pirated
content on its servers salvage the plaintiff’s direct infringement claim. As the Netcom court
pointed out, knowledge is not a required element of direct infringement, and the court ruled that
a participant in the chain of events that ultimately allows viewers to obtain infringed material
does not become the direct cause of the copying merely because he learned of it. The court
noted that the Arista Records v. Usenet, MegaUpload, MP3tunes, and Playboy Enterprises cases
had taken into account a defendant’s knowledge in determining whether that defendant engaged
in volitional conduct, but disagreed with those decisions.222 “By focusing on the defendant’s
awareness or state of mind – rather than on who actually caused the infringement – these cases
effectively hold defendants liable for copyright infringement committed by third parties without
requiring a full assessment of the additional elements of secondary copyright infringement
claims.”223
Moreover, the court held the plaintiff’s allegation that the defendants controlled the
content on their servers, without a good faith allegation specifying how the defendants exercised
that control to directly create copies, could not alone create an inference that the defendants
engaged in a volitional act directly causing infringement. Accordingly, the court dismissed the
plaintiff’s claims for direct copyright infringement.224
(w) Capitol Records v. ReDigi
In Capital Records, LLC v. ReDigi, Inc.,225 ReDigi operated a web site that enabled users
to “resell” their legally acquired iTunes music files and purchase “used” iTunes files from others
at a fraction of the price on iTunes. To sell music on ReDigi’s web site, a user was required to
download ReDigi’s “Media Manager” to his or her computer. Once installed, Media Manager
analyzed the user’s computer to build a list of digital music files eligible for sale. A file was
eligible only if it was purchased on iTunes or from another ReDigi user; music downloaded from
a CD or other file-sharing webs site was ineligible for sale. After the validation process, Media
Manager continually ran on the user’s computer and attached devices to ensure that the user had
not retained music that had been sold or uploaded for sale. However, Media Manager could not
221 Id. at *21-22.
222 Id. at *22-25.
223 Id. at *25.
224 Id. at *22-23, 26.
225 934 F. Supp. 2d 640 (S.D.N.Y. 2013).
- 61 -
detect copies stored in other locations. If a copy was detected, Media Manager prompted the
user to delete the file. The file was not deleted automatically or involuntarily, although ReDigi’s
policy was to suspend the accounts of users who refused to comply.226
Once uploaded, a digital music file underwent a second analysis to verify eligibility. If
ReDigi determined that the file had not been tampered with or offered for sale by another user,
the file was stored in ReDigi’s “Cloud Locker,” and the user was given the option of simply
storing and streaming the file for personal use or offering it for sale in ReDigi’s marketplace. If
a user chose to sell a digital music file, the user’s access to the file was terminated and
transferred to the new owner at the time of purchase. When users purchased a file (at 59 cents to
79 cents), the seller received 20%, 20% went to an escrow fund for the artist, and 60% was
retained by ReDigi. Capitol Records sued ReDigi for direct, contributory and vicarious
copyright infringement.227
The court found ReDigi liable under all three theories. With respect to direct
infringement, the court noted that courts had not previously addressed whether the unauthorized
transfer of a digital music file over the Internet – where only one file exists before and after the
transfer – constitutes reproduction within the meaning of the Copyright Act. The court held that
it does. The court characterized the reproduction right as the exclusive right to embody, and to
prevent others from embodying, a copyrighted work in a new material object. The court
concluded that, because the reproduction right is necessarily implicated when a copyrighted
work is embodied in a new material object, and because digital music files must be embodied in
a new material object following their transfer over the Internet, the embodiment of a digital
music file on a new hard disk is a reproduction within the meaning the meaning of the Copyright
Act. The court determined this to be true regardless whether one or multiple copies of the file
exist.228 “Simply put, it is the creation of a new material object and not an additional material
object that defines the reproduction right.”229 The court found it to be beside the point that the
original phonorecord no longer existed – it mattered only that a new phonorecord had been
created.230
The court found sufficient volitional conduct on the part of ReDigi to hold it liable for
direct infringement. The court noted that ReDigi’s founders had built a service where only
copyrighted works could be sold. Media Manager scanned a user’s computer to build a list of
eligible files that consisted solely of protected music purchased on iTunes. While the process
was automated, absolving ReDigi of direct liability on that ground alone would be a distinction
without a difference. The fact that ReDigi’s founders programmed their software to choose
copyrighted content satisfied the volitional conduct requirement and rendered ReDigi’s case
indistinguishable from those where human review of content gave rise to direct liability.
226 Id. at 645.
227 Id. at 646.
228 Id. at 648-50.
229 Id. at 650 (emphasis in original).
230 Id.
- 62 -
Moreover, ReDigi provided the infrastructure for its users’ infringing sales and affirmatively
brokered sales by connecting users who were seeking unavailable songs with potential sellers.
The court concluded that such conduct transformed ReDigi from a passive provider of a space in
which infringing activities happened to an active participant in the process of copyright
infringement.231
Capitol Records also argued that ReDigi violated it distribution rights by simply “making
available” Capitol Records’ recordings for sale to the public, regardless whether a sale occurred.
The court cited a number of courts that had cast significant doubt on a “making available” theory
of distribution,232 but concluded that because actual sales on ReDigi’s web site infringed Capitol
Records’ distribution right, the court need not reach this additional theory of liability.233
The court found ReDigi contributorily liable because it knew or should have known that
its service would encourage infringement, was aware that copyrighted content was being sold on
its web site, and provided the site and facilities for the direct infringement. The court found that
the site was, by virtue of its design to deal solely in music files from iTunes, not capable of
substantial noninfringing uses. The court also ruled ReDigi to be vicariously liable because it
exercised complete control over its web site content, user access, and sales, and benefitted
financially from every infringing sale when it collected 60% of each transaction fee.234 The
court rejected ReDigi’s fair use defense because its web site made commercial use of the music
files and did nothing to transform them, and ReDigi’s sales were likely to undercut the market
for or value of the copyrighted works.235
For the reasons set forth in Section III.F.1 below, the court rejected ReDigi’s assertion
that the first sale doctrine permitted users to resell their digital music files on ReDigi’s web site.
(x) Summary of Case Law
To sum up, under a majority of the cases decided to date, a direct volitional act of some
kind is required for liability for direct copyright infringement. The MAPHIA and Sabella,
Cablevision, and Hotfile cases suggest that it is insufficient for direct liability for an actor such
as a BBS or web site operator to have provided only encouragement of the acts (such as initial
uploading of unauthorized copies) that lead to infringement. Similarly, the CoStar, Ellison and
Perfect 10 v. Cybernet Ventures cases suggest that an OSP will not have direct liability for
infringing material posted on its service by users or available through its service on third party
sites where the OSP has not encouraged such posting or had advance knowledge of it. And the
Field v. Google and Parker v. Google cases hold that a search engine operator will not have
direct liability for serving up cached copies of copyrighted materials in an automated response to
231 Id. at 657.
232 Elektra Entertainment Group, Inc. v. Barker, 551 F. Supp. 2d 234, 243 (S.D.N.Y. 2008); London-Sire Records,
Inc. v. John Doe 1, 542 F. Supp. 2d 153, 169 (D. Mass. 2008).
233 ReDigi, 934 F. Supp. 2d at 651 n.6.
234 Id. at 658-60.
235 Id. at 653-54.
- 63 -
user requests based on search results. Rather, for direct liability the defendant must have
engaged in the very acts of infringement themselves in a volitional way. The Perfect 10 v.
Giganews case, while agreeing with Netcom that a volitional act is required for direct
infringement, equated the “volitional conduct” requirement with a requirement of causation, not
intent. That court cited the Cybernet Ventures and MAPHIA cases approvingly for their
descriptions of the volitional conduct requirement as requiring that the defendant must “actively
engage” or “directly cause” the infringing activity in order to be held liable for direct
infringement.
However, the Frena, Webbworld, Sanfilippo, Quantum Systems, Megaupload and ReDigi
cases (as well as the Hardenburgh and Webbworld cases discussed in Section II.C below with
respect to the public display and distribution rights) suggest that where an actor such as a BBS
operator or web site operator has some form of substantial direct involvement in the anticipated
acts that lead to infringement or in the infringing acts themselves (such as resale of the infringing
material), there may be a finding of sufficient volitional activity to impose direct liability. And
the Arista Records v. Usenet.com case suggests that direct liability for violation of the
distribution right can be premised on active promotion of sharing of illicit files coupled with
close control over what types of material are featured for distribution in the first instance. Thus,
to establish direct liability for infringement one must look at whether the defendant participated
in the very acts of infringement themselves.
However, one case – the Myxer case – simply refused to adopt the volitional requirement
for direct infringement, noting that the Ninth Circuit had never expressly adopted the volitional
requirement and finding such a requirement to be inconsistent with copyright infringement being
a strict liability tort.
As discussed in Section III.C below, the Digital Millennium Copyright Act236(referred to
herein as the “DMCA”) defines certain safe harbors against liability for OSPs who act as merely
passive conduits for infringing information and without knowledge of the infringement. An OSP
must meet quite specific detailed requirements to qualify for the safe harbors relating to acting as
a passive conduit and innocent storage of infringing information. Where an OSP does not
qualify for these safe harbors, the standards under the case law discussed above will apply to
determine liability.
5. The Reproduction Right Under WIPO Implementing Legislation
(a) United States Legislation
Four bills were introduced in Congress to implement the WIPO treaties. Two of them,
neither of which were ultimately enacted, would have attempted to clarify the issue of whether
interim copies made during the course of transmission infringe the reproduction right. The bill
that was adopted – The Digital Millennium Copyright Act – contains nothing explicitly
addressing the scope of the reproduction right in a digital environment.
236 Pub. L. No. 105-304, 112 Stat. 2860 (1998).
- 64 -
(1) The Digital Millennium Copyright Act
The DMCA was signed into law by President Clinton on Oct. 28, 1998. It is essentially
an enactment of H.R. 2281, introduced in the House in July of 1997 by Rep. Howard Coble, and
its nearly identical counterpart in the Senate, S. 1121, introduced by Sen. Orrin Hatch also in
July of 1997, which was later combined with another bill and, as combined, denominated S.
2037. Both H.R. 2281 and S. 1121 were introduced with the support of the Clinton
administration.
Title I of the DMCA, entitled the “WIPO Copyright and Performances and Phonograms
Treaties Implementation Act of 1998” and comprised of Sections 101 through 105, implements
the WIPO treaties. Title I takes a minimalist approach to implementing the requirements of the
WIPO treaties. The Clinton administration took the view that most of the enhanced copyright
protections set forth in the treaties were already available under United States law, so that no
major changes to U.S. law were believed necessary to implement the treaties.
Specifically, the DMCA addresses only the requirements of Arts. 11 and 12 of the WIPO
Copyright Treaty, and of Arts. 18 and 19 of the WIPO Performances and Phonograms Treaty, to
provide adequate legal protection and effective legal remedies against (i) the circumvention of
effective technological measures that are used by rights holders to restrict unauthorized acts with
respect to their protected works, and (ii) the removal or alteration of any electronic rights
management information (information which identifies the work, the author of the work, the
owner of any right in the work, or information about the terms and conditions of use of the
work), or the distribution or communication to the public of copies of works knowing that the
electronic rights management information has been removed or altered. The specific provisions
of these bills are discussed in further detail below. These bills contain nothing addressing the
reproduction right or how that right relates to the digital environment.
(2) Legislation Not Adopted
An alternative bill to implement the WIPO treaties, S. 1146, entitled the “Digital
Copyright Clarification and Technology Education Act of 1997,” was introduced on Sept. 3,
1997 by Sen. John Ashcroft. Like the DMCA, S. 1146 contained language to implement
prohibitions against the circumvention of technologies to prevent unauthorized access to
copyrighted works and to provide electronic rights management information about a work,
although it adopted a different approach to doing so than the DMCA, as discussed further below.
S. 1146 also contained, however, a much broader package of copyright-related measures.
With respect to the reproduction right, S. 1146 would have clarified that ephemeral copies of a
work in digital form that are incidental to the operation of a device in the ordinary course of
lawful use of the work do not infringe the reproduction right. Specifically, S. 1146 would have
added a new subsection (b) to Section 117 of the copyright statute to read as follows:
(b) Notwithstanding the provisions of section 106, it is not an infringement to
make a copy of a work in a digital format if such copying –
- 65 -
(1) is incidental to the operation of a device in the course of the use of a
work otherwise lawful under this title; and
(2) does not conflict with the normal exploitation of the work and does
not unreasonably prejudice the legitimate interests of the author.
The proposed new clause (b)(1) was similar to the right granted in the existing Section
117 of the copyright statute with respect to computer programs, which permits the making of
copies of the program “as an essential step in the utilization of the computer program in
conjunction with a machine.”237 Clause (b)(1) would have extended this right to the otherwise
lawful use of other types of works in a digital format, to the extent that copying is necessary for
such use. It would seem to have covered activities such as the loading of a musical work into
memory in conjunction with playing the work, the incidental copies of a movie or other work
ordered on demand that are made in memory in the course of the downloading and viewing of
the movie, and the various interim copies of a work that are made in node computers in the
routine course of an authorized transmission of the work through the Internet.
The limiting language contained in new clause (b)(2) was drawn directly from the WIPO
treaties themselves. Specifically, Article 10 of the WIPO Copyright Treaty permits treaty
signatories to provide for limitations of or exceptions to the rights granted under the treaty “in
certain special cases that do not conflict with a normal exploitation of the work and do not
unreasonably prejudice the legitimate interests of the author.” The scope of reach of this
language is obviously not self evident, and the boundaries of this exception to the reproduction
right are therefore not entirely clear. However, the exception should apply to at least the most
common instances in which incidental copies must be made in the course of an authorized use of
a digital work, including in the course of an authorized transmission of that work through a
network.
Another bill introduced into Congress to implement the WIPO copyright treaties was
H.R. 3048, entitled the “Digital Era Copyright Enhancement Act,” which was introduced on
Nov. 14, 1997 by Rep. Rick Boucher. With respect to the reproduction right, H.R. 3048
contained an identical amendment to Section 117 as S. 1146 that would have permitted the
making of incidental copies of a work in digital form in conjunction with the operation of a
device in the ordinary course of lawful use of the work.
The clarifying amendment to Section 117 concerning the reproduction right that these
alternative bills would have set up was not ultimately adopted by Congress in the DMCA.
(b) The European Copyright Directive
The European Copyright Directive contains strong statements of copyright owners’ rights
to control the reproduction, distribution and presentation of their works online. The European
Copyright Directive requires legislative action by EC member states with respect to four rights:
237 17 U.S.C. § 117.
- 66 -
the reproduction right,238 the communication to the public right,239 the distribution right,240 and
protection against the circumvention or abuse of electronic management and protection
systems.241
With respect to the reproduction right, the European Copyright Directive adopts
essentially the same broad language of proposed Article 7(1) of the WIPO Copyright Treaty that
provoked so much controversy and was ultimately deleted from the WIPO Copyright Treaty.
Specifically, Article 2 of the European Copyright Directive provides that member states must
“provide the exclusive right to authorize or prohibit direct or indirect, temporary or permanent
reproduction by any means and in any form” of copyrighted works. The extension of the
reproduction right to “direct or indirect” and “temporary or permanent” reproductions would
seem to cover even ephemeral copies of a work made during the course of transmission or use of
a copyrighted work in an online context. Indeed, the official commentary to Article 2 notes that
the definition of the reproduction right covers “all relevant acts of reproduction, whether on-line
or off-line, in material or immaterial form.”242 The commentary also appears to adopt the
approach of the MAI case in recognizing copies of a work in RAM as falling within the
reproduction right: “The result of a reproduction may be a tangible permanent copy, like a book,
but it may just as well be a non-visible temporary copy of the work in the working memory of a
computer.”243
To provide counterbalance, however, Article 5(1) of the European Copyright Directive
provides an automatic exemption from the reproduction right for “[t]emporary acts of
reproduction … which are transient or incidental, which are an integral and essential part of a
technological process whose sole purpose is to enable: (a) a transmission in a network between
third parties by an intermediary or (b) a lawful use of a work or other subject-matter to be made,
and which have no independent economic significance.” This provision is very similar to the
new clause (b) that would have been added to Section 117 of the U.S. copyright statute under S.
1146 and H.R. 3048 (discussed in Section II.A.5(a)(2) above). The Article 5(1) exception would
appear to cover the store and forward procedure adopted by routers and the RAM copy produced
as a result of browsing at least by a private user (whether browsing for a commercial purpose
238 European Copyright Directive, art. 2.
239 Id. art. 3.
240 Id. art. 4.
241 Id. arts. 6-7.
242 Commentary to Art. 2, ¶ 2.
243 Id. ¶ 3.
- 67 -
would have “independent economic significance” is unclear).244 The exception does not apply to
computer programs or databases because they are separately regulated in other Directives.245
Thus, the European Copyright Directive adopts an approach that affords the reproduction
right a very broad inherent scope, but provides an explicit and automatic exemption for copies
that are made incidental to the use246 of a work through a technological process, such as
transmission through a network or loading into memory for viewing or playing of the work.
Indeed, Recital (33) of the European Copyright Directive notes that the exception of Article 5(1)
“should include acts which enable browsing as well as acts of caching to take place, including
those which enable transmission systems to function efficiently, provided that the intermediary
does not modify the information and does not interfere with the lawful use of technology, widely
recognized and used by industry, to obtain data on the use of the information.”
According to Recital (32) of the European Copyright Directive, the final Directive, unlike
its predecessor drafts, opted for an approach of listing “an exhaustive enumeration of exceptions
and limitations to the reproduction right and the right of communication to the public.” These
exceptions and limitations are enumerated in Articles 5(2) and 5(3). The exceptions and
limitations in Article 5(2) apply only to the reproduction right, whereas the exceptions and
limitations in Article 5(3) apply to both the reproduction right and the right of communication to
the public.
Under Article 5(2), member states may provide for exceptions or limitations to the
reproduction right in the following cases:
(a) in respect of reproductions on paper or any similar medium, effected by the
use of any kind of photographic techniques or by some other process having
similar effects, with the exception of sheet music, provided that the rightholders
receive fair compensation;
(b) in respect of reproductions on any medium made by a natural person for
private use and for ends that are neither directly or indirectly commercial, on
condition that the rightholders receive fair compensation which takes account of
the application or non-application of technological measures referred to in Article
6 to the work or subject-matter concerned;
244 Justin Harrington & Tina Berking, “Some Controversial Aspects of the EU Copyright Directive (Directive
2001/29/EC),” Cyberspace Lawyer, Jan. 2003, at 2, 3-4. The Electronic Commerce Directive contains
exemptions in respect of hosting, caching and acting as a mere conduit. Id. at 4.
245 David Schollenberger, “Entertainment Without Borders” (Mar. 2003), at 9 (seminar paper on file with the
author).
246 An earlier version of Art. 5(1) provided that the use of the work must be “authorized or otherwise permitted by
law.” A copy of an earlier version of the European Copyright Directive and comments may be found at
www.bna.com/e-law/docs/ecdraft.html (last modified Dec. 2, 1997).
- 68 -
(c) in respect of specific acts of reproduction made by publicly accessible
libraries, educational establishments or museums, or by archives, which are not
for direct or indirect economic or commercial advantage;
(d) in respect of ephemeral recordings of works made by broadcasting
organizations by means of their own facilities and for their own broadcasts; the
preservation of these recordings in official archives may, on the ground of their
exceptional documentary character, be permitted;
(e) in respect of reproductions of broadcasts made by social institutions pursuing
non-commercial purposes, such as hospitals or prisons, on condition that the
rightholders receive fair compensation.
It is interesting to note that the majority of these exceptions are conditioned upon the
rightholders receiving fair compensation, and they cover only copying that is for noncommercial
purposes. Exception (b) is of particular interest, for it provides a right for natural
persons to make copies for private use and for purposes that are neither directly or indirectly
commercial, provided the rightholders receive fair compensation. Presumably the exception
would apply where a natural person has purchased a copy of a copyrighted work, thereby
providing fair compensation to the rightholders, and thereafter makes additional copies for
personal, noncommercial uses – e.g., by making a copy of one’s purchased music CD onto a
cassette for use in one’s car. The drafters of the European Copyright Directive deemed this right
of private use to be of such significance that under Article 6(4), member states are permitted to
take measures to ensure that beneficiaries of this right are able to take advantage of it, “unless
reproduction for private use has already been made possible by rightholders to the extent
necessary to benefit from the exception or limitation concerned and in accordance with the
provisions of Article 5(2)(b) and (5), without preventing rightholders from adopting adequate
measures regarding the number of reproductions in accordance with these provisions.”247
The right of private use contained in Article 5(2)(b) is similar to a right afforded in the
United States under the Audio Home Recording Act (AHRA), 17 U.S.C. § 1008, which provides,
“No action may be brought under this title alleging infringement of copyright based on the
manufacture, importation, or distribution of a digital audio recording device, a digital audio
recording medium, an analog recording device, or an analog recording medium, or based on the
noncommercial use by a consumer of such a device or medium for making digital musical
recordings or analog musical recordings.” This statute is discussed in detail in Section II.A.7
below, and in Section III.C.2.(c)(1) below in connection with the Napster litigations. Napster,
Inc., the operator of a service that enabled subscribers to share music files in MP3 audio format
with one another, asserted the AHRA as a defense to an allegation by copyright owners that it
was contributorily and vicariously liable for the unauthorized sharing of copyrighted sound
recordings through its service. Napster argued that the AHRA permitted its subscribers to share
247 Under the last paragraph of Article 6(4), this right of member states to take measures to ensure that beneficiaries
of the right of private use are able to take advantage of it does not apply “to works or other subject-matter made
available to the public on agreed contractual terms in such a way that members of the public may access them
from a place and at a time individually chosen by them.”
- 69 -
such sound recordings because they were shared for personal use by its subscribers. As
discussed in detail below, the courts rejected this argument.
Perhaps in response to online systems like Napster, the drafters of the European
Copyright Directive seem to have been concerned that the exception for personal use in Article
5(2)(b) not be construed to permit the unauthorized sharing of copyrighted works in digital form
through online systems, at least without compensation to the rightholders affected. Specifically,
Recital (38) of the European Copyright Directive states:
Member States should be allowed to provide for an exception or limitation to the
reproduction right for certain types of reproduction of audio, visual and audiovisual
material for private use, accompanied by fair compensation. This may
include the introduction or continuation of remuneration schemes to compensate
for the prejudice to rightholders. … Digital private copying is likely to be more
widespread and have a greater economic impact. Due account should therefore be
taken of the differences between digital and analogue private copying and a
distinction should be make in certain respects between them.
In addition, the drafters of the European Copyright Directive seemed to contemplate that
“intermediaries” providing services through which infringing activities take place online should
be subject to injunctive relief to stop unauthorized transmissions of copyrighted works through
its service. Recital (58) of the European Copyright Directive provides:
In the digital environment, in particular, the services of intermediaries may
increasingly be used by third parties for infringing activities. In many cases such
intermediaries are best placed to bring such infringing activities to an end.
Therefore, without prejudice to any other sanctions and remedies available,
rightholders should have the possibility of applying for an injunction against an
intermediary who carries a third party’s infringement of a protected work or other
subject-matter in a network. This possibility should be available even where the
acts carried out by the intermediary are exempted under Article 5. The conditions
and modalities relating to such injunctions should be left to the national law of the
Member States.
Under Article 5(3), member states may provide for further exceptions or limitations to the
reproduction right and the right of communication to the public in the following cases:
(a) use for the sole purpose of illustration for teaching or scientific research, as
long as the source, including the author’s name, is indicated, unless this proves
impossible, and to the extent justified by the non-commercial purpose to be
achieved;
(b) uses, for the benefit of people with a disability, which are directly related to
the disability and of a non-commercial nature, to the extent required by the
specific disability;
- 70 -
(c) reproduction by the press, communication to the public or making available of
published articles on current economic, political or religious topics or of broadcast
works or other subject-matter of the same character, in cases where such use is
not expressly reserved, and as long the source, including the author’s name, is
indicated, or use of works or other subject-matter in connection with the reporting
of current events, to the extent justified by the informatory purpose and as long as
the source, including the author’s name, is indicated, unless this proves
impossible;
(d) quotations for purposes such as criticism or review, provided that they relate
to a work or other subject-matter which has already been lawfully made available
to the public, and that, unless this proves impossible, the source, including the
author's name, is indicated, and that their use is in accordance with fair practice,
and to the extent required by the specific purpose;
(e) use for the purposes of public security or to ensure the proper performance or
reporting of administrative, parliamentary or judicial proceedings;
(f) use of political speeches as well as extracts of public lectures or similar works
or subject-matter to the extent justified by the informatory purpose and provided
that the source, including the author's name, is indicated, except where this proves
impossible;
(g) use during religious celebrations or official celebrations organized by a public
authority;
(h) use of works, such as works of architecture or sculpture, made to be located
permanently in public places;
(i) incidental inclusion of a work or other subject-matter in other material;
(j) use for the purpose of advertising public exhibition or sale of artistic works, to
the extent necessary to promote the event, excluding any other commercial use;
(k) use for the purpose of caricature, parody or pastiche;
(l) use in connection with the demonstration or repair of equipment;
(m) use of an artistic work in the form of a building or a drawing or plan of a
building for the purposes of reconstructing the building;
(n) use by communication or making available, for the purpose of research or
private study, to individual members of the public by dedicated terminals on the
premises of establishments referred to in paragraph 2(c) of [Article 5(2)] of works
and other subject-matter not subject to purchase or licensing terms which are
contained in their collections;
- 71 -
(o) use in certain other cases of minor importance where exceptions or limitations
already exist under national law, provided that they only concern analogue uses
and do not affect the free circulation of goods and services within the Community,
without prejudice to the other exceptions and limitations contained in this Article.
Note that, unlike many of the exceptions of Article 5(2), the exceptions of Article 5(3)
are not conditioned upon fair compensation to the rightholders.
6. Peer-to-Peer File Sharing
(a) BMG Music v. Gonzalez
In BMG Music v. Gonzalez,248 defendant Cecilia Gonzalez sought to defend her
downloading of more than 1370 copyrighted songs through the Kazaa file-sharing network by
arguing that her actions should fall under the fair use doctrine on the theory that she was just
sampling the music to determine what she liked sufficiently to buy at retail.249 The Seventh
Circuit rejected this argument out of hand. Focusing principally on the fourth fair use factor –
the effect of the use upon the potential market for or value of the copyrighted work – Judge
Easterbrook noted that as file sharing had increased over the last four years, sales of recorded
music had dropped by approximately 30%. Although other economic factors may have
contributed, he noted that the events were likely related.250
He further noted that rights holders had economic interests beyond selling compact discs
containing collections of works – specifically, there was also a market in ways to introduce
potential consumers to music. Noting that many radio stations stream their content over the
Internet, paying a fee for the right to do so, he noted that Gonzalez could have listened to
streaming music to sample songs for purchase, and had she done so, the rights holders would
have received royalties from the broadcasters.251 Rejecting the proffered fair use defense, Judge
Easterbrook stated, “Copyright law lets authors make their own decisions about how best to
promote their works; copiers such as Gonzalez cannot ask courts (and juries) to second-guess the
market and call wholesale copying ‘fair use’ if they think that authors err in understanding their
own economic interests or that Congress erred in granting authors the rights in the copyright
statute.”252
The plaintiffs sought statutory damages for Gonzalez’ unauthorized copying, seeking the
minimum amount of $750 per work infringed. Gonzalez sought to reduce the award below the
$750 minimum by arguing under Section 504(c)(2) that she was not aware and had no reason to
believe that her acts constituted infringement of copyright. The district court rejected the request
under the provisions of Section 402(d), which provides that if a valid notice of copyright appears
248 430 F.3d 999 (7th Cir. 2005).
249 Id. at 889-90.
250 Id. at 890.
251 Id. at 891.
252Id.
- 72 -
on the phonorecords to which a defendant had access, then no weight shall be given to the
defendant’s interposition of a defense based on innocent infringement in mitigation of actual or
statutory damages.253 Gonzalez sought to avoid Section 402(d) by arguing that there were no
copyright notices on the data she downloaded. The court rejected this argument: “She
downloaded data rather than discs, and the data lacked copyright notices, but the statutory
question is whether ‘access’ to legitimate works was available rather than whether infringers
earlier in the chain attached copyright notices to the pirated works. Gonzalez readily could have
learned, had she inquired, that the music was under copyright.”254
(b) Columbia Pictures v. Bunnell
In Columbia Pictures Industries, Inc. v. Bunnell,255 the court entered judgment against
defendant Valence Media LLC, operator of the web site at www.torrentspy.com, for willful
inducement of copyright infringement, contributory copyright infringement, and vicarious
copyright infringement. The court awarded the plaintiffs statutory damages of $30,000 per
infringement for each of 3,699 infringements shown, for a total judgment of $110,970,000. The
court also issued a permanent injunction enjoining the defendants from encouraging, inducing, or
knowingly contributing to the reproduction, download, distribution, upload, or public
performance or display of any copyrighted work at issue, and from making available for
reproduction, download, distribution, upload, or public performance or display any such work.256
(c) Sony BMG Music Entertainment v. Tenenbaum
In Sony BMG Music Entertainment v. Tenenbaum,257 the court rejected a broadside fair
use defense for the file-sharing by a college sophomore, Joel Tenenbaum, of 30 copyrighted
songs belonging to the plaintiffs. Describing the defense raised by the defendant’s counsel as
“truly chaotic,”258 the court noted that it represented a version of fair use so broad that it would
excuse all file sharing for private enjoyment. As the court described counsel’s defense, “a
defendant just needs to show that he did not make money from the files he downloaded or
distributed – i.e., that his use was ‘non-commercial’ – in order to put his fair use defense before a
253 Id. at 891-92.
254 Id. at 892. Gonzalez also challenged the district court’s award of the $750 amount on summary judgment,
arguing that the choice of amount is a question for the jury. The Seventh Circuit noted that, although a suit for
statutory damages under Section 504(c) is a suit at law to which the seventh amendment applies, this does not
mean that a jury must resolve every dispute. When there are no disputes of material fact, a court may enter
summary judgment without transgressing the Constitution. The court noted that Gonzalez had argued for the
minimum amount of $750 per song and the plaintiffs had been content with that amount, which the district court
then awarded on summary judgment. Id.
255 2008 U.S. Dist. LEXIS 63227 (C.D. Cal. July 10, 2008).
256 Id. at *1-3.
257 672 F. Supp. 2d 217 (D. Mass. 2009), rev’d, 660 F.3d 487 (1st Cir. 2011), cert. denied, 132 S. Ct. 2431 (2012).
258 Id. at 220.
- 73 -
jury. Beyond that threshold, the matter belongs entirely to the jury, which is entitled to consider
any and all factors touching on its innate sense of fairness – nothing more and nothing less.”259
The court first turned to the threshold issue of whether fair use is an equitable defense.
Noting that a number of courts had suggested that it is, the court nevertheless opined that even if
fair use is an entirely equitable defense, it is not clear that its determination requires a jury trial,
because judges, not juries, traditionally resolve equitable defenses. However, given that two
leading copyright historians had suggested that the equitable label may be a misnomer, and
because neither party pressed the point, the court assumed that fair use is a jury question, without
resolving the question of the equitable origins of the defense. But because fair use is ultimately a
legal question, the court noted that, in the face of the plaintiff’s motion for summary judgment on
the fair use issue, the defendant could put the defense to a jury only if he showed through
specific, credible evidence that the facts relevant to that legal analysis were in dispute. The
defendant had failed to do so.260
Turning to an application of the four fair use factors, the court found that the first factor –
purpose and character of the use – favored the plaintiffs. The court rejected the defendant’s
binary distinction between “commercial” and “non-commercial” uses under the first factor,
noting that the purpose and character of a use must be classified along a spectrum that ranges
from pure, large-scale profit-seeking to uses that advance important public goals, like those
recognized in the statute. The defendant’s file sharing fell somewhere in between. Although the
court was not willing to label it “commercial,” as the plaintiffs urged, the court ruled that
because the use was not accompanied by any public benefit or transformative purpose, the first
factor cut against fair use.261 The second factor – nature of the copyrighted work – also cut
against fair use because musical works command robust copyright protection.262
The defendant argued that the third factor – portion of the work used – cut against the
plaintiffs because he was alleged to have downloaded only individual songs, but not full albums,
and it was the albums in which the plaintiffs registered their copyrights, while the individual
songs were works made for hire. The court rejected this argument, noting that under existing file
sharing case law, individual songs were regularly treated as the relevant unit for evaluating
infringement and fair use of musical works.263
With respect to the fourth factor – effect on the potential market for the work – the
defendant argued that his file sharing made little economic difference to the plaintiffs because
the songs at issue were immensely popular and therefore widely available on file sharing
networks. The court rejected this as an improper framework for the analysis. Rather, one must
consider the effect on the market of the sum of activity if thousands of others were engaged in
259 Id. at 221.
260 Id. at 223-24.
261 Id. at 227-29.
262 Id. at 229.
263 Id. at 229-30.
- 74 -
the same conduct. The plaintiffs had provided evidence that the widespread availability of free
copies of copyrighted works on the Internet had decreased their sales revenue, and the defendant
had offered no affidavits or expert report to disprove or dispute that evidence.264
The court’s opinion contains a few other interesting observations with respect to the
doctrine of fair use as applied to file sharing. First, citing the case of American Geophysical
Union v. Texaco Inc.,265 the court noted that a fair use determination may be affected by the
availability or absence of authorized ways to obtain the work in question. The defendant
asserted that the emergence of easy-to-use, paid outlets for digital music, such as the iTunes
music store, had lagged well behind the advent of file sharing, and this fact should affect the fair
use analysis. The court responded that, whatever the availability of authorized digital
alternatives was when peer-to-peer networks first because widespread in 1999, it was clear that
by August 2004 – when the defendant’s file sharing was detected – a commercial market for
digital music had fully materialized. In light of that chronology, the unavailability of paid digital
music was simply not relevant to the court’s application of the fair use doctrine.266
Although granting the plaintiffs’ motion for summary judgment on the defendant’s fair
use defense, the court concluded with the following two interesting dicta:
– “[T]he Court does not believe the law is so monolithic, or the principles of fair use so
narrow that they could not encompass some instances of file sharing copyrighted works. This
Court, unlike others that have spoken on the subject, can envision a scenario in which a
defendant sued for file sharing could assert a plausible fair use defense – for example, the
defendant who ‘deleted the mp3 files after sampling them, or created mp3 files exclusively for
space-shifting purposes from audio CDs they had previously purchased.’ (Berkman Center Br. at
36-37, document # 177-3.) The Court can also envision a fair use defense for a defendant who
shared files during a period before the law concerning file sharing was clear and paid outlets
were readily available. … A defendant who shared files online during this interregnum, sampling
the new technology and its possibilities, but later shifted to paid outlets once the law because
clear and authorized sources available, would present a strong case for fair use.”267
– “As this Court has previously noted, it is very, very concerned that there is a deep
potential for injustice in the Copyright Act as it is currently written. It urges – no implores –
Congress to amend the statute to reflect the realities of file sharing. There is something wrong
with a law that routinely threatens teenagers and students with astronomical penalties for an
activity whose implications they may not have fully understood. The injury to the copyright
holder may be real, and even substantial, but, under the statute, the record companies do not even
have to prove actual damage.”268
264 Id. at 230-31.
265 60 F.3d 913, 931 (2d Cir. 1994).
266 Tenenbaum, 672 F. Supp. 2d at 235-36.
267 Id. at 237-38.
268 Id. at 237.
- 75 -
Following a trial, the jury found that Tenenbaum had willfully infringed the plaintiffs’
copyrights and imposed statutory damages of $22,500 per song, yielding a total award of
$675,000.269 In response to the defendant’s motion for a new trial or remitter, the trial court held
that an award of that size, given that Tenenbaum reaped no pecuniary reward from the
infringement and the infringing acts caused the plaintiffs minimal harm, violated the due process
clause of the Constitution as excessive. The court found the award to be far greater than
necessary to serve the government’s legitimate interests in compensating copyright owners and
deterring infringement and that, in fact, it bore no meaningful relationship to those objectives.
Accordingly, the court reduced the jury’s award to one-tenth the amount, or $2,250 per infringed
work (three times the statutory minimum), for a total award of $67,500. The court noted that
such amount was still more than the court itself might have awarded in its independent judgment,
but the amount was the greatest amount that the Constitution would permit given the facts of the
case.270 The court also reaffirmed its previous ruling rejecting Tenenbaum’s fair use defense.271
On appeal, the First Circuit reversed, finding that the district court erred when it bypassed
Tenenbaum’s remittitur arguments based on the excessiveness of statutory damages and reached
the constitutional due process issue. The court noted that, under established precedent, a trial
court’s reduction of compensatory damages must, to avoid Seventh Amendment error, allow the
plaintiff a new trial. Punitive damage awards, by contrast, may be reduced on due process
grounds without offering the plaintiff a new trial without running afoul of the Seventh
Amendment. In bypassing remittitur and the offer of a new trial, the district court had assumed
that statutory damage awards should be treated largely as punitive, not compensatory, awards for
Seventh Amendment purposes.272 But the First Circuit found that statutory damages have both a
compensatory and punitive element, and further noted that the Supreme Court had ruled in the
Feltner case273 that the Seventh Amendment provides a right to a jury trial on all issues pertinent
to an award of copyright statutory damages. Given these important Seventh Amendment issues,
the First Circuit held that the district court had erred in not ordering remittitur, which would have
afforded a number of possible outcomes that could have eliminated the constitutional due
process issue altogether, or at the very least materially reshaped it – e.g., by altering the amount
of the award at issue or even the evidence on which to evaluate whether a particular award was
excessive.274
The court also rejected the defendant’s argument that no statutory damages can be
awarded where harm caused by the defendant has not been proved, and that statutory damages
269 Sony BMG Music Entertainment v. Tenenbaum, 721 F. Supp. 2d 85, 87 (D. Mass. 2010), rev’d, 660 F.3d 487,
514 (1st Cir. Sept. 16, 2011), cert. denied, 132 S. Ct. 2431 (2012).
270 Id. at 89-90.
271 Id. at 98-99.
272 Sony BMG Music Entertainment v. Tenenbaum, 660 F.3d 487, 514 (1st Cir. 2011), cert. denied, 132 S. Ct. 2431
(2012).
273 Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998).
274 Tenenbaum, 660 F.3d at 511, 514-15.
- 76 -
cannot be awarded unless reasonably related to actual damages.275 The court further rejected a
number of challenges to the district court’s jury instructions, including a challenge to the
instruction that willful infringement means that a defendant had knowledge that his actions
constituted copyright infringement or acted with reckless disregard for the copyright holder’s
rights. The First Circuit joined precedent from sister circuits that had unanimously and routinely
found that an infringement is willful under Section 504 if it is knowing or in reckless disregard
of the copyright holder’s rights.276
Accordingly, the court affirmed the finding of liability against Tenenbaum and the
injunctive relief, but vacated the district court’s due process damages ruling and reversed the
reduction of the jury’s statutory damages award. The court reinstated the jury’s award of
damages and remanded for consideration of the defendant’s motion for common law remittitur
based on excessiveness. If on remand, the district court allowed any reduction through
remittitur, the First Circuit ruled that the plaintiffs must be given the choice of a new trial or
acceptance of remittitur.277
On remand, the district court ruled there was no basis for common law remittitur of the
award because it was not grossly excessive, inordinate, shocking to the conscience of the court,
or so high that it would be a denial of justice to permit it to stand. Tenenbaum had personally
received multiple warnings from various sources across several years about downloading and
distributing copyrighted materials, including the fact that his activities could subject him to
liability of up to $150,000 per infringement. There was thus ample evidence of willfulness on
his part and the need for deterrence based on his blatant contempt of warnings and apparent
disregard for the consequences of his actions.278 Turning next to the legal principles set forth by
the First Circuit for evaluating a due process challenge to the award, the court ruled that under
the applicable standard – a statutory damages award comports with due process as long as it
cannot be said to be so severe and oppressive as to be wholly disproportioned to the offense of
obviously unreasonable – the award must withstand a due process challenge. The court
concluded that, given the deference afforded Congress’ statutory award determination and the
public harms it was designed to address, the particular behavior of Tenenbaum in the case, and
the fact that the award was not only within the range for willful infringement but also below the
limit for non-willful infringement, it could not be said that its amount was either wholly
disproportioned to the offense or obviously unreasonable.279
On appeal, the First Circuit affirmed that the $675,000 statutory damages award did not
violate due process, finding that the district court had applied the correct standard to judge the
275 Id. at 502, 506.
276 Id. at 507.
277 Id. at 515.
278 Sony BMG Music Entertainment v. Tenenbaum, 2012 U.S. Dist. LEXIS 119243 at *6-10 (D. Mass. Aug. 23,
2012), aff’d, 719 F.3d 67 (1st Cir. 2013).
279 Id. at *14-18.
- 77 -
constitutionality of the award and reached the correct result for the reasons the district court had
given.280
(d) Capitol Records v. Thomas-Rasset
The case of Capitol Records, Inc. v. Thomas-Rasset281 presented a factual situation very
similar to that of the Tenenbaum case. Jammie Thomas-Rasset, an individual, was accused by
several record companies of copyright infringement for downloading and distributing their
copyrighted sound recordings through the Kazaa peer-to-peer filing sharing application. Three
jury trials were conducted, each of which resulted in a finding of willful infringement. The first
jury returned a statutory damages award of $9,250 per song for a total award of $222,000 based
on the defendant’s distribution of 24 songs. The court vacated the verdict, however, and granted
a new trial based on its conclusion that it had erred in giving a jury instruction which addressed
the existence of a “making available” right. The second jury returned a statutory damages award
of $80,000 per song for a total award of $1,920,000. Upon motion to set aside the award, the
court ruled the award was shocking and unjust and remitted the award to $2,250 per song, or
three times the statutory minimum – the same amount as the district judge used in the
Tenenbaum case. The plaintiffs then exercised their right to reject remittitur and requested a new
trial. The third jury returned a verdict awarding statutory damages in the amount of $62,500 for
each song, for a total award of $1,500,000.282
The defendant filed a motion to reduce the damages award on the ground that it violated
the due process clause of the Constitution because it bore no reasonable relationship to the actual
damages caused by the defendant. The court noted that, although in the past it had endeavored to
avoid unnecessary adjudication of a constitution issue by relying upon remittitur, based on the
plaintiffs’ demonstrated refusal to accept a remittitur and the fact that the defendant had not
requested remittitur, the court felt it was required to address the constitutionality of the award.
Reviewing the relevant legal authority governing the constitutionality of damage awards, the
court concluded that, although the due process clause does not require that a statutory damages
award be confined or proportioned to the plaintiff’s actual loss or damages, the award should
bear some relation to the actual damages suffered. That was not the case here.283 “In the case of
an individual, like Thomas-Rasset, who infringes by using peer-to-peer networks, the potential
gain from infringement is access to free music to build a personal library, which could be
purchased, at most, for thousands of dollars, not the possibility of hundreds of thousands – or
even millions – of dollars in profits.”284
Finding a broad legal practice of establishing a treble award as the upper limit permitted
in both statutory and common law contexts to address willful or particularly damaging behavior,
280 Sony BMG Music Entertainment v. Tenenbaum, 719 F.3d 67, 70-72 (1st Cir. 2013).
281 799 F. Supp. 2d 999 (D. Minn. 2011), rev’d, 692 F.3d 899 (8th Cir. 2012), cert. denied, 133 S. Ct. 1584 (2013).
282 Id. at 1002-03.
283 Id. at 1003, *1007-08.
284 Id. at 1010.
- 78 -
the court concluded, with citation to the Tenenbaum case, that “in this particular case, involving
a first-time willful, consumer infringer who committed illegal song file-sharing for her own
personal use, $2,250 per song [three times the minimum statutory amount], for a total award of
$54,000, is the maximum award consistent with due process.”285
After the court issued this ruling in the Thomas-Rasset case, the First Circuit reversed the
Tenenbaum case, finding that the district court should not have reached the constitutional issues,
but instead should have relied upon the mechanism of remittitur/new trial to address the size of
the award. However, it should be noted that the procedural posture in which the district court
issued its constitutional ruling in the Thomas-Rasset case, in which a previous rejection of
remittitur and election of a new trial had taken place and the defendant had not requested
remittitur again, was very different from the procedural posture in which the Tenenbaum court
issued its ruling, where the court simply went directly to the constitutional issues in response to
the defendant’s motion for remittitur or a new trial.
The court in the Thomas-Rasset case issued a permanent injunction prohibiting the
defendant from infringing the plaintiffs’ copyrights, present or future, in any sound recording.
The court rejected, however, the plaintiffs request that the court include language in the
injunction barring the defendant from “making available” any of the plaintiffs’ sound recordings
for distribution:286
Plaintiffs argue that, if Thomas-Rasset makes Plaintiffs’ copyrighted works
available on a peer-to-peer network, she will have completed all of the steps
necessary for her to engage in the same illegal distribution of Plaintiffs’ works for
which she has already been found liable. Because the Court has held that the
Copyright Act does not provide a making-available right, it will not enjoin
Thomas-Rasset from making the copyrighted sound recordings available to the
public.287
On appeal, the plaintiffs argued that the Eighth Circuit should reverse the district court’s
order granting a new trial and reinstate the first jury’s award of $222,000. The plaintiffs also
sought a broadened injunction that would forbid Thomas-Rasset from making their copyrighted
sound recordings available for distribution. In summary, the Eighth Circuit held that the
plaintiffs were entitled to the remedies they sought: damages of $222,000 and a broadened
injunction that prohibited Thomas-Rasset to make available the plaintiffs’ sound recordings for
distribution. However, because the verdicts returned by the second and third juries were
sufficient to justify those remedies, the court found it unnecessary to consider the merits of the
district court’s order granting a new trial after the first verdict. And although the court
acknowledged the importance of the “making available” legal issue to the plaintiff recording
companies, the court ruled that they were not entitled to an opinion on an issue of law that was
285 Id. at 1013.
286 Id. at 1016.
287 Id.
- 79 -
unnecessary for the remedies sought or to a freestanding decision on whether Thomas-Rasset
violated the law by making recordings available.288
On appeal, Thomas-Rasset lodged no objection to reinstatement of the first verdict,
subject to arguments about the constitutionality of the size of the damages. She also offered to
acquiesce in the entry of an injunction that would forbid her from making available copyrighted
works for distribution, which would render moot the issue whether making works available is
part of the distribution right of the copyright holder. In response, the Eighth Circuit observed
that it reviews judgments, not decisions on issues. The entitlement of the plaintiffs to the
remedies sought – damages of $222,000 and an injunction against making copyrighted works
available to the public – were the matters in controversy. That the plaintiffs sought these
remedies with the objective of securing a ruling on a particular legal issue did not make that legal
issue itself the matter in controversy.289 “Once the requested remedies are ordered, the desire of
the companies for an opinion on the meaning of the Copyright Act, or for a statement that
Thomas-Rasset violated the law by making works available, is not sufficient to maintain an
Article III case or controversy.”290
With respect to the scope of the injunction that should have been issued, the Eighth
Circuit noted that the district court’s refusal to enjoin the making available of the recordings was
an error of law, even assuming that the district court was correct in concluding that the
distribution right does not include a right of making available, because a district court has
authority to issue a broad injunction in cases where a proclivity for unlawful conduct has been
shown. Here, Thomas-Rasset’s willful infringement and subsequent efforts to conceal her
actions showed such a proclivity. Accordingly, the district court erred after the third trial by
concluding that the broader injunction requested by the plaintiffs was impermissible as a matter
of law. An injunction against making recordings available was lawful and appropriate under the
circumstances, even accepting the district court’s interpretation of the Copyright Act. Because
Thomas-Rasset was not resisting expanding the injunction to include that relief, the Eighth
Circuit directed the district court to modify the judgment to include the requested injunction.291
With respect to the question of damages, the Eighth Circuit ruled that the district court
erred in reducing the third jury’s verdict to $2,250 per work, for a total of $54,000, on the ground
that this amount was the maximum permitted by the Constitution. Under relevant Supreme
Court authority, damages awarded pursuant to a statute violate due process only if they are so
severe and oppressive as to be wholly disproportioned to the offense and obviously
unreasonable, and that was not the case here. The court noted that Congress set a statutory
damages range for willful copyright infringement of $750 to $150,000 per infringed work, and
the $222,000 sought was toward the lower end of that broad range. And it noted that the
Supreme Court has rejected the notion that the constitutional inquiry calls for a comparison of an
288 Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899, 901-02 (8th Cir. 2012), cert. denied, 133 S. Ct. 1584
(2013).
289 Id. at 905.
290 Id. at 906.
291 Id. at 906-07.
- 80 -
award of statutory damages to actual damages caused by the violation – because statutory
damages are imposed as a punishment for the violation of a public law, Congress may adjust
their amount to the public wrong rather than the private injury, just as if the award were going to
the state. Accordingly, the Eighth Circuit concluded that the plaintiffs were entitled to the
$222,000 award they sought, and the question whether the district court correctly granted a new
trial after the first verdict was moot.292
7. The Immunity of the Audio Home Recording Act (AHRA)
The Audio Home Recording Act of 1992 (AHRA)293 made two major substantive
changes to copyright law. First, Subchapter D of the AHRA (Section 1008) immunizes certain
noncommercial recording and use of musical recordings in digital or analog form.294 Section
1008 provides:
No action may be brought under this title alleging infringement of copyright295
based on the manufacture, importation, or distribution of a digital audio recording
device, a digital audio recording medium, an analog recording device, or an
analog recording medium, or based on the noncommercial use by a consumer of
such a device or medium for making digital musical recordings or analog musical
recordings.
Second, Subchapters B and C (Sections 1002-1007) of the AHRA require (i) that any
“digital audio recording device” (DARD) conform to the “Serial Copyright Management
System” (SCMS), which allows unlimited first generation copies of an original source, but
prohibits second generation copies (i.e., copies of a copy), and (ii) that manufacturers and
distributors of digital audio recording devices and digital audio recording media (such as DAT
tape and recordable CDs) pay royalties and file various notices and statements to indicate
payment of those royalties.296
(a) The Napster Cases
For a discussion of the rulings with respect to the AHRA in the Napster cases, see
Section III.C.2(c)(1) below.
292 Id. at 906, 907-10.
293 Pub. L. No. 102-563, 106 Stat. 4244 (1992), codified at 17 U.S.C. §§ 1001-1010.
294 Nimmer § 8B.01 (2000).
295 The immunity applies with respect to copyrights in both the sound recordings and any musical compositions
embodied therein. Id. § 8B.07[C][2], at 8B-90.
296 Id. §§ 8B.02 & 8B.03 (2000).
- 81 -
(b) The Aimster Case
In In re Aimster Copyright Litigation,297 the plaintiffs brought copyright infringement
claims against the Aimster peer-to-peer file sharing site and its operators for secondary liability
for the infringing distribution of the plaintiffs’ copyrighted sound recordings. On a motion for a
preliminary injunction, the defendants asserted that the plaintiffs had failed to establish that
Aimster’s users were engaged in direct copyright infringement because the AHRA provided an
affirmative defense. The defendants argued that the AHRA shielded them from liability because
it was intended to immunize from liability personal use of copyrighted material by protecting all
noncommercial copying by consumers of digital and analog musical recordings, relying on the
Ninth Circuit’s Diamond Multimedia case, discussed in Section III.C.2(c)(1) above.298
The court rejected the defendants’ reliance on the AHRA, distinguishing the Diamond
Multimedia case as follows:
The facts of the instant case and Diamond Multimedia are markedly different.
The activity at issue in the present case is the copying of MP3 files from one
user’s hard drive onto the hard drive of another user. The Rio in Diamond
Multimedia, by contrast, “merely [made] copies in order to render portable, or
‘space shift,’ those files that already reside on a user’s hard drive.” 180 F.3d at
1079. The difference is akin to a[n] owner of a compact disc making a copy of
the music onto a tape for that owner’s sole use while away from home versus the
owner making thousands of copies of the compact disk onto a tape for distribution
to all of his friends. Furthermore, Diamond Multimedia had nothing whatsoever
to do with whether the MP3 files on the owner’s computers themselves infringed
copyrights. Rather, the decision was limited solely to the infringement issue
regarding the act of shifting files from a computer to a personal device and
whether that copying was subject to the particular requirements of the AHRA. In
short, Defendant’s reliance on Diamond Multimedia is entirely misplaced.299
(c) Atlantic Recording Corp. v. XM Satellite Radio
In Atlantic Recording Corp. v. XM Satellite Radio, Inc.,300 numerous record companies
sued XM Satellite Radio for contributory, vicarious and inducement copyright liability based on
XM’s offering of digital radio broadcast services together with special receivers marketed as
“XM + MP3” players that allowed subscribers to record, retain and library individually
297 252 F. Supp. 2d 634 (N.D. Ill. 2002), aff’d on other grounds, 334 F.3d 643 (7th Cir. 2003), cert. denied, 124 S.
Ct. 1069 (2004).
298 Id. at 648-49.
299 Id. at 649.
300 2007 U.S. Dist. LEXIS 4290 (S.D.N.Y. Jan. 19, 2007).
- 82 -
disaggregated and indexed audio files from XM broadcast performances. The record companies
challenged these capabilities as an infringing “digital download delivery service.”301
XM offered several services specifically to XM + MP3 player users that were the subject
of the plaintiff’s challenge. First, while listening to XM programming, an XM + MP3 user could
instantly record any song at the touch of a button. To facilitate such recording, the XM + MP3
player maintained a short-term buffered copy of every broadcast song a user listened to. As a
result, a user could record and store in its entirety any broadcast song he or she heard, even if the
user started listening to the song after it began to play.302
Second, XM provided XM + MP3 users with playlists from blocks of broadcast
programming which had been disaggregated into individual tracks. XM sent users such digital
playlists with title and artist information included. The playlists identified all songs broadcast
over a particular channel and during a particular period of time. Users could then scroll through
a playlist and select which songs to store for future replay, and which to delete. Using this
utility, users could hear and store individual songs without actually listening to XM broadcast
programming.303
Third, XM provided to users a search function together with “ArtistSelect” and
“TuneSelect” utilities that made it easy for a user to find out when a requested song was being
broadcast. XM would send the listener immediate notice when his or her chosen artists or songs
were played on any XM channel. The user could then immediately switch channels and store the
requested track onto his or her XM + MP3 player.304
Fourth, the XM + MP3 players enabled users to store the approximate equivalent of
1,000 songs recorded from XM broadcasts for as long as the user maintained an XM
subscription. Accordingly, the court found that these songs were effectively leased to the XM
subscriber for as long as he or she maintained status as a subscriber.305
XM brought a motion to dismiss the copyright claims on the ground that it was shielded
from infringement actions by Section 1008 of the AHRA because it was acting as a distributor of
a digital audio recording device (DARD) immunized by the AHRA. The court first turned to
whether the XM + MP3 players constituted a DARD. The plaintiffs argued that they did not,
citing the Ninth Circuit’s decision in Recording Industry Ass’n of Am. v. Diamond Multimedia
Sys.,306 which held that the Diamond Rio device at issue was not a DARD because it could not
make copies from a transmission but instead could make copies only from a computer hard drive,
which is exempted under Section 1001(5)(B) of the AHRA. The court distinguished the facts of
301 Id. at *6.
302 Id. at *9.
303Id.
304 Id. at *9-10.
305 Id. at *10-11.
306 180 F.3d 1072 (9th Cir. 1999).
- 83 -
the Diamond case, noting that the XM + MP3 players could receive from transmissions and were
capable of copying without an external computer or computer hard drive.307 “Accordingly, at
this stage of the proceeding, relying on plain meaning statutory interpretation and the definition
of a DARD contained in Diamond, until proven otherwise by means of discovery, the Court
treats the [XM + MP3 players] as DARDs.”308
The court next turned to whether the AHRA offered XM complete immunity from the
plaintiffs’ copyright claims. XM argued that, because it was a distributor of DARDs, it did have
such immunity. The court rejected this argument, noting that, while Section 1008 would protect
XM from suit for actions based on the distribution of DARDs, such protection would not act as a
wholesale, blanket protection for other conduct that XM might be engaged in beyond such
distribution. In particular, XM’s acts as a satellite radio broadcaster could form a separate basis
for copyright liability. Indeed, the plaintiffs’ complaint made clear that their claims of copyright
infringement were based on XM’s acting without authorization as a commercial content delivery
provider that delivered permanent digital copies of sound recordings to those devices without
permission from the copyright owner.309
More specifically, the plaintiffs alleged that, in providing services specific to users of
XM + MP3 players, XM was acting outside the scope of its statutory license for broadcast
service under Section 114 of the copyright statute – XM’s only source of permission to use the
plaintiffs’ recordings. Such unauthorized acts, according to the plaintiffs, were encroaching
directly on their digital download business.310 The court agreed, finding that by broadcasting and
storing copyrighted music on DARDs for later recording by the consumer, XM was acting as a
both a broadcaster and a distributor, but was paying license fees only to be a broadcaster.311
XM argued that its XM + MP3 player was much like a traditional radio/cassette player
and should therefore not be viewed as an improper adjunct to broadcasts. The court rejected this
analogy, noting that, in the case of traditional radio/cassette players, the only contact between
manufacturers of the devices and users occurred at the point of sale. The court found it quite
apparent that the use of a radio/cassette player to record songs played over free radio did not
threaten the market for copyrighted works as would the use of a recorder which stores songs
from private radio broadcasts on a subscription fee basis. The court further noted that, although
XM subscribers might put XM + MP3 players to private use, several court decisions had rejected
attempts by for profit users to stand in the shoes of their customers making non-profit or
noncommercial uses.312
307 XM Satellite, 200 U.S. Dist. LEXIS 4290 at *14 n.4.
308Id.
309 Id. at *16-18.
310 Id. at *19.
311 Id. at *20.
312 Id. at *21-22.
- 84 -
The court therefore denied XM’s motion to dismiss: “The Court finds that because of the
unique circumstances of XM being both a broadcaster and a DARD distributor and its access to
the copyrighted music results from its license to broadcast only, that the alleged conduct of XM
in making that music available for consumers to record well beyond the time when broadcast, in
violation of its broadcast license, is the basis of the Complaint, and being a distributor of a
DARD is not. Thus the AHRA, on these facts, provides no protection to XM merely because
they are distributors of a DARD.”313
B. The Right of Public Performance
Section 106 (4) of the copyright statute grants the owner of copyright in a work the
exclusive right to perform the work publicly. The right applies to literary, musical, dramatic, and
choreographic works, pantomimes, motion pictures and other audiovisual works. It does not
apply to pictorial, graphic, sculptural, and architectural works. It also does not apply to sound
recordings, other than with respect to public performances by digital transmission,314 although a
public performance of a sound recording may infringe the right of public performance of the
underlying musical work that is recorded in the sound recording.
Section 101 provides that to perform a work “publicly” means:
(1) to perform ... it at a place open to the public or at any place where a substantial
number of persons outside of a normal circle of a family and its social
acquaintances is gathered; or
(2) to transmit or otherwise communicate a performance ... of the work to a place
specified by clause (1) or to the public, by means of any device or process,
whether the members of the public capable of receiving the performance or
display receive it in the same place or in separate places and at the same time or at
different times.
Because this definition encompasses transmissions of works, it clearly implicates online
activity. However, to fall within the public performance right, there must be a transmission of a
performance of the work, not merely of the work itself. Thus, for example, transmission of the
digitally encoded sounds of a musical work to the hard disk of a recipient computer may infringe
313 Id. at *23-24.
314 The Digital Performance Right in Sound Recordings Act of 1995 created a limited public digital performance
right in sound recordings as of February 1, 1996. Pub. L. No. 104-39, 109 Stat. 336 (codified at 17 U.S.C. §§
106, 114, 115). Certain transmissions of performances are exempt. The exemptions do not apply, however, to
an “interactive” service, which the copyright statute defines as a service “one that enables a member of the
public to receive a transmission of a program specially created for the recipient, or on request, a transmission of
a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the
recipient.” 17 U.S.C. §§ 114(d)(1), 114(j)(7).
- 85 -
the right of distribution of the work (as well as the reproduction right), but not the public
performance right, because the work is not being performed315 at the recipient’s end.
1. Isochronous Versus Asynchronous Transmissions
One of the most hotly debated issues concerning the scope of the public performance
right in online contexts is whether, to fall within the copyright owner’s right of public
performance, the “performance” must be accomplished by a transmitted signal that is capable of
immediate conversion to a performance moment-by-moment in time (referred to as an
“isochronous transmission”), or whether it is sufficient that the transmitted signal is sent either
faster or slower (overall or moment-by-moment) than the embodied performance (referred to as
an “asynchronous transmission”).316
The definition of performing a work publicly in Section 101 of the copyright statute was
drafted at a time when “transmissions” were generally isochronous transmissions, as in
broadcasting. If this definition is read to require an isochronous transmission – and to date all of
the types of transmissions that courts have held to be public performances have been isochronous
transmissions317 – then many acts of downloading of works on the Internet (being asynchronous
transmissions), even if followed by in-home playback, may not fall within the public
performance right. The issue is far from settled, however, and performing rights societies have
argued to the contrary.318 The issue is particularly significant for musical works because
different organizations are often responsible for licensing and collecting royalties for public
distribution and public performance of musical works.
Even if an isochronous transmission is required for a public performance, the distinction
between isochronous and asynchronous transmissions becomes highly blurred on the Internet.
Because the Internet is based on packet switching technology, all transmissions through the
Internet are in some sense “asynchronous.” Moreover, through use of buffering in memory or
storage of information on magnetic or optical storage, either at the transmitting or the receiving
end or both, of all or parts of transmitted data, even an asynchronous transmission can effect a
smooth, moment-by-moment performance at the receiving end.
One can argue that the determinative factor of whether a public performance has been
accomplished should be judged from the perspective of what the recipient perceives, not the
transmission technology used (whether isochronous or asynchronous), especially if the
transmitting party controls when and what the recipient sees. For example, the Senate Report
accompanying the Digital Performance Right in Sound Recordings Act of 1995 suggests that
burst transmissions for prompt playback may constitute public performances:
315 The copyright statute provides that “[t]o ‘perform’ a work means to recite, render, play, dance, or act it, either
directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to
show its images in any sequence or to make the sounds accompanying it audible.” 17 U.S.C. § 101.
316 K. Stuckey, Internet and Online Law § 6.08[4][b], at 6-63 – 6-64 (2008).
317 Id. at 6-64.
318Id.
- 86 -
[I]f a transmission system was designed to allow transmission recipients to hear
sound recordings substantially at the time of transmission, but the sound recording
was transmitted in a high-speed burst of data and stored in a computer memory
for prompt playback (such storage being technically the making of a
phonorecord), and the transmission recipient could not retain the phonorecord for
playback on subsequent occasions (or for any other purpose), delivering the
phonorecord to the transmission recipient would be incidental to the
transmission.319
2. The Meaning of “Publicly”
Section 106 (4) grants the exclusive right to perform a work “publicly.” Section 101
defines performing a work “publicly” to include performance by transmission to an audience that
may receive the transmission at different times, at different places, or both. Thus, the mere fact
that recipients may download performances of a work at dispersed times on demand through the
Internet does not diminish the “public” nature of such performances. For example, in On
Command Video Corp. v. Columbia Pictures Industries, Inc.,320 the court held that the public
performance right was implicated by a system of video cassette players wired to hotel rooms
which was capable of transmitting guest-selected movies to the occupants of one room at a time.
In sum, the breadth of definition of “public” performances makes a variety of online
transmissions of “on demand” information potentially within the public performance right. How
contemporaneously the playback of that information must be with the transmission in order for
there to be deemed a “performance” under current United States law remains to be seen. The
WIPO treaties could render many of these issues largely academic in view of the fact that the
current public performance right could become subsumed in the potentially broader right of
“communication to the public” or “making available to the public” contained in the WIPO
treaties discussed below. However, as discussed further below, the implementation of the WIPO
treaties in the DMCA takes a minimalist approach and does not adopt separate rights of
“communication to the public” or “making available to the public.” Accordingly, the noted
uncertainties with respect to the right of public performance are likely to await further
clarification through judicial development.
3. Live Nation Motor Sports v. Davis
In Live Nation Motor Sports, Inc. v. Davis,321 the plaintiff promoted and produced
motorcycle racing events and streamed webcasts of the events on its web site. Although the facts
are unclear from the court’s opinion, the defendant provided links to the plaintiff’s web site that
enabled users of the defendant’s web site to view the webcasts from the defendant’s web site.
The plaintiff sought a preliminary injunction against the defendant, arguing that the defendant’s
319 S. Rep. No. 104-128, at 39 (1995), reprinted in 1995 U.S.C.C.A.N. 356, 386.
320 777 F. Supp. 787 (N.D. Cal. 1991).
321 2006 U.S. Dist. LEXIS 89552 (N.D. Tex. Dec. 11, 2006).
- 87 -
links to the plaintiff’s web site constituted an unauthorized display and performance of the
plaintiff’s copyrighted broadcasts.322
The court granted a preliminary injunction enjoining the defendant from providing
Internet links to the plaintiff’s webcasts of its racing events or otherwise displaying or
performing the plaintiff’s webcasts.323 With almost no analysis, the court ruled that the plaintiff
had a likelihood of success on its copyright claim because “the unauthorized ‘link’ to the live
webcasts that [the defendant] provides on his website would likely qualify as a copied display or
performance of [the plaintiff’s] copyrightable material.”324 The court found a threat of
irreparable harm to the plaintiff because the defendant’s links would cause the plaintiff to lose its
ability to sell sponsorships or advertisements on the basis that its website was the exclusive
source of the webcasts.325
Although the unclear facts of this case make its reach uncertain, it could potentially imply
that any unauthorized link that causes material available on another site to be streamed through
an unauthorized site could constitute an infringing public display or performance.
4. United States v. ASCAP
In United States v. ASCAP,326 the district court ruled that the downloading of a digital
music file embodying a particular song does not constitute a public performance of that song.
The case arose out of an application that Yahoo, RealNetworks and AOL made to ASCAP for a
license to publicly perform the musical works of the ASCAP repertoire by means of their
respective Internet services. After the parties were unable to agree on a licensing fee, ASCAP
applied to the court for a determination of a reasonable fee. The parties cross-moved for partial
summary judgment on the issue of whether downloading a digital music file embodying a song
constitutes a public performance of the song.327
The court noted that the copyright statute provides that, to “perform” a work means to
“recite,” “render,” or “play” it, and the plain meanings of each of those terms require
contemporaneous perceptibility. Accordingly, the court concluded that for a song to be
“performed,” it must be transmitted in a manner designed for contemporaneous perception. The
downloading of a music file is more accurately characterized as a method of reproducing that
file, rather than performing it.328 The court also noted that its interpretation was consistent with
322 Id. at *3-4.
323 Id. at *18.
324 Id. at *12.
325 Id. at *15.
326 485 F. Supp. 2d 438 (S.D.N.Y. 2007), aff’d, 627 F.3d 64 (2d Cir. 2010), cert. denied, 181 L.Ed.2d 232 (Oct. 3,
2011).
327 Id. at 440-41. The applicants conceded that the streaming of a musical work does constitute a public
performance. Id. at 442.
328 Id. at 443-44. The court also found this interpretation consistent with the holdings of those courts that have
addressed downloading of music over the Internet using peer-to-peer file transfer programs. For example, the
- 88 -
the Copyright Office’s position in its 2001 DMCA Section 104 Report to Congress, in which the
Copyright Office stated that “we do not endorse the proposition that a digital download
constitutes a public performance even when no contemporaneous performance takes place.”329
On appeal, the Second Circuit affirmed this ruling.330 The Second Circuit agreed with the
district court that the ordinary sense of the words “recite,” “render,” and “play” refer to actions
that can be perceived contemporaneously. Downloaded songs are not performed in any
perceptible manner during the transfers – the user must take some further action to play the songs
after download. Because the electronic download itself involves no recitation, rendering, or
playing of the musical work encoded in the digital transmission, the court held that such a
download is not a performance of that work.331
The Second Circuit rejected ASCAP’s argument that all downloads fall under clause (2)
of the definition of “perform or display a work ‘publicly’” in Section 101332 because downloads
“transmit or otherwise communicate a performance,” namely the initial or underlying
performance of the copyrighted work, to the public. The Second Circuit cited its 2008 ruling in
Cartoon Network (discussed in the next subsection) that, when the statute speaks of transmitting
a performance to the public, it refers to the performance created by the act of transmission, not
simply to transmitting a recording of a performance. ASCAP’s alternative interpretation was
flawed because, in disaggregating the “transmission” from the simultaneous “performance” and
treating the transmission itself as a performance, ASCAP rendered superfluous the subsequent “a
performance … of the work” as the object of the transmittal. Cartoon Network recognized that a
“transmittal of a work” is distinct from a transmittal of “a performance” – the former being a
transmittal of the underlying work and the latter being a transmittal that is itself a performance of
the underlying work. Accordingly, the court ruled that transmittal without a performance does
not constitute a “public performance.”333
court cited the holding in Maverick Recording Co. v. Goldshteyn, 2006 U.S. Dist. LEXIS 52422 at *8
(E.D.N.Y. July 31, 2006) (“Downloading and uploading copyrighted files from a peer-to-peer network
constitutes, respectively, reproducing and distributing copyrighted material in violation of 17 U.S.C. § 106.”)
(emphasis added). ASCAP, 2007 U.S. Dist. LEXIS 31910 at *14.
329 Id. at 444 (quoting U.S. Copyright Office, Digital Millennium Copyright Act Section 104 Report to the United
States Congress at xxvii-xxviii (Aug. 29, 2001)).
330 United States v. ASCAP, 627 F.3d 64 (2d Cir. 2010), cert. denied, 181 L.Ed.2d 232 (Oct. 3, 2011).
331 Id. at 73.
332 That clause provides that to “perform or display a work “publicly” means “(2) to transmit or otherwise
communicate a performance or display of the work to a place specified by clause (1) or to the public, by means
of any device or process, whether the members of the public capable of receiving the performance or display
receive it in the same place or in separate places and at the same time or at different times.” 17 U.S.C. § 101.
333 ASCAP, 627 F.3d at 73-74.
- 89 -
5. The Cablevision Case
In The Cartoon Network LP v. CSC Holdings, Inc.334 the Second Circuit ruled on
whether the playback through Cablevision’s network of copies of cable programs stored on its
servers at the instance of its customers as part of its “Remote Storage” Digital Video Recorder
(RS-DVR) system constituted unauthorized public performances of the stored works. The
detailed facts of how the RS-DVR system worked are set forth in Section II.A.4(n) above.
Cablevision argued that the transmissions generated in response to customer requests for
playback of programs stored on its network servers by customers did not constitute public
performances because the RS-DVR customer, not Cablevision, invoked the transmitting and thus
the performing, and the transmissions were not “to the public.”335
The court ruled that it need not address Cablevision’s first argument because, even if the
court were to assume that Cablevision made the transmissions when RS-DVR playbacks
occurred, the RS-DVR playbacks did not involve the transmission of a performance “to the
public.” The court began its analysis by noting that the second, or “transmit,” clause of the
definition of public performance applies “whether the members of the public capable of
receiving the performance or display receive it in the same place or in separate places and at the
same time or at different times.”336 The court observed, “The fact that the statute says ‘capable
of receiving the performance,’ instead of ‘capable of receiving the transmission,’ underscores the
fact that a transmission of a performance is itself a performance.”337
The Second Circuit therefore focused on who was “capable of receiving” performances
through playbacks via the RS-DVR system. Cablevision argued that, because each RS-DVR
transmission was made using a single unique copy of a work, made by an individual subscriber,
one that could be decoded exclusively by that subscriber’s cable box, only one subscriber was
capable of receiving any given RS-DVR transmission. By contrast, the district court had
suggested that, in considering whether a transmission was “to the public,” one should consider
not the potential audience of a particular transmission, but the potential audience of the
underlying work whose content was being transmitted. The Second Circuit ruled that the district
court’s approach was inconsistent with the language of the transmit clause, which speaks of
persons capable of receiving a particular “transmission” or “performance,” and not of the
potential audience of a particular “work.”338
On appeal, the plaintiffs presented a slightly different argument, insisting that the same
original performance of a work was being transmitted to Cablevision’s various subscribers at
different times upon request. The court noted that the implication of the plaintiffs’ argument was
that, to determine whether a given transmission of a performance was to the public, one should
334 536 F.3d 121(2d Cir. 2008), cert. denied sub nom. CNN, Inc. v. CSC Holdings, Inc., 557 U.S. 946 (2009).
335 Id. at 134.
336 Id.
337 Id.
338 Id. at 135.
- 90 -
consider not only the potential audience of that transmission, but also the potential audience of
any transmission of the same underlying “original” performance. The court rejected this
argument, noting that it would obviate any possibility of a purely private transmission.339
We do not believe Congress intended such odd results. Although the transmit
clause is not a model of clarity, we believe that when Congress speaks of
transmitting a performance to the public, it refers to the performance created by
the act of transmission. Thus, HBO transmits its own performance of a work
when it transmits to Cablevision, and Cablevision transmits its own performance
of the same work when it retransmits the feed from HBO.340
Accordingly, the Second Circuit concluded that a court must look downstream, rather
than upstream or laterally, to determine whether any link in a chain of transmissions made by a
party constitutes a public performance, and should not examine the potential recipients of the
content provider’s initial transmission to determine who was capable of receiving the RS-DVR
playback transmission. Because the RS-DVR system, as designed, made transmissions only to
one subscriber using a copy made by that particular subscriber, the court concluded that the
universe of people capable of receiving an RS-DVR transmission was the single subscriber
whose self-made copy was used to the create the transmission, and the transmissions through the
RS-DVR system were therefore not public performances.341 The court cautioned, however, that
its holding “does not generally permit content delivery networks to avoid all copyright liability
by making copies of each item of content and associating one unique copy with each subscriber
to the network, or by giving their subscribers the capacity to make their own individual copies.
We do not address whether such a network operator would be able to escape any other form of
copyright liability, such as liability for unauthorized reproductions or liability for contributory
infringement.”342
6. Ringtones – In re Application of Cellco Partnership
In In re Application of Cellco Partnership d/b/a Verizon Wireless,343 the court
ruled that the sale of ringtones by Verizon to its cell phone customers did not require payment to
ASCAP for a public performance license for the musical works embodied in the ringtones.
ASCAP argued that Verizon engaged in public performances of the musical works when it
downloaded ringtones to its customers. It also argued that Verizon was both directly and
339 Id. at 135-36.
340 Id. at 136.
341 Id. at 137, 139. “If the owner of a copyright believes he is injured by a particular transmission of a performance
of his work, he may be able to seek redress not only for the infringing transmission, but also for the underlying
copying that facilitated the transmission. Given this interplay between the various rights in this context, it
seems quite consistent with the Act to treat a transmission made using Copy A as distinct from one made using
Copy B, just as we would treat a transmission made by Cablevision as distinct from an otherwise identical
transmission made by Comcast.” Id. at 138.
342 Id. at 139.
343 663 F. Supp. 2d 363 (S.D.N.Y. 2009).
- 91 -
secondarily liable for public performances of musical works when its customers played ringtones
on their telephones upon incoming calls.344
The court rejected both these arguments. As to the first, citing the Cablevision case
discussed in the previous subsection, the court ruled that, because only one subscriber was
capable of receiving a particular transmission of a ringtone during download, such transmission
was not itself made to the “public,” regardless of whether a download could be considered a
transmission of a “performance” of the musical works in the ringtone.345 The court did note that,
“[w]here a transmission is of a digital file rather than a performance that can be
contemporaneously observed or heard, and where that transmission is but a link in a chain to a
downstream public performance, it may be that the transmission is not an act of infringement for
which the transmitter is directly liable under § 106(4), but rather an act that may subject the
transmitter to contributory liability under § 106(4) for the infringement created by any ultimate
public performance.”346 That could not be the case here, however, because the court concluded
that there was no qualifying public performance under § 106(4) when the customer used the
ringtone upon an incoming call.
Specifically, the court ruled that, when a ringtone plays on a cellular telephone, even
when that occurs in public, the user is exempt from copyright liability under Section 110(4) of
the copyright statute, which exempts any “performance of a nondramatic literary or musical
work otherwise than in a transmission to the public, without any purpose of direct or indirect
commercial advantage and without payment of any fee or other compensation for the
performance to any of its performers, promoters, or organizers, if [] there is no direct or indirect
admission charge.”347 The court held that on occasions when Verizon customers had activated
their ringtones and the telephones rang in the presence of members of the public at a level where
it could be heard by others, such playing of the musical works embodied in the ringtones
satisfied all of the requirements of the §110(4) exemption: Verizon customers were not playing
the ringtones for any commercial advantage, they did not get paid any fee or compensation for
those performances, and they did not charge admission. Accordingly, there was no non-exempt
public performance by the users of the ringtones to which Verizon could be secondarily liable.348
The court also rejected ASCAP’s argument that Verizon was directly liable for itself
engaging in a public performance of copyrighted musical works when ringtones played in public
on customers’ cell phones because it controlled the entire series of steps that allowed and
triggered the cellular telephone to perform the musical works in public. The court noted that
344 Id. at 368.
345 Id. at 371.
346 Id. at 374 n.14.
347 Id. at 374 (quoting 17 U.S.C. § 110(4)).
348 Id. at 375. Nor, in order to avoid secondary liability, was Verizon obligated to show that each and every
customer would be able to meet its burden of proof that its performance of ringtones in public satisfied the §
110(4) exemption. “The law does not impose an insurmountable burden on Verizon to show precisely how
each of its customers has actually used her telephone, but only requires it to demonstrate that customers as a
group do not exhibit any expectation of profit when they permit the telephones to ring in public.” Id. at 376.
- 92 -
Verizon’s only role in the playing of a ringtone was the sending of a signal to alert a customer’s
telephone to an incoming call, and that signal was the same whether the customer had
downloaded a ringtone or not, whether she had set the phone to play a ringtone upon receiving a
call or not, whether she was in a public setting or not, and whether she had the ringtone volume
turned high or low. And it was the caller, not Verizon, who initiated the entire process that led to
the playing of the ringtone. Accordingly, Verizon did not engage in activity constituting direct
liability, even if the ringing of its customers’ phones in public constituted public
performances.349
7. Arista Records v. Myxer
In Arista Records LLC v. Myxer Inc.,350 the defendant Myxer operated a website that
enabled registered users to upload recorded music to the site and then, through the use of
Myxer’s software, to transcode the music into a format to create and download ringtones. Users
could make ringtones they had created available for download to other users. In addition to
uploading and downloading ringtones, Myxer users could play portions of any of the sound
recordings on Myxer’s site. Users could also select a sound recording on Myxer’s site and share
it on certain third party websites such as Facebook. Finally, users could select a sound recording
on Myxer’s site, often a full-length recording, and “Customize It” (using editing tools provided
by Myxer) by selecting a desired start and stop point for a ringtone. UMG Records, a competitor
in the ringtone market, contended that, by storing copies of UMG’s sound recordings on its
servers, allowing users to download copies of its sound recordings to users’ cell phones, and
allowing users to preview its sound recordings on either the Myxer site or on users’ cell phones,
Myxer was a direct infringer of UMG’s reproduction, distribution and digital public performance
rights.351
In a footnote, the court noted that Myxer correctly argued that downloading ringtones to
one’s personal cell phone is not a public performance. Agreeing with the reasoning of the In re
Application of Cellco case, the court ruled that the act of downloading and then playing
ringtones so as to alert the individual of an incoming call does not violate the exclusive right of
public performance because it is not a “public” performance.352
8. Warner Bros. v. WTV Systems
In Warner Bros. Entertainment Inc. v. WTV Systems,353 the defendants offered a DVD
“rental” service called “Zediva” that allowed customers to view streams from DVDs in DVD
players hosted on the defendants’ premises. To operate the service, the defendants purchased
hundreds of DVD players and installed them in cabinets at a data center they leased in Santa
349 Id. at 376-79.
350 2011 U.S. Dist. LEXIS 109668 (C.D. Cal. Apr. 1, 2011).
351 Id. at *2, 15-18.
352 Id. at *37 n.16.
353 824 F. Supp. 2d 1003 (C.D. Cal. 2011).
- 93 -
Clara, California. The defendants also purchased copies of the plaintiffs’ copyrighted works on
DVD and placed those DVDs in their DVD players for selection by their customers. Each DVD
remained in its respective DVD player while it was transmitted to the defendants’ customers on
multiple occasions.354
When a customer requested a particular work, the defendants, through their Zediva
service, started the play process on a particular DVD player holding the requested work,
converted the analog video signal from the DVD player into a digital signal using a video
adapter, fed the digital signal into a DVD control server that converted the digital signal to a
form suitable for streaming across the Internet, converted the digital signal to a format that could
be viewed in the player created by the defendants and used on their web site, transmitted the
performance via the Internet to the customer, and provided the customer with a custom viewer
necessary to view the video stream. To begin the process, the customer clicked on a virtual
button on the defendants’ web site. Customers were unable to access all the other features
available on a particular DVD, such as deleted and extra scenes, or other special DVD features.
The defendants maintained exclusive control of their servers, and the customers had no control
whatsoever over the various servers that the defendants used to direct traffic among their stacks
of DVD players.355
The defendants described the Zediva service as allowing customers to “rent” a particular
DVD and DVD player for 14 days. However, customers did not have access to or control over a
specific DVD or DVD player. Instead, the defendants streamed the content of the DVD to a
customer for a maximum period of four hours, provided that the customer did not pause it for
more than one hour during that time. After four hours of total “rental” time or an hour-long
pause, whichever occurred first, the defendants used the DVD player containing the same DVD
to transmit the work to a different customer. When the first customer made a request to resume
viewing, the transmission might be sent from a different DVD or a different DVD player than the
one originally used to transmit in the earlier “rental” period. According to the defendants’ web
site, if all of the copies of a particular work were “rented out” when a customer wanted to view
the work, the customer could request to be notified, via email, when it became available.356
The plaintiffs claimed that the Zediva service infringed their rights of public performance
and sought a preliminary injunction, which the court determined the plaintiffs were entitled to.
Turning to whether the streams constituted public performances, the court noted that the
definition of “public performance” in Section 106(4) is comprised of two clauses: (1) the
“public place” clause, which states that a performance is public if it occurs at a place open to the
public or at any place where a substantial number of persons outside of a normal circle of a
family and its social acquaintances is gathered; and (2) the “transmit” clause, which states that a
performance is public if someone transmits or otherwise communicates the performance to a
place specified by the public place clause, or to “the public,” whether the members of the public
354 Id. at 1006-07.
355 Id. at 1007 & n.2.
356 Id. at 1007.
- 94 -
capable of receiving the performance receive it in the same place or in separate places and at the
same time or at different times.357
The defendants argued that their service offered “DVD rentals” rather than transmissions
of performances. The court rejected this argument, analogizing to On Command Video Corp. v.
Columbia Pictures Industries,358 which held that transmissions of movies from a central console
of VCRs (each VCR containing a copy of a particular movie) in a hotel to private guest rooms
did not constitute “electronic rentals” similar to guests’ physical borrowing of videotapes, but
rather constituted transmissions of performances under the transmit clause of Section 106(4). In
On Command, the fact that hotel guests initiated the transmission by turning on the television
and choosing a video was immaterial. The court ruled that, as in On Command, the Zediva
service fell under the transmit clause because it transmitted performances by communicating the
images and sounds of the movies through the use of a device or process (the defendants’
equipment, servers and the Internet) from its central bank of DVD players to individual
customer’s computers, where the images and sounds were received beyond the place from which
they were sent. And as in On Command, the fact that Zediva’s customers initiated the
transmission by turning on their computers and choosing which of the works they wished to view
was immaterial to the legal analysis.359
The court further ruled that the transmissions of the Zediva service were “to the public”
for purposes of the transmit clause “because the relationship between Defendants, as the
transmitter of the performance, and the audience, which in this case consists of their customers,
is a commercial, ‘public’ relationship regardless of where the viewing takes place. The nonpublic
nature of the place of the performance has no bearing on whether or not those who enjoy
the performance constitute ‘the public’ under the transmit clause.”360
The court rejected the defendants’ argument that their performances were not “to the
public” in view of the Cartoon Network (Cablevision) case discussed in Section II.B.5 above.
Under Cartoon Network, the Second Circuit found that the transmissions were not “to the
public” because each RS-DVR playback transmission was made to a single subscriber using a
single unique copy produced by that subscriber. By contrast, in this case, the defendants’
customers did not produce their own unique copy of the plaintiffs’ copyrighted works. Instead,
like On Command, the same DVD was used over and over again to transmit performance of the
works, which destroyed the one-to-one relationship on which the Cartoon Network decision
depended for its finding that the transmissions were not to the public.361
The court also rejected the defendants’ argument that it should adopt the Second Circuit’s
volitional requirement for direct copyright infringement liability. The court found that no Ninth
357 Id. at 1008-09.
358 777 F. Supp. 787, 789-90 (N.D. Cal. 1991).
359 WTV Systems, 824 F. Supp. 2d at 1009-10.
360 Id. at 1010.
361 Id. at 1011 n.7.
- 95 -
Circuit case had adopted the volitional conduct requirement and that, in view of the fact that
copyright infringement is a strict liability offense, the court was not inclined to adopt the
volitional conduct requirement without clear instruction from the Ninth Circuit.362 Finally, the
court rejected the defendants’ reliance on Professional Real Estate Investors, Inc.,363 which
involved a service provided by a hotel that rented videodiscs to its guests, who carried the discs
to their rooms to watch them on in-room videodisc players. The Ninth Circuit found that
because the performances at issue took place in a guest’s private hotel room, the performances
were not “in public,” and the performances were not transmissions under the transmit clause
because the guests carried the discs to their rooms, rather than the hotel transmitting a
performance to the room from a central bank of players. The Ninth Circuit stated, however, that
a closed circuit system similar to the one described in On Command would fall squarely within
the transmit clause. Accordingly, the district court found that the Professional Real Estate case
supported the court’s finding of infringement.364
In concluding that the plaintiffs were entitled to a preliminary injunction, the court noted
the following forms of irreparable harm: because the defendants were exploiting the plaintiffs
copyrighted works without paying the normal licensing fees, they were depriving the plaintiffs of
revenue and jeopardizing the continued existence of the plaintiffs’ licensees’ businesses; the
Zediva service threatened the development of a successful and lawful video-on-demand market
and, in particular, the growing Internet-based video-on-demand market; the presence of the
Zediva service in the market threatened to confuse consumers about video-on-demand products,
and to create incorrect but lasting impressions with consumers about what constitutes lawful
video-on-demand exploitation of copyrighted works; and the Zediva service threatened the
development of a successful and lawful video-on-demand market by offering a sub-optimal
customer experience (the defendants admitted they had received complaints about the quality of
their service and that a lot of times customers would receive a notice that a particular copyrighted
work was temporarily “out of stock” because all DVD players containing that particular work
were in use).365
The case settled in October 2011, with Zediva agreeing to pay $1.8 million to six major
movie studios and to cease showing their movies without permission.366
9. Capitol Records v. MP3tunes
For analysis of this case’s rulings with respect to infringement of public performance
rights against the operator of a music “locker” service, see Section III.C.6(b)(1)(iii).s below.
362 Id.
363 866 F.2d 278 (9th Cir. 1989).
364 WTV Systems, 824 F. Supp. 2d at 1011.
365 Id. at 1013-14. The court required the defendants to post a bond of $50,000 as a condition to issuance of the
preliminary injunction. Id. at 1015.
366 Melissa Lipman, “DVD Streaming Co. Settles Movie Studios’ IP Suit For $2M,” Law360 (Oct. 28, 2011),
available as of Aug. 3, 2012 at http://www.law360.com/articles/281603.
- 96 -
10. The Aereo Case
The District Court Decision
The widely followed case of American Broadcasting Cos. v. Aereo, Inc.367 applied the
logic of the Cablevision case, discussed in detail in Section II.B.5 above, to adjudicate important
issues of the scope of the public performance right. The plaintiffs sought a preliminary
injunction to stop Aereo from offering a private streaming service that allowed its users to access
live copyrighted content over the Internet through various mobile devices such as PCs, laptops,
smartphones, and tablet computers. The plaintiffs’ motion for a preliminary injunction was
limited in scope, challenging only the aspects of Aereo’s service that allowed subscribers to view
the plaintiffs’ copyrighted television programs contemporaneously with the over-the-air
broadcast of those programs.368
Aereo’s service worked as follows. A user of Aereo’s system, after logging into his
account on Aereo’s web site, could navigate through a programming guide to select television
programs currently being aired or that would be aired at a later time. If the user selected a
program that was currently being aired, the user was given two options, “Watch” and “Record.”
Selecting “Watch” caused Aereo’s system to transmit a web page to the user in which the
program started after a short delay, allowing the user to view the program “live,” i.e., roughly
contemporaneous with its over-the-air broadcast. If the user pressed the “Record” button after
having begun watching a program using the “Watch” feature, the Aereo system retained the copy
that the user had been watching. If “Record” was not selected, the copy was not retained and
could not be viewed again later.369
Instead of selecting the “Watch” function at the outset, the user could press the “Record”
button to schedule a recording of a program that would be broadcast at a later time or that was
currently being aired. However, the “Record” feature could also be used, like the “Watch”
feature, to view programs live – users could direct Aereo’s system to begin a recording and then
immediately begin playback of the recording as it was being made.370
The technology that implemented the service, which was designed specifically to take
advantage of the reasoning of the Cablevision case, consisted of a large bank of individual
antennas that could be “assigned” individually to specific users who wanted to watch or record a
program. Specifically, when a user clicked on the “Watch” button, the user’s web browser sent a
request to Aereo’s Application Server, which in turn sent a request and certain information about
the user and the requested television program to Aereo’s Antenna Server. The Antenna Server
allocated resources to the user, including an antenna and transcoder, depending on whether the
user was a “static” or “dynamic” user, a distinction based on the user’s subscription plan with
Aereo. Static users had a set of previously selected antennas that had been assigned to them,
367 874 F. Supp. 2d 373 (S.D.N.Y. 2012).
368 Id. at 375.
369 Id. at 377.
370 Id.
- 97 -
whereas dynamic users, who were the vast majority of Aereo’s subscribers, were randomly
assigned an antenna each time they used Aereo’s system. No two users were assigned a single
antenna at the same time. The data obtained by a particular antenna while allocated to a
particular user was not shared with or accessible by any other Aereo use. 371
Once these resources were allocated, the Antenna Server sent a “tune” request that
directed the user’s antenna to tune into a particular broadcast frequency band to obtain the
desired program. The Antenna Server also sent a request to the Streaming Server that created a
unique directory, assigned to the user, for storing the output data received by the antennas and
processed by the transcoder. Once that directory was created, an electrical signal was sent from
the antenna, processed and converted into data packets, and then sent to the transcoder, which
encoded it in a form to be transmitted over the Internet. The encoded data was sent to the
Streaming Server, where it was saved on a hard disk to a file in the previously created directory
and, once saved, was read from that file into a RAM memory buffer that sent the data to the user
over the Internet once a sufficient amount of data (at least six or seven seconds of programming)
had accumulated. Essentially the same process occurred when the user engaged the “Record”
function, the only substantial difference between the “Watch” and “Record” functions being that
when a user engaged the “Record” function, the file saved to the hard disk was tagged as
permanent and automatically retained, whereas the file saved using the “Watch” function was not
automatically retained unless the user clicked “Record” while the show was still open on the
user’s web browser.372
The plaintiffs moved for a preliminary injunction. The district court noted that the only
significant factual dispute for purposes of that motion concerned the operation of Aereo’s
antennas. Aereo contended that each of its antennas functioned separately to receive the
incoming broadcast signals. The plaintiffs asserted that Aereo’s antennas functioned collectively
as a single antenna, because the individual antennas were packed so closely together on a board
that they in effect had a shared metallic substructure which appeared to the incoming signals as
one continuous piece of metal. After extensive review of the conflicting testimony of the parties’
experts, the court determined that, based on the evidence at that stage of the proceedings,
Aereo’s antennas did indeed function independently – a crucial fact for applicability of the
Cablevision case to the facts at hand.373
The district court then turned to the first element of establishing entitlement to a
preliminary injunction – likelihood of success on the merits. Aereo argued that Cablevision
applied to its system because, like the RS-DVR system in Cablevision, its system created unique,
user-requested copies that were transmitted only to the particular user that created them, and the
performances were thus not public. The plaintiffs distinguished Cablevision on its facts, arguing
that because Aereo’s subscribers were watching the programs as they were still being broadcast,
they were not using the copies Aereo created for time shifting purposes, and those copies
therefore did not “break the chain” of the over-the air transmission received by Aereo. Thus, the
371 Id. at 377-78.
372 Id. at 378-79.
373 Id. at 379-81.
- 98 -
plaintiffs contended, Aereo was engaged in a public performance that emanated from the original
broadcast signal itself, much like a community antenna which simply passes along a broadcast
signal the public. Stated differently, the plaintiffs argued that the stored copies of the signals
made by Aereo should be viewed as merely facilitating the transmission of a single master copy
– in this case, the broadcast signal – rather than as copies from which a distinct transmission was
made.374
The court agreed with Aereo’s characterization of its system and rejected the plaintiffs’
attempts to distinguish Cablevision. With respect to the copies created by Aereo’s system, the
court found that they were not mere facilitating copies, but rather were no less materially
significant to how the system functioned than the copies created in Cablevision’s system. First,
Aereo’s system created a unique copy of each television program for each subscriber who
requested to watch that program, saved to a unique directory on Aereo’s hard disks assigned to
that user. Second, each transmission that Aereo’s system ultimately made to a subscriber was
from that unique copy. Third, the transmission of the unique copy was made solely to the
subscriber who requested it and no other subscriber was capable of accessing that copy. The
court held that these factual similarities of Aereo’s service to the Cablevision system suggested
that Aereo’s service fell within the core of what Cablevision held lawful. The court also ruled
the fact that Aereo’s users could “share” resource like antennas by using them at different times
did not affect the analysis, as it remained clear that the copies Aereo’s system made were unique
for each user and not shared.375
The court found other similarities to Cablevision as well. An undercurrent in the Second
Circuit’s reasoning in Cablevision was that the Cablevision system merely allowed subscribers to
enjoy a service that could also be accomplished using any standard DVR or VCR. Similarly,
Aereo’s functionality substantially mirrored that available using devices such as a DVR or a
Slingbox,376 which allow users to access free, over-the-air broadcast television on mobile
Internet devices of their choosing.377 Moreover, the court found that the analysis the Second
Circuit undertook in finding that the performance to the user was made from the copies stored in
the Cablevision system rather than from, for example, the incoming stream of data, was equally
applicable here. Specifically, Cablevision held that a public performance does not occur merely
because a number of people are transmitted the same television program. Nor was the Second
Circuit willing to accept the argument that, notwithstanding its creation of unique copies,
Cablevision was actually transmitting to its users the performance of that work that occurred
when the programming service supplying Cablevision’s content transmitted that content to
Cablevision. In fact, the Second Circuit expressly refused to look back to the received signal to
374 Id. at 385.
375 Id. at 385-86 & n.7.
376 A Slingbox, when connected to a user’s television in the home, digitized the received signals, including live
broadcast television, and allowed them to be streamed over the Internet to the user’s personal mobile devices.
Id. at 377. The district court noted, “Plaintiffs do not appear to contend in this litigation that services such as
Slingbox are unlawful, instead claiming that they are ‘irrelevant’ and that Aereo’s service is distinguishable
because Slingbox consumers themselves set up the Slingbox in their homes.” Id.
377 Id. at 386.
- 99 -
judge whether Cablevision was engaged in a public performance. The district court therefore
observed that, given that each antenna in Aereo’s system functioned independently, in at least
one respect the Aereo system presented a stronger case than Cablevision for attaching
significance to the copies made because, unlike Cablevision in which multiple copies were all
created from a single stream of data, each copy made by Aereo’s system was created from a
separate stream of data.378
The district court also rejected the plaintiffs’ attempt to distinguish Cablevision on the
ground that Cablevision addressed only copies used for time shifting. The court noted that
nowhere in Cablevision did the Second Circuit articulate a requirement that the copies be used
for time shifting in order to “break the chain” of transmission from the original broadcaster to the
end user. Rather, the Second Circuit’s analysis of the public performance claim was entirely
directed toward explaining why the copies created by the system in Cablevision were significant
and resulted in performances to a limited, non-public audience. Nor did anything in Cablevision
turn on the times at which individuals received their transmissions.379
Finally, the court rejected the plaintiffs’ suggestion that Cablevision addressed only
transmissions using the same medium as the initial broadcast that were made to the same device
and to the same place as the initial transmission. Although points of distinction from
Cablevision, the court found no reason to believe that they had any material bearing on who was
“capable of receiving” a particular transmission or whether Aereo “breaks the chain” of
transmission.380
Accordingly, the court concluded that the plaintiffs were unlikely to succeed on the
merits of their public performance claim.381 The court, however, issued some words of caution
about the scope of its decision. First, the court made clear that it did not accept Aereo’s position
that the creation of any fixed copy from which a transmission is made always defeats a claim for
a violation of the public performance right, because such position would eviscerate the transmit
clause given the ease of making reproductions before transmitting digital data. Nor did the court
378 Id. at 386-87.
379 Id. at 387-90. The court found the plaintiffs’ argument that “complete” time shifting should be required to fit
within the contours of Cablevision even less persuasive, as the argument was no longer tied to the rationale that
time shifting is required to “break the chain” of the original transmission. For example, an Aereo user who
began watching a recording of the Academy Awards, initially broadcast at 6:00 p.m., one minute before the
program ended at 11:00 p.m. would not have engaged in complete time shifting, although the chain of
transmission would certainly have been “broken” across the nearly five hours of recording before viewing
commenced. The court found that the plaintiffs had not provided an argument as to why a user who began
watching a recording of a program one minute (or five minutes, or ten minutes) before the broadcast ended was
part of a public performance but a user who began watching a minute after the program ended was not. Id. at
393-94.
380 Id. at 394.
381 In view of its conclusion that the plaintiffs had failed to demonstrate they were likely to succeed in establishing
that Aereo’s system resulted in a public performance, the court found it need not reach the issue of whether
Aereo also could escape liability because it was the consumer, not Aereo, who made the transmissions that the
plaintiffs complained of. Id. at 396.
- 100 -
need to resolve Aereo’s argument that its antennas, standing alone, defeated the plaintiffs’ claims
that it was engaged in a public performance. Instead, the court merely pointed out that it had
found Aereo’s use of single antennas to reinforce its conclusion that the copies created by
Aereo’s system were unique and accessible only to a particular user, as they indicated that the
copies were created using wholly distinct signal paths. Because the copies were created from a
signal received independently by each antenna, in order to find a “master” copy that was
arguably being transmitted, the court would have been required, contrary to Cablevision, to look
back to the incoming over-the-air signal rather than simply an earlier step in Aereo’s process.
Aereo’s antennas thus reinforced the significance of the copies its system created and aided the
court in finding that Aereo did not create mere facilitating copies.382
As such, the Court’s holding that Plaintiffs have not demonstrated a likelihood of
success is limited. There may be cases in which copies are purely facilitory, such
as true buffer copies or copies that serve no function whatsoever other than to
pass along a clearly identifiable “master” copy from which the transmission is
made. These facts, however, are not before the Court today.383
Turning to the other elements for a preliminary injunction, the district court found that
the plaintiffs had demonstrated they would suffer irreparable harm because Aereo would damage
their ability to negotiate with advertisers by siphoning viewers from traditional distribution
channels, in which viewership is measured by Nielsen ratings, into Aereo’s service which is not
measured by Nielsen, artificially lowering those ratings. Similarly, by poaching viewers from
cable or other companies that license the plaintiffs’ content, Aereo’s activities would damage the
plaintiffs’ ability to negotiate retransmission agreements, as those companies would demand
concessions from the plaintiffs to make up for the decrease in viewership. Aereo’s service would
also harm the plaintiffs’ streaming of their content on their own web sites.384
With respect to the balance of hardships, the court found that the balance did not tip
decidedly in favor of the plaintiffs. The harm to Aereo of a preliminary injunction would be
substantial, as it had sufficient capital to continue operations for just six to seven months, after
which it would likely shut down absent investment of further capital. An injunction was also
likely to cause Aereo to lose employees and damage its ability to attract investors to obtain new
capital, and to diminish its competitive advantage in launching a unique and innovative product.
Having concluded that Aereo’s service was likely lawful, the court ruled that it could not
disregard the harms to Aereo that an injunction would cause by assuming its business was
founded on infringement.385
In sum, the district court concluded that because it could not accept the plaintiffs’
attempts to distinguish Cablevision, the plaintiffs had not shown a likelihood of success on the
merits. And although they had demonstrated they faced irreparable harm, they had not
382 Id. at 396.
383 Id.
384 Id. at 397-99.
385 Id. at 402-03.
- 101 -
demonstrated that the balance of hardships decidedly tipped in their favor. Accordingly, the
court denied the motion for a preliminary injunction.386
The Second Circuit Opinion
On appeal, the Second Circuit affirmed.387 The majority opinion began by reviewing the
Second Circuit’s interpretation of the transmit clause in Cablevision and noted several key
aspects of that interpretation. First, the phrase “capable of receiving the performance” in the
transmit clause refers not to the performance of the underlying work being transmitted but rather
to the transmission itself, since the transmission of a performance is itself a performance.
Second, the transmit clause directs courts to consider the potential audience of only the
performance created by the act of transmission. Third, following an interpretation of the transmit
clause first advanced by Professor Nimmer, whether a transmission originates from a distinct or
shared copy is relevant to the transmit clause because the use of a unique copy may limit the
potential audience of a transmission and thus whether that transmission is made to the public.388
The court noted that the preceding summary of Cablevision’s interpretation of the
transmit clause established “four guideposts that determine the outcome of this appeal”:
First and most important, the Transmit Clause directs courts to consider the
potential audience of the individual transmission. … Second and following from
the first, private transmissions – that is those not capable of being received by the
public – should not be aggregated. … Third, there is an exception to this noaggregation
rule when private transmissions are generated from the same copy of
the work. In such cases, these private transmissions should be aggregated, and if
these aggregated transmissions from a single copy enable the public to view that
copy, the transmissions are public performances. … Fourth and finally, “any
factor that limits the potential audience of a transmission is relevant” to the
Transmit Clause analysis.389
Applying these guideposts to the present case, the court found the key facts pertaining to
application of the transmit clause to be the same as in Cablevision. Specifically, when an Aereo
user elected to invoke the Watch or Record features, Aereo’s system created a unique copy of
that program on a portion of a hard drive assigned only to that Aereo user. And when an Aereo
user chose to watch the recorded program, the transmission sent by Aereo and received by that
386 Id. at 404.
387 WNET v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013). Judge Chin filed a lengthy dissent. The plaintiffs did not
appeal the district court’s factual finding that Aereo’s antennas operated independently, which was the only
relevant fact on which the parties disagreed. Id. at 680.
388 Id. at 687-88.
389 Id. at 689 (citations omitted).
- 102 -
user was generated from that unique copy. Thus, just as in Cablevision, the potential audience of
each Aereo transmission was the single user who requested that a program be recorded.390
The court rejected a number of arguments put forth by the plaintiffs to distinguish
Cablevision. First, the plaintiffs noted that in Cablevision the defendant had a license to transmit
programming in the first instance when it first aired the programs, and no such license existed
here. The court rejected this, noting that Cablevision did not hold that Cablevision’s RS-DVR
transmissions were licensed public performances, but rather they were not public performances
at all, so no license was needed to make them, whether or not a license was required to first air
the programs to the public.391
Second, the plaintiffs argued that discrete transmissions should be aggregated to
determine whether they are public performances. Because Aereo’s discrete transmissions
enabled members of the public to receive the same performance (i.e., Aereo’s retransmission of a
program), they were transmissions made to the public. The court noted that this was nothing
more than the Cablevision plaintiffs’ interpretation of the transmit clause, as it equated Aereo’s
transmissions with the original broadcast made by the over-the-air network rather than treating
Aereo’s transmissions as independent performances. That approach had been explicitly rejected
by the Cablevision court. The plaintiffs also argued that the Copyright Act requires all of
Aereo’s discrete transmissions be aggregated and viewed collectively as constituting a public
performance. The plaintiffs argued this was not contrary to Cablevision, because Cablevision
held only that transmissions of the same performance or work made by different entities should
not be aggregated, but discrete transmissions of the same performance or work made by the same
entity should be aggregated to determine whether a public performance has occurred. The court
rejected this argument because it required a reading of the transmit clause contrary to that
adopted by Cablevision by focusing on the potential audience of the performance or work being
transmitted, not the potential audience of the particular transmission.392
Third, the plaintiffs argued that Cablevision was based on an analogy to a typical VCR,
with the RS-DVR simply an upstream version, but Aereo’s system was more analogous to a
cable television provider. The court responded that, while it was true that the Cablevision court
did compare the RS-DVR system to the stand-alone VCR, those comparisons occurred in the
section of the opinion discussing Cablevision’s potential liability for infringing the plaintiffs’
reproduction right. No part of Cablevision’s analysis of the public performance right, however,
seemed to have been influenced by any analogy to the stand-alone VCR.393
Fourth, the plaintiffs argued that Cablevision’s RS-DVR copies broke the continuous
chain of retransmission to the public in a way that Aereo’s copies did not. Specifically, Aereo’s
copies were merely a device by which Aereo enabled its users to watch nearly live TV, while
Cablevision’s copies, by contrast, could serve only as the source for a transmission of a program
390 Id. at 690.
391 Id.
392 Id. at 690-91.
393 Id. at 691.
- 103 -
after the original transmission, i.e. the live broadcast of the program, had finished. The court
rejected this argument for two reasons. First, Aereo’s copies did have the legal significance
ascribed to the RS-DVR copies in Cablevision because the user exercised the same control over
their playback. Such volitional control over how the copy was played made Aereo’s hard disk
copies unlike the temporary buffer copies generated incident to Internet streaming only after the
user had selected the program to watch. Second, the plaintiffs’ argument failed to account for
Aereo’s user-specific antennas. Each user-associated copy of a program created by Aereo’s
system was generated from a unique antenna assigned only to the user who requested that the
copy be made. The feed from that antenna was not used to generate multiple copies of each
program for different Aereo users but rather only one copy – the copy that could be watched by
the user to whom that antenna was assigned, and only that user.394
Finally, the plaintiffs argued that holding that Aereo’s transmissions are not public
performances would exalt form over substance, because the Aereo system was functionally
equivalent to a cable television provider. The court noted that the same was likely true of
Cablevision, which created separate user-associated copies of each recorded program for its RSDVR
system instead of using more efficient shared copies because transmissions generated from
the latter would likely be found to infringe copyright holders’ public performance right. The
court acknowledged that perhaps the application of the transmit clause should focus less on the
technical details of a particular system and more on its functionality, but the Second Circuit’s
decision in Cablevision held that technical architecture matters.395
The majority opinion made one final point with respect to stare decisis, observing that,
though presented as efforts to distinguish Cablevision, the plaintiffs’ arguments were really ones
to overrule Cablevision. After noting that one panel could not overrule a prior decision of
another panel, the court went on to observe that stare decisis was particularly warranted here in
view of the substantial reliance on Cablevision, pointing to many media and technology
companies that had relied on Cablevision as an authoritative interpretation of the transmit clause.
One interesting example the court pointed to was cloud media services that allow their users to
store music on remote hard drives and stream it to Internet-connected devices, which apparently
had been designed to comply with Cablevision.396
Accordingly, the court ruled that Aereo’s transmission of unique copies of broadcast
television programs created at its users’ requests and transmitted while the programs were still
airing on broadcast television were not public performances under Cablevision, and affirmed the
district court’s denial of a preliminary injunction.397
394 Id. at 692-93.
395 Id. at 693-94.
396 Id. at 695 & n.19.
397 Id. at 696.
- 104 -
11. The BarryDriller Case
The district court in this case reached the opposite result from the Aereo case on very
similar facts involving the defendants’ “Aereokiller” streaming service that allowed users to use
an individual mini digital antenna and DVR to watch or record a free television broadcast.
Indeed, the defendants opposed the plaintiff’s motion for a preliminary injunction in this case
largely on the argument that their streaming service was legal because it was “technologically
analogous” to the service found legal in the Aereo case.398 The BarryDriller court, however,
rejected the reasoning of the Second Circuit’s decision in Cablevision, upon which the Aereo
court had relied in reaching its decision. In particular, the court disagreed with the Second
Circuit’s analysis in Cablevision that the statutory definition of “public performance” requires
that a transmission of a performance itself be public in order for the transmitter to infringe the
public performance right:
That is not the only possible reading of the statute. The definition section sets
forth what constitutes a public performance of a copyrighted work, and says that
transmitting a performance to the public is a public performance. It does not
require a “performance” of a performance. The Second Circuit buttressed its
definition with a “cf.” to Buck v. Jewell-La Salle Realty Co., 283 U.S. 191, 196, S.
Ct. 410, 75 L.Ed. 971 (1931), which interpreted the 1909 Copyright Act’s
provision of an exclusive right to publicly perform a musical composition and
held that “the reception of a radio broadcast and its translation into audible sound”
is a performance. But Buck, like Cablevision and this case, was concerned with a
copyright in the work that was broadcast. Id. at 195. The Supreme Court was not
concerned about the “performance of the performance” – instead, it held that
using a radio to perform the copyrighted song infringed the exclusive right to
perform the song (not to perform the performance of the song). Id. at 196.399
The district court noted that the Second Circuit had supported its decision via citation to
the House Report on the 1976 Copyright Act, which stated that a performance made available by
transmission to the public at large is “public” even though the recipients are not gathered in a
single place, and that the same principles apply whenever the potential recipients of the
transmission represent a limited segment of the public, such as the occupants of hotel rooms or
the subscribers of a cable television service. From this, the Second Circuit reasons that the
transmission had to itself be public, and one must therefore look at the persons who are capable
of receiving a particular transmission of a performance to determine whether such transmission
398 Fox Television Stations, Inc. v. BarryDriller Content Systems, PLC, 2012 U.S. Dist. LEXIS 184209 at * 3-4
(C.D. Cal. Dec. 27, 2012). Before turning to its main analysis, the court rejected in a footnote the plaintiffs’
apparent argument that creation of a buffer copy in the course of streaming is itself a public performance:
“Plaintiffs seems to be relying on the fact that courts have found ‘streaming’ to be infringement of the
transmission right, and are arguing that streaming’s use of buffer copies means that the buffer copy is itself a
public performance. But Plaintiffs have cited to no authority that holds that the act of creating the transient
buffer copy – expressly considered in Cablevision and held not to be an act of infringement – is an infringement
of the public performance right. Cablevision, 536 F.3d at 127.” Id. at *12 n.9.
399 Id. at *14-15.
- 105 -
constitutes a public performance.400 The district court rejected the Second Circuit’s
interpretation of the import of the House Report:
But the House Report did not discuss which copy of a work a transmission was
made from. The statute provides an exclusive right to transmit a performance
publicly, but does not by its express terms require that two members of the public
receive the performance from the same transmission. The statute provides that
the right to transmit is exclusive “whether the members of the public capable of
receiving the performance or display receive it in the same place or in separate
places and at the same time or at different times. 17 U.S.C. § 101. Again, the
concern is with the performance of the copyrighted work, irrespective of which
copy of the work the transmission is made from. … Thus, Cablevision’s focus on
the uniqueness of the individual copy from which a transmission is made is not
commanded by the statute.401
The district court noted that the Second Circuit’s focus on which copy of the work the
transmission is made from put it in tension with the 1991 decision in the On Command Video
Corp. case,402 in which a court in the Northern District of California held that a hotel system that
transmitted to individual hotel rooms movies being played from individual videotapes by remote
control from a central bank in a hotel equipment room violated the copyright holder’s public
performance right. The district court believed that the On Command Video Corp. case properly
focused on the public performance of the copyrighted work. Accordingly, the court concluded
that the defendants’ unique-copy transmission argument based on Cablevision and Aereo was not
binding in the Ninth Circuit.403
Having found that the plaintiffs had established a likelihood of success on the merits, and
finding the other three factors for a preliminary injunction weighed in the plaintiffs’ favor, the
court issued a preliminary injunction against the operation of the Aereokiller service. However,
given the court’s finding that the application of Ninth Circuit law differed from Second Circuit
law, the court believed that principles of comity prevented the entry of an injunction that would
apply to the Second Circuit, and that it should not assume that the other Circuits would agree
with its decision rather than Cablevision. Accordingly, the court issued an injunction prohibiting
the defendants from offering their service only within the states covered by the Ninth Circuit.404
400 Id. at *15.
401 Id. at *16. The court elaborated further in a footnote: “The Second Circuit appears to implicitly bracket the text
of the House Report like this: [a performance made available by] [transmission to the public]. It seems like the
House Report could just as easily be read like this: [a performance made available by transmission] [to the
public]. Defendants make Plaintiffs’ copyrighted works available to the public by transmission. The Second
Circuit’s reading effectively converts ‘available by transmission’ to ‘available by a single transmission.’ In any
event, the statute uses the verb ‘transmit,’ rather than the noun used in the House Report.” Id. at *16-17.
402 777 F. Supp. 787 (N.D. Cal. 1991).
403 BarryDriller, 2012 U.S. Dist. LEXIS at *17-18, 20.
404 Id. at 23-29.
- 106 -
12. The FilmOn Case
This was the third major case to adjudicate claims of infringement of the public
performance right based on a streaming system that operated in a very similar way to those at
issue in the Aereo and BarryDriller cases by allowing users to use an individual mini digital
antenna and DVR to watch or record a free television broadcast.405 Indeed, FilmOn, the operator
of the system, readily admitted that its technology was “similar … in every relevant way” to the
technology at issue in Aereo and BarryDriller.406 The court issued a preliminary injunction
enjoining FilmOn from offering its service through the U.S. except within the Second Circuit
(where Aereo was the binding precedent), and required the plaintiffs to post a bond of
$250,000.407
To judge the plaintiffs’ likelihood of success on the merits of their claim that FilmOn’s
system infringed their right of public performance, the court pointed to the legislative history of
the transmit clause in the House Report for the 1976 Act, which stated, “Under the definitions of
‘perform,’ ‘display,’ ‘publicly,’ and ‘transmit’ in section 101, the concepts of public performance
and public display cover not only the initial rendition or showing, but also any further act by
which that rendition or showing is transmitted or communicated to the public.”408 The court
noted that the House Report further elaborated on the transmit clause, stating, “Each and every
method by which the images or sounds comprising a performance or display are picked up and
conveyed is a ‘transmission,’ and if the transmission reaches the public in [an]y form, the case
comes within the scope of clauses (4) or (5) of section 106.”409
In view of the legislative history, the court found that FilmOn’s service violated the
plaintiffs’ right of public performance:
By making available Plaintiffs’ copyrighted performances to any member of the
public who accesses the FilmOn X service, FilmOn X performs the copyrighted
work publicly as defined by the Transmit Clause: FilmOn X “transmit[s] … a
performance … of the work … to the public, by means of any device or process.”
See 17 U.S.C. § 101. “A ‘device,’ ‘machine,’ or ‘process’ is one now known [i.e.
in 1976] or later developed;” “[t]o ‘transmit’ a performance or display is to
communicate it by any device or process.” Id. (emphasis added). These two
definitions are facially broad and encompass FilmOn X’s convoluted process for
relaying television signals. The Transmit Clause, which applies whether
“members of the public capable of receiving the performance or display receive it
in the same place or in separate places and at the same time or at different times,”
also plainly captures FilmOn X’s DVR-like capabilities. Id. FilmOn X transmits
405 Fox Television Stations, Inc. v. FilmOn X LLC, 2013 U.S. Dist. LEXIS 126543 (D.D.C. Sept. 5, 203).
406 Id. at *8.
407 Id. at *57-61.
408 Id. at *38-39 (quoting H.R. Rep. No. 94-1476 (1976), reprinted in 1976 U.S.C.C.S.A.N. 5659, 5676-77).
409 Id. at *40 (quoting 1976 U.S.C.C.S.A.N. at 5678).
- 107 -
(i.e., communicates from mini-antenna through servers over the Internet to a user)
the performance (i.e., an original over-the-air broadcast of a work copyrighted by
one of the Plaintiffs) to members of the public (i.e., any person who accesses the
FilmOn X service through its website or application) who receive the
performance in separate places and at different times (i.e. at home at their
computers or on their mobile devices).410
The court rejected FilmOn’s argument that it did not perform publicly because its system
facilitated a one-to-one relationship between a single mini antenna and a viewer of the plaintiffs’
programs. The court observed that, while each user might have an assigned antenna and harddrive
directory temporarily, the mini antennas were networked together so that a single tuner
server and router, video encoder, and distribution endpoint could communicate with them all. In
the court’s view, FilmOn’s system, through which any member of the public could click on the
link for the video feed, was hardly akin to an individual user stringing up a television antenna on
the roof. The court also expressed the belief that every broadcast of a television program
(whether cable, satellite, over-the-air, over the Internet, or otherwise) could be described as
generated from the same copy – the original source. The court therefore found FilmOn, a
commercial service retransmitting the plaintiffs’ television performances, to be in no meaningful
way different from cable television companies, whose relationship with broadcasters was the
primary motivation for the 1976 Act’s enactment of the transmit clause.411
Accordingly, the court concluded that the plaintiffs had established a likelihood of
success on the merits of their copyright infringement claim. Finding that the plaintiffs would
suffer irreparable harm if FilmOn were allowed to continue operation of its system, that the
balance of harm tipped in the plaintiffs’ favor, and that the public interest would be served by
upholding copyright protection, the court issued a preliminary injunction against FilmOn.412
C. The Right of Public Display
Section 106 (5) of the copyright statute grants the owner of copyright in a literary,
musical, dramatic, and choreographic work, a pantomime, and a pictorial, graphic or sculptural
work, including the individual images of a motion picture or other audiovisual work,413 the
exclusive right to display the work publicly.414 Section 101 defines the meaning of “to display a
work publicly” in virtually identical terms as the definition of “to perform a work publicly.”
Thus, a public display can be accomplished by a transmission of a display of the work to
410 Id. at *42-44. The court noted that it respectfully disagreed with the Second Circuit’s interpretation of the
transmit clause in Aereo for the reasons set forth in BarryDriller and in Judge Chin’s dissent in Aereo. Id. at
*44 n.11.
411 Id. at *46-48.
412 Id. at *50-59.
413 To display a motion picture, one must display individual images “nonsequentially.” K. Stuckey, Internet and
Online Law § 6.03[5], at 6-17 (2008).
414 The right of public display does not apply to sound recordings, architectural works, and audiovisual works
(except for display of individual images of an audiovisual work).
- 108 -
members of the public capable of receiving the display in the same place or separate places and
at the same time or at different times.
The WIPO Copyright Treaty does not contain a right of public display per se. However,
the right of public display is arguably subsumed under the right of communication to the public
in the WIPO Copyright Treaty.
1. The Frena, Marobie-FL, Hardenburgh and Webbworld Cases
In Playboy Enterprises, Inc. v. Frena,415 the court held that the making of photographs
available on a BBS was a “public” display, even though the display was limited to subscribers,
and subscribers viewed the photographs only upon downloading the photographs from the BBS
on demand. Thus, making material available through the Internet even to only a small and select
audience may still constitute a “public” display. The point at which a selected audience becomes
so small that a display to such audience can no longer be considered a “public” display is
unclear. The Playboy court seemed to define an audience as “public” if it contains “a substantial
number of persons outside of a normal circle of family and its social acquaintances.”416
Similarly, in Marobie-FL, Inc. v. National Association of Fire Equipment Distributors,417
the administrator of the Web page of the defendant, National Association of Fire Equipment
Distributors (NAFED), placed certain files on NAFED’s Web page containing three volumes of
copyrighted clip art of the plaintiff. The court ruled that the placement of the files containing the
clip art on the Web page constituted a direct violation of both the plaintiff’s distribution right and
public display right. The court concluded that the mere making available of the files for
downloading was sufficient for liability, because “once the files were uploaded [onto the Web
server], they were available for downloading by Internet users and … the [OSP] server
transmitted the files to some Internet users when requested.”418 The court, citing the Netcom
case, refused to hold the OSP supplying Internet service to NAFED directly or vicariously liable,
although the court noted that the OSP might be liable for contributory infringement, depending
upon whether the OSP knew that any material on NAFED’s Web page was copyrighted, when it
learned of that fact, and the degree to which the OSP monitored, controlled, or had the ability to
monitor or control the contents of NAFED’s Web page.419
And in Playboy Enterprises, Inc. v. Hardenburgh,420 the defendants operated a BBS
which made available graphic image files to subscribers for a fee, many of which contained adult
material. To increase its stockpile of available information, and thereby its attractiveness to new
customers, defendants provided an incentive to encourage subscribers to upload information onto
415 839 F. Supp. 1552 (M.D. Fla. 1993).
416 Id. at 1557.
417 45 U.S.P.Q.2d 1236 (N.D. Ill. 1997).
418 Id. at 1241.
419 Id. at 1245.
420 982 F. Supp. 503 (N.D. Ohio 1997).
- 109 -
the BBS. Subscribers were given “credit” for each megabyte of electronic data that they
uploaded onto the system, which entitled them to download defined amounts of data from the
system in return. Information uploaded onto the BBS went directly to an “upload file” where an
employee of the BBS briefly checked the new files to ascertain whether they were “acceptable,”
meaning not pornographic and not blatantly protected by copyright.421 Many of the plaintiff’s
copyrighted photographs appeared on the BBS and the plaintiff brought suit for infringement.
With respect to the issue of direct liability for the infringing postings of its subscribers,
the court agreed with the Netcom decision’s requirement of some direct volitional act or
participation in the infringement. However, the court found that the facts of the case, unlike
those of Frena, MAPHIA, and Netcom, were sufficient to establish direct liability for
infringement of both the public display and distribution rights. The court based its conclusion on
“two crucial facts: (1) Defendants’ policy of encouraging subscribers to upload files, including
adult photographs, onto the system, and (2) Defendants’ policy of using a screening procedure in
which [its] employees viewed all files in the upload file and moved them into the generally
available files for subscribers. These two facts transform Defendants from passive providers of a
space in which infringing activities happened to occur to active participants in the process of
copyright infringement.”422
Finally, in Playboy Enterprises, Inc. v. Webbworld, Inc.,423 the court held the defendants
directly liable for infringing public displays of copyrighted images for making such images
available through a website for downloading by subscribers.
2. Kelly v. Arriba Soft
An important case construing the scope of the public display right on the Internet is that
of Kelly v. Arriba Soft Corp.424 In that case, the defendant Arriba was the operator of a “visual
search engine” on the Internet that allowed users to search for and retrieve images. In response
to a search query, the search engine produced a list of reduced, “thumbnail” images. To provide
this functionality, Arriba developed a program called a “crawler” that would search the Web
looking for images to index, download full-sized copies of the images onto Arriba’s server, then
use those images to generate lower resolution thumbnails. Once the thumbnails were created, the
program deleted the full-sized originals from the server.425
When the user double-clicked on the thumbnail, a full-sized version of the image was
displayed. During one period of time, the full-sized images were produced by “inline linking” –
i.e., by retrieving the image from the original web site and displaying it on the Arriba web page
with text describing the size of the image and a link to the originating site – such that the user
421 Id. at 506.
422 Id. at 513.
423 45 U.S.P.Q.2d 1641 (N.D. Tex. 1997).
424 336 F.3d 811 (9th Cir. 2003).
425 Id. at 815.
- 110 -
would typically not realize the image actually resided on another web site. During a subsequent
period of time, the thumbnails were accompanied by two links, a “source” and a “details” link.
The “details” link produced a separate screen containing the thumbnail image with text
describing the size of the image and a link to the originating site. Alternatively, by clicking on
the “source” link or the thumbnail itself, the Arriba site produced two framed windows on top of
the Arriba page: the window in the forefront contained the full-sized image, imported directly
from the originating site; underneath that was a second window displaying the home page
containing the image from the original site.426
Arriba’s crawler copied 35 photographs on which the plaintiff, Kelly, held the copyrights
into the Arriba database. When he complained, Arriba deleted the thumbnails of images that
came from Kelly’s own web sites and placed those sites on a list of sites that it would not crawl
in the future. Several months later, Kelly sued Arriba, identifying in the complaint other images
of his that came from third party web sites.427 The district court ruled that Arriba’s use of both
the thumbnails and the full sized images was a fair use, and Kelly appealed.428
The Ninth Circuit, in an opinion issued in July of 2003,429 affirmed the ruling that the use
of the thumbnails was a fair use. Applying the first of the four statutory fair use factors, the
court held that the thumbnails were a transformative use of Kelly’s works because they were
much smaller, lower resolution images that served an entirely different function than Kelly’s
original images. Users would be unlikely to enlarge the thumbnails and use them for artistic
purposes because the thumbnails were of much lower resolution than the originals. Thus, the
first fair use factor weighted in favor of Arriba.430
The court held that the second factor, the nature of the copyrighted work, weighed
slightly in favor of Kelly because the photographs were creative in nature. The third factor, the
amount and substantiality of the portion used, was deemed not to weigh in either party’s favor.
Although the entire images had been copied, it was necessary for Arriba to copy the entire
images to allow users to recognize the image and decide whether to pursue more information
about it or the originating web site.431
Finally, the court held that the fourth factor, the effect of the use upon the potential
market for or value of the copyrighted work, weighed in favor of Arriba. The court found that
Arriba’s use of the thumbnail images would not harm the market for Kelly’s use of his images or
the value of his images. By displaying the thumbnails, the search engine would guide users to
Kelly’s web site rather than away from it. Nor would Arriba’s use of the images harm Kelly’s
426 Id. at 815-16.
427 Id. at 816.
428 Id. at 816-17.
429 The 2003 opinion withdrew an earlier and highly controversial opinion issued by the court in 2002, discussed
further below.
430 Id. at 818-19.
431 Id. at 820-21.
- 111 -
ability to sell or license the full-sized images. Anyone downloading the thumbnails would not be
successful selling full sized-images from them because of the low resolution of the thumbnails,
and there would be no way to view, create, or sell clear, full-sized images without going to
Kelly’s web sites. Accordingly, on balance, the court found fair use.432
The court reversed, however, the district court’s ruling that Arriba’s use of the full-sized
images through inline linking or framing was a fair use and remanded for further proceedings.
The Ninth Circuit’s ruling on this issue was contrary to a result the Ninth Circuit had reached in
an earlier opinion in the case issued in 2002,433 which it withdrew when issuing its 2003 opinion.
In the 2002 ruling, the Ninth Circuit had held, in a highly controversial ruling, that Arriba’s
inline linking to and framing of the full-sized images violated the plaintiff’s public display
rights.434 Interestingly, the court ruled that Kelly’s reproduction rights had not been infringed:
“This use of Kelly’s images does not entail copying them but, rather, importing them directly
from Kelly’s web site. Therefore, it cannot be copyright infringement based on the reproduction
of copyrighted works …. Instead, this use of Kelly’s images infringes upon Kelly’s exclusive
right to ‘display the copyrighted work publicly.’”435 Apparently the court’s observation that the
offering of the full-sized images through linking “does not entail copying” was meant to refer to
direct copying by Arriba, because a copy of the images is certainly made in the user’s computer
RAM, as well as on the screen, when the user clicks on the thumbnail to display the full sized
image.
With respect to infringement of the display right, the court ruled in its 2002 opinion that
the mere act of linking to the images constituted infringement. First, the court ruled that there
was an unauthorized “display”: “By inline linking and framing Kelly’s images, Arriba is
showing Kelly’s original works without his permission.”436 Second, the court held that such
“showing” was a “public” one: “A display is public even if there is no proof that any of the
potential recipients was operating his receiving apparatus at the time of the transmission. By
making Kelly’s images available on its web site, Arriba is allowing public access to those
images. The ability to view those images is unrestricted to anyone with a computer and internet
access.”437 The court thus concluded that Arriba had directly infringed Kelly’s public display
rights: “By allowing the public to view Kelly’s copyrighted works while visiting Arriba’s web
site, Arriba created a public display of Kelly’s works. … Allowing this capability is enough to
establish an infringement; the fact that no one saw the images goes to the issue of damages, not
liability.”438
432 Id. at 821-22.
433 Kelly v. Arriba Soft Corp., 280 F.3d 934 (9th Cir. 2002).
434 Kelly had never argued, either in the proceedings below or on appeal, that his public display rights had been
infringed. The Ninth Circuit raised this issue on its own.
435 Id. at 944.
436 Id. at 945.
437Id.
438 Id. at 946.
- 112 -
The court went on in its 2002 opinion to hold that Arriba’s display of Kelly’s full-sized
images was not a fair use. Unlike the case of the thumbnails, the court held that the use of the
full-sized images was not transformative. “Because the full-sized images on Arriba’s site act
primarily as illustrations or artistic expression and the search engine would function the same
without them, they do not have a purpose different from Kelly’s use of them.”439 Accordingly,
the first factor weighed against fair use. For the same reasons as before, the second factor
weighed slightly in favor of Kelly.440 The third factor weighed in favor of Kelly because,
although it was necessary to provide whole images “to suit Arriba’s purpose of giving users
access to the full-sized images without having to go to another site, such a purpose is not
legitimate.”441 Finally, the fourth factor weighed in Kelly’s favor, because “[b]y giving users
access to Kelly’s full-sized images on its own web site, Arriba harms all of Kelly’s markets.”442
The Ninth Circuit’s ruling in its 2002 decision on the public display issue generated a lot
of controversy, since the reach of that ruling was potentially so broad. In particular, the logic the
Ninth Circuit adopted in its 2002 decision – that the mere act of inline linking to or framing of a
work, whether or not users actually view the linked work – constitutes a public display of the
linked work, could call into question the legality of many types of linking or framing that has not
been expressly authorized by the owner of the linked material. Apparently in response to the
controversy, on Oct. 10, 2002, the Ninth Circuit ordered additional briefing on issues of public
display and derivative use rights raised by the case.443
In its 2003 decision, the Ninth Circuit omitted entirely the discussion of the public
display right that had appeared in its 2002 decision. Instead, the court held that the district court
should not have decided whether the display of the full-sized images violated Kelly’s public
display rights because the parties never moved for summary judgment on that issue.444 In the
proceedings below, Kelly had moved only for summary judgment that Arriba’s use of the
thumbnail images violated his display, reproduction and distribution rights. Arriba cross-moved
for summary judgment and, for purposes of the motion, conceded that Kelly had established a
prima facie case of infringement as to the thumbnail images, but argued that its use of the
thumbnail images was a fair use. The Ninth Circuit concluded that, by ruling that use of both the
thumbnail images and the full-sized images was fair, the district court had improperly broadened
the scope of both Kelly’s original motion to include a claim for infringement of the full-sized
images and the scope of Arriba’s concession to cover the prima facie case for both the thumbnail
images and the full-sized images.445 Accordingly, the court remanded for further proceedings
439 Id. at 947.
440 Id. at 947-48.
441 Id. at 948.
442Id.
443 “Ninth Circuit Orders Added Briefs on Hyperlinking Issues in Arriba Soft Appeal,” BNA’s Electronic
Commerce & Law Report (Oct. 30, 2002) at 1082.
444 Kelly v. Arriba Soft Corp., 336 F.3d 811, 822 (9th Cir. 2003).
445 Id. at 817.
- 113 -
with respect to the full-sized images to give the parties an opportunity to fully litigate those
issues.446
3. Ticketmaster v. Tickets.com
See Section III.D.7 below for a discussion of this case, which distinguished the Kelly v.
Arriba Soft case and held that Tickets.com’s deep linking to pages on Ticketmaster’s web site
where tickets could be purchased for events listed on Tickets.com’s site did not constitute an
infringing public display.
4. Perfect 10 v. Google (aka Perfect 10 v. Amazon)
Perfect 10 v. Google set forth a detailed adjudication of the boundaries of the display
right on the Internet, and in particular, which entity should be deemed to perform the display for
purposes of copyright liability when the display results through links from a web site to another
web site storing copies of the copyrighted material at issue. Because both the district court and
the Ninth Circuit issued very thorough, thoughtful opinions, the holdings of both courts will be
explained in detail.
The plaintiff Perfect 10 sought to preliminarily enjoin Google from displaying
thumbnails and full size versions of its copyrighted photographs through the “Google Image
Search” function in response to user search queries. Google Image Search allowed a user to
input a text search string and returned thumbnail images organized into a grid potentially
responsive to the search query.447
To operate Google Image Search, Google created and stored in its cache thumbnail
versions of images appearing on web sites crawled by Google’s web crawler. The thumbnails
chosen for display in response to search queries depended solely upon the text surrounding the
image at the original site from which the image was drawn. When a user clicked on a thumbnail
image, Google displayed a page comprised of two distinct frames divided by a gray horizontal
line, one frame hosted by Google and the second one hosted by the underlying web site that
originally hosted the full size image.448 In the upper frame, Google displayed the thumbnail,
retrieved from its cache, and information about the full size image, including the original
resolution of the image and the specific URL associated with that image. The upper frame made
clear that the image might be subject to copyright and that the upper frame was not the original
context in which the full size image was found. The lower frame contained the original web
page on which the original image was found. Google neither stored nor served any of the
content displayed in the lower frame, which was stored and served by the underlying third party
446 Id. at 822.
447 Perfect 10 v. Google, 416 F. Supp. 2d 828, 832-33 (C.D. Cal. 2006), aff’d sub nom. Perfect 10 v. Amazon.com,
Inc., 508 F.3d 1146, 1169 (9th Cir. 2007).
448 Id. at 833.
- 114 -
web site containing the original image.449 Perfect 10 brought claims against Google for direct,
vicarious and contributory copyright infringement.
Direct Infringement Claims. Perfect 10 alleged that Google directly infringed its
copyrights by displaying and distributing the full size images hosted by third party web sites, and
by creating, displaying and distributing thumbnails of its copyrighted full size images. Google
conceded that it created and displayed thumbnails, but denied that it displayed, created, or
distributed what was depicted in the lower frame of search results displays, which were
generated via in-line links to third party sites storing the original images of interest.450
The district court began with a consideration of how “display” should be defined in the
context of in-line linking, noting that two approaches were possible: (1) a “sever” test, in which
display is defined as the act of serving content over the web, i.e., physically sending bits over the
Internet to the user’s browser, and (2) an “incorporation” test, in which display is defined as the
mere act of incorporating content into a web page that is then pulled up by the browser through
an in-line link. Under the server test, advocated in the case by Google, the entity that should be
deemed liable for the display of infringing content is the entity whose server served up the
infringing material. Under the incorporation test, advocated by Perfect 10, the entity that should
be deemed liable for the display of infringing content is the entity that uses an in-line link in its
web page to direct the user’s browser to retrieve the infringing content.451
The district court reviewed the existing decisions dealing with the question of whether
linking constitutes infringing “displaying” of copyrighted material. The court noted that in the
Webbworld and Hardenburg cases,452 the material was stored on the defendant’s servers, and in
the Perfect 10 v. Cybernet Ventures case,453 it was unclear whether the defendant stored or
served any of the infringing content. The court further noted that the Ninth Circuit had
withdrawn its opinion in Kelly v. Arriba Soft454 adopting the incorporation test in the face of
widespread criticism of that decision. The court therefore found that none of these cases, or any
other existing precedent, resolved the question before it.455
The district court concluded that the server test was the most appropriate one for
determining whether Google’s lower frames were a “display” of infringing material. The court
articulated several reasons for adopting the server test. First, it is based on what happens at the
technological level as users browse the web, and thus reflects the reality of how content actually
travels over the Internet before it is shown on users’ computers. Second, it precludes search
engines from being held directly liable for in-line linking and/or framing infringing content
449 Id. at 833-34.
450 Id. at 838.
451 Id. at 838-40.
452 These cases are discussed in Section II.C.1 above.
453 This case is discussed in Section II.A.4(k) above.
454 This case is discussed in Section II.C.2 above.
455 416 F. Supp. 2d at 840-43.
- 115 -
stored on third party web sites, but allows copyright owners still to seek to impose contributory
or vicarious liability on web sites for including such content. Third, web site operators can
readily understand the server test and courts can apply it relatively easily. Fourth, in the instant
case, it imposes direct liability on the web sites that took Perfect 10’s full size images and posted
them on the Internet for all to see. Finally, the server test promotes the balance of copyright law
to encourage the creation of works by protecting them while at the same time encouraging the
dissemination of information. The server test would avoid imposing direct liability for merely
indexing the web so that users can more readily find the information they seek, while imposing
direct liability for the hosting and serving of infringing content.456
Applying the server test, the district court ruled that for purposes of direct infringement,
Google’s use of frames and in-line links did not constitute a “display” of the full size images
stored on and served by infringing third party web sites, but Google did “display” the thumbnails
of Perfect 10’s copyrighted images because it created, stored, and served those thumbnails on its
own servers.457
On appeal, the Ninth Circuit agreed with the district court that the “server” test should be
used to determine which entity displays an image on the web, concluding that the test was
consistent with the statutory language of the copyright statute. Under that test, Perfect 10 had
made a prima facie case that Google’s communication of its stored thumbnail images directly
infringed Perfect 10’s display rights. However, Google had not publicly displayed a copy of the
full size infringing images when it framed in-line linked images that appeared on a user’s
computer screen.458 The Ninth Circuit found that Google’s activities with respect to the full size
images did not meet the statutory definition of public display “because Google transmits or
communicates only an address which directs a user’s browser to the location where a copy of the
full-size image is displayed. Google does not communicate a display of the work itself.”459 The
court also ruled that, because Google’s cache merely stored the text of web pages, and not the
images themselves, Google was not infringing the display right by virtue of its cache.460
Fair Use. The district court evaluated Google’s assertion of the fair use defense to the
display of the thumbnails. With respect to the first fair use factor, the purpose and character of
the use, the court found that Google’s display of the thumbnails was a commercial use, since
Google derived significant commercial benefit from Google Image Search in the form of
increased user traffic and, in turn, increased advertising revenue. The court distinguished the
Ninth Circuit’s decision in the Kelly v. Arriba Soft case by noting that, unlike Arriba Soft,
Google derived direct commercial benefit from the display of thumbnails through its “AdSense”
program, under which third party web sites could place code on their sites to request Google’s
server to algorithmically select relevant advertisements for display based on the content of the
456 Id. at 843-44.
457 Id. at 844.
458 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1159-60 (9th Cir. 2007).
459 Id. at 1161 n.7.
460 Id. at 1162.
- 116 -
site, and then share revenue flowing from the advertising displays and click-throughs. If third
party web sites participating in the AdSense program contained infringing copies of Perfect 10
photographs, Google would serve ads on those sites and split the revenue generated from users
who clicked on the Google-served ads.461 Accordingly, the court concluded that “AdSense
unquestionably makes Google’s use of thumbnails on its image search far more commercial than
Arriba’s use in Kelly II. Google’ thumbnails lead users to sites that directly benefit Google’s
bottom line.”462
Relying on the Kelly v. Arriba Soft decision, the court concluded that the use of the
thumbnails was transformative because their creation and display enabled the display of visual
search results quickly and efficiently, and did not supersede Perfect 10’s us of the full size
images. But the court noted that the transformative nature of the thumbnail use did not end the
analysis, because the use was also “consumptive.” In particular, the court noted that after it filed
suit against Google, Perfect 10 entered into a licensing agreement with a third party for the sale
and distribution of Perfect 10 reduced-size images for download to and use on cell phones.463
“Google’s use of thumbnails does supersede this use of P10’s images, because mobile users can
download and save the thumbnails displayed by Google Image Search onto their phones.”464 On
balance, then, the court concluded that, because Google’s use of thumbnails was more
commercial than Arriba Soft’s and because it was consumptive with respect to Perfect 10’s
reduced-size images, the first factor weighed “slightly in favor” of Perfect 10.465
The district court ruled that the second fair use factor, the nature of the copyrighted work,
weighed “only slightly in favor” of Perfect 10 because, although its photographs were creative,
as in the case of the Kelly v. Arriba Soft case, they had appeared on the Internet before use in
Google’s search engine.466 The court found that the third factor, the amount and substantiality of
the portion used, favored neither party because Google’s use of the copies of Perfect 10’s images
was no greater than necessary to achieve the objective of providing effective image search
capabilities.467 Finally, the court found that the fourth factor, the effect of the use upon the
potential market for and value of the copyrighted work, weighed slightly in Perfect 10’s favor
because of the court’s finding that Google’s use of thumbnails likely would harm the potential
461 Perfect 10 v. Google, 416 F. Supp. 2d 828, 834, 846-47 (C.D. Cal. 2006), aff’d sub nom. Perfect 10 v.
Amazon.com, Inc., 508 F.3d 1146, 1169 (9th Cir. 2007).
462 Id. at 846. Google counterargued that its AdSense program policies prohibited a web site from registering as an
AdSense partner if the site’s web pages contained images that appeared in Google Image Search results. The
court noted, however, that Google had not presented any information regarding the extent to which the
purported policy was enforced nor had it provided examples of AdSense partners who were terminated because
of violations of the policy. In contrast, Perfect 10 submitted numerous screenshots of third party web sites that
served infringing content and also appeared to be receiving and displaying AdSense ads from Google. Id. at
846-47.
463 Id. at 847-49.
464 Id. at 849.
465Id.
466 Id. at 849-50.
467 Id. at 850.
- 117 -
market for the downloading of Perfect 10’s reduced-size images onto cell phones. On balance,
then, the court found that the fair use doctrine likely would not cover Google’s use of the
thumbnails.468
On appeal, the Ninth Circuit reached the opposite conclusion under the fair use doctrine.
Before beginning its specific analysis of the four fair use factors, the Ninth Circuit made some
important preliminary rulings concerning the burden of proof with respect to the fair use
doctrine. The district court had ruled that, because Perfect 10 had the burden of showing a
likelihood of success on the merits, it also had the burden of demonstrating a likelihood of
overcoming Google’s fair use defense. The Ninth Circuit held the district court’s ruling on this
point to be erroneous. Citing cases from the Supreme Court and the Federal Circuit holding that
the burdens at the preliminary injunction stage track the burdens at trial, the Ninth Circuit ruled
that, once Perfect 10 had shown a likelihood of success on the merits, the burden shifted to
Google to show a likelihood that its affirmative defenses – including that of fair use – would
succeed.469
The Ninth Circuit’s analysis of the fair use factors is significant in its recognition of the
need, when judging the transformative nature of the use, to balance the public benefit from the
use against the potential harm to the rights holder from superseding commercial uses, as well as
in its requirement of a showing that alleged potential superseding commercial uses are both real
and significant in their impact. Specifically, with respect to the first factor, the Ninth Circuit,
citing the Kelly v. Arriba Soft case, noted that Google’s use of the thumbnails was highly
transformative because its search engine transformed each image into a pointer directing a user
to a source of information.470 In addition, “a search engine provides social benefit by
incorporating an original work into a new work, namely, an electronic reference tool.”471
468 Id. at 850-51.
469 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1158 (9th Cir. 2007). This holding was the opposite of one the
Ninth Circuit had reached in an earlier issued opinion in the appeal, which the instant opinion replaced. In the
earlier opinion, the Ninth Circuit had concluded that, because a plaintiff has the burden of showing a likelihood
of success on the merits in order to obtain a preliminary injunction, the plaintiff should also have the burden of
demonstrating a likelihood of overcoming the defendant’s fair use defense. However, because the defendant in
an infringement action has the burden of proving fair use, the Ninth Circuit had ruled in its earlier opinion that
the defendant is responsible for introducing evidence of fair use in the first instance in responding to a motion
for preliminary relief, whereupon the burden would then shift to the plaintiff to demonstrate that it will
overcome the fair use defense. Perfect 10 v. Amazon.com, Inc., 487 F.3d 701, 714 (9th Cir. 2007) (superseded
by 508 F.3d 1146 (9th Cir. 2007)). The court further elaborated its rationale in the earlier opinion as follows:
“In order to demonstrate its likely success on the merits, the moving party must necessarily demonstrate it will
overcome defenses raised by the non-moving party. This burden is correctly placed on the party seeking to
demonstrate entitlement to the extraordinary remedy of a preliminary injunction at an early stage of the
litigation, before the defendant has had the opportunity to undertake extensive discovery or develop its
defenses.” 487 F.3d at 714. The Ninth Circuit apparently concluded that this earlier holding was inconsistent
with established precedent that the burdens at the preliminary injunction stage track the burdens at trial, leading
the court to issue a revised opinion.
470 508 F.3d at 1165.
471 Id. The Ninth Circuit rejected Perfect 10’s argument that providing access to infringing web sites cannot be
deemed transformative and is inherently not fair use. The court noted that Google was operating a
- 118 -
In a significant ruling, the Ninth Circuit disagreed, on two grounds, with the district
court’s conclusion that Google’s use of thumbnail images was less transformative than the video
search engine at issue in Kelly v. Arriba Soft because Google’s use of thumbnails superseded
Perfect 10’s right to sell its reduced-size images for use on cell phones. First, the Ninth Circuit
noted that the alleged superseding use was not significant at the present time, because the district
court had not found that any downloads of Perfect 10’s photos for mobile phone use had actually
taken place.472 Second, the court concluded “that the significantly transformative nature of
Google’s search engine, particularly in light of its public benefit, outweighs Google’s
superseding and commercial uses of the thumbnails in this case.”473 Accordingly, the first fair
use factor weighed in favor of Google.
The Ninth Circuit found that the district court had correctly analyzed the second and third
factors.474 With respect to the fourth factor, Perfect 10 challenged the district court’s finding of
no harm to the market for the full sized images on the ground that likelihood of market harm may
be presumed if the intended use of an image is for commercial gain. The court noted, however,
that this presumption does not arise when a work is transformative because market substitution is
less certain. Because Google’s use of thumbnails for search engine purposes was highly
transformative and market harm could therefore not be presumed, and because Perfect 10 had not
introduced evidence that Google’s thumbnails would harm its existing or potential market for
full size images, the Ninth Circuit rejected Perfect 10’s argument.475
With respect to harm to Perfect 10’s alleged market for reduced size images, the Ninth
Circuit noted that the district court did not make a finding that Google users had actually
downloaded thumbnail images for cell phone use, so any potential harm to that alleged market
remained hypothetical. Accordingly, the court concluded that the fourth factor favored neither
party.476 Balancing the four factors, and particularly weighing Google’s highly transformative
use and its public benefit against the unproven use of thumbnails for cell phone downloads, the
court concluded that Google’s use of Perfect 10’s thumbnails was a fair use. Accordingly, the
court vacated the preliminary injunction regarding Google’s use of thumbnail images.477
comprehensive search engine that only incidentally indexed infringing web sites. “This incidental impact does
not amount to an abuse of the good faith and fair dealing underpinnings of the fair use doctrine. Accordingly,
we conclude that Google’s inclusion of thumbnail images derived from infringing websites in its Internet-wide
search engine activities does not preclude Google from raising a fair use defense.” Id. at 1164 n.8.
472 Id. at 1166.
473Id.
474 Id. at 1167-68
475 Id. at 1168.
476Id.
477 Id. In a side, but significant, issue, Google argued that the Ninth Circuit lacked jurisdiction over the preliminary
injunction to the extent it enforced unregistered copyrights. The court rejected this argument: “Once a court
has jurisdiction over an action for copyright infringement under section 411 [of the copyright statute], the court
may grant injunctive relief to restrain infringement of any copyright, whether registered or unregistered.” Id. at
1154 n.1.
- 119 -
Contributory Infringement. Perfect 10 argued to the district court that Google was
contributing to the infringement of two direct infringers – third party web sites hosting and
serving infringing copies of Perfect 10 photographs, and Google Image Search users
downloading such images. The district court ruled as a preliminary matter that Perfect 10 could
not base its contributory infringement claim on users’ actions, because Perfect 10 had
demonstrated only that users of Google search were capable of directly infringing by
downloading the images, but had not submitted sufficient evidence showing the extent to which
users were in fact downloading Perfect 10’s images through Google Image Search. Thus, the
contributory infringement claim had to be based on knowledge and material contribution by
Google to the infringing activities of third party web sites hosting Perfect 10’s images.478
With respect to the knowledge prong, the district court, citing the Supreme Court’s
Grokster case, noted that either actual or constructive knowledge is sufficient for contributory
liability. The court rejected Perfect 10’s argument that Google had actual knowledge from the
presence of copyright notices on Perfect 10’s images or from the fact that Google’s AdSense
policy stated that it monitored the content of allegedly infringing sites. The court noted that
Google would not necessarily know that any given image on the Internet was infringing
someone’s copyright merely because the image contained a copyright notice. With respect to the
alleged monitoring by Google, Google had changed its AdSense policy to remove the language
reserving to Google the right to monitor its AdSense partners. The court further noted that, in
any event, merely because Google may have reserved the right to monitor its AdSense partners
did not mean that it could thereby discern whether the images served by those web sites were
subject to copyright.479
The district court then turned to an analysis of whether numerous notices of infringement
sent by Perfect 10 to Google were sufficient to give Google actual knowledge of infringing
activity. Google challenged the adequacy of those notices on the grounds that they frequently
did not describe in sufficient detail the specific URL of an infringing image and frequently did
not identify the underlying copyrighted work. Some notices listed entire web sites as infringing,
or entire directories within a web site. Google claimed that despite these shortcomings, it
promptly processed all of the notices it received, suppressing links to specific web pages that it
could confirm displayed infringing Perfect 10 copies. The court concluded, however, that it need
not resolve the question of whether Google had adequate actual knowledge of infringement, in
view of the court’s conclusion that Google had not materially contributed to the infringing
activity of third party web sites.480
The district court articulated the following grounds for its finding that Perfect 10 had not
adequately met its burden to show that Google sufficiently contributed to the infringing activity
for contributory liability. First, the court set forth numerous differences between Google’s
activity and the activity that had been found to materially contribute to infringement in the
478 Perfect 10 v. Google, 416 F. Supp. 2d 828, 851-52 (C.D. Cal. 2006), aff’d sub nom. Perfect 10 v. Amazon.com,
Inc., 508 F.3d 1146, 1169 (9th Cir. 2007).
479 Id. at 853-54.
480 Id. at 854.
- 120 -
Napster cases. For example, unlike in the case of the Napster system, in the instant case the
infringing third party web sites existed, were publicly accessible, and engaged in the infringing
activity irrespective of their inclusion or exclusion from Google’s index. Unlike Napster,
Google did not provide the means of establishing connections between users’ computers to
facilitate the downloading of the infringing material. Even absent Google, third party web sites
would continue to exist and would continue to display infringing content (an observation which
would seem true of all search engines). And unlike Napster, Google did not boast about how
users could easily download infringing content, nor did it facilitate the transfer of files stored on
users’ otherwise private computers.481
In sum, the district court found that Perfect 10 had overstated Google’s actual conduct
and confused the mere provision of search technology with active encouragement and promotion
of infringing activity. The court also rejected Perfect 10’s argument based on the Supreme
Court’s Grokster case that Google had materially contributed to the infringing activity by
providing through AdSense a revenue stream to the infringing web sites. The court held that,
although the AdSense program might provide some level of additional revenue to the infringing
web sites, Perfect 10 had not presented any evidence establishing what that revenue was, much
less that it was material, either in its own right or relative to those web sites’ total income.
Accordingly, the court ruled that Perfect 10 was not likely to prevail on its claim for contributory
liability.482
In an important ruling on appeal,483 the Ninth Circuit reversed and remanded for factual
findings under a specialized test for contributory infringement for computer system operators.
The Ninth Circuit began its analysis by examining the issue of whether Perfect 10 had
adequately proved direct infringements to which Google could potentially contribute. Perfect 10
alleged that three parties directly infringed its images – third party web sites that copied,
displayed and distributed unauthorized Perfect 10 images, individual users of Google’s search
engine who stored full size Perfect 10 images on their computers, and users who linked to
infringing web sites, thereby automatically making cache copies of full size images in their
computers. Google did not dispute that third party web sites directly infringed Perfect 10’s
copyrights by copying, displaying and distributing unauthorized copies of Perfect 10 images.484
The Ninth Circuit agreed, however, with the district court that Perfect 10 failed to provide
any evidence directly establishing that users of Google’s search engine had stored infringing
images on their computers. Finally, the Ninth Circuit agreed with the district court that any
cache copies of full size images made by users who linked to infringing web sites were a fair use.
The copying performed automatically by a user’s computer to assist in accessing the Internet was
a transformative use and did not supersede the copyright holder’s exploitation of the work.485
481Id.
482 Id. at 855-56.
483 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).
484 Id. at 1169.
485Id.
- 121 -
“Such automatic background copying has no more than a minimal effect on Perfect 10’s rights,
but a considerable public benefit.”486 Accordingly, the Ninth Circuit assessed Google’s
secondary liability based solely with respect to activities of third party web sites that reproduced,
displayed, and distributed unauthorized copies of Perfect 10’s images on the Internet.487
Turning to whether Google could be secondarily liable for the infringing acts of those
third party web sites, the Ninth Circuit first noted that under the Sony doctrine, Google could not
be held liable for contributory infringement based solely on the fact that the design of its search
engine facilitated such infringement. Nor, under footnote 12 of the Supreme Court’s Grokster
decision, could Google be held liable solely because it did not develop technology that would
enable its search engine to automatically avoid infringing images.488
The Ninth Circuit next held that Google could not be liable under the Supreme Court’s
inducement test in Grokster, because Google had not promoted the use of its search engine
specifically to infringe copyrights.489 In reaching this result, however, the Ninth Circuit appears
to have put a gloss on the Supreme Court’s test for inducement liability, for in addition to noting
that inducement liability could result from intentionally encouraging infringement through
specific acts, the Ninth Circuit stated that intent could be imputed “if the actor knowingly takes
steps that are substantially certain to result in … direct infringement.”490
Finally, turning to whether Google could have secondary liability under the traditional
common law doctrine of contributory liability, the Ninth Circuit, citing its Napster decisions,
noted that it had “further refined this test in the context of cyberspace to determine when
contributory liability can be imposed on a provider of Internet access or services.”491 The Ninth
Circuit noted that under both Napster and Netcom, a service provider’s knowing failure to
prevent infringing actions could be the basis for imposing contributory liability, because under
such circumstances, the intent required under the Supreme Court’s Grokster decision may be
imputed. Accordingly, the Ninth Circuit articulated the following test for contributory liability
in the context of cyberspace:
[W]e hold that a computer system operator can be held contributorily liable if it
“has actual knowledge that specific infringing material is available using its
system,” Napster, 239 F.3d at 1002, and can “take simple measures to prevent
further damage” to copyrighted works, Netcom, 907 F. Supp. At 1375, yet
continues to provide access to infringing works.492
486Id.
487 Id. at 1170.
488 Id.
489 Id. at 1171 n.11.
490 Id. at 1171.
491 Id.
492 Id. at 1172 (emphasis in original).
- 122 -
This articulated test leaves open at least the following questions, with respect to which
the Ninth Circuit’s decision gives little guidance:
-- Is this the exclusive test for contributory infringement in “the context of cyberspace”?
-- What are the boundaries of “the context of cyberspace” within which this test will
apply?
-- Does the reference to “actual” knowledge preclude secondary liability on the
alternative traditional common law formulation of “reason to know” in the context of
cyberspace?
-- Do “simple measures” extend only to taking down specific infringing material, or to
preventing its recurrence also?
Applying this specialized test, the Ninth Circuit ruled that the district court had erred in
concluding that, even if Google had actual knowledge of infringing material available on its
system, it did not materially contribute to infringing conduct because it did not undertake any
substantial promotional or advertising efforts to encourage visits to infringing web sites, nor
provide a significant revenue stream to the infringing web sites.493 The Ninth Circuit stated:
There is no dispute that Google substantially assists websites to distribute their
infringing copies to a worldwide market and assists a worldwide audience of users
to access infringing materials. We cannot discount the effect of such a service on
copyright owners, even though Google’s assistance is available to all websites,
not just infringing ones. Applying our test, Google could be held contributorily
liable if it had knowledge that infringing Perfect 10 images were available using
its search engine, could take simple measures to prevent further damage to Perfect
10’s copyrighted works, and failed to take such steps.494
Noting that there were factual disputes over whether there are “reasonable and feasible
means” for Google to refrain from providing access to infringing images, the Ninth Circuit
remanded the contributory infringement claim for further consideration of whether Perfect 10
would likely succeed in establishing that Google was contributorily liable for in-line linking to
full size infringing images under the test the court had enunciated.495
Similarly, the Ninth Circuit remanded for further proceedings on whether Amazon.com,
which Perfect 10 had also sued based on its offering of the A9.com search engine, should be held
contributorily liable. “It is disputed whether the notices gave Amazon.com actual knowledge of
specific infringing activities available using its system, and whether Amazon.com could have
493 Id.
494 Id.
495 Id. at 1172-73
- 123 -
taken reasonable and feasible steps to refrain from providing access to such images, but failed to
do so.”496
Vicarious Liability. Perfect 10 also asserted claims against Google for vicarious liability.
With respect to the financial benefit prong, the district court found that Google obtained a direct
financial benefit from the infringing activity through its AdSense revenues under the standard
articulated in the Ninth Circuit’s Fonovisa decision,497 in which it held that the financial benefit
prong can be satisfied where the availability of infringing material acts as a “draw” for customers
to the site. Under that standard, the district court found it likely that at least some users were
drawn to Google Image Search because they knew that copies of Perfect 10’s photos could be
viewed for free, and Google derived a direct financial benefit when users visited AdSense
partners’ web sites that contained such infringing photos.498
Notwithstanding the financial benefit to Google, however, the district court found that
Google had insufficient control over the infringing activity to impose vicarious liability because
the Web is an open system. “Google does not exercise control over the environment in which it
operates – i.e., the web. Google’s ability to remove a link from its search index does not render
the linked-to site inaccessible. The site remains accessible both directly and indirectly (i.e., via
other search engines, as well as via the mesh of websites that link to it). If the phrase ‘right and
ability to control’ means having substantial input into or authority over the decision to serve or
continue serving infringing content, Google lacks such right or ability.”499 Moreover, Google’s
software lacked the ability to analyze every image on the Internet, compare each image to all
other copyrighted images that existed in the world, or even to that much smaller subset of images
that had been submitted to Google by copyright owners such as Perfect 10, and determine
whether a certain image on the web infringed someone’s copyright.500 Finally, the court ruled
that the “right and ability to control” prong required more than Google’s reservation in its
AdSense policy of the right to monitor and terminate partnerships with entities that violated
others’ copyrights. Accordingly, the district court held that Perfect 10 had not established a
likelihood of proving the second prong necessary for vicarious liability.501
Based on its various rulings, the district court concluded that it would issue a preliminary
injunction against Google prohibiting the display of thumbnails of Perfect 10’s images, and
ordered the parties to propose jointly the language of such an injunction.502
On appeal, the Ninth Circuit affirmed the district court’s ruling that Perfect 10 had not
shown a likelihood of establishing Google’s right and ability to stop or limit the directly
496 Id. at 1176.
497 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996).
498 Perfect 10 v. Google, 416 F. Supp. 2d at 856-57.
499 Id. at 857-58.
500 Id. at 858.
501 Id.
502 Id. at 859.
- 124 -
infringing conduct of third party web sites. The Ninth Circuit began its analysis by noting that,
under Grokster, “a defendant exercises control over a direct infringer when he has both a legal
right to stop or limit the directly infringing conduct, as well as the practical ability to do so.”503
With respect to the first part of this test, the court noted that, unlike in Fonovisa where the swap
meet operator had contracts with its vendors giving it the right to stop the vendors from selling
counterfeit recordings on its premises, Perfect 10 had not shown that Google had contracts with
third party web sites that empowered Google to stop or limit them from reproducing, displaying
and distributing infringing copies of Perfect 10’s images. Although Google had AdSense
agreements with various web sites, an infringing third party web site could continue to
reproduce, display, and distribute its infringing copies after its participation in the AdSense
program was ended.504 And unlike the Napster system, in which Napster’s control over its
closed system that required user registration and enabled Napster to terminate its users’ accounts
and block their access to the Napster system, Google could not terminate third party web sites
distributing infringing photographs or block their ability to host and serve infringing full size
images on the Internet.505
The Ninth Circuit also affirmed the district court’s findings that Google lacked the
practical ability to police the third party web sites’ infringing conduct. “Without imagerecognition
technology, Google lacks the practical ability to police the infringing activities of
third-party websites.”506 Google’s inability to police distinguished it from the defendants held
liable in the Napster and Fonovisa cases. Accordingly, Perfect 10 had failed to establish the right
and ability to control prong of vicarious liability.507 Having so concluded, the Ninth Circuit
determined that it need not reach Perfect 10’s argument that Google received a direct financial
benefit.508
Based on its rulings, the Ninth Circuit reversed the district court’s determination that
Google’s thumbnail versions of Perfect 10’s images likely constituted a direct infringement. It
also reversed the district court’s conclusion that Perfect 10 was unlikely to succeed on the merits
of its secondary liability claims because the district court failed to consider whether Google and
Amazon.com knew of infringing activities yet failed to take reasonable and feasible steps to
refrain from providing access to infringing images. Accordingly, the Ninth Circuit remanded the
case to the district court for further proceedings on this point, as well as to consider whether
Google and Amazon.com would qualify for any of the safe harbors of the DMCA, an issue
which the district court did not consider because of its rulings. Because the district court would
503 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1173 (9th Cir. 2007).
504 Id.
505 Id. at 1174.
506 Id.
507 Id. The Ninth Circuit also stated, without analysis, that it agreed with the district court’s conclusion that
Amazon.com did not have the right and ability to supervise the infringing activity of Google or third parties,
and that the district court did not clearly err in concluding that Amazon.com lacked a direct financial interest in
such activities. Id. at 1176.
508 Id. at 1175 n.15.
- 125 -
need to reconsider the appropriate scope of injunctive relief after addressing the secondary
liability issues, the Ninth Circuit decided that it need not address the parties’ dispute over
whether the district court abused its discretion in determining that Perfect 10 satisfied the
irreparable harm element of a preliminary injunction.509
On remand, Google asserted various safe harbors under the DMCA. Analysis of the
rulings with respect to whether Google was entitled to any of the safe harbors may be found in
Section III.C.6(b)(1)(ii).c.
5. Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey
In Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey,510 the court ruled
that display of copyrighted images on computer monitors within a law office constituted a public
display, but was permitted under the fair use doctrine. Healthcare Advocates had filed a lawsuit
alleging that a competitor infringed trademarks and copyrights and misappropriated trade secrets
belonging to Healthcare Advocates. The defendants in that case were represented by the
boutique IP law firm of Harding, Earley, Follmer & Frailey. To aid in preparing a defense, on
two occasions employees of the Harding firm accessed screenshots of old versions of Healthcare
Advocates’ web sites that had been archived by the Internet Archive’s web site
(www.archive.org). The old versions of the web site were accessed through the “Wayback
Machine,” an information retrieval system offered to the public by the Internet Archive that
allowed users to request archived screenshots contained in its archival database. Viewing the
content that Healthcare Advocates had included on its public web site in the past was very useful
to the Harding firm in assessing the merits of the trademark and trade secret allegations brought
against the firm’s clients. The Harding firm printed copies of the archived screenshots of interest
and used the images in the litigation against their clients. Healthcare Advocates then sued the
Harding firm, alleging that viewing the screenshots of the old versions of their web site on
computers within the firm constituted an infringing public display, and that printing of copies of
those screenshots and storing them on hard drives at the firm also infringed the company’s
copyrights.511
The court ruled that, “[u]nder the expansive definition of a public display, the display of
copyrighted images on computers in an office constitutes a public display.”512 The court
concluded, however, that the Harding firm’s display and copying of those images for purposes of
defending its clients in the litigation brought by Healthcare Associates constituted a fair use.
With respect to the purpose of the use, the court noted that the images were used to better
understand what Healthcare Associates’ complaint, which did not specify what had been
infringed nor have any documents attached to it depicting the infringement, was based on.513
509 Id. at 1176-77.
510 2007 U.S. Dist. LEXIS 52544 (E.D. Pa. July 20, 2007).
511 Id. at *2-10.
512 Id. at *19.
513 Id. at *22-23.
- 126 -
Only a small group of employees were able to see the images within the law firm’s office, which
the court found was “similar to a family circle and its acquaintances.”514 The purpose of the
printing was only to make a record of what had been viewed and for use as supporting
documentation for the defense the firm planned to make for its clients.515 “It would be an absurd
result if an attorney defending a client against charges of trademark and copyright infringement
was not allowed to view and copy publicly available material, especially material that his client
was alleged to have infringed.”516
The second fair use factor weighed in favor of the firm because the nature of Healthcare
Associates’ web sites was predominantly informational. The third factor weighed in favor of the
firm because, although entire images were copied, employees at the firm needed to copy
everything they viewed because they were using the screenshots to defend their clients against
copyright and trademark infringement claims. The firm also had a duty to preserve relevant
evidence. Finally, the court found that the fourth fair use factor also favored the firm, because
the value of Healthcare Associates’ web sites was not affected by the Harding’s firm’s use, and
the images viewed and copied were archived versions of the web site that Healthcare Associates
no longer utilized, suggesting their worth was negligible. Accordingly, the court held that the
Harding firm’s use of the images obtained through the Wayback Machine constituted a fair
use.517
6. ICG-Internet Commerce Group, Inc. v. Wolf
In ICG-Internet Commerce Group, Inc. v. Wolf,518 the court held that the defendant had
infringed the plaintiff’s copy and public display rights in an adult video by posting the video to
the defendant’s web site. The court also ruled that the insertion into the plaintiff’s video of a
URL link to the defendant’s web site constituted the creation of an infringing derivative work.519
7. Perfect 10 v. Yandex
In Perfect 10, Inc. v. Yandex, N.V.,520 Yandex operated image search engines at
Yandex.ru, whose servers were located in Russia, and Yandex.com, whose servers were located
in the U.S. Yandex.ru was Russia’s most popular search engine and the fourth largest search
engine worldwide. The search engines did not store any full-sized images that its crawlers
514 Id. at *24. The copyright statute defines a “public” display as one made in a place “where a substantial number
of persons outside of a normal circle of a family and its social acquaintances is gathered.” 17 U.S.C. § 101.
515 Id. at *24.
516 Id. at *24-25.
517 Id. at *26-29. The court also ruled that the firm’s failure to preserve temporary cache files of the screenshots
that were automatically created by the computers used by the firm’s employees to view the images through the
Internet, and were also automatically deleted by the computers’ operating system, did not constitute spoliation
of evidence. Id. at *30-38.
518 519 F. Supp. 2d 1014 (E.D. Pa. 2007).
519 Id. at 1018.
520 2013 U.S. Dist. LEXIS 98608 (N.D. Cal. July 12, 2013).
- 127 -
located, but rather stored only lower-resolution thumbnails of the images. Yandex reproduced its
thumbnail copies on search results pages so that a user making a search query could determine
which, if any, thumbnails were of interest and then click through to the third party web site that
hosted the full-sized image. When the user clicked on a link, the full-size source image was
displayed via in-line linking in the same browser window without including other parts of the
surrounding third-party web page on which the full-sized image appeared. Thumbnails of
several thousand unauthorized Perfect 10 images were stored on Yandex’s search engine servers
and Perfect 10 sued for direct, contributory and vicarious copyright infringement. Yandex
moved for summary judgment on several issues.521
Turning first to the issue of direct liability, the court noted that of the 63,756 alleged
infringements to which Yandex.ru and Yandex.com linked in search results, 51,959 of them were
hosted on servers located outside the U.S. The court noted that under the Ninth Circuit’s “server
test” adopted in the Perfect 10 v. Amazon case, the hosting web site’s computer, rather than the
search engine’s computer, is the situs of direct infringement, and Yandex could therefore have no
liability for direct infringement under U.S. copyright law with respect to those images hosted
outside the U.S. The court rejected Perfect 10’s argument that Yandex committed direct
infringement by display in the U.S. of images hosted outside the U.S. because users in the U.S.
could download them. Nowhere in the Amazon decision did the Ninth Circuit endorse the idea
that display of a copyrighted image anywhere in the world creates direct copyright liability in the
U.S. merely because images could be downloaded from a server abroad by someone in the U.S.
The court observed that such a principle would destroy the concept of territoriality inhering in
the Copyright Act for works on the Internet. The court found more plausible Perfect 10’s
argument that, when Yandex’s servers were located in the U.S. for a nine-month period, a
Yandex.com image search performed by a server in the U.S. could have linked to a Perfect 10
imaged hosted on a Yandex server in Russia. The court, however, found it unnecessary to
address the validity of the argument because Perfect 10 had not demonstrated that Yandex in fact
stored or displayed full-sized copies of the Perfect 10 images on Yandex’s U.S. servers.
Accordingly, the court granted Yandex summary judgment on direct infringement with respect to
hosting or display of Perfect 10 images through servers outside the U.S.522
The court then turned to storage of thumbnail versions of Perfect 10 images on
Yandex.com servers in the U.S. during the nine-month period from June 2012 to March 2013.
Yandex did not dispute that its use of the thumbnails in the U.S. constituted a prima facie
violation of Perfect 10’s display and distribution rights, but argued that its thumbnail copies were
a fair use. The court agreed. With respect to the first fair use factor, citing the Amazon and
Kelly v. Arriba cases, the court found that use of a thumbnail image as a pointer to a source of
information is highly transformative, and noted that Yandex’s in-linking to a full-size image,
which caused it to be transmitted from the third party web site hosting it, did not constitute direct
infringement on the part of Yandex.523
521 Id. at *2-6, 17.
522 Id. at *11-14.
523 Id. at 16-20..
- 128 -
The court noted that the second fair use factor slightly favored the plaintiff Perfect 10, as
in Amazon. With respect to the third factor, the amount and substantiality of the use, the court
rejected Perfect 10’s argument that the third factor should favor it because Yandex allegedly
used 40,000 Perfect 10 thumbnails. The court noted that the substantiality analysis must be
made on a copyright-by-copyright basis, and the number of allegedly infringed images is
therefore not relevant. As in Amazon and Kelly, the court concluded that the third factor favored
neither party because Yandex’s transformative use required use of the entire image, although in
reduced size. With respect to the fourth factor, the court rejected Perfect 10’s argument that
Yandex’s search engines caused it market harm because they led to billions of unauthorized
views and downloads of its images from web sites to which Yandex linked Perfect 10
thumbnails. The court found that Perfect 10 had not substantiated the argument by competent
evidence. Perfect 10’s evidence consisted of screen shots from third party web sites showing
that links on those sites leading to Perfect 10 images had been viewed approximately 3.8 million
times, but Perfect 10 failed to provide evidence that any of those views were the result of
Yandex.com users clicking on thumbnails stored on Yandex.com servers in the U.S. during the
nine-month period. The court also rejected Perfect 10’s argument that its market for reducedsize
images for cell phone use had dried up since 2007 and Yandex had begun providing a
thumbnail search service since 2007; ergo, Perfect 10 had been harmed by Yandex. The court
noted that this simple correlation, without more, did not constitute sufficient evidence that
Yandex’s use of 40,000 thumbnail images during the nine-month period affected Perfect 10’s
market for reduced-size images. The court therefore concluded that the fourth factor favored
neither party. Balancing the four factors, the court ruled that Yandex.com’s thumbnails stored
on its servers in the U.S. for the nine-month period were fair use.524
Finally, the court ruled that Yandex could have potential contributory and vicarious
liability only with respect to direct infringements taking place in the U.S., which eliminated
contributory or vicarious liability for links connecting to full-size images hosted outside the U.S.
The court therefore granted summary judgment to Yandex to that extent. The court then ruled
that the case would proceed to trial with respect to liability pertaining to evidence submitted by
Perfect 10 of 23 links that connected to U.S. web sites.525
D. The Right of Public Distribution
Section 106 (3) of the copyright statute grants the copyright owner the exclusive right to
distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer
of ownership, or by rental, lease, or lending. Thus, to implicate the right of public distribution,
three conditions must obtain: (a) a “copy” must be distributed; (b) the distribution must be to the
“public”; and (c) the distribution must be by sale, rental, lease, lending or “other transfer of
ownership.”
524 Id. at *20-24.
525 Id. at *24-28 & n.3.
- 129 -
1. The Requirement of a “Copy”
Whether transmissions of a work on the Internet implicate the public distribution right
turns in the first instance on whether there has been a distribution of a “copy” of the work. The
broadcasting and cable industries have traditionally treated broadcasts and cable transmissions as
not constituting distributions of copies of a work. With respect to Internet transmissions,
however, if a complete copy of a work ends up on the recipient’s computer, it may be easy to
conclude that a “copy” has been distributed. Indeed, to remove any doubt from this issue, the
NII White Paper proposed to include “transmission” within the copyright owner’s right of
distribution,526 where transmission is defined essentially as the creation of an electronic copy in a
recipient system.527
It is less clear whether other types of transmissions constitute distributions of “copies.”
For example, what about an artistic work that is transmitted and simultaneously performed live at
the recipient’s end? Although the public performance right may be implicated, has there been a
distribution of a “copy” that would implicate the right of distribution? Should it matter whether
significant portions of the work are buffered in memory at the recipient’s computer? Many of
these distinctions could be rendered moot by the potentially broader right of “communication to
the public” contained in the WIPO treaties discussed below, were that right ever to be expressly
adopted in implementing legislation in the United States (the DMCA does not contain such a
right).
Even if a “copy” is deemed to have been distributed in the course of an Internet
transmission of an infringing work, difficult questions will arise as to who should be treated as
having made the distribution – the original poster of the unauthorized work, the OSP or BBS
through which the work passes, the recipient, or some combination of the foregoing? Thus, the
same issue of volition arises with respect to the distribution right as was discussed above in
connection with the reproduction right.
(a) Cases Addressing Whether Mere Posting Is a Distribution
Several decisions have addressed the question of whether the mere posting – i.e., the
“making available” – of a work on a BBS or other Internet site, or in a “shared file” folder within
peer-to-peer client software, from which it can be downloaded by members of the public
constitutes a public distribution of the work, and have reached quite contrary results, as detailed
in the next two subsections. In addition to those decisions, several other decisions have declined
to reach the issue and/or left the question open, often acknowledging the existence of conflicting
authority:
526 The copyright statute currently defines “transmission” or “transmit” solely in reference to performances or
displays of a work. The NII White Paper does not, however, argue for removal of the requirement that an
offending distribution be one to the “public.” NII White Paper at 213-15.
527 NII White Paper at 213. Appendix 1 of the NII White Paper proposes the following definition: “To ‘transmit’ a
reproduction is to distribute it by any device or process whereby a copy or phonorecord of the work is fixed
beyond the place from which it was sent.” Id. App. 1, at 2.
- 130 -
– In Arista Records LLC v. Greubel, 453 F. Supp. 2d 961 (N.D. Tex. 2006), the court,
although not deciding on a motion to dismiss whether the electronic transmission over a
computer network (here, transmission of copyrighted recordings through a file sharing network)
or the mere listing of such copyrighted recordings in a directory as available for download, is
sufficient to violate a copyright owner’s distribution right, the court cited numerous decisions so
holding or suggesting that either of such acts is sufficient for infringement of the distribution
right, and concluded that such decisions were sufficient to deny the defendant’s motion to
dismiss the complaint on the pleadings.528 The court stated, “[M]aking copyrighted works
available to other may constitute infringement by distribution in certain circumstances.”529
– Maverick Recording Co. v. Goldshteyn, 2006 U.S. Dist. LEXIS 52422 at *3 (E.D.N.Y.
July 31, 2006) (“[T]he ‘making available’ argument need not be decided here.”).
– Fonovisa, Inc. v. Alvarez, 2006 U.S. Dist. LEXIS 95559 at *8 (N.D. Tex. July 24,
2006) (“This Court is not making a determination as to whether ‘making works available’
violates the right of distribution.”).
– Warner Bros. Records, Inc. v. Payne, 2006 U.S. Dist. LEXIS 65765 at *4 (W.D. Tex.
July 17, 2006) (declining to “rule out the Plaintiffs’ ‘making available’ theory as a possible
ground for imposing liability”).
– Atlantic Recording Corp. v. Brennan, 2008 U.S. Dist. LEXIS 23801 at *3 (D. Conn.
Feb. 13, 2008) (denying plaintiffs’ entry of default against defendant, in part, by finding that
defendant may have a meritorious defense against plaintiffs’ “problematic” make available
argument).
– Electra Entertainment Group, Inc. v. Doe, 2008 U.S. Dist. LEXIS 98145 at *8-9
(E.D.N.C. Dec. 4, 2008) (court need not decide whether “making available” a sound recording
over the Internet constitutes a distribution because the plaintiffs’ complaint sufficiently alleged
an actual dissemination of copies of the recordings had occurred).
– Warner Bros. Records, Inc. v. Doe, 2008 U.S. Dist. LEXIS 98143 at *8-9 (E.D.N.C.
Dec. 4, 2008) (same).
(1) Cases Holding That Mere Posting Is a Distribution
In Playboy Enterprises, Inc. v. Frena,530 the court, with very little analysis of the issue,
held a BBS operator liable for infringement of the public distribution right for the making of
photographs available through the BBS that were downloaded by subscribers, even though the
defendant claimed he did not make copies of the photographs himself. But because the BBS was
apparently one devoted to photographs, much of it of adult subject matter, and subscribers
528 Id. at 967-71.
529 Id. at 969 (emphasis added).
530 839 F. Supp. 1552 (M.D. Fla. 1993).
- 131 -
routinely uploaded and downloaded images therefrom, the court seems to have viewed the
defendant as a direct participant in the distributions to the public that took place through the
BBS.
Similarly, in Playboy Enterprises, Inc. v. Chuckleberry Publishing Inc.,531 the court ruled
that uploading copyrighted pictorial images onto a computer in Italy which could be accessed by
users in the United States constituted a public distribution in the United States. In contrast to the
Netcom case, the court noted that the defendant did more than simply provide access to the
Internet. Instead, the defendant provided services and supplied the content for those services,
which gave users the option to either view or download the images. By actively soliciting
United States customers to the services, the court concluded that the defendant had distributed its
product within the United States.
In Playboy Enterprises, Inc. v. Webbworld, Inc.,532 the court held the defendants directly
liable for infringing the distribution right by making copyrighted images available through a
website for downloading by subscribers. The court found that, in contrast to the Netcom case,
the defendants took “affirmative steps to cause the copies to be made.”533
The court in Marobie-FL, Inc. v. National Association of Fire Equipment Distributors534
ruled that the placement of three files containing copyrighted clip art on the Web page of the
defendant constituted a direct violation of the plaintiff’s distribution right because the files were
available for downloading by Internet users and were transmitted to Internet users upon request.
In all of the preceding four cases, it was apparent that actual downloads of complete
copies of the copyrighted material had taken place, and this fact, coupled with affirmative steps
taken by the defendants to promote the acts of downloading, seem to have led those courts to
find a violation of the distribution right. The more difficult cases of line drawing have arisen in
the peer-to-peer file sharing cases, many of which are discussed in the remainder of this
subsection and the next subsection, in which the defendant often merely makes available
copyrighted files for sharing (through a “shared file” folder used by the peer-to-peer client
software), but does not take additional affirmative steps to promote the downloading of copies of
those files. In addition, there often is not clear proof in those cases whether actual downloads
have taken place from the defendant’s particular shared file folder, and if so, to what extent –
including whether complete copies have been downloaded from the defendant’s shared file
folder or only bits and pieces of files, as is the inherent nature of the peer-to-peer protocol
mechanisms.
In its decision in Napster I, the Ninth Circuit held, without any discussion, that “Napster
users who upload files names to the search index for others to copy violate plaintiff’s distribution
531 939 F. Supp. 1032, 1039 (S.D.N.Y. 1996).
532 45 U.S.P.Q.2d 1641 (N.D. Tex. 1997).
533 Id. at 1647.
534 45 U.S.P.Q.2d 1236 (N.D. Ill. 1997).
- 132 -
rights.”535 Although the Ninth Circuit’s opinion addressed whether Napster could be secondarily
liable for the infringing acts of its users through the system, it did not address the question of
whether Napster itself directly violated the plaintiff’s distribution rights by maintaining its search
index. That question was subsequently adjudicated by the district court in the Napster litigation,
which answered the question in the negative, as discussed in the next subsection.
In Interscope Records v. Duty,536 the court held that the mere placement of copyrighted
works in a share folder connected to the Kazaa peer-to-peer service constituted a public
distribution of those works. The court noted that, although “distribute” is not defined in the
copyright statute, the right of distribution is synonymous with the right of publication, which is
defined to include the “offering to distribute copies or phonorecords to a group of persons for
purposes of further distribution, public performance, or public display.”537 The court also cited
the Ninth Circuit’s decision in Napster I, which held that “Napster users who upload files names
to the search index for others to copy violate plaintiff’s distribution rights.”538
In Warner Bros. Records, Inc. v. Payne,539 the court ruled, on a motion to dismiss the
plaintiff’s complaint against a defendant who was making the plaintiff’s recordings available
through the Kazaa network, that “[l]isting unauthorized copies of sound recordings using an
online file-sharing system constitutes an offer to distribute those works, thereby violating a
copyright owner’s exclusive right of distribution.”540 The court relied on the Supreme Court’s
equating of the term “distribute” with “publication” in Harper & Row Publishers, Inc. v. Nation
Enterprises,541 noting that publication is defined to include the “offering to distribute copies.”
The court also relied on the logic of Hotaling v. Church of Jesus Christ of Latter-Day Saints,542
which held a library engages in the distribution of a copyrighted work when it adds the work to
its collections, lists the work in its index or catalog and makes the work available for borrowing
or browsing.543 Accordingly, the court denied the defendant’s motion to dismiss: “Making an
unauthorized copy of a sound recording available to countless users of a peer-to-peer system for
free certainly contemplates and encourages further distribution, both on the Internet and
elsewhere. Therefore, the Court is not prepared at this stage of the proceedings to rule out the
Plaintiffs’ ‘making available’ theory as a possible ground for imposing liability. A more detailed
understanding of the Kazaa technology is necessary and Plaintiffs may yet bring forth evidence
535 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001) (emphasis added).
536 2006 U.S. Dist. LEXIS 20214 (D. Ariz. Apr. 14, 2006).
537 Id. at *7 (citing 17 U.S.C. § 101) (emphasis by the court).
538 Id. at *8 (quoting A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001)).
539 2006 U.S. Dist. LEXIS 65765 (W.D. Tex. July 17, 2006).
540 Id. at *8.
541 471 U.S. 539 (1985).
542 118 F.3d 199 (4th Cir. 1997).
543 2006 U.S. Dist. LEXIS at *9-10.
- 133 -
of actual uploading and downloading of files, rendering use of the ‘making available’ theory
unnecessary.”544
In Universal City Studios Productions v. Bigwood,545 the court granted summary
judgment of infringement against the defendant, a user of Kazaa who had made two of the
plaintiffs’ copyrighted motion pictures available in his shared folder. Citing Hotaling and
Napster I and no contrary authority, and without any further analysis of its own, the court ruled
that “by using KaZaA to make copies of the Motion Pictures available to thousands of people
over the internet, Defendant violated Plaintiffs’ exclusive right to distribute the Motion
Pictures.”546
In Motown Record Co. v. DePietro,547 the court, citing the Ninth Circuit’s Napster I case,
held that a “plaintiff claiming infringement of the exclusive-distribution right can establish
infringement by proof of actual distribution or by proof of offers to distribute, that is, proof that
the defendant ‘made available’ the copyrighted work [in this case, via a peer-to-peer system].”548
In United States v. Carani,549 the court ruled that storing child pornography in a shared
folder on the Kazaa peer-to-peer network where it could be downloaded by others qualified as an
illegal “distribution” of child pornography, thus justifying an enhanced punishment.550
In ICG-Internet Commerce Group, Inc. v. Wolf,551 the court denied a motion for
summary judgment that the defendant had infringed the plaintiff’s distribution right in an adult
video by posting the video to the defendant’s web site, because it was unclear from a screenshot
of the defendant’s web site showing a hyperlink to “[s]ex tape download souces [sic]” whether
the hyperlink linked to a streaming or downloadable source file containing the plaintiff’s video.
The court did, however, find that the plaintiff’s copy and public display rights had been violated
by the posting of the video on the defendant’s site from which it could be viewed publicly.552
In Maverick Recording Co. v. Harper,553 in considering a copyright infringement claim
against the defendant for having copies of the plaintiffs’ copyrighted sound recordings in a
shared folder on a peer-to-peer network, the court held that a complete download of a given work
over the network is not required for copyright infringement to occur. Citing the Warner Bros. v.
544 Id. at *11.
545 441 F. Supp. 2d 185 (D. Me. 2006).
546 Id. at 190.
547 2007 U.S. Dist. LEXIS 11626 (E.D. Pa. Feb. 16, 2007).
548 Id. at *12.
549 492 F.3d 867 (7th Cir. 2007).
550 Id. at *21-23; accord United States v. Shaffer, 472 F.3d 1219, 1123-24 (10th Cir. 2007).
551 519 F. Supp. 2d 1014 (E.D. Pa. 2007).
552 Id. at 1018-19.
553 Order, Maverick Recording Co. v. Harper, No. 5:07-CV-026-XR (W.D. Tex. Aug. 7, 2008).
- 134 -
Payne and Interscope decisions, the court stated, “The fact that the Recordings were available for
download is sufficient to violate Plaintiffs’ exclusive rights of reproduction and distribution. It is
not necessary to prove that all of the Recordings were actually downloaded; Plaintiffs need only
prove that the Recordings were available for download due to Defendant’s actions.”554
On appeal, the Fifth Circuit ruled that it need not address whether merely making
available files for download violates the distribution right because the defendant did not appeal
the district court’s finding that she had infringed the plaintiffs’ copyrights by downloading and
therefore reproducing the audio files. Thus, the distribution issue was moot since the defendant’s
liability would remain even if the Fifth Circuit were to agree with the district court on the
distribution issue.555 The Fifth Circuit also ruled that the defendant was not entitled to an
innocent infringer defense as a matter of law because Section 402(d) makes that defense
unavailable when a proper copyright notice appears on the published phonorecords to which a
defendant had access. There was no dispute that each of the published phonorecords from which
the shared audio files were taken had proper copyright notices on them, and lack of legal
sophistication as to what the notices meant was irrelevant.556 (The court does not mention
whether the audio files themselves that the defendant shared had copyright notices on them.)
Accordingly, the court concluded that the plaintiffs must be awarded statutory damages of $750
per infringed work.557
In Columbia Pictures Industries, Inc. v. Fung,558 the district court ruled, in the context of
a BitTorrent site, that “uploading a copyrighted content file to other users (regardless of where
those users are located) violates the copyright holder’s § 106(3) distribution right.”559 Because
of the nature of the BitTorrent protocol, users were not uploading the infringing content itself to
the defendants’ site, but rather were uploading dot-torrent files that contained only information
about hosts from which the infringing content could be downloaded using the BitTorrent
protocol. The dot-torrent files were indexed on the defendants’ site for searching. Thus, the
quoted language seems to implicitly hold that an actual distribution of infringing content is not
required to infringe the distribution right, since the mere upload of the dot-torrent file through
which the infringing content could be located was sufficient to infringe. In its opinion affirming
on appeal, the Ninth Circuit stated, “Both uploading and downloading copyrighted material are
infringing acts. The former violates the copyright holder’s right to distribution, the latter the
right to reproduction.”560 The court immediately thereafter indicated awareness that the dottorrent
files that were uploaded to Fung’s web sites did not contain the infringing content itself,
for the Ninth Circuit noted the plaintiff’s expert had averred that 90 to 96% of the content
554 Id., slip op. at 10.
555 Maverick Recording Co. v. Harper, 598 F.3d 193, 197 (5th Cir. 2010).
556 Id. at 198-99.
557 Id. at 199.
558 2009 U.S. Dist. LEXIS 122661 (C.D. Cal. Dec. 21, 2009), aff’d, 710 F.3d 1020 (9th Cir. 2013).
559 Id. at *29.
560 Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020, 1034 (9th Cir. 2013).
- 135 -
“associated with” the torrent files available on Fung’s web sites was for confirmed or highly
likely copyright infringing material.561
(2) Cases Holding That Mere Posting Is Not a Distribution
In Religious Technology Center v. Netcom On-Line Communication Services,562 the
court refused to hold either an OSP or a BBS operator liable for violation of the public
distribution right based on the posting by an individual of infringing materials on the BBS. With
respect to the BBS, the court stated: “Only the subscriber should be liable for causing the
distribution of plaintiffs’ work, as the contributing actions of the BBS provider are automatic and
indiscriminate.”563 With respect to the OSP, the court noted: “It would be especially
inappropriate to hold liable a service that acts more like a conduit, in other words, one that does
not itself keep an archive of files for more than a short duration.”564
In In re Napster, Inc. Copyright Litigation,565 the district court rejected the plaintiffs’
argument that Napster’s indexing of MP3 files that its users posted on the Napster network made
Napster a direct infringer of the plaintiffs’ exclusive distribution rights. The plaintiffs relied on
Hotaling v. Church of Jesus Christ of Latter-Day Saints,566 which held a library engages in the
distribution of a copyrighted work when it adds the work to its collections, lists the work in its
index or catalog and makes the work available for borrowing or browsing. The Napster court
distinguished the Hotaling case, arguing that the library had itself made actual, unauthorized
copies of copyrighted materials made available to its borrowers. By contrast, Napster did not
itself have a “collection” of recordings on its servers, but rather merely an index of recordings.567
“This might constitute evidence that the listed works were available to Napster users, but it is
certainly not conclusive proof that the songs identified in the index were actually uploaded onto
the network in a manner that would be equivalent to the way in which the genealogical materials
at issue in Hotaling were copied and distributed to the church’s branch libraries.”568
The court further noted that the definition of “publication” in the copyright statute, which
the Supreme Court observed in a 1985 case that the legislative history equated with the right of
distribution,569 requires the distribution of copies or phonorecords of a work to the public or the
offering to distribute copies of that work for purposes of further distribution, public performance,
or public display. The court held that merely by indexing works available through its system,
561 Id.
562 907 F. Supp. 1361, 1372 (N.D. Cal. 1995).
563 Id. at 1372.
564Id.
565 377 F. Supp. 2d 796 (N.D. Cal. 2005).
566 118 F.3d 199 (4th Cir. 1997).
567 In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d at 802-03.
568 Id. at 803.
569 Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985).
- 136 -
Napster was not offering to itself distribute copies of the works for further distribution by its
users.570
The plaintiffs argued that the requirement of a transmission of a material object in order
to find a violation of the distribution right was no longer viable in view of the recently enacted
Artists’ Rights and Theft Prevention Act of 2005 (the ART Act).571 The plaintiffs cited Section
103(a)(1)(C) of the ART Act, codified at 17 U.S.C. § 506(a), which provides criminal sanctions
for any person who willfully infringes a copyright by the distribution of a work being prepared
for commercial distribution, by making it available on a computer network accessible to
members of the public. The plaintiffs interpreted this provision as imposing criminal liability on
any person who willfully makes an unauthorized copy of a copyrighted work available on a
publicly accessible computer network while that work is being prepared for commercial
distribution, and argued that Congress must have understood civil liability for copyright
infringement to be equally broad.572
The court rejected this argument, noting that the ART Act did not amend Section 106(3)
of the copyright statute, and in any event Section 103(a)(1)(C) of the ART Act makes clear that
willful copyright infringement and making the work available on a computer network are
separate elements of the criminal offense. Hence, the mere making available of an unauthorized
work on a computer network should not be viewed as sufficient to establish a copyright
infringement.573 Accordingly, the court ruled that the defendants were entitled to summary
judgment on the issue of direct liability on Napster’s part by virtue of its index.574 However,
note that the Ninth Circuit’s earlier decision in Napster I held that “Napster users [as opposed to
Napster itself] who upload files names to the search index for others to copy violate plaintiff’s
distribution rights.”575
In Perfect 10 v. Google,576 discussed in detail in Section II.C.4 above, the district court
ruled that Google did not publicly distribute infringing copies of Perfect 10’s copyrighted images
that could be located through the Google Image Search function. “A distribution of a
570 In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d at 803-05.
571 Pub. L. No. 109-9, 119 Stat. 218 (2005).
572 In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d at 804.
573 Id. at 804-05.
574 Id. at 805. The court held, however, that the plaintiffs had submitted sufficient evidence of direct infringement
by Napster’s users in the form of a showing of massive uploading and downloading of unauthorized copies of
works, together with statistical evidence strongly suggesting that at least some of the plaintiffs’ copyrighted
works were among them. Id. at 806. “It may be true that the link between such statistical evidence of copyright
infringement and the uploading or downloading of specific copyrighted works is at the moment a weak one.
However, to avoid summary judgment, plaintiffs need only establish that triable issue of material fact preclude
entry of judgment as a matter of law. … Here in particular, the court is mindful of the fact that the parties have
not even completed discovery relating to issues of copyright ownership and infringement.” Id. at 806-07.
575 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001).
576 416 F. Supp. 2d 828 (C.D. Cal. 2006), aff’d sub nom. Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1169 (9th
Cir. 2007).
- 137 -
copyrighted work requires an ‘actual dissemination’ of copies. … In the internet context, an
actual dissemination means the transfer of a file from one computer to another. Although
Google frames and in-line links to third-party infringing websites, it is those websites, not
Google, that transfer the full-size images to users’ computers [upon clicking on a thumbnail
version of the image displayed in the Google search results]. Because Google is not involved in
the transfer, Google has not actually disseminated – and hence, [] has not distributed – the
infringing content.”577
On appeal, the Ninth Circuit affirmed this ruling. Because Google’s search engine
communicated only HTML instructions telling a user’s browser where to find full size images on
web site, and Google did not itself distribute copies of the infringing photographs, Google did
not have liability for infringement of the right of distribution with respect to full size images that
could be located and displayed through the Image Search function.578 Perfect 10 argued that,
under the Napster I and Hotaling cases discussed above, the mere making available of images
violates the copyright owner’s distribution right. The Ninth Circuit held that this “deemed
distribution” rule did not apply to Google, because, unlike the users of the Napster system or the
library in Hotaling, Google did not own a collection of stored full size images that it made
available to the public.579
In Latin American Music Co. v. Archdiocese of San Juan,580 although not a case
involving online activity, the First Circuit held that the defendant’s mere listing in its licensing
catalog of songs that it did not own the copyright for did not constitute infringement. The court
ruled that mere authorization of an infringing act is insufficient basis for copyright infringement,
as infringement depends upon whether an actual infringing act, such as copying or performing,
has taken place.581
In London-Sire Records, Inc. v. Doe 1,582 the court ruled that merely listing recordings as
available for downloading on a peer-to-peer service did not infringe the distribution right. The
court held that authorizing a distribution is sufficient to give rise to liability, but only if an
infringing act occurs after the authorization.583 The court rejected the plaintiff’s argument to the
contrary based on the Supreme Court’s equating of the term “distribute” with “publication” in
Harper & Row Publishers, Inc. v. Nation Enterprises.584 The court noted that the Supreme Court
stated only that Section 106(3) recognized for the first time a distinct statutory right of first
publication, and quoted the legislative history as establishing that Section 106(3) gives a
577 Id. at 844 (citing In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d 796, 802-04 (N.D. Cal. 2005)).
578 Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1162 (9th Cir. 2007).
579 Id. at 1162-63. Cf. National Car Rental Sys. v. Computer Assocs. Int’l, Inc., 991 F.2d 426, 434 (8th Cir. 1993)
(stating that infringement of the distribution right requires the actual dissemination of copies or phonorecords).
580 499 F.3d 32 (1st Cir. 2007).
581 Id. at 46-47.
582 542 F. Supp. 2d 153 (2008).
583 Id. at 166.
584 471 U.S. 539 (1985).
- 138 -
copyright holder the right to control the first public distribution of an authorized copy of his
work.585 The court went on to state, however, “That is a far cry from squarely holding that
publication and distribution are congruent.”586
The court noted that the statutory language itself suggests the terms are not synonymous.
Noting that “publication” incorporates “distribution” as part of its definition (“publication” is
“the distribution of copies or phonorecords of a work to the public”), the court reasoned:
By the plain meaning of the statute, all “distributions … to the public” are
publications. But not all publications are distributions to the public – the statute
explicitly creates an additional category of publications that are not themselves
distributions. For example, suppose an author has a copy of her (as yet
unpublished) novel. If she sells that copy to a member of the public, it constitutes
both distribution and publication. If she merely offers to sell it to the same
member of the public, that is neither a distribution nor a publication. And if the
author offers to sell the manuscript to a publishing house “for purposes of further
distribution,” but does not actually do so, that is a publication but not a
distribution.587
Accordingly, the court concluded that the defendants could not be liable for violating the
plaintiffs’ distribution right unless a “distribution” actually occurred.588 But that conclusion, did
not, however, mean that the plaintiffs’ pleadings and evidence were insufficient: “The Court can
draw from the Complaint and the current record a reasonable inference in the plaintiffs’ favor –
that where the defendant has completed all the necessary steps for a public distribution, a
reasonable fact-finder may infer that the distribution actually took place.”589
The court also made the following additional rulings:
-- That the Section 106(3) distribution right is not limited to physical, tangible objects,
but also confers on copyright owners the right to control purely electronic distributions of their
work. The court reasoned that electronic files are “material objects” in which a sound recording
can be fixed, and electronic distributions entail the movement of such electronic files, thereby
implicating the distribution right.590
-- That actual downloads of the plaintiffs’ works made by the plaintiffs’ investigator
were “sufficient to allow a statistically reasonable inference that at least one copyrighted work
585 London-Sire, 542 F. Supp. 2d at 168.
586Id.
587 Id. at 169.
588Id.
589Id.
590 Id. at 169-71 & 172-74.
- 139 -
was downloaded at least once [by persons other than the investigator]. That is sufficient to make
out a prima facie case for present purposes.”591
In Elektra Entertainment Group, Inc. v. Barker,592 contrary to the London-Sire Records
decision (which incidentally was decided on the same day), the court ruled that, based on the
legislative history of the copyright statute and the Supreme Court’s Harper & Row decision, the
words “distribution” and “publication” should be construed as synonymous, and therefore the
right of distribution should be equated to the right of publication.593 Accordingly, the court ruled
that the same acts that would constitute a publication as defined in Section 101 of the copyright
statute – namely, the “offer[] to distribute copies or phonorecords to a group of persons for
purposes of further distribution, public performance, or public display” – would also violate the
distribution right, and that proof of an actual transfer need not be shown.594
However, the court rejected the plaintiff’s argument that a violation of the distribution
right could be established by a mere showing of the “making available” of copyrighted works by
the defendant, as the plaintiffs had pled in their complaint. The court rejected the plaintiffs’
argument that Congress’ adoption of the WIPO Copyright Treaty, which contains an express
right of “making available” a copyrighted work to the public, should control the interpretation of
Section 106(3)’s distribution right. The court noted that, because the WIPO treaties were not
self-executing, they created no private right of action on their own. The court was also unwilling
to infer the intent of an earlier Congress when enacting amendments to the definition of the
distribution right from the acts of a later Congress in ratifying the WIPO Copyright Treaty.595
Accordingly, the court was unwilling to equate Congress’ words, that the distribution right may
be infringed by “[t]he offer[] to distribute copies or phonorecords to a group of person for
purposes of further distribution, public performance, or public display,” to what the court
described as “the contourless ‘make available’ right proposed by Plaintiff.”596
The court also rejected the argument in an amicus brief submitted by the MPAA that the
plaintiffs’ “make available” claim was supported by the introductory clause of Section 106,
which gives the owner of a copyright the exclusive right “to authorize” the enumerated rights.
The court cited and followed authority noting that Congress had added the “authorize” language
to Section 106 in order to avoid any confusion that the statute was meant to reach contributory
infringers, not to create a separate basis for direct infringement.597
591 Id. at 176. “As noted above, merely exposing music files to the internet is not copyright infringement. The
defendants may still argue that they did not know that logging onto the peer-to-peer network would allow others
to access these particular files, or contest the nature of the files, or present affirmative evidence rebutting the
statistical inference that downloads occurred.”Id.
592 551 F. Supp. 2d 234 (S.D.N.Y. 2008).
593 Id. at 239-41.
594 Id. at 242 (quoting 17 U.S.C. § 101’s definition of “publication”).
595 Id. at 242 n.7.
596 Id. at 243.
597 Id. at 245-46.
- 140 -
The court did, however, give the plaintiffs the opportunity to amend their complaint to be
faithful to the language of the copyright statute by alleging that the defendant had made an offer
to distribute, and that the offer to distribute was for the purpose of further distribution, public
performance, or public display.598 In addition, the court denied the defendant’s motion to
dismiss the complaint entirely because the plaintiffs had adequately alleged that, in addition to
making their works available, the defendant had actually distributed the plaintiffs’ copyrighted
works in direct violation of the distribution right.599 In August of 2008 the case settled.600
In Atlantic Recording Corp. v. Howell,601 seven major recording companies brought suit
against the defendants, who had allegedly made over 4,000 files available for download in a
shared folder on Kazaa. The private investigation company MediaSentry took screen shots
showing the files that were available for download. The plaintiffs owned registered copyrights
in 54 of the sound recordings in the folder. MediaSentry downloaded 12 of the copyrighted
recordings from the defendants’ computer, and the plaintiffs traced the computer to the
defendants and filed an action for copyright infringement. The plaintiffs filed a motion for
summary judgment of infringement.602
The court denied the motion. Citing numerous decisions and two copyright treatises, the
court noted the general rule that infringement of the distribution right requires an actual
dissemination of either copies or phonorecords. The court rejected the plaintiffs’ reliance on the
Hotaling case and the Ninth Circuit’s Napster I decision. With respect to Hotaling, the court
noted that in that case the plaintiff had already proved that the library made unlawful copies and
placed them in its branch libraries, so there had been actual distributions of copies in addition to
listing of the unlawful copies in the library’s catalog. With respect to the Napster I decision, the
court noted that the Ninth Circuit in the later Perfect 10 v. Amazon case had grouped the
holdings of Hotaling and Napster I together based upon the factual similarity that in both cases
the owner of a collection of works made them available to the public. Only in such a situation
could the holding of Hotaling potentially apply to relieve the plaintiff of the burden to prove
actual dissemination of an unlawful copy of a work. The defendant in the Perfect 10 case did not
own a collection of copyrighted works or communicate them to the public, so the Ninth Circuit
found Hotaling inapplicable.603 The Howell court went on to note the following:
However, the court did hold that “the district court’s conclusion [that distribution
requires an ‘actual dissemination’] is consistent with the language of the
598 Id. at 244-45.
599 Id. at 245.
600 “RIAA Settles Pending ‘Making Available’ Claim,” BNA’s Electronic Commerce & Law Report (Aug. 27,
2008) at 1160.
601 554 F. Supp. 2d 976 (D. Ariz. 2008).
602 Id. at 978.
603 Id. at 981-82.
- 141 -
Copyright Act.” That holding contradicts Hotaling and casts doubt on the single
unsupported line from Napster upon which the recording companies rely.604
After surveying the many decisions addressing the issue, the court concluded that it
agreed “with the great weight of authority that § 106(3) is not violated unless the defendant has
actually distributed an unauthorized copy of the work to a member of the public. … Merely
making an unauthorized copy of a copyrighted work available to the public does not violate a
copyright holder’s exclusive right of distribution.”605 In reaching its conclusion, the court
rejected the plaintiffs’ argument that “distribution” and “publication” are synonymous terms in
the statute for all purposes. Rather, the court noted it was not clear that “publication” and
“distribution” are synonymous outside the context of first publication, which was the subject of
discussion in the Supreme Court’s Harper & Row decision. Citing London-Sire, the court noted
that while all distributions to the public are publications, not all publications are distributions.606
The court concluded: “A plain reading of the statute indicates that a publication can be either a
distribution or an offer to distribute for the purposes of further distribution, but that a distribution
must involve a ‘sale or other transfer of ownership’ or a ‘rental, lease, or lending’ of a copy of
the work.”607
Finally, the court noted that the plaintiffs’ motion for summary judgment must also fail
because they had not proved that a Kazaa user who places a copyrighted work into the shared
folder distributes a copy of that work when a third party downloads it. The court noted that in
the Kazaa system the owner of the shared folder does not necessarily ever make or distribute an
unauthorized copy of the work. And if the owner of the shared folder simply provides a member
of the public with access to the work and the means to make an unauthorized copy, the owner
would not be liable as a primary infringer of the distribution right, but rather would be
potentially liable only as a secondary infringer of the reproduction right.608 The court therefore
concluded that the plaintiffs’ motion for summary judgment must fail because “they have not
explained the architecture of the KaZaA file-sharing system in enough detail to determine
conclusively whether the owner of the shared folder distributes an unauthorized copy (direct
violation of the distribution right), or simply provides a third-party with access and resources to
make a copy on their own (contributory violation of the reproduction right).”609
In Capitol Records Inc. v. Thomas,610 the court sua sponte raised the issue of whether it
had erred in instructing the jury that making sound recordings available for distribution on a
peer-to-peer network, regardless of whether actual distribution was shown, qualified as
604 Id. at 982 (quoting Perfect 10 v. Amazon.com, Inc., 487 F.3d 701, 718 (9th Cir. 2007) (superseded by 508 F.3d
1146 (9th Cir. 2007)).
605 554 F. Supp. 2d at 983.
606 Id. at 984.
607 Id. at 985.
608 Id. at 986.
609Id.
610 579 F. Supp. 2d 1210 (D. Minn. 2008).
- 142 -
distribution under the copyright act. The court concluded that it had erred and ordered a new
trial for the defendant.611 The parties agreed that the only evidence of actual dissemination of
copyrighted works was that plaintiffs’ infringement policing agent, MediaSentry, had
downloaded songs. The defendant argued that dissemination to an investigator acting as an
agent for the copyright owner cannot constitute infringement. The court rejected this argument,
noting that Eighth Circuit precedent clearly approved of the use of investigators by copyright
owners, and distribution to an investigator can constitute infringement.612
The court then turned to the issue of whether merely making available recordings for
download constitutes unauthorized distribution. The court first noted that the plain language of
Section 106(3) does not state that making a work available for sale, transfer, rental, lease or
lending constitutes distribution, and two leading copyright treatises (Nimmer and Patry) agree
that making a work available is insufficient to establish distribution. Congress’ choice not to
include offers to do the acts enumerated in Section 106(3) further indicated its intent that an
actual distribution or dissemination is required by Section 106(3).613
The court rejected the holding of other courts that the definition of “distribution” should
be taken to be the same as that of “publication,” noting that the legislative history does not
expressly state that distribution should be given the same broad meaning as publication, and in
any case, even if the legislative history indicated that some members of Congress equated
publication with distribution under Section 106(3), that fact could not override the plain meaning
of the statute. The court concluded that the statutory definition of publication is broader than the
term “distribution” as used in Section 106(3). Specifically, under the definition in Section 101, a
publication can occur by means of the distribution of copies of a work to the public, but it can
also occur by offering to distribute copies to a group of persons for purposes of further
distribution, public performance, or public display. Thus, while a publication effected by
distributing copies of the work is a distribution, a publication effected by merely offering to
distribute copies to the public is merely an offer of distribution, an actual distribution.614
The court rejected the plaintiffs’ argument that Section 106 affords an exclusive right to
authorize distribution (based on Section 106’s language that “the owner of copyright under this
title has the exclusive rights to do and to authorize any of the following …”) and that making
sound recordings available on a peer-to-peer network would violate such an authorization right.
The court concluded that the authorization clause merely provides a statutory foundation for
secondary liability, not a means of expanding the scope of direct infringement liability. The
court reasoned that if simply making a copyrighted work available to the public constituted a
distribution, even if no member of the public ever accessed that work, copyright owners would
611 Id. at 1212 & 1227. The instruction to the jury read: “The act of making copyrighted sound recordings
available for electronic distribution on a peer-to-peer network, without license from the copyright owners,
violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been
shown.” Id. at 1212.
612 Id. at 1214-15.
613 Id. at 1217-18.
614 Id. at 1219-20.
- 143 -
be able to make an end run around the standards for assessing contributory copyright
infringement.615
Finally, the court rejected the arguments of the plaintiffs and various amici that the WIPO
treaties require the U.S. to provide a making-available right and that right should therefore be
read into Section 106(3). The court noted that the WIPO treaties are not self-executing and lack
any binding legal authority separate from their implementation through the copyright act. The
contents of the WIPO treaties would be relevant only insofar as Section 106(3) was ambiguous,
and there was no reasonable interpretation of Section 106(3) that would align with the United
States’ treaty obligations. Concern for compliance with the WIPO treaties could not override the
clear congressional intent in the language of Section 106(3).616
The defendant in this case, Jammie Thomas-Rasset, ultimately became the first peer-topeer
file sharer to defend infringement litigation all the way to a jury verdict. In July 2007, a
jury concluded that she should pay $220,000 in statutory damages, but she was granted a motion
for a new trial based on the erroneous jury instruction discussed above. In the second trial, the
jury returned a verdict for $1.92 million. The court later reduced the award to $54,000 but
granted the plaintiffs’ request for a new trial on damages. After a third trial, the jury again
returned a special verdict that included a statutory damages award of $1.5 million ($62,500 for
each shared song, multiplied by 24 songs).617
(3) Cases Refusing To Decide the Issue
In Arista Records LLC v. Does 1-16,618 several record labels brought a copyright
infringement claim against 16 unidentified defendants for illegally downloading and distributing
the plaintiffs’ copyrighted music through a peer-to-peer network and issued a subpoena seeking
information from the State University of New York at Albany sufficient to identify each
defendant. The defendants sought to quash the subpoena, in part on the basis that the plaintiffs’
complaint was defective in that, in essence, according to the defendants, it alleged that the
defendants were infringers because they were making available copyrighted song files, but
without any evidence of actual distribution of those files to the public. The court refused to
decide whether the mere “making available” of song files would be sufficient to violate the
distribution right because the complaint did not use that language, but rather alleged that each
defendant downloaded and/or distributed to the public copies of sound recordings.619 “We are
persuaded by the majority of cases and the school of thought that Plaintiffs have adequately pled
that Defendants distributed Plaintiffs’ copyrighted work, by merely stating, within the four
corners of the Complaint, the distribution allegation alone. The tasks of pleading and proving
615 Id. at 1220-21.
616 Id. at 1225-26.
617 “On Third Shot, Jury Returns $1.5 Million Statutory Damages Verdict Against P2P User,” BNA’s Electronic
Commerce & Law Report (Nov. 10, 2010) at 1692.
618 2009 U.S. Dist. LEXIS 12159 (N.D.N.Y. Feb. 18, 2009).
619 Id. at *15-16.
- 144 -
that each Defendant actually distributed the copyright work do not necessarily collide at this
juncture of the case, and dismissal of the Complaint would not be appropriate at this stage.”620
2. The Requirement of a “Public” Distribution
Unlike the case of the public performance and public display rights, the copyright statute
does not define what constitutes a “public” distribution. However, one might expect courts to
afford a similarly broad interpretation of “public” with respect to the right of public distribution.
Some distributions will clearly be “public,” such as the posting of material on a Usenet
newsgroup, and some will clearly not, such as sending e-mail to a single individual. Many other
Internet distributions will fall in between. However, one might expect courts to treat distribution
to members of the public by Internet access at different times and places as nevertheless
“public,” by analogy to the public performance and public display rights.
As previously discussed with respect to the public display right, the court in Playboy
Enterprises, Inc. v. Hardenburgh,621 held the defendant operators of a BBS directly liable for
infringement of the public distribution right by virtue of making available photographs to
subscribers of the BBS for a fee, many of which were copyrighted photographs of the plaintiff
Playboy Enterprises. The court’s basis for finding liability was derived principally from the fact
that the defendants had a policy of encouraging subscribers to contribute files, including adult
photographs, to an “upload file” on the BBS and the defendants’ practice of using a screening
procedure in which its employees screened all files in the upload file to remove pornographic
material and moved them into the generally available files for subscribers. These facts led the
court to conclude that the defendants were active participants in the process of copyright
infringement.
With respect to the requirement that the distributions be “to the public” in order to
infringe the distribution right, the court ruled that “Defendants disseminated unlawful copies of
[the plaintiff’s] photographs to the public by adopting a policy in which [the defendants’]
employees moved those copies to the generally available files instead of discarding them.”622
The court also concluded that the defendants were liable for contributory infringement by virtue
of their encouraging of subscribers to upload information to the BBS with at least constructive
knowledge that infringing activity was likely to be occurring on their BBS.623
3. The Requirement of a Rental or Transfer of Ownership
The public distribution right requires that there have been either a rental or a transfer of
ownership of a copy. If material is distributed free, as much of it is on the Internet, there is no
sale, rental, or lease, and it is therefore unclear whether a sale or a “transfer of ownership” has
taken place. With respect to distributions in which the recipient receives a complete copy of the
620 Id. at *16-17.
621 982 F. Supp. 503 (N.D. Ohio 1997).
622 Id. at 513.
623 Id. at 514.
- 145 -
work on the recipient’s computer, perhaps a “transfer of ownership” should be deemed to have
taken place, since the recipient has control over the received copy.
It is unclear precisely what a “rental” means on the Internet. For example, is a download
of an on-demand movie a “rental”? In a sense, the user pays a “rental” fee to watch the movie
only once. However, the downloaded bits of information comprising the movie are never
“returned” to the owner, as in the case of the usual rental of a copy of a work. These unanswered
questions lend uncertainty to the scope of the distribution right on the Internet.
4. The Right of Distribution Under the WIPO Treaties
Article 6 of the WIPO Copyright Treaty provides that authors of literary and artistic
works shall enjoy “the exclusive right of authorizing the making available to the public of the
original and copies of their works through sale or other transfer of ownership.” This right seems
potentially broader than the public distribution right under current U.S. law, because it includes
the mere “making available” of copies of works to the public, whereas U.S. law currently reaches
only the actual distribution of copies.
It is unclear whether this “making available” right reaches the mere posting of copies on
the Internet. The Agreed Statement for Article 6 provides: “As used in these Articles, the
expressions ‘copies’ and ‘original and copies,’ being subject to the right of distribution and the
right of rental under the said Articles, refer exclusively to fixed copies that can be put into
circulation as tangible objects.” One interpretation of the Agreed Statement is that a copy posted
on the Internet, being electronic in format, is not capable of being “put into circulation as
tangible objects.”
On the other hand, one might argue that at least complete copies downloaded to
permanent storage at recipient computers should be treated as the equivalent of circulation of
copies “as tangible objects.” If, for example, copies of a book were sold on floppy disks rather
than on paper, such floppy disks might well be treated as the placement of copies into circulation
as tangible objects. Yet a network download can result in a copy on a floppy disk (or a hard
disk) at the recipient’s computer. One could therefore argue that the transmission of electronic
copies to “physical” storage media at the receiving end should be treated as within the
distribution right of the WIPO treaty.
In any event, this “making available” right might more easily reach BBS operators and
OSPs through which works are “made available” on the Internet. It is unclear whether a
requirement of volition will be read into Article 6 for liability, as some U.S. courts have required
for liability under the current rights of public distribution, display and performance. Moreover,
because the WIPO Copyright Treaty does not define the “public,” the same ambiguities will arise
as under current U.S. law concerning what type of availability will be sufficient to be “public,”
particularly with respect to the “making available” of works to limited audiences.
- 146 -
Articles 8 and 12 of the WIPO Performances and Phonograms Treaty contain rights of
distribution very similar to that of Article 6 of the WIPO Copyright Treaty,624 so the same
ambiguities noted above will arise.
5. The Right of Distribution Under WIPO Implementing Legislation
(a) United States Legislation
The DMCA does not contain any provisions that would modify the right of distribution as
it exists under current United States law. Thus, the DMCA implicitly deems the current right of
public distribution to be equivalent to the Article 6 right.
(b) The European Copyright Directive
Article 4(1) of the European Copyright Directive requires member states to “provide for
authors, in respect of the original of their works or of copies thereof, the exclusive right to
authorize or prohibit any form of distribution to the public by sale or otherwise.” Use of the
phrase “any form” of distribution suggests that a broad right is intended, although, as in the
United States, the right applies only with respect to the distribution of “copies.”625 Consistent
with the Agreed Statement of the WIPO Copyright Treaty, the comments to Article 4(1) of the
European Copyright Directive recite that “the expressions ‘copies’ and ‘originals and copies,’
being subject to the distribution right, refer exclusively to fixed copies that can be put into
circulation as tangible objects.”626
Thus, although use of the phrase “any form” of distribution might suggest that all online
transmissions of copyrighted works would fall within the distribution right of the European
Copyright Directive, the comments limit the distribution right “to fixed copies that can be put
into circulation as tangible objects.” It seems that the drafters of the European Copyright
Directive intended the right of communication to the public, rather than the right of distribution,
to cover online transmissions of copyrighted works, for Recital (23) states that the right of
communication to the public “should be understood in a broad sense covering all communication
to the public not present at the place where the communication originates. This right should
624 Article 8(1) provides, “Performers shall enjoy the exclusive right of authorizing the making available to the
public of the original and copies of their performances fixed in phonograms through sale or other transfer of
ownership.” Article 12(1) provides, “Producers of phonograms shall enjoy the exclusive right of authorizing
the making available to the public of the original and copies of their phonograms through sale or other transfer
of ownership.”
Like the Agreed Statement for the WIPO Copyright Treaty quoted in the text, the Agreed Statement for Articles
8 and 12 of the WIPO Performances and Phonograms Treaty provides: “As used in these Articles, the
expressions ‘copies’ and ‘original and copies,’ being subject to the right of distribution and the right of rental
under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects.”
625 Art. 4(2) deals with exhaustion of the distribution right under the first sale doctrine, and will be discussed in
Section III.F below.
626 Commentary to Art. 4, ¶ 1.
- 147 -
cover any such transmission or retransmission of a work to the public by wire or wireless means,
including broadcasting. This right should not cover any other acts.”
E. The Right of Importation
Section 602(a) of the copyright statute provides that “importation into the United States
... of copies or phonorecords of a work that have been acquired outside the United States is an
infringement of the exclusive right to distribute copies ....” One purpose of Section 602(a) was
to allow a copyright owner to prevent distribution into the United States of copies of works that,
if made in the United States, would have been infringing, but were made abroad outside the
reach of United States copyright law.
Section 602(a) was obviously drafted with a model of physical copies in mind.
“Importation” is not defined in the copyright statute, but the requirement that copies of a work be
“acquired outside the United States” might suggest that “importation” means the movement of
physical copies into the United States.627 It is unclear how this right will be applied to Internet
transmissions into the United States, with respect to which no physical copies in a traditional
sense are moved across national borders. Because the NII White Paper takes the position that the
stream of data sent during a transmission does not constitute a “copy” of a copyrighted work, the
NII White Paper concludes that the Section 602(a) importation right does not apply to network
transmissions into the United States,628 and recommends that Section 602 be amended to include
importation by transmission of copies, as well as by carriage or shipping of them.629
However, because physical copies often end up on a computer in the United States as a
result of network transmissions into the United States, it is possible that the importation right will
be construed analogously to the distribution right with respect to transmissions, especially since
the importation right is defined in Section 602(a) in terms of the distribution right. Thus, if a
transmission is deemed to be within the distribution right, then it is possible that the importation
right will be construed to apply when transmissions of copies are made into the United States
from abroad.
In any event, the new right of communication to the public afforded under the WIPO
treaties, discussed in the next section, could help plug any hole that may exist in the traditional
importation right, at least with respect to transmissions into the United States that qualify as
“communications to the public,” if the such right is adopted in implementing legislation (as
noted in the next section, however, the DMCA does not contain an explicit right of
communication to the public).
627 Lemley, supra note 6, at 564.
628 NII White Paper at 68.
629 Id. at 135.
- 148 -
F. The New Right of Transmission and Access Under the WIPO Treaties
The WIPO treaties each afford a broad new right of transmission and access to a
copyrighted work. The right is denominated a “right of communication to the public” in the
WIPO Copyright Treaty, and is denominated a “right of making available to the public” in the
WIPO Performances and Phonograms Treaty. Despite the difference in denomination, the rights
appear to be very similar.
1. The Right of Communication to the Public in the WIPO Copyright
Treaty
Article 8 of the WIPO Copyright Treaty provides a new right of “communication to the
public” as follows:
Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii),
11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary
and artistic works shall enjoy the exclusive right of authorizing any
communication to the public of their works, by wire or wireless means, including
the making available to the public of their works in such a way that members of
the public may access these works from a place and at a time individually chosen
by them.
This new extended right of communication to the public is clearly meant to cover online
dissemination of works, and in that sense is broader than the existing rights of communication to
the public in the Berne Convention, which are confined to performances, broadcasts, and
recitations of works. Specifically, Article 11(1)(ii) of the Berne Convention provides that
authors of dramatic, dramatico-musical and musical works shall enjoy the exclusive right of
authorizing “any communication to the public of the performance of their works.” Article
11bis(1)(ii) provides that authors of literary and artistic works shall enjoy the exclusive right of
authorizing “any communication to the public by wire or by rebroadcasting of the broadcast of
the work, when this communication is made by an organization other than the original one.”
Finally, Article 11ter(1)(ii) provides that authors of literary works shall enjoy the exclusive right
of authorizing “any communication to the public of the recitation of their works.”
The new right of communication to the public in the WIPO Copyright Treaty appears to
be broader than the existing rights of reproduction, display, performance, distribution, and
importation under current United States law in the following ways:
• No Requirement of a Copy. The right does not require the making or distribution of
“copies” of a work. It therefore removes the potential limitations on the rights of
reproduction and distribution under United States law stemming from the requirement
of a “copy.”
• Right of Transmission. It affords the exclusive right to control any “communication
to the public” of a work “by wire or wireless means.” Although “communication” is
not defined in the WIPO Copyright Treaty, the reference to a communication “by
- 149 -
wire or wireless means” seems clearly applicable to electronic transmissions of works
(a right of transmission). This conclusion is bolstered by the fact that Article 2(g) of
the WIPO Performances and Phonograms Treaty does contain a definition of
“communication to the public,” which is defined in terms of “transmission to the
public by any medium, other than broadcasting.”630 This transmission right will
potentially site the infringement at the place of transmission, in addition to the point
of receipt of a transmitted work (under the reproduction right).
• Right of Authorization. It also affords the exclusive right of “authorizing” any
communication to the public. No actual communications to the public are apparently
necessary to infringe the right.
• Right of Access. The right of authorizing communications to the public explicitly
includes “making available to the public” a work “in such a way that members of the
public may access” the work “from a place and a time individually chosen by them”
(a right of access).631 This access right would seem to allow the copyright holder to
remove an infringing posting of a work prior to any downloading of that work. This
right may also expand potential liability beyond just posters or recipients of infringing
material on the Internet to include OSPs and BBS operators, who could be said to
make a work available to the public in such a way that members of the public may
access it.
The Agreed Statement for Article 8, however, appears aimed at limiting the breadth of
the net of potential liability that Article 8 might establish. The Agreed Statement provides: “It is
understood that the mere provision of physical facilities for enabling or making a communication
does not in itself amount to communication within the meaning of this Treaty or the Berne
Convention. It is further understood that nothing in Article 8 precludes a Contracting Party from
applying Article 11bis(2).” It is unclear who the “mere” provider of “physical facilities” was
meant to reference – only the provider of telecommunications lines (such as phone companies)
through which a work is transmitted, or other service providers such as OSPs or BBS operators,
who may provide “services” in addition to “facilities.”
Another unclear point with respect to the scope of the right of communication to the
public is who the “public” is. Neither the WIPO Copyright Treaty nor the European Copyright
Directive provide any explanation of “to the public,” although the Commission in its 1997
commentary to one of the earlier drafts of the Directive stated that “public” included “individual
630 Article 2(f) of the WIPO Performances and Phonograms Treaty defines “broadcasting” to mean “the
transmission by wireless means for public reception of sounds or of images and sounds or of the representations
thereof ....” This definition seems to contemplate isochronous transmission.
631 Although “public” is not defined in the WIPO Copyright Treaty, the reference in Article 10 to access by
members of the public “from a place and at a time individually chosen by them” is very similar to the definition
of display or performance of a work “publicly” in Section 101 of the U.S. copyright statute, which applies
“whether the members of the public capable of receiving the performance or display receive it in the same place
or in separate places and at the same time or at different times.”
- 150 -
members of the public,” but went on to state that “the provision does not cover mere private
communications.”632
The right of transmission and access under Article 8 of the WIPO Copyright Treaty is
similar to (and potentially broader than) the amendment to U.S. copyright law proposed in the
NII White Paper “to expressly recognize that copies or phonorecords of works can be distributed
to the public by transmission, and that such transmissions fall within the exclusive distribution
right of the copyright owner.”633 The NII White Paper’s proposal would expand the distribution
right, as opposed to creating a wholly new right, as the WIPO Copyright Treaty does. The
amendment proposed by the NII White Paper proved to be very controversial, and implementing
legislation introduced in Congress in 1996 ultimately did not win passage.
2. The Right of Making Available to the Public in the WIPO Performances
and Phonograms Treaty
Articles 10 and 14 of the WIPO Performances and Phonograms Treaty grant analogous
rights for performers and producers of phonograms to the right of “communication to the public”
contained in Article 8 of the WIPO Copyright Treaty. The WIPO Performances and
Phonograms Treaty, however, casts these rights as ones of “making available to the public.”
Specifically, Article 10 of the WIPO Performances and Phonograms Treaty provides:
Performers shall enjoy the exclusive right of authorizing the making available to
the public of their performances fixed in phonograms, by wire or wireless means,
in such a way that members of the public may access them from a place and at a
time individually chosen by them.
Thus, Article 10 provides an exclusive right with respect to analog and digital on-demand
transmission of fixed performances.634
Similarly, Article 14 provides:
Producers of phonograms shall enjoy the exclusive right of authorizing the
making available to the public of their phonograms, by wire or wireless means, in
such a way that members of the public may access them from a place and at a
time individually chosen by them.
632 Harrington & Berking, supra note 244, at 4.
633 NII White Paper at 130.
634 Rebecca F. Martin, “The WIPO Performances and Phonograms Treaty: Will the U.S. Whistle a New Tune?”, J.
Copyright Soc’y U.S.A., Spring 1997, at 157, 178. Art. 8 provides a correlative distribution right with respect
to more traditional forms of distribution: “Performers shall enjoy the exclusive right of authorizing the making
available to the public of the original and copies of their performances fixed in phonograms through sale or
other transfer of ownership.” The WIPO Performances and Phonograms Treaty also grants to authors in Art. 6
the exclusive right of authorizing “the broadcasting and communication to the public of their unfixed
performances except where the performance is already a broadcast performance” as well as “the fixation of their
unfixed performances.”
- 151 -
No Agreed Statements pertaining to Articles 10 and 14 were issued.
Article 2(b) of the WIPO Performances and Phonograms Treaty defines a “phonogram”
to mean “the fixation of the sounds of a performance or of other sounds, or of a representation of
sounds other than in the form of a fixation incorporated in a cinematographic or other
audiovisual work.” Article 2(c) defines “fixation” broadly as “the embodiment of sounds, or of
the representations thereof, from which they can be perceived, reproduced or communicated
through a device.” Under this definition, storage of sounds on a computer would constitute a
“fixation,” and the fixed copy of such sounds would therefore constitute a “phonogram.”
Accordingly, the making available to the public of sounds stored on a computer would seem to
fall within the access rights of Articles 10 and 14.
Because there were no Agreed Statements generated in conjunction with Sections 10 and
14 of the WIPO Performances and Phonograms Treaty, there is no Agreed Statement similar to
that accompanying Article 8 in the WIPO Copyright Treaty for limiting liability for the mere
provision of physical facilities for enabling or making transmissions. Accordingly, one will have
to await the implementing legislation in the various countries to know how broadly the rights set
up in Articles 10 and 14 will be codified into copyright laws throughout the world.
3. The Right of Transmission and Access Under WIPO Implementing
Legislation
(a) United States Legislation
The DMCA does not contain any express implementation of a right of “communication
to the public” or of “making available to the public.” In view of this, the uncertainties discussed
previously concerning whether the mere transmission or access of a copyrighted work through an
online medium falls within existing United States rights of reproduction, distribution, public
display, or public performance remain under the DMCA.
With respect to the Article 10 right of making available to the public of fixed
performances, the recently enacted Digital Performance Rights in Sound Recordings Act grants
these rights for digital transmissions, although not for analog transmissions.635 However,
because the WIPO Performances and Phonograms Treaty grants these rights with respect to both
digital and analog transmissions, as well as with respect to spoken or other sounds in addition to
musical works, it would seem that the United States might have to amend its copyright laws to
comply with the requirements of Article 10.636
Although the DMCA does not contain any express rights of transmission or access, recent
case law suggests that courts may interpret existing copyright rights to afford the equivalent of a
right of transmission and access. For example, in the recent case of Marobie-FL, Inc. v. National
Association of Fire Equipment Distributors,637 discussed previously, the court concluded that the
635 17 U.S.C. § 106 (6).
636 Martin, supra note 634, at 178-79.
637 45 U.S.P.Q.2d 1236 (N.D. Ill. 1997).
- 152 -
mere making available of the files for downloading was sufficient for liability, because “once the
files were uploaded [onto the Web server], they were available for downloading by Internet users
and … the [OSP] server transmitted the files to some Internet users when requested.”638 From
this statement, it appears that the court construed the distribution and public display rights to
cover both the making available of the clip art to the public on the Web page (a right of access),
as well as subsequent downloads by users (a right of transmission).
(b) The European Copyright Directive
The European Copyright Directive explicitly adopts both the right of communication to
the public of copyrighted works and the right of making available to the public of fixed
performances, by wire or wireless means, in language that parallels that of the WIPO Copyright
Treaty and the WIPO Performances and Phonograms Treaty. Specifically, Article 3(1) of the
European Copyright Directive provides the following with respect to copyrighted works:
Member States shall provide authors with the exclusive right to authorize or
prohibit any communication to the public of their works, by wire or wireless
means, including the making available to the public of their works in such a way
that members of the public may access them from a place and at a time
individually chosen by them.
The comments to Article 3 define “communication to the public” to cover “any means or
process other than the distribution of physical copies. This includes communication by wire or
by wireless means,”639 which clearly encompasses a right of transmission. Indeed, the comments
explicitly note: “One of the main objectives of the provision is to make it clear that interactive
‘on-demand’ acts of transmissions are covered by this right.”640 This theme is picked up in
Recital (25) of the European Copyright Directive, which states, “It should be made clear that all
rightholders recognized by this Directive should have an exclusive right to make available to the
public copyright works or any other subject-matter by way of interactive on-demand
transmissions. Such interactive on-demand transmissions are characterized by the fact that
members of the public may access them from a place and at a time individually chosen by them.”
Recital (27), however, echoes similar statements in the WIPO Copyright Treaty when it states
that the “mere provision of physical facilities for enabling or making a communication does not
in itself amount to communication within the meaning of this Directive.” The Recitals do not
clear up the ambiguity previously noted in the WIPO Treaty as to who the “mere” provider of
“physical facilities” was meant to reference – only the provider of telecommunications lines
(such as phone companies) through which a work is transmitted, or other service providers such
as OSPs or BBS operators.
The comments to the European Copyright Directive also make clear that Article 3(1)
affords a right to control online access to a work, apart from actual transmissions of the work:
638 Id. at *12.
639 Commentary to Art. 3, ¶ 1.
640 Id. ¶ 2.
- 153 -
As was stressed during the WIPO Diplomatic Conference, the critical act is the
“making available of the work to the public,” thus the offering a work on a
publicly accessible site, which precedes the stage of its actual “on-demand
transmission.” It is not relevant whether it actually has been retrieved by any
person or not. The “public” consists of individual “members of the public.”641
Similarly, Article 3(2) of the European Copyright Directive affords a right of making
available to the public of fixed performances by wire or wireless means:
Member States shall provide for the exclusive right to authorize or prohibit the
making available to the public, by wire or wireless means, in such a way that
members of the public may access them from a place and at a time individually
chosen by them:
(a) for performers, of fixations of their performances;
(b) for phonogram producers, of their phonograms;
(c) for the producers of the first fixation of films, of the original and
copies of their films;
(d) for broadcasting organizations, of fixations of their broadcasts,
whether these broadcasts are transmitted by wire or over the air, including by
cable or satellite.
The right of Article 3(2) of the European Copyright Directive is actually broader than the
right required under Article 10 of the WIPO Performances and Phonograms Treaty. The Article
10 right of making available to the public applies only to performances fixed in “phonograms,”
which Article 2 defines to mean the fixation of the “sounds of a performance or of other sounds
other than in the form of a fixation incorporated in a cinematographic or other audiovisual
work.” The Article 3(2) right of the European Copyright Directive goes further, covering fixed
performances of audiovisual material as well. The comments to Article 3(2) of the European
Copyright Directive justify this extension of the right on the ground that audiovisual productions
or multimedia products are as likely to be available online as are sound recordings.642
In sum, the European Copyright Directive explicitly grants a right of transmission and
access to copyrighted works and fixed performances, whereas the DMCA does not. It remains to
be seen how broadly these rights mandated under the European Copyright Directive will be
adopted in implementing legislation in EC member countries. However, this disparity between
the express rights afforded under United States law and the European Copyright Directive raises
considerable potential uncertainty. First, at a minimum, use of different language to denominate
the various rights among countries may breed confusion. Second, differences of scope of the
rights of transmission and access are likely to arise between the United States and the EC by
641Id.
642 Id. ¶ 3.
- 154 -
virtue of the fact that these rights are spelled out as separate rights in the EC, whereas, if they
exist at all, they are subsumed under a collection of various other rights in the United States.
Adding further to the potential confusion is the possibility that some EC member countries may
adopt these rights expressly, as mandated by the European Copyright Directive, whereas other
countries may, like the United States, deem them to be subsumed in other rights already afforded
under that country’s laws.
Because online transmissions through the Internet are inherently global, these disparities
raise the possibility that rights of varying scope will apply to an online transmission as it travels
through computers in various countries on the way to its ultimate destination. Similarly, legal
rights of varying scope may apply depending upon in which country a work is actually first
accessed. Given the ubiquitous nature of caching on the Internet, the site of the access may be
arbitrary from a technical point of view, but significant from a legal point of view. Such a
situation would not afford the international uniformity that the WIPO treaties seek to establish.
G. New Rights and Provisions Under The Digital Millennium Copyright Act, the
European Copyright Directive & Legislation That Did Not Pass
This Section discusses a number of new rights and provisions related to various areas of
copyright law that are contained in the DMCA and the European Copyright Directive. In
addition, this Section discusses a number of interesting rights and provisions concerning
copyright in the online context that were contained in proposed legislation that did not pass
Congress. These provisions are indicators of areas where future legislation and/or debate may
arise.
1. Circumvention of Technological Measures and Rights Management
Information Under the DMCA
Both the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty
require signatories to establish certain obligations with respect to circumvention of technological
measures to protect copyrighted works and the preservation and use of certain “rights
management information.”
With respect to the circumvention of technological measures, Article 11 of the WIPO
Copyright Treaty and Article 18 of the WIPO Performances and Phonograms Treaty require
treaty signatories to “provide adequate legal protection and effective legal remedies against the
circumvention of effective technological measures” that are used by authors, performers and
producers of phonograms to restrict acts with respect to their copyrighted works that are not
authorized by the rights holders or permitted by law.643
643 Shortly after the WIPO treaties were adopted, Assistant Secretary of Commerce and Commissioner of Patents
and Trademarks Bruce Lehman, who headed the U.S. delegation at the WIPO Conference, noted that this
provision is somewhat broader than the statutory language proposed on the subject in Congress before adoption
of the treaties. He noted that implementation of this treaty provision would therefore require new legislation.
“WIPO Delegates Agree on Two Treaties,” BNA’s Electronic Information Policy & Law Report (Jan. 3, 1997)
at 23.
- 155 -
With respect to the preservation and use of rights management information, Article 12 of
the WIPO Copyright Treaty and Article 19 of the WIPO Performances and Phonograms Treaty
require treaty signatories to provide adequate and effective legal remedies against any person
performing any of the following acts knowing (or, with respect to civil remedies, having
reasonable grounds to know) “that it will induce, enable, facilitate or conceal an infringement of
any right covered by this Treaty or the Berne Convention”: (i) removing or altering any
electronic rights management information without authority or (ii) distributing, importing for
distribution, broadcasting or communicating to the public, without authority, copies of works
knowing that electronic rights management information has been removed or altered without
authority. The treaties define “rights management information” as “information which identifies
the work, the author of the work, the owner of any right in the work, or information about the
terms and conditions of use of the work, and any numbers or codes that represent such
information, when any of these items of information is attached to a copy of a work or appears in
connection with the communication of a work to the public.”
This subsection 1 discusses the implementation of these rights in the DMCA. The
following subsection 2 discusses the implementation of these rights under the European
Copyright Directive.
The four bills that were introduced in Congress to implement the WIPO treaties adopted
one of two approaches to the circumvention of technological measures and rights management
information. The first approach, contained in H.R. 2281 and S. 2037 and ultimately adopted in
the DMCA, outlawed both conduct and devices directed toward or used for circumventing
technological copyright protection mechanisms. The second approach, contained in S. 1146 and
H.R. 3048 but not passed by Congress, outlawed only conduct involving the removal or
deactivation of technological protection measures. Although Bruce Lehman conceded that the
WIPO treaties do not mandate adoption of a device-based approach, he and other supporters of
this approach argued that a conduct-only approach would be difficult to enforce and that
meaningful legislation should control the devices used for circumvention.644
The DMCA adds several new provisions to the Copyright Act, which are contained in a
new Chapter 12.
(a) Circumvention of Technological Protection Measures
(1) Prohibition on Conduct
Section 1201(a)(1) of the DMCA outlaws conduct to circumvent protection mechanisms
that control access to a copyrighted work: “No person shall circumvent a technological measure
that effectively controls access to a work protected under this title.” Note that this provision
does not expressly require either knowledge or intent, and is therefore potentially very broad in
its reach – the language states that the mere act of circumvention is a violation, and does not
expressly require that an infringement follow the circumvention act (although some courts have
644 Cunard & Coplan, “WIPO Treaty Implementation: Debate Over OSP Liability,” Computer Law Strategist (Oct.
1997) 1, 3.
- 156 -
grafted such a requirement as discussed below). Section 1201(a)(3) defines “circumvent a
technological measure” as “to descramble a scrambled work, to decrypt an encrypted work, or
otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the
authority of the copyright owner.” That section further provides that a technological protection
measure “effectively controls access to a work” if “the measure, in the ordinary course of its
operation, requires the application of information, or a process or a treatment, with the authority
of the copyright owner, to gain access to the work.”
Section 1201(a)(1) provides that the prohibition on circumventing a technological
measure to gain unauthorized access to a work does not take effect until the end of a two-year
period beginning on the date of enactment of the bill – the two year waiting period expired on
October 28, 2000, and the prohibition is now in effect.
(i) Exemptions Adopted by the Librarian of Congress
Section 1201(a)(1) requires the Librarian of Congress, upon recommendation of the
Register of Copyrights and in consultation with the Assistant Secretary of Commerce for
Communications and Information, to conduct a rulemaking645 during the initial two-year period,
and during each succeeding three-year period, to determine whether certain types of users of
copyrighted works are, or are likely to be, adversely affected by the prohibition in Section
1201(a)(1).646 The Librarian must publish a list of particular classes of copyrighted works for
which the rulemaking determines that noninfringing uses have been, or are likely to be, adversely
affected, and the prohibitions of Section 1201(a) shall not apply to such users with respect to
such class of works for the ensuing three-year period.
The Exemptions of 2000. On Oct. 27, 2000, the Copyright Office published the first set
of classes of copyrighted works that the Librarian of Congress determined would be exempt from
the anti-circumvention provisions of Section 1201(a)(1), with the exemption to be in effect until
Oct. 28, 2003.647 Those classes, which were only two in number and very narrowly defined,
were as follows:
1. Compilations consisting of lists of websites blocked by filtering software and
applications. The Librarian determined that an exemption was necessary to avoid an adverse
effect on persons who wish to criticize and comment on such lists, because they would not be
645 As originally passed by Congress, section 1201(a)(1) required that the rulemaking be on the record. However,
the Intellectual Property and Communications Omnibus Reform Act of 1999, P.L. 106-113, passed by Congress
on Nov. 19, 1999 and signed by the President in late 1999, removed the requirement that the rulemaking be “on
the record.”
646 Section 1201(a)(C) provides that in conducting the rulemaking, the Librarian shall examine the availability for
use of copyrighted works; the availability for use of works for nonprofit archival, preservation, and educational
purposes; the impact that the prohibition on the circumvention of technological measures applied to copyrighted
works has on criticism, comment, news reporting, teaching, scholarship, or research; and the effect of
circumvention of technological measures on the market for or value of copyrighted works.
647 65 Fed. Reg. 64556 (Oct. 27, 2000).
- 157 -
able to ascertain which sites are on the lists unless they circumvented encryption protecting the
contents of the lists.648
2. Literary works, including computer programs and databases, protected by access
control mechanisms that fail to permit access because of malfunction, damage or obsoleteness.
The Librarian determined that an exemption was necessary to gain access to literary works
protected by access control mechanisms, such as dongles or other mechanisms, that malfunction
or become obsolete.649
The Exemptions of 2003. On Oct. 27, 2003, the Copyright Office issued the second
determination of the classes of copyrighted works that the Librarian decided should have an
exemption, with the exemption to be in effect until Oct. 27, 2006.650 The classes, which were
only four in number and even more specifically defined than the first set of classes,651 were as
follows:
1. Compilations consisting of lists of Internet locations blocked by commercially
marketed filtering software applications that are intended to prevent access to domains, websites
or portions of websites, but not including lists of Internet locations blocked by software
applications that operate exclusively to protect against damage to a computer or computer
network or lists of Internet locations blocked by software applications that operate exclusively to
prevent receipt of email.652 The Librarian defined “Internet locations” to “include domains,
uniform resource locators (URLs), numeric IP addresses or any combination thereof.653 This
class is similar to the first class of exemptions in the Librarian’s first determination, but was
narrowed so as to exclude the ability to circumvent blocked lists associated with firewalls, antivirus
software and anti-spam software.654
648 Id. at 64564.
649 Id. at 64564-66. For the Copyright Office’s rationale for rejecting an exemption for a host of other proposed
classes of works, see id. at 64566-74.
650 68 Fed. Reg. 62011 (Oct. 31, 2003).
651 A statement accompanying the Librarian’s decision with respect to the exempted classes partially explained the
narrowness of the classes: “It is important to understand the purposes of this rulemaking, as stated in the law,
and the role I have in it. The rulemaking is not a broad evaluation of the successes or failures of the DMCA.
The purpose of the proceeding is to determine whether current technologies that control access to copyrighted
works are diminishing the ability of individuals to use works in lawful, noninfringing ways. The DMCA does
not forbid the act of circumventing copy controls, and therefore this rulemaking proceeding is not about
technologies that control copying. Some of the people who participated in the rulemaking did not understand
that and made proposals based on their dissatisfaction with copy controls. Other participants sought exemptions
that would permit them to circumvent access controls on all works when they are engaging in particular
noninfringing uses of those works. The law does not give me that power.” Statement of the Librarian of
Congress Relating to Section 1201 Rulemaking, available as of Oct. 30, 2003 at
www.copyright.gov/1201/docs/librarian_statement_01.html.
652 68 Fed. Reg. at 62013.
653Id.
654Id.
- 158 -
2. Computer programs protected by dongles that prevent access due to malfunction or
damage and which are obsolete. This class is similar to the second class of exemptions in the
Librarian’s first determination, but was narrowed to cover only the case of obsolete dongles
because the Librarian found that this was the only class for which adequate factual support of
potential harm had been submitted in the second rulemaking proceeding.655 The Librarian
defined “obsolete” as “no longer manufactured or reasonably available in the commercial
marketplace.”656
3. Computer programs and video games distributed in formats that have become obsolete
and which require the original media or hardware as a condition of access. A format shall be
considered obsolete if the machine or system necessary to render perceptible a work stored in
that format is no longer manufactured or is no longer reasonably available in the commercial
marketplace. The Librarian determined that this exemption is necessary to allow archiving or
continued use of computer programs and video games that are subject to “original media only”
restrictions, are stored on media no longer in use, such as 5.25” floppy disks, or require use of an
obsolete operating system.657
4. Literary works distributed in ebook format when all existing ebook editions of the
work (including digital text editions made available by authorized entities) contain access
controls that prevent the enabling of the ebook’s read-aloud function and that prevent the
enabling of screen readers to render the text into a specialized format. The Librarian defined
“specialized format,” “digital text” and “authorized entities” to have the same meaning as in 17
U.S.C. § 121.658 The Librarian determined that this exemption is necessary in response to
problems experienced by the blind and visually impaired in gaining meaningful access to literary
works distributed as ebooks.659
For the Copyright Office’s rationale for rejecting an exemption for a host of other
proposed classes of works, see 68 Fed. Reg. at 62014-18. One of the more interesting proposed
exemptions that the Copyright Office rejected was one submitted by Static Control Components,
Inc. in response to the district court’s ruling in the case of Lexmark International, Inc. v. Static
Control Components, Inc.,660 discussed in Section II.G.1(o)(1) below. In that case, the district
court ruled on a motion for a preliminary injunction that Static Control violated Section
1201(a)(2) by distributing microchips that were used to replace the microchip found in plaintiff
Lexmark’s toner cartridges so as to circumvent Lexmark’s authentication sequence that
prevented the printer engine software on the Lexmark printer from allowing the printer to operate
with a refilled toner cartridge. In view of this ruling, Static Control submitted a proposed
655 Id. at 62013-14.
656 Id. at 62018.
657 Id. at 62014.
658Id.
659 Id.
660 253 F. Supp. 2d 943, 948-49 (E.D. Ky. 2003), rev’d, 387 F.3d 522 (6th Cir. 2004), reh’g denied, 2004 U.S. App.
LEXIS 27422 (Dec. 29, 2004), reh’g en banc denied, 2005 U.S. App. LEXIS 3330 (6rh Cir. Feb. 15, 2005).
- 159 -
exemption to the Copyright Office to permit circumvention of access controls on computer
programs embedded in computer printers and toner cartridges and that control the interoperation
and functions of the printer and toner cartridge. The Copyright Office concluded that the
statutory exemption set forth in Section 1201(f), discussed in Section II.G.1(g) below, already
adequately addressed the concerns of toner cartridge re-manufacturers.661 The rationale for the
Copyright Office’s conclusion is discussed further in Section II.G.1(g) below.
The Exemptions of 2006. On Nov. 27, 2006, the Copyright Office issued the third
determination of the classes of copyrighted works that the Librarian decided should have an
exemption, with the exemption to be in effect until Oct. 27, 2009.662 In previous rulemakings,
the Copyright Office had determined that an exempted class must be based primarily on
attributes of the work itself and not the nature of the use or the user. In its 2006 ruling, the
Copyright Office determined for the first time that in certain circumstances it would be
permissible to refine the description of a class of works by reference to the type of user who may
take advantage of the exemption or by reference to the type of use of the work that may be made
pursuant to the exemption, and the Copyright Office applied this refinement to some of the
classes of works exempted.663
The exempted classes of works in the 2006 ruling were the following:
1. “Audiovisual works included in the educational library of a college or university’s
film or media studies department, when circumvention is accomplished for the purpose of
making compilations of portions of those works for educational use in the classroom by media
studies or film professors.”664 This exemption was the first one to define the class by reference
to particular types of uses and users.
2. “Computer programs and video games distributed in formats that have become
obsolete and that require the original media or hardware as a condition of access, when
circumvention is accomplished for the purpose of preservation or archival reproduction of
published digital works by a library or archive. A format shall be considered obsolete if the
machine or system necessary to render perceptible a work stored in that format is no longer
manufactured or is no longer reasonably available in the commercial marketplace.”665 This
exemption is the same as the third class in the 2003 ruling, except that a definition of what
renders constitutes an obsolete format was added.
661 68 Fed. Reg. at 62017.
662 71 Fed. Reg. 68472 (Nov. 27, 2006). On Oct. 27, 2009, the Librarian of Congress extended the 2006
exemptions on an interim basis until the Copyright Office and Librarian of Congress could complete their
decision with respect to the next classes of exemptions to be granted. See 74 Fed. Reg. 55139 (Oct. 27, 2009).
The extension period turned out to be 9 months, ending on July 26, 2010.
663 Id. at 68473-74.
664Id.
665 Id. at 68474.
- 160 -
3. “Computer programs protected by dongles that prevent access due to malfunction or
damage and which are obsolete. A dongle shall be considered obsolete if it is no longer
manufactured or if a replacement or repair is no longer reasonably available in the commercial
marketplace.”666 This exemption is the same as the second class in the 2003 ruling.
4. “Literary works distributed in ebook format when all existing ebook editions of the
work (including digital text editions made available by authorized entities) contain access
controls that prevent the enabling either of the book’s read-aloud function or of screen readers
that render the text into a specialized format.”667 This exemption is similar to the fourth class in
the 2003 ruling, except that the two requirements in the description of the access controls is
phrased in the disjunctive, whereas in the 2003 ruling it was phrased in the conjunctive.
5. “Computer programs in the form of firmware that enable wireless telephone handsets
to connect to a wireless telephone communication network, when circumvention is accomplished
for the sole purpose of lawfully connecting to a wireless telephone communication network.”668
This is a new exemption, and is another one defined by reference to a particular type of use. The
purpose of this exemption is to address the use of software locks that prevent customers from
using their handsets on a competitor’s network, even after all contractual obligations to the
original wireless carrier have been satisfied, by controlling access to the firmware that operates
the mobile phone. The Copyright Office justified the exemption by noting that “in this case, the
access controls do not appear to actually be deployed in order to protect the interests of the
copyright owner or the value or integrity of the copyrighted work; rather, they are used by
wireless carriers to limit the ability of subscribers to switch to other carriers, a business decision
that has nothing whatsoever to do with the interests protected by copyright. … When application
of the prohibition on circumvention of access controls would offer no apparent benefit to the
author or copyright owner in relation to the work to which access is controlled, but simply offers
a benefit to a third party who may use § 1201 to control the use of hardware which, as is
increasingly the case, may be operated in part through the use of computer software or firmware,
an exemption may well be warranted.”669 The rationale underlying this class is an important one,
and may be applied to justify more exempted classes in future rulemakings by the Copyright
Office.
6. “Sound recordings, and audiovisual works associated with those sound recordings,
distributed in compact disc format and protected by technological protection measures that
control access to lawfully purchased works and create or exploit security flaws or vulnerabilities
that compromise the security of personal computers, when circumvention is accomplished solely
for the purpose of good faith testing, investigating, or correcting such security flaws or
vulnerabilities.”670 This exemption was prompted by the notorious case of the DRM technology
666 Id. at 68475.
667Id.
668 Id. at 68476.
669 Id.
670 71 Fed. Reg. 68477.
- 161 -
that Sony BMG Music added to some music CDs distributed in 2005 and that went awry,
causing damage to users’ computers.
Among the proposed classes that the Copyright Office rejected was the interesting one of
an exemption for “space-shifting” to permit circumvention of access controls applied to
audiovisual and musical works in order to copy these works to other media or devices and to
access these works on those alternative media or devices. The Copyright Office rejected the
proposal on the ground that those proposing the exemption “uniformly failed to cite legal
precedent that establishes that such space-shifting is, in fact, a noninfringing use. The Register
concludes that the reproduction of those works onto new devices is an infringement of the
exclusive reproduction right unless some exemption or defense is applicable. In the absence of
any persuasive legal authority for the proposition that making copies of a work onto any device
of the user’s choosing is a noninfringing use, there is no basis for recommending an exemption
to the prohibition on circumvention.”671 The Copyright Office also rejected a proposed
exemption for all works protected by access controls that prevent the creation of backup copies,
reasoning that “the proponents offered no legal arguments in support of the proposition that the
making of backup copies is noninfringing.”672
The Exemptions of 2010. On July 27, 2010, the Librarian of Congress issued the fourth
determination of the classes of copyrighted works that should have an exemption, with the
exemption to be in effect until Oct. 27, 2012.673 The 2010 ruling continued the approach of the
2006 ruling in refining the description of a class of works by reference to the type of user who
may take advantage of the exemption or by reference to the type of use of the work that may be
made pursuant to the exemption. Indeed, in announcing the exemption, the Copyright Office
stated that the prohibitions against circumvention “shall not apply to persons who are users of a
copyrighted work which is in a particular class of works” granted an exemption.674
The six exempted classes of works in the 2010 ruling are the following:
1. “Motion pictures on DVDs that are lawfully made and acquired and that are protected
by the Content Scrambling System when circumvention is accomplished solely in order to
accomplish the incorporation of short portions of motion pictures into new works for the purpose
of criticism or comment, and where the person engaging in circumvention believes and has
reasonable grounds for believing that circumvention is necessary to fulfill the purpose of the use
in the following instances:
(i) Educational uses by college and university professors and by college and
university film and media studies students;
(ii) Documentary filmmaking;
671 Id. at 68478.
672 Id. at 68479.
673 75 Fed. Reg. 43825 (July 27, 2010).
674 Id. at 43826.
- 162 -
(iii) Noncommercial videos.”
2. “Computer programs that enable wireless telephone handsets to execute software
applications, where circumvention is accomplished for the sole purpose of enabling
interoperability of such applications, when they have been lawfully obtained, with computer
programs on the telephone handset.”
3. “Computer programs, in the form of firmware or software, that enable used675 wireless
telephone handsets to connect to a wireless telecommunications network, when circumvention is
initiated by the owner of the copy of the computer program solely in order to connect to a
wireless telecommunications network and access to the network is authorized by the operator of
the network.”
4. “Video games accessible on personal computers and protected by technological
protection measures that control access to lawfully obtained works, when circumvention is
accomplished solely for the purpose of good faith testing for, investigating, or correcting security
flaws or vulnerabilities, if:
(i) The information derived from the security testing is used primarily to promote
the security of the owner or operator of a computer, computer system, or computer network; and
(ii) The information derived from the security testing is used or maintained in a
manner that does not facilitate copyright infringement or a violation of applicable law.”
5. “Computer programs protected by dongles that prevent access due to malfunction or
damage and which are obsolete. A dongle shall be considered obsolete if it is no longer
manufactured or if a replacement or repair is no longer reasonably available in the commercial
marketplace.”
6. “Literary works distributed in ebook format when all existing ebook editions of the
work (including digital text editions made available by authorized entities) contain access
controls that prevent the enabling either of the book’s read-aloud function or of screen readers
that render the text into a specialized format.”676
The Exemptions of 2012. On Oct 26, 2012, the Librarian of Congress issued the fifth
determination of the classes of copyrighted works that should have an exemption, effective as of
Oct. 28, 2012.677 The 2012 ruling broadened somewhat the approach of the 2010 ruling’s focus
on refining the description of a class of works by reference to the type of user who may take
advantage of the exemption or by reference to the type of use of the work that may be made
pursuant to the exemption. For example, the Copyright Office noted in its recommendation to
the Librarian of Congress the following: “While beginning with a category of works identified
675 The limitation of this exemption to “used” wireless telephone handsets was a narrowing of the network
connection exemption granted in the 2006 rulemaking.
676 75 Fed. Reg. at 43849.
677 77 Fed. Reg. 65260 (Oct. 26, 2012).
- 163 -
in Section 102, or a subcategory thereof, the description of the ‘particular class’ ordinarily will
be refined with reference to other factors so that the scope of the class is proportionate to the
scope of harm to noninfringing uses. For example, a class might be refined in part by reference
to the medium on which the works are distributed, or to the access control measures applied to
the works. The description of a class of works may also be refined, in appropriate cases, by
reference to the type of user who may take advantage of the exemption or the type of use that
may be made pursuant to the designation.”678
Notably, the Librarian omitted from the exempted classes one of the broad classes that
had been granted an exemption in 2010 pertaining to computer programs for “unlocking”
wireless handsets to function with alternative wireless networks. Instead, the Librarian granted a
much more limited exemption that applied only to handsets acquired within 90 days after the
effective date of the exemption. The principle rationale for the much more limited exemption
was the following:
The Register further concluded that the record before her supported a finding that,
with respect to new wireless handsets, there are ample alternatives to
circumvention. That is, the marketplace has evolved such that there is now a wide
array of unlocked phone options available to consumers. While it is true that not
every wireless device is available unlocked, and wireless carriers’ unlocking
policies are not free from all restrictions, the record clearly demonstrates that
there is a wide range of alternatives from which consumers may choose in order
to obtain an unlocked wireless phone. Thus, the Register determined that with
respect to newly purchased phones, proponents had not satisfied their burden of
showing adverse effects related to a technological protection measure.679
This decision on the part of the Register proved to be the source of significant subsequent
controversy.
The six exempted classes of works in the 2012 ruling are the following:
1. “Literary works, distributed electronically, that are protected by technological
measures which either prevent the enabling of read-aloud functionality or interfere with screen
readers or other applications or assistive technologies in the following instances:
(i) When a copy of such a work is lawfully obtained by a blind or other person with a
disability, as such a person is defined in 17 U.S.C. 121; provided, however, the rights owner is
remunerated, as appropriate, for the price of the mainstream copy of the work as made available
to the general public through customary channels; or
(ii) When such work is a nondramatic literary work, lawfully obtained and used by an
authorized entity pursuant to 17 U.S.C. 121.”
678 Id. at 65261.
679 Id. at 65265.
- 164 -
2. “Computer programs that enable wireless telephone handsets to execute lawfully
obtained software applications, where circumvention is accomplished for the sole purpose of
enabling interoperability of such applications with computer programs on the telephone
handset.”
3. “Computer programs, in the form of firmware or software, that enable a wireless
telephone handset originally acquired from the operator of a wireless telecommunications
network or retailer no later than ninety days after the effective date of this exemption to connect
to a different wireless telecommunications network, if the operator of the wireless
communications networks to which the handset is locked has failed to unlock it within a
reasonable period of time following a request by the owner of the wireless telephone handset,
and when circumvention is initiated by the owner, an individual consumer, who is also the owner
of the copy of the computer program in such wireless telephone handset, solely in order to
connect to a different wireless telecommunications network, and such access to the network is
authorized by the operator of the network.”
4. “Motion pictures, as defined in 17 U.S.C. 101, on DVDs that are lawfully made and
acquired and that are protected by the Content Scrambling System, where the person engaging in
the circumvention believes and has reasonable grounds for believing that circumvention is
necessary because reasonably available alternatives, such as noncircumventing methods or using
screen capture software as provided for in alternative exemptions, are not able to produce the
level of high-quality content required to achieve the desired criticism or comment on such
motion pictures, and where circumvention is undertaken solely in order to make use of short
portions of the motion pictures for the purpose of criticism or comment in the following
instances:
(i) In noncommercial videos;
(ii) In documentary films;
(iii) In nonfiction multimedia ebooks offering film analysis; and
(iv) For educational purposes in film studies or other courses requiring close analysis of
film and media excerpts, by college and university faculty, college and university students, and
kindergarten through twelfth grade educators. For purposes of this exemption, ‘noncommercial
videos’ includes videos created pursuant to a paid commission, provided that the commissioning
entity’s use is noncommercial.”
5. “Motion pictures, as defined in 17 U.S.C. 101, that are lawfully made and acquired via
online distribution services and that are protected by various technological protection measures,
where the person engaging in circumvention believes and has reason able grounds for believing
that circumvention is necessary because reasonably available alternatives, such as
noncircumventing methods or using screen capture software as provided for in alternative
exemptions, are not able to produce the level of high-quality content required to achieve the
desired criticism or comment on such motion pictures, and where circumvention is undertaken
- 165 -
solely in order to make use of short portions of the motion pictures for the purpose of criticism or
comment in the following instances:
(i) In noncommercial videos;
(ii) In documentary films;
(iii) In nonfiction multimedia ebooks offering film analysis; and
(iv) For educational purposes in film studies or other courses requiring close analysis of
film and media excerpts, by college and university faculty, college and university students, and
kindergarten through twelfth grade educators. For purposes of this exemption, “noncommercial
videos” includes videos created pursuant to a paid commission, provided that the commissioning
entity’s use is noncommercial.”
6. “(i) Motion pictures, as defined in 17 U.S.C. 101, on DVDs that are lawfully made
and acquired and that are protected by the Content Scrambling System, where the circumvention,
if any, is undertaken using screen capture technology that is reasonably represented and offered
to the public as enabling the reproduction of motion picture content after such content has been
lawfully decrypted, when such representations have been reasonably relied upon by the user of
such technology, when the person engaging in the circumvention believes and has reasonable
grounds for believing that the circumvention is necessary to achieve the desired criticism or
comment, and where the circumvention is undertaken solely in order to make use of short
portions of the motion pictures for the purpose of criticism or comment in the following
instances:
(A) In noncommercial videos;
(B) In documentary films;
(C) In nonfiction multimedia ebooks offering film analysis; and
(D) For educational purposes by college and university faculty, college and university
students, and kindergarten through twelfth grade educators.
(ii) For purposes of this exemption, ‘noncommercial videos’ includes videos created
pursuant to a paid commission, provided that the commissioning entity’s use is noncommercial.”
7. “(i) Motion pictures, as defined in 17 U.S.C. 101, that are lawfully made and acquired
via online distribution services and that are protected by various technological protection
measures, where the circumvention, if any, is undertaken using screen capture technology that is
reasonably represented and offered to the public as enabling the reproduction of motion picture
content after such content has been lawfully decrypted, when such representations have been
reasonably relied upon by the user of such technology, when the person engaging in the
circumvention believes and has reasonable grounds for believing that the circumvention is
necessary to achieve the desired criticism or comment, and where the circumvention is
- 166 -
undertaken solely in order to make use of short portions of the motion pictures for the purpose of
criticism or comment in the following instances:
(A) In noncommercial videos;
(B) In documentary films;
(C) In nonfiction multimedia ebooks offering film analysis; and
(D) For educational purposes by college and university faculty, college and university
students, and kindergarten through twelfth grade educators.
(ii) For purposes of this exemption, ‘noncommercial videos’ includes videos created
pursuant to a paid commission, provided that the commissioning entity’s use is noncommercial.”
8. “Motion pictures and other audiovisual works on DVDs that are protected by the
Content Scrambling System, or that are distributed by an online service and protected by
technological measures that control access to such works, when circumvention is accomplished
solely to access the playhead and/or related time code information embedded in copies of such
works and solely for the purpose of conducting research and development for the purpose of
creating players capable of rendering visual representations of the audible portions of such works
and/or audible representations or descriptions of the visual portions of such works to enable an
individual who is blind, visually impaired, deaf, or hard of hearing, and who has lawfully
obtained a copy of such a work, to perceive the work; provided, however, that the resulting
player does not require circumvention of technological measures to operation.”680
a. Scope of the Network Connection Exemption – The
TracFone Cases
In TracFone Wireless, Inc. v. Dixon,681 the court ruled that this exemption did not apply
to the defendants’ resale of unlocked TracFone phones that would work on wireless services
other than TracFone’s, because the defendants’ unlocking activity “was for the purpose of
reselling those handsets for a profit, and not ‘for the sole purpose of lawfully connecting to a
wireless telephone communication network.’”682 Thus, under this court’s view, the exemption
appears to be targeted to acts by individual owners of handsets who circumvent the phone’s lock
to enable their personal use of their own handset on another wireless network. It is unclear from
the court’s brief analysis whether the exemption would cover those who sell the “computer
firmware” referenced in the exemption (and not the unlocked phone itself) that enables an
individual to accomplish unlocking of his or her phone. It also unclear whether the reference in
the exemption only to “computer firmware” means that it would not apply to services rendered
by a third party in assisting an individual to unlock a phone for a fee.
680 Id. at 65278-79.
681 475 F. Supp. 2d 1236 (M.D. Fla. 2007).
682 Id. at 1238.
- 167 -
In TracFone Wireless, Inc. v. Riedeman,683 TracFone brought claims under Section 1201
of the DMCA based on the defendant’s resale of TracFone phones for which the prepaid
software had been disabled. The defendant failed to file a response to the complaint and the
clerk entered a default against the defendant. The court entered a judgment finding that the
defendant had violated Section 1201 by circumventing technological measures that controlled
access to proprietary software in the phones and by trafficking in services that circumvented
technological measures protecting the software. The court also ruled that the Copyright Office
exemption did not apply to the defendant’s activities because the defendant’s “purchase and
resale of the TracFone handsets was for the purpose of reselling those handsets for a profit, and
not ‘for the sole purpose of lawfully connecting to a wireless telephone communication
network.’”684 The court entered a judgment against the defendant for statutory damages in the
amount of $1,020,800.685 Interestingly, the court entered an injunction against the defendant that
prohibited the defendant from even “purchasing … any wireless mobile phone that they know or
should know bears any TracFone Trademark ….”686
In TracFone Wireless, Inc. v. GSM Group, Inc.,687 the defendant was engaged in bulk
purchase, reflashing, and redistributing TracFone phones. The plaintiff brought claims under
Section 1201 for circumvention and trafficking in circumvention technology, and the defendant
moved to dismiss for failure to state a claim, relying on the Copyright Office exemption. The
court denied the motion, ruling that the exemption did not apply because, citing the Dixon case,
the purpose of the defendant’s circumvention was to resell wireless telephone handsets for profit
and not for the sole purpose of lawfully connecting to a wireless telephone communications
network.688 The court subsequently entered final judgment and a permanent injunction against
the defendants based on the DMCA claims on the same rationale. The permanent injunction
prohibited the defendants from purchasing or selling any wireless mobile phone that the
defendants knew or should have known bore any TracFone trademark and from reflashing or
unlocking any such phone. The court retained jurisdiction over the matter to punish any
violation of the permanent injunction in an amount of not less than $5,000 for each TracFone
handset that a defendant was found to have purchased, sold, or unlocked in violation of the
injunction, or $250,000, whichever was greater.689
Similarly, in TracFone Wireless, Inc. v. Bitcell Corp.,690 the court found the defendant’s
unlocking and resale of TracFone phones to constitute a violation of Section 1201. The court
683 2007 Copyr. L. Dec. ¶ 29,500 (M.D. Fla. 2007).
684 Id. at p. 40,531.
685Id.
686Id.
687 555 F. Supp. 2d 1331 (S.D. Fla. 2008).
688 Id. at 1336-37.
689 TracFone Wireless, Inc. v. GSM Groups, Inc., No. 07-23166-C1V Martinez-Brown, slip op. at 4-6 (S.D. Fla.
Aug. 15, 2008).
690 2008 U.S. Dist. LEXIS 41955 (S.D. Fla. May 28, 2008).
- 168 -
noted that TracFone phones were sold subject to terms and conditions restricting use and sale of
the phones that were set forth in printed inserts included in the packaging with the phones, were
available to the public on TracFone’s web site, and were referenced in printed warnings placed
on the outside of the retail packaging of the phones.691 With no legal analysis, the court simply
stated that the “Terms and Conditions and language on the packaging constitute a valid binding
contract.”692 The court ruled that the Copyright Office exemption did not apply because the
defendant’s conduct “was for the purpose of reselling those Phones for a profit, and not ‘for the
sole purpose of lawfully connecting to a wireless telephone communication network.’”693 As in
the Riedeman case, the court entered an injunction against the defendant that prohibited the
defendant from even “purchasing … any wireless mobile phone that they know or should know
bears any Registered TracFone Trademark ….”694 The court ruled that any violation of the
injunction would be subject to a finding of contempt and a payment of liquated damages to
TracFone of the greater of $250,000 or $5,000 for each TracFone handset purchased, sold,
unlocked, altered in any way, or shipped.695
In a virtually identical opinion under similar facts, in TracFone Wireless, Inc. v. Anadisk
LLC,696 the same court found a violation of Section 1201, imposed the maximum statutory
damages award of $2,500 per phone on 4,990 phones for a total award of $12,375,000, and
entered a similar injunction. The court ruled that any violation of the injunction would be
subject to a finding of contempt and a payment of liquated damages to TracFone of the greater of
$1,000,000 or $5,000 for each TracFone handset purchased, sold, unlocked, altered in any way,
or shipped.697
And again in TracFone Wireless, Inc. v. SND Cellular, Inc., the same court imposed the
maximum statutory damages award of $11,370,000 based on trafficking in a minimum of 4,548
phones and entered a similar injunction. Again the court ruled that any violation of the
injunction would be subject to a finding of contempt and a payment of liquated damages to
TracFone of the greater of $1,000,000 or $5,000 for each TracFone handset purchased, sold,
unlocked, re-flashed, altered in any way, or shipped.698
In TracFone Wireless, Inc. v. Zip Wireless Products, Inc.,699 the court denied a motion to
dismiss TracFone’s claims of copyright infringement on the ground that the Copyright Office
exemption applied. TracFone had adequately alleged in its complaint that lawful connection to a
691 Id. at *3.
692 Id.
693 Id. at *8.
694 Id. at *9.
695 Id. at *12.
696 685 F. Supp. 2d 1304 (S.D. Fla. 2010).
697 Id. at 1317-18 & 1319-20.
698 TracFone Wireless, Inc. v. SND Cellular, Inc., 715 F. Supp. 2d 1246, 1263-64 (S.D. Fla. 2010).
699 716 F. Supp. 2d 1275 (N.D. Ga. 2010).
- 169 -
wireless telephone network was not the sole purpose of the defendants’ circumvention efforts,
and that factual allegation was sufficient to overcome the defendants’ argument that TracFone’s
DMCA claims fell within the scope of the exemption.700
In TracFone Wireless, Inc. v. Bequator Corp., the court rejected the applicability of the
Copyright Office’s July 2010 exemption to the defendant’s bulk resale of unlocked or reflashed
TracFone phones. The court noted that the July 2010 exemption applied only to used wireless
telephone handsets and therefore did not cover the defendant’s activities. The court granted a
maximum statutory damages award of $46,540,000 ($2500 per phone sold) and entered a
permanent injunction against the defendants. Any violation of the injunction would incur
liquidated damages in the amount of the greater of $1,000,000 or $5,000 for each TracFone
handset purchased, sold, unlocked, reflashed, altered, rekitted, advertised, solicited and/or
shipped in violation of the injunction.701
(ii) Epic Games v. Altmeyer
In this case, the court issued a TRO enjoining the defendant from offering services to
modify Microsoft’s Xbox 360 to play pirated copies of the plaintiff’s video game Gears of War
2. The Xbox contained the capability to allow users to play the game live online, and to do so,
players were required to connect through an official web site. The software involved in playing
live was programmed to detect modifications to the Xbox and to recognize pirated games. If
modification or piracy was detected, the user would be banned from playing live. The defendant
offered a service to modify the Xbox to that neither the system itself nor the live software could
recognize pirated games or any modification. The court found a likelihood of establishing that
the offered services violated Section 1201(a)(2), and issued a TRO enjoining the defendant from
performing, advertising, marketing, distributing, or selling game console modification
services.702
(iii) Facebook v. Power Ventures
In this case, the defendants operated an Internet service called Power.com that collected
user information from Facebook’s web site outside of the “Facebook Connect” application
programmer’s interface (API). After a user provided his or her user names and passwords, the
Power.com service used the access information to scrape user data from those accounts.
Facebook’s Terms of Use broadly prohibited the downloading, scraping, or distributing of any
content on the web site, except that a user was permitted to download his or her own user
content. Facebook alleged that it had implemented specific technical measures to block access
by Power.com after the defendants informed Facebook that they intended to continue their
service without using Facebook Connect, and that the defendants then attempted to circumvent
those technological measures in violation of the anti-circumvention provisions of the DMCA.
700 Id. at 1285.
701 TracFone Wireless, Inc. v. Bequator Corp., 2011 U.S. Dist. LEXIS 42314 at *32-35, *41-44 (S.D. Fla. Apr. 13,
2011).
702 Epic Games, Inc. v. Altmeyer, 2008 U.S. Dist. LEXIS 89758 at * 3-4, 9-10 & 19 (S.D. Ill. Nov. 5, 2008).
- 170 -
The defendants brought a motion to dismiss the DMCA claims, arguing that the unauthorized use
requirement of a Section 1201(a)(1) claim was not met because it was the users who were
controlling access (via Power.com) to their own content on the Facebook web site. The court
denied the motion, in view of the fact that the defendants’ argument relied on an assumption that
Facebook users were authorized to use Power.com or similar services to access their user
accounts, and the Terms of Use barred users from using automated programs to access the
Facebook web site.703
(iv) Bose v. Zavala
In this case, the defendant sold Bose Lifestyle Media Centers in auctions on eBay. In his
auctions, he offered to unlock the region coding within the Media Center’s DVD player by
altering Bose’s firmware in the device or to give the purchaser directions on how to do so.
Unlocking the region code would permit the Media Centers to play DVDs distributed anywhere
in the world. Bose brought claims against the defendant under Section 1201 of the DMCA and
the defendant moved to dismiss them under Fed. R. Civ. Pro. 12(b)(6) on the ground that Bose
lacked standing to assert the claims because it was not the type of party protected by the DMCA,
since it did not sell digital media or region code-changing services. The court rejected this
argument, ruling that a party who controls the technological measures that protect copyrighted
works is a “person injured” by the circumvention of the measures within the meaning of Section
1203(c).704 The court concluded, “Bose controls region coding, a technological measure that
protects copyrighted DVDs. This is sufficient to allege that it is a ‘person injured’ within the
meaning of the DMCA.”
(v) MGE UPS Systems v. GE
In MGE UPS Systems Inc. v. GE Consumer & Industrial Inc.,705 the Fifth Circuit ruled
that mere use of a copyrighted work subsequent to an illegal circumvention does not violate
Section 1201(a). The plaintiff distributed uninterruptible power supplies (UPS’s), some of which
required the use of MGE’s copyrighted software programs during servicing. The software
required connection of a security dongle to a laptop serial port during servicing. Software
hackers had published information on the Internet disclosing general instructions on how to
defeat the external security features of the dongle, thereby rendering the hacked software
accessible for use without limitation. The defendant’s employees obtained a hacked copy of
MGE’s software and used it to service the plaintiff’s UPS’s. The Fifth dismissed the plaintiff’s
claim that such use violated Section 1201(a). The court ruled that because Section 1201(a)(1) is
targeted at circumvention, it does not apply to the use of copyrighted works after the
technological measure has been circumvented. There was no evidence showing that a
703 Facebook, Inc. v. Power Ventures, Inc., 2009 U.S. Dist. LEXIS 42367 at *1-2, 9-10 & 13-14 (N.D. Cal. May
11, 2009).
704 Bose BV v. Zavala, 2010 U.S. Dist. LEXIS 2719 at *1-5 (D. Mass. Jan. 14, 2010).
705 622 F.3d 361 (5th Cir. 2010).
- 171 -
representative or employee of the defendant had altered the software such that a dongle was not
required to use it, and hence the defendant had not itself engaged in any circumvention.706
(vi) Granger v. One Call Lender Services
In this case, the plaintiff was the owner of a computer program that estimated the rate or
cost of real estate title insurance sold by title insurance agents. The defendants placed an
infringing version of the rate calculator program on their website, though later took it down upon
receipt of a demand letter from the plaintiff. The plaintiffs had embedded within the computer
program copyright tag lines and a watermark that, if not removed carefully, could leave a telltale
sign as to the origin of the work. The plaintiff argued that removal of the watermark
constituted circumvention in violation of Section 1201 and sought statutory damages. The court
rejected this argument, citing authority that in the Third Circuit, the legal theory of
circumvention had been applied solely to circumstances where the conduct complained of
entailed circumventing protective measures such as passwords, server software, or other
technological barriers, as opposed to the embedded copyright tag lines and watermark at issue in
the present case. Accordingly, the plaintiff could not recover damages for circumvention,
although it could recover damages for removal of CMI.707
(vii) Eyepartner v. Kor Media Group
In Eyepartner, Inc. v. Kor Media Group LLC,708 the plaintiff licensed the defendant its
software under a limited license to use the software but not to modify or access the encrypted
source code. The license agreement expressly prohibited any acts to modify, translate, reverse
engineer, decompile, disassemble or create derivative works of the software. The defendants
were unhappy with the quality of the software and, rather than pay for the additional application
programming interface service that might have addressed the defendants’ concerns, they chose to
make their own modifications to the plaintiff’s code by decrypting and disassembling the source
code. The defendants argued that it was a fair use to disassemble the source code so that it could
be modified to make the program function as they wished. The court ruled, however, that such a
defense could absolve liability only as to willful copyright infringement but not as to the
plaintiff’s claims for violation of the anti-circumvention provisions. The court further concluded
that, in any event, fair use was inappropriate because the defendants had contractually waived
their rights to modify the code. The plaintiffs had used an encrypting technology called IonCube
to prevent the defendants from accessing the source code of the software, which the defendants
had circumvented using a “deZender” program. The court found that such acts violated Section
1201(a)(3)(A) of the DMCA and issued a preliminary injunction against the defendants.709
706 Id. at 364-66.
707 Granger v. One Call Lender Services, LLC, 2012 U.S. Dist. LEXIS 104885 at *2-4, 14-15 (E.D. Pa. July 26,
2012).
708 2013 U.S. Dist. LEXIS 98370 (S.D. Fla. July 15, 2013).
709 Id. at *1-23.
- 172 -
(2) Prohibition on Devices
The DMCA also outlaws devices and technology directed to circumvention of
technological copyright protection measures. Specifically, Sections 1201(a)(2) and 1201(b)
prohibit the manufacture, import, offer to the public, or trafficking in any technology, product,
service, device, component, or part thereof that is primarily designed or produced for the purpose
of circumventing a technological measure that effectively “controls access to” a copyrighted
work or “protects a right of a copyright owner,” or has only limited commercially significant
purpose or use other than to circumvent such technological measure, or is marketed for use in
circumventing such technological protection measure. Section 1201(b)(2) provides that a
technological measure “effectively protects a right of a copyright owner” if the measure “in the
ordinary course of its operation, prevents, restricts, or otherwise limits the exercise of a right of a
copyright owner.” Although trafficking in these types of prohibited devices might well
constitute contributory infringement, Sections 1201(a)(2) and 1201(b) make it a direct statutory
violation subject to criminal and civil penalties.
It should be noted that, although Sections 1201(a)(2) and 1201(b) in combination prohibit
devices designed to circumvent both technological measures that control access to a copyrighted
work and that protect a right of a copyright owner, Section 1201(a)(1) prohibits conduct that is
directed only to the former, but not the latter. The rationale for this distinction was apparently a
belief that anyone should be free to circumvent a measure protecting rights of a copyright owner
in order to make fair use of a work,710 whereas gaining access in the first instance to a
copyrighted work without the owner’s permission cannot be a fair use.711
Unlike the case of the prohibition of circumvention to gain unauthorized access to a work
under Section 1201(a)(1), the prohibitions of Sections 1201(a)(2) and 1201(b) were not
suspended for a two year period and went into effect immediately under the DMCA. Thus, the
DMCA set up the curious situation in which, for the initial two year period, it did not directly
prohibit circumvention of a technological measure to gain access to a work, but did prohibit the
manufacture, sale or importation of devices that would enable or assist one to gain such access.
710 See The Digital Millennium Copyright Act of 1998, U.S. Copyright Office Summary (Dec. 1998) at 4
(explaining that the distinction between Section 1201(a) and (b) as to the act of circumvention in itself was “to
assure that the public will have the continued ability to make fair use of copyrighted works. Since copying may
be a fair use under appropriate circumstances, section 1201 does not prohibit the act of circumventing a
technological measure that prevents copying.”). Similarly, the Copyright Office noted in its rationale for the
first set of exemptions it established from the prohibition against circumvention of technological measures
controlling access to a work: “The decision not to prohibit the conduct of circumventing copy controls was
made, in part, because it would penalize some noninfringing conduct such as fair use.” 65 Fed. Reg. 64556,
64557 (Oct. 27, 2000).
711 Realnetworks, Inc. v. DVD Copy Control Ass’n, 641 F. Supp. 2d 913, 942 (N.D. Cal. 2009) (“The prohibition
on individual circumvention conduct only applies with respect to access protection technologies (because fair
use can never be an affirmative defense to the act of gaining unauthorized access), not to technologies that
prevent copying.”); Inna Fayenson, “Anti-Circumvention Provisions of The Digital Millennium Copyright Act,”
Journal of Internet Law, Apr. 1999, at 9, 10.
- 173 -
Another curious aspect of the DMCA is that it authorizes the Librarian to create
additional exceptions via rulemaking only to Section 1201(a)(1), but not to Sections 1201(a)(2)
and 1201(b). Thus, the DMCA appears to allow the Librarian to permit acts of circumvention in
additional situations, but not the devices necessary to enable or assist such acts.
(i) Sony Computer Entertainment America v.
Gamemasters
In this lawsuit, Sony Computer Entertainment America (SCEA) obtained a preliminary
injunction against the defendants, who were distributing a device called the “Game Enhancer”
that enabled players to play Sony PlayStation games sold in Japan or Europe, and intended by
SCEA for use exclusively on Japanese or European PlayStation consoles, on U.S. PlayStation
consoles.712 The Sony PlayStation console was designed to operate only when encrypted data
was read from a game CD-ROM verifying that the CD was an authorized, legitimate product
licensed for distribution in the same geographical territory of the console’s sale.713
The Game Enhancer enabled a player to trick a U.S. PlayStation console into playing a
Japanese or European authorized game CD by the following method. After inserting an
authorized CD game, the user was instructed to hold down the disk cover switch of the console
while keeping the lid or disk cover open. The Game Enhancer was then turned on and its
internal operating system selected for execution, thereby replacing the PlayStation console’s
internal operating system. The validity and territorial codes were read from the authorized CD,
thereby instructing the console that the inserted CD was valid and authorized. The user was then
instructed to hit the “select” button on the game controller to signal the console to stop the CD
motor, enabling the player to remove the U.S. authorized game CD and replace it with a CD that
was authorized for play only on a Japanese or European console. Once the game was loaded, the
Game Enhancer then returned control to the PlayStation’s operating system, and the
unauthorized game could be played.
The court ruled that, because the Game Enhancer was a device whose primary function
was to circumvent the mechanism on the PlayStation console that ensured the console operated
only when encrypted data was read from an authorized CD-ROM, the Game Enhancer had a
primary function to circumvent a technological measure that effectively controls access to a
copyrighted work and was therefore a violation of Section 1201(a)(2)(A). The court ruled that
SCEA was therefore entitled to a preliminary injunction against sale of the device under Section
1203.714
(ii) The DirecTV Cases
a. DirecTV, Inc. v. Borow
712 Sony Computer Entertainment America v. Gamemasters, 87 F. Supp. 2d 976, 981 (N.D. Cal. 1999).
713Id.
714 Id. at 987-88. A similar case finding a violation of the DMCA as a result of sales of a cable descrambler and
decoder is CSC Holdings, Inc. v. Greenleaf Electronics, Inc., 2000 U.S. Dist. LEXIS 7675 (N.D. Ill. 2000).
- 174 -
This straightforward case found defendant Randy Borow in violation of Section
1201(a)(1) for using an emulator to circumvent DirecTV’s encryption on its signals and to
simulate certain functions of the DirecTV access card in order to watch DirecTV’s programming
without paying subscription fees.715
b. DirecTV, Inc. v. Carrillo
In this case, the court found the defendant liable under Section 1201 based on his
possession and transfer of equipment used to pirate satellite TV signals. The court found that the
devices were primarily designed to intercept encrypted signals.716
(iii) Sony Computer Entertainment America v. Divineo
In Sony Computer Entertainment America, Inc. v. Divineo,717 the court granted summary
judgment to the plaintiff that several devices sold by the defendant violated the anticircumvention
provisions of the DMCA. The devices all could be used to circumvent an
authentication process designed by Sony into the Playstation system to verify that an inserted
disc was authentic before the Playstation would play it. If a user burned a copy of a copyrighted
Playstation game, a unique code that was part of every authentic disc would not be copied, thus
preventing the user from playing the copy on the Playstation. The defendant sold the following
devices that could be used to circumvent this process: (i) HDLoader, software that permitted a
user to make an unauthorized copy of Playstation-compatible video games onto a separate hard
drive connected to the Playstation system; (ii) mod chips that, when wired to a Playstation
console, circumvented the authentication system and allowed the system to play the unauthorized
software; and (iii) devices that allowed a user to boot up a Playstation console and perform a disc
swap without triggering the software and hardware mechanisms within the Playstation that
initiated the authentication system.718
The defendant argued against liability on the ground that there were several ways in
which the devices could be used that did not result in infringement of the plaintiff’s copyrighted
video games. First, the devices could be used to allow more than 150 items of “homemade”
software to execute on the Playstation. Second, software developers could use the devices to test
their own games as a less expensive alternative to purchasing a specialized Sony console that
would run any game. Third, HDLoader made playing games more convenient by allowing users
to avoid having to swap out discs to change games and because the Playstation could read hard
drive data more quickly than data stored on CDs or DVDs. The defendant also gave a legal
notice on its web site warning users that they were responsible for the legality of their own use of
materials obtained through the web site.719 The defendant also invoked the reverse engineering
715 DirecTV, Inc. v. Borow, 2005 U.S. Dist. LEXIS 1328 at *3, 12-13 (N.D. Ill. Jan. 6, 2005).
716 DirecTV, Inc. v. Carrillo, 227 Fed. Appx. 588, 589-90 (9th Cir. 2007).
717 457 F. Supp. 2d 957 (N.D. Cal. 2006).
718 Id. at 958-59.
719 Id. at 961.
- 175 -
defense of Section 1201(f) of the DMCA, arguing that users of mod chips could use them to
ensure the interoperability of an independently created computer program with the Playstation.720
The court rejected all of these arguments, holding that the challenged devices were
primarily designed for the purpose of circumventing the Playstation authentication system which
otherwise controlled access to software played on the system, and that “downstream customers’
lawful or fair use of circumvention devices does not relieve [defendant] from liability for
trafficking in such devices under the DMCA.”721 The court also ruled that the defendant’s legal
notice to users of its devices was not relevant to its own liability under the DMCA.722 The
application of the court’s ruling to the Section 1201(f) interoperability rights is interesting. It
means that, even though it may be permissible to circumvent a technological measure to obtain
information necessary for interoperability of an independently developed computer program, or
for the user of an independently developed computer program to circumvent an access control
measure in order to interoperate with a program controlled by the measure, it is nevertheless
illegal for a third party to sell such user a device that would enable the circumvention, if the
device is designed primarily for circumvention. Another implication of the ruling is that legal
uses that may result after use of a device to accomplish circumvention are not to be factored into
whether the device is primarily designed for circumvention. Under this decision, the DMCA
focuses only on the capability of the device to accomplish circumvention in the first instance,
and if that is its primary technical function, it is illegal.
(iv) Ticketmaster L.L.C. v. RMG Technologies, Inc.
In this case, the plaintiff Ticketmaster alleged the defendant had violated Sections
1201(a)(2) and 1201(b)(1) by distributing an automated tool that enabled users (such as ticket
brokers) to access and navigate rapidly through the Ticketmaster site and purchase large
quantities of tickets. The tool enabled users to bypass Ticketmaster’s “CAPTCHA” system, a
security system designed to distinguish between human users and automated programs by
requiring the user to read a distorted sequence of letters and numbers on the screen and enter
those letters and numbers correctly into the system in order to gain access to the ticket purchase
page.723
On a motion for a preliminary injunction, the court found the plaintiff likely to prevail on
these claims. The court rejected the defendant’s argument that CAPTCHA was not a system or a
program that qualified as a technological measure under the DMCA because it was simply an
image, and it was designed to regulate ticket sales, not to regulate access to a copyrighted work.
The court ruled that the DMCA does not equate its use of the term “technological measure” with
the defendant’s terms “system” or “program,” and that in any case the CAPTCHA system was a
technological measure within the DMCA because most automated devices could not decipher
and type the stylized random characters the system generated in order to proceed to the
720 Id. at 965.
721 Id.
722 Id.
723 Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp. 2d 1096, 1102, 1111-12 (C.D. Cal. 2007).
- 176 -
copyrighted ticket purchase pages.724 Thus, CAPTCHA qualified as a technological measure
that restricted access to copyrighted works within the purview of Section 1201(a)(2). Similarly,
it also fell within the purview of Section 1201(b)(1) because it protected rights of the copyright
owner by preventing automated access to the Ticketmaster ticket purchase web pages, thereby
preventing users from copying those pages. Accordingly, the court issued a preliminary
injunction prohibiting the defendant from trafficking in any computer program or other
automatic devices to circumvent copy protection systems in Ticketmaster’s web site and from
using any information gained from access to Ticketmaster’s web site to create computer
programs to circumvent Ticketmaster’s copy protection and web site regulation systems.725
(v) The Tracfone Cases
In TracFone Wireless, Inc. v. Pak China Group Co., Ltd.,726 the defendants were engaged
in bulk purchase, reflashing, and redistributing TracFone phones. The plaintiff brought claims
under Section 1201 for circumvention and trafficking in circumvention technology. The
defendants failed to answer and were in default. The court found the defendants guilty of the
alleged violations of Section 1201 and imposed the maximum statutory damages of $37,707,500
based on the sale of at minimum 15,083 reflashed TracFone prepaid phones.727
In TracFone Wireless, Inc. v. Technopark Co., Ltd.,728 the court found the defendants
liable under Section 1201 for the unauthorized unlocking or reflashing of TracFone phones and
for trafficking in certain unlocking devices known as “Octopus Boxes” in furtherance of its
unlocking scheme. The court also found the defendants liable for facilitating co-conspirators
who were trafficking in the service of circumventing TracFone’s technological measures. The
court imposed a maximum statutory damages award of $10,000 for the four unlocking or
reflashing devices manufactured by the defendants and sold by distributors that TracFone was
aware of.729
In addition, see the numerous TracFone cases discussed in Section II.G.1(a)(1) above.
(vi) Movida Communications, Inc. v. Haifa
In this case, the court ruled that the defendant’s actions of tampering with or altering prepaid
control software resident on Movida pre-paid wireless handsets, entering unauthorized PIN
numbers into the phones for purposes of unlocking or re-flashing the phones, and reselling the
phones for use on networks other than Movida’s, violated Section 1201 of the DMCA. The court
issued a permanent injunction against the defendant, prohibiting him even from purchasing any
724 Id. at 1112.
725 Id. at 1112, 1116.
726 843 F. Supp. 2d 1284 (S.D. Fla. 2012).
727 Id. at 1301.
728 2012 U.S. Dist. LEXIS 58449 (S.D. Fla. Apr. 9, 2012).
729 Id. at *4, 13-14 & 15-16.
- 177 -
model of Movida handsets, in addition to re-flashing or unlocking any Movida handset, and
accessing, altering, erasing, tampering with, deleting or otherwise disabling Movida’s proprietary
prepaid cellular software contained within any model of Movida handset. The order also
provided that any violation would be punished in an amount of not less than $5,000 per Movida
handset.730
(vii) Microsoft Corp. v. EEE Business Inc.
In this case, the defendant engaged in the unauthorized distribution of Microsoft software
that was available only under a Volume License Agreement. The agreement permitted only
authorized volume licensees to install software to unlock the media programming to enable the
user to enter a 25-character alphanumeric code, called the Volume License Key (VLK), which
was unique to the licensee and required to be kept confidential under the terms of the Volume
License Agreement. The court ruled that, by distributing a VLK without authorization, the
defendant had effectively circumvented Microsoft’s technological measure to control access to a
copyrighted work in violation of Section 1201(a)(2) of the DMCA.731
(viii) MDY Industries v. Blizzard Entertainment
In this case, the defendant distributed bot software called “Glider” that was able to play
Blizzard Entertainment’s multiplayer online role-playing game known as World of Warcraft
(WoW) for its owner while the owner was away from his or her computer, thereby enabling the
owner to advance more quickly within WoW than would otherwise be possible.732 Blizzard
Entertainment brought claims under the DMCA, alleging that Glider evaded Blizzard
technologies known as “Warden” to detect and prevent the use of bots by WoW players.
Warden included two different software components. The first component, known as “scan.dll,”
scanned the user’s computer for unauthorized programs such as Glider before the user logged
onto the WoW servers to play the game, and if it detected such programs, scan.dll would deny
the user access to the game servers. The second component, known as the “resident” component
of Warden, ran periodically while a user played WoW and if it detected the use of a bot program,
Blizzard would revoke access to the game.733
Blizzard argued that scan.dll and the resident software controlled access to copyrighted
software, as required by Section 1201(a)(2) of the DMCA, in two ways. First, when scan.dll
prevented a user from playing WoW, or when the resident software terminated a user’s playing
of WoW, they prevented additional code in the game client software from being written to RAM.
Second, scan.dll and the resident software barred access to WoW’s non-literal elements (the
730 Movida Communications, Inc. v. Haifa, 2008 Copyr. L. Dec. ¶ 29,528 (C.D. Cal. 2008).
731 Microsoft Corp. v. EEE Business Inc., 555 F. Supp. 2d 1051, 1059 (N.D. Cal. 2008).
732 MDY Industries, LLC v. Blizzard Entertainment, Inc., 2008 U.S. Dist. LEXIS 53988 at *2 (D. Ariz. 2008 July
14, 2008).
733 Id. at *34.
- 178 -
multi-media presentation of the WoW universe and character interactions) generated by the
code’s interaction with the computer hardware and operating systems.734
The court rejected Blizzard’s claim under Section 1201(a)(2). With respect to access to
the code of WoW, the court, citing the Lexmark case, ruled that a holder of Blizzard’s game
client software had full and complete access to that code on both the CD that contained it and on
the user’s hard drive once the software had been loaded onto the user’s computer. The user
thereafter could view a copy of the game client software code, regardless of whether the user
actually played WoW or encountered Warden. The user did not need to pass through Blizzard’s
security devices to gain access to the code. Accordingly, the court granted summary judgment to
the defendant on this issue. The court ruled that it could not similarly grant summary judgment
with respect to the non-literal elements of WoW because the parties’ statement of facts filed in
conjunction with their motions for summary judgment said virtually nothing about this aspect of
the game. Finally, the court noted that neither scan.dll nor the resident software appeared to
require the application of information by the game user, or the application of a process or a
treatment by the game user, before granting access to copyrighted information, as required by
Section 1201(a)(2). Instead, they merely scanned for unauthorized programs. However, because
neither party had addressed this issue in their briefs, the court noted that it would be a factual
issue for trial.735
The court also rejected a claim by Blizzard under Section 1201(b)(1) of the DMCA.
Blizzard asserted that scan.dll and the resident software prevented users from copying software
code to RAM and accessing the non-literal elements of the game once they were caught using
Glider. MDY disputed this factual assertion, contending that code from the game client software
was not written to RAM after a user passed by scan.dll or the resident software. The court
concluded that, because there was a factual dispute with respect to the extent to which Blizzard’s
Warden software protected against the copying of software code to RAM, and because the
parties did not submit sufficient facts from which the court could decide whether the protective
measures protected Blizzard’s rights in the non-literal elements of the game, summary judgment
on the Section 1201(b)(1) claim was denied.736
In a subsequent opinion issued after a bench trial, the court held that Blizzard’s
circumvention claims against Glider under Sections 1201(a)(2) and 1201(b)(1) failed with
respect to the discrete nonliteral components of the games stored on the game player’s hard
drive, because they could be accessed and viewed without signing onto the server (and therefore
involving the Warden software) by independently purchased computer programs that could call
up the individual visual images or recorded sounds within the game client software. However,
the circumvention claims were valid with respect to the “dynamic” nonliteral elements of WoW
– i.e., the real-time experience of traveling through different worlds, hearing their sounds,
viewing their structures, encountering their inhabitants and monsters, and encountering other
players – because those dynamic elements could be accessed and copied only when the user was
734 Id. at *34-35.
735 Id. at 18*35-40.
736 Id. at *41-43.
- 179 -
connected to a Blizzard server that controlled their dynamic display, which in turn required the
user successfully to pass scan.dll when logging on and to survive the periodic scrutiny of the
resident component.737
Six weeks later, the court entered two permanent injunctions against the marketing, sale
and distribution of Glider for use in connection with WoW – one on the basis of the copyright
infringement and DMCA claims, and another on the basis of a tortious interference with contract
claim for which the court had ruled in favor of Blizzard. The court stayed the injunction on the
copyright and DMCA claims pending their appeal, but refused to stay the injunction on the
tortious interference claims.738 In a subsequent opinion, the court awarded Blizzard statutory
damages of $6.5 million.739
On appeal, the Ninth Circuit reversed, except as to MDY’s liability for violation of
Section 1201(a)(2).740 The Ninth Circuit cast one of the key issues on appeal to be whether the
DMCA’s anti-circumvention provisions prohibit circumvention of access controls only when
unauthorized access leads to copyright liability, as the Federal Circuit had held in the
Chamberlain and Storage Tech cases.741 The Ninth Circuit reached a conclusion contrary to the
Federal Circuit on that issue.742
First, the Ninth Circuit noted textual differences between the prohibitions of Section
1201(a) and 1201(b). Section 1201(a) is directed to protecting a “work protected under this
title,” whereas Section 1201(b) is directed to protecting “a right of a copyright owner.”743
Noting that neither Section 1201(a)(1) nor 1201(a)(2) explicitly refer to traditional copyright
infringement under Section 106, the court read Section 1201(a) “as extending a new form of
protection, i.e., the right to prevent circumvention of access controls, broadly to works protected
737 MDY Industries, LLC v. Blizzard Entertainment, Inc., 616 F. Supp. 2d 958, 964-68 (D. Ariz. 2009). The court
noted that Warden did not prevent all WoW users from copying the dynamic nonliteral elements of the game
because players who did not use Glider could copy that content while connected to Blizzard servers. The court
noted, however, that Section 1201(b)(1)(A) requires only that the technological measure restrict or otherwise
limit unauthorized copying. Id. at 968 n.3.
738 MDY Industries, LLC v. Blizzard Entertainment, Inc., 2009 U.S. Dist. LEXIS 24151 (Mar. 10, 2009). The
court denied a motion for reconsideration of the denial of the stay of the tortious interference injunction. MDY
Industries, LLC v. Blizzard Entertainment, Inc., 2009 U.S. Dist. LEXIS 25650 (Mar. 25, 2009).
739 MDY Industries, LLD v. Blizzard Entertainment, Inc., 2009 U.S. Dist. LEXIS 38260 (D. Ariz. Apr. 1, 2009).
740 MDY Industries, LLC v. Blizzard Entertainment, Inc., 2011 U.S. App. LEXIS 3428 (9th Cir. Feb. 17, 2011).
741 Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178, 1203 (Fed. Cir. 2004); Storage
Technology Corp. v. Custom Hardware Eng’g Consulting, Inc., 421 F.3d 1307 (Fed. Cir. 2005).
742 The court also rejected MDY’s contention that Warden’s scan.dll and resident components were separate, and
only scan.dll should be considered as a potential access control measure under Section 1201 (a)(2). The court
held that “an access control measure can both (1) attempt to block initial access and (2) revoke access if a
secondary check determines that access was unauthorized. Our analysis considers Warden’s scan.dll and
resident components together because the two components have the same purpose: to prevent players using
detectable bots from continuing to access WoW software” MDY Industries, 2011 U.S. App. LEXIS at *27.
743 Id. at *29-30.
- 180 -
under Title 17, i.e., copyrighted works.”744 The court also noted that the two specific examples
of unlawful circumvention recited under Section 1201(a) – descrambling a scrambled work and
decrypting an encrypted work – are acts that do not necessarily infringe or facilitate infringement
of a copyright. Descrambling or decrypting do not necessarily result in someone’s reproducing,
distributing, publicly performing, or publicly displaying the copyrighted work, or creating
derivative works based on the copyrighted work.745
In addition, the court noted another significant difference between Section 1201(a) and
Section 1201(b) in that Section 1201(a)(1)(A) prohibits circumventing an effective access
control measure, whereas Section 1201(b) prohibits trafficking in circumvention devices, but
does not prohibit circumvention itself because, as the Senate Judiciary Committee report noted,
such conduct was already outlawed as copyright infringement, so no new prohibition was
necessary.746 Accordingly, the court concluded, “This difference reinforces our reading of §
1201(b) as strengthening copyright owners’ traditional rights against copyright infringement and
of § 1201(a) as granting copyright owners a new anti-circumvention right.”747 The court found
the legislative history of the anti-circumvention provisions of the DMCA to reinforce its reading
that Section 1201(a) creates a new anti-circumvention right distinct from copyright infringement,
while Section 1201(b) strengthens the traditional prohibition against copyright infringement.748
The Ninth Circuit noted that its reading of the anti-circumvention provisions put it in
conflict with the Federal Circuit’s decisions in the Chamberlain and Storage Tech cases, in
which the Federal Circuit required Section 1201(a) plaintiffs to demonstrate that the
circumventing technology infringes or facilitates infringement of the plaintiff’s copyright – what
the Ninth Circuit referred to as an “infringement nexus requirement.”749 Although the Ninth
Circuit stated that it appreciated the policy considerations expressed by the Federal Circuit in
Chamberlain, the Ninth Circuit found itself unable to follow the Federal Circuit’s infringement
nexus requirement because it is contrary to the plain language of the statute and would lead to
statutory inconsistencies in the DMCA. For example, under the Federal Circuit’s construction,
Congress’s creation of a mechanism in Section 1201(a)(1)(B)-(D) for the Librarian of Congress
to grant exemptions to certain non-infringing behavior from Section 1201(a)(1) liability would
be unnecessary if an infringement nexus requirement existed.750
744 Id. at *31.
745 Id.
746 Id. at *32.
747 Id. The court also noted that, if a copyright owner puts in place an effective measure that both (1) controls
access and (2) protects against copyright infringement, a defendant who traffics in a device that circumvents
that measure could be liable under both Sections 1201(a) and 1201(b). Id. at *35.
748 Id. at *35-40.
749 Id. at *40.
750 Id. at *45-46. The Ninth Circuit noted, that like the Chamberlain court, it need not reach the question of the
relationship between fair use and violations of Section 1201. MDY had not claimed that Glider use was a fair
use of WoW’s dynamic non-literal elements. Accordingly, the court left open the question whether fair use
might serve as an affirmative defense to a prima facie violation of Section 1201. Id. at *48 n.12.
- 181 -
Turning to application of its construction of the anti-circumvention provisions to the facts
of the case, the Ninth Circuit agreed with the district court that Glider did not violate Section
1201(a)(2) with respect to WoW’s literal elements and individual non-literal elements, because
Warden did not effectively control access to those WoW elements. The literal elements (the
game client’s software code) were available on a player’s hard drive once the game client
software was installed, and the non-literal components could be accessed by a user without
signing on to the server by using independently purchased computer programs to call up the
visual images or the recorded sounds within the game client software stored in files on the hard
disk. Because a player needed not encounter Warden to access WoW’s individual non-literal
elements, Warden did not effectively control access to those elements.751 On this point, the
Ninth Circuit founds its conclusion in accord with the Sixth Circuit’s decision in the Lexmark
case,752 in which mere purchase of one of the plaintiff’s printers allowed “access” to the
copyrighted program, because it could be read directly from the printer memory without
encountering the printer’s authentication sequence.753
The court next found Blizzard to be liable for trafficking in violation of Section
1201(a)(2) with respect to WoW’s dynamic non-literal elements, which constituted a copyrighted
work available only through the WoW server. The Ninth Circuit noted a split between other
circuits with respect to the meaning of the phrase “circumvent a technological measure …
without the authority of the copyright owner.” The Federal Circuit concluded in Chamberlain
that the definition of “circumvent a technological measure” imposes an additional requirement
on a Section 1201(a)(2) plaintiff: to show that the defendant’s circumventing device enables
third parties to access the copyrighted work without the copyright owner’s authorization (citing
Chamberlain, 381 F.3d at 1193).754 The Second Circuit adopted a different view, “that §
1201(a)(3)(A) plainly exempts from § 1201(a) liability those whom a copyright owner authorizes
to circumvent an access control measure, not those whom a copyright owner authorizes to access
the work” (citing Corley, 273 F.3d at 333 & n.15).755 The Ninth Circuit found “the Second
Circuit’s view to be the sounder construction of the statute’s language, and [we] conclude that §
1201(a)(2) does not require a plaintiff to show that the accused device enables third parties to
access the work without the copyright owner’s authorization. Thus, Blizzard has satisfied the
‘circumvention’ element of a § 1201(a)2) claim, because Blizzard has demonstrated that it did
not authorize MDY to circumvent Warden.”756
The Ninth Circuit found, however, that MDY was not liable under Section 1201(b)(1)
because Warden did not protect MDY’s reproduction right against unauthorized copying.
Although WoW players copied the software code into RAM while playing the game, Blizzard’s
end user license agreement and Terms of Use authorized all licensed WoW players to do so.
751 Id. at *52-53.
752 See Section II.G.1(a)(15)(i) below.
753 Id. at *53-54.
754 Id. at *56 n.16.
755 Id.
756 Id.
- 182 -
Because the court had found that the prohibition in the Terms of Use on use of bots was a
contractual covenant rather than a condition to the license,757 violation of the covenant by a
Glider user did not make the user a copyright infringer by continuing to copy code into RAM.
Second, although WoW players could theoretically record game play by taking screen shots,
there was no evidence that Warden detected or prevented such allegedly infringing copying.
Warden had been designed to reduce the presence of cheats and bots, not to protect WoW’s
dynamic non-literal elements against copying. Accordingly, the court ruled that Warden did not
effectively protect any of Blizzard’s rights under the copyright act, and MDY was therefore not
liable under Section 1201(b)(1) for Glider’s circumvention of Warden.758
(ix) Coupons, Inc. v. Stottlemire
The plaintiff offered coupon printing software that enabled online, printable coupons to
be delivered to consumers. The software placed a registry key file on the user’s personal
computer that acted as a counter, limiting the number of times each coupon could be printed on
that computer (typically, two prints per coupon). The defendant discovered how to remove the
counter, created a computer program that automated its removal, and distributed the program.
The plaintiff alleged that, because each coupon had its own unique bar code and date stamp, the
coupons were subject to copyright protection, and the defendant’s distribution of its computer
program violated the DMCA by allowing users to access more than the limit for each coupon.
The plaintiff also claimed that the act of printing constituted unauthorized copying. The
defendant brought a motion to dismiss.759 The court found fault with the plaintiff’s DMCA
claims:
These concepts seem to be logically inconsistent and, when asserted together, do
appear to blur the carefully constructed distinction between “access controls” and
“rights controls.” If the court accepts Coupons’ argument that each coupon is
“unique,” then can there be a claim of improper copying ….? On the other hand,
if the coupons are not unique, then the allegations against Stottlemire appear to
fall within the “rights controls” (i.e., permitting users to print more copies of
coupons than were authorized by Plaintiff).760
The court was also not convinced that the addition of a bar code or other functional
device on the coupon qualified it as a unique copyrighted work. But in any event, if Coupons
wanted to make the argument, then the court noted that it needed to actually allege it in the
complaint, and the plaintiff’s reference to “unique coupons” in the complaint was not sufficient
to put the defendant on notice of the claims against him. The court ruled that the plaintiff needed
to clarify which theory it was pursuing (a “unique” coupon theory or a “general” coupon theory).
Accordingly, the court dismissed the DMCA cause of action with leave to amend the complaint
to clarify whether the plaintiff was asserting a claim under a Section 1201(b) “rights controls”
757 See Section III.C.2(i) below.
758 2011 U.S. App. LEXIS 3428 at *60-61.
759 Coupons, Inc. v. Stottlemire, No. CV 07-03457 HRL (N.D. Cal. July 2, 2008), slip op. at 1, 4.
760 Id. at 4-5.
- 183 -
theory (i.e., allowing users to print more than the authorized number of copies) or a claim under
a Section 1201(a) “access controls” theory (i.e., “unique” coupons).761
After the plaintiff amended its complaint, the defendant again brought a motion to
dismiss, which the court denied.762 In the amended complaint, the plaintiff claimed that each
printed coupon’s identification number marked it as an authorized copy of a copyrighted work,
and did not create a derivative work. The plaintiff asserted claims under both Sections 1201(a)
and 1201(b). The court ruled that the plaintiff had sufficiently alleged facts that its software
controlled access to the printing of the copyrighted coupon to state a claim under Section
1201(a). With respect to Section 1201(b), the court ruled that the plaintiff had adequately
alleged that its software controlled copying and distribution in two ways: the registry key
limited the number of coupons distributed to a single computer (simultaneously limiting the
number of authentic copies that the computer could print), and the software’s counter limited the
number of authentic coupons distributed as a whole. The court held that, although the plaintiff
would have to prove that its software actually worked as both an access and use control, it had
sufficiently alleged facts that supported its theory that the defendant had violated Section
1201(b), and the motion to dismiss was denied.763
(x) CoxCom, Inc. v. Chafee
CoxCom leased cable boxes to its subscribers that enabled them to descramble incoming
signals for viewing and that transmitted certain information from subscribers back to CoxCom,
including billing information association with purchase of pay-per-view programming. The
defendant sold a digital cable filter that filtered out low-frequency signals, including the return
transmissions from the cable box containing purchase information. The court noted that the
filters were not illegal, and had innocuous uses, such as allowing cable television subscribers to
enhance viewing quality by filtering out interference from FM radio broadcast towers, shortwave
radios, and home appliances. However, the defendants marketed the filters to their customers as
capable of filtering out pay-per-view charges.764 The plaintiffs brought claims under the DMCA
anti-circumvention provisions and the district court granted summary judgment to the plaintiffs
on those claims.765
On appeal, the First Circuit affirmed, rejecting the defendants’ argument that their filters
did not “circumvent” technological measures. The court found the technological measure at
issue to be CoxCom’s pay-per-view delivery and billing system that scrambled pay-per-view
programming to make it not viewable unless subscribers chose to purchase it.766 Without further
analysis, the First Circuit simply concluded: “A digital cable filter allows subscribers to ‘avoid’
761 Id. at 5.
762 Coupons, Inc. v. Stottlemire, 588 F. Supp. 2d 1069, 1072 (N.D. Cal. 2008).
763 Id. at 1073-75.
764 CoxCom, Inc. v. Chafee, 536 F.3d 101, 104-05 (1st Cir. 2008).
765 Id. at 106.
766 Id. at 110.
- 184 -
or ‘bypass’ that technological measure. Given the factual record, we have little trouble
concluding that the district court properly granted summary judgment to CoxCom as to
appellants’ liability under the DMCA.”767
(xi) The DISH Network Cases
a. Dish Network v. Sonicview
DISH Network transmitted encrypted programming signals that were then received by an
EchoStar receiver, which processed and decrypted the signals using data and encryption
technology stored in a DISH Network access card loaded into the receiver. The access card
communicated with the receiver to assure that only signals the subscriber was authorized to
received would be decrypted. DISH Network brought anti-circumvention claims against the
defendants, whom DISH Network alleged were involved in the manufacture of receivers,
software and other devices used to intercept and steal DISH Network’s encrypted signals. Upon
a motion for a TRO, the court ruled that DISH Network’s security access cards functioned as
both access controls and copyright controls, and that the defendants’ distribution of software files
through a website that allowed individuals to decrypt and view DISH Network content likely
violated both Section 1201(a)(2) and 1201(b)(1).768
b. Dish Network v. SatFTA
In Dish Network v. SatFTA,769 the court found the defendant liable under Section
1201(a)(2) for trafficking in circumvention devices that aided in circumvention of Dish
Network’s signal and content security measures in its receivers, including software that
facilitated the unauthorized re-programming of Dish Network smartcards, circuit diagrams that
could be used to build a connector to interface with the EEPROM in a Dish Network receiver to
erase the data created by Dish Network’s electronic countermeasures and continue receiving
unauthorized programming, and diagrams depicting the storage locations of data that secured
communication between receivers and smartcards.770 The court also found the defendant liable
under Section 1201(b)(1) for trafficking in a program that allowed users to copy the
programming of a Dish Network satellite receiver to a computer hard drive. Dish Network
protected against unauthorized copying and distribution of recorded programming by saving the
copyrighted content in an unrecognizable format, and the court found that to be a sufficient
technological measure to invoke the protection of Section 1201(b)(1). The defendant contended
that his program served a legitimate function by allowing individuals to create backup copies of
767 Id.
768 Dish Network L.L.C. v. Sonicview USA, Inc., 2009 U.S. Dist. LEXIS 63429 at *2-3,*7-8 (S.D. Cal. July 23,
2009).
769 2011 U.S. Dist. LEXIS 25038 (N.D. Cal. Mar. 9, 2011).
770 Id. at *3-6, *12-13. The court also found the defendant liable for personal violations of Section 1201(a)(1) for
his admitted modification of Dish Network smartcards. The court rejected the defendant’s defense that he had
modified the smartcards only for the purpose of testing the operation of various receivers, not to receive an
unauthorized satellite signal. Id. at *10-11.
- 185 -
their Dish Network recordings. The court rejected this defense, citing the case of Realnetworks,
Inc. v. DVD Copy Control Ass’n771 for the rule that, although the DMCA provides for a limited
fair use exception for certain end users of copyrighted works, the exception does not apply to
manufacturers or traffickers. Because the defendant’s program allowed a computer to overcome
Dish Network’s copy-control measures, it violated Section 1201(b)(1).772
c. Dish Network v. Dimarco
The case of Dish Network LLC v. Dimarco773 involved the impoundment of technology
that could be used to gain unauthorized access to Dish Network signals. When an authorized
EchoStar receiver received a Dish Network signal, it forwarded part of the signal called the
“entitlement control message” to a NagraStar smart card in the receiver. If the subscriber was
tuned to a channel he was authorized to receive, the smart card retrieved a decryption key from
its read-only memory and used the key to unlock the “control word” from the entitlement control
message. The smart card then transmitted the control word back to the receiver, and the receiver
used it to decode the incoming signal so the subscriber could watch the programming. Content
providers like Dish Network routinely changed their decryption keys to help thwart piracy. A
new form of piracy was developed called “Internet key sharing” or “IKS” whereby a pirate kept
his unauthorized receiver connected to the Internet for automatic re-flashing with the newest
keys, which were retrieved from an IKS server connected to multiple legitimate NagraStar smart
cards. Control words obtained from the authorized smart cards were sent from the IKS server
over the Internet to unauthorized receivers.774
The defendants sold unauthorized receivers with decryption software and hardware,
cables to connect the unauthorized receivers to the Internet for use with an IKS server, and
passwords to access the IKS server which were euphemistically referred to as “extended
warranty codes.” The defendants admitted that the receivers they sold were capable of being
used for piracy, but argued that because they did not themselves traffic in illegal encryption keys,
their products amounted to “modern day rabbit ears” for their customers to receive free satellite
programming. The receivers had no built-in means of connecting to the Internet, but the
defendants sold an adapter called a “WizHub” that enabled connection to the Internet.775
The defendants argued that the court should not impound its WizHubs or extended
warranty codes because the WizHub was simply an adapter and one could not engage in piracy
without the piracy software and IKS servers. The court rejected this argument, noting that a
device such as the WizHub permitting the connection of an otherwise legitimate receiver to the
Internet along with a password permitting access to a server with illegally trafficked decryption
keys could be said to constitute a product designed to circumvent a technological measure that
771 641 F. Supp. 2d 913 (N.D. Cal. 2009).
772 Dish Network, 2011 U.S. Dist. LEXIS 25038 at *13-14.
773 2012 U.S. Dist. LEXIS 33889 (D. Nev. Mar. 14, 2012).
774 Id. at *3-4.
775 Id. at *4, 11-12.
- 186 -
effectively controlled access to a protected work. The court could not see any possible need for a
person using a free-to-air satellite receiver in a legitimate way to connect that receiver to the
Internet and enter a password to connect to a server whose sole purpose was the trafficking of
decryption keys. The court therefore ordered the impoundment of the WizHub connectors and
the extended warranty codes under Section 1203(b)(2), although not of the receivers themselves
(for which the plaintiffs had not sought impoundment). The court refused, however, to seize the
defendants’ web sites, which appeared to be used for the legitimate sale of free-to-air
receivers.776
d. Dish Network v. Sonicview
This case, a follow-on decision of the case described in subsection a. above, involved the
same kind of “Internet Key Sharing” (or “IKS”) piracy of Dish Network signals described in the
Dimarco case in the previous subsection. To enable IKS piracy, the defendants sold their
Sonicview receivers, each model of which contained firmware having more than one exact match
of the proprietary code and data that resided on the plaintiffs’ smart card, a particular algorithm
important for encrypting and decrypting Dish Network satellite signals, and a graphical user
interface. There were also strong similarities between the Sonicview receivers’ firmware and
that of existing piracy firmware. The defendants also sold a serial Ethernet adapter called the
iHub, which came with a 16-digit code that enabled the Sonicview receiver to access the IKS
server through a dongle and an add-on module that worked in conjunction with the receiver,
when loaded with piracy software, to receive Dish Network’s high-definition programming.
Sonicview also operated a web site that contained piracy software available for download which
was intended for use with Sonicview receivers to decrypt Dish Network’s satellite television
programming.777
The court found the defendants in violation of Section 1201(a)(2) by trafficking in the
receivers, iHubs, add-on modules, and piracy software. The combination of a Sonicview
receiver, iHub, and add-on module, when loaded with the piracy software, permitted
unauthorized access to Dish Network’s satellite programming. The court, citing two other
district court decisions to the same effect, noted that potential lawful or fair use is not a defense
to Section 1201(a) when its requirements are established. The court awarded statutory damages
of $200 per violation for 324,901 violations (at least 307,401 receivers and 17,500 iHubs sold),
for a total award of $64,980,200.778
e. Dish Network v. Alejandri
In Dish Network v. Alejandri,779 the court granted summary judgment to the plaintiffs
that the defendants’ sale of free-to-air receivers together with referral to service providers who
776 Id. at *12-15, 17.
777 Dish Network, LLC v. Sonicview USA, Inc., 2012 U.S. Dist. LEXIS 75663 at *10-11, 13 (S.D. Cal. May 31,
2012).
778 Id. at *22, 24-25 & 40-41.
779 2012 U.S. Dist. LEXIS 106839 (D. Puerto Rico July 30, 2012).
- 187 -
could program them using the IKS piracy technology to receive Dish Network signals without
payment of subscriber fees violated Section 1201(a)(1)(A) of the DMCA. The court noted that
the defendants’ equipment used for unlawful circumvention, which had been impounded, would
be disposed of by the U.S. Marshals’ Service upon order of the court at the conclusion of the
proceedings.780 The court also found a violation of Section 605(a) of the Communication Act
(47 U.S.C. § 605(a)) and awarded statutory damages under that Act. The court did not award
statutory damages under the DMCA – although the court’s opinion does not make clear, it
appears that the plaintiffs did not seek statutory damages under the DMCA.781
(xii) Realnetworks v. DVD Copy Control Association.
In Realnetworks, Inc. v. DVD Copy Control Association, Inc.,782 the DVD Copy Control
Association (DVDCCA) brought claims alleging that distribution of Realnetworks’ RealDVD
product violated the anti-trafficking provisions of the DMCA. DVDCCA licenses the Content
Control System (CSS) technology, which combines multiple layers of encryption with an
authentication process to protect the content on DVDs. CSS requires that a DVD drive lock
upon insertion of a CSS-protected DVD and prevent access to its contents until a CSS-authorized
player engages in an authentication procedure, akin to a secret handshake, to establish mutual
trust. It also requires that players authenticate themselves to DVD drives to establish mutual
trust, both to unlock the DVD and gain access to its protected video contents and also separately
to gain access to keys stored in secure areas of the DVD, which then decrypt and descramble the
DVD content. The process of authentication with the DVD drive, and subsequent content
decryption, will fail if a DVD is not in the DVD drive. Finally, the CSS technology creates a
system whereby content on a DVD may be played back only in decrypted and unscrambled form
from the physical DVD and not any other source, such as a computer hard drive.783
The RealDVD product provided a variety of functions, including playing back DVDs
placed in a computer’s DVD drive, looking up information about the DVD from Internet
databases, providing links to various information web sites relevant to the chosen DVD, and –
the function at issue in the lawsuit – saving an image of the copy-protected content on the
device’s hard drive for later playback without the physical DVD being present.784
The court ruled that the CSS technology was both an access control and a copy control
(the authentication process functioned as an access control and the encryption functioned as a
copy control),785 and that distribution of RealDVD therefore violated the anti-trafficking
780 Id. at *10-14, 21-25 & 28-29.
781 Id. at *16-21, 25-28.
782 641 F. Supp. 2d 913 (N.D. Cal. 2009).
783 Id. at 919-20.
784 Id. at 924. The RealDVD und user license agreement provided, “You may use the saving functionality of the
Software only with DVDs that you own. You may not use the Software to save DVDs that you do not own,
such as rental or borrowed DVDs.” Id. at 926.
785 Id. at 935.
- 188 -
provisions of both Sections 1201(a)(2) and 1201(b). RealDVD circumvented the access controls
of CSS in violation of Section 1201(a)(2) by allowing access of CSS content on the hard drive
without going through most of the CSS protection steps, such as DVD drive-locking, CSS
authentication, and CSS bus encryption. Once RealDVD had copied a DVD, it did not
authenticate the DVD drive or receive encrypted keys for playback from the hard drive.
Accordingly, the process of authentication with the DVD drive, and subsequent content
decryption, were thereby circumvented by RealDVD.786 RealDVD circumvented the copy
controls of CSS in violation of Section 1201(b) by using the CSS authentication codes and
algorithms to make an unauthorized copy of the DVD content.787
The court rejected a number of defenses asserted by Realnetworks. First, Realnetworks
argued that CSS was not an “effective” technological measure because it had been widely
cracked. The court found this fact of no moment, because the DMCA is predicated on the
authority of the copyright owner, not whether or not the technological measure is a strong means
of protection. The court held that it is sufficient under the statutory language if an access control
prevents the easy creation at the consumer level of widely available and usable copies of
copyrighted works.788
The court rejected Realnetworks’ argument that the copyright holder plaintiffs (the movie
studios) could not bring a DMCA claim against a co-licensee to CSS technology. Realnetworks
cited cases holding that copyright licenses are governed by contract law and copyright owners
who enter into such licenses waive their rights to sue the licensee for copyright infringement and
are limited to breach of contract claims. The court distinguished those cases, noting that the
studios were not bringing copyright infringement claims, nor were they the direct licensors of
CSS technology. Because Realnetworks had acted outside the scope of its license with the
DVDCCA, the studios were permitted to bring circumvention claims under the DMCA.789
The court also rejected Realnetworks defenses that distribution of RealDVD was
protected by the Sony doctrine because it was capable of substantial noninfringing uses and by
virtue of the fact that the copying it permitted fell within the fair use rights of users who made
copies for personal, noncommercial use. First, the court held that the DMCA supersedes Sony to
the extent that the DMCA broadened copyright owners’ rights beyond the Sony holding.
Second, the court ruled that whether consumer copying of a DVD for personal use is a fair use
was not at issue, because while the DMCA provides for a limited fair use exception for certain
end users of copyrighted works, the exception does not apply to manufacturers or traffickers of
the devices prohibited by Section 1201(a)(2).790 “So while it may well be fair use for an
individual consumer to store a backup copy of a personally-owned DVD on that individual’s
786 Id. at 933.
787 Id. at 935.
788 Id. at 932.
789 Id. at 933.
790 Id. at 941-43.
- 189 -
computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or
tool that permits a consumer to make such copies.”791
Accordingly, the court granted a preliminary injunction against the distribution of
RealDVD.792
(xiii) Apple v. Psystar
In Apple, Inc. v. Psystar Corp.793 Apple contended that Psystar’s distribution of modified
copies of its Mac OS X operating system on non-Apple computers constituted copyright
infringement and illegal trafficking in circumvention devices. Apple distributed Mac OS X
subject to a license agreement that prohibited its use on any non-Apple-labeled computer. Apple
used lock-and-key technological measures to prevent Mac OS X from operating on non-Apple
computers. Specifically, it encrypted the files of Mac OS X and used a kernel extension that
communicated with other kernel extensions to locate a decryption key in the hardware and use
that key to decrypt the encrypted files of Mac OS X. Psystar distributed a line of computers
called Open Computers that contained copies of Mac OS X, modified to run on Psystar’s own
hardware, which was not authorized by Apple.794
Psystar’s had engaged in the following conduct at issue. It bought a copy of Mac OS X
and installed it on an Apple Mac Mini computer. It then copied Mac OS X from the Mac Mini
onto a non-Apple computer for use as an “imaging station.” Once on the imaging station, Mac
OS X was modified. Psystar then replaced the Mac OS X bootloader (a program that runs when
a computer first powers up and locates and loads portions of the operating system into random
access memory) and disabled and/or removed Mac OS X kernel extension files and replaced
them with its own kernel extension files. Psystar’s modifications enabled Mac OS X to run on
non-Apple computers. The modified copy of Mac OS X became a master copy that was used for
mass reproduction and installation onto Psystar’s Open Computers.795
The court first ruled that Psystar had violated Apple’s exclusive right to copy Mac OS X
by making copies of the modified version of OS X and installing them on non-Apple computers,
and by making copies of such software in random access memory when turning on its computers
running Mac OS X. The court refused to allow Psystar to assert a defense to such copying under
Section 117 of the copyright statute, ruling that Psystar had waived such a defense by failing to
plead it.796 The court also held that distribution of Psystar’s computers infringed Apple’s
exclusive distribution rights with respect to Mac OS X. The court rejected Psystar’s defense
791 Id. at 942.
792 Id. at 952.
793 673 F. Supp. 2d 931 (N.D. Cal. 2009), aff’d, 658 F.3d 1150 (9th Cir. 2011), cert. denied, 132 S. Ct. 2374 (2012).
794 Id. at 933-34.
795 Id. at 934.
796 Id. at 935. Without giving any reasons why, the court also observed that “the assertion of Section 117 is so
frivolous in the true context of how Psystar has used Mac OS X that a belated attempt to amend the pleadings
would not be excused.” Id. at 936.
- 190 -
under the first sale doctrine, based on the fact that it allegedly included a legitimately purchased
Mac OS X DVD with every Psystar computer. The court held that the first sale defense under
Section 109 provides immunity only when copies are lawfully made, and the master copy of the
modified Mac OS X residing on Psystar’s imaging station was unauthorized, as were all the
many unauthorized copies that were made from such master copy.797 The court also concluded
that Psystar had violated Apple’s exclusive right to create derivative works by replacing the Mac
OS X bootloader with a different bootloader to enable an unauthorized copy of Mac OS X to run
on Psystar’s computers, by disabling and removing Apple kernel extension files, and by adding
non-Apple kernel extension files. The court rejected Psystar’s contention that these
modifications did not amount to creation of a derivative work because Apple’s source code,
object code and kernel extensions had not been modified. The court held that the replacement of
entire files within the software while copying other portions resulted in a substantial variation
from the underlying copyrighted work and therefore an infringing derivative work.798
Turning to Apple’s trafficking claim, the court noted that Apple’s encryption of the Mac
OS X operating system files, although aimed primarily at controlling access, also effectively
protected its right to copy, at least for copies made in RAM. Accordingly, the encryption
scheme constituted both an access control measure and a copy control measure. Psystar’s
distribution of “decryption software” (apparently referring to Psystar’s substituted kernel
extension files that obtained Apple’s decryption key from the hardware and then used that key to
decrypt the Mac OS X modules) violated both Section 1201(a)(1)(A) and Section 1201(b)(1)
because it enabled obtaining unauthorized access to Mac OS X and resulted in an unauthorized
copy of Mac OS X being loaded into RAM.799
The court rejected Psystar’s argument that Apple’s technological protection measure was
not effective because the decryption key for circumvention was publicly available on the
Internet. “The fact that circumvention devices may be widely available does not mean that a
technological measure is not, as the DMCA provides, effectively protecting the rights of
copyright owners in the ordinary course of its operations.”800 Accordingly, the court granted
Apple’s motion for summary judgment.801
The court also rejected Psystar’s argument that Apple’s alleged attempt to use copyright
to tie Mac OS X to Apple hardware constituted copyright misuse. Because Apple had not
prohibited others from independently developing and using their own operating system, it had
not violated the public policy underlying copyright law or engaged in copyright misuse. The
court noted that Apple had not prohibited purchasers of Mac OS X from using competitor’s
products. Rather, it had simply prohibited purchasers from using OS X on competitor’s
797 Id. at 937.
798 Id. at 938.
799 Id. at 941.
800 Id. at 942 (quoting Sony Computer Entm’t Am., Inc. v. Divineo, Inc., 457 F. Supp. 2d 957, 965 (N.D. Cal.
2006)).
801 Psystar, 673 F. Supp. 2d at 942.
- 191 -
products. Thus, Apple’s license agreement was simply an attempt to control the use of its own
software.802
On appeal, the defendant did not challenge the district court’s rulings of infringement, but
rather challenged the district court’s rejection of Psystar’s misuse defense. The Ninth Circuit
affirmed the district court’s copyright misuse rulings.803 After a review of relevant misuse
decisions by courts in the Ninth Circuit, the court concluded, “A software licensing agreement
may reasonably restrict use of the software as long as it does not prevent the development of
competing products.”804 The court found that Apple’s license agreement did not impermissibly
do so: “Apple’s [license agreement] does not restrict competitor’s ability to develop their own
software, nor does it preclude customers from using non-Apple components with Apple
computers. Instead, Apple’s [license agreement] merely restricts the use of Apple’s own
software to its own hardware. … Psystar produces its own computer hardware and it is free to
develop its own computer software.”805 The court also rejected Psystar’s reliance on the first
sale doctrine, arguing that Apple was attempting to control the use of the Mac OS X software
after it had been sold, because Psystar purchased retail-packaged copies of the OS. The court
found that the argument falsely assumed that Apple transferred ownership of the Mac OS X
when it sold a retail-packaged DVD containing software designed to enable Apple’s existing
customers to upgrade to the latest version of the OS. The court found that, although buyers of
the DVD purchased the disc, they knew they were not buying the software, as Apple’s license
agreement clearly explained as much. Accordingly, the DVD purchasers were licensees, not
owners, of the copies of the software.806 The Ninth Circuit therefore affirmed the district court’s
grant of summary judgment in favor of Apple and its entry of a permanent injunction against
Psystar’s infringement of the Mac OS X.807
(xiv) Blizzard Entertainment v. Reeves
In this case, the defendant ran a website that enabled its users to bypass the checks and
restrictions for access to the plaintiff’s World of Warcraft online gaming environment. After
granting a default judgment, the court turned to what the appropriate award of statutory damages
should be. The court estimated the number of circumvention violations by looking to the total
number of community members on the defendant’s website (427,393), each of whom was
assumed to have downloaded, access or otherwise used anti-circumvention software, services, or
products offered by the defendant. The court then awarded the $200 minimum amount per
violation, for a total award of $200 x 427,393 = $85,478,600.808
802 Id. at 939-40.
803 Apple, Inc. v. Psystar Corp., 658 F.3d 1150, 1152 (9th Cir. 2011), cert. denied, 132 S. Ct. 2374 (2012).
804 Id. at 1159.
805 Id. at 1160.
806 Id. at 1159-60.
807 Id. at 1162.
808 Blizzard Entertainment, Inc. v. Reeves, 2010 U.S. Dist. LEXIS 85560 at *7-8 (C.D. Cal. Aug. 10, 2010).
- 192 -
(xv) The Craigslist Cases
a. Craigslist v. Naturemarket
In Craigslist, Inc. v. Naturemarket,809 the defendants distributed software that bypassed
the CAPTCHA system of the Craigslist site and enabled users to post ads automatically in
whatever quantity, frequency, and location the user wished, in violation of the Craigslist site
Terms of Use.810 Upon a motion for a default judgment, a magistrate judge issued an opinion
recommending that the defendants’ distribution of the software be found in violation of Sections
1201(a)(2) and 1201(b)(1) because the software “enabled unauthorized access to and copies of
copyright-protected portions of Plaintiff’s website controlled by [the CAPTCHA system] –
particularly the ad posting and account creation portions of the website.”811 The magistrate
judge also recommended an award of statutory damages in the amount of $1,000 per copy of
software distributed, estimated at 470 copies (obtained by dividing the defendants’ estimated
revenue of $40,000 by the list price of $84.95 for the software), for a total statutory damages
award of $470,000.812 The district court adopted the magistrate judge’s recommendations and
opinion in every respect, and entered a permanent injunction against the defendants enjoining
them from distributing software that enabled postings on Craigslist without each posting being
entered manually or that used automated means to download or otherwise obtain data from
Craigslist, from circumventing the CAPTCHA system or other technological measures
controlling access to the site, from repeatedly posting the same or similar content on the site or in
more than one category, and from accessing or using the site for any commercial purpose
whatsoever.813
b. Craigslist v. Mesiab
In Craigslist, Inc. v. Mesiab,814 a magistrate judge recommended that the plaintiff’s
motion for default judgment and award of statutory damages be granted based on violations of
the DMCA anti-circumvention provisions in the following ways:
– Distribution of “EasyAd Suite” software that bypassed the CAPTCHA system of the
Craigslist site and enabled users to post ads automatically and in unlimited quantity. The
magistrate recommended that an award of $800 per copy sold be increased to $1,500 per copy
809 694 F. Supp. 2d 1039 (N.D. Cal. 2010) (report and recommendation of magistrate judge re plaintiff’s motion for
default judgment).
810 Id. at 1048-49.
811 Id. at 1056.
812 Id. at 1063-64. The magistrate judge also recommended that an award of actual damages be made against the
defendants based on the liquidated damages clause of the Terms of Use, which provided for $200 for every ad
the defendants posted as posting agents on behalf of users, for a total of $840,000. Id. at 1064.
813 Craigslist, Inc. v. Naturemarket, Inc., 694 F. Supp. 2d 1039 (N.D. Cal. 2010) at 1046-47.
814 2010 U.S. Dist. LEXIS 134411 (N.D. Cal. Nov. 15, 2010).
- 193 -
because the defendants had shown disregard for the injunction entered by the court. Based on
2,983 copies of the software distributed, the magistrate recommended an award of $4,474,500.815
– Sale or offer for sale of “CAPTCHA credits,” which was a service to circumvent
CAPTCHAs through instantaneous outsourcing for occasions when the EasyAd Suite program
was unable to decode the CAPTCHA. The defendants also offered CAPTCHA circumventions
in bulk for prices ranging from $12.50 for 500 credits to $157.50 for 10,000 credits. The
magistrate ruled that damages under the DMCA could properly be calculated based on offers to
sell and not actual sales of CAPTCHA credits, as well as credits sold through a third party.
Because it was uncontested that defendants’ web site offered to sell CAPTCHA credits and those
offers were made to at least the number of people who purchased the EasyAd Poster Deluxe
software, the magistrate found the defendants liable for damages for 2,983 offers. The
magistrate recommended an award of $400 per violation for offers to sell CAPTCHA credits, for
an award of $1,193,200.816
– Offers of Craigslist telephone-verified accounts. The “Adult” and “Therapeutic
Services” categories on Craigslist required telephone verification in order to post ads and the
telephone-verified accounts offered by the defendants allowed purchasers to pay to have their
accounts fraudulently verified by contracted employees or devices. Again applying the rule that
offers for sale were sufficient for damages, the magistrate found that at least 1,000 offers for
telephone-verified accounts were made, and that an award of $400 per offer was reasonable
($400,000 in total).817
The district court adopted the magistrate’s recommendation in full and entered judgment
against the defendants for a total statutory damages award of $6,067,700.818
c. Craigslist v. Hubert
In Craigslist, Inc. v. Hubert,819 the court ruled, on an entry of default judgment after the
defendant failed to appear, that the sale of software allowing users to automatically post ads to
Craigslist and the provision of a service that automated and circumvented the entry of
CAPTCHA passwords violated the ant-circumvention provisions of the DMCA. The court
awarded statutory damages of $400 for each of the 3,000 users of the defendant’s web site, on
the theory that each user received an “offer” to circumvent in the form of an offer to purchase the
defendant’s software or CAPTCHA credits, for a total award of $1,200,000. The court rejected
the plaintiff’s request for the statutory maximum of $2,500 per offer, finding that such an award
815 Id. at *30-32.
816 Id. at *6, 33-35.
817 Id. at *35-37.
818 Craigslist, Inc. v. Mesiab, 2010 U.S. Dist. LEXIS 134381 (N.D. Cal. Dec. 20, 2010).
819 2010 U.S. Dist. LEXIS 143037 (N.D. Cal. Apr. 15, 2010).
- 194 -
would be vastly disproportional to the actual costs the plaintiff alleged it had incurred as a result
of auto-posting, $5,000 per year.820
d. Craigslist v. Branley
In this case, the court denied Craigslist’s request for a default permanent injunction
against a defendant who failed to appear because Craigslist had not alleged facts sufficient to
support the allegation that the defendant would continue to act as an agent posting ads for third
parties by circumventing Craigslist’s CAPTCHA system using software known as “CLAD
Genius,” in violation of Section 1201 and Craigslist’s Terms of Use.821
e. Craigslist v. Kerbel
In this case, the court granted the plaintiff’s motion for a default judgment, finding that
the plaintiff had adequately pled claims for violation of the anti-circumvention provisions based
on the defendants’ alleged bypassing of Craiglist’s CAPTCHA software and its phone
verification measures in order to automatically create accounts and post ads to Craigslist. The
court awarded statutory damages of $200,000, calculated on the defendants’ offer to sell a bundle
of 10,000 “credits” used to purchase phone-verified accounts on Craigslist at 10 credits each,
representing 1,000 offers to sell the accounts, multiplied by the minimum statutory damages
award of $200 per violation.822
(xvi) Echostar v. Viewtech
In Echostar Satellite LLC v. Viewtech, Inc.,823 the court granted the plaintiff summary
judgment on its claim under Section 1201(a)(2) against the defendants for the distribution of
receivers structurally altered so as to be capable of unauthorized decryption of Echostar satellite
TV programming and of software that would enable the piracy of Echostar’s programming. The
court also found that the defendants’ provision of free receiver to moderators on popular piracy
web sites and encouragement of the moderators to provide favorable reviews of the receiver’s
ability to obtain the plaintiff’s protected programming violated the third prong of Section
1201(a)(2), which prohibits marketing a technology used in circumventing an access measure.
The court awarded statutory damages of $214,898,600, representing $200 for each of at least
1,074,493 receivers intended for piracy sold by the defendants.824
820 Id. at *4, 10-13.
821 Craigslist, Inc. v. Branley, 2012 U.S. Dist. LEXIS 36731 at *4-5, 12 (N.D. Cal. Mar. 19, 2012).
822 Craigslist, Inc. v. Kerbel, 2012 U.S. Dist. LEXIS 108573 at *26-27, 49-50 (N.D. Cal. Aug. 2, 2012).
823 2011 U.S. Dist. LEXIS 42709 (S.D. Cal. Apr. 20, 2011).
824 Id. at *4-5, *8-11.
- 195 -
(xvii) Adobe Systems v. Feather
In this case, the defendant offered for sale and distributed pirated copies of the plaintiffs’
software via the Internet, including on eBay and through his own website. He also trafficked in
and sold product keys or serial numbers designed to circumvent the plaintiffs’ copyright
protection measures to enable the pirated copies to function. Upon a motion for default
judgment, the court found that the defendant’s actions, as alleged in the complaint, established
violations of Section 1201(a)(2) and of willful copyright infringement. The court awarded
statutory damages for willful infringement under Section 504(c)(2) in the amount of $90,000 for
each of 28 copyrighted works infringed, for a total award of $2,520,000 in damages. The
plaintiffs did not seek separate damages for their DMCA claim, and the court noted in a footnote
that they could not do so in any event, citing other authority for the proposition that a plaintiff
cannot seek duplicative statutory damages under the Copyright Act and the DMCA.825 Note that
the ruling with respect to “duplicative” statutory damages seems contrary to other cases, such as
the Pacific Stock v. MacArthur & Co. case discussed in Section G.1(c)(1)(xi) below, which
awarded statutory damages for CMI violations in addition to statutory damages for copyright
infringement arising out of the same acts.
(3) What Constitutes an Effective Technological Measure
(i) Auto Inspection Services v. Flint Auto Auction
In Auto Inspection Services v. Flint Auto Auction,826 the plaintiff was the owner of an
automotive inspection program that provided a uniform method of inspecting vehicles after the
term of a lease or use had expired. The plaintiff included a quality control feature as part of the
program that allowed it to monitor all information collected using the program. For example,
when a vehicle inspector collected data for a vehicle and entered it into the program, the data had
to be sent to the plaintiff for quality control inspection before the information could be forwarded
to the owner of the vehicle. In this way, the plaintiff could monitor who was using the program
to protect against unauthorized use.827
The defendant, a former licensee of the plaintiff’s program, wrote its own automotive
inspection program to replace the plaintiff’s program. The plaintiff claimed that the defendant’s
program was a copyright infringement. The plaintiff also claimed that its quality control feature
constituted a technical protection measure to restrict access and use of its software, and that the
defendant had violated the anti-circumvention provisions of the DMCA by circumventing the
quality control feature to gain access to the plaintiff’s source code to copy it.828
The court found it questionable that the quality control feature was a technical measure
that effectively controlled access to a protected work within the purview of the DMCA. The
825 Adobe Sys v. Feather, 895 F. Supp. 2d 297, 301-02 & 303 n.5 (D. Conn. 2012).
826 2006 U.S. Dist. LEXIS 87366 (E.D. Mich. Dec. 4, 2006).
827 Id. at *1-2.
828 Id. at *4-5, 22.
- 196 -
court noted that the protected work at issue was the source code of the program, and the user
detection feature was a part of the program itself that in no way controlled access to the source
code. Rather, it merely alerted the plaintiff as to who was using the program. Consequently, the
user detection feature would not prevent anyone from gaining access to the source code and
copying it verbatim. Moreover, the feature came into play only after a user had conducted an
inspection, and did not prevent unauthorized users from accessing the program in the first
instance.829
(ii) Healthcare Advocates, Inc. v. Harding, Earley,
Follmer & Frailey
In Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey,830 the court
addressed the issue of whether a robots.txt file applied to a web site to indicate no archival
copying by robots should take place constitutes an effective technological measure. Healthcare
Advocates had filed a lawsuit alleging that a competitor infringed trademarks and copyrights and
misappropriated trade secrets belonging to Healthcare Advocates. The defendants in that case
were represented by the boutique IP law firm of Harding, Earley, Follmer & Frailey. To aid in
preparing a defense, on two occasions employees of the Harding firm accessed screenshots of
old versions of Healthcare Advocates’ web sites that had been archived by the Internet Archive’s
web site (www.archive.org). The old versions of the web site were accessed through the
“Wayback Machine,” an information retrieval system offered to the public by the Internet
Archive that allowed users to request archived screenshots contained in its archival database.
Viewing the content that Healthcare Advocates had included on its public web site in the past
was very useful to the Harding firm in assessing the merits of the trademark and trade secret
allegations brought against the firm’s clients.831
The Internet Archive had a policy to respect robots.txt files and not to archive sites
containing a robots.txt file that indicated the site should not be archived. In addition, for those
web sites that did not have a robots.txt file present at the web site’s inception, but included it
later, the Internet Archive would remove the public’s ability to access any previously archived
screenshots stored in its database. The archived images were not deleted, but were instead
rendered inaccessible to the general public, and the Internet Archive’s web crawler was
instructed not to gather screenshots of that web site in the future.832
Healthcare Advocates had not included a robots.txt file on its web site prior to July 7,
2003. Consequently, Internet Archive’s database included screenshots from Healthcare
Advocates’ web site when the Harding firm’s employees accessed that database through the
Wayback Machine on July 9, 2003 and July 14, 2003. On those two dates of access, however,
the Internet Archive’s servers, which checked for robots.txt files and blocked the images from
being displayed from the corresponding web site, were malfunctioning due to a cache exhaustion
829 Id. at *23.
830 2007 U.S. Dist. LEXIS 52544 (E.D. Pa. July 20, 2007).
831 Id. at *1-3.
832 Id. at *7-8.
- 197 -
condition. Because of this malfunction, employees of the Harding firm were able to view and
print copies of the archived screenshots of Healthcare Advocates’ web site stored in Internet
Archive’s database, contrary to Internet Archives’ normal policy. Healthcare Advocates sued the
Harding firm, alleging that it has manipulated the Wayback Machine on the two dates in question
in a way that rendered useless the protective measure of the robots.txt file that Healthcare
Advocates had placed on its web site, in violation of the anti-circumvention provisions of the
DMCA.833
The court turned first to the question of whether the robots.txt file used by Healthcare
Advocates qualified as a technological measure effectively controlling access to its web site as
defined in the Section 1201(a)(3)(B) of the DMCA. The court concluded on the particular facts
of the case that it did, although the court refused to hold that a robots.txt file universally
constitutes a technological protection measure:
The measure at issue in this case is the robots.txt protocol. No court has found
that a robots.txt file universally constitutes a “technological measure effectively
controll[ing] access” under the DMCA. The protocol by itself is not analogous to
digital password protection or encryption. However, in this case, when all
systems involved in processing requests via the Wayback Machine are operating
properly, the placement of a correct robots.txt file on Healthcare Advocates’
current website does work to block users from accessing archived screenshots on
its website. The only way to gain access would be for Healthcare Advocates to
remove the robots.txt file from its website, and only the website owner can
remove the robots.txt file. Thus, in this situation, the robots.txt file qualifies as a
technological measure effectively controlling access to the archived copyrighted
images of Healthcare Advocates. This finding should not be interpreted as a
finding that a robots.txt file universally qualifies as a technological measure that
controls access to copyrighted works under the DMCA.834
However, the court found no violation of the DMCA by the actions of the Harding firm
employees because those employees had not acted to “avoid” or “bypass” the technological
measure. The court noted that those choice of words in the DMCA “imply that a person
circumvents a technological measure only when he affirmatively performs an action that disables
or voids the measure that was installed to prevent them from accessing the copyrighted
material.”835 The employees of the Harding firm had not taken such affirmative action. As far
as they knew, no protective measures were in place with respect to the archived screenshots they
were able to view, and they could in fact not avoid or bypass any protective measure because on
the dates in question nothing stood in the way of them viewing the screenshots.836
833 Id. at *4, 8-10, 43.
834 Id. at *41-42 (citation omitted).
835 Id. at *46.
836 Id. at *47.
- 198 -
Healthcare Advocates argued that liability under the DMCA should be judged on what
the Harding firm knew, not what actions it took. Healthcare Advocates argued that the Harding
firm knew it was not permitted to view certain archived images, because some of the images
were blocked. Healthcare Advocates therefore claimed that the firm knew or should have known
that it was not supposed to be able to view any of the screenshots at issue, and that any request
made for archived images after the first request resulted in a denial constitute circumvention of
its robots.txt file. The court rejected this argument, ruling that simply making further requests is
not circumvention under the DMCA. The requests did not alter any computer code to render the
robots.txt file void. Internet Archive’s servers indicated that no lock existed when the requests
were made. Accordingly, the Harding firm could not avoid or bypass a digital wall that was not
there.837
The court also ruled that Healthcare Advocates’ inference that the Harding firm should
have known it was not allowed to view any archived images via the Wayback Machine was both
unreasonable and irrelevant. When a screenshot was blocked, the Wayback Machine returned a
message stating that the page was blocked by the web site owner, but the message also included
links, one of which said, “Try another request or click here to search for all pages on
healthcareadvocates.com.” When this page appeared, the firm’s employee clicked on the link
and received a list of all available screenshots.838 The court held that, even if the firm knew that
Healthcare Advocates did not give it permission to see its archived screenshots, “lack of
permission is not circumvention under the DMCA.”839 Accordingly, the court granted the
Harding firm summary judgment on Healthcare Advocates’ claim of a violation of the DMCA.840
(iii) Apple v. Psystar
The facts of this case are set forth in Section II.G.1(b)(14) above. The court rejected the
defendant’s argument that Apple’s encryption of its Mac OS X operating system files, which
were decrypted by a decryption key stored within Apple’s hardware, was not an effective
technological protection measure because the decryption key was publicly available on the
Internet. “The fact that circumvention devices may be widely available does not mean that a
technological measure is not, as the DMCA provides, effectively protecting the rights of
copyright owners in the ordinary course of its operations.”841
(4) No Requirements With Respect to Design of a Product
Section 1201(c)(3) provides that nothing in the bills “shall require that the design of, or
design and selection of parts and components for, a consumer electronics, telecommunications,
or computing product provide for a response to any particular technological measure ….”
837 Id. at *47-50.
838 Id. at *50-51.
839 Id. at *51.
840Id.
841 Apple, Inc. v. Psystar Corp., 673 F. Supp. 2d 931, 942 (quoting Sony Computer Entm’t Am., Inc. v. Divineo,
Inc., 457 F. Supp. 2d 957, 965 (N.D. Cal. 2006)).
- 199 -
(5) Other Rights Not Affected
Sections 1201(c)(1), (2), and (4) provide that Section 1201 is not intended to affect rights,
remedies, limitations, or defenses (including fair use) to copyright infringement; or to enlarge or
diminish vicarious or contributory liability in connection with any technology or product; or to
enlarge or diminish any rights of free speech of the press for activities using consumer
electronics, telecommunications, or computing products.
Notwithstanding these provisions, groups such as the Digital Future Coalition (DFC)
have criticized the approach of the DMCA. In a position paper dated August 1997,842 the DFC
argued that Section 1201 would effectively negate fair use rights, because it imposes liability for
“circumvention” even when the purpose of the activity is permitted by the copyright act (such as
reverse engineering or other activities that otherwise constitute fair use). The DFC also argued
that Section 1201 would outlaw legitimate devices with substantial noninfringing uses,
effectively overruling the Supreme Court’s decision in Sony Corp. v Universal City Studios.843
The DFC argued that the savings clauses of Section 1201(c) are inadequate because
“while Section 1201 will not as a formal matter restrict existing limitations and exceptions to
copyright, it will as a practical matter preclude the exercise of these limitations and exceptions
by preventing the manufacture and use of the technologies necessary for their existence. Nor
would the savings clause protect individuals who gain ‘access’ to works in violation of
1201(a)(1), even if they do so for entirely lawful purposes.”844
Another position paper filed on behalf of the Information Technology Industry Council
raised concern that Section 1201 will impose liability too broadly in view of the broad definition
of “circumvention”:
Thus, if a device does not respond to a technological protection measure that is
intended to control copying, which in some cases may be a simple 1 or 0 in
header information included with the digital content, the device may be construed
as avoiding, bypassing, deactivating or impairing that measure.… Companies
that make devices that do not respond to copy flags – because they don’t know
about the flags or because of technological difficulties associated with complying
– could be liable under Section 1201 even though they had no intent to
circumvent.845
842 The position paper may be found at www.ari.net/dfc/docs/stwip.htm.
843 464 U.S. 417 (1984).
844 Position paper at 3.
845 Prepared Statement of Chris Byrne of Silicon Graphics, Inc. on Behalf of the Information Technology Industry
Council Before the House Judiciary Committee Courts and Intellectual Property Subcommittee (Wed., Sept. 17,
1997) (available from Federal News Service, 620 National Press Building, Washington, D.C. 20045, and on file
with the author). Section 1201(c)(3), discussed above, appears to be directed at least in part to addressing this
issue.
- 200 -
The paper also raised concern about broadening the standard for liability for third party
use of devices that infringe copyright owner’s rights from that of the Sony case, which imposes
liability only for sale of devices having no substantial noninfringing uses, to the prohibition
under the bill of devices that are “primarily designed or produced” for circumvention, or have
“only limited commercially significant purpose” other than circumvention, or are marketed for
use in circumvention.
(6) Exemption for Nonprofit Organizations and Law
Enforcement
Section 1201(d) sets up an exemption from the circumvention prohibitions of Section
1201(a)(1) for nonprofit libraries, archives, or educational institutions that gain access to a
commercially exploited copyrighted work solely in order to make a good faith determination of
whether to acquire a copy of that work, provided that a copy of the work is not retained longer
than necessary to make the good faith determination, is used for no other purpose, and there is
not otherwise reasonably available an identical copy of the work in another form. Section
1201(e) provides that the prohibitions of Section 1201 do not apply to lawfully authorized
investigative, protective, information security,846 or intelligence activity of law enforcement
officers.
(7) Reverse Engineering for Interoperability
Section 1201(f) provides three exemptions to the anti-circumvention provisions relating
to reverse engineering and interoperability:
Reverse Engineering for Interoperability of an Independently Created Computer
Program. Section 1201(f)(1) provides that, notwithstanding the prohibitions in Section
1201(a)(1)(A), “a person who has lawfully obtained the right to use a copy of a computer
program may circumvent a technological measure that effectively controls access to a particular
portion of that program for the sole purpose of identifying and analyzing those elements of the
program that are necessary to achieve interoperability of an independently created computer
program with other programs, and that have not previously been readily available to the person
engaging in the circumvention, to the extent any such acts of identification and analysis do not
constitute infringement under this title.” The language in Section 1201(f) requiring that the
reverse engineering be for the sole purpose of “identifying and analyzing those elements of the
program that are necessary to achieve interoperability of an independently created computer
program with other programs” comes directly from Article 6 of the European Union Software
Directive, and appears to be the first time that language from an EU Directive has been
incorporated verbatim into the United States Code.847
846 Section 1201(e) defines “information security” to mean activities carried out to identify and address the
vulnerabilities of a government computer, computer system, or computer network.
847 Jonathan Band & Taro Issihiki, “The New Anti-Circumvention Provisions in the Copyright Act: A Flawed
First Step,” Cyberspace Lawyer, Feb. 1999, at 2, 4. Section 1201(f) may also represent the first Congressional
recognition of the legitimacy of software reverse engineering. Id.
- 201 -
Development and Employment of a Technological Means for Enabling Interoperability.
Section 1201(f)(2) provides that, notwithstanding the prohibitions in Sections 1201(a)(2) and
1201(b), “a person may develop and employ technological means to circumvent a technological
measure, or to circumvent protection afforded by a technological measure, in order to enable the
identification and analysis under paragraph (1), or for the purpose of enabling interoperability of
an independently created computer program with other programs, if such means are necessary to
achieve such interoperability, to the extent that doing so does not constitute infringement under
this title.”
The scope of this exemption is uncertain from its language in several respects. First, it is
unclear what kinds of “technological means” Congress had in mind for falling within this
exemption. The reference to allowing a person to “develop and employ” such technological
means may suggest that the exemption is limited to only those means developed by the person
desiring to circumvent, as opposed to commercially available circumvention means. The
legislative history suggests otherwise, however, for it contemplates that the rights under Section
1201(f)(2) may be exercised through either generally available tools or specially developed tools:
[Section 1201(f)(2)] recognizes that to accomplish the acts permitted under
[Section 1201(f)(1)] a person may, in some instances, have to make and use
certain tools. In most instances these will be generally available tools that
programmers use in developing computer programs, such as compilers, trace
analyzers and disassemblers, which are not prohibited by this section. In certain
instances, it is possible that a person may have to develop special tools to achieve
the permitted purpose of interoperability. Thus this provision creates an
exception to the prohibition on making circumvention tools contained in
subsections 1201(a)(2) and (b). These tools can be either software or hardware.848
From this legislative history, it is apparent that the phrase “develop and employ” in Section
1201(f)(2) was probably intended to mean “develop and/or employ.”
A second ambiguity is whether the “technological means” of Section 1201(f)(2) were
intended to be limited to the kinds of reverse engineering “tools” cited in the legislative history
(compilers, trace analyzers, disassemblers and the like), or whether they could be read more
broadly to encompass computer programs, such as application programs, that in their ordinary
operation are designed to circumvent technological measures protecting another computer
program so as to interoperate with it. For example, consider the fact pattern at issue in the case
of Lexmark International, Inc. v. Static Control Components, Inc.,849 discussed in Section
II.G.1(o)(1) below. In that case, the district court ruled on a motion for a preliminary injunction
that Static Control violated Section 1201(a)(2) by distributing microchips that were used to
replace the microchip found in the plaintiff Lexmark’s toner cartridges. Static Control’s
microchip contained a computer program that circumvented Lexmark’s authentication sequence
848 S. Rep. No. 105-190, at 33 (1998).
849 253 F. Supp. 2d 943, 948-49 (E.D. Ky. 2003), rev’d, 387 F.3d 522 (6th Cir. 2004), reh’g denied, 2004 U.S. App.
LEXIS 27422 (Dec. 29, 2004), reh’g en banc denied, 2005 U.S. App. LEXIS 3330 (6th Cir. Feb. 15, 2005).
- 202 -
that prevented the printer engine software on the Lexmark printer from allowing the printer to
operate with a refilled toner cartridge.
The district court in that case ruled that the exemptions of Section 1201(f) did not apply
because Static Control’s microchips could not be considered to contain independently created
computer programs, since the toner loading program on those microchips was an exact copy of
the toner loading program contained on Lexmark’s microchips.850 However, suppose Static
Control had independently developed the computer program contained on its microchips.851
Would the exemption of Section 1201(f)(2) apply? Static Control could argue yes, on the ground
that Section 1201(f)(2) permits it to “employ technological means [the computer program on its
microchip] to circumvent a technological measure [the authentication sequence implemented by
the Lexmark printer engine software] … for the purpose of enabling interoperability of an
independently created computer program [again, the computer program on Static Control’s
microchip] with other programs [the Lexmark printer engine program].”
On the other hand, Lexmark could argue no, on the ground that the legislative history
indicates that the “technological means” referenced in Section 1201(f)(2) were meant to be
limited to reverse engineering “tools,” and the program on the Static Control microchip is not a
reverse engineering tool, but rather an application program. In sum, the issue is whether the
“independently created computer program” referenced in Section 1201(f)(2) can also constitute
the “technological means” of circumvention, or whether the “technological means” is limited to
the reverse engineering tool used to develop the independently created computer program in the
first place. Stated differently, the issue is whether Section 1201(f)(2) was meant to be narrow to
cover only the development and employment of special tools used to aid the reverse engineering
permitted by Section 1201(f)(1), or whether it was intended to permit more generalized
circumvention of technological measures by one computer program in order to interoperate with
another computer program whose technological protection measures are being circumvented by
the first program. A similar ambiguity is embedded in Section 1201(f)(2)’s reference to “other”
programs – can a program whose technological measure is circumvented by an independently
created computer program, both in the ordinary operation of the independently created computer
program and in the reverse engineering that was done to create such program, qualify as an
“other” program? The legislative history contains no guidance on the interpretation of “other” in
the exemption.
850 As discussed further in Section II.G.1(a)(13)(i) below, the Sixth Circuit on appeal reversed the district court’s
grant of a preliminary injunction and remanded. Among other things, the Sixth Circuit questioned whether
Lexmark’s toner loading program was even copyrightable, ruling that on the preliminary injunction record
Lexmark had made inadequate showings with respect to originality of its toner loading program and whether
that program functioned as a “lock-out code” that had to be copied for functional purposes. Lexmark Int’l v.
Static Control Components, 387 F.3d 522, 536-41 (6th Cir. 2004), reh’g denied, 2004 U.S. App. LEXIS 27422
(Dec. 29, 2004), reh’g en banc denied, 2005 U.S. App. LEXIS 3330 (6th Cir. Feb. 15, 2005).
851 The Sixth Circuit also ruled that, whether or not the toner loading program on Static Control’s microchips was
independently created, the record established that there were other programs on Static Control’s microchips that
were independently created, and those computer programs also interoperated with Lexmark’s printer engine
program on Lexmark’s microchips. Id. at 550.
- 203 -
It appears that the Copyright Office agrees with an expansive reading of the Section
1201(f) exemption. After the district court’s decision in the Lexmark case came down, Static
Control submitted a proposed exemption to the Copyright Office in its 2003 rulemaking
proceeding under Section 1201(a)(1) to determine classes of works exempt from the anticircumvention
prohibitions. In particular, Static Control asked for an exemption for the
following classes of works:
1. Computer programs embedded in computer printers and toner cartridges and that
control the interoperation and functions of the printer and toner cartridge.
2. Computer programs embedded in a machine or product and which cannot be copied
during the ordinary operation or use of the machine or product.
3. Computer programs embedded in a machine or product and that control the operation
of a machine or product connected thereto, but that do not otherwise control the performance,
display or reproduction of copyrighted works that have an independent economic significance.852
The Copyright Office set forth its analysis of Static Control’s requested exemptions,
among many other requested exemptions, in a lengthy memorandum issued on Oct. 27, 2003 by
the Register of Copyrights to the Librarian of Congress. Although it is not clear from the
memorandum whether the Copyright Office took a position with request to Static Control’s
second and third proposed exemptions, the Copyright Office determined that no exemption was
warranted for the first proposed exemption because “Static Control’s purpose of achieving
interoperability of remanufactured printer cartridges with Lexmark’s … printers could have been
lawfully achieved by taking advantage of the defense found in §1201(f), the reverse engineering
exemption.”853
The Copyright Office read the purpose behind Section 1201(f) broadly: “Not only did
Congress intend that ‘interoperability’ include the exchange of information between computer
programs; it also intended ‘for such programs mutually to use the information which has been
exchanged.’ Interoperability necessarily includes, therefore, concerns for functionality and use,
and not only of individual use, but for enabling competitive choices in the marketplace.”854 The
Copyright Office elaborated that the statutory exemptions of Section 1201(f) afford broader
exemptions than even the Copyright Office itself could grant by virtue of rulemaking. In
particular, the Copyright Office’s exemptions are limited to individual acts of exemption
prohibited by Section 1201(a)(1), whereas the statutory exemptions of Section 1201(f) include
the distribution of the means of circumvention into the marketplace:
852 Memorandum from Marybeth Peters, Register of Copyrights, to James H. Billington, Librarian of Congress,
“Recommendation of the Register of Copyrights in RM 2002-4; Rulemaking on Exemptions from Prohibition
on Circumvention of Copyright Protection Systems for Access Control Technologies,” Oct. 27, 2003, p. 172,
available as of Jan. 10, 2004 at www.copyright.gov/1201/docs/registers-recommendation.pdf.
853 Id. at 176.
854 Id. at 178 (quoting the House Manager’s Report at 14).
- 204 -
[T]he statutory exemption found in §1201(f) not only permits circumvention of
technological measures to analyze and identify interoperable elements of a
protected computer program, but also provides exemptions to the trafficking
provisions in §1201(a)(2) and 1201(b). Even if the Register had found a factual
basis for an exemption, it would only exempt the act of circumvention. It would
not exempt the creation and distribution of the means to circumvent or the
distribution of interoperable computer programs embedded in devices. Since it is
clear that Static Control’s goal was not merely to privately circumvent, but rather
to facilitate the distribution of competitive toner cartridges to others, a
recommendation for an exemption in this rulemaking would have little effect on
the intended use.855
Accordingly, the Copyright Office concluded that “Congress has comprehensively
addressed the important concern of interoperability for competition and functionality within its
own statutory exemption” and that an exemption through rulemaking was not necessary.856
Providing Information or Means for Interoperability to Others. Section 1201(f)(3)
provides that the “information acquired through the acts permitted under paragraph (1), and the
means permitted under paragraph (2), may be made available to others if the person referred to in
paragraph (1) or (2), as the case may be, provides such information or means solely for the
purpose of enabling interoperability of an independently created computer program with other
programs, and to the extent that doing so does not constitute infringement under this title or
violate applicable law other than this section.”
Section 1201(f)(3) contains ambiguities with respect to its scope that are similar to those
noted with respect to Section 1201(f)(2). The legislative history for Section 1201(f)(3) states the
following:
[Section 1201(f)(3)] recognizes that developing complex computer programs
often involves the efforts of many persons. For example, some of these persons
may be hired to develop a specific portion of the final product. For that person to
perform these tasks, some of the information acquired through the permitted
analysis, and the tools to accomplish it, may have to be made available to that
person. This subsection allows developers of independently created software to
rely on third parties either to develop the necessary circumvention tools or to
identify the necessary information to achieve interoperability. The ability to rely
on third parties is particularly important for small software developers who do not
have the capability of performing these functions in-house. This provision
permits such sharing of information and tools.857
855 Id. at 180-81 (emphasis in original).
856 Id. at 183.
857 S. Rep. No. 105-190, at 33 (1998).
- 205 -
Although Section 1201(f)(3) clearly contemplates an exemption for distribution to third
parties of the “technological means” referenced in Section 1201(f)(2), as well as the
“information” gleaned from reverse engineering under Section 1201(f)(1), the same issues of the
scope of “technological means” intended to be within the exemption arise as in Section
1201(f)(2). As noted, the Copyright Office seems to read Section 1201(f)(3) broadly to permit
the distribution of independently developed computer programs that circumvent the
technological protection measures of other programs in order to interoperate with such other
programs. The legislative history quoted above, however, seems to read Section 1201(f)(3) more
narrowly as directed to distribution of reverse engineering “tools” or information to third party
developers who may be hired to assist in the development of an independent computer program,
as opposed to a distribution of a competitive product into the marketplace.
These ambiguities in the scope of the Section 1201(f) exemptions will need to be
resolved over time through litigation. In addition, it is worth observing that, although Section
1201(f) provides useful exemptions, it leaves open the issue of whether circumvention of access
restrictions in order to perform reverse engineering for purposes other than interoperability, such
as error correction, is prohibited. The Copyright Office’s exemption rulemaking procedures may
afford a mechanism to further flesh out or clarify the Section 1201(f) exemptions.
Several cases have adjudicated the scope of the Section 1201(f) exemption:
(i) Universal City Studios Inc. v. Reimerdes
In Universal City Studios, Inc. v. Reimerdes,858 discussed in further detail in Section
II.G.1(m)(4) below, the court rejected the applicability of Section 1201(f) to the defendants’
posting on their Web site of, and posting links to, a descrambling computer program known as
“DeCSS,” which circumvented the encryption of movies stored in digital form on a digital
versatile disk (“DVD”) encoded with the industry standard Content Scramble System (“CSS”).
The defendants argued that DeCSS had been created to further the development of a DVD player
that would run under the Linux operating system, as there allegedly were no Linux-compatible
players on the market at the time.859 They further contended that DeCSS was necessary to
achieve interoperability between computers running the Linux operating system and DVDs, and
that the exception of Section 1201(f) therefore applied.860
The court rejected this argument for several reasons. First, Section 1201(f)(3) permits
information acquired through reverse engineering to be made available to others only by the
person who acquired the information, and the defendants did not themselves do any reverse
engineering (DeCSS had been created by a third party). Even if the defendants had authored
DeCSS, the court ruled that Section 1201(f)(3) would allow the dissemination only of
information gleaned from the reverse engineering and solely for the purpose of achieving
interoperability as defined in the statute (which was not the reason the defendants posted
858 111 F. Supp. 2d 294 (S.D.N.Y. 2000).
859 Id. at 319.
860 Id. at 320.
- 206 -
DeCSS), and not dissemination of the means of circumvention itself.861 Second, the defendants
could not claim that the sole purpose of DeCSS was to create a Linux DVD player, because
DeCSS was developed on and ran under the Windows operating system, and could therefore
decrypt and play DVD movies on Windows as well as Linux machines.862 In addition, in an
earlier opinion, the court ruled that Section 1201(f) was inapplicable because the legislative
history of the DMCA makes clear that Section 1201(f) permits reverse engineering of
copyrighted computer programs only and does not authorize circumvention of technological
systems that control access to other copyrighted works, such as movies.863
(ii) Storage Technology Corporation v. Custom
Hardware Engineering & Consulting
This case rejected an assertion of a Section 1201(f) defense because the defendant’s
circumvention resulted in an infringing copy of the plaintiff’s copyrighted program being made
in RAM, and the Section 1201(f) defense exempts circumvention only if it does not result in
copyright infringement. For a discussion of the details of the case, see Section II.G.1(o)(4)
below.
(iii) Chamberlain Group, Inc. v. Skylink Technologies,
Inc.
The facts of this case are set forth in Section II.G.1(o)(2) below. Although this case did
not directly adjudicate the scope of the Section 1201(f) exemptions, the court made a few
statements in dicta suggesting that Section 1201(f) acts to immunize interoperability from anticircumvention
liability. In that case, the Federal Circuit ruled that the anti-circumvention
provisions of Section 1201 do not apply to all forms of circumvention to gain access to a work,
but rather only to circumventions that facilitate some form of copyright infringement.864 The
court reached this conclusion in part on the rationale that a broad interpretation of the anticircumvention
provisions to prohibit all forms of unauthorized access, whether or not protected
copyright rights were thereby implicated, would be tantamount to “ignoring the explicit
861Id.
862Id.
863 Universal City Studios Inc. v. Reimerdes, 82 F. Supp. 2d 211, 218 (S.D.N.Y. 2000) (citing S. Rep. No. 105-190
(1998) and H.R. Rep. 105-551 (II) (1998)). Section 1201(f) would seem applicable to the original reverse
engineering that the developers of DeCSS engaged in, but the trickier issue dealt with by the court is whether it
should apply to subsequent use of the DeCSS to gain access to copyrighted works stored on a DVD in order to
play such works under the Linux operating system. Such access is for use of the work stored on the DVD
(albeit in an interoperable way), whereas the exception speaks in terms of “identifying and analyzing” the
copyrighted work to achieve interoperability. In addition, Section 1201(f) appears to be a defense only to the
conduct of circumvention prohibited by Section 1201(a)(1), and not to the distribution of devices prohibited
under Sections 1201(a)(2) and 1201(b). Because the court found that DeCSS is a device within the prohibition
of Section 1201(a)(2), it was not subject to the exception of Section 1201(f).
864 Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178, 1195, 1203 (Fed. Cir. 2004), cert.
denied, 161 L. Ed. 2d 481 (2005).
- 207 -
immunization of interoperability from anticircumvention liability under § 1201(f).”865 This
language, although dicta, characterizes the Section 1201(f) exemption very broadly.866
Another dictum by the court in connection with articulating its rationale for rejecting
such a broad interpretation of anti-circumvention liability makes clear the court’s belief that the
anti-circumvention provisions should not be construed to prevent interoperability of computer
programs:
Chamberlain’s proposed construction would allow any manufacturer of any
product to add a single copyrighted sentence or software fragment to its product,
wrap the copyrighted material in a trivial “encryption” scheme, and thereby gain
the right to restrict consumers’ rights to use its products in conjunction with
competing products. In other words, Chamberlain’s construction of the DMCA
would allow virtually any company to attempt to leverage its sales into
aftermarket monopolies – a practice that both the antitrust laws and the doctrine
of copyright misuse normally prohibit.867
(iv) Lexmark International, Inc. v. Static Control
Components, Inc.
For a discussion of the applicability of the reverse engineering exception of Section
1201(f) in this case, see Section II.G.1(o)(1) below.
(v) Davidson Assocs. v. Internet Gateway
In this case, the plaintiff Davidson & Assocs., doing business as Blizzard Entertainment,
owned the copyrights in several computer games. The games could be played in either a singleplayer
mode or in an online multi-player mode called “Battle.net mode.”868 Blizzard operated a
24-hour online gaming service known as the Battle.net service that allowed owners of certain
Blizzard games to play those games against each other in Battle.net mode by linking together
over the Internet through Battle.net servers. In addition to multi-player game play, Battle.net
mode allowed users to chat with other potential players, to record wins and losses and save
advancements in a password protected individual game account, and to set up private games on
the Battle.net service to allow players to determine whom they wished to interact with on the
Battle.net service.869 The court noted that these Battle.net mode features were “accessed from
865 Id. at 1200.
866 The court noted that it had no occasion to reach the argument, raised by an amicus, that Section 1201(f) should
cover the defendant’s actions in distributing a product that circumvented technological measures restricting
access to the plaintiff’s computer program so as to interoperate with it. Because Section 1201(f) is an
affirmative defense, the court noted that it would become relevant only if the plaintiff could prove a prima facie
case of anti-circumvention liability to shift the burden to the defendant, which the court ruled the plaintiff had
ultimately failed to do. Id. at 1200 n.15.
867 Id. at 1201 (citations omitted).
868 Davidson & Assocs. v. Internet Gateway, 334 F. Supp. 2d 1164, 1168 (E.D. Mo. 2004).
869Id.
- 208 -
within the games themselves,” which seems to mean that there was particular code within the
Blizzard games that allowed them to operate in Battle.net mode and communicate with the
Battle.net servers.870
The Battle.net service was designed to prohibit access and use of Battle.net mode by
unauthorized or pirated copies of Blizzard games. In particular, in order to log on to the
Battle.net service and access Battle.net mode, the Blizzard games were designed to initiate an
authentication sequence or “secret handshake” between the game and the Battle.net server based
on the “CD Key” of the game, a unique sequence of alphanumeric characters that was printed on
a sticker attached to the case in which each game was packaged. The game would pass the CD
Key to the Battle.net server, which would verify its validity and determine whether the same CD
Key was already being used by another game that was currently logged on to the server. If the
CD Key was determined to be valid by the server and not already in use, the server would send a
signal to the game allowing it to enter the Battle.net mode and to use the Battle.net gaming
services.871
In order to install a copy of a Blizzard game, the user was required to click acceptance of
a clickwrap license agreement that prohibited reverse engineering of the software and that
required the user to agree to the Terms of Use of the Battle.net service, which prohibited
emulation or redirection of the communication protocols used by Blizzard as part of Battle.net
service for any purpose.872
The defendants developed a server, known as the bnetd server, that was designed to
emulate the Battle.net service so as to allow players to play their Blizzard games in an online
multi-player mode through the bnetd server.873 In order to develop the bnetd server, the
defendants had to reverse engineer the Blizzard games to learn the Battle.net protocol. In
addition, because Blizzard games were designed to connect only to Battle.net servers, the
defendants had to modify a computer file in the Blizzard games containing the Internet address
of the Battle.net servers so as to cause the games to connect to a bnetd server instead. The
defendants distributed a utility known as “BNS” that modified such file and caused Blizzard
games to connect to the bnetd server rather than the Battle.net server. Once connected to the
bnetd server through the modified Internet address file, a Blizzard game would send its CD Key
to the bnetd server. When the bnetd server received the CD Key, unlike Battle.net, it did not
determine whether the CD Key was valid or currently in use by another player. Instead, the
bnetd server would always send the game an “okay” reply. Thus, both authorized as well as
unauthorized or pirated copies of Blizzard games could be played in online mode through the
bnetd server.874
870Id.
871 Id. at 1169.
872 Id. at 1169-71.
873 Id. at 1172.
874 Id. at *1172-73.
- 209 -
The plaintiffs alleged two violations of the anti-circumvention provisions of the DMCA.
First, they alleged that the defendants had violated Section 1201(a)(1)(A) in the course of
development of the bnetd emulator by circumventing Blizzard’s technological measures (the
secret handshake) to gain access to Battle.net mode in the course of their reverse engineering.875
Although not clear from the court’s opinion, the copyrighted work that the defendant’s gained
access to via their circumvention was apparently the code in the Blizzard games that allowed
them to operate in Battle.net mode and to communicate with the Battle.net service.
The defendants argued that their circumvention in the course of reverse engineering was
permitted by Section 1201(f)(1) because it was done for the sole purpose of creating and
distributing interoperable computer programs such as the bnetd server. They also argued that
they had authority to access the Battle.net mode because they lawfully purchased the Blizzard
software they reverse engineered.
The district court rejected these defenses. First, it ruled that it was “undisputed that
defendants circumvented Blizzard’s technological measure, the ‘secret handshake,’ between
Blizzard games and Battle.net, that effectively control access to Battle.net mode.”876 By its
reference to “Battle.net mode,” the court was again presumably referring to the code in the
Blizzard games that allowed them to operate in Battle.net mode. The court rejected the
defendants’ reliance on Section 1201(f)(1), because the defendants had not developed an
independently created computer program. The court noted that the defendants’ actions in
developing the bnetd server “extended into the realm of copyright infringement” because once
game play started, “there are no differences between Battle.net and the bnetd emulator from the
standpoint of a user who is actually playing the game.”877 It is unclear from this language
precisely what the basis was on which the court found copyright infringement. Perhaps the court
believed that the defendants had copied code from the Battle.net server into the bnetd server, for
earlier in the opinion the court noted that the plaintiffs contended “that the defendants not only
copied code that would achieve interoperability, but also copied elements that would preserve
player account information, display of icons, and presentation of ad banners.”878 However, the
opinion on appeal suggests that there was no copying of battle.net server code into the bnetd
server.879
The court also rejected the Section 1201(f)(1) defense because it found that the
defendants’ actions constituted more than enabling interoperability, since the emulator did not
875 Id. at 1183.
876 Id. at 1184-85.
877 Id. at 1185.
878 Id. at 1184.
879 Davidson & Assocs. v. Jung, 422 F.3d 630, 636 (8th Cir. 2005) (“By necessity, Appellants used reverse
engineering to learn Blizzard’s protocol language and to ensure that bnetd.org worked with Blizzard games.
Combs used reverse engineering to develop the bnetd.org server, including a program called ‘tcpdump’ to log
communications between Blizzard games and the Battle.net server.”).
- 210 -
check the validity of the CD Key code passed from the game to the emulator, thereby allowing
unauthorized copies of the Blizzard games to play on bnetd servers.880
The plaintiffs also asserted that by distributing the bnetd software, the defendants had
violated Section 1201(a)(2) by trafficking in devices whose only purpose was to circumvent their
secret handshake and allow access to Battle.net mode. The defendants did not dispute the
plaintiffs’ factual assertions, but instead asserted the defense of Sections 1201(f)(2)-(3) on the
ground that those sections entitled them to distribute software to others for the purpose of
enabling interoperability with the Blizzard games.881 The court rejected the defenses on two
grounds. First, the court ruled that the defendants’ purpose in distributing their software was not
solely to enable interoperability, but rather to “avoid the restricted access to Battle.net.”882 In
addition, the court reiterated its conclusion that the development and distribution of the bnetd
software was infringing, and “persons who commit copyright infringement cannot benefit from
the exemptions of § 1201(f).”883 Accordingly, the court granted the plaintiffs’ motion for
summary judgment on their anti-circumvention and trafficking in anti-circumvention technology
claims.884
On appeal, the Eight Circuit affirmed in an opinion that is even more terse and difficult to
understand than the district court’s opinion. The court found a violation of Section 1201(a)(1)
merely because unauthorized copies of Blizzard games were allowed to play through the bnetd
server, even though the circumvention of the secret handshake did not cause the illegal copy of
the Blizzard games to be made in the first place:
Blizzard games, through Battle.net, employed a technological measure, a software
“secret handshake” (CD key), to control access to its copyrighted games. The
bnetd.org emulator developed by Appellants allowed the Blizzard game to access
Battle.net mode features without a valid or unique CD key. As a result,
unauthorized copies of the Blizzard games were played on bnetd.org servers.885
880 334 F. Supp. 2d at 1185.
881 Id. at 1185-86.
882 Id. at 1186.
883 Id. at 1187.
884Id.
885 Davidson & Assocs. v. Jung, 422 F.3d 630, 640 (8th Cir. 2005). The Eighth Circuit distinguished the Lexmark
decision by noting that in Lexmark, the Sixth Circuit had found Lexmark’s authentication sequence did not
effectively control access to the Toner Loading Program and Printer Engine Program at issue, because it was
not Lexmark’s authentication sequence that controlled access to such programs, but rather the purchase of a
Lexmark printer that allowed access to the programs. “Here, Battle.net’s control measure was not freely
available. Appellants could not have obtained a copy of Battle.net or made use of the literal elements of
Battle.net mode without acts of reverse engineering, which allowed for a circumvention of Battle.net and
Battle.net mode. Unlike in Lexmark Int’l, Inc., Battle.net mode codes were not accessible by simply purchasing
a Blizzard game or logging onto Battle.net, nor could data from the program be translated into readable source
code after which copies were freely available without some type of circumvention.” Id. at 641. Although the
preceding passage is confusing, it seems to imply (by the reference to “literal elements of Battle.net mode”) that
- 211 -
The court also ruled that the anti-trafficking provisions of Section 1201(a)(2) had been violated
because the bnetd.org emulator had as its sole purpose “to avoid the limitations of Battle.net.”886
With respect to the Section 1201(f) defense asserted by the defendants, the Eighth Circuit
generalized all subsections of Section 1201(f) into one set of requirements as follows:
To successfully provide the interoperability defense under § 1201(f), Appellants
must show: (1) they lawfully obtained the right to use a copy of a computer
program; (2) the information gathered as a result of the reverse engineering was
not previously readily available to the person engaging in the circumvention; (3)
the sole purpose of the reverse engineering was to identify and analyze those
elements of the program that were necessary to achieve interoperability of an
independently created computer program with other programs; and (4) the alleged
circumvention did not constitute infringement.887
In a very confusing portion of its opinion, the court then ruled that the exemption of
Section 1201(f) was not available to the defendants because their circumvention constituted
infringement. Precisely what that “infringement” was is unclear, although the court seems to
base its holding on the fact that infringement by third parties was encouraged because pirated
copies of Blizzard games could be played in multi-player mode through the bnetd server (even
though the circumvention at issue did not cause or allow the pirated copies of the Blizzard games
to be made in the first instance):
As detailed earlier, Blizzard’s secret handshake between Blizzard games and
Battle.net effectively controlled access to Battle.net mode within its games. The
purpose of the bnetd.org project was to provide matchmaking services for users of
Blizzard games who wanted to play in a multi-player environment without using
Battle.net. The bnetd.org emulator enabled users of Blizzard games to access
Battle.net mode features without a valid or unique CD key to enter Battle.net.
The bnetd.org emulator did not determine whether the CD key was valid or
currently in use by another player. As a result, unauthorized copies of the
Blizzard games were freely played on bnetd.org servers. Appellants failed to
establish a genuine issue of material fact as to the applicability of the
interoperability exception.888
Based on these terse and confusing rulings, the court affirmed summary judgment in
favor of the plaintiffs.889
the secret handshake controlled access to some Battle.net code within the Blizzard game itself. The Court’s
reference to “Battle.net” seems to be referring to the Battle.net server software.
886Id.
887 Id. at 641-42.
888 Id. at 642.
889 Id.
- 212 -
(vi) Sony Computer Entertainment America v. Divineo
In Sony Computer Entertainment America, Inc. v. Divineo,890 the court ruled that
downstream lawful or fair uses of a circumvention device, including use to exercise Section
1201(f) rights, did not relieve the defendant from liability for trafficking in such devices under
the DMCA. For a discussion of the details of the facts and rulings of the court, see Section
II.G.1(b)(3) above.
(8) Encryption Research
Section 1201(g) provides that it is not a violation of the regulations prohibiting
circumventing a technological measure if such circumvention is done as an act of good faith
“encryption research.” “Encryption research” is defined as “activities necessary to identify and
analyze flaws and vulnerabilities of encryption technologies applied to copyrighted works, if
these activities are conducted to advance the state of knowledge in the field of encryption
technology or to assist in the development of encryption products.” “Encryption technology” is
defined as “the scrambling and descrambling of information using mathematical formulas or
algorithms.” Sections 1201(g)(2)(C) and (D) require, however, that the person have made a
good faith effort to obtain authorization before the circumvention, and that such acts not
otherwise constitute a copyright infringement or violate other applicable law. Section 1201(g)(5)
required that a report be generated to Congress on encryption technologies, with legislative
recommendations (if any), not later than one year after enactment of the bill.
(9) Protection of Minors
Section 1201(h) provides that a court, in applying the prohibitions of Section 1201(a)
against the manufacture or trafficking in a component or part designed to circumvent
technological measures, may consider the necessity of such component or part for its intended
and actual incorporation into a product whose sole purpose is to prevent the access of minors to
material on the Internet.891
(10) Protection of Personally Identifying Information
Section 1201(i) provides that it is not a violation of the Section 1201(a)(1)(A) prohibition
on circumventing a technological measure if such measure, or the work it protects, is capable of
collecting or disseminating personally identifying information reflecting the online activities of a
natural person who seeks to gain access to the work protected, or if the measure in the normal
course of its operation or the work it protects, collects or disseminates personally identifying
information about the person who seeks to gain access to the work, without providing
conspicuous notice of such collection or dissemination to such person and the capability to
890 547 F. Supp. 2d 957 (N.D. Cal. 2006).
891 An earlier version of H.R. 2281 would have expanded this exception to also allow a parent to circumvent a
technological measure controlling access to a test or evaluation of that parent’s minor child’s abilities by a
nonprofit educational institution if the parent attempted to obtain authorization before the circumvention and the
circumvention was necessary to obtain a copy of the test or evaluation.
- 213 -
prevent or restrict the same, and the circumvention is carried out solely to prevent such collection
or dissemination. If a technological measure is disclosed to a user as not being capable of
collecting or disseminating personally identifying information, then the exception of Section
1201(i) does not apply.
(11) Security Testing
Section 1201(j) provides that it is not a violation of the prohibitions of Sections
1201(a)(1)(A) and 1201(a)(2) if a person is engaged in “security testing,” which is defined to
mean accessing a computer, computer system, or computer network solely for the purpose of
good faith testing, investigating or correcting a security flaw or vulnerability with the
authorization of the owner or operator, provided that such act does not otherwise constitute a
violation of applicable law (including the Computer Fraud and Abuse Act of 1986).
(12) Copy Restrictions To Be Built Into VCRs and Camcorders
Section 1201(k) dictates that certain technological capabilities be built into consumer
analog video cassette recorders (VCRs) and camcorders (professional analog video cassette
recorders are exempted) to protect certain analog television programming and prerecorded
movies. Specifically, effective 18 months after enactment of the DMCA, most formats of
consumer analog892 VCRs and camcorders must contain one of two forms of copy control
technology in wide use in the market today – either the “automatic gain control technology”
(which causes distortion in the images upon playback) or the “colorstripe copy control
technology” (which causes distracting visible color stripes to appear through portions of the
viewable picture in normal viewing mode). Effective immediately, Section 1201(k) also
prohibits tampering with these analog copy control technologies to render them ineffective. The
Conference Report accompanying H.R. 2281893 states that Congress intended this Section to
prohibit the manufacture and sale of “black box” devices and software “hacking” that defeat
these copy control technologies.
Section 1201(k) defines certain specific encoding rules that such devices must implement
in order to preserve the capability to perform long-standing consumer home taping practices.
Specifically, such devices cannot limit the copying of traditional broadcasts of programming
through basic or extended basic tiers of programming services, although they may limit the
copying of pay-per-view, near video-on-demand or video-on-demand transmission, or content
stored on prerecorded media, as well the making of second generation copies where the original
transmission was through a pay television service (such as HBO, Showtime or the like).
892 Page 68 of the Conference Report states, “The conferees also acknowledge that numerous other activities are
underway in the private sector to develop, test, and apply copy control technologies, particularly in the digital
environment. Subject to the other requirements of this section, circumvention of these technologies may be
prohibited under this Act.”
893 H.R. Rep. No. 105-796, at 78 (1998).
- 214 -
(13) Other Cases Filed Under the Anti-Circumvention
Provisions
Several other anti-circumvention cases have been filed under the DMCA:
(i) Sony Computer Entertainment, Inc. v. Connectix,
Inc.
On Jan. 27, 1999, Sony Computer Entertainment, Inc. and its U.S. subsidiary Sony
Computer Entertainment America, manufacturers and distributors of the Sony PlayStation, filed
suit against Connectix, Inc., a company that had developed a software emulator called the
“Virtual Game Station” that would enable video games written for the PlayStation to run on
Apple computers. In order to create the emulator, Connectix disassembled and reverse
engineered the PlayStation’s operating system. The plaintiff’s complaint included claims for
copyright infringement, trademark dilution, and circumvention of technological protection
measures.894
The circumvention claim was based on the fact that the PlayStation and its video games
each contain embedded technological measures to prevent counterfeit games from running on the
PlayStation, and the alleged fact that Connectix’s emulator software did not contain such
technological measures, thus enabling counterfeit games to run on it. The plaintiffs contended
that omission of the PlayStation’s technological measures constituted an unlawful circumvention
of those measures. In its opposition to the plaintiffs’ motion for a temporary restraining order,
Connectix asserted that its emulator did in fact implement the PlayStation’s technological
measures and could not run counterfeit games. Thus, the alleged factual predicate on which the
plaintiffs based their circumvention claim was apparently missing. On Feb. 4, 1999, the district
court judge denied the plaintiffs’ motion for a temporary restraining order.895
Even if Connectix’s emulator software did not contain the technological measures of the
PlayStation, the plaintiffs’ circumvention claim appears to be flawed for several reasons. First,
the DMCA’s prohibition under Section 1201(a)(1) on circumvention of technological measures
controlling access was not yet in effect at the time the complaint was filed, and the DMCA
contains no prohibition on the act of circumventing copy controls. Second, Connectix’s
emulator did not actively “circumvent” anything in the games it could run. At most, it simply
allegedly operated regardless of whether the video games contained the authentication signals
required by the PlayStation (i.e., it allegedly ignored the authentication signal of the
PlayStation). But Section 1201(c)(3) provides that Section 1201 does not require a computing
product to “provide for a response to any particular technological measure,” so long as the
product is not primarily designed or produced for the purpose of circumventing a technological
measure or has only limited commercially significant purposes or uses other than the same.
Because the Connectix emulator was not primarily designed to circumvent technological
894 See Band & Issihiki, supra note 847, at 8.
895 Id. at 8-9. On appeal, the Ninth Circuit ultimately held that Connectix’s reverse engineering of the Sony
Playstation fell within the fair use doctrine. See Sony Computer Entertainment, Inc. v. Connectix Corp., 203
F.3d 596 (9th Cir. 2000). The Ninth Circuit’s opinion did not address the DMCA issues.
- 215 -
measures, but rather to run legitimate PlayStation games, it should probably fall within the
savings clause of Section 1201(c)(3).896
(ii) RealNetworks, Inc. v. Streambox Inc.
On Dec. 20, 1999, RealNetworks, Inc., the developer and distributor of various versions
of the “RealPlayer,” which embodied “streaming” technology that allowed Internet users to
obtain real-time delivery and instant playback of audio and video content over the Internet,
brought suit against Streambox, Inc.897 RealNetworks’ products embodied anti-piracy
technology. Specifically, RealNetworks supplied copyright holders with a product known as
“RealProducer,” which converted ordinary audio and video files into digitized “RealAudio” and
“RealVideo” files. RealNetworks also offered a “RealServer” product to copyright holders that
allowed them to distribute their copyrighted material in a secure format designed to interact only
with RealPlayers to further prevent unauthorized access to copyrighted content.898
RealNetworks based its complaint on the following three products developed and
distributed by Streambox:
“Streambox Ripper,” which converted any RealAudio file to a file in the format of
Windows Media Audio (WMA), MPEG-Layer 3 (MP3), or Microsoft Windows
Wave Format (WAV). Once in any of these three formats, an audio file could be
copied, stored, or freely distributed, thereby circumventing RealNetworks’ security
measures.899
“Streambox VCR,” which mimicked a RealPlayer, tricking RealServers into interacting
with it and distributing both RealAudio and RealMedia files to it, thereby also
circumventing the RealNetworks’ security measures.900
“Streambox Ferret,” which was supposedly designed to work with and enhance the
functionality of RealPlayers. RealNetworks alleged, however, that Streambox Ferret
replaced the “snap.com” search engine on the RealPlayer’s search bar with a
“Streambox” logo that diverted those using the RealPlayer’s search function from
Snap’s search services (with whom RealNetworks had an exclusive arrangement) to a
competing service operated by Streambox. In addition, RealNetworks alleged that
896 Band & Issihiki, supra note 847, at 8-9.
897 Complaint for Violation of The Digital Millennium Copyright Act, Contributory, Vicarious and Direct
Copyright Infringement, Tortious Interference with Contract, and Lanham Act Violations, RealNetworks, Inc.
v. Streambox Inc., No. C99-2070Z (W.D. Wa. Dec. 20, 1999), available as of Dec. 30, 1999 at
www.realnetworks.com/company/pressroom/pr/99/rnwk_complaint.html.
898 Id. ¶ 6.
899 Id. ¶¶ 12-13.
900 Id. ¶¶ 17-19.
- 216 -
Streambox Ferret corrupted completely the search functionality of the more recent
versions of the RealPlayer.901
RealNetworks alleged, among other things, that (i) by circumventing RealNetworks’
technological measures that protect the rights of copyright owners to control whether an end-user
can copy and distribute copyright owners’ works, both Streambox Ripper and Streambox VCR
violated Section 1201(b) of the DMCA,902 and (ii) because the installation of Streambox Ferret
modified the graphical user interface and computer code of RealPlayer, thereby creating an
unauthorized derivative work, Streambox’s distribution of Streambox Ferret made it
contributorily liable for copyright infringement, as well as vicariously liable, since Streambox
allegedly controlled and profited from the infringement.903
In a decision issued Jan. 18, 2000, the court entered a preliminary injunction against
Streambox, enjoining the manufacturing and distribution of Streambox VCR and Streambox
Ferret, but not of Streambox Ripper.904 This case raised three important procedural issues with
respect to the DMCA. First, the case raised the interesting issue of who has standing to invoke
the remedies of the DMCA – specifically, whether RealNetworks should be considered a proper
party to bring the lawsuit, since the material that Streambox Ripper and Streambox VCR placed
into a different file format (i.e., allegedly circumvented a protection measure for) was
copyrighted, not by RealNetworks, but by its customers. As discussed further below, Section
1203 of the DMCA provides: “Any person injured by a violation of section 1201 or 1202 may
bring a civil action in an appropriate United States district court for such violation.”
Significantly, the reference to “any person” suggests that Section 1203 does not limit its scope to
the copyright owner of the material with respect to which a technological protection measure has
been circumvented, and the court so held. Specifically, the court ruled that RealNetworks had
standing to pursue DMCA claims under Section 1203 based on the fact that it affords standing to
“any person” allegedly injured by a violation of Section 1201 and 1202 of the DMCA.905
Second, the case raised the issue of what type of “injury” a plaintiff must show under
Section 1203. Neither Section 1203 itself nor the legislative history illuminate this issue. In the
instant case, RealNetworks was apparently relying on the argument that, because its customers
were potentially injured by Streambox’s violation of Section 1201(b), RealNetworks itself was
also injured. Although the court did not explicitly address this issue, by issuing a preliminary
injunction, it implicitly accepted that RealNetworks was exposed to injury cognizable by the
DMCA.
901 Id. ¶¶ 22-24.
902 Id. ¶¶ 33-35 & 41-43.
903 Id. ¶¶ 48-49.
904 RealNetworks, Inc. v. Streambox Inc., 2000 U.S. Dist. LEXIS 1889 (W.D. Wa. 2000).
905 Id. at *15-16. This holding is consistent with CSC Holdings, Inc. v. Greenleaf Electronics, Inc., 2000 U.S. Dist.
LEXIS 7675 (N.D. Ill. 2000). In that case the plaintiff was a cable provider bringing suit against defendants
under the DMCA for selling and distributing pirate cable descrambling equipment. The court held that the
plaintiff was authorized to bring suit under Section 1203(a), as it was a person injured by a violation of the
DMCA.
- 217 -
Third, the case raised the issue of whether a plaintiff who demonstrates a likelihood of
success on the merits of claims under Section 1201 of the DMCA is entitled to a presumption of
irreparable harm for purposes of a preliminary injunction, as would be the case in a showing of
likely success on a claim for copyright infringement. The court noted that this must be
considered an open issue: “Because the DMCA is a recently-enacted statute, there appears to be
no authority holding that a plaintiff seeking a preliminary injunction who shows a reasonable
likelihood of success on a claim arising under section 1201 of the DMCA is entitled to a
presumption of irreparable harm.”906 Accordingly, the court considered in each instance whether
Streambox’s violations of the DMCA were likely to cause irreparable harm.
Turning to the plaintiff’s claims under the anti-circumvention provisions of the DMCA,
the court noted that RealNetworks’ products embodied two technological measures to control
against unauthorized access or copying of content. First, a “Secret Handshake” – an
authentication sequence that only RealServers and RealPlayers knew – ensured that files hosted
on a RealServer could be sent only to a RealPlayer. Second, a “Copy Switch” was used, which
was a piece of data in all RealMedia files that contained the content owner’s preference
regarding whether or not the stream could be copied by end users.907 RealPlayers were designed
to read the Copy Switch and obey the content owner’s wishes.
The court ruled that the Secret Handshake constituted a technological measure that
effectively controlled access to copyrighted works within the meaning of Section 1201(a)(3)(B),
and that the Copy Switch constituted a technological measure that effectively protected the right
of a copyright owner to control the unauthorized copying of its work within the meaning of
Section 1201(b)(2)(B). The court concluded that, because Streambox VCR was primarily
designed to bypass the Secret Handshake and circumvent the Copy Switch (and had only limited
commercially significant purposes beyond the same), Streambox VCR violated Sections
1201(a)(2) and 1201(b) of the DMCA.908
The court rejected Streambox’s defense that Streambox VCR allowed consumers to make
“fair use” copies of RealMedia files under the Supreme Court’s decision in Sony Corp. v.
Universal City Studios, Inc.909 The court distinguished the Sony case on the ground that, in
Sony, the Supreme Court based its holding on the fact that video cassette recorders were mostly
used by consumers for “time shift” viewing of programs, rather than the redistribution of perfect
digital copies of audio and video files, and that substantial numbers of copyright holders who
broadcast their works either had authorized or would not object to having their works timeshifted
by private viewers. In the instant case, the court noted, copyright owners had specifically
chosen to prevent the copying enabled by the Streambox VCR by putting their content on
RealServers and leaving the Copy Switch off.910
906 RealNetworks, 2000 U.S. Dist. LEXIS 1889 at *17.
907 Id. at *6.
908 Id. at *19-21.
909 464 U.S. 417 (1984).
910 RealNetworks, 2000 U.S. Dist. LEXIS at *21-22.
- 218 -
In addition, the court, citing Nimmer’s copyright treatise, ruled that, by passage of the
DMCA, Congress had decided that “those who manufacture equipment and products generally
can no longer gauge their conduct as permitted or forbidden by reference to the Sony doctrine.
For a given piece of machinery might qualify as a stable item of commerce, with a substantial
noninfringing use, and hence be immune from attack under Sony’s construction of the Copyright
Act – but nonetheless still be subject to suppression under Section 1201.”911 The court also
rejected Streambox’s asserted defense under Section 1201(c)(3) of the DMCA, which it cited for
the proposition that the Streambox VCR was not required to respond to the Copy Switch. The
court noted that this argument failed to address Streambox VCR’s circumvention of the Secret
Handshake, which was enough by itself to create liability under Section 1201(a)(2).912
Turning to the Streambox Ripper product, the court ruled that the plaintiff had not
established a reasonable likelihood of success on its DMCA claim. RealNetworks maintained
that the primary purpose and only commercially significant use for the Ripper was to enable
consumers to prepare unauthorized derivative works of copyrighted audio or video content. The
court rejected this argument, noting that the Ripper has legitimate and commercially significant
uses to enable content owners, including copyright holders and those acquiring content with the
content owner’s permission, to convert their content from the RealMedia format to other formats.
Moreover, there was little evidence that content owners use the RealMedia format as a
“technological measure” to prevent end users from making derivative works. In any case, the
court found that RealNetworks had not introduced evidence that a substantial number of content
owners would object to having end users convert RealMedia files that they legitimately obtained
into other formats, or that Ripper would cause injury to RealNetworks.913
Finally, the court ruled that the plaintiff was entitled to a preliminary injunction with
respect to Streambox Ferret. RealNetworks claimed that Streambox committed contributory or
vicarious copyright infringement by distributing the Ferret to the public, because consumers who
used the Ferret as a plug-in were making an unauthorized derivative work of the RealPlayer by
changing the RealPlayer user interface to add a clickable button that permitted the user to access
the Streambox search engine, rather than the Snap search engine. Although the court stated that
it was not persuaded that RealNetworks had demonstrated that it was likely to succeed on its
contributory/vicarious infringement claims on this basis, the court concluded that RealNetworks
had raised serious questions going to the merits of its claims, and the balance of hardships clearly
favored RealNetworks, because the addition of the alternative search engine afforded by the
Ferret jeopardized RealNetworks’ exclusive relationship with Snap.914
In September of 2000, the parties settled the lawsuit pursuant to an agreement in which
Streambox agreed to modify Streambox Ripper so that it no longer transformed RealMedia
streams into other formats, to modify Streambox VCR so that it respected RealNetworks’ copy
911 Id. at *23 (quoting 1 M. Nimmer & D. Nimmer, Nimmer on Copyright (1999 Supp.) § 12A.18[B]).
912 RealNetworks, 2000 U.S. Dist. LEXIS at *23.
913 Id. at *27-28.
914 Id. at *30-33.
- 219 -
protection features, to license RealNetworks’ software development kit (which would allow
Streambox to create versions of its products that worked with RealNetworks’ copy protection
technology), to stop distributing Streambox Ferret, and to pay an undisclosed sum of money.915
(iii) Universal City Studios, Inc. v. Reimerdes
In this case, the plaintiffs were copyright holders who distributed motion pictures
encoded in a proprietary system for the encryption and decryption of data contained on digital
versatile disks (DVDs) known as the Content Scramble System (CSS). The CSS technology was
licensed to manufacturers of DVDs, who used it to encrypt the content of copyrighted motion
pictures distributed in the DVD format. The plaintiffs filed suit under the DMCA against various
defendants whom the plaintiffs alleged violated the anti-circumvention provisions of the DMCA
by posting on their websites the source code of a program named “DeCSS,” which was able to
defeat DVD encryption using the CSS technology and enable viewing of DVD movies on
unlicensed players and the making of digital copies of DVD movies.916 The plaintiffs sought a
preliminary and permanent injunction to prevent the defendants from posting DeCSS on their
Web site and from linking their site to others that posted DeCSS.917
On Jan. 20, 2000, the court entered a preliminary injunction against the defendants,
restraining them from posting on any website or otherwise making available DeCSS or any other
technology, product or service primary designed or produced for the purpose of, or having only
limited commercially significant purposes or use other than, circumventing CSS, or marketed by
defendants or others acting in concert with them for use in circumventing CSS.918 In an opinion
issued Feb. 2, 2000, the court set forth its findings of fact and conclusions of law supporting the
preliminary injunction.919
On Aug. 17, 2000, after a bench trial, the court issued a permanent injunction against the
defendants.920 The court ruled that DeCSS was clearly a means of circumventing CSS, a
technological access control measure, that it was undisputed that DeCSS was designed primarily
to circumvent CSS, and therefore that DeCSS constituted a prima facie violation of Section
1201(a)(2).921 The court rejected the defendants’ argument that CSS did not “effectively
control” access to the plaintiffs’ copyrighted works because it was based on a 40-bit encryption
915 “Early DMCA Lawsuit Settled, Streambox Will Modify Products to Prevent Digital Copying,” BNA’s
Electronic Commerce & Law Report (Oct. 11, 2000) at 1019.
916 Universal City Studios Inc. v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y. 2000).
917 Id. at 303.
918 Preliminary Injunction, Universal City Studios, Inc. v. Reimerdes, No. 00 Civ. 0277 (LAK) (S.D.N.Y. Jan. 20,
2000) ¶ 2.
919 Universal City Studios, Inc. v. Reimerdes, 82 F. Supp. 2d 211 (S.D.N.Y. 2000).
920 Universal City Studios Inc. v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y. 2000). An amended final judgment
was entered by the court on Aug. 23, 2001, enjoining the defendants from posting DeCSS on their web site and
from knowingly linking their web site to any other web site on which DeCSS was posted. Universal City
Studios Inc. v. Reimerdes, 111 F. Supp. 2d 346 (S.D.N.Y. 2000).
921 111 F. Supp. 2d at 317-19.
- 220 -
key, which the defendants argued was a weak cipher. The court noted that Section 1201(a)(3)(B)
provides that a technological measure “effectively controls access to a work” if it requires the
application of information or a process with the authority of the copyright owner to gain access
to a work. Because one cannot gain access to a CSS-protected work on a DVD without the
application of three keys that are required by the player software and are made available only
under license, CSS satisfied this definition. The court refused to import into the statute any
requirement for a technologically “strong means” of protection.922
The court also rejected the defendants’ argument that DeCSS was written to further the
development of a DVD player that would run under the Linux operating system, as there
allegedly were no Linux-compatible players on the market at the time. The court ruled that, even
if there were so, it would be immaterial to whether the defendants had violated Section
1201(a)(2) by trafficking in DeCSS.923 “The offering or provision of the program is the
prohibited conduct – and it is prohibited irrespective of why the program was written, except to
whatever extent motive may be germane to determining whether [the defendants’] conduct falls
within one of the statutory exceptions.”924
The court rejected a number of other defenses under the DMCA asserted by the
defendants. First, for the reasons set forth in Section II.G.1(g) above in the discussion of Section
1201(f), the court rejected the defendants’ argument that the reverse engineering exception of
Section 1201(f) was applicable.
Second, the defendants asserted the encryption research defense under Section 1201(g),
which requires a showing that the person asserting the defense lawfully obtained the encrypted
copy of the work being studied, the circumvention act at issue is necessary to conduct encryption
research, the person made a good faith effort to obtain authorization before the circumvention,
and the act does not constitute copyright infringement. The court held that the defendants had
failed to prove that any of them were engaged in good faith encryption research, nor was there
any evidence that the defendants made any effort to provide the results of the DeCSS effort to
the copyright owners (which Section 1201(g)(3) instructs the court to take into account in
assessing whether one is engaged in good faith encryption research), nor any evidence that any
of them made a good faith effort to obtain authorization from the copyright owners.925
Third, the defendants asserted the security testing defense under Section 1201(j). The
court rejected this defense, which is limited to “assessing a computer, computer system, or
computer network, solely for the purpose of good faith testing, investigating, or correcting [of a]
security flaw or vulnerability, with the authorization of the owner or operator,” because the
record did not establish that DeCSS has anything to do with testing computers, computer
922 Id. at 318. The court cited legislative history to the effect that a technological measure “effectively controls
access” to a copyrighted work merely if its function is to control access. Id. at 317-18.
923 Id. at 319.
924Id.
925 Id. at 320-21.
- 221 -
systems, or computer networks, and the defendants had not sought authorization for their
activities.926
Fourth, the defendants claimed that they were engaged in a fair use under Section 107 of
the copyright statute. The court categorically rejected this defense, noting that the defendants
were not being sued for copyright infringement, but rather for offering to the public technology
primarily designed to circumvent technological measures that control access to copyrighted
works.927 The court held that fair use is not a defense to Section 1201(a)(2) of the DMCA: “If
Congress had meant the fair use defense to apply to such actions, it would have said so. Indeed,
as the legislative history demonstrates, the decision not to make fair use a defense to a claim
under Section 1201(a) was quite deliberate.”928 The court noted that Congress had provided a
vehicle, in the form of rulemaking by the Register of Copyrights, by which particular classes of
copyrighted works could be exempted from the prohibitions if noninfringing uses of those
classes of works would be affected adversely by Section 1201(a)(1).929 The court also rejected
the defendants’ assertion that, because DeCSS could be used for noninfringing purposes, its
distribution should be permitted under Sony Corp. v. Universal City Studios, Inc.930 The court
elected to follow the holding in the RealNetworks case that a piece of technology might have a
substantial noninfringing use, and therefore be immune from attack under Sony, yet nonetheless
be subject to suppression under Section 1201.931
Finally, in one of the most novel aspects of the opinion, the court addressed the issue
whether the mere linking by the defendants to other Web sites on which DeCSS could be
obtained should be deemed to be offering to the public or providing or otherwise trafficking in
DeCSS within the prohibitions of Section 1201(a)(2). The court, noting that the dictionary
definitions of the words “offer,” “provide,” and “traffic” are broad, ruled that “the antitrafficking
provision of the DMCA is implicated where one presents, holds out or makes a
circumvention technology or device available, knowing its nature, for the purpose of allowing
others to acquire it.”932 Accordingly, the court enjoined the defendants from providing three
types of links:
926 Id. at 321.
927 Id. at 322.
928Id.
929 Id. at 323 The court, in a very lengthy analysis, also rejected various First Amendment challenges to the
constitutionality of the anti-circumvention provisions of the DMCA. See id. at 325-341.
930 464 U.S. 417 (1984).
931 Reimerdes, 111 F. Supp. 2d at 323. In the preliminary injunction proceeding, one of the defendants asserted a
defense under Section 512(c) of the DMCA, discussed below, which limits liability of “service providers” for
certain acts of infringement committed through systems or networks operated by them. The court rejected this
defense on the ground that Section 512(c) provides protection only from liability for copyright infringement,
and not for violations of the anti-circumvention provisions of Section 1201(a)(2). The court also ruled that the
defendant had offered no proof that he was a “service provider” within the meaning of Section 512(c). 82 F.
Supp. 2d at 217.
932 Reimerdes, 111 F. Supp. 2d at 325.
- 222 -
Links “to sites that automatically commence the process of downloading DeCSS upon a
user being transferred by defendants’ hyperlinks.” The court ruled that this was the
functional equivalent of the defendants transferring the DeCSS code themselves.933
Links “to web pages that display nothing more than the DeCSS code or present the user
only with the choice of commencing a download of DeCSS and no other content. The
only distinction is that the entity extending to the user the option of downloading the
program is the transferee site rather than defendants, a distinction without a
difference.”934
Links “to pages that offer a good deal of content other than DeCSS but that offer a
hyperlink for downloading, or transferring to a page for downloading, DeCSS,” based on
the given facts, in which the defendants had intentionally used and touted the links to
“mirror” sites to help others find copies of DeCSS, after encouraging sites to post DeCSS
and checking to ensure that the mirror sites in fact were posting DeCSS or something that
looked like it, and proclaimed on their own site that DeCSS could be had by clicking on
the links.935
On appeal, the defendants renewed their attack on the constitutionality of the DMCA. In
Universal City Studios Inc. v. Corley,936 the Second Circuit rejected such challenges and upheld
the constitutionality of the DMCA anti-circumvention provisions. The court first rejected the
defendants’ argument that Section 1201(c)(1) should be read narrowly to avoid ambiguity that
could give rise to constitutional infirmities. The defendants contended that Section 1201(c)(1)
could and should be read to allow the circumvention of encryption technology when the
protected material would be put to fair uses. The court disagreed that Section 1201(c)(1)
permitted such a reading. “Instead, it clearly and simply clarifies that the DMCA targets the
circumvention of digital walls guarding copyrighted material (and trafficking in circumvention
tools), but does not concern itself with the use of those materials after circumvention has
occurred.”937 The court held that, in any event, the defendants did not claim to be making fair
use of any copyrighted materials, and nothing in the injunction prohibited them from making
such fair use.938 “Fair use has never been held to be a guarantee of access to copyrighted
material in order to copy it by the fair user’s preferred technique of in the format of the
original.”939
The court ruled that computer programs are not exempted from the category of First
Amendment speech merely because their instructions require use of a computer. Rather, the
933Id.
934Id.
935Id.
936 273 F.3d 429 (2d Cir. 2001).
937 Id. at 443 (emphasis in original).
938 Id. at 459.
939Id.
- 223 -
ability to convey information renders the instructions of a computer program in source code form
“speech” for purposes of the First Amendment.940 However, the court held that the “realities of
what code is and what its normal functions are require a First Amendment analysis that treats
code as combining nonspeech and speech elements, i.e., functional and expressive elements.”941
Accordingly, the scope of First Amendment protection for the DeCSS code at issue was
limited.942
With this background, the court turned to a First Amendment analysis of the specific
prohibitions of the injunction. With respect to the prohibition against posting of the DeCSS
code, the court held that the prohibition was content neutral and was directed only toward the
nonspeech component of DeCSS – “[t]he DMCA and the posting prohibition are applied to
DeCSS solely because of its capacity to instruct a computer to decrypt CSS. That functional
capability is not speech within the meaning of the First Amendment.”943 Therefore, the contentneutral
posting prohibition, which had only an incidental effect on a speech component, would
pass muster if it served a substantial governmental interest unrelated to the suppression of free
expression, which the court found that it did.944
With respect to the prohibition against linking to other web sites posting DeCSS, the
court again noted that a link has both a speech and a nonspeech component. “It conveys
information, the Internet address of the linked web page, and has the functional capacity to bring
the content of the linked web page to the user’s computer screen.”945 And again, the court ruled
that the prohibition on linking was content neutral. “The linking prohibition applies whether or
not the hyperlink contains any information, comprehensible to a human being, as to the Internet
address of the web page being accessed. The linking prohibition is justified solely by the
functional capability of the hyperlink.”946 The court rejected the defendants’ argument that the
prohibition burdened substantially more speech than necessary to further the government’s
legitimate interest because it did not require an intent to cause harm by the linking, and that
linking could be enjoined only under circumstances applicable to a print medium. The court
found that the defendants’ arguments ignored the reality of the functional capacity of decryption
computer code and hyperlinks to facilitate instantaneous unauthorized access to copyrighted
940 Id. at 447.
941 Id. at 451.
942 Id. at 453.
943 Id. at 454.
944 Id. at 454-55. The court noted that it had considered the opinion of the California Court of Appeal in the
Bunner case, discussed in subsection e. below and that to “the extent that DVD Copy Control disagrees with our
First Amendment analysis, we decline to follow it.” Id. at 455 n.29. As noted in subsection e. below, the
Supreme Court of California subsequently reversed the California Court of Appeal decision.
945 Id. at 456.
946Id.
- 224 -
materials by anyone anywhere in the world. Accordingly, “the fundamental choice between
impairing some communication and tolerating decryption cannot be entirely avoided.”947
Having rejected all constitutional challenges to the district court’s injunction, the Second
Circuit affirmed the district court’s final judgment.948 The defendants decided not to appeal the
case further to the Supreme Court.949
(iv) A Related DVD Case Involving Trade Secret Claims
– DVD Copy Control Association, Inc. v. McLaughlin (the Bunner case)
This case,950 although initially filed in state court alleging only misappropriation of trade
secrets, presented another fact pattern amenable to a claim under the anti-circumvention
provisions of the DMCA. The plaintiff in that case, DVD Copy Control Association, Inc. (DVD
CCA), was the sole licensor of CSS.951 The plaintiff alleged that various defendants had
misappropriated trade secrets in CSS by posting on their websites proprietary information
relating to how the CSS technology functions, the source code of DeCSS, and/or providing links
to other websites containing CSS proprietary information and/or the DeCSS program.952
On Dec. 29, 1999, the court denied an application by the plaintiff for a temporary
restraining order that would have required the defendants to remove the DeCSS program and
proprietary information from their websites, as well as links to other sites containing the same.953
However, on Jan. 21, 2000 (the day after the court in Reimerdes issued its preliminary injunction
under the DMCA), the judge reversed course and issued a preliminary injunction prohibiting the
defendants from “[p]osting or otherwise disclosing or distributing, on their websites or
elsewhere, the DeCSS program, the master keys or algorithms of the Content Scrambling System
(‘CSS’), or any other information derived from this proprietary information.”954
In its order, the court stated that the evidence was fairly clear that the trade secret was
obtained through reverse engineering, and acknowledged that reverse engineering is not
considered “improper means” of obtaining a trade secret under the Uniform Trade Secrets Act.
“The only way in which the reverse engineering could be considered ‘improper means’ herein
would be if whoever did the reverse engineering was subject to the click license agreement
947 Id. at 458.
948Id.
949 Lisa Bowman, “Copyright Fight Comes to an End” (July 3, 2002), available as of July 8, 2002 at
http://news.com.com/2102-1023-941685.html.
950 No. CV786804 (Santa Clara Superior Court, Dec. 27, 1999).
951 Id. ¶ 4.
952 Id. ¶¶ 1, 27-29, 45-50, 60-61.
953 Deborah Kong, “DVD Movie Fight Loses,” San Jose Mercury News (Dec. 30, 1999) at 1C.
954 Order Granting Preliminary Injunction, DVD Copy Control Assoc. v. McLaughlin (Sup. Ct., County of Santa
Clara, Jan. 21, 2000), available as of Jan. 19, 2002 at
www.eff.org/pub/Intellectual_property/Video/DVDCCA_case/20000120-pi-order.html.
- 225 -
which preconditioned installation of DVD software or hardware, and prohibited reverse
engineering. Plaintiff’s case is problematic at this pre-discovery state. Clearly they have no
direct evidence at this point that [defendant] Jon Johansen did the reverse engineering, and that
he did so after clicking on any licence [sic] agreement.”955 Nevertheless, without elaboration,
the court found that the “circumstantial evidence, mostly due to the various defendants’
inclination to boast about their disrespect for the law, is quite compelling on both the issue of
Mr. Johansen’s improper means [and] th[e] Defendants’ knowledge of impropriety.”956 The
court found that the harm to the defendants of the injunction would be minimal, while without
the injunction, “the Plaintiff’s right to protect this information as secret will surely be lost, given
the current power of the Internet to disseminate information and the Defendants’ stated
determination to do so.”957
The court rejected the defendants’ argument “that trade secret status should be deemed
destroyed at this stage merely by the posting of the trade secret to the Internet. To hold
otherwise would do nothing less than encourage misappropriators of trade secrets to post the
fruits of their wrongdoing on the Internet as quickly as possible and as widely as possible,
thereby destroying a trade secret forever. Such a holding would not be prudent in this age of the
Internet.”958 The court refused, however, to extend the injunction to links to other websites
where DeCSS was posted. The court warned that a ban on Internet links would be “overbroad
and burdensome,” calling links “the mainstay of the Internet and indispensable to its convenient
access to the vast world of information. A website owner cannot be held responsible for all of
the content of the sites to which it provides links.”959
In November 2001, a California Court of Appeal reversed the injunction on First
Amendment grounds. In DVD Copy Control Assoc. v. Bunner,960 the court acknowledged that,
if the trial court correctly concluded that the plaintiffs had established a reasonable probability of
success, a preliminary injunction would be justified in the absence of any free speech concerns.
Nevertheless, the court found that the preliminary injunction could not withstand First
Amendment scrutiny. The court ruled that DeCSS was “speech” within the scope of the First
Amendment because “[r]egardless of who authored the program, DeCSS is a written expression
of the author’s ideas and information about decryption of DVDs without CSS.”961 The court
then held that republication of DeCSS by defendant Bunner962 was “pure speech within the ambit
955 Id. at 2.
956 Id. at 2-3.
957 Id. at 3.
958Id.
959 Id. at 4.
960 60 U.S.P.Q.2d 1803 (Cal. Ct. App. 2001).
961 Id. at 1809.
962 According to Bunner, defendant Jon Johansen actually reverse engineered the CSS software and Bunner merely
republished it. He argued that he had no reason to know that DeCSS had been created by improper use of any
proprietary information since the reverse engineering of CSS performed by Johansen was not illegal under
Norwegian law. Id. at 1805-06.
- 226 -
of the First Amendment” and that the preliminary injunction therefore constituted an unlawful
prior restraint.963 “[A] person who exposes the trade secret may be liable for damages if he or
she was bound by a contractual obligation to safeguard the secret. And anyone who infringes a
copyright held by [the plaintiff] of by an DVD content provider may be subject to an action
under the Copyright Act. We hold only that a preliminary injunction cannot be used to restrict
Bunner from disclosing DeCSS.”964
On appeal, the California Supreme Court reversed the California Court of Appeal’s
decision, ruling that the trial court’s preliminary injunction did not violate the First
Amendment.965 Although the Court held that restrictions on the dissemination of computer code
were subject to scrutiny under the First Amendment because the code was a means of expressing
ideas,966 it found that the preliminary injunction passed scrutiny, assuming the trial court
properly issued the injunction under California’s trade secret law, because it was content neutral
(and therefore not subject to strict scrutiny) and achieved the requisite balance of interests by
burdening no more speech than necessary to serve the government interests at stake.967 The
Court emphasized that its holding was “quite limited,” and that its ruling that the preliminary
injunction did not violate the free speech clauses of the United States and California
Constitutions was based on the assumption that the trial court properly issued the injunction
under California’s trade secret law. “On remand, the Court of Appeal should determine the
validity of this assumption.”968
On remand, the California Court of Appeal held that the preliminary injunction was not
warranted under California trade secret law because DeCSS had been so widely distributed on
the Internet that it was no longer a trade secret.969 At the time of the hearing in the trial court for
a preliminary injunction, the evidence showed that DeCSS had been displayed on or linked to at
least 118 Web pages in 11 states and 11 countries throughout the world and that approximately
93 Web pages continued to publish information about DeCSS. Subsequent to the filing of the
law suit, a campaign of civil disobedience began among the programming community to spread
the DeCSS code as widely as possible. Persons distributed the code at the courthouse, portions
of it appeared on tee shirts, and contests were held encouraging people to submit ideas about
how to disseminate the information as widely as possible.970
The court stated, “Publication on the Internet does not necessarily destroy the secret if the
publication is sufficiently obscure or transient or otherwise limited so that it does not become
963 Id. at 1811.
964 Id. at 1812.
965 DVD Copy Control Ass’n v. Bunner, 31 Cal.4th 864 (2003).
966 Id. at 876.
967 Id. at 877-85.
968 Id. at 889.
969 DVD Copy Control Ass’n Inc. v. Bunner, 116 Cal. App. 4th 241 (6th Dist. 2004).
970 Id. at 248-49.
- 227 -
generally known to the relevant people, i.e., potential competitors or other persons to whom the
information would have some economic value.”971 However, in the instant case, the court held
that the evidence in the case demonstrated that DeCSS had been published to “a worldwide
audience of millions” and “the initial publication was quickly and widely republished to an eager
audience so that DeCSS and the trade secrets it contained rapidly became available to anyone
interested in obtaining them.”972 Accordingly, the plaintiff had not established a likelihood of
success on its trade secret claim because DeCSS had been so widely published that the CSS
technology “may have lost its trade secret status.”973
In a related DeCSS case involving jurisdictional issues, defendant Matthew Pavlovich, a
Texas resident who posted DeCSS on the web, was sued by the movie industry in California. A
state judge granted an injunction against his posting of DeCSS on trade secret grounds. The
California Supreme Court ruled that Pavlovich could not be sued in California because he did not
have substantial ties to the state. In January of 2004, the U.S. Supreme Court reversed an
emergency stay of the California Supreme Court’s decision and lifted the injunction. Justice
O’Connor noted in the order that there was no need to keep DeCSS a secret.974
(v) A Related DVD Case – Norwegian Prosecution of
Jon Johansen
In January 2002, Norwegian prosecutors brought criminal charges against Jon Johansen,
one of the original three authors of the DeCSS program, for violating Norwegian hacking
laws.975 On Jan. 11, 2002, the civil rights organization Electronic Frontier Norway (EFN) issued
a press release calling for Johansen’s acquittal and full redress.976 After a trial, a three-judge
court in Oslo acquitted Johansen, ruling that consumers have rights to view legally obtained
DVD films “even if the films are played in a different way than the makers had foreseen.” On
appeal, Johansen was again acquitted.977
(vi) Another Challenge to the DMCA – The Felten Case.
During 2000, the Secure Digital Music Initiative (SDMI) offered a cash prize to anyone
who could break its watermark encryption scheme for the protection of digital content. A team
of scientists, led by Prof. Edward Felten of Princeton University, was able to crack the scheme
971 Id. at 251.
972 Id. at 252-53.
973 Id. at 255.
974 Samantha Chang, “Supreme Court Unscrambles DVD Decision” (Jan. 17, 2004), available as of Jan. 19, 2004
at www.reuters.com/newsArticle.jhtml?type=musicNews&storyID=4152687.
975 Declan McCullagh, “Norway Cracks Down on DVD Hacker” (Jan. 10, 2002), available as of Jan. 19, 2002 at
www.wired.com/news/politics/0,1283,49638,00.html.
976 The press release was available as of Jan. 19, 2002 at www.efn.no/freejon01-2002.html.
977 “Court Surprised DVD-Jon’s Lawyer” (Dec. 22, 2003), available as of Dec. 22, 2003 at
www.aftenposten.no/english/local/article.jhtml?articleID=696470.
- 228 -
and desired to publish a paper on how they were able to do it. The RIAA threatened Prof. Felten,
contending that publication of the paper would violate the anti-circumvention provisions of the
DMCA. As a result of the threats, Prof. Felten withdrew publication of his paper from an April
2001 conference. In June 2001, he and seven other researchers, together with the Usenix
Association (a professional organization that had accepted Felten’s paper for a security
symposium to be held during August 2001), filed a lawsuit against the RIAA, seeking a
declaration that publication of their work would not violate the DMCA, and against the Justice
Department to block it from prosecuting the symposium organizers for allowing the paper to be
presented.978 On Nov. 28, 2001, a district judge in New Jersey dismissed the lawsuit, apparently
concluding that neither the RIAA nor the Justice Department had imminent plans to seek to stop
Prof. Felten from publishing his findings.979 Citing assurances from the government, the RIAA,
and the findings of the district judge, in Feb. of 2002, Prof. Felten and his research team decided
not to appeal the dismissal of their case.980
(vii) Pearl Investments, LLC v. Standard I/O, Inc.
In this case, Pearl hired Standard to perform software programming services to develop
an automated stock-trading system (ATS). After completion of ATS, an employee of Standard
named Chunn who had helped develop ATS, working on his own time, created software for his
own experimental automated trading system, which he maintained on a server separate from the
server that Pearl’s ATS system was operating on, although Chunn’s server was hosted by the
same service provider as Pearl’s ATS system.981 Pearl’s ATS system operated on a virtual
private network (VPN) that contained access restrictions implemented through a special router to
the VPN.982 At one point, Pearl requested the service provider to install Linux on its ATS server.
The service provider mistakenly installed Linux on Chunn’s server, which was plugged into
Pearl’s router. Pearl alleged that a “tunnel” (a secure connection) was configured in the router
that provided a connection between Chunn’s server and Pearl’s server, thereby allowing Chunn
to circumvent Pearl’s password-protected VPN and gain unauthorized access to its ATS system
running on the VPN, which included Pearl’s copyrighted software.983
Pearl brought claims against Standard and Chunn for, among other things, violation of
Section 1201(a)(1)(A) of the DMCA based on the alleged creation of the tunnel. Both the
plaintiff and the defendants sought summary judgment on the claim. The court ruled that
978 Declan McCullagh, “Code-Breakers Go to Court” (June 6, 2001), available as of Jan. 19, 2002 at
www.wired.com/news/mp3/0,1285,44344,00.html.
979 Robert Lemos, “Court Dismisses Free-Speech Lawsuit” (Nov. 28, 2001), available as of Jan. 19, 2002 at
http://news.cnet.com/news/0-1005-200-8010671.html.
980 Electronic Frontier Foundation press release, “Security Researchers Drop Scientific Censorship Case” (Feb. 6,
2002), available as of Feb. 10, 2002 at www.eff.org/IP/DMCA/Felten_v_RIAA/20020206_eff_felten_pr.html.
The government stated in documents filed with the court in Nov. 2001 that “scientists attempting to study
access control technologies” are not subject to the DMCA. Id.
981 Pearl Investments, LLC v. Standard I/O, Inc., 257 F. Supp. 2d 326, 339-40 (D. Me. 2003).
982 Id. at 342, 349.
983 Id. at 341-42 & n.36, 349.
- 229 -
Standard was entitled to summary judgment because the evidence was undisputed that Chunn, in
developing and operating his automated trading system, was acting solely on his own and not as
an employee of Standard. Standard could therefore not be held liable for his actions.984
The court, however, denied summary judgment to Chunn. First, the court ruled that
Pearl’s VPN was the “electronic equivalent” of a locked door that fit the definition of a
technological protection measure put in place by the copyright owner to control access to Pearl’s
copyrighted ATS software.985 The court rejected the argument that the VPN did not effectively
control Chunn’s access to the ATS system in view of the fact that he had written the ATS system
himself and maintained a backup file of it for Pearl. “The question of whether a technological
measure ‘effectively controls access’ is analyzed solely with reference to how that measure
works ‘in the ordinary course of its operation.’ 17 U.S.C. § 1201(a)(3)(B). The fact that Chunn
had alternative means of access to the works is irrelevant to whether the VPN effectively
controlled access to them.”986 Finally, the court ruled that because there was a factual dispute
about whether only employees of the service provider, rather than Chunn, had configured the
tunnel from Chunn’s server to the Pearl VPN, or whether Chunn had configured his server and
router to tunnel into Pearl’s network, Chunn was not entitled to summary judgment on the
DMCA claim.987
In a subsequent jury trial, the jury found for Chunn on Pearl’s DMCA claim.988
(viii) 321 Studios v. Metro Goldwyn Mayer Studios, Inc.
In this case, 321 Studios marketed and sold software called DVD Copy Plus, which was
capable of copying the video contents of a DVD, both encrypted and unencrypted with the
DeCSS encryption scheme, onto a recordable CD. 321 Studios sought a ruling that its software
did not violate the anti-circumvention provisions of the DMCA.989 The court ruled that the
software’s capability to decrypt DVDs encoded with CSS did violate the anti-circumvention
provisions. The court first rejected 321 Studios’ argument that CSS was not an effective
technological measure because the CSS access keys were widely available on the Internet. The
court held that “this is equivalent to a claim that, since it is easy to find skeleton keys on the
black market, a deadbolt is not an effective lock to a door.”990
984 Id. at 346-47, 349-50.
985 Id. at 350.
986Id.
987Id.
988 See Pearl Investments v. Standard I/O, Inc., 324 F. Supp. 2d 43 (2004) (rejecting Pearl’s claim that the jury’s
verdict in favor of Chunn on the DMCA claim was inconsistent with its conclusion that Chunn’s physical
hookup to the Pearl system caused damage to Pearl).
989 321 Studios v. Metro Goldwyn Mayer Studios, Inc., 307 F. Supp. 2d 1085, 1089-90 (N.D. Cal. 2004).
990 Id. at 1095.
- 230 -
With respect to the specific prohibition of Section 1201(a)(2), 321 Studios argued that it
had the authority of the copyright holder to decrypt DVDs protected by CSS because its product
worked only on original DVDs, and the purchaser of a DVD has the authority of the copyright
holder to bypass CSS to play the DVD. The court rejected this argument, citing Universal City
Studios, Inc. v. Corley991 for the proposition that purchase of a DVD does not authorize the
purchaser to decrypt CSS, but rather only to view the content on the DVD. Only a licensed DVD
player has the authority of the copyright holder to decrypt CSS and 321 Studios did not hold a
CSS license.992
With respect to the specific prohibition of Section 1201(b)(1), 321 Studios argued that
CSS was not a copy control measure because it controlled only access to content and did not
control or prevent copying of DVDs. The court rejected this argument, noting that while it was
technically correct that CSS controlled access to DVDs, “the purpose of this access control is to
control copying of those DVDs, since encrypted DVDs cannot be copied unless they are
accessed.”993 The court also rejected 321 Studios’ argument that the primary purpose of DVD
Copy Plus was not to violate rights of a copyright holder since the software could be used for
many purposes that did not involve accessing CSS or that involved making copies of material in
the public domain or under fair use principles. In a potentially very broad holding, the court held
that the downstream uses of DVD Copy Plus, whether legal or illegal, were irrelevant to
determining whether 321 Studios itself was violating the DMCA.994 “It is the technology itself at
issue, not the uses to which the copyrighted material may be put. This Court finds, as did both
the Corley and Elcom courts, that legal downstream use of the copyrighted material by
customers is not a defense to the software manufacturer’s violation of the provisions of §
1201(b)(1).”995
321 Studios also argued that its software did not violate Section 1201(b)(2) because it
used authorized keys to decrypt CSS. The court ruled that, “while 321’s software does use the
authorized key to access the DVD, it does not have authority to use this key, as licensed DVD
players do, and it therefore avoids and bypasses CSS.”996
Finally, 321 Studios argued that, under the common requirement of both Sections
1201(a)(2) and 1201(b)(1), its DVD Copy Plus software was not primarily designed and
produced to circumvent CSS, but rather was designed and produced to allow users to make
copies of all or part of a DVD, and that the ability to unlock CSS was just one of the features of
its software. The court rejected this argument, noting that Sections 1201(a)(2) and 1201(b)(1)
both prohibit any technology or product “or part thereof” that is primarily designed or produced
991 273 F.3d 429 (2d Cir. 2001).
992 321 Studios, 307 F. Supp. 2d at 1096.
993 Id. at 1097.
994Id.
995 Id. at 1097-98.
996 Id. at 1098. This holding is contrary to that reached by the court in I.M.S. Inquiry Management Systems, Ltd. v.
Berkshire Information Systems, Inc., 307 F. Supp. 2d 521 (S.D.N.Y. 2004), discussed in the next subsection.
- 231 -
for circumvention. Because it was undisputed that a portion of 321 Studios’ software was solely
for the purpose of circumventing CSS, that portion of the software violated the DMCA.997
Accordingly, the court enjoined 321 Studios from manufacturing, distributing, or otherwise
trafficking in any type of DVD circumvention software.998
(ix) I.M.S. Inquiry Management Systems, Ltd. v.
Berkshire Information Systems, Inc.
This case reached the opposite result from the 321 Studios v. Metro Goldwyn Mayer
case, and held that the unauthorized use of an otherwise legitimate, owner-issued password does
not constitute a “circumvention” of a technological measure under the DMCA.999 The plaintiff
owned a web-based service that provided information on tracking magazine advertising
exclusively to its clients through proprietary passwords. The defendant obtained a user
identification and password issued to a third party and made unauthorized use of the same to gain
access to the plaintiff’s web site, from which the defendant downloaded approximately 85% of
the report formats and copied those formats into its competing service.1000 The court ruled there
was no DMCA violation because “what defendant avoided and bypassed was permission to
engage and move through the technological measure from the measure’s author. … Defendant
did not surmount or puncture or evade any technological measure to do so; instead, it used a
password intentionally issued by plaintiff to another entity.”1001
(x) Paramount Pictures Corp. v. 321 Studios.
The court in this case, in a very short opinion citing the Corley and Reimerdes cases and
for the reasons stated therein, held that 321 Studios violated the anti-circumvention provisions of
the DMCA by manufacturing and selling its software product that permitted the possessor of a
DVD encoded with CSS to decode CSS and thereby make identical copies of the DVD. The
court enjoined 321 Studios from manufacturing, distributing, linking to, or otherwise trafficking
in any of its software products that were capable of decrypting CSS.1002
997 321 Studios, 307 F. Supp. 2d at 1098. The court ruled that it could not determine on summary judgment
whether the software had only limited commercially significant purposes other than circumvention, and that
would be an issue a jury would have to decide. Id. The court also rejected 321 Studios’ challenge to the
constitutionality of the anti-circumvention provisions on the ground that is unconstitutionally restricted 321
Studios’ right to tell others how to make fair use of a copyrighted work, impermissibly burdened the fair use
rights of others, and exceeded the scope of Congressional powers. Id. at 1098-1105.
998 Id. at 1105.
999 I.M.S. Inquiry Management Systems, Ltd. v. Berkshire Information Systems, Inc., 307 F. Supp. 2d 521
(S.D.N.Y. 2004).
1000 Id. at 523.
1001 Id. at 532-33.
1002 Paramount Pictures Corp. v. 321 Studios, 69 U.S.P.Q.2d 2023, 2023-24 (S.D.N.Y. 2004).
- 232 -
(xi) Macrovision Corp. v. 321 Studios
In this case, the same judge as in the Paramount Pictures case, in a one paragraph opinion
that simply cited his earlier decision in the Paramount Pictures case, issued a preliminary
injunction against 321 Studios barring it from selling the various versions of its DVD copying
software.1003 In August of 2004, 321 Studios reached a settlement with the motion picture
industry, which included a financial payment and an agreement to stop distributing its DVD
copying software worldwide, and ceased operations.1004
(xii) Comcast of Illinois X v. Hightech Electronics, Inc.
In this case, the defendant Hightech set up a website named 1-satellite-dish.com that
contained links to over thirty other websites selling illegal cable pirating devices. Comcast
brought claims under Sections 1201(a)(2) and (b)(1) against the website as well as against Net
Results, the named domain server for the 1-satellite-dish.com website.1005 The defendants
argued that only copyright holders can bring suit under the anti-circumvention provisions and
that Comcast, in regard to the cable signals at issue, was not the copyright owner. The court
rejected this argument, citing CSC Holdings, Inc. v. Greenleaf Electronics, Inc., 2000 U.S. Dist.
LEXIS 7675 (N.D. Ill. 2000), which held that the plaintiff cable provider had standing to bring
suit under Section 1203(a) against the defendants for selling and distributing pirate cable
descrambling equipment, as it was a person injured by a violation of the DMCA Accordingly,
the Comcast court concluded that Comcast could bring its claim under the DMCA.1006
With respect to the merits of the DMCA claims, the court ruled that Comcast controlled
through technological measures access to copyrighted programs it provided to its subscribers by
scrambling those programs, and that such measures also protected the rights of the copyright
owners in those programs, as required by Sections 1201(a)(2) and (b)(1). Citing the Reimerdes
case, the court noted that there can be a violation of the DMCA for maintaining links to other
websites that contain access to or information regarding circumvention technology. The court
noted that the Intellectual Reserve case had refused to find contributory liability for posting links
to infringing websites because there was no direct relationship between the defendant and the
people who operated the websites containing the infringing material, and the defendants did not
receive any kind of compensation from the linked websites.1007
By contrast, in the instant case, the court noted that Comcast had alleged that Hightech
received compensation from the website operators that linked to 1-satellite-dish.com. In
addition, the court found that Net Results, as the domain server of websites selling illegal cable
1003 Macrovision Corp. v. 321 Studios, 2004 U.S. Dist. LEXIS 8345 (S.D.N.Y. May 12, 2004).
1004 “Maker of DVD-Copying Products Reaches Settlement Over Suits” (Aug. 10, 2004), available as of Aug. 11,
2004 at www.siliconvalley.com/mld/siliconvalley/news/editorial/9364923.htm.
1005 Comcast of Illinois X v. Hightech Electronics, Inc., 2004 Copyr. L. Dec. ¶ 28,840 at pp. 37,299 & 37,232-33
(N.D. Ill. 2004).
1006 Id. at 37,233.
1007Id.
- 233 -
equipment, could possibly be engaging in trafficking under the DMCA because it was allegedly
assisting sellers of illegal cable equipment in distributing such equipment. The court therefore
concluded that Comcast had sufficiently stated a claim against the defendants under the DMCA
in trafficking or acting in concert with a person who had manufactured or distributed illicit
circumvention equipment, and denied the defendants’ motion to dismiss the DMCA claims.1008
(xiii) Davidson & Assocs. v. Internet Gateway
For a discussion of this case, which found violations of both the anti-circumvention and
trafficking prohibitions of Section 1201, see Section II.G.1(g)(5) above.
(xiv) Agfa Monotype Corp. v. Adobe Sys.
This case addressed the issue of whether a passive bit or flag indicating the copyright
owner’s preference with respect to copying or distribution constitutes an effective technological
access control measure or measure protecting copyright rights, and held that it does not. The
plaintiffs were the copyright owners in about 3,300 copyrighted TrueType fonts. The plaintiffs
alleged that Version 5 of Adobe’s Acrobat product violated the anti-circumvention provisions of
the DMCA because it ignored the “embedding bits” in certain of the plaintiffs’ fonts that
indicated whether the fonts were licensed for editing.1009
Adobe Acrobat 5.0 was capable of embedding fonts into portable electronic documents
stored in Adobe’s Portable Document Format (PDF). The court described the technology of font
embedding as follows:
A font is copied when it is embedded. Fonts are embedded through embedding
bits. Embedding bits indicate to other programs capable of reading them, such as
Adobe Acrobat, the font embedding licensing rights that the font vendor granted
with respect to the particular font. The software application decides whether or
not to embed the font based upon the embedding bit. An embedding bit cannot be
read by a computer program until that program has already accessed the font data
file. TrueType Fonts are not encrypted, scrambled, or authenticated. A TrueType
Font data file can be accessed regardless of the font’s embedding permissions. A
program seeking to access a TrueType font need not submit a password or
complete an authorization sequence to access, use or copy TrueType Fonts.1010
The Microsoft TrueType Font specification defined four levels of embedding bit
restrictions: Restricted (font cannot be embedded); Print & Preview (font can be embedded but
the document must be opened as read-only and no edits may be applied to the document),
Editable (font can be embedded and the document may be opened for reading and editing), and
1008 Id. at 37,233-34.
1009 Agfa Monotype Corp. v. Adobe Sys., 404 F. Supp. 2d 1030, 1031-32 (N.D. Ill. 2005).
1010 Id. at 1031.
- 234 -
Installable.1011 Acrobat 5.0 made it possible for the first time to embed in the “form field” or
“free text annotation” of a PDF document1012 any TrueType Font whose embedding bit was not
set to “Restricted,” including fonts whose embedding bit was set to “Print and Preview.” This
capability of Acrobat 5.0 was referred to as the “Any Font Feature.”1013
The plaintiffs contended that the Any Font Feature resulted in “editable embedding,”
because a recipient of a PDF file with embedded fonts could use the fonts to change the contents
of a form field or free text annotation. The plaintiffs further contended that such editable
embedding was possible only because Acrobat 5.0 allowed the embedding bits set by the
plaintiffs to be “circumvented” in violation of the DMCA.1014
The court rejected the plaintiffs’ claims under both Sections 1201(a)(2) and 1201(b)(1) of
the DMCA. With respect to Section 1201(a)(2), the court ruled that the plaintiffs’ embedding
bits did not effectively control access to the TrueType fonts. The court found that an embedding
bit was a passive entity that did nothing by itself. Embedding bits were not encrypted, scrambled
or authenticated, and software applications such as Acrobat 5.0 did not need to enter a password
or authorization sequence to obtain access to the embedding bits or the specification for the
TrueType font (which was publicly available for free download from the Internet). The
embedding bits therefore did not, in their ordinary course of operation, require the application of
information, or a process or a treatment, with the authority of the copyright owner, to gain access
to the plaintiffs’ TrueType fonts, as required by Section 1201(a)(3)(B) in order for a
technological measure to effectively protect access to a copyrighted work.1015
In addition, the court ruled that Acrobat 5.0 did not contain technology, components or
parts that were primarily designed to circumvent TrueType embedding bits. The court found
that Acrobat 5.0 had many commercially significant purposes other than to circumvent
embedding bits, even if it did circumvent them. The purpose of the embedded font capability in
Acrobat 5.0 was so that electronic documents could look exactly the same when printed and
viewed by a recipient as sent by the creator. The primary purpose of the forms feature was to
allow recipients to complete electronic forms they receive and electronically return the
information inputted on the form to the creator. Similarly, the commercial purpose of the free
text annotation feature was to allow recipients to insert comments into the PDF that could be
viewed by the creator when electronically returned. Nor was Acrobat 5.0 marketed for the
primary purpose of circumventing the embedding bits – Adobe had made no mention of
1011 Id. at 1031-32.
1012 A PDF form field was designed to allow a recipient to complete an electronic form and electronically return the
information inputted on the form to the creator. A PDF free text annotation was designed to allow recipient to
insert comments into the PDF document that could be viewed by the creator when electronically returned. Id. at
1033.
1013 Id. at 1032.
1014 Id. at 1034.
1015 Id. at 1036-37.
- 235 -
embedding bits, circumvention of embedding bits, or the Any Font Feature in any of its
marketing materials for Acrobat 5.0.1016
With respect to the plaintiffs’ Section 1201(b)(1) claim, Adobe argued, and the court
agreed, that the embedding bits did not constitute a technological measure that prevented,
restricted, or otherwise limited the exercise of a right of copyright. The plaintiffs had already
authorized the copy and distribution of their TrueType fonts for embedding in PDF documents
for “Print and Preview” purposes. Acrobat 5.0 did not make an additional copy or distribution of
a font to embed the font in free text annotations or form fields, and the plaintiffs’ copyright did
not give them the right to control subsequent use of lawfully made copies of the fonts.1017
In addition, for the same reasons noted in connection with the plaintiffs’ Section
1201(a)(2) claim, the court ruled that Acrobat 5.0 as a whole and the parts thereof were not
primarily designed or promoted for font embedding purposes and had many other commercially
significant purposes other than circumventing the embedding bits associates with the plaintiffs’
TrueType fonts. Accordingly, the court granted Adobe’s motion for summary judgment with
respect to the plaintiffs’ anti-circumvention claims.1018
(xv) Egilman v. Keller & Heckman
This case agreed with the I.M.S. case and held that access to a computer through the
unauthorized use of a valid password does not constitute an unlawful circumvention.1019 The
plaintiff Egilman was a medical doctor and testifying expert witness in a case in which the court
had issued an order prohibiting anyone involved in the litigation from publishing any statements
on Internet websites over which they had control concerning the litigation. Egilman was
sanctioned for violating the order by publishing certain inflammatory statements on his website.
Egilman claimed that one of the defendant’s law firms had obtained the user name and password
to his website without authorization and disclosed that information to another defendant’s law
firm, which then used the user name and password to gain access to his website, from which the
firm obtained information showing that Egilman had violated the court order. Egilman asserted
a claim under the anti-circumvention provisions against the law firm.1020
The court rejected the claim. It reviewed the facts and holding of the I.M.S. case
discussed in subsection j. above, and found that the case was correctly decided.1021 The court
therefore ruled that “using a username/password combination as intended – by entering a valid
username and password, albeit without authorization – does not constitute circumvention under
1016 Id. at 1032-33.
1017 Id. at 1038-40.
1018 Id. at 1040.
1019 Egilman v. Keller & Heckman, LLP, 401 F. Supp. 2d 105 (D.D.C. 2005).
1020 Id. at 107-09.
1021 Id. at 112-14.
- 236 -
the DMCA.” The “technological measure” employed by Egilman had not been “circumvented,”
but rather merely utilized.1022
(xvi) Macrovision v. Sima Products Corp.
In Macrovision v. Sima Products Corp.,1023 the court held that the defendant’s products,
which eliminated Macrovision’s Analog Copy Protection (ACP) signals imprinted on DVDs
containing copyrighted works to prevent the copying of the DVDs, violated the anticircumvention
provisions. The ACP system inserted additional information in the non-visible
portion of the analog signal, the practical effect of which was to render videotaped copies of the
analog signal so visually degraded as to be unwatchable. The defendant’s devices eliminated
Macrovision’s ACP from an analog signal. The removal function was effectuated by a single
chip, usually the SA7114 chip from Philips. Macrovision contended, and Sima did not dispute,
that Sima’s devices could be fitted with an alternate chip manufactured by Philips that, under
license from Macrovision, would recognize the ACP and not allow for its circumvention.1024
Sima contended that its devices were intended primarily to allow the consumer to make
“fair use” backup copies of a DVD collection. The court noted, however, that although the
DMCA provides for a limited “fair use” exception for certain users of copyrighted works under
Section 1201 (a)(2)(B), the exception does not apply to manufacturers or traffickers of the
devices prohibited by Section 1201(a)(2).1025
Sima argued that the “primary purpose” of its devices was not circumvention. The court
rejected this argument, noting that, although some of the devices had some auxiliary functions,
Sima did not argue that it was necessary for the device to be able to circumvent ACP in order to
perform those functions. Nor did Sima argue that using the Macrovision-licensed Philips chips
would prevent the devices from performing the auxiliary functions or facilitating the copying of
non-protected works, such as home videos. Accordingly, the devices had only limited
commercially significant purposes or uses other than circumvention.1026 The court also noted
that Sima had touted on its web site the devices’ capability of circumventing copy protection on
copyrighted works. And the DMCA does not provide an exception to the anti-circumvention
provisions for manufacturers of devices designed to enable the exercise of fair use rights.
Finally, the court noted that in any event Sima had cited no authority, and the court was aware of
none, for the proposition that fair use includes the making of a backup copy.1027 Accordingly,
1022 Id. at 114.
1023 2006 U.S. Dist. LEXIS 22106 (S.D.N.Y. Apr. 20, 2006).
1024 Id. at *2-3.
1025 Id. at *2-3, 6.
1026 Id. at *6-7.
1027 Id. at *7-8.
- 237 -
the court preliminarily enjoined Sima from selling its devices and any other products that
circumvented Macrovision’s copyright protection technologies in violation of the DMCA.1028
(xvii) Nordstrom Consulting, Inc. v. M&S Technologies,
Inc.
In Nordstrom Consulting, Inc. v. M&S Technologies, Inc.,1029 Nordstrom, acting as a
consultant, developed software for a visual eye chart to be distributed as part of M&S’s visual
acuity systems. Nordstrom retained ownership of the copyrights in the software and, after a
falling out with M&S, assigned the copyrights to a separate corporation. After leaving M&S, the
plaintiffs alleged that M&S violated the DMCA by circumventing the password protection on a
computer used by Nordstrom in order to gain access to the software.1030 The court rejected this
claim. Citing the Chamberlin v. Skylink case, the court noted that there must be a showing that
the access resulting from the circumvention led to infringement, or the facilitation of
infringement, of a copyrighted work, and the plaintiffs had failed to make such a showing. The
court noted it was undisputed that the defendant had accessed the software in order to repair or
replace the software of a client of M&S and a valid licensee of the software, so the
circumvention of the password did not result in an infringement or the facilitation of
infringement.1031
M&S, in turn, alleged that Nordstrom had violated the DMCA by circumventing the
digital security of M&S’s computer network. M&S’s network was divided into two parts, one
dealing with visual acuity systems and one with hotel/hospitality businesses. M&S asserted that,
while Nordstrom had a password to access the acuity side of the system, he did not have a
password to access the hotel side, yet Nordstrom claimed to have accessed the hotel side. The
court denied summary judgment on M&S’s claim because of factual disputes. Nordstrom
asserted that he did not access the hotel side of the system and that any materials on the hotel
side were not registered copyrights. By contrast, M&S had offered evidence that Nordstrom
accessed the hotel side of the system, and alleged that the hotel side contained copyrighted
works.1032
(xviii) R.C. Olmstead v. CU Interface
This case agreed with the I.M.S. case and held that access to a computer through the
unauthorized use of a valid username and password does not constitute an unlawful
circumvention.1033 The plaintiff was the owner of data processing software for credit unions
called RCO-1 that it licensed to the defendant. The defendant CUI hired some developers to
1028 Id. at *11-12.
1029 2008 U.S. Dist. LEXIS 17259 (N.D. Ill. Mar. 4, 2008).
1030 Id. at *3-8.
1031 Id. at *23-24/
1032 Id. at *30-31.
1033 R.C. Olmstead, Inc. v. CU Interface, LLC, 2009 U.S. Dist. LEXIS 87705 (N.D. Ohio Mar. 27, 2009).
- 238 -
develop a replacement program for RCO-1 and, to aid development, allowed the developers to
gain access to RCO-1 using valid usernames and passwords issued to CUI. The plaintiff claimed
that such unauthorized access violated the DMCA. The court rejected this claim, finding the
case indistinguishable from I.M.S. and the reasoning of I.M.S. persuasive. The court also noted
that the license agreement between the plaintiff and CUI did not set any restrictions regarding
issuance of usernames and passwords, so that the plaintiff could not even show that CUI’s use of
its usernames and passwords was unauthorized.1034 “Simply put, CUI did not circumvent or
bypass any technological measures of the RCO software – it merely used a username and
password – the approved methodology – to access the software.”1035
(xix) Avaya v. Telecom Labs
In this case, the court refused to decide on a motion for summary judgment the issue
addressed in the I.M.S. case of whether unauthorized use of a valid password to gain access to
software constitutes a violation of the DMCA.1036 The plaintiff Avaya sold PBX systems with
maintenance software embedded in them. When selling a new system, Avaya supplied the
customer with a set of default passwords that the customer used to first log in to the system.
Avaya alleged that the passwords were used without authorization by the defendants to log in
and gain access to Avaya’s maintenance software. Defendants moved for summary judgment
that use of valid logins to gain access to software does not violate the DMCA. The court ruled
that summary judgment was not appropriate because granting the motion would not result in
dismissal of any portion of Avaya’s DMCA claims from the case. All that would be resolved
would be the abstract issue of whether use of valid logins does not violate the DMCA. Because
Avaya had not identified a single, specific PBX to which the alleged illegal conduct was applied,
ruling on the motion would have no effect until such time as the defendants could prove which of
the PBXs at issue were accessed with the known, valid logins that they alleged were immune
from DMCA liability.1037 “Avaya’s DMCA claims may or may not have merit, but a summary
judgment rendered on a discrete set of facts that have yet to be proven is not the proper vehicle
for that determination.”1038
(xx) Actuate v. IBM
In Actuate Corp. v. International Business Machines Corp.,1039 Actuate alleged that
IBM’s unauthorized posting on an IBM web site of Actuate’s copyrighted software for
downloading, together with the license keys that allowed for unlimited use of such software by
downloaders, whether they were authorized to use the software or not, constituted circumvention
of technological measures on the software that restricted access to it and trafficking in
1034 Id. at *21-24.
1035 Id. at *24.
1036 Avaya, Inc. v. Telecom Labs, Inc., 2009 U.S. Dist. LEXIS 82609 (D.N.J. Sept. 9, 2009).
1037 Id. at *2 & *10-13.
1038 Id. at *13.
1039 2010 U.S. Dist. LEXIS 33095 (N.D. Cal. Apr. 5, 2010).
- 239 -
circumvention devices. IBM filed a motion to dismiss the claim, relying on the I.M.S., Egilman,
and R.C. Olmstead cases for the proposition that improper use of a legitimate password issued by
the copyright holder does not constitute circumvention.1040
The court denied the motion. It found the I.M.S., Egilman, and R.C. Olmstead cases in
conflict with the 321 Studios and the Microsoft v. EEE Business cases from the Northern District
of California with respect to the issue of whether the unauthorized use of an otherwise legitimate
password can constitute circumvention. The court rejected IBM’s argument that the two lines of
cases were not inconsistent on the ground that, in the 321 Studios and Microsoft v. EEE Business
cases, there was no allegation that the parties whose passwords were being used had issued those
passwords to a third party. The court found no basis in 321 Studios for such a distinction, and
noted that Egilman expressly rejected the distinction. Accordingly, the court concluded that the
two lines of cases simply reached contradictory results, and declined to follow the reasoning of
the I.M.S. line of cases. It instead followed the 321 Studios and the Microsoft v. EEE Business
cases, and held that unauthorized distribution of passwords and user-names avoids and bypasses
a technological measure in violation of Sections 1201(a)(2) and 1201(b)(1).1041
The reasoning of the I.M.S. court – that a password somehow does not fall within
[the analogy to the combination of a locked door used in the DeCSS cases], is not
well-founded. Rather, a combination to a lock appears to be essentially the same
as a password. Nor does the Court find support in the statute itself for drawing a
distinction between passwords and other types of code that might be used for
decryption. Therefore, the Court rejects Defendants’ position. Unauthorized use
of a password may constitute circumvention under the DMCA.1042
(xxi) Navistar v. New Baltimore Garage
In this case, the plaintiff restricted access to its dealer communication network
and copyrighted material stored therein through use of passwords. The license agreement
for use of the network prohibited sharing with or otherwise distributing passwords to
third parties and using a third party’s password to gain access to the network. The
defendant, a licensee of the plaintiff’s network, violated these prohibitions and shared its
passwords with a third party who used them to log in and gain unauthorized access to
information on the plaintiff’s network. The plaintiff claimed that the defendant’s
provision to the third party with access to the plaintiff’s network through the
unauthorized use of its passwords constituted circumvention of a technological measure
or trafficking in technology designed to circumvent access or copy controls. The court,
noting a split in authority on the issue, ruled that unauthorized use of a valid password
does not violate the anti-circumvention provisions of the DMCA, and the unauthorized
sharing of a valid password does not constitute prohibited trafficking. Accordingly, the
1040 Id. at *9-10.
1041 Id. at *24-25.
1042 Id. at *26.
- 240 -
court granted the defendant’s motion to dismiss the plaintiff’s DMCA claim with leave to
amend.1043
(xxii) Dice Corp. v. Bold Technologies
Both the plaintiff and the defendant provided software for companies in the alarm
industry. The defendant wrote an extraction program to extract customer data from the
plaintiff’s software (written in Thoroughbred basic) and convert it into a format that
could be read by the defendant’s software (written in C++ and Visual Basic). The
database files where the customer data was stored by the plaintiff’s software were not
subject to any access or security features and could be accessed by anyone who had a
copy of Thoroughbred basic. No administrative password was required to run queries on
the database.1044
The plaintiff’s complaint alleged that encryption of its software constituted a
technological measure that effectively controlled access to its products and that the
defendant’s use of former employees of the plaintiff with knowledge of methods to
circumvent such encryption permitted the defendant to access the plaintiff’s software
without permission, in violation of the anti-circumvention provisions of the DMCA. The
court granted the defendant summary judgment on this claim, finding that the plaintiff
had produced no evidence that the defendant accessed any source code (which one of the
plaintiff’s employees admitted during discovery was not in fact encrypted) or other
copyrighted material of the plaintiff. Rather, the defendant had accessed through its
extraction program only customer data that was owned by the user of the plaintiff’s
software, which data was neither encrypted nor protected against access by any password
or other technological measure.1045
(14) Criminal Prosecutions Under the DMCA
(i) The Sklyarov/Elcomsoft Case
Dmitry Sklyarov, a 27-year-old Russian programmer who worked for a Russian company
called Elcomsoft, helped create the Advanced eBook Processor (AEBPR) software, which
enabled eBook owners to translate from Adobe’s secure eBook format into the more common
Portable Document Format (PDF). The software worked only on legitimately purchased eBooks.
Sklyarov was arrested at the behest of Adobe Systems, Inc. on July 17, 2001 in Las Vegas after
he delivered a lecture at a technical convention, and charged by the Dept. of Justice with criminal
violations of the DMCA for distributing a product designed to circumvent copyright protection
measures. He was subsequently released on $50,000 bail and restricted to California.1046
1043 Navistar, Inc. v. New Baltimore Garage, Inc., 2012 U.S. Dist. LEXIS 134369 at *2-5, 13-15 & 29 (N.D. Ill.
Sept. 20, 2012).
1044 Dice Corp. v. Bold Technologies, 913 F. Supp. 2d 389, 392, 395-96 & 400 (E.D. Mich. 2012).
1045 Id. at 409-11.
1046 This information is taken from the Free Dmitry Sklyarov! web site at www.freesklyarov.org.
- 241 -
On Dec. 13, 2001, the U.S. government permitted Sklyarov to return home to Russia with
his family, essentially dropping prosecution of him in return for his agreement to testify against
his employer Elcomsoft in criminal proceedings the government brought against Elcomsoft. In
early Feb. 2002, the Electronic Frontier Foundation, joined by The Computing Law and
Technology and U.S. Public Policy Committees of the Association for Computing Machinery,
the American Association of Law Libraries, the Electronic Privacy Information Center, the
Consumer Project on Technology, Computer Professionals for Social Responsibility, and the
Music Library Association, filed an amicus brief, along with a brief from 35 law professors,
supporting a motion by Elcomsoft to dismiss the case. Elcomsoft’s motion and the Electronic
Frontier Foundation’s brief argued that the DMCA should be found unconstitutional because it
impinges on protected speech and stifles technological innovation.
Elcomsoft’s motion to dismiss and its challenge on constitutional grounds were rejected
by the court in an opinion issued on May 8, 2002.1047 The court concluded that Congress
intended to ban all circumvention tools and rejected Elcomsoft’s argument that Congress
intended to ban only those circumvention devices that would facilitate copyright
infringement.1048 The court also specifically concluded that “[n]othing within the express
language [of the anti-circumvention provisions] would permit trafficking in devices designed to
bypass use restrictions in order to enable a fair use, as opposed to an infringing use. Instead, all
tools that enable circumvention of use restrictions are banned, not merely those use restrictions
that prohibit infringement.”1049 The court rejected the constitutional challenges on a rationale
very similar to that of the Second Circuit’s opinion in the Corley case,1050 discussed in Section
II.G.1(m)(4) above. On Dec. 17, 2002, after a two week trial, a jury acquitted Elcomsoft of
criminal charges under the DMCA. The jury foreman told the press that some jurors were
concerned about the scope of the DMCA and whether it curtailed the fair use of material simply
because it was in electronic format. “Under the eBook formats, you have no rights at all, and the
jury had trouble with that concept,” the foreman reported.1051
(ii) Other Criminal Prosecutions Under the DMCA
In Feb. of 2003, the operator of a web site, iSoNews.com, pleaded guilty to criminal
DMCA violations for sale of “mod” chips that allowed Microsoft Xbox and Sony Playstation
owners to modify their devices so they could use them to play illegally copied games. As part of
a plea bargain, the defendant turned over the site’s domain name to the control of the U.S.
Department of Justice, which then put a notice on the site stating that it had been surrendered to
U.S. law enforcement.1052 In Sept. of 2003, a federal jury found a Florida hacker known as
1047 United States v. Elcom Ltd., 62 U.S.P.Q.2d 1736 (N.D. Cal. 2002).
1048 Id. at 1743.
1049Id.
1050 Id. at 1744-57.
1051 Howard Mintz, “Russian Company is Acquitted by S.J. Jury” (Dec. 17, 2002), available as of Dec. 18, 2002 at
www.bayarea.com/mld/mercurynews/4763575.htm.
1052 Declan McCullagh, “Feds Confiscate ‘Illegal’ Domain Names” (Feb. 26, 2003), available as of Feb. 27, 2003 at
www.news.com.com/2102-1023-986225.html.
- 242 -
“JungleMike” guilty under the DMCA of selling hardware used to illegally receive DirecTV
satellite broadcasts. This case marked the first-ever jury conviction under the DMCA. Several
other defendants pleaded guilty to DMCA charges in the same operation.1053
In July of 2005, a Maryland man, one of a group of employees and managers from the
three-store Pandora’s Cube chain in Maryland, pled guilty and was sentenced to four months in
prison for conspiracy to commit felony copyright infringement and for violating the DMCA
based on sales by Pandora’s Cube of modified Xboxes that let players use pirated console games.
Pandora’s Cube was also selling modified Xboxes preloaded with pirated games.1054
In United States v. Whitehead,1055 the Ninth Circuit affirmed the sentence for a man who
was convicted of selling over $1 million worth of counterfeit access cards that allowed his
customers to access DirecTV’s digital satellite feed without paying for it. The court found no
abuse of discretion in the district court’s conclusion that a substantial amount of community
service (1000 hours), a hefty restitution order ($50,000) and five years of supervised release were
more appropriate than prison, even though the punishment was below that of the federal
sentencing guidelines, which called for a range of 41 to 51 months in prison.1056
(15) Other Uses of the Anti-Circumvention Provisions as a
Sword
The RealNetworks and Reimerdes cases suggest how the anti-circumvention provisions
of the DMCA might be used as a “sword” in other ways. For example, the manufacturer of a
database product that enables users to password protect data files might bring an action under the
DMCA against the manufacturer of “cracking” software that enables third parties to bypass or
deactivate the password protection on such data files. The manufacturer of the database product
might, for example, allege “injury” from the “cracking” software in the form of damage to its
reputation as the manufacturer of a “secure” product. Alternatively, if a claim were made against
the database product manufacturer by a user alleging injury resulting from the user’s data file
being “cracked” by a third party, such claim would provide another basis for the database
product manufacturer to allege its own injury from the “cracking” software.
1053 “DirecTV Hacker Convicted Under DMCA,” BNA’s Patent, Trademark & Copyright Journal (Sept. 26, 2003)
at 595.
1054 Daniel Terdiman, “Video Game Pirate Headed to Slammer” (July 27, 2005), available as of July 28, 2005 at
http://news.com.com/2100-1043_3-5807547.html.
1055 532 F.3d 991 (9th Cir. 2008).
1056 Id. at 992.
- 243 -
Other recent examples of attempts at creative use of the anti-circumvention provisions as
a sword are the following:
(i) Lexmark International, Inc. v. Static Control
Components, Inc.
Lexmark sold toner cartridges for use with its laser printers. The cartridges were of two
types: “regular” cartridges that could be refilled and remanufactured freely by third parties, and
“prebate” cartridges that could be used only once, and for which the consumer agreed, in the
form of a shrinkwrap agreement placed across the top of every prebate cartridge box, to return
the used cartridge to Lexmark for remanufacturing and recycling. Lexmark’s printers contained
two computer programs – a Printer Engine Program that controlled various printer operations
such as paper feed, paper movement, and motor control, and a Toner Loading Program of 37 to
55 bytes, which resided within microchips attached to the toner cartridges and enabled Lexmark
printers to approximate the amount of toner remaining in the cartridge.1057
To protect the Printer Engine Programs and Toner Loading Programs, and to prevent
unauthorized toner cartridges from being used with Lexmark’s printers, Lexmark’s printers used
an authentication sequence that ran each time a toner cartridge was inserted into a Lexmark
printer, the printer was powered on, or whenever the printer was opened and closed. The
authentication sequence required the printer and the microchip on the cartridge to calculate a
Message Authentication Code (MAC) using a hashing algorithm, to communicate the MAC from
the microchip to the printer, and the printer to compare the MAC it calculated with the MAC it
received from the microchip. If the MAC calculated by the microchip matched that calculated
by the printer, the cartridge was authenticated and authorized for use by the printer, which in turn
enabled the Printer Engine Program to allow the printer to print and the Toner Loading Program
to monitor the toner status of the authenticated cartridge.1058
The defendant Static Control Components (SCC) manufactured and sold a “SMARTEK”
microchip that was used to replace the microchip found in Lexmark’s toner cartridges. SCC
admitted that it copied verbatim Lexmark’s Toner Loading Program into its SMARTEK
microchips and that its SMARTEK microchips were designed to circumvent Lexmark’s
authentication sequence by mimicking the sequence performed by an original microchip on
Lexmark’s cartridges and the printer.1059 Lexmark sued SCC for violation of the anticircumvention
provisions of the DMCA as well as copyright infringement.
The District Court’s Ruling. On a motion for a preliminary injunction, the district court
ruled that SCC had violated the anti-circumvention provisions of the DMCA and committed
copyright infringement. With respect to the issue of infringement, although SCC admitted
copying the Toner Loading Program, SCC argued that the program was not copyrightable
because it was a functional “lock-out code” whose exact content was required as part of the
1057 Lexmark International, Inc. v. Static Control Components, Inc., 253 F. Supp. 2d 943, 948-49 (E.D. Ky. 2003).
1058 Id. at 952-53.
1059 Id. at 955-56.
- 244 -
authentication sequence. The court rejected this argument, because the binary content of the
Toner Loading Program was not used as an input to the hashing algorithm of the authentication
sequence, and copying of the Toner Loading Program was therefore not necessary for a valid
authentication sequence to occur.1060 The court also rejected SCC’s arguments that its copying
was a fair use, noting that “[w]here the accused infringer’s copying is part of the ordinary
operation of the accused product, fair use does not apply,”1061 and that the Toner Loading
Program was an uncopyrightable formula or constant, noting that there were a number of ways
the Toner Loading Program could have been written to approximate toner level.1062 Because
SCC had engaged in verbatim copying of the Toner Loading Program, it had committed
copyright infringement. The court also rejected a copyright misuse defense, ruling that
“Lexmark’s efforts to enforce the rights conferred to it under the DMCA cannot be considered an
unlawful act undertaken to stifle competition.”1063
Turning to the DMCA claim, the court found that the SMARTEK microchips violated the
anti-circumvention provision of Section 1201(a)(2) in that its primary purpose was to circumvent
a technological measure that effectively controlled access to a copyrighted work. The court
adopted a plain dictionary meaning of “access” as the “ability to enter, to obtain, or to make use
of.”1064 The court held that the authentication sequence was an effective technological measure
restricting access under this definition, because it required application of information and the
application of a process to gain access to Lexmark’s copyrighted Toner Loading Programs and
Printer Engine Programs for use.1065 Accordingly, SCC’s manufacture, distribution and sale of
its SMARTEK microchips violated the DMCA.1066 The court held that the exemption under
Section 1201(f) for circumvention for reverse engineering “solely for the purpose of enabling
interoperability of an independently created computer program with other programs” was
inapplicable. The court ruled that SCC’s SMARTEK microchips could not be considered to
contain independently created computer programs, since they were exact copies of Lexmark’s
Toner Loading Programs and the “SMARTEK microchips serve no legitimate purpose other than
to circumvent Lexmark’s authentication sequence.”1067
Finally, the court ruled, consistent with the Reimerdes case, that a plaintiff that
demonstrates a likelihood of success on the merits of a claim for violation of the anticircumvention
provisions of the DMCA is entitled to a presumption of irreparable injury for
1060 Id. at 950, 958-59.
1061 Id. at 960.
1062 Id. at 962.
1063 Id. at 966. The court further noted that an “antitrust claim cannot succeed under an after-market antitrust theory
when the accused party has not changed its policy and has been otherwise forthcoming about its policies.” Id.
at 966 n.3.
1064 Id. at 967.
1065 Id. at 967-68.
1066 Id. at 969-70.
1067 Id. at 971
- 245 -
purposes of a preliminary injunction. Accordingly, the court entered a preliminary injunction
against the distribution of the SMARTEK microchips.1068
The Sixth Circuit’s Ruling. On appeal, the Sixth Circuit reversed and remanded.1069
Turning first to the issue of copyright infringement, the Sixth Circuit found the district court’s
ruling erroneous with respect to whether the Toner Loading Program constituted a “lock-out
code.” The court noted generally that “[t]o the extent compatibility requires that a particular
code sequence be included in [a] component device to permit its use, the merger and scenes a
faire doctrines generally preclude the code sequence from obtaining copyright protection.”1070
The court noted that the Toner Loading Program served as input to a checksum operation
performed each time the printer was powered on or the printer door was opened and closed for
toner cartridge replacement. Specifically, after downloading a copy of the Toner Loading
Program to calculate toner levels, the Printer Engine Program ran the checksum calculation using
every data byte of the Toner Loading Program as input. The program then compared the result
of the calculation with a checksum value located elsewhere on Lexmark’s toner cartridge chip.
If any single byte of the Toner Loading Program was altered, the checksum value would not
match the checksum calculation result.1071
In addition, the Sixth Circuit noted that, at least for purposes of a preliminary injunction,
the expert testimony established that it would be “computationally impossible” to modify the
checksum value without contextual information that the defendant did not have access to.
Accordingly, the checksum operation imposed a compatibility constraint that “justified SCC’s
copying of the Toner Loading Program.”1072 Accordingly, the court concluded that, on the
preliminary injunction record, the Toner Loading Program was not copyrightable.1073
With respect to the DMCA claims, the Sixth Circuit began its analysis by agreeing with
the district court and the Reimerdes case that there should be a presumption of irreparable harm
arising from demonstration of a likelihood of success on a DMCA claim.1074 The court then
1068 Id. at 971, 974.
1069 Lexmark Int’l v. Static Control Components, Inc., 387 F.3d 522 (6th Cir. 2004), reh’g denied, 2004 U.S. App.
LEXIS 27422 (Dec. 29, 2004), reh’g en banc denied, 2005 U.S. App. LEXIS 3330 (6th Cir. Feb. 15, 2005).
1070 Id. at 536.
1071 Id. at 541.
1072 Id. at 542.
1073 Id. at 544. Because the court found the Toner Loading Program not to be copyrightable, it noted that it need not
decide whether copying of the same was a fair use. Nevertheless, the court noted its disagreement with the
district court’s fair use analysis, among other reasons because the copying was done for functional reasons. “In
copying the Toner Loading Program into each of its SMARTEK chips, SCC was not seeking to exploit or
unjustly benefit from any creative energy that Lexmark devoted to writing the program code. As in Kelly,
SCC’s chip uses the Toner Loading Program for a different purpose, one unrelated to copyright protection.
Rather than using the Toner Loading Program to calculate toner levels, the SMARTEK chip uses the content of
the Toner Loading Program’s data bytes as input to the checksum operation and to permit printer functionality.
Under these circumstances, it is far from clear that SCC copied the Toner Loading Program for its commercial
value as a copyrighted work – at least on the preliminary-injunction record we have before us.”Id.
1074 Id. at 533.
- 246 -
turned to separate analyses of Lexmark’s anti-circumvention claims with respect to the Printer
Engine Program and the Toner Loading Program.
Concerning the Printer Engine Program, the court held that Lexmark’s authentication
sequences did not “control access” to the Printer Engine program sufficiently to trigger the
applicability of the anti-circumvention provisions because anyone could read the literal code of
the Printer Engine Program directly from the printer memory, with or without the benefit of the
authentication sequence.1075 “The authentication sequence, it is true, may well block one form of
‘access’ – the ability to … make use of’ the Printer Engine Program by preventing the printer
from functioning. But it does not block another relevant form of ‘access’ – the ‘ability to []
obtain’ a copy of the work or to ‘make use of’ the literal elements of the program (its code).”1076
The court rejected Lexmark’s argument that several cases had embraced a “to make use
of” definition of “access” in applying the DMCA. The court noted that “[i]n the essential setting
where the DMCA applies, the copyright protection operates on two planes: in the literal code
governing the work and in the visual or audio manifestation generated by the code’s
execution.”1077 Those cases finding liability based on a technological measure that restricted
“use” of the work were ones in which consumers were restricted from making use of
copyrightable expression in the work, such as a video game.1078
“The copyrightable expression in the Printer Engine Program, by contrast,
operates on only one plane: in the literal elements of the program, its source and
object code. Unlike the code underlying video games or DVDs, ‘using’ or
executing the Printer Engine Program does not in turn create any protected
expression. Instead, the program’s output is purely functional. … Presumably, it
is precisely because the Printer Engine Program is not a conduit to protectable
expression that explains why Lexmark (or any other printer company) would not
block access to the computer software that makes the printer work. Because
Lexmark’s authentication sequence does not restrict access to this literal code, the
DMCA does not apply.”1079
The Sixth Circuit’s holding that, to qualify for DMCA anti-circumvention protection, a
technological measure for a computer program must block either the ability to copy the code or
to read the literal code, at least where that code does not create any separately protectable
expression such as a video game, is potentially very significant. Many computer programs
perform only “invisible” functions and do not generate copyrightable expression as output to the
user. The Sixth Circuit’s ruling that technological measures which merely restrict use of such
programs, and do not prohibit copying or reading of the code (such as passwords and
1075 Id. at 546.
1076 Id. at 547 (quoting from Merriam-Webster’s Collegiate Dictionary’s definitions of “access”).
1077 Id. at 548.
1078Id.
1079Id.
- 247 -
handshaking or other authentication sequences), do not qualify for anti-circumvention protection
under the DMCA, if adopted by other courts and applied widely, may significantly narrow the
scope of protection the DMCA affords to computer programs. Under the Sixth Circuit’s
definition of “access control,” it may be that only those measures that encrypt or otherwise
protect a program against copying or the ability to read it will be sufficient to qualify purely
“functional” programs for anti-circumvention protection under the DMCA.
Concerning the Toner Loading Program, the court ruled that the defendant’s chip did not
provide “access” to the Toner Loading Program, but rather replaced the program, and therefore
did not circumvent any access control. In addition, to the extent the Toner Loading Program was
not copyrightable, it would not constitute a “work protected under [the copyright statute]” to
which the DMCA protections would apply.1080
Finally, the court turned to the interoperability defenses asserted by the defendant. The
Sixth Circuit rejected the district court’s ruling against the defendant’s argument that its
microchip constituted a “technological means” that it could make available to others under §
1201(f)(3) solely for the purpose of enabling interoperability of an independently created
computer program with other programs. The district court rejected the defense on the ground
that the defendant had copied the Toner Loading Program and thus had not created an
independently created computer program.1081
The Sixth Circuit noted that, even if the Toner Loading Program had been copied, the
defendant’s microchips contained other independently developed computer programs that
interoperated with the Printer Engine Program, and those other programs were sufficient to allow
the defendant to benefit from the interoperability defense.1082 The implication of this ruling is
that every computer program on a device need not qualify for the interoperability defense in
order for the device itself to be able to benefit from the defense.
The court also rejected Lexmark’s argument that the independently created program must
have existed prior to the reverse engineering – holding that they can be created simultaneously –
and its argument that the circumvention means must be necessary or absolutely needed for
interoperability – ruling that the statute is silent as to whether there is any necessity requirement
at all, but there was necessity in this case because the Toner Loading Program was used in a
checksum calculation. Finally, the defendant’s copying of the Toner Loading Program did not
destroy the interoperability defense (§ 1201(f)(3) conditions its defense on a requirement that the
circumvention not violate other “applicable law”) because the Sixth Circuit had concluded that
the Toner Loading Program was not copyrightable on the preliminary injunction record.1083
1080 Id. at 549-50.
1081 Id. at 550.
1082Id.
1083 Id. at 550-51.
- 248 -
Accordingly, the Sixth Circuit vacated the district court’s grant of a preliminary injunction and
remanded the case.1084
The depth of the court’s concern about the policy implications of Lexmark’s proposed
broad reading for the scope of the anti-circumvention provisions is further illustrated by
comments made by two members of the panel in separate opinions. One judge, in a concurring
opinion, noted that the main point of the DMCA is “to prohibit the pirating of copyrightprotected
works such as movies, music and computer programs. If we were to adopt Lexmark’s
reading of the statute, manufacturers could potentially create monopolies for replacement parts
simply by using similar, but more creative, lock-out codes.”1085 He further stated that “Congress
did not intend to allow the DMCA to be used offensively in this manner, but rather only sought
to reach those who circumvented protective measures ‘for the purpose’ of pirating works
protected by the copyright statute.”1086
Another judge, in an opinion concurring in part and dissenting in part, stated, “We agree
that the DMCA was not intended by Congress to be used to create a monopoly in the secondary
markets for parts or components of products that consumers have already purchased.”1087 This
judge also argued that fair use should be a defense to an anti-circumvention violation, because
where fair use applies there would be no “right of a copyright owner” to be infringed by the
circumvention.1088
By order entered Feb. 23, 2006, the parties stipulated to entry of summary judgment on
all DMCA claims and counterclaims in favor of Static Control Components. The order
preserved Lexmark’s right to appeal the order, as well as the Sixth Circuit’s interpretation of the
DMCA, after entry of final judgment on all issues in the cases.1089
On remand from the Sixth Circuit, the district court found that neither party had
submitted new evidence that would undermine the Sixth Circuit’s applicability of facts to the law
with respect to the issue of the copyrightability of the Toner Loader Program. Accordingly, the
Sixth Circuit’s decision controlled, and the court ruled that the Toner Loader Program was
insufficiently original to be copyrightable.1090 The court also held that, even if the Toner Loader
1084 Id. at 551.
1085 Id. at 552.
1086Id.
1087 Id. at 553. The judge also noted a link in the legislative history between the anti-circumvention prohibitions and
the facilitation of copyright infringement. He quoted a House Report to the DMCA stating that Section
1201(b)(1) sought to prohibit “making or selling the technological means to overcome these protections and
thereby facilitate copyright infringement.” Id. at 564 (emphasis by the court) (quoting H.R. Rep. 105-796 (Oct.
8, 1998)).
1088 387 F.3d at 562.
1089 See “Lexmark Stipulates to Judgment on DMCA Claims,” BNA’s Patent, Trademark & Copyright Journal
(Mar. 10, 2006) at 506.
1090 Static Control Components, Inc. v. Lexmark Int’l, Inc., 2007 U.S. Dist. LEXIS 36017 at *36 (E.D. Ky. Apr. 18,
2007).
- 249 -
Program were copyrightable, the defendant’s use of it on its chip was a fair use, principally on
the ground that the first fair use factor heavily weighed in the defendant’s favor “because
Lexmark does not even rebut that [the defendant’s] purpose for copying the [Toner Loader
Program] was solely for the purpose of enabling interoperability between remanufactured
Lexmark cartridges and Lexmark printers, not for the allegedly-expressive, hypotheticallycopyrightable
content contained therein.”1091
(ii) Chamberlain Group, Inc. v. Skylink Technologies,
Inc.
In this case, the plaintiff Chamberlain was the manufacturer of a garage door opener
(GDO) system which contained a feature known as “rolling code” designed to protect against
burglars equipped with “code grabber” devices. A code grabber allows a burglar to capture and
record the coded radio frequency (RF) signal sent by the transmitter device to the GDO, which
can then be used to open the GDO at a later time to enter the house.1092 Chamberlain’s rolling
code feature was designed to defeat code grabbers by changing the expected transmitted RF code
each time the GDO was activated. The feature was implemented by two copyrighted computer
programs owned by Chamberlain – one in the transmitter of the GDO and the other in the
receiver of the GDO that activated the motor to open the door. Each time the transmitter was
activated to open the door, the computer program in the transmitter would cause the next rolling
code in sequence to be sent to the receiver where it was stored, which code the receiver would
require the next time the transmitter was activated, or the door would not open.1093
The defendant sold a universal transmitter device that was capable of opening
Chamberlain’s GDO, although the opener code transmitted by the defendant’s door opener was
not a rolling code. The defendant’s door opener was able to bypass Chamberlain’s rolling code
feature by mimicking a certain “resynchronization” process of Chamberlain’s rolling code
software.1094 Chamberlain characterized that portion of the computer program in the receiver
that verified the rolling code as a protective measure that controlled access to Chamberlain’s
copyrighted computer program in the receiver, and argued that by circumventing the rolling code
feature and gaining access to the receiver computer program to open the garage door, the
defendant was in violation of the anti-circumvention provisions of Section 1201(a)(2).1095
Rulings by the District Court. The district court denied a motion by Chamberlain for
summary judgment on the anti-circumvention claim, analyzing a number of defenses raised by
the defendant. The first defense was that because the defendant’s universal transmitter was
capable of operating a number of different GDOs, it was not “primarily” designed to circumvent
the access control measure of Chamberlain’s GDO. The court rejected this argument, noting that
1091 Id. at *38.
1092 Chamberlain Group Inc. v. Skylink Technologies Inc., 292 F. Supp. 2d 1023, 1026-27 (N.D. Ill. 2003).
1093 Id. at 1027-28.
1094 Id. at 1029-32.
1095 Id. at 1028, 1033.
- 250 -
the defendant’s transmitter had one particular setting that served only one function – to operate
the Chamberlain rolling code GDO. The fact that the transmitter was able to serve more than
one purpose was insufficient to deny summary judgment to Chamberlain.1096
Next, the defendant argued that Chamberlain’s computer programs were not in fact
subject to copyright protection. The court ruled that this argument raised a disputed issue of
material fact sufficient to deny summary judgment, particularly since Chamberlain had not
supplied to the defendant the most recent version of the rolling code software until filing its reply
brief (which differed from the version of the software that Chamberlain had registered), and the
defendant had therefore not had a sufficient opportunity to review it.1097
Finally, the defendant argued that the consumers’ use of the defendant’s transmitter with
Chamberlain’s rolling code GDOs was authorized. In particular, Chamberlain argued that a
consumer who purchases a Chamberlain GDO owns it and has a right to use it to access his or
her own garage. Before the defendant’s transmitter was capable of operating the rolling code
GDO, the consumer was required to program the transmitter into the GDO. The defendant
argued that this fact demonstrated that the consumer had thereby authorized the use of the
defendant’s transmitter with the GDO software. The defendant further noted that the packaging
for Chamberlain’s GDO did not include any restrictions on the consumer’s ability to buy a
replacement transmitter or additional transmitter.1098 Thus, according to the defendant, “those
Chamberlain GDO consumers who purchase a Skylink transmitter are not accessing the GDO
without the authority of Chamberlain, but instead, have the tacit permission of Chamberlain to
purchase any brand of transmitter that will open their GDO.”1099 The court ruled that these facts,
together with the fact that there was a history in the GDO industry of universal transmitters being
marketed and sold to allow homeowners an alternative means to access any brand of GDO,
raised sufficient disputes of material fact about whether the owner of a Chamberlain rolling code
GDO was authorized to use the defendant’s universal transmitter to deny summary judgment to
Chamberlain.1100
Following this opinion, and at the invitation of the court, the defendant moved for
summary judgment on Chamberlain’s DMCA claim, which the court granted.1101 Although both
1096 Id. at 1037-38.
1097 Id. at 1038.
1098 Id. at 1039.
1099Id.
1100 Id. at 1040. An amicus brief submitted by the Computer and Communications Industry Association (CCIA)
argued that the court should deny summary judgment because the defendant’s activities fell within Section
1201(f) of the DMCA, which CCIA argued permits circumvention of a protective measure for the purpose of
achieving interoperability. The court noted that, although it was not reaching this issue, the defendant might
perhaps be entitled to summary judgment on that basis. Id.
1101 Chamberlain Group, Inc. v. Skylink Technologies, Inc., 292 F. Supp. 2d 1040 (N.D. Ill. 2003). As a
preliminary matter, Chamberlain asserted that the defendant bore the burden of proof to show that it was
authorized to circumvent – not access – Chamberlain’s software as an affirmative defense. The court disagreed,
ruling that it was clearly Chamberlain’s burden to demonstrate that the defendant circumvented a technological
measure without the authority of the copyright owner. Id. at 1044.
- 251 -
parties had agreed for purposes of Chamberlain’s original motion for summary judgment that
Chamberlain did not place any restrictions on consumers regarding the type of transmitter they
had to buy to operate a Chamberlain rolling code GDO, in opposing the defendant’s motion for
summary judgment, Chamberlain submitted an affidavit of its Vice President asserting that
Chamberlain did not authorize the circumvention of its rolling code GDOs, and argued that it had
not warned consumers against using unauthorized transmitters because it had no idea that other
transmitters could be made to operate its rolling code GDOs.1102 The court rejected these
arguments, finding that the affidavit was conclusory and entitled to little weight, and that
Chamberlain’s failure to anticipate the defendant’s technology did not “refute the fact that
homeowners have a reasonable expectation of using the technology now that it is available.”1103
Finally, Chamberlain argued that even if its customers were authorized to circumvent its
security measures, that had no bearing on whether sellers had similar authorization. The court
found this argument ignored the fact that (1) there was a history in the GDO industry of
marketing and selling universal transmitters; (2) Chamberlain had not placed any restrictions on
the use of competing transmitters to access its rolling code GDOs; and (3) in order for the
defendant’s transmitter to activate the Chamberlain garage door, the homeowner herself had to
choose to store the defendant’s transmitter signal into the Chamberlain GDO’s memory, thereby
demonstrating the homeowner’s willingness to bypass Chamberlain’s system and its
protections.1104
Accordingly, the court granted the defendant’s motion for partial summary judgment with
respect to Chamberlain’s DMCA claim.1105 Since so much of the district court’s opinion
emphasized the fact that Chamberlain had not placed restrictions on the type of transmitters
customers could use to operate Chamberlain’s GDOs, one must wonder whether the court would
have ruled differently had Chamberlain made clear to customers of its GDO products at the time
of purchase that they were not authorized to use any transmitters to access the software in their
GDOs other than Chamberlain’s transmitters. If so, then under the district court’s rationale, it
seems that DMCA claims of the type Chamberlain made in this case could easily be strengthened
by copyright holders in the future by making express statements of authorization with respect to
use of their products. The Federal Circuit, in its decision on appeal, expressly declined to reach
this issue.1106
The Federal Circuit’s Decision. On appeal, the Federal Circuit affirmed in a detailed
opinion that examined the legislative history and purpose of the anti-circumvention provisions of
the DMCA, and placed some significant boundaries around the scope of those provisions.1107
1102Id.
1103Id.
1104 Id. at 1946.
1105Id.
1106 The Federal Circuit did, however, make some statements suggesting that such restrictions might constitute
copyright misuse, as discussed below.
1107 The Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178 (Fed. Cir. 2004) ), cert. denied, 161
L. Ed. 2d 481 (2005).
- 252 -
The Federal Circuit began its analysis by ruling that the plaintiff has the burden under an anticircumvention
claim to prove that the defendant’s access to its copyrighted work was not
authorized. The court derived this holding from the distinction between a copyright – which is a
property right – and the anti-circumvention provisions – which do not establish a new property
right, but rather only a new cause of action for liability. Under a copyright (a property right), the
plaintiff need only establish copying, and the burden then shifts to the defendant to prove a
defense. By contrast, under the anti-circumvention provisions, the language of the statute
defines the cause of action in terms of a circumvention or trafficking without authority of the
copyright owner. The plaintiff therefore has the burden to prove that the defendant’s access was
unauthorized.1108
In a very significant ruling, the Federal Circuit held that the anti-circumvention
provisions of Section 1201 do not apply to all forms of circumvention to gain access to a work,
but rather only to circumventions that accomplish “forms of access that bear a reasonable
relationship to the protections that the Copyright Act otherwise affords copyright owners”1109 –
in other words, circumventions that facilitate some form of copyright infringement.1110
Conversely, “defendants whose circumvention devices do not facilitate infringement are not
subject to § 1201 liability.”1111
The court reached this conclusion based on three rationales. First, the court noted that in
the statutory language itself, “virtually every clause of § 1201 that mentions ‘access’ links
‘access’ to ‘protection.’”1112 Second, the court found that every decision cited by the plaintiff
finding anti-circumvention liability involved a circumvention that facilitated or was coupled with
copyright infringement. In the Reimerdes case, the DeCSS program allowed the user to
circumvent the CSS protective system and to view or to copy a motion picture from a DVD,
whether or not the user had a DVD player with the licensed technology. In the Lexmark case,
the court ruled that the defendant’s conduct in copying the Toner Loading Program constituted
copyright infringement. In the Gamemasters case, the defendant conceded that its product made
temporary modifications to the plaintiff’s copyrighted computer program. In the Real Networks
case, the defendant’s product allegedly disabled Real Networks’ copy switch, which defeated the
copyright owner’s ability to control copying upon streaming of the work.1113 “In short, the
access alleged in all [these] cases was intertwined with a protected right.”1114
Third, the court believed that a broad reading of the anti-circumvention provisions to
prohibit all forms of unauthorized access, whether or not protected copyright rights were thereby
implicated, as urged by Chamberlain, would risk too much potential harm to competition.
1108 Id. at 1193.
1109 Id. at 1202.
1110 Id. at 1195, 1203.
1111 Id. at 1195.
1112 Id. at 1197.
1113 Id. at 1198-99 (citations omitted).
1114 Id. at 1199.
- 253 -
“Chamberlain’s proposed construction would allow any manufacturer of any product to add a
single copyrighted sentence or software fragment to its product, wrap the copyrighted material in
a trivial ‘encryption’ scheme, and thereby gain the right to restrict consumers’ rights to use its
products in conjunction with competing products. In other words, Chamberlain’s construction of
the DMCA would allow virtually any company to attempt to leverage its sales into aftermarket
monopolies – a practice that both the antitrust laws and the doctrine of copyright misuse
normally prohibit.”1115
The court noted that such a broad reading would also contradict other statutory provisions
of the DMCA. In particular, Section 1201(c)(1) provides that nothing in Section 1201 shall
affect rights, remedies, limitations, or defenses to copyright infringement, including fair use.
The court noted that a reading of Section 1201 that prohibited access without regard to the rest of
the copyright statute would clearly affect rights and limitations, if not remedies and defenses,1116
and might also be tantamount to “ignoring the explicit immunization of interoperability from
anticircumvention liability under § 1201(f).”1117
The court’s statements might imply that circumvention for fair uses is privileged. Indeed,
the court stated, “Chamberlain’s proposed construction would allow copyright owners to prohibit
exclusively fair uses even in the absence of any feared foul use. It would therefore allow any
copyright owner, through a combination of contractual terms and technological measures, to
repeal the fair use doctrine with respect to an individual copyrighted work – or even selected
copies of that copyrighted work. Again, this implication contradicts § 1201(c)(1) directly.”1118
Despite these pregnant statements, however, the court stated in a footnote, “We leave open the
question as to when § 107 might serve as an affirmative defense to a prima facie violation of §
1201. For the moment we note only that though the traditional fair use doctrine of § 107 remains
unchanged as a defense to copyright infringement under § 1201(c)(1), circumvention is not
infringement.”1119
Turning to Chamberlain’s specific claims under Section 1201(a)(2), the court
summarized the requirements for liability as follows:
A plaintiff alleging a violation of § 1201(a)(2) must prove: (1) ownership of a
valid copyright on a work, (2) effectively controlled by a technological measure,
which has been circumvented, (3) that third parties can now access (4) without
authorization, in a manner that (5) infringes or facilitates infringing a right
protected by the Copyright Act, because of a product that (6) the defendant either
1115 Id. at 1201 (citations omitted).
1116 Id. at 1200.
1117 Id. Although amicus Computer and Communications Industry Association urged the court to consider the
import of Section 1201(f) on the case, the court did not reach the issue since it held there had been no anticircumvention
violation by the defendant in the first place under its reading of the scope of the DMCA. Id. at
1191 n.8.
1118 Id. at 1202.
1119 Id. at 1200 n.14.
- 254 -
(i) designed or produced primarily for circumvention; (ii) made available despite
only limited commercial significance other than circumvention; or (iii) marketed
for use in circumvention of the controlling technological measure.1120
The court ruled that Chamberlain had failed to satisfy both the fourth and fifth elements
of the test. With respect to the fifth element, Chamberlain had neither alleged copyright
infringement nor explained how the access provided by the defendant’s transmitter facilitated
third party infringement of any of its copyright rights. Instead, the defendant’s transmitter
merely enabled the end user to make legitimate use of the computer program in the GDO.1121
Nor had Chamberlain established the fourth element. The record established that
Chamberlain had placed no explicit restrictions on the types of transmitter that the homeowner
could use with its system at the time of purchase.1122 “Copyright law itself authorizes the public
to make certain uses of copyrighted materials. Consumers who purchase a product containing a
copy of embedded software have the inherent legal right to use that copy of the software. What
the law authorizes, Chamberlain cannot revoke.”1123 Although this statement suggests that a
plaintiff could not even use contractual prohibitions to eliminate authorization to circumvent
controls to gain access to the software in a way that did not facilitate infringement, the court
backed away from any such absolute principle in a footnote: “It is not clear whether a consumer
who circumvents a technological measure controlling access to a technological measure
controlling access to a copyrighted work in a manner that enables uses permitted under the
Copyright Act but prohibited by contract can be subject to liability under the DMCA. Because
Chamberlain did not attempt to limit its customers’ use of its product by contract, however, we
do not reach that issue.”1124
In conclusion, then, the court held, “The Copyright Act authorized Chamberlain’s
customers to use the copy of Chamberlain’s copyrighted software embedded in the GDOs that
they purchased. Chamberlain’s customers are therefore immune from § 1201(a)(1)
circumvention liability. In the absence of allegations of either copyright infringement or §
1201(a)(1) circumvention, Skylink cannot be liable for § 1201(a)(2) trafficking.”1125 The court
therefore affirmed the district court’s grant of summary judgment in favor of Skylink.1126
1120 Id. at 1203.
1121 Id. at 1198, 1204.
1122 Id. at 1183.
1123 Id. at 1202.
1124 Id. at 1202 n.17.
1125 Id. at 1204.
1126Id.
- 255 -
(iii) In re Certain Universal Transmitters for Garage
Door Openers
In addition to its lawsuit against Skylink, Chamberlain also filed an action in the
International Trade Commission to bar the importation of Skylink’s GDOs. That investigation
established a second ground beyond that of the district court’s ruling as to why Skylink had not
committed a violation of the DMCA. Specifically, in an Initial Determination concerning
temporary relief in the investigation that preceded the district court’s ruling, an administrative
law judge denied temporary relief on the ground that Skylink’s transmitters did not violate the
DMCA because they “do not circumvent Chamberlain’s copyrighted rolling code software
program, but instead send fixed identification code signals to Chamberlain’s GDOs that fall
outside of the copyrighted software. … The fact that [Skylink’s] transmitters send a fixed
identification code that does not circumvent Chamberlain’s copyrighted software program
removes those products entirely from the purview of the DMCA, regardless of whether
Chamberlain warns its customers and Skylink that non-rolling code transmitters are
unauthorized.”1127
After the district court’s ruling, Skylink moved to dismiss the ITC investigation on the
ground that Chamberlain’s claim was barred under res judicata by that ruling. Chamberlain
opposed the dismissal on the ground that there were new facts not before the district court –
namely, that Chamberlain had since changed its GDO users’ manuals to expressly warn
customers that use of non-rolling code transmitters would circumvent Chamberlain’s rolling
code security measure, and to make clear that customers were not authorized to access
Chamberlain’s operating software using non-rolling code transmitters.1128 The administrative
law judge ruled that this fact was insufficient to avoid res judicata, because the fact could have
been asserted before the district court, since the administrative ruling on the request for
temporary relief issued before the district court acted.1129 In addition, the administrative law
judge ruled that Chamberlain’s new owners’ manuals “impose no enforceable restrictions on
consumers even if they do ‘warn’ them that non-rolling code transmitters are ‘unauthorized.’
There are no negative consequences for a consumer who ignores the statement in Chamberlain’s
new manuals.”1130 Accordingly, the administrative law judge determined that the investigation
should be terminated in its entirety and certified that determination to the Commission.1131
(iv) Storage Technology Corporation v. Custom
Hardware Engineering & Consulting
In this case, the plaintiff Storage Technology Corporation (“StorageTek”) sold systems
for storing and retrieving very large amounts of computer data. StorageTek also serviced its
1127 In re Certain Universal Transmitters for Garage Door Openers, 70 U.S.P.Q.2d 1906, 1909 (I.T.C. 2004).
1128 Id. at 1907-08.
1129 Id. at 1909-10.
1130 Id. at 1910.
1131Id.
- 256 -
customers’ installations by means of diagnostic software, called the “Maintenance Code,” that it
used to identify malfunctions and problems in its customers’ storage systems. In order to protect
its service market, StorageTek restricted access to the Maintenance Code with a proprietary
algorithm called GetKey.1132
When activated, the Maintenance Code ran a series of diagnostic tests and provided
information concerning the nature of existing or potential problems. It was programmed to be
set at different levels between 0 and 9. At the 0 level (the usual setting), the Maintenance Code
was disabled. Above 0 the Maintenance Code activated specific diagnostic functions at different
levels. To enable the Maintenance Code for a particular system, a technician was required to
contact StorageTek’s technical support staff, provide the serial number of the equipment being
serviced and identify the desired level of the Maintenance Code. The technician would then be
given a GetKey password specific to the request that the technician was required to enter in order
to reset the maintenance level. During the process of accessing the Maintenance Code and
changing the level, a complete copy of the code was made in the RAM memory of the
system.1133
The defendants competed with StorageTek for servicing StorageTek systems. They
figured out how to circumvent the GetKey algorithm to gain access to the Maintenance Code and
to reset its maint