USDC D. Minnesota, September 24, 2008

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In a recent decision involving file-sharing on peer-to-peer networks, the United States District Court for the District of Minnesota held that simply making songs available for downloading on peer-to-peer networks, without actual proof of downloading by others, does not constitute infringing distribution under the Copyright Act. In this action, the judge had instructed the jury that “[t]he 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.” The jury returned a verdict for the plaintiffs and awarded $222,000 in statutory damages. On defendant’s motion for a new trial, the court sua sponte raised the issue of whether this instruction adopted an erroneous interpretation of the Copyright Act’s distribution right.

During trial, the plaintiff recording companies had demonstrated that an investigator they hired had downloaded 24 songs that the defendant made available on the peer-to-peer network Kazaa. The court held that the dissemination of these songs to the investigator constituted distribution, but nonetheless rejected plaintiffs’ argument that the jury instruction at issue, even if erroneous, had no prejudicial effect in light of the fact that plaintiffs had proved violations of the distribution right. The court held that because it was impossible to determine the basis for the verdict and damages award, the erroneous jury instruction at issue requires a new trial.

In holding that simply making sound recordings available over peer-to-peer networks without actual dissemination does not constitute distribution, the court primarily relied on the statutory framework of the Copyright Act. Noting that section 106(3) of the Copyright Act grants an exclusive right “to distribute copies or phonorecords of the copyrighted work by sale or other transfer of ownership, or by rental, lease, or lending,” the court found the plain meaning of this phrase to require actual dissemination. Moreover, the court noted, other provisions of the Copyright Act define “distribute” to include offers to disseminate, demonstrating Congress’s ability to prohibit offers of dissemination when it so chooses. Contrasting these other provisions, the court stated, “While the Copyright Act does not offer a uniform ‘distribution,’ the Court concludes that, in light of the examined provisions, Congress’s choice to not include offers to do the enumerated acts or the making available of the work indicates its intent that an actual distribution or dissemination is required in § 106(3).”

In reaching its holding, the court rejected several arguments made by the plaintiffs. First, the court rejected the argument that, under the Copyright Act, “distribution” is synonymous with “publication,” defined to include both distribution and offers of distribution. The court held that, notwithstanding certain portions of the legislative history of the Copyright Act equating the two terms, “that fact cannot override the plain meaning of the statute.”

Second, the court also rejected the argument that the plaintiff had violated the exclusive right under Section 106 “to authorize” distribution by making songs available over the peer-to-peer network, holding that “the authorization clause merely provides a statutory foundation for secondary liability, not a means of expanding the scope of direct infringement liability. . . . Without actual distribution, there can be no claim for authorization of distribution.”

Finally, the court rejected the plaintiffs’ argument that U.S. treaty obligations under the World Intellectual Property Organization and the WIPO Performances and Phonograms Treaty, as well as certain free trade agreements, require the United States to provide an exclusive “making-available” right with respect to copyrighted works. Noting that none of these treaties is self-executing and thus does not create an independent enforceable right, the court explained that the U.S. Supreme Court’s Charming-Betsy doctrine nonetheless directs courts to adopt reasonable constructions of Congressional statutes so as to comply with the United States’ international obligations. The court held, however, the application of the Charming-Betsy doctrine could not override the clear Congressional intent to exclude a making-available right from the distribution right.

Accordingly, the court vacated the judgment and granted defendant’s motion for a new trial.