Secondary liability for copyright infringement

Question 1

Whats the difference between primary infringement and secondary infringement?

Answer 1

• Primary (or Direct) infringement = engaging in a restricted act (e.g. reproduction,
  distribution, communication to the public, …) without authorization from the © holder
• Secondary (or Indirect) infringement = to be responsible for encouraging, facilitating or profiting from an infringing activity
  Device makers, concert venues, marketplaces, internet service providers etc. can be held indirectly liable for the copyright infringements committed by those who use their goods or services.

Question 2

How’s the legislation for secondary liability for copyright infringement?

Answer 2

Neither the TRIPs Agreement nor the Berne Convention says anything about secondary
liability.
* In the USA: not statutorily defined. Courts apply common-law doctrines of Contributory
infringement and Vicarious liability
* Not harmonized under EU law
* European countries apply various civil-law torts, e.g. contribution, facilitation,
authorization,
* Secondary liability typically requires some form of knowledge and/or control over the
infringing activity

It is important because… “When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious
infringement.”

Question 3

How’s the legislation in the USA for secondary liability?

Answer 3

Contributory infringement
* Derived from tort law (enterprise liability)
* The basic test is a two-parts requirement that the defendant
(1) has knowledge of a third party’s infringing activity, and
(2) induces, causes, or materially contributes to the infringing conduct.
Example: Gershwin Pub. Corp. v. Columbia Artist Management, Inc., 443 F.2d 1159 (2d Cir. 1971)
* A company in the business of managing and organizing live concerts for third-parties (local communities, artists and performers) was held liable of causing the copyright infringement committed by those third parties.
* One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a “contributory” infringer – even absent “direct financial interest”

Vicarious liability
* Derived from the agency principle of respondeat superior. It requires
(1) the right and ability to supervise the infringing conduct, and
(2) a direct financial interest in the infringing activity
Example: Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (2nd Cir. 1963)
* A department store chain (Green) was held accountable for the infringing sale of pirated records
manufactured and sold by its retailing concessionaire (Jalen).
* Right and ability to supervise + direct financial interest = sufficient to fix vicarious liability upon the company

Question 4

Explain the case Sony v. Universal City Studios, 464 U.S. 417 (1984), the Sony Betamex “safe harbor”.

Answer 4

The sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate purposes, or, indeed, is merely capable of substantial noninfringing uses.
* The Court also found that the making of individual copies of TV shows for purposes of time-shifting is fair use

Question 5

Explain the case A&M Records v Napster, and the peer-to-peer network

Answer 5

• Napster provided its customers with “MusicShare” software, which enabled them to share mp3 music files with other customers.
• The software was combined with a database locating all the available files on the Napster’s network.
  The Court’s decision:
• No fair use – Space-shifting, unless Sony’s time-shifting, cannot be considered private use when files
  are shared with the rest of the world
• Napster’s ability to deny customers access to its database giving the locations of mp3 files, and
• Napster’s knowledge, or reason to know, of the infringing activities being carried by its customers creates a duty to act to prevent infringements

After Napster…
* From ‘centralized’ to ‘decentralized’: p2p networks where the transactions between users do not need any central database
* The software providers do not have ongoing means to control the transactions occurring on the network (Like Gnutella, grokster…)

Question 6

Explain the case MGM Studios, Inc. v. Grokster.

Answer 6

The Grokster’s defence: no contributory infringement because
* The software provided by Grokster has substantial noninfringing uses (Sony)
* Grokster does not retain control over p2p transactions (Napster)

The Supreme Court decision: Grokster liable for inducing copyright infringement

Still some questions about this case:
* “Inducement”: third category of secondary liability? Or subset of contributory infringement?
* Can software developers still rely on Sony safe harbour (as long as they do not “induce” infringement)?