Copyright infringement by ISPs

By Priyan Garg

Amity University, Uttar Pradesh

Editor’s note: If you can’t protect what you own—you don’t own anything. That is the principle that copyright rests upon – providing a bundle of rights to protect one’s data on the internet and other systems. It prevents the copying of all or a substantial part of a work. There can be copyright infringement where only a small portion of the work is copied but the portion is of great qualitative importance in the original. This paper examines the conflict over ISP liability, and leading case laws and primary legislations regarding the same.

Abstract

Copyright, as its name suggests, includes the right to prevent others from copying one’s work. Copyright does not protect all forms of information against all forms of copying but it provides a useful bundle of rights that may apply to protect data on the Internet and electronic bulletin board systems.

Copyright is established by federal statute in Canada and the United States. These statutes set out a variety of related rights which belong to the copyright holder:

  • the right to stop infringement by copying the whole or a substantial part of the work; the right to record a literary, dramatic or musical work where the record is mechanically performed, or delivered;
  • the right to communicate a work to the public by telecommunications;
  • the right to import a work for selling or hire;
  • in respect of computer software, the right to rent out a computer program;
  • in respect of artistic works, the right to present a work at a public exhibition; and
  • in the United States, the right to prepare derivative works.

The Canadian statute also provides for moral rights, which belong to the creator of the work. Moral rights are owned by the author(s) even if the copyright in the work has been assigned to someone else. They cannot be assigned but can be waived.

Copyright prevents the copying of all or a substantial part of a work. Whether a portion of a work is “substantial” is a subjective question, which includes a consideration of both the quality and quantity of the portion. There can be copyright infringement where only a small portion of the work is copied but the portion is of great qualitative importance in the original. For example, one English case found infringement where a newsreel producer recorded 20 seconds of a popular march without the permission of the copyright owner. Moreover, the intention of the defendant is irrelevant to the question of whether infringement occurred. As former Beatle George Harrison learned, unconscious copying of a portion of a work may amount to infringement.

To be protected by copyright, a creation must fit within one or more of the recognized categories of subject matter. The basic categories of “works” are literary, dramatic, artistic or musical. The Canadian Act includes a computer program within its definition of a literary work. Another category of work is the compilation, which applies to works resulting from the combination of other categories of works and works resulting from the selection or arrangement of data. Multimedia products and databases are good examples of compilations.

Introduction

“If you can’t protect what you own—you don’t own anything.”[1]

– Motion Picture Association of America

“To promote the progress of knowledge on the Internet, those who are building the Net itself need fair and predictable ground rules”[2]

– S. Telephone Association

The above quotes, the first from a member of the content community and the second from an association representing telephone companies and Internet Service Provider (ISP), highlight the tension that exists between copyright holders and Internet Service Providers concerning the issue of on-line copyright infringement liability. As the Internet has grown, the problem of on-line copyright infringement has developed into an economically significant issue.[3] According to the Motion Picture Association of America, U.S. companies are losing millions per year to on-line copyright pirates, and with the current growth of the Internet, the content community fears that the amount lost to pirates will only increase.[4] The ISP industry, however, while acknowledging its unique position in terms of the Internet, does not want to become a “deep-pocket”, third-party defendant in every on-line copyright infringement lawsuit. The Internet Service Providers have argued that the law’s lack of predictability in this area and its standards for ISP copyright liability over the past few years have caused real concerns for this new and growing industry.[5] ISPs have argued that due to the nature of the Internet and the unique role of the ISP industry, a narrow limitation on copyright infringement liability should be established for Internet Service Providers so that those who are building the Internet will have a clearer sense of how and when they might be held liable for on-line copyright infringement.[6] In turn, they argue that a heightened level of certainty about this issue will help speed the growth of the Internet by encouraging more entrepreneurs to enter the ISP industry.

How fast has the Internet grown? At the end of the Reagan-Bush era, just six years ago, the world of cyberspace consisted of fewer than 50 World Wide Web sites, most of them used by computer scientists and physicists[7]. Today the Internet is no longer just for researchers, and it is expected that within five years international commerce on the Internet could reach $3.2 trillion. The fact is that in the past 72 months the number of Internet users has risen from hundreds to millions of users, and is estimated by some experts to reach perhaps a billion users by the year 2008. In terms of copyright infringement, the commercialization and exponential growth of the Internet create an entirely new set of problems for copyright holders.[8]

In this context, it is understandable why writers, publishers, and researchers often look upon using the Internet as “Riding the Tiger.” While the Internet has allowed researchers, educators, artists and publishers to expand their markets at an unprecedented rate, the same technology allows any anonymous and invisible copyright pirate to copy and disseminate instantaneously anything that is displayed on the Internet. Understanding how easy it is to duplicate copyrighted material from the Internet today, the content community has valid concerns about how much easier pirating could be five or ten years from now, and they argue that something must be done now to address this problem.

Recognizing the inherent difficulty of enforcing copyrights against individual Internet users world-wide, some experts have argued that the answer to this problem is placing legal liability for copyright infringement on those who allow and enable Internet copyright pirates to exist, namely the ISPs. It is argued that ISPs profit from the pirates’ use of the Internet, and in comparison to an independent publisher or author, an ISP is in a much better position to police how its subscribers use the Internet. On the other side of the argument, ISPs claim that they are passive carriers similar to telecommunications companies and therefore should be granted some limitation from copyright infringement liability. In addition, they argue that to make ISPs liable could stifle the growth of the Internet.

Others argue that the answers to this problem will come from technological innovations, such as the use of “digital watermarking”, rather than through legal reforms.[9] In addition, the argument has been made that cooperation between ISPs and the content community is what is truly needed to solve this problem. ISPs share the content community’s desire to see the Internet grow, and some believe that the threat of holding ISPs liable for copyright infringement may not be the best way to encourage ISPs to help minimize Internet copyright piracy.

The issue of on-line copyright infringement has been around since the use of the Internet started to expand rapidly in the early 1990’s and has been the subject of extensive federal executive branch activities, court cases, and Congressional action. In the closing days of the 105th Congress, President Clinton signed into law a bill that addressed this issue; Title II of the Digital Millennium Copyright Act, the Online Copyright Infringement Liability Limitation Act of 1998.[10]

Copyright infringement

Copyright prevents the copying of all or a substantial part of a work. Whether a portion of a work is “substantial” is a subjective question, which includes a consideration of both the quality and quantity of the portion. There can be copyright infringement where only a small portion of the work is copied but the portion is of great qualitative importance in the original.[11] For example, one English case found infringement where a newsreel producer recorded 20 seconds of a popular march without the permission of the copyright owner.[12] Moreover, the intention of the defendant is irrelevant to the question of whether infringement occurred. As former Beatle George Harrison learned, unconscious copying of a portion of a work may amount to infringement.[13]

There are two main types of copyright infringement. The first is direct infringement, where the defendant has copied the whole or a substantial part of the work. The second is contributory infringement, where the defendant has authorized another to make infringing copies of the work.[14] What amounts to “authorizing” another to make infringing copies will depend on the facts of each case.[15] However, merely making a method of copying available to another person may not amount to contributory infringement.

For example, in Sony Corp. v. Universal City Studios [16] the U.S. Supreme Court rejected a claim that a manufacturer of video cassette recorders was liable for contributory infringement because people might use them to make unauthorized copies of copyright movies shown on television. The court reasoned that there were other, legitimate uses for video cassette recorders, such as using the VCR to temporarily “time-shift” programs. Because the machines were capable of substantial non-infringing uses their sale did not amount to contributory infringement.[17]

Some limited ability to use copyright material without authorization is provided for by statute. In Canada, s. 27 of the Act sets out the “fair dealing” defence which applies to “any fair dealing with any work for the purposes of private study, research” and “any fair dealing with any work for the purposes of criticism, review or newspaper summary, if (i) the source, and (ii) the author’s name, if given in the source, are mentioned.” In the United States, a more flexible and sophisticated “fair use” defence exists. The U.S. Act states that whether a particular use is “fair use” will be determined based on four factors: the purpose of the use, the nature of the copyrighted work, the amount used, and the effect of the use on the commercial market for the original.[18]

To be protected by copyright, a creation must fit within one or more of the recognized categories of subject matter. The basic categories of “works” are literary, dramatic, artistic or musical. The Canadian Act includes a computer program within its definition of a literary work. Another category of work is the compilation, which applies to works resulting from the combination of other categories of works and works resulting from the selection or arrangement of data. Multimedia products and databases are good examples of compilations.

A work must be “fixed” in a more or less permanent form before it will receive copyright protection. Fixation occurs when text is written (or typed and saved on a computer), a graphic is drawn, or an audio work is recorded. The particular storage medium is irrelevant. As well, the work must be of a sufficient size in order to be protected. Traditionally, song or book titles were too short to constitute a literary work and were denied copyright protection.[19]

A work must be “original” to qualify for copyright but the standard of originality is not particularly high. Usually, a work will be original where it involves the creator’s own expression rather than copying from another source. In the case of compilations, the United States Supreme Court has ruled that a compilation must show originality in either the arrangement or the selection of its data. In Feist Publications Inc. v. Rural Telephone Service Company Inc.,[20] the court held that a phone book which listed all telephone numbers in a particular area in alphabetical order did not qualify for copyright protection. The directory failed to display originality in either its arrangement (all subscribers listed alphabetically by last name) or its selection (all subscribers within a particular area). Later U.S. decisions have found the necessary degree of originality in other types of telephone directories.[21]

It remains unclear whether Feist will apply in Canada. Traditionally, Canadian and English courts have provided a higher level of protection to compilations; they have protected compilations on the basis of the labour spent by the creator rather than the originality of the work,[22] which is sometimes referred to as the “sweat of the brow” test. However, the definition of a compilation included in the Canadian Copyright Act in 1993 suggests that selection and arrangement of data are the key elements necessary to qualify for copyright protection. In a recent Canadian case, Tele-Direct (Publications) Inc. v. American Business Information, Inc.[23], the court considered whether the “yellow pages” produced by the plaintiff could be protected under the Copyright Act as a compilation. The court explicitly avoided dealing with whether Feist should be adopted in Canada. Instead, the court focussed on the particular facts of the case, concluding that Tele-Direct exercised only a minimal degree of skill, judgment or labour in its overall arrangement which was insufficient to support a claim of originality in the compilation so as to warrant copyright protection.

A basic principle of copyright is that it will protect original expression but will not protect the general ideas or facts being expressed. For example, in the case of a compilation of facts, copyright will prevent others from copying a substantial portion of the compilation or copying the form in which the facts are expressed. Note that copyright will not prevent others from taking a particular fact from the compilation, expressing it in their own manner and then using it for their own purposes.

On the other hand, copyright does protect ideas in the limited sense that it will protect certain levels of abstraction of a work, such as the plot of a movie or book. In the case of software, courts have ruled that copyright will protect the “structure, sequence and organization” of a program.[24] In order to qualify for protection, the abstraction must be so closely tied to the work that they may be considered part of the expression of the work. The U.S. jurist Learned Hand proposed an influential “levels of abstraction” test, which has been summarized as follows: “Judge Hand recommended comparing the similarities between the two works as a `series of abstractions’ of increasing generality. If the similarities pass beyond the point of mere `ideas’ into the realm of expression, there is infringement.” The line between the idea and expression of a work is difficult to determine and will be drawn on a case-by-case basis.

To receive protection under the Copyright Act of Canada, the work must either be created in Canada or be created by a citizen of a group of countries who have agreed to offer reciprocal rights to Canadian authors in their countries.[25] Where these requirements are met, copyright arises automatically. Registration of a work makes it easier to prove the author’s copyright at a later date, but registration is not necessary in order for copyright to arise.

History

As seen in the following cases, copyright infringement liability on the Internet often hinges on the degree to which the owner or operator of a computer Bulletin Board Service (BBS) or Internet Service Provider has knowledge and control of the information placed on the Internet by individual subscribers.

In Playboy Enterprises Inc. v. Frena,[26] the defendant was an operator of a computer bulletin board service that, unknown to the defendant, distributed unauthorized copies of Playboy Enterprises, Inc.’s (PEI) copyrighted photographs.

For a fee, anyone with an appropriately equipped computer could log onto the BBS, browse through different BBS directories to look at the pictures, download the high quality computerized copies of the photographs, and then store the images onto their home computer.  Among the many pictures stored on Frena’s BBS were one hundred and seventy that were copies of Playboy’s copyrighted photographs. Frena admitted that the materials were displayed on the BBS and that he never received consent from Playboy. However, Frena argued that he did not personally upload any of the infringing pictures onto the BBS (his subscribers had uploaded the images) and that he removed the infringing pictures as soon he was made aware of the matter.

On these facts, the court found Frena guilty of copyright infringement. In making its determination, the court analysed the elements needed for copyright infringement as follows. In order to establish a prima facie case of copyright infringement, the plaintiff must show ownership of the copyright and “copying” by the defendant.[27] In this case there was no question that Playboy owned the copyrights on the photographs due to the fact that at trial, Frena had offered no evidence to rebuff Playboy’s copyright documentation.  As for copying, the court noted that since evidence of copying is rarely found, copying could be inferentially proven by showing that defendant Frena had access to the copyrighted work, the work is substantially similar to the copyrighted work, and that one of the rights statutorily guaranteed to copyright owners is implicated by the defendant’s actions. In this case there was no question about the elements of access and similarity—Playboy sells 3.4 million copies of its magazine per month in the United States, and the pictures were essentially exact copies of the copyrighted photographs. The only remaining issue was whether the defendant’s actions implicated one of the copyright holders exclusive rights.

The court held that Frena’s actions had infringed Playboy’s exclusive right to distribute the works and the exclusive right to display the works. Concerning the right to distribute, the court held that there was no question that Frena supplied a product containing unauthorized copies of a copyrighted work. As for display rights, the court held that Frena’s display of the copyrighted materials to his subscribers constituted a public display even though his subscribers were limited in number.

Frena defended his use as within the scope of the fair use exception to copyright infringement. His argument, however, fell on deaf ears. The court found that Frena’s actions were commercial in nature and of the sort that if they were to become widespread would result in a substantially adverse impact on the potential market for or value of the plaintiff’s work and therefore were not within the fair use exception.

Concerning Frena’s argument that he had not uploaded any of the infringing photographs and was not aware that the photographs were in fact infringing PEI’s copyrights, the court wrote that

“it does not matter that Defendant Frena may have been unaware of the copyright infringement. Intent to infringe is not needed to find copyright infringement. Intent or knowledge is not an element of copyright infringement, and thus even an innocent is liable for infringement; rather, innocence is significant to a trial court when it fixes statutory damages.”
Because knowledge is not an element of direct copyright infringement, the court set forth a standard that the creation and/or operation of a BBS can be sufficient to establish direct infringement liability where copyrighted materials appears on the system.

In a similar case, Sega Enterprises v. MAPHIA,[28] the defendants owned and operated a BBS known as “MAPHIA”, which specialized in sharing video games among BBS subscribers. Sega Enterprises, a video game manufacturer, held copyrights on many of the video games that, with defendant’s knowledge and indeed with their encouragement, were uploaded and downloaded onto the BBS by MAPHIA subscribers without the consent of Sega. In supporting the plaintiff’s motion for a preliminary injunction, the court found that Sega had established the required probability of success on the merits for a case of direct and contributory copyright infringement against the defendants.

In order to prove a prima facie case of direct copyright infringement, Sega had to establish ownership and copying of their copyrighted work. Concerning the issue of ownership, there was no question that Sega owned the copyright for the video games. As for the “copying” requirement, the court cited MAI Systems Corp. v. Peak Computer, Inc.,[29] which held that saving an unauthorized copy of a work on a computer’s “Random Access Memory” satisfies the “copying” element needed prove infringement. Applying this standard to the facts of the Sega case, the court held that MAPHIA’s activities satisfied the copying requirement.

The MAI Systems case involved a computer repair person who was not authorized to use a computer owner’s licensed operating system software. The repairman’s turning on of a computer automatically loaded an operating system into RAM for long enough to check an “error” log. The problem stems from how software systems function. The result of turning on the computer was that an unauthorized copy of the operating system was automatically generated on the computer. The MAI Systems case held that the automatic copying of an operating system onto the computer’s RAM satisfied the “copying” requirement for copyright infringement. In the Sega case, the court cited the MAI Systems case and held that the act of uploading or downloading a game from the MAPHIA BBS constituted a “copying.”

As for the issue of contributory copyright infringement, the court found that MAPHIA’s activities, including the fact that the company sold hi-tech equipment that is only used for the illegal copying of video game software, satisfied the standard for contributory copyright infringement. The court held that even if the defendants did not know when games will be uploaded to or downloaded from the MAPHIA BBS, their role in the copying, including provision of facilities, direction, knowledge and encouragement, amounts to contributory copyright infringement.

The defendants argued that their activities fell within the fair use exception for copyright infringement. Among the reasons for rejecting this argument, the court pointed out that in order to use the fair use defence the defendant must first possess an authorized copy of the copyrighted work. The defendants admitted that they did not own an authorized copy of any of the Sega games and as a result their fair use defence failed.

Notably, MAPHIA held in that case that a single, even temporary copy of a copyrighted work saved on a computer file is prima facie an infringement of the copyright. Due to the fact that the Internet functions by having files temporarily download onto a user’s computer, extending the MAI Systems case, as the MAPHIA court did, could mean that every time an Internet-surfer transfers and/or opens a document or a Web-page on the Internet, he or she would satisfy the “copying” requirement for copyright infringement. This problem was addressed in both the Administration’s White Paper and in the Online Copyright Infringement Liability Limitation Act.

Another important copyright case involving an ISP is Religious Technology Center v. Netcom.[30] The facts of the case are as follows: Defendant Dennis Erlich is a former minister of the Church of Scientology (the Church) and is a vocal critic of the Church. At the time of this case, Erlich was subscriber to an on-line BBS managed by co-defendant Thomas Klemesrud. The BBS, known as “support.com” functioned as an on-line forum for discussion and criticism of the Church. The BBS obtained access to the Internet through Netcom, one of America’s largest ISPs. The plaintiffs in the case, Religious Technology Center and Bridge Publications, Inc. (RTC) hold copyrights in the unpublished and published works of L. Ron Hubbard, the late founder of the Church of Scientology. Mr. Erlich posted portions of Mr. Hubbard’s works onto the BBS. Initially, RTC attempted to persuade Erlich to remove the materials but Erlich refused. RTC then asked Klemesrud and in turn, Netcom to keep Erlich off the Internet. Both refused. Klemesrud refused to take Erlich off the BBS because RTC refused to prove that it owned the copyrights to the works posted by Erlich. Netcom refused, stating that it would be impossible to pre-screen Erlich’s material, and to kick Erlich off the Internet meant kicking off the hundreds of users of Klemesrud’s BBS. As a result of their refusal to kick Erlich off the Internet, RTC added Klemesrud and Netcom to its lawsuit against Erlich. While RTC charged Erlich with several claims, the claims against Klemesrud and Netcom were limited to copyright infringement. For the purposes of brevity, this paper will address only those issues concerning Netcom’s potential liability for direct and vicarious copyright infringement.

The first requirement for satisfying a prima facie case of copyright infringement is to prove that the defendant made a copy of a valid copyrighted work.[31] In this case the court analysed the technological workings of the Internet and acknowledged the fact that the Internet functions by creating temporary copies of documents on every computer that transfers, receives and/or opens a given document. Nevertheless, although copies had technically been made, the court held that Netcom was not liable for direct copyright infringement. In reaching this decision the court wrote that, unlike the repairman in the MAI Systems case, Netcom had not initiated the copying of the copyrighted works in question. All Netcom did was establish a computer system that was integrated into the Internet. The court wrote that applying the MAI standard in this case would mean that everyone who owns a computer through which Erlich’s messages had been sent would be liable for copyright infringement. The court found this unreasonable and stated that “there is no need to construe the [Copyright] Act to make all of these parties infringers.” The court held that “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.” The court held that it “does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet.”

After dismissing the claim for direct copyright infringement, the court stated that Netcom was similar to the owner of a public copier machine and therefore its liability should be analysed under the category of secondary copyright infringement.

The court held that Netcom was not liable for vicarious copyright infringement. For a finding of vicarious copyright infringement, RTC had to prove that Netcom had the right and ability to control the infringer’s actions and also received a direct financial benefit from the infringement. While the court found that questions of fact did exist concerning whether Netcom had the right and ability to control Erlich’s activities, the court held that the ISP did not receive a direct financial benefit from the infringement. The court reasoned that Netcom’s uniform monthly subscription fees and the fact that there was no evidence that Erlich’s infringement helped Netcom gain more subscribers was enough to prove that the ISP did not gain a financial benefit from the infringement. RTC’s claim of vicarious copyright liability was dismissed.

The holding in this case is an excellent example of the courts melding the law to fit new technology. Congress later codified it as part of the Online Copyright Infringement Liability Limitation Act of 1998.

A similar case, but one that concerns a Website news-group rather than a BBS, is Playboy Enterprises v. Webbworld, Inc.,[32] In this case, defendant Webbworld operated a Website-based news-group which collected news, pictures and articles concerning adult entertainment from various other web-pages and posted them on Webbworld’s “Neptics.com” webpage. The Webpage was accessible for a monthly subscription fee. Among the materials maintained on the webpage were various adult photographs on which Playboy Enterprises, Inc. held copyrights. Initially Webbworld argued that it could not be held liable because unknown third parties were the ones who placed the photographs on to other Internet news-group webpages from which Neptics gathered its material. The court disagreed, stating that what was important was not whether Webbworld could control who placed materials on other webpages but rather that Webbworld, and only Webbworld, controlled what material eventually appeared on its own Neptics.com webpage.

Recognizing that their arguments against copyright infringement were weak, Webbworld cited Religious Technology Center v. Netcom and argued that Webbworld was similar to Netcom in that it functioned only as an access point to the Internet for its subscribers. The court didn’t agree with Webbworld and wrote that while Netcom only provided access to the Internet, Webbworld provided and controlled the images and content of the Neptics.com webpage and therefore Webbworld was liable for direct copyright infringement.

In addition, the court found Webbworld’s two principal operators, the individual who ran the day-to-day operations and the individual who thought up the business idea and created the computer software that operates on the Neptics.com webpage, respectively, liable for vicarious copyright infringement. The court reasoned that if a defendant “has a direct financial interest in the infringing activity and has the right and the ability to supervise the activity which causes the infringement, then he should be held vicariously liable.” The two were held liable due to the fact that they had the right and ability to determine what materials appeared on the Neptics.com webpage and because they financially benefitted by the infringing actions of their subscribers.

The latest BBS case is Playboy Enterprises, Inc. v. Hardenburgh.[33] Again, the degree to which the operator of the BBS could control the content on the BBS determined liability. In this case, the defendant’s own well-intentioned attempts to police his Webpage for copyright infringement were used as evidence that he had participated in copyright infringement and had the right and ability to control his subscribers’ activities.

The subscribers to Hardenburgh’s BBS could, for a fee, download a set number of photographs per month from the collection of photographs maintained on the BBS’s computer files. As an incentive, Hardenburgh gave “credits” to subscribers who uploaded new photographs onto the BBS. These “credits” could be used by subscribers to increase the number of photographs they could download each month. In turn, Hardenburgh hoped that the new photographs would add value to the collection and help attract and maintain fee paying subscribers to his BBS. Many of the photographs uploaded onto the BBS by subscribers infringed copyrights held by Playboy Enterprises, Inc.

Concerning the copyrighted photographs, Hardenburgh argued that he had no knowledge of any infringement and that he had, in fact, taken affirmative steps to avoid such infringement. When a subscriber first uploaded a picture on to Hardenburgh’s BBS, the picture would be maintained in an “upload file.” Before being made publicly accessible on the BBS, one of Hardenburgh’s employees would inspect each picture to ensure that they were not copyrighted material.

As part of its reasoning, using language that would please the ISP industry, the court held that “a finding of direct copyright infringement requires some element of direct action or participation….” in the infringing activities. The court wrote that “the Copyright Act is cast in terms of activities which are reserved to copyright owners. It follows that an infringer must actually engage in one of those activities in order to directly violate the statute. Setting up a computer BBS is not one of those activities. Merely encouraging or facilitating those activities is not proscribed by the copyright statute.” This standard mirrors the holding in RTC concerning the need for some act of volition to trigger liability for direct copyright infringement and is a major change from the strict liability standard set forth in the 1993 Frena case.

Unfortunately for Hardenburgh, however, the court applied this standard to his BBS operation and held Hardenburgh liable for direct and contributory copyright infringement.
The court wrote that Hardenburgh’s actions of encouraging subscribers to upload new pictures and Hardenburgh’s actions of pre-screening the photographs were enough to transform him from a passive provider exempt from liability to a participant in the infringement. Playboy had already presented evidence of proof of ownership of the copyrighted works, evidence to satisfy the copying requirement, and evidence that Hardenburgh had violated Playboy’s exclusive rights to distribute and display. As a result the court held the corporate owner of the BBS, Hardenburgh’s company, liable for direct copyright infringement.

In addition, the court pierced the corporate veil and held Hardenburgh, in his capacity as the company’s corporate officer, liable for direct copyright infringement. The court, cited Southern Bell Tel. & Tel v. Associated Tel. Directory Publishers, which held that an individual who has the ability to supervise the infringing activities and had a financial interest in that activity, or who personally participates in that activity is personally liable for the infringement.[34] Under this standard, the court found Hardenburgh liable for direct copyright infringement.

Finally, the court held Hardenburgh and the corporation liable for contributory copyright infringement as well. An individual is liable for contributory copyright liability when, “with knowledge of the infringing activity, (the party) induces, causes or materially contributes to the infringing conduct of another.” The court held that Hardenburgh clearly had satisfied the requirements for a finding of contributory copyright infringement. The court held that the BBS’s policies had induced, caused and materially contributed to the infringing activity. Concerning the issue of knowledge of the infringing activity, the court wrote that the defendant had at least “constructive knowledge” that infringing activity was likely to be occurring on their BBS. The court reasoned that an individual who encourages others to upload pictures must take appropriate steps to ensure that the images are not infringing on the copyrights of others.

As expected, the language from this decision that restates the principle that an act of volition is needed to trigger copyright liability is the kind of language that pleases the ISP industry. Any language that reaffirms the idea that passive providers should not be held liable will be supported by the ISP. However, the court’s use of “constructive knowledge” rather than actual knowledge to hold Hardenburgh liable for contributory copyright infringement is the kind of language that worries ISPs. It begs the question, “How much knowledge of their subscribers’ activities should ISPs have?”

In the context of these five cases, questions remained concerning the potential liability of ISPs. What level of engagement or what level of service to subscribers would satisfy the standard set forth in Hardenburgh for contributory copyright infringement? Could an ISP that offered value-added services in addition to simple Internet-access, such as a telecommunications company, be held liable for contributory copyright infringement due to the actions of a subscriber? At what specific level of knowledge would an individual or corporation be held liable for contributory copyright infringement?

Among other concerns, the ISP community worried about whether the standard set forth in the RTC case would stand. In the RTC case, the court held that passive activities, such as simply offering access to the Internet were not sufficient to be found liable for direct copyright infringement. The ISP community worried that a future court might reinstate the much stricter standard set forth in the 1993 Frena case. As for contributory copyright infringement, the ISP community worried that the standard for what constitutes “knowledge” might be too easily satisfied and that the fear of legal liability would negatively impact the growth of the ISP industry and the growth of the Internet in general.[35]

Legislative activities and arguments

As could be expected, the content community saw a limitation on copyright infringement liability for ISPs as a step in the wrong direction.[36] They made several arguments against the establishment of such a limitation based on their belief that it would weaken copyright enforcement on the Internet.

Primarily, the need to exempt or limit the ISP industry’s liability from copyright infringement was questioned. While the ISP industry argued that the limitation on liability was needed to prevent a flood of legal suits, the truth is that there have only been a dozen or so decisions concerning this topic, and not a single ISP has been found liable for on-line copyright infringement. Secondly, the argument that the lack of protection from on-line copyright infringement liability has dampened entrepreneurial interest in the ISP industry also appears to be fairly weak. Between 1995 and 1997, a time in which the stricter “Frena” standards for copyright liability were still in place, revenue for providing Internet access nearly quadrupled.

In opposing the limitation, some experts looked at the publishing industry and asked why ISPs should be granted a limitation on liability. The publishing industry has always been held strictly liable for copyright infringement, what makes the ISP’s any different? Similar comparisons were made about the fact that photo finishers also operate under a strict liability standard for copyright infringement.[37] In fact, many argued that rather than limiting the copyright infringement liability for ISPs, ISPs should bear their share of the burden. The argument was made that the ISPs performed a unique and lucrative function for the Internet, were uniquely empowered to help minimize copyright infringement by Internet users, and therefore individual ISPs should have a legally enforceable duty to help minimize on-line piracy and a legal obligation to monitor their users for copyright infringement.

In response, the ISPs and telecommunication companies argued that a narrow limitation on copyright infringement liability for ISPs was indeed needed. The US Telephone Association testified before Congress that lawsuits had already been filed and major trade associations have threatened to bring more lawsuits against ISP’s for “condoning the illegal” copyright infringement that occurs on their systems. A vice president of one trade association from the content community was quoted as stating that “the fight about third party liability will be resolved in future litigation.” The ISPs pointed out that contrary to what may be a popular belief, ISPs are not unduly lucrative and in rural areas, in fact, have extremely tight profit margins, and they fear that any increase in the number of lawsuits or in the cost of providing service could lead many ISPs and telecommunications companies to decide not to provide Internet services in rural areas. In addition, the ISP industry argued that the legal history of this issue left questions unanswered about what level of knowledge would be needed to satisfy the legal standard for contributory copyright infringement, whether offering other services would lead to copyright infringement liability, or even whether establishing hyper-links to other Internet sites would lead to legal liability.

The Online Copyright Infringement Liability Limitation Act, 1998

During the 104th Congress, Congressman Robert Goodlatte and the then-Chairman of the Subcommittee and Congressman Carlos Moorhead prepared legislation on ISP copyright infringement liability.[38] Their efforts, however, failed to generate a consensus, and the ISP liability dispute was postponed until the 105th Congress.

The major legislation filed in the 105th Congress concerning on-line copyright infringement was HR 2180, Congressman Howard Coble’s “Online Copyright Infringement Liability Limitation Act.”[39] In July 1997, Congressman Coble, the Chairman of the House Judiciary Committee’s Subcommittee on Intellectual Property and the Courts, introduced his legislation. Unlike Congressman Goodlatte’s detailed draft from the 104th Congress, HR 2180 was written with a minimalist approach to this problem. HR 2180 was adopted as Title II of the Digital Millennium Copyright Act of 1998 and sign into law on October 28, 1998.

Coble’s legislation accomplishes three main objectives;

1) It codifies into statutory law the principle that passive automatic acts cannot be the basis for a finding of on-line copyright infringement as set forth in the RTC v. Netcom case,

2) It clarifies the criteria and makes it more difficult to establish a case of contributory or vicarious copyright infringement against an ISP, and

3) In instances where ISPs take action against alleged copyright violators, it protects ISPs from lawsuits when they act to assist copyright owners in limiting or preventing infringement and contains provisions requiring the payment of costs incurred when someone knowingly makes false accusations of on-line infringement.[40]

It should be pointed out that the law does not establish an exemption to copyright infringement liability. The law is explicitly a “limitation” on liability, and the limitation takes the form of a statutory change in the remedies available to a plaintiff, rather than by creating a legal exemption to copyright infringement liability.[41]

Codifying the Netcom decision into law was the main purpose of the legislation. By doing this, the ISPs’ fear of being found liable due to automatic passive acts was addressed. Throughout the legislative process the argument was made that cooperation between ISPs and the content community is what is needed to address properly the issue of on-line copyright infringement.[42] This provision gives the ISPs the assurance that they will not be joined as third-party defendants simply due to the nature of the Internet and should encourage more ISPs to cooperate voluntarily with the content community. More importantly, however, the fact that it is now harder to find an ISP liable for copyright infringement, may give the content community more incentive to shift their anti-piracy strategy from legal tactics to technological innovations. As seen in the cases addressed in this paper, it often takes the legal system several years to catch up with technological innovations. In fact, some experts have argued that the content community may have more success in fighting on-line copyright infringement using technology rather than the law.[43]

As stated above, the law also makes it more difficult for an ISP to be found liable for contributory copyright infringement. The law contains provisions that require that the ISP must have actual knowledge of the infringement, awareness of the facts and circumstances of the infringement, or have received notice of the infringing activity in order to be found liable. The provisions state that an ISP will still not be liable if, upon notification, the ISP responds expeditiously to remove or disable access to the infringing material. The law also includes a provision that states that an ISP cannot be found liable for removing or disabling access to material claimed to be infringing as long as the ISP is acting in good faith. And lastly, the law allows ISPs to bring suits against individuals who misrepresent infringing activity.

While enacting this bill into law is a victory for the ISP’s, the law is not entirely one-sided. For example, the law states that the new limitation only applies to ISPs that have designated an agent to receive notifications of claimed infringements with the Copyright Office. The Copyright Office has already written interim regulations and is already receiving information from ISPs. In addition, the exemption from liability concerning the removal of information from the Internet only applies within strict time limitations. In addition, questions still remain concerning, for example, what may or may not constitute an “expeditious response” to a notification of alleged on-line infringement as described in the law.

As for the content community, the law still allows copyright holder to sue ISPs for injunctive relief to stop infringing activity. In considering such an injunction, the court would consider the burden on the ISP, the potential harm to the copyright holder, the feasibility and effectiveness of the injunction, whether it would interfere with non-infringing material, and whether less burdensome means were available.

Perhaps for the content community, the best thing about this law is that the On-line Copyright Infringement Liability Limitation Act is only one title of a much larger law–the Digital Millennium Copyright Act is the WIPO Copyright and Performances and Phonographs Treaties Implementation Act of 1998. Ratifying the WIPO Treaty is a major victory for the U.S. content community.

The Online Copyright Infringement Liability Limitation Act is a victory for the ISP industry and for the Internet as a whole. One of the real concerns about this issue was that for several years the issue of copyright infringement on the Internet had forced many Internet Service Providers to spend more money hiring lawyers than programmers.[44] Society will be better off in the long term, if more of its resources are directed towards improving technology rather than arguing about the law. To the extent that the Online Copyright Liability Limitation Act of 1998 will allow Internet providers to allocate more funds into building the Internet, this law is a step in the right direction.

Conclusion

Some people argue traditional concepts of copyright such as “fair use” need to be revised in light of new technologies and new trends in expression such as user-generated content and “mash-ups.” Today our fragmented copyright system is ill-adapted to the real essence of art, which has no frontiers. Instead, that system has ended up giving a more prominent role to intermediaries than to artists. It irritates the public who often cannot access what artists want to offer and leaves a vacuum which is served by illegal content, depriving the artists of their well-deserved remuneration. And copyright enforcement is often entangled in sensitive questions about privacy, data protection or even net neutrality.

It may suit some vested interests to avoid a debate, or to frame the debate on copyright in moralistic terms that merely demonise millions of citizens. But that is not a sustainable approach.

We must look beyond national and corporatist self-interest to establish a new approach to copyright. The commission will soon make legislative proposals on orphan works and on the transparency and governance of the collective management societies.

As the international emphasis expands from enforcement to include the scope of copyright, it would be also be useful for that debate to be informed by the perspectives and expertise of the Internet technical community. The future of copyright in the online environment should be examined holistically, and include consideration of issue such as: the scope of copyright in the online environment, motives behind online infringement, how copyright is infringed, objectives behind online copyright enforcement, how the internet functions and develops, how different enforcement policies might operate in practice, and the potential impact they may have, as well as the role (if any) of Internet intermediaries and domain name registries.

Edited by Neerja Gurnani

[1] WIPO Copyright Treaties Implementation Act & Online Copyright Infringement Liability Limitation Act: Hearing on H.R. 2281 & H.R. 2180 Before the Subcomm on Courts & Intell. Property of the House Comm. On Judiciary , 105th Cong. 33, at 78 (1997) at 78 [Hereinafter House Judiciary Comm. Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997 ] (prepared statement of Jack Valenti, President & CEO Motion Picture Association of America (MPAA).

[2] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997, at 89 (prepared statement of Roy Neel, on behalf of the US Telephone Association).

[3] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997, at 117 (prepared statement of Ken Wasch, President, Software Publishers Association).

[4] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997, at 78 (prepared statement of Jack Valenti, President. Motion Picture Association of America).

[5] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997 at 53 (prepared statement of Marybeth Peters, Register of Copyrights).

[6] Information Infrastructure Task Force, Intellectual Property & The NII, at 116, Washington, 1995 Government Printing Office.

[7] President William Jefferson Clinton, Speech before the President’s Export Council, November 10, 1998

[8] Doug Isenberg, “Digital Watermarks: New Tools for Copyright owners & Webmasters ”, Mecklermedia Corporation (January 26, 1998)

[9] Virginia Lawrence, Protecting Copyrights Online, CongiText, 1998

[10] Digital Millennium Copyright Act, Pub. L. 105-304, Title II, 112 Stat 2877 (1998).

[11] Janus v. A & M Records. , 827 F. Supp. 282 (D.N.J. 1993).

[12] Hawkes and Son (London) Limited v. Paramount Film Service, Limited , [1934] 1 Ch. 593.

[13] Bright Tunes Music Corp. v. Harrisongs Music Ltd. , (1976), 420 F. Supp. 177.

[14] Copyright Act , R.S.C. 1985, c. C-42, ss. 3(1) and 27(1).

[15] Roger T. Hughes and Susan J. Peacock, Hughes on Copyright and Industrial Design (Markham: Butterworths, 1984/updated to 1995) at 545

[16] 464 U.S. 417 (1984).

[17] CBS Songs Ltd. v. Armstrad Consumer Electronics , [1988] 2 All E.R. 484 (H.L.).

[18] Copyright Act , 17 U.S.C.A. s. 107.

[19] British Columbia v. Mihhaljevic (1989), 26 C.P.R. (3d) 184 (B.C.S.C.), aff’d (1991) 36 C.P.R. (3d) 445 (B.C.C.A.);

Via Rail Canada Ltd. v.Location Via-Route Inc. (1992), 45 C.P.R. (3d) 96 (Que. C.A).

[20] 111 S. Ct. 1282 (1991).

[21] Key Publications v. Chinatown Today Publishing Enterprises, Inc. , 945 F. 2d 509;

 Warren Publishing, Inc. v. Microdos Data Corp. , (1995) 21 The Computer Law Reporter 873.

[22] British Columbia Jockey Club v. Standen , [1983] 4 W.W.R. 5375 (B.C.S.C.)

[23] June 28, 1996, Federal Court of Canada, Trial Division T-1373-94 (McGillis J.)

[24] Gemologists International Inc. v. GemScan International Inc. (1986), 9 C.P.R. (3d) 255 (Ont. H.C.)

[25] Copyright Act , R.S.C. 1985, c. C-42, s. 5.

[26] Playboy Enterprises, Inc. v. Frena , 839 F. Supp. 1552 (M.D. Fla, 1993).

[27] Religious Technology Center v. Netcom , 907 F. Supp 1361, 1367 (N.D. California 1995).

[28] Sega Enterprises v. MAPHIA , 857 F. Supp 679, 682 (N.D. California 1994).

[29] MAI Systems Corp. v. Peak Computer, Inc., 991 F.2nd 511, 518 (9th Cir 1993).

[30] Religious Technology Center v. Netcom , 907 F. Supp 1361, 1369 (N.D. California 1995).

[31] Feist Publications, Inc. v. Rural Tel. Service , 499 U.S. 340, 350 (1991).

[32] Playboy Enterprises v. Webbworld, Inc ., 968 F. Supp 1171 (N.D. Tex. 1997).

[33] Playboy Enterprises, Inc. v. Hardenburgh , 982 F. Supp 503, 512 (N.D. Ohio 1997).

[34] Southern Bell Tel. & Tel v. Associated Tel. Directory Publishers , 756 F.2nd 801 (11th Cir.)

[35] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997 at 88 (prepared statement of Roy Neel, USTA).

[36] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997 at 81 (prepared statement of Jack Valenti, President, MPAA)

[37] Olan Mills, Inc. v. Linn Photo Co., 23 F.3d 1345 (8th Cir. 1994).

[38] H.R. 2441, 104th Cong. (1996).

[39] Digital Millennium Copyright Act, Pub. L. 105-304, Title II, 112 Stat 2877 (1998).

[40] 144 Congressional Record E-160, February 12, 1998 (Extension of remarks of Congressman Howard Coble).

[41] 17 USC Sec. 512 (j) (1) (A).

[42] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright Legislation, September, 1997 at 80 (prepared statement of Jack Valenti, President, MPAA).

[43] Pamela Samuelson, “Facing a Pay-Per-Use Future ”, Washington Post, November 1, 1998, page C3.

[44] House Judiciary Comm Hearing on WIPO Treaty & Online Copyright, September, 1997, at 116 (prepared statement of Tushar Patel, Vice President & Managing Director, US Web).

One Reply to “Copyright infringement by ISPs”

  1. If I am right,
    Only copyright owner(eg.yash raj music) or member of copyright society(eg.PPL or IPRS ) can issue license by his own name? I found in market some people(eg.Raval IP protectors) who take contract and make agreements for collect royalty and also legal action on behalf of copyright owner. but such people who take contract from copyright owner are collecting royalty from market and issue licence by his own name(eg.Raval IP protectors).Is it right or wrong? can we take action against such fraud people if I am correct….Please reply me

Leave a Reply

Your email address will not be published. Required fields are marked *