Class 19 Copyright, Autumn, 2016 Third-Party Liability 9/20/2018 Class 19 Copyright, Autumn, 2016 Third-Party Liability Randal C. Picker James Parker Hall Distinguished Service Professor of Law Ludwig & Hilde Wolf Teaching Scholar The Law School The University of Chicago

9/20/2018 17 USC 1008: “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.” September 20, 2018 Audio Home Recording Act of 1992

Copyright © 2005-07 Randal C. Picker 9/20/2018 Copying under the AHRA Three Types Analog Recording The old school original AHRA Digital Recording Recording that tracks the definitions set out in 1001 September 20, 2018 Copyright © 2005-07 Randal C. Picker

Copyright © 2005-07 Randal C. Picker 9/20/2018 Copying under the AHRA Non-AHRA Digital Recording All of the other digital recording September 20, 2018 Copyright © 2005-07 Randal C. Picker

Copyright © 2005-07 Randal C. Picker 9/20/2018 Protection under 1008 For consumers engaging in noncommercial use Of analog recording Of AHRA Digital Recording But No protection for Non-AHRA Digital Recording September 20, 2018 Copyright © 2005-07 Randal C. Picker

Diamond sells the Rio, an early MP3-player 9/20/2018 Diamond sells the Rio, an early MP3-player The RIAA challenges the Rio as violating the Audio Home Recording Act of 1992, which requires certain recording devices to include SCMS, the Serial Copy Management System. The Rio doesn’t include SCMS. The Act imposes a royalty system on targeted devices and copying media. September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 Diamond wins: “Under the plain meaning of the Act’s definition of digital audio recording devices, computers (and their hard drives) are not digital audio recording devices because their ‘primary purpose’ is not to make digital audio copied recordings.” September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 “In fact, the Rio’s operation is entirely consistent with the Act’s main purpose—the facilitation of personal use. As the Senate Report explains, “[t]he purpose of [the Act] is to ensure the right of consumers to make analog or digital audio recordings of copyrighted music for their private, noncommercial use.” S. Rep. 102-294, at *86 (emphasis added).” September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 “The Act does so through its home taping exemption, see 17 U.S.C. § 1008, which “protects all noncommercial copying by consumers of digital and analog musical recordings,” H.R. Rep. 102-873(I).” September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 “The Rio merely makes copies in order to render portable, or ‘space-shift,’ those files that already reside on a user’s hard drive. Cf Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984) (holding that ‘time-shifting’ of copyrighted television shows with VCR’s constitutes fair use under the Copyright Act, and thus is not an infringement). Such copying is paradigmatic noncommercial personal use entirely consistent with the purposes of the Act.” September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 “For the foregoing reasons, the Rio is not a digital audio recording device subject to the restrictions of the Audio Home Recording Act of 1992. The district court properly denied the motion for a preliminary injunction against the Rio's manufacture and distribution.” September 20, 2018 RIAA v. Diamond, 180 F.3d 1072 (9th Cir. 1999)

9/20/2018 Source: http://www.apple.com/pr/library/2001/10/23Apple-Presents-iPod.html September 20, 2018

9/20/2018 “Napster contends that MP3 file exchange is the type of ‘noncommercial use’ protected from infringement actions by [Section 1008]. Napster asserts it cannot be secondarily liable for users’ nonactionable exchange of copyrighted musical recordings. … We agree with the district court that the Audio Home Recording Act does not cover the downloading of MP3 files to computer hard drives.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “We conclude that the district court did not err when it refused to apply the ‘shifting’ analyses of Sony and Diamond. Both Diamond and Sony are inapposite because the methods of shifting in these cases did not also simultaneously involve distribution of the copyrighted material to the general public; the time or space-shifting of copyrighted material exposed the material only to the original user.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “In Diamond, for example, the copyrighted music was transferred from the user’s computer hard drive to the user’s portable MP3 player. So too Sony, where ‘the majority of VCR purchasers . . . did not distribute taped television broadcasts, but merely enjoyed them at home.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “We find no error in the district court’s determination that plaintiffs will likely succeed in establishing that Napster users do not have a fair use defense.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “The record supports the district court’s finding that Napster has actual knowledge that specific infringing material is available using its system, that it could block access to the system by suppliers of the infringing material, and that it failed to remove the material.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “Here, plaintiffs have demonstrated that Napster retains the right to control access to its system. Napster has an express reservation of rights policy … . To escape imposition of vicarious liability, the reserved right to police must be exercised to its fullest extent. Turning a blind eye to detectable acts of infringement for the sake of profit gives rise to liability. …” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “The district court correctly determined that Napster had the right and ability to police its system and failed to exercise that right to prevent the exchange of copyrighted material.” September 20, 2018 A&M Records v Napster, 239 F.3d 1004 (9th Cir. 2001)

9/20/2018 “Even when there are noninfringing uses of an Internet file-sharing service, moreover, if the infringing uses are substantial then to avoid liability as a contributory infringer the provider of the service must show that it would have been disproportionately costly for him to eliminate or at least reduce substantially the infringing uses.” September 20, 2018 In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003)

9/20/2018 “This appeal presents the question of whether distributors of peer-to-peer file-sharing computer networking software may be held contributorily or vicariously liable for copyright infringements by users. Under the circumstances presented by this case, we conclude that the defendants are not liable for contributory and vicarious copyright infringement and affirm the district court's partial grant of summary judgment.” September 20, 2018 MGM v Grokster, 380 F.3d 1154 (9th Cir. 2004)

Grokster in the Sup Ct Two Cuts 9/20/2018 Grokster in the Sup Ct Two Cuts Grokster loses 9-0 on an inducement theory We get a 3-3-3 decision on Sony Souter, Thomas & Scalia: 9th Cir wrong on Sony and no more Ginsberg, The Chief Justice & Kennedy: Liable under Sony Breyer, Stevens & O’Connor: Not liable under Sony September 20, 2018

Grokster Key Questions How does Grokster relate to Sony? 9/20/2018 Grokster Key Questions How does Grokster relate to Sony? What does it take to avoid liability under Grokster? September 20, 2018

Three Pieces of Evidence 9/20/2018 Three Pieces of Evidence 1. Satisfying known demand for copyright infringement Trying to get Napster users 2. Business model driven by advertising Turns on infringing high-volume use September 20, 2018

Three Pieces of Evidence 9/20/2018 Three Pieces of Evidence 3. Didn’t try to filter out infringing uses “Underscores … intentional facilitation of their users’ infringement” September 20, 2018

Three Pieces of Evidence 9/20/2018 Three Pieces of Evidence But See Footnote 12 “Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor.” September 20, 2018

Cox Acceptable Use Policy September 20, 2018 Cox Acceptable Use Policy

Cox Acceptable Use Policy September 20, 2018 Cox Acceptable Use Policy

Cox Acceptable Use Policy September 20, 2018 Cox Acceptable Use Policy

September 20, 2018 17 USC 512

September 20, 2018 17 USC 512

September 20, 2018 17 USC 512

BMG v Cox: Jury Instructions Key Structure The contributory infringement instruction No Sony instruction (Cox wanted one) No Grokster instruction (Cox wanted one) A DMCA instruction (BMG didn’t want that) September 20, 2018

BMG v Cox: Jury Instructions Key Structure The contributory infringement instruction No Sony instruction (Cox wanted one) No Grokster instruction (Cox wanted one) A DMCA instruction (BMG didn’t want that) September 20, 2018

BMG v Cox: Jury Instructions The contributory infringement instruction A copyright may be infringed by contributory infringing. With certain exceptions, a person is liable for copyright infringement by another if the person knows or should have known of the infringing activity and induces, causes, or materially contributes to the activity. September 20, 2018

BMG v Cox: Jury Instructions The contributory infringement instruction Plaintiff has the burden of proving each of the following by a preponderance of the evidence. First, that there was direct infringement of BMG’s copyrighted works by users of Cox’s internet service. And second, that Cox knew or should have known of such infringing activity. September 20, 2018

BMG v Cox: Jury Instructions The contributory infringement instruction And third, that Cox induced, caused, or materially contributed to such infringing activity. September 20, 2018

BMG v Cox: Jury Instructions The DMCA Instruction You have heard some testimony and seen some documents that refer to the Digital Millennium Copyright Act, commonly known by its initials “DMCA.” The DMCA provides that an internet service provider (commonly referred to as an “ISP”) like Cox may have a defense to liability for September 20, 2018

BMG v Cox: Jury Instructions The DMCA Instruction contributory or vicarious copyright infringement arising from the use of its services for infringement by its subscribers. This defense is often referred to as a “safe harbor.” The DMCA is not a defense in this case and must be disregarded. September 20, 2018