Indirect Infringement and Fair Use Intro to IP – Prof Merges

Indirect infringement Acts which fall short of copyright infringement – Instructing, guiding or facilitating infringement: inducement (e.g., landlord-music hall cases) – Selling something which naturally or inevitably leads to infringement: e.g., an “infringement machine”

Direct Infringement Direct infringement: violating a statutory exclusive right (not otherwise privileged) – 76 Act: 106(1) reproduce work in copies, 106(2) make derivative works, 106(3) distribute copies to public, 106 (4),(5) public performance/display Indirect infringement: – inducing or materially contributing to another’s infringement – responsible for other’s infringement because of right of control and financial benefit from infringement

Essential to understand roots of indirect infringement Common law roots With extremely important “digital era” ramifications Think: Grokster etc.

‘‘The evidence shows that the defendants bought the pictures from the complainants, furnished them to the photogravure company, ordered the copies made, and gave general directions as to how the work should be done. They are therefore liable as joint tortfeasors.’’ Fishel v. Lueckel, 53 F. 499 (S.D.N.Y. 1892)

Basic Tort Principles Applied to IP Respondeat superior: Master-servant relationship Vicarious liability – Dance hall and movie theater-live music cases

Contributory infringement In Elektra Records v. Gem Elec. Distribs., 360 F. Supp. 821 (E.D. N.Y. 1973), an electronics store which sold blank tapes and made available both prerecorded tapes of copyrighted works and a high speed, coin-operated ‘‘Make-A Tape’’ system was held contributorily liable for the infringing activities of its customers.

Contributory Infringement: Basics Need an act of actual infringement for there to be contributory infringement No indirect infringement liability if there is no act constituting direct infringement

Sony v. Universal Studios Contributory infringement intertwined with fair use If no infringement by consumers (because of fair use), then no contributory infringement by Sony for selling Betamax

Procedural history: Sony Universal & Disney sued Sony for © infringement because it sold Betamax machines knowing that users would infringe © and encouraged them to do so DCt: no direct or indirect infringement by Sony – Implied home taping privilege, so no infringement; Betamax was staple item of commerce – Case was tried in full to judge, not jury – Legal conclusion based on findings of fact 9 th Cir: Sony is liable for contributory © infringement, remand for appropriate remedy (damages, injunction)

Issue Whether 9 th Circuit was correct in ruling that Sony was liable for contributory infringement for selling video tape recording machines knowing that the primary use of these machines would be to make illegal copies of programs, including movies made by Universal and Disney

Majority: Holding Stevens: – Common law perspective: Studios are trying to extend the limited monopoly grant in movies to control staple item of commerce (ie, VTR technology) – Making copies for time-shifting purposes was fair use, so Betamax had substantial noninfringing uses, so OK

Dissent Blackmun for the dissent: – Strict statutory analysis: home tape copies violate exclusive right to reproduce copies; no private use privilege/not fair use to home-tape because unproductive and potential to harm markets – Remand for determination of proportion of infringing and non- infringing uses

Feb. 7, 2005IS 296A: Sony Betamax case15 Copying for Private Use Some countries have private use copying privileges; US statute doesn’t Home taping privilege based on legislative testimony in 1970’s (implicitly carried over?) Fair use (Blackmun’s view): – “ordinary” (consumptive) v. “productive” uses – entertainment 80% of TV programming – amount copied (whole thing rarely if ever FU) – harm to actual or potential markets (Studios alleged) Time-shifting v. “librarying” v. authorized uses Stipulation of no harm to date (trial ruling) Main issue about which Justices debated

Time shifting vs. archiving Why different treatments? Effect on the mkt for the copyrighted work? Look to fair use factors

The 4 Factors (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

Factors favoring fair use Some program copyright owners authorize home taping, or at least acquiesce in it District court found time shifting at home to be “non-commercial, non-profit” activity

Was the district court correct? Yes and no DVD sales now a big part of movie studios’ income But online access is a threat...

“substantial noninfringing use” Different from, but related to, the question of whether consumers infringe at all Prof Menell/David Nimmer: writings on this Crucial to Grokster case (coming soon)

Patent and TM Law: Analogies Patent law: – 271(b): active inducement of infringement (with specific intent to bring it about) – 271(c): selling product specially made to infringe, not a staple item of commerce TM law: – Lanham Act 32 (1)(b): copy mark on labels, signs, ads likely to confuse consumers as to source – Common law: intentional inducement; supplying products knowing others will use to infringe

Menell and Nimmer Unwinding Sony, 95 Cal. L. Rev. 945 (2007) (1) Supreme Court ignored Copyright Act legislative history (2) Proper, tort-based approach, “would have brought the reasonable alternative design framework of products liability law into play.”

Alternative Design Approach [Menell and Nimmer show] that this approach almost certainly would have resulted in the same outcome that the Sony Court reached; but, of critical importance, it would have provided a more sound and dynamic jurisprudential framework for calibrating liability as new technologies develop.

Critique “Substantial noninfringing use” standard creates an inefficient and perverse “safe harbor” 85% infringing uses, 15% non-infringing, with massive costs from infringement: exempt from liability

What about alternative designs? What if infringement could be reduced 95% at very little cost, with a different product design No incentive to redesign the product as long as the Substantial Non-Infringing Use threshold is met

Harvard Univ. Press 2011

The 400 mph sports car Substantial non-injurious uses But it does maim and kill a fair number of people too....

Sec Limitations on Exclusive Rights: Fair Use Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

The 4 Factors (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

A different view? Tort law-common law perspective Balance harm with benefit; possible alternative designs?

Fair Use Background and history Changing scope of fair use: has changed along with the scope of copyright itself

Abridgements and translations permitted under 19 th C. Copyright

Stowe v. Thomas, 23 F. Cas. 201 (C.C.E.D. Pa. 1853) Held: A “fair abridgment” of “Uncle Tom’s Cabin” was not an infringement The abridgement used paraphrase throughout and did not copy the actual words of the original “Reversed” in 1879 Copyright Act

Harper & Row v. Nation Gerald Ford Memoir Clear and definite financial harm: loss of $12,500 payment by Time Magazine Held: Reversed, Not Fair Use

“Implied Consent” Theory – p. 525 Does this hold up in subsequent cases? Compare: classic defense of fair use for criticism, e.g., book reviews

Unpublished Nature of Work P. 526: Author’s right to control prepublication of works, creative control and financial returns... True for all time? What about long unpublished works?

First Amendment Defense Fair Use should be informed by First Amendment First Amendment protection built into copyright in idea/expression dichotomy First Amendment argument would eliminate market for political memoirs, etc.

Commercial Use Commercial uses are presumptively not fair uses Effect on the market as key factor “Market Failure” theory of fair use – p.597

Wendy Gordon: Fair Use as Market Failure

1992 Amendment “The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.” – Sec. 107