THEORIES OF SECONDARY LIABILITY FOR INFRINGEMENT Contributory Infringement Contributory Infringement (1) With knowledge of direct infringing activity (2) induce, cause, or materially contribute to infringing conduct of another (1) With knowledge of direct infringing activity (2) induce, cause, or materially contribute to infringing conduct of another Vicarious Infringement Vicarious Infringement (1) Direct financial interest in infringing activity, (2) right and ability to supervise the infringing activity (cabined by current system architecture) (1) Direct financial interest in infringing activity, (2) right and ability to supervise the infringing activity (cabined by current system architecture) HENNIGAN BENNETT & DORMAN LLP

TYPES OF CONTRIBUTORY INFRINGEMENT Intentional Participation (Dance Hall Cases) Intentional Participation (Dance Hall Cases) Ongoing relationship with direct infringer and authorization of infringing conduct Ongoing relationship with direct infringer and authorization of infringing conduct Product Sale or Distribution (Sony) Product Sale or Distribution (Sony) Distribution of product that facilitates infringement by others unless product is capable of substantial noninfringing uses Distribution of product that facilitates infringement by others unless product is capable of substantial noninfringing uses Inducement (Grokster) Inducement (Grokster) Actively encouraging infringement by others through specific acts Actively encouraging infringement by others through specific acts HENNIGAN BENNETT & DORMAN LLP

INDUCEMENT AFTER GROKSER Legal Test Legal Test 1.Unlawful objective: Intent that copyrights be infringed 2.Knowledge: Actual knowledge of direct infringement 3.Culpable acts: Clear expression or other affirmative steps taken to foster infringement Product Distribution as Culpable Act Product Distribution as Culpable Act –Yes if distributor intended and encouraged product to be used to infringe (Grokster) –Yes if distributor could take simple measures to prevent infringement yet continues to provide access to infringing works though product (Perfect 10) HENNIGAN BENNETT & DORMAN LLP

AVOIDING INDUCEMENT LIABILITY AFTER GROKSER STUDY AND IMPLEMENT (IF POSSIBLE) RESONABLE MEASURES TO PREVENT INFRINGEMENT STUDY AND IMPLEMENT (IF POSSIBLE) RESONABLE MEASURES TO PREVENT INFRINGEMENT IMPLEMENT PROCEDURES TO BECOME DCMA SAFE HARBOR COMPLIANT IMPLEMENT PROCEDURES TO BECOME DCMA SAFE HARBOR COMPLIANT HENNIGAN BENNETT & DORMAN LLP