United States Court of Appeals,
Ninth Circuit.
Harlan ELLISON, Plaintiff-Appellant,
v.
Stephen ROBERTSON, an individual a/k/a Steven Robertson a/k/a [email protected],
Defendant,
and
America Online Inc., a Corporation, Defendant-Appellee.
No. 02-55797.
Argued and Submitted March 6, 2003.
Filed Feb. 10, 2004.
Background: Owner of copyrighted works which third party posted on USENET newsgroup brought infringement action against, inter alios, Internet service
provider (ISP) which temporarily stored third party's posts on its USENET servers. The United States District Court for the Central District of California, 189 F.Supp.2d 1051, Florence Marie Cooper, J., granted summary judgment for ISP, and owner appealed.
Holdings: The Court of Appeals, Pregerson, Circuit Judge, held that:
(1) fact issue existed
as to whether ISP was liable for contributory infringement;
(2) ISP was not liable
for vicarious infringement; and
(3) fact issue existed
as to whether ISP was eligible for Digital Millennium Copyright Act's
safe-harbor provisions.
Affirmed in part, reversed in part, and
remanded.
West Headnotes
[1] Federal Courts 
776
Order
granting summary judgment is reviewed de novo.
[2] Federal Courts 776
District
court's interpretations of Copyright Act are reviewed de novo. 17
U.S.C.A. § 101 et seq.
[3] Copyrights and Intellectual Property 51
Elements
of prima facie copyright infringement claim are: (1) ownership of valid copyright, and (2)
that defendant violated copyright owner's exclusive rights under Copyright
Act. 17
U.S.C.A. § 501(a).
[4] Copyrights and Intellectual Property 77
One who,
with actual or implied knowledge of copyright infringing activity, induces,
causes, or materially contributes to infringing conduct of another may be
liable as contributory infringer.
[5] Copyrights and Intellectual Property 77
Defendant
is vicariously liable for copyright infringement if he enjoys direct financial
benefit from another's infringing activity and has right and ability to
supervise infringing activity.
[6] Copyrights and Intellectual Property 89(2)
Issues of
material fact as to whether Internet service provider knew or should have known
that copyright infringing material was being stored on its USENET servers, and
whether its provision of server facilities materially contributed to underlying
infringement, precluded summary judgment on claim of contributory infringement.
[7] Copyrights and Intellectual Property 77
Direct
financial benefit from another's copyright infringement, which defendant must
receive as condition for imposing vicarious liability, does not need to be
substantial in proportion to defendant's overall profits; rather, essential issue is whether there is
causal relationship between infringing activity and any financial benefit
defendant reaps. 17
U.S.C.A. § 512(c)(1)(B).
[8] Copyrights and Intellectual Property 77
Internet service provider (ISP) on whose
USENET servers copyright infringing material was posted could not be held
liable for vicarious infringement absent showing it derived direct financial
benefit from its conduct; there was no
evidence that ISP attracted or retained subscriptions because of infringement
or lost subscriptions because of its eventual obstruction of infringement. 17
U.S.C.A. § 512(c)(1)(B).
[9] Copyrights and Intellectual Property 89(2)
Issue of
material fact as to whether Internet service provider (ISP), on whose USENET
servers copyright infringing material was posted, had reasonably implemented
its policy against repeat infringers precluded summary judgment on question of
whether ISP was eligible for Digital Millennium Copyright Act's safe-harbor
provisions. 17
U.S.C.A. § 512(i).
[10] Copyrights and Intellectual Property 75
Internet
service provider's storage of copyright infringer's posts on its USENET servers for fourteen days constituted
"intermediate and transient storage" that was not "maintained on
system or network for longer period than is reasonably necessary for
transmission, routing, or provision of connections," within meaning of
Digital Millennium Copyright Act's safe-harbor provision. 17
U.S.C.A. § 512(a).
*1073
Glen L. Kulik, John H. Carmichael (brief), and Brigit
K. Connelly, of Kulik, Gottesman, and Mouton,
LLP, Sherman Oaks, CA, and Charles
E. Petit (argued), Law Office of Charles E.
Petit, Urbana, IL, for the plaintiff-appellant.
Daniel
Scott Schecter (argued) and Belinda
S. Lee, Latham & Watkins, Los Angeles, CA,
for the defendant-appellee.
Donald B. Verilli, Jr. (argued), Thomas J.
Perilli, Kali
N. Bracey, and Younjae
Lee, Jenner & Block, LLC, Washington, D.C.,
for amici curiae BMG Music, EMI Recorded Music, Sony Music Entertainment, and
Universal Music Group.
Sonya
D. Winner, Evan
Cox, Daniel
Hirsch, Covington & Burling, San Francisco,
CA, for amicus curiae Business Software Alliance.
Daniel
Schultz, James
J. Halpert, and Arthur
F. Fergenson, Piper Rudnick, LLP, Los Angeles,
CA, for amicus curiae Internet Commerce Coalition and Stewart A. Baker and Alice
E. Loughran, Steptoe & Johnson, LLP,
Washington, D.C., for amicus curiae U.S. Internet Service Provider Association.
*1074
Laura A. Kaster, Frank
L. Politano, and Michele
A. Farber, AT & T Corp., Bedminster, NJ, for
amicus curiae AT & T Corporation.
Bruce
G. Joseph and Scott
E. Bain, Wiley, Rein, & Fielding, Washington,
D.C., for amici curiae Association of American Universities, American Council
on Education, and National Association of State Universities and Land-Grant
Colleges.
Appeal from the United States District Court
for the Central District of California; Florence
Marie Cooper, District Judge, Presiding. D.C. No. CV-00-04321-FMC.
Before PREGERSON, THOMAS, Circuit Judges, and OBERDORFER, [FN*] Senior District Judge.
FN* The Honorable
Louis F. Oberdorfer, Senior Judge, United States District Court for the District
of Columbia, sitting by designation.
PREGERSON, Circuit Judge:
Harlan Ellison appeals the district court's
summary judgment dismissal of his copyright infringement action against America
Online, Inc. (AOL). The copyright
infringement action arose when, without Ellison's authorization, Stephen Robertson posted copies of some of
Ellison's copyrighted short stories on a peer-to-peer file sharing network, the
USENET. [FN1] Because AOL provides its subscribers access
to the USENET news-group [FN2] at issue, Ellison brought claims for vicarious and
contributory copyright infringement against AOL. AOL moved for summary
judgment. It asserted defenses to
Ellison's infringement claims and alternatively argued that it qualified for
one of the four safe harbor limitations of liability under Title II of the
Digital Millennium Copyright Act (DMCA). [FN3] The district court concluded that AOL was not
liable for vicarious infringement.
Although the court found there to be triable issues of material fact
concerning Ellison's contributory infringement claim, it nonetheless granted
summary judgment because it held that AOL qualified for the DMCA safe harbor
limitation of liability under 17
U.S.C. § 512(a).
FN1. USENET is an
abbreviation of "user network."
This term refers to an international collection of organizations and
individuals (known as "peers") whose computers connect to one another
and exchange messages posted by USENET users.
See Ellison
v. Robertson,
189 F.Supp.2d 1051, 1053 (C.D.Cal.2002).
FN2. A news-group is
an online forum for USENET users to discuss, read
about, or post messages on a particular topic.
News-groups are commonly organized around a particular shared interest,
such as science fiction or politics. See
Religious
Tech. Ctr. v. Netcom Online Communication Servs., Inc.,
923 F.Supp. 1231, 1239 n. 5 (N.D.Cal.1995).
FN3. Title II of the
DMCA, 17
U.S.C. § 512,
is also known as the Online Copyright Infringement Liability Limitation Act
(OCILLA).
We hold that the district court erred in
granting AOL's motion for summary judgment.
We affirm the district court's holdings as to vicarious and contributory
infringement, but we reverse the district court's application of the safe
harbor limitation from liability. There
are triable issues of material fact concerning whether AOL meets the threshold
requirements, set forth in § 512(i), to
assert the safe harbor limitations of liability of §
§ 512(a-d). If after remand a jury finds AOL to be
eligible under § 512(i) to
assert the safe harbor limitations of §
§ 512(a-d),
the parties need not relitigate whether AOL qualifies for the limitation of
liability provided by § 512(a); the district court's resolution of that issue
at the summary judgment stage is sound.
We affirm in part, reverse in part, and remand.
Facts and Procedural Background
Harlan Ellison is the author of numerous
science fiction novels and short stories, *1075 and he owns valid
copyrights to those works. In the spring
of 2000, Stephen Robertson electronically scanned and copied a number of
Ellison's fictional works to convert them to digital files. Robertson subsequently uploaded the files
onto the USENET news-group "alt.binaries.e-book." Robertson accessed
the Internet through his local Internet service provider, Tehama County Online,
and his USENET service was provided by RemarQ Communities, Inc. The USENET
news-group at issue in this case was used primarily to exchange unauthorized
digital copies of works by famous authors, including Ellison.
After Robertson made the infringing copies of
Ellison's works accessible to the news-group, the works were forwarded and
copied throughout the USENET to servers all over the world, including those
belonging to AOL. As a result, AOL's subscribers had access to the news-group
containing the infringing copies of Ellison's works. At the time Robertson posted the infringing
copies of Ellison's works, AOL's policy was to store and retain files attached
to USENET postings on the company's servers for fourteen days.
On or about April 13, 2000, Ellison learned of
the infringing activity and contacted legal counsel. On April 17, 2000, in compliance with the
notification procedures the DMCA requires, Ellison's counsel sent an e-mail
message to agents of Tehama County Online and AOL to notify the service providers of the infringing activity. Ellison received an acknowledgment of receipt
from Tehama County Online but received nothing from AOL, which claims never to
have received the e-mail.
On April 24, 2000, Ellison filed an action
against AOL and others in the United States District Court for the Central
District of California. Upon receipt of
Ellison's complaint, AOL blocked its subscribers' access to the news-group at
issue. AOL thereafter moved for summary
judgment, arguing that the undisputed facts did not prove Ellison's copyright
infringement claims. AOL alternatively asserted the safe harbor limitations to
liability under Title II of the DMCA. On November 27, 2001, Ellison moved for
summary judgment of his contributory and vicarious copyright infringement
claims against AOL. On March 13, 2002, the district court granted AOL's summary
judgment motion and denied Ellison's summary judgment motion. The court found
that: (1) the evidence failed to
establish Ellison's claims of direct and vicarious copyright infringement; (2) whether AOL was liable for contributory
copyright infringement presented a triable issue of fact; (3) the evidence showed that AOL met the
threshold eligibility requirements of 17
U.S.C. § 512(i) for the safe harbor limitations from liability under
OCILLA (Title II of the DMCA); and (4) AOL qualified for the safe harbor
limitation on liability under 17
U.S.C. § 512(a). Ellison now
appeals.
Discussion
I.
Jurisdiction and Standard of Review
[1][2] We have jurisdiction to hear this appeal under 28
U.S.C. § 1291. We review an order granting
summary judgment de novo. Clicks
Billiards, Inc. v. Sixshooters, Inc.,
251 F.3d 1252, 1257 (9th Cir.2001). For the purposes of summary judgment, the
moving party bears the burden of proving the absence of a genuine issue of a
material fact for trial. Anderson
v. Liberty Lobby, Inc.,
477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Fed.R.Civ.P.
56. A
genuine issue of fact is one that could reasonably be resolved in favor of
either party. Anderson,
477 U.S. at 250- 51, 106 S.Ct. 2505. Moreover, in the summary judgment context, we
construe all facts in the light most favorable to the non-moving party. *1076Clicks,
251 F.3d at 1257. We review de novo
the district court's interpretations of the Copyright Act, 17
U.S.C. § 101,
et seq. Ets-Hokin
v. Skyy Spirits, Inc.,
225 F.3d 1068, 1073 (9th Cir.2000).
II. The Law of Copyright Infringement and
the DMCA
[3][4][5] Ellison alleges that AOL infringed his copyrighted
works. As a threshold question, a
plaintiff who claims copyright infringement must show: (1) ownership of a valid copyright; and (2) that the defendant violated the
copyright owner's exclusive rights under the Copyright Act. 17
U.S.C. § 501(a) (2003); Ets-Hokin,
225 F.3d at 1073.
We recognize three doctrines of copyright liability: direct copyright infringement, contributory
copyright infringement, and vicarious
copyright infringement. To prove a claim
of direct copyright infringement, a plaintiff must show that he owns the
copyright and that the defendant himself violated one or more of the
plaintiff's exclusive rights under the Copyright Act. [FN4] A
& M Records v. Napster, Inc.,
239 F.3d 1004, 1013 (9th Cir.2001) (Napster II
). "One who, with knowledge of the infringing
activity, induces, causes or materially contributes to the infringing conduct of
another may be liable as a 'contributory' [copyright] infringer." Gershwin
Publ'g Corp. v. Columbia Artists Mgmt., Inc.,
443 F.2d 1159, 1162 (2d Cir.1971) (footnote
omitted and emphasis added). We have
interpreted the knowledge requirement for contributory copyright infringement
to include both those with actual knowledge and those who have reason
to know of direct infringement. Napster
II,
239 F.3d at 1020.
A defendant is vicariously liable for copyright infringement if he
enjoys a direct financial benefit from another's infringing activity and
"has the right and ability to supervise" the infringing
activity. Napster
II,
239 F.3d at 1022 (quoting Gershwin
Publ'g Corp.,
443 F.2d at 1162); Fonovisa,
Inc. v. Cherry Auction, Inc.,
76 F.3d 259, 262 (9th Cir.1996); 3 Melville B. Nimmer & David Nimmer, Nimmer
on Copyright § 12.04[A][1]
(perm.ed., rev.vol.2003).
FN4. The district
court granted AOL's motion for summary judgment with respect to Ellison's claim
of direct copyright infringement. See
Ellison,
189 F.Supp.2d at 1056-57. Ellison abandoned his claim for direct
infringement on appeal.
Congress enacted the DMCA in 1998 to comply
with international copyright treaties and to update domestic copyright law for
the online world. See Digital
Millennium Copyright Act, Pub.L.
No. 105-304, 112 Stat. 2860 (1998); 3 Nimmer on Copyright § 12A.02[A];
David W. Quinto, Law of Internet Disputes § 6.02 (2002).
Difficult and controversial questions of copyright liability in the
online world prompted Congress to enact Title II of the DMCA, the Online
Copyright Infringement Liability Limitation Act (OCILLA). 17
U.S.C. § 512 (2003). OCILLA endeavors
to facilitate cooperation among Internet service providers and copyright owners
"to detect and deal with copyright infringements that take place in the
digital networked environment." S.
Rep. 105-190, at 20 (1998); H.R.
Rep. 105-551, pt. 2, at 49 (1998). Congress hoped
to provide "greater certainty to service providers concerning their legal
exposure for infringements that may occur in the course of their
activities." Id.
But "[r]ather than embarking on a
wholesale clarification of" the various doctrines of copyright liability,
Congress opted "to leave current law in its evolving state and, instead,
to create a series of 'safe harbors,' for certain common activities of service
providers." S.
Rep. 105-190, at 19. Under OCILLA's
four safe harbors, service providers may limit their liability for claims of
copyright infringement. 17
U.S.C. § 512(a-d). These safe *1077
harbors provide protection from liability for:
(1) transitory digital network communications; [FN5] (2) system caching; [FN6] (3) information residing on systems or
networks at the direction of users; [FN7] and (4) information
location tools. [FN8] Far short of adopting enhanced or wholly new
standards to evaluate claims of copyright infringement against online service
providers, Congress provided that OCILLA's "limitations of liability apply
if the provider is found to be liable under existing principles of law." S.
Rep. 105-190, at 19 (emphasis added).
We thus agree with the district court that
"[t]he DMCA did not simply rewrite copyright law for the on-line
world." Ellison,
189 F.Supp.2d at 1061. Congress would have done so if it so
desired. Claims against service
providers for direct, contributory, or vicarious copyright infringement,
therefore, are generally evaluated just as they would be in the non-online
world.
III. Ellison's Claims Against AOL
A. Contributory Copyright Infringement
[6] Ellison alleged in his complaint that AOL was
contributorily liable for copyright infringement. To substantiate his claim, he must show that
AOL knew or had reason to know of the infringing activity taking place on its
USENET servers and that AOL materially contributed to the infringing activity.
1. Knowledge
We first consider whether AOL knew or had
reason to know of the infringing activity.
The district court found that AOL did not have actual knowledge of the
infringement before Ellison filed his copyright infringement action, but
concluded that "a reasonable trier of fact could certainly find that AOL
had reason to know that infringing copies of Ellison's works were stored on
their Usenet servers." Ellison,
189 F.Supp.2d at 1058. We agree.
AOL changed its contact e-mail address from
"[email protected]" to
"[email protected]" in the fall of 1999, but waited until
April 2000 to register the change with the U.S. Copyright Office. Moreover, AOL failed to configure the old
e-mail address so that it would either forward messages to the new address or
return new messages to their senders. In
the meantime, complaints such as Ellison's
went unheeded, and complainants were not notified that their messages had not
been delivered. Furthermore, there is
evidence in the record suggesting that a phone call from AOL subscriber John J.
Miller to AOL should have put AOL on notice of the infringing activity on the
particular USENET group at issue in this case, "alt.binaries.e-book."
Miller contacted AOL to report the existence of unauthorized copies of works by
various authors. Because there is evidence indicating that AOL changed its
e-mail address in an unreasonable manner and that AOL should have been on
notice of infringing activity we conclude that a reasonable trier of fact could
find that AOL had reason to know of potentially infringing activity occurring
within its USENET network.
2. Material Contribution
The second element a plaintiff must prove to
succeed on a claim of contributory copyright infringement is that the defendant
materially contributed to another's infringement. Napster
II,
239 F.3d at 1022.
The district court found that Ellison demonstrated a triable issue
regarding *1078 whether AOL materially contributed to the copyright
infringement:
The Court agrees with the findings of the court in Netcom
that "[p]roviding a service that allows for the automatic distribution of
all Usenet postings, infringing and noninfringing" can constitute a
material contribution when the [Internet service provider] knows or should know
of infringing activity on its system
"yet continues to aid in the accomplishment of ... [the direct
infringer's] purpose of publicly distributing the postings."
Ellison,
189 F.Supp.2d at 1059 (quoting Religious
Tech. Ctr. v. Netcom Online Communication Servs., Inc.,
907 F.Supp. 1361, 1375 (N.D.Cal.1995)); see also 3 Nimmer on Copyright
§ 12B.01[A][1] n. 50 (indicating that
Netcom's inaction constituted material contribution). In Netcom, the copyright holders of
certain works of L. Ron Hubbard sued the operator of a news-group and a large
Internet service provider, Netcom, for copyright infringement. The Netcom
court held that the fact that the USENET service allowed Netcom's subscribers
access to copyrighted works was sufficient to raise a triable issue regarding
material contribution. Netcom,
907 F.Supp. at 1375. We conclude that this reasoning applies to
Ellison's claim of contributory copyright infringement. Because a reasonable trier of fact could
conclude that AOL materially contributed to the copyright infringement by
storing infringing copies of Ellison's works on its USENET groups and providing
the groups' users with access to those copies, we agree with the district
court's finding that this constituted a triable issue.
B. Vicarious Copyright Infringement
Ellison alleges that AOL is vicariously liable
for copyright infringement. Thus,
Ellison must show that AOL derived a direct financial benefit from the
infringement and had the right and ability to supervise the infringing activity.
"Financial benefit exists where the
availability of infringing material 'acts as a "draw" for customers.'
" Napster
II,
239 F.3d at 1023 (quoting Fonovisa,
76 F.3d at 263-64). In Napster II, we found that Napster
increased its userbase by providing its customers with access to pirated copies
of protected works and that "[a]mple evidence support[ed] the district
court's finding that Napster's future revenue[was] directly dependent upon
increases in userbase." Id.
(quotations omitted). But in this case,
the district court sought to distinguish Napster II. The district court
emphasized that virtually all of Napster's "draw" of customers
resulted from Napster's providing access to infringing material. Because AOL's USENET group access constituted
a relatively insignificant draw when cast against AOL's vast array of products
and services, the district court reasoned, AOL did not receive a direct
financial benefit from the infringing activity. [FN9]
FN9. Ellison,
189 F.Supp.2d at 1062-64 ("Making it easier
to exchange infringing copies of music files was Napster's main draw.... By
contrast, only a tiny fraction of AOL usage has anything to do with USENET, and
only a substantially smaller subset of that usage appears to have anything to
do with infringing copyrights.").
[7] The district court
interprets Fonovisa and "direct financial benefit" to require
a "substantial" proportion of a defendant's income to be directly
linked to infringing activities for the purpose of vicarious liability
analysis. Ellison,
189 F.Supp.2d at 1062-64. We disagree with the addition of this
quantification requirement. We concluded
in Fonovisa that "the sale of pirated recordings at the Cherry
Auction swap meet is a 'draw' for customers," which we held sufficient to
state the financial benefit element of the claim for vicarious liability. *1079Fonovisa,
76 F.3d at 263-64. There is no requirement that the draw be
"substantial."
AOL offers access to USENET groups as part of
its service for a reason: it helps to
encourage overall subscription to its services.
Here, AOL's future revenue is directly dependent upon increases in its
userbase. Certainly, the fact that AOL
provides its subscribers access to certain USENET groups constitutes a small
"draw" in proportion to its overall profits, but AOL's status as a
behemoth online service provider, by itself, does not insulate it categorically
from vicarious liability. Regardless of
what fraction of AOL's earnings are considered a direct result of
providing its subscribers access to the USENET groups that contained infringing
material--indeed, almost any aspect of AOL's services would appear relatively
minuscule because of its sheer size-- they would be earnings nonetheless. The essential aspect of the "direct
financial benefit" inquiry is whether there is a causal relationship
between the infringing activity and any
financial benefit a defendant reaps, regardless of how substantial the
benefit is in proportion to a defendant's overall profits.
[8] Given this framework, the question before us is whether
there is a triable issue of a material fact regarding whether AOL received a
direct financial benefit from the copyright infringement. Ellison proffers the following evidence to
support his contention that AOL received a direct financial benefit from the
infringement: (1) an AOL securities
filing that reflects the central importance of attracting and retaining
subscribers for its business and revenue generation and (2) evidence indicating
that many subscribers inquired about AOL blocking access to the USENET group at
issue. This evidence is hardly compelling.
We note that there is no evidence that indicates that AOL customers
either subscribed because of the available infringing material or canceled
subscriptions because it was no longer available. While a causal relationship might exist
between AOL's profits from subscriptions and the infringing activity taking
place on its USENET servers, Ellison has not offered enough evidence for a
reasonable juror so to conclude.
We recognize, of course, that there is usually
substantial overlap between aspects of goods or services that customers value
and aspects of goods or services that ultimately draw the customers. There are, however, cases in which customers
value a service that does not "act as a draw." Accordingly, Congress
cautions courts that "receiving a one-time set-up fee and flat periodic
payments for service ... [ordinarily] would not constitute receiving a
'financial benefit directly attributable to the infringing activity.' " S.
Rep. 105-190, at 44. But "where the value of the service lies
in providing access to infringing material," courts might find such
"one-time set-up and flat periodic" fees to constitute a direct
financial benefit. Id. at 44-
45. Thus, the central question of the
"direct financial benefit" inquiry in this case is whether the
infringing activity constitutes a draw for subscribers, not just an added
benefit.
The record lacks evidence that AOL attracted
or retained subscriptions because of the infringement or lost subscriptions
because of AOL's eventual obstruction of the infringement. Accordingly, no jury could reasonably
conclude that AOL received a direct financial benefit from providing access to
the infringing material. Therefore,
Ellison's claim of vicarious copyright infringement fails. [FN10]
FN10. Because
Ellison's argument that AOL received a direct financial benefit from the
infringement in this case fails, we need not address whether AOL had the right
and ability to supervise the infringing activity.
*1080 IV. AOL and the Safe Harbors
from Liability Under the DMCA
A.
Threshold Eligibility Under § 512(i)
for OCILLA's Safe Harbors
To be eligible for any of the four safe harbor
limitations of liability, a service provider must meet the conditions for
eligibility set forth in OCILLA. 17
U.S.C. § 512(i). The safe harbor
limitations of liability only apply to a service provider that:
(A) has adopted and reasonably implemented, and informs
subscribers and account holders of the service provider's system or network of,
a policy that provides for the termination in appropriate circumstances of
subscribers and account holders of the service provider's system or network who
are repeat infringers; and
(B) accommodates and does not interfere with standard
technical measures. [FN11]
FN11. "Standard
technical measures" refers to technical measures that copyright owners use
to identify or to protect copyrighted works and: (1) have been developed pursuant to a broad
consensus of copyright owners and service providers in an open, fair,
voluntary, multi-industry standards process;
(2) are available to any person on reasonable and nondiscriminatory
terms; and (3) do not impose substantial
costs on service providers or substantial burdens on their systems or networks.
17
U.S.C. § 512(i)(2).
17
U.S.C. § 512(i)(1). If a service
provider does not meet these threshold requirements, it is not entitled to
invoke OCILLA's safe harbor limitations on liability. 17
U.S.C. § 512(i)(1).
[9] We hold that the district court erred in concluding on
summary judgment that AOL satisfied the requirements of § 512(i). There is at least a triable issue of material
fact regarding AOL's eligibility for the safe harbor limitations of liability
in this case. Section
512(i)(1)(A) requires service providers to: (1) adopt a policy that provides for the
termination of service access for repeat copyright infringers in appropriate
circumstances; (2) implement that policy in a reasonable manner; and (3) inform its subscribers of the
policy. It is difficult to conclude as a
matter of law, as the district court did, that AOL had "reasonably
implemented" a policy against repeat infringers. There is ample evidence in the record that
suggests that AOL did not have an effective notification procedure in place at
the time the alleged infringing activities were taking place. Although AOL did notify the Copyright Office
of its correct e-mail address before Ellison's attorney attempted to contact
AOL and did post its correct e-mail address on the AOL website with a brief
summary of its policy as to repeat infringers, AOL also: (1) changed the e-mail
address to which infringement notifications were supposed to have been
sent; and (2) failed to provide for
forwarding of messages sent to the old
address or notification that the e-mail address was inactive. See Ellison,
189 F.Supp.2d at 1057-58. AOL should have closed the old e-mail account
or forwarded the e-mails sent to the old account to the new one. Instead, AOL allowed notices of potential
copyright infringement to fall into a vacuum and to go unheeded; that fact is sufficient for a reasonable jury
to conclude that AOL had not reasonably implemented its policy against repeat
infringers.
B. AOL and the Limitation of Liability
Under § 512(a)
[10] If after remand a jury finds AOL eligible under § 512(i) to
assert OCILLA's safe harbor limitations of liability, the court need not
revisit whether AOL qualifies for the limitation of liability provided by § 512(a).
The first safe harbor in OCILLA pertains to
"transitory digital network communications." *1081
17 U.S.C. § 512(a). Under this
section, a service provider would not be liable for copyright infringement:
by reason of the provider's transmitting, routing, or
providing connections for, material through a system or network controlled or
operated by or for the service provider, or by reason of the intermediate and
transient storage of that material in the course of such transmitting, routing,
or providing connections, if--
(1) the transmission of the material was initiated by or at
the direction of a person other than the service provider;
(2) the transmission, routing, provision of connections, or
storage is carried out through an automatic technical process without selection
of the material by the service provider;
(3) the service provider does not select the recipients of
the material except as an automatic response to the request of another person;
(4) no copy of the material made by the service provider in
the course of such intermediate or transient storage is maintained on the
system or network in a manner ordinarily accessible to anyone other than
anticipated recipients, and no such copy is maintained on the system or network
in a manner ordinarily accessible to such anticipated recipients for a longer
period than is reasonably necessary for the transmission, routing, or provision
of connections; and
(5) the material is transmitted through the system or
network without modification of its content.
Id. The definition of "service
provider" for the purposes of the § 512(a) safe
harbor limitation of liability is "an entity offering the transmission,
routing, or providing of connections for digital online communications, between
or among points specified by a user, of material of the user's choosing,
without modification to the content of the material as sent or
received." 17
U.S.C. § 512(k)(1)(A).
Whether AOL functioned as a conduit service
provider in this case presents pure
questions of law: was the fourteen day
period during which AOL stored and retained the infringing material
"transient" and "intermediate" within the meaning of § 512(a)?; was "no ... copy ... maintained on the
system or network ... for a longer period than is reasonably necessary for the
transmission, routing, or provision of connections?" The district court appropriately answered
these questions in the affirmative. In
doing so, the court relied upon on the legislative history indicating that
Congress intended the relevant language of § 512(a) to
codify the result of Netcom,
907 F.Supp. at 1361 (provider that stored Usenet
messages for 11 days not liable for direct infringement merely for
"installing and maintaining a system whereby software automatically
forwards messages received from subscribers onto the Usenet, and temporarily
stores copies on its system"), and to extend it to claims for secondary
liability. We affirm the district
court's ruling that AOL is eligible for the safe harbor limitation of liability
of § 512(a). [FN12]
FN12. Because a jury
has not found AOL liable for copyright infringement and eligible under § 512(i) for the
safe harbor limitations of liability, we do not address (nor did the district
court) whether AOL could successfully assert the safe harbor under § 512(c).
We conclude that the district court correctly
identified triable issues of fact with respect to Ellison's claim against AOL
for contributory copyright infringement.
We also agree with the district court that Ellison's claim for vicarious
copyright infringement fails; Ellison
did not offer sufficient evidence that AOL received a direct *1082
financial benefit from the infringement to survive summary judgment. Further, because we conclude that the
district court failed to discern triable issues of fact concerning AOL's
threshold eligibility under § 512(i) for the
DMCA's safe harbor limitations of liability, we reverse the district court's
judgment on this matter. If a jury
determines that AOL is eligible for the DMCA's safe harbor limitations of
liability under § 512(i), the parties
do not need to relitigate whether AOL satisfies the requirements of § 512(a) in this
case; we agree with the district court
that it does.
In sum, we AFFIRM in part and REVERSE in part
the district court's summary judgment in favor of AOL. We REMAND for trial on
Ellison's claim of contributory copyright liability, and, if necessary, on
AOL's eligibility under § 512(i) to
assert the DMCA's safe harbor limitations of liability. Each party to bear its
own costs.
AFFIRMED in part, REVERSED in part, and
REMANDED.
357 F.3d 1072, 2004 Copr.L.Dec. P 28,769, 69
U.S.P.Q.2d 1616, 2004 Daily Journal D.A.R. 1198, 2004 Daily Journal D.A.R. 1535
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