CBA Technology and
Forum Committee Update
In an article in the November 1994 issue of The Colorado Lawyer,
1 this author
described the potential liability for software piracy committed by others.
Answers to the question of what responsibility an individual has when
his or her maintenance company uses pirated software inevitably led to
an examination of exposure for copyright infringement in the new on-line
environment. This article expands the concepts of the previous article
to the emerging medium of on-line services, such as America On Line, and
various bulletin board services.
An electronic bulletin board
consists of electronic storage media attached to telephone lines via modems
and controlled by a computer. Third parties, or "users", can
transfer information over the modem from their own computers to the storage
media on the bulletin board. Each bulletin board has hundreds or thousands
of subscribers. Information can be transferred either to the user from
the host bulletin board or to the host from the user.
Three theories under which
liability can be asserted for copyright infringement are direct infringement,
contributory infringement and vicarious infringement. Direct infringement
is not within the scope of this article. The previous article showed that
contributory infringement requires that the alleged infringer have knowledge
of the infringement of the third party and that it aid, induce or actively
contribute to the infringement.2
Vicarious infringement can be sustained when (1) the alleged infringer
can exercise control over the direct infringer or infringing activity
and (2) the alleged infringer had a direct financial interest in the infringement.
The concepts of vicarious
and contributory infringement were expanded to the new interactive environment
when the U.S. Supreme Court in 1984 confronted the then-new technology
of video recording. In Sony Corporation of America v. Universal City
owners of copyrights on television programs sued the manufacturers of
home video tape recorders. They alleged that some individuals had used
the recorders to record some of the owners' copyrighted works on television,
that these individuals had thereby infringed their copyrights and that
the recorder manufacturers were vicariously liable for such infringement
because they sold these recorders.
However, the Supreme Court
held in favor of the manufacturers, overturning the Ninth Circuit Court
of Appeals in a five-to-four decision. In doing so, the Court implicitly
held that vicarious liability could not be imposed on the manufacturers
even if they sold the equipment with constructive knowledge of the fact
that their customers might use the equipment to make unauthorized copies
of copyrighted material. In addition to finding that there were substantial
non-infringing uses for the video recorders, the Court concluded that
the sale of home video tape recorders to the general public did not constitute
contributory infringement of copyrights on television programs since there
was a significant likelihood that substantial numbers of copyright holders
who license their works for broadcast on free television would not object
to having their broadcasts time-shifted by private viewers.
Further, the copyright owners
in Sony were unable to prove that the practice of time-shifting
had impaired the commercial value of their copyrights or had created any
likelihood of future harm to the potential market for, or the value of,
their copyrighted works. It appears that the Court applied an economic
analysis to its decision and was unwilling to create liability where the
defendant merely provided the means for performing the infringement.
Recent cases have not been
as generous to the defendant. In the 1994 case of Sega Enterprises
LTD v. MAPHIA, 5
a federal court in California held that the operator of a bulletin board
had allowed the unauthorized copying of video games where the games were
uploaded to bulletin boards by unknown users and subsequently downloaded
by users. In holding that Sega was entitled to a preliminary injunction
enjoining the computer bulletin board company and its operator from infringing
on Sega's copyrights, the court found that there was a strong likelihood
of contributory copyright infringement on the part of the operator.
The court in Sega found
contributory infringement based on the fact that the operator was aware
of the uploading and downloading of the video games, that the operator
specifically solicited the copying of the video games and that he sought
placement of the game programs on the on-line bulletin board for downloading
purposes. This is consistent with the traditional rule that the defendant
have knowledge and control and actively induce infringement.
In 1993, a federal court in
Florida found a computer bulletin board operator liable for copyright
infringement, even though the operator himself did not upload the material
onto the bulletin board and took steps to remove the material once it
was brought to his attention. In Playboy Enterprises, Inc. v. Frena,
6 the court
by implication held that a passive service provider was liable for the
users' acts. In finding the bulletin board operator liable for copyright
infringement, the court overlooked (perhaps intentionally) the fact that
the operator was unaware of the infringement. Under Playboy Enterprises,
intent and knowledge are not elements of infringement and, therefore,
an innocent infringer is just as liable.
of Playboy Enterprises
The Playboy Enterprises
court appears to have expanded the concept of contributory infringement
to include all individuals who obtain a financial gain from the acts of
another, even if such an individual is unaware of the actual infringement.
Therefore, the court would no longer require that the individual must
knowingly aid, induce or contribute to the copyright infringement, as
the Sega court held.
The idea of holding an individual
liable because he or she obtained a financial gain from the acts of another
is found in the doctrine of vicarious liability, which stems from the
right to supervise the infringer's activities. However, in Playboy
Enterprises, the court did not address whether the bulletin board
operator had the ability or right to supervise the subscribers' actions.
The Playboy Enterprises
court seemed to depart from the traditional rules discussed at the beginning
of this article, treating the defendant as if he were a direct infringer.
The record demonstrated that the defendant was not involved in inducing,
aiding or in any way directly participating in the infringement; in fact,
the defendant did not know the infringement was occurring.
In this author's opinion,
the rationale of the Sony decision, rather than the Playboy
or Sega decisions, should be applied to the unsettled issues
involving copyright infringement liability in the on-line environment
of dial-in bulletin boards and the Internet. The Internet facilitates
a series of communication protocols that allow individuals to communicate
by computer. For the analogous reasons that the phone company would not
be liable for a user singing a copyrighted song on the phone, bulletin
board operators should not be liable for the infringing acts of others.
Practitioners should be aware that it will be difficult to apply inconsistent
precedent to this newly emerging area of copyright law.
"Am I My Brother's Keeper?: Vicarious Liability for Software Piracy",
23 The Colorado Lawyer 2511 (Nov. 1994).
Mississippi Planning and Development District, Inc. v. Robertson, 660
F.Supp. 1057 (S.D.Miss. 1986).
Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963).
U.S. 417 (1984).
F.Supp. 679 (N.D.Cal. 1994).
F.Supp. 1552 (M.D.Fla. 1993).
This update was
written by Leslie G. Berkowitz, Denver, a practitioner in private practice,
(720) 787-3361. Update editors are Gayle L. Strong, Denver, assistant general
counsel for University Hospital and UCHSC, and Letty Friesen, who practices
intellectual law in Denver.
The Colorado Lawyer/November 1995/Vol.24, No.11