Stephen J. Quigley – Ostrolenk Faber LLP – squigley@ostrolenk.com
2009 saw a number of significant court decisions and other legal developments concerning the impact of copyright law on the Internet. In this continuously evolving area of the law, parties and courts struggle to apply established legal principles to a constantly changing technology that drives the Internet.
The cases discussed in this article are representative of recent court decisions deciding copyright infringement issues, and they provide a framework for ascertaining permissible and impermissible uses of copyrighted works.
File Sharing
Determining liability for copyright infringement where protected materials were made available through Internet web sites continued to be a primary topic of litigation.
A favorable decision for copyright holders was Arista Records LLC v. Usenet.com, Inc., 633 F. Supp.2d 124 (S.D.N.Y. 2009). Usenet provided its subscribers access to unlimited downloads of copyrighted sound recordings that were owned by Arista and 13 other recording companies. The USENET network is a global system of online bulletin boards in which users post messages and download “articles” for storage on the users’ personal computers. Unlike peer-to-peer file sharing networks such as Napster, articles on the USENET are saved to central news servers (“USENET hosts”) instead of another end-user’s personal computer. The Court held that Usenet was not a “passive conduit” that merely facilitated the exchange of content between users for the delivery of the recordings. Instead, Usenet was liable for copyright infringement for actively engaging in the unlawful distribution of the plaintiffs’ copyrighted sound recordings because it:
1) Had taken active measures to create servers dedicated to mp3 files and to increase the retention times of newsgroups containing digital music files.
2) Had taken active steps, including both automated filtering and human review, to remove access to certain categories of content, and to block certain users.
3) Had control over which newsgroups its servers accepted and stored and which they rejected, and routinely exercised that control.
Arista, on the other hand, lost its attempt to have “webcasting” declared an interactive service. Arista Records, LLC v. Launch Media, Inc., 578 F.3d 148 (2d Cir. 2009), affirmed the jury’s verdict that Launch Media’s webcasting service which enabled users to create individual internet radio stations that play songs within a particular genre selected by the user was not an interactive service because the users could not request a particular song, nor did Launch Media’s webcasting site allow users to receive a transmission of a program that had been specially created for them.
For a webcasting service to be interactive a user must be able to either (1) request – and have played – a particular sound recording, or (2) receive a transmission of a program “specially created” for the user. Launch Media provided neither service. Therefore, it was not required to obtain licenses or pay separate royalties for the recordings transmitted to the end users – it needed to pay only the compulsory or statutory licensing fees.
Copyright holders received another setback in UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F. Supp.2d 1081 (C.D. Cal. 2008), in which Veoh, an internet service provider (ISP), found protection under the “safe harbor” provision of the Digital Millennium Copyright Act (DMCA). UMG (Universal Music Group) controlled the rights to millions of copyrighted sound recordings and musical compositions. Veoh operated an internet-based service that allowed users to share videos with others, free of charge. UMG sued Veoh for copyright infringement, and Veoh, in turn, asserted the “safe harbor” defense under Section 512(c) of the DMCA claiming that it merely provided “storage” for videos that had been uploaded by others.
Section 512(c) will shield an ISP (defined in the statute as “a provider of online services or network access, or the operator of facilities therefor”) from liability for money damages for infringement of copyrighted works that have been stored at the direction of a user – but only if the ISP:
- does not receive a financial benefit directly attributable to the infringing activity in those instances where the ISP has the right and ability to control such an activity; and
- does not have actual knowledge of the material or that the material is infringing; or is not aware of facts or circumstances from which infringing activity is apparent; and
- upon obtaining such knowledge, acts expeditiously to remove, or disable, access to the material.
Finding that the DMCA’s safe harbor provisions apply to ISPs that provide storage for the purpose of facilitating access to user-stored material, the Court denied UMG’s motion for summary judgment holding that Veoh was not liable because there was no evidence that any infringement occurred by reason of the storage. The Court also expressed a strong public policy reason for its holding: “If providing access could trigger liability without the possibility of DMCA immunity, service providers would be greatly deterred from performing their basic, vital and salutary function — namely, providing access to information and material for the public.”
Finally, in Atlantic Recording Corp. v. Project Playlist, Inc., 603 F. Supp.2d 690 (S.D.N.Y. 2009), the question was whether an interactive computer service provider is liable under the Communications Decency Act (CDA) for posting or linking to third parties’ content. Project Playlist used “spider” technology for searching the Internet to compile and provide an index of links to sound recordings available on other websites. Users can create playlists on Project Playlist’s website for uploading to their social networking sites or downloading to their personal computers.
The Court distinguished between an “information content provider” which creates or develops content and an “interactive computer service provider” which creates an interface for users to access and download third-party content. The CDA states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The Court agreed with Playlist that it was immune under this section and noted that courts across the country have construed CDA’s grant of immunity broadly because
It would be impossible for service providers to screen each of their millions of postings for possible problems. Faced with potential liability for each message republished by their services, interactive computer service providers might choose to severely restrict the number and type of messages posted. Congress considered the weight of the speech interests implicated and chose to immunize service providers to avoid any such restrictive effect.
The conclusion to be drawn from the cases in this section is that the degree of control by the service provider over the content is key. Copyright infringement will likely not be found where the service provided is primarily technical and facilitates, rather than creates or controls, the content.
Also worth noting is the award of $675,000 in damages to Capitol Records and other copyright holders against a Boston University student who had used the Kazaa peer-to-peer file-sharing service to download copyrighted musical works. The jury awarded $22,500 for each of 30 representative works. In an earlier ruling in the case, Capitol Records Inc. v. Alaujan, D. Mass. No. 1:03-cv-11771-NG, the Court denied the defendant’s fair use defense and granted summary judgment to the plaintiffs.
Web site scanning
In the long running battle concerning Google’s plan to scan and post on-line the entire contents of several large libraries, including works still under copyright (Authors Guild Inc. v. Google Inc., S.D.N.Y. No. 05 CV 8136), on November 19, 2009, the Court granted preliminary approval of the settlement proposal. A final fairness hearing has been scheduled for February 18, 2010. Under the proposed terms of the settlement, Google will pay $125 million to the copyright holders and divide the royalties from the online sale of books, allocating 63% to the Books Rights Registry which represents the copyright holders.
On July 9, 2009, the European Publishers Council, in conjunction with the World Association of Newspapers and News Publishers (WAN-IFRA) issued the Hamburg Declaration demanding new intellectual property rights protection for copyrighted materials disseminated on the Internet. WAN-IFRA advocates the use of the Automated Content Access Protocol (ACAP) for marking electronic documents online in a machine readable way that communicates the content owners’ copyright terms and conditions.
Not surprisingly, Google opposes the ACAP. According to Google, an existing standard, the Robots Exclusion Protocol (REP), allows webmasters to tell search engines whether or not their sites, or pages within a site, can be crawled. A July 15, 2009 Google blog stated “news publishers, like all other content owners, are in complete control when it comes not only to what content they make available on the web, but also who can access it and at what price.” Microsoft also joined in the debate noting that the REP was developed 15 years ago and is no longer adequate to deal with the technological developments in search engines. The ACAP is preferable because it is a mechanism for implementing a conditional access, rather than the all or nothing choice of allowing or disallowing access under the REP.
The movement toward more restrictions on content on the Internet is likely to continue. For example, The Wall Street Journal currently charges a subscription fee for access to portions of its on-line publication, and The New York Times, whose web site has never been profitable, is contemplating a subscription fee as well. As stated in the Hamburg Declaration:
Universal access to websites does not necessarily mean access at no cost. We disagree with those who maintain that freedom of information is only established when everything is available at no cost. Universal access to our services should be available, but going forward we no longer wish to be forced to give away property without having granted permission.
Notwithstanding Google’s opposition to the ACAP, on December 1, 2009, Google announced that it had updated its “First Click Free” program which allows publishers of subscription web site content to limit users to no more than five pages per day without registering or subscribing. Users are often able to obtain content free through the search engine site that would not be available through the content provider’s site. The user’s first five clicks on a web site located by Google will remain free, but subsequent clicks can generate a payment or registration request.
In Parker v. Yahoo!, Inc., 88 USPQ2d 1779, 2008 U.S. Dist. LEXIS 74512 (E.D. Pa. 2008), Parker alleged that Yahoo’s and Microsoft’s search engines created and made available unauthorized cached copies of his works. Parker conceded, however, that he had not made use of the opt-out mechanisms that would have prevented his websites from being cached. This meant, defendants argued, that Parker had given them an implied license to cache his sites. The Court agreed, finding that because of Parker’s silence and lack of an earlier objection, the defendants could properly infer that Parker knew of and encouraged the search engines’ activity and they could reasonably interpret Parker’s conduct to be a grant of a license for that use.
Foreign Copyrighted Work on the Internet
In Moberg v. 33T LLC, 92 USPQ2d 1242, 2009 U.S. Dist. LEXIS 93402 (D. Del. 2009), photographs that originated in Germany and were displayed on plaintiff’s German based website were not “United States works” and did not have to be previously registered in the U.S. in order for the owner to file suit for copyright infringement, even though the web site was obviously accessible in the United States.
Publishing a work on a website does not cause the work to be considered published everywhere in the world, so that the copyright holder is not subject to the formalities of the copyright laws of each country where the website is accessible and the work therefore appears. Foreign works posted on a web site are entitled to the same Berne Convention privileges enjoyed by other foreign works distributed in conventional ways.
“Hot News”
All Headline News Corp. (AHN) was an online venture that disseminated news reports obtained from the Internet, including reports of breaking news (“hot news”), to paying customers’ web sites. The Associated Press sued alleging that the AHN was unlawfully copying, altering and disseminating AP’s news stories.
The Court, in AP v. All Headline News Corp., 608 F. Supp.2d 454 (S.D.N.Y. 2009), denied AHN’s motion to dismiss the complaint, finding that a civil action for hot news misappropriation under state law is not pre-empted by the federal Copyright Act, and the Court applied New York law because the AP is headquartered in New York City. Misappropriation does not implicate copyright and occurs when (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free riding on the plaintiff’s efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiff; and (v) the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that the product’s or service’s existence or quality would be substantially threatened.