Content Owners’ Pursuit Of Secondary Infringement Claims

Part Two of a Two-Part Article

Eliminating an Internet service provider's right to safe harbor protection is merely a first step in establishing its liability as a secondary copyright infringer. The plaintiff still must demonstrate that the elements for secondary infringement are present. As illustrated in the Hotfile, Columbia Industries and Lime Group cases discussed in Part One of this article last month, meeting this burden at the summary judgment stage is an achievable but, even with a strong factual record, not an assured outcome.

Secondary liability can be imposed on an ISP or distributor of a product used to commit infringement based upon claims of contributory infringement, inducement infringement or vicarious infringement. The contributory and inducement claims both focus on a defendant's contribution to the infringement and require that the defendant knows that direct infringement is occurring. These related claims, which provide independent ways to attack secondary infringement, differ in important respects.

'Materially Contribute'

For contributory infringement to exist, the defendant must cause or materially contribute to the direct infringement, and the challenged product or Internet service must be incapable of substantial non-infringing uses. The second element was established in the Supreme Court's seminal decision, Sony Corp. of America v. Universal City Studios Inc., 464 U.S. 417 (1984) (popularly known as the Betamax case). In Sony Corp., which involved time-shifting of television programs using Sony's Betamax recording device (a precursor to today's DVR), the court ruled that contributory infringement liability could not be imposed because the Betamax was "capable of commercially significant non-infringing uses." In reaching this decision, the Supreme Court analogized to the "staple article of commerce" doctrine applicable in patent cases, which permits third-party use of a component part of a patented device if the use is capable of substantial non-infringing purposes. Significantly, the Supreme Court found that there was no evidence that Sony had sought to encourage copyright infringement through use of the Betamax or had taken steps to profit from unlawful taping.

The inducement infringement claim has been an important weapon for content owners since the U.S. Supreme Court's decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd. , 545 U.S. 913 (2005). In Grokster, as in Sony Corp., the Supreme Court considered secondary infringement claims in the context of a defendant's distribution of a product that was capable of substantial non-infringing uses. (Grokster distributed software that permitted peer-to-peer sharing of copyrighted and public domain content. While the software could be used to make unauthorized copies of copyrighted works, it also could be used to distribute such works with permission and to share other files for which copyright infringement issues did not arise.) However, the Supreme Court distinguished Sony Corp., in which Sony was not shown to have encouraged infringement, with Grokster's conduct of which the evidence established that such encouragement was "unmistakeable."

The Grokster court ruled that the "staple article of commerce" defense recognized in Sony Corp. did not apply to "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement ...." Accordingly, the Supreme Court held that a defendant who knows that direct infringement is occurring through the use of its products or Internet site, and promotes infringing activity, is liable for inducement liability even if its product or site is capable of substantial non-infringing uses.

The third secondary liability claim, for vicarious infringement, does not focus on the defendant's contribution to the direct infringement, but rather on the defendant's failure to stop third parties from committing direct infringements. To establish...