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Article


(A version of this article appeared in the State Bar News, Technology Issue, November 2003, a publication of the New York State Bar Association)

    Contributory Copyright Infringement
 For Music File Sharing:
 Grokster v. Aimster

    by: Richard L. Ravin, Esq.*

    When it comes to copyright infringement, nothing compares to online file sharing (music and video downloading) in terms of the sheer quantity of works being copied. In the two recent cases of Grokster,[1] and Aimster, [2] brought by the music recording and motion picture industries, the issue was not whether such activities were unlawful, rather, the focus was on who could be held contributorily or vicariously liable. Notwithstanding identical legal issues and nearly identical facts, the two courts arrived at opposite decisions on whether to order preliminary injunctions.

Grokster

    In the first case, Grokster enabled its users to exchange digital music and video files via a peer-to-peer network by distributing free software known as Kazaa Media Desktop. The software was licensed to Grokster without any right to access or alter the source code.[3] Grokster received advertising revenue based on the number of users who downloaded its software.[4] Grokster’s software automatically connected the user to the FasTrack supernode peer-to-peer network, and made the shared files available to all other users who were connected to the network.[5]

Napster

    As in the case of Napster,[6] users downloaded the software from servers operated by the defendant, and once installed, a user could elect to share certain files located on the user’s computer, such as music, video, text and software.[7] Unlike Napster, however, Grokster did not operate a network on which users could search for, locate and download the desired files.[8] Napster had operated a database server which was accessed by users, enabling them to locate and download files residing on computers of other Napster registered users.[9] In Napster, the court held that plaintiffs were likely to succeed on the merits that Napster was contributorily and vicariously liable for copyright infringement, and granted a preliminary injunction.[10]

    In Grokster, a California federal district court ruled in favor of Grokster on cross motions for summary judgment, holding that Grokster was neither contributorily or vicariously liable for infringement.[11] There was no issue that the end-users were engaged in direct infringement. Direct copyright infringement requires a showing of (i) copyright ownership, and (ii) unauthorized copying of the work which is original.[12] As to the second prong, a plaintiff must prove that the alleged infringer has violated one of the exclusive rights granted to copyright holders under 17 U.S.C. §106.[13]

    Contributory copyright infringement, however, requires a showing that, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another. The knowledge element is satisfied if the defendant is shown to have known or have reason to know of the direct infringement. Material contribution means that the defendant engages in personal conduct that encourages or assists the infringement.[14]

Sony (The Betamax Case)

    The Supreme Court, in Sony[15] (the Betamax case), held that Sony was not liable for contributory copyright infringement even though Sony knew that its video tape recording machines (predecessors to VCR’s) could be used, and were being used, to infringe copyrighted works. According to the court in Grokster, the Sony Court found that since the video tape recorders were capable of both infringing and “substantial noninfringing uses,” generic or “constructive” knowledge of infringing activity was not sufficient to warrant liability based on the mere retail sales of Sony’s products.[16] The sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is capable of substantial noninfringing uses.[17] The Grokster court found that Grokster was not unlike companies selling home video recorders or copy machines, both of which are used to infringe copyrights.[18]

    The Grokster court also found that the declarations filed by Grokster demonstrated substantial noninfringing uses for Grokster’s software, such as the distribution of free songs or other non-copyrighted works, movie trailers, and using the software in countries where it is legal, or sharing works of Shakespeare. The court also noted that plaintiffs did not dispute that the software was being used, and could be used, for substantial noninfringing uses.[19]

    Critically, the Grokster court also found that defendant did not have actual knowledge of infringement at a time when it could have used that knowledge to stop the particular infringement: “Plaintiffs’ notices of infringing conduct are irrelevant if they arrive when Defendants do nothing to facilitate, and cannot do anything to stop, the alleged infringement.”[20] In granting Grokster’s motion for summary judgment, the court held that Grokster did not materially contribute to the infringing activity, as Grokster had no control over the FasTrack network and was not in a position to stop the infringement once it received actual notice of the unlawful activity. Thus, the court held that there was no evidence of active and substantial contribution to the infringement itself.[21]

    Finally, on the issue of vicarious liabilty, two elements are required: the right and ability to supervise the direct infringer, and direct financial interest in the infringing activity.[22] The court found that while Grokster did derive financial benefit from the infringement, it did not have the ability to police the user’s conduct.[23]

Aimster

    Two months after the Grokster case was decided, the opposite result obtained when the U.S. Court of Appeals for the Seventh Circuit affirmed a preliminary injunction in the Aimster case based on contributory infringement. As with Grokster, Aimster distributed free software which was downloaded from its Web site. The software allowed the user to register on the Aimster system, which used AOL’s Instant Messenger network (hence the “AIM” in “Aimster”) to swap the files. As in Grokster, Aimster did not control the network on which the file sharing occurred, and the copies of the songs did not reside on Aimster’s computers. Thus, Aimster was not a direct infringer.

    While in the Sony case, Sony did not encourage the use of the Betamax tape recording machine to infringe copyrights in its advertising,[24] Aimster, on the other hand, provided in its tutorial examples of downloading copyrighted music, including works which the recording industry notified Aimster were being infringed.[25] The Aimster court noted that “[t]he tutorial is the invitation to infringement that the Supreme Court found missing Sony.”[26]

    Aimster did not sell paid advertising on its Web site. Instead, it relied on selling memberships to its Club Aimster, which, for a fee of $4.95 per month, allowed users to receive from other Aimster users with one click the 40 most popular songs downloaded on the Aimster system. The court recognized that these top 40 songs were most probably copyrighted works.

    The court stated that although the evidence submitted did not exclude the possibility of substantial noninfringing uses, it was sufficient at a preliminary injunction proceeding (which is summary in nature) to shift the burden of production to Aimster to prove that its services had substantial noninfringing uses.[27] The court also found that Aimster did not provide any evidence from real-life Aimster users that there was any actual noninfringing uses for Aimster.[28]

    The court held that when there are noninfringing uses of an Internet file-sharing service, if the infringing uses are substantial, then to avoid contributory infringement liability, the provider of the service must show that it would have been disproportionately costly for it to eliminate or at least reduce substantially the infringing uses.[29] The court held that plaintiffs had proven a likelihood of success on the merits that Aimster would be held contributorily liable for infringement at trial and affirmed the preliminary injunction.

    With respect to the issue of vicarious liabilty, the court found that the distribution of Aimster’s software was inseparable from revenue generated by Club Aimster, since the more the free software was distributed, the more users would sign up for Club Aimster. The court was not persuaded, however, that Aimster was likely to be held vicariously liable at trial, and thus, vicarious liability was not a basis for the preliminary injunction.

Conclusion

    Both the Grokster and Aimster courts were asked to decide the same legal question, but arrived at different results in large part due to the facts, or lack thereof, put forth in the declarations filed with the respective courts in connection with preliminary injunction hearings. The diverging outcomes are odd because common sense dictates that both the Grokster and Aimster systems were used for the same purposes, and that both systems either did, or did not, have substantial noninfringing uses. In online contributory infringement cases, the court must decide whether, and to what extent, the accused activities or software provided substantial noninfringing uses. In the final analysis, it is a matter of degree, turning on the evidence presented in each particular case.

    In Aimster, the court was looking for “real-life” customers, as opposed to individuals affiliated with the defendant, to submit written testimony of actual noninfringing uses. None was presented. The Aimster court also found that there was no evidence presented as to future substantial noninfringing uses, an inquiry taught by the Sony case. The court held that Aimster went too far when it encouraged users in its online tutorial to use the technology to violate the copyrights of others, thereby warranting the court to shift the burden of production to Aimster to demonstrate substantial noninfringing uses.

    The Grokster court, on the other hand, also followed the teachings of Sony, and thereby refused to condemn a technology which was knowingly being used for infringing purposes, but was also being used for substantial noninfringing purposes. It is interesting to note that the court acknowledged that the defendant may well have structured its business enterprise precisely to avoid running afoul of secondary copyright liability, but such was a matter for the legislature, not the judiciary.[30]

    _____________

    * Richard L. Ravin is a member of Hartman & Winnicki, P.C., and head of the firm’s Internet and Intellectual Property Law Group, with offices in Paramus New Jersey and New York City. He is Vice Chair of the New York State Bar Association’s Intellectual Property Section, and past (founding) Co-Chair of the Internet Law Committee of the Section. His e-mail address is: rick@ravin.com. © 2004 Richard L. Ravin. All Rights Reserved.



    [1] Metro-Goldwyn-Mayer Studios v. Grokster, 259 F.Supp.2d 1029, (C.D.Cal. 2003).

    [2] In re: Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).

    [3] Grokster, 259 F.Supp.2d at 1039.

    [4] Grokster, 259 F.Supp.2d at 1044.

    [5] Grokster, 259 F.Supp.2d at 1032.

    [6] A&M Records, Inc. v. Napster, Inc., 239 F3d 1004 (9th Cir. 2001).

    [7] Napster, 239 F3d at 1011-12.

    [8] Grokster, 259 F.Supp.2d at 1041-43.

    [9] Napster, 239 F3d at 1011-12.

    [10] Napster, 239 F3d at 1022, 1024.

    [11] Grokster, 259 F.Supp.2d at 1043 1046.

    [12] Grokster, 259 F.Supp.2d at 1034; 1038.

    [13] Grokster, 259 F.Supp.2d at 1034.

    [14] Grokster, 259 F.Supp.2d at 1035, 1036.

    [15] Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).

    [16] Grokster, 259 F.Supp.2d at 1035, citing, Sony, 464 U.S. at 442.

    [17] Id.

    [18] Grokster, 259 F.Supp.2d at 1043.

    [19] Grokster, 259 F.Supp.2d at 1034-35.

    [20] Grokster, 259 F.Supp.2d at 1037.

    [21] Grokster, 259 F.Supp.2d at 1043.

    [22] Grokster, 259 F.Supp.2d at 1043-44.

    [23] Grokster, 259 F.Supp.2d at 1045-46.

    [24] Aimster, 334 F.3d at 651; Sony, 464 U.S. 438.

    [25] Aimster, 334 F.3d at 651.

    [26] Id.

    [27] Aimster, 334 F.3d at 651-652.

    [28] Aimster, 334 F.3d at 653.

    [29] Aimster, 334 F.3d at 653.

    [30] Grokster, 259 F.Supp.2d at 1046.

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