Internet Library of Law
and Court Decisions

MP3 - Internet Library of Law and Court Decisions - Updated January 31, 2008

The court denied Napster Inc.'s ("Napster") motion for partial summary judgment, in which motion Napster sought to limit the damages and other relief that could be awarded against it for alleged direct or contributory copyright infringement by application of the safe harbor provisions of 17 U.S.C. section 512(a) of the Digital Millennium Copyright Act ("DMCA"). Section 512(a) limits a service provider's liability for copyright infringement by reason of the service provider's "transmitting, routing or providing connections for material through a system or network controlled or operated by or for the service provider ...".

The court held that Napster's role in the transmission of MP3 files by and among the various users of its system was not entitled to protection under Section 512(a) because such transmission does not occur through Napster's system. Rather, although Napster informs the user's computer of the location of a computer on which MP3 files the user seeks are stored, and its willingness to permit the user to download such files, all files transfer directly from the computer of one Napster user through the Internet to the computer of the requesting user. Similarly, any role that Napster plays in providing or facilitating a connection between these two computers does not occur through its system. "Although the Napster server conveys address information to establish a connection between the requesting and host users, the connection itself occurs through the Internet."

The court also held that issues of fact existed as to whether Napster was entitled to any protection under the DMCA at all. To be entitled to such protection, a service provider must meet the requirements of section 512(i) of the DMCA, which, among other things, obligates the service provider to "adopt[] and reasonably implement[] and inform[] subscirbers 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 ...". The court held that issues of fact existed as to whether Napster had appropriately adopted and informed its users of such an effective policy which precluded at this time any relief to Napster under the DMCA.

Court holds that both Sharman Network Ltd. ("Sharman") a company based in Australia which distributes software that enables individuals to utilize the Kazaa peer-to-peer file sharing network, and LEF Interactive PTY Ltd. ("LEF"), which manages Sharman's operations, are subject to personal jurisdiction in the California federal courts in a copyright infringement lawsuit arising out of Sharman's distribution of its file sharing software to California residents, and their subsequent use of such software.  The court reached this conclusion notwithstanding the fact that Sharman's activities all occur outside California, where it operates a web site from which California residents download the Kazaa software.  As a result, the court denied defendants' motion to dismiss this action for want of personal jurisdiction.

Granting defendants' motion for summary judgment, the District Court holds that neither Grokster Ltd. ("Grokster") nor StreamCast Networks Ltd. ("StreamCast") are liable, on theories of contributory or vicarious copyright infringement, for infringing plaintiffs' copyrights as a result of their distribution, respectively, of branded versions of Kazaa (Grokster) and Gnutella (StreamCast) software.  This software enables third party users to connect to peer-to-peer file sharing networks, over which they frequently share and download copyrighted materials without the consent of the owners of the copyrights therein.  The court held that defendants were not liable for contributory copyright infringement both because there were "substantial non-infringing uses" to which their software applications could be put, and because defendants were not involved in the third parties' use of their software after its distribution.  Similarly, the court held that defendants were not responsible for vicarious copyright infringement because they could not control the uses to which their software were put.  In making this conclusion, the court rejected plaintiffs' arguments that defendants should be held liable for vicarious infringement because, by altering the functionality of their software, defendants could prevent it from being used to infringe the copyrights of third parties.

Affirming the court below, the Ninth Circuit Court of Appeals holds that distributors of Kazaa and Morpheus are not liable for the infringing uses to which their peer-to-peer file sharing programs are put by third parties.  These third parties use defendants' software to make and distribute unauthorized copies of sound recordings and motion pictures in which plaintiffs hold copyrights.  Because, however, defendants' programs can also be used for 'substantial non-infringing uses,' such as the sharing of works either in the public domain, or with the permission of the holders of the copyrights therein, the Ninth Circuit held that defendant distributors are not liable as contributory infringers for such third party activities.  These claims fail because defendants did not have the requisite knowledge of the users' infringing activities at a time when they contributed to, or could take steps to prevent that infringement, given the decentralized nature of defendants' software.  Nor are the distributor defendants liable as vicarious infringers, as they did not have the requisite right and ability to supervise, or prevent, the infringing conduct of the users of their software.  The Ninth Circuit accordingly affirmed the District Court's grant of partial summary judgment to the distributor defendants, dismissing so much of the complaint which asserted copyright infringement claims arising out of those versions of defendants' software being distributed at the time of the District Court's decision.

Court holds that copyright holder has the right under the Digital Millennium Copyright Act ("DMCA") to compel service provider to produce information which identifies individual who allegedly transmitted infringing materials over service provider's network.  Court accordingly grants motion by the Recording Industry Association of America ("RIAA") to compel Verizon Internet Services ("Verizon") to comply with a subpoena, and produce information which will identify a Verizon customer who used KazaA to download MP3 files.

Reversing the court below, the D.C. Court of Appeals holds that a copyright holder may not, under the Digital Millennium Copyright Act ("DMCA"), serve a subpoena seeking the identity of an individual who allegedly transmitted infringing materials over a P2P file sharing network, on the Internet Service Provider which provides that individual's connection to the Internet.  The Court accordingly granted the motion of Verizon Internet Services ("Verizon") to quash subpoenas issued by the Recording Industry Association of America ("RIAA") seeking information that would identify Verizon customers who, via a connection to the Internet provided by Verizon, used P2P networks to share MP3 files.  The RIAA has sought to issue subpoenas under the DMCA, in part, because it could do so without the necessity of first commencing a litigation.  The court's ruling obligates the RIAA either to commence such a litigation, or seek leave of the court, before serving such a subpoena on ISPs like Verizon.

Court held that defendant's My.MP3.com service infringes plaintiffs' copyrights in various sound recordings. Defendant claims in advertisements that this service permits users to store and listen to their CDs from any location at which they can access the Internet. To operate this service, defendant purchased a large number of CD's containing plaintiffs' sound recordings, converted them to MP3 files, and stored these MP3 files on its servers. A user wishing to access any of the songs contained in these files was first required either to demonstrate to defendant that it owned a CD containing the song in question (by inserting the CD into its computer), or to purchase the CD from a designated online vendor. Once the user satisfied this requirement, he was permitted for free to access the MP3 file resident on defendant's server, which MP3 file had been created from plaintiffs' CDs.

The court held that defendant's act of converting plaintiffs' CDs into MP3 files, and providing access to these files to users in the manner outlined above, infringed plaintiffs' copyrights in these sound recordings. In addition, the court rejected defendant's arguments that this was a fair use of plaintiffs' sound recordings because its activities "transform" the original recordings. Instead, the court held that in the case at bar, "unauthorized copies are being retransmitted in another medium" in violation of the copyright laws.

Quick Hits

Affirming the decision of the court below, the Seventh Circuit finds defendant Cecilia Gonzalez (“Gonzalez”) guilty of copyright infringement because she downloaded and retained on her computer over 1370 copyrighted songs.  The Court rejected Gonzalez’ contention that she was engaging in a permissible fair use by downloaded the songs to sample and purchase if they appealed to her.  In finding defendant guilty of copyright infringement, the Court made no distinction between songs Gonzalez owned at the time of her download, subsequently purchased, or never owned.  Said the Seventh Circuit:

Although BMG Music sought damages for only the 30 songs that Gonzalez concedes she has never purchased, all 1000+ of her downloads violated the [copyright] statute.  All created copies of an entire work.  All undermined the means by which authors seek to profit. … With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrights material without compensation to authors cannot be deemed ‘fair use.’

The Seventh Circuit accordingly affirmed the lower court’s award to BMG of statutory damages of $22,500 on its motion for summary judgment.  This represented the minimum statutory damage award permitted under the Copyright Act of $750 for each of 30 works Gonzalez was held to have infringed.  Importantly, this was the relief requested by BMG, and not the result of the trial court’s exercise of its discretion as to an appropriate damage award.  BMG elected to seek damages for only those songs Gonzalez downloaded which she admitted she did not own or purchase, either before or after downloading.

In reaching this result, the Seventh Circuit rejected defendant’s claim that the lower court erred in failing, under Section 504 of the Act, to reduce this statutory damage award because defendant did not believe her acts constituted infringement.  Such a defense is not available where the infringed works, such as those at bar, bear an appropriate copyright notice.  This was true notwithstanding the fact that the actual copies Gonzalez copied did not themselves contain such notice.

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The Digital Millennium Copyright Act (“DMCA”), section 17 U.S.C. Section 512 (h), does not permit copyright owners and their representatives to obtain and serve subpoenas on internet service providers to obtain personal information about an ISP’s subscribers who are alleged to be transmitting copyrighted works via the internet using so-called ‘peer to peer’ or ‘P2P’ file sharing computer programs, where the ISP acts solely as a conduit for the transmission of material by others.  The text and structure of the DMCA require the ISP to be able both to locate and remove the allegedly infringing material before a subpoena can be issued against it.  The Court based this holding on the requirements of the Act which mandate that a subpoena be accompanied by the notice described in section 512(c)(3)(A) of the DMCA.  Because an ISP cannot remove such material when it acts as a mere conduit, such an ISP cannot be served with a subpoena under the DMCA.  The First Circuit accordingly reversed the decision of the District Court below, and directed that the subpoenas at issue, seeking the identity of individuals who purportedly traded and made available MP3s via P2P programs such Kazaa, be quashed.  In reaching this result, the First Circuit followed and found persuasive the reasoning of the DC Circuit court in RIAA v. Verizon, 351 F.3d 1229 (D.C. Cir., 2003).  

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