vicarious liability Archives

Yo-Ho-No Vicarious Liability for Online Piracy Without Financial Benefit

by Karen Gover | Feb 29, 2024 | Copyrights

The US Court of Appeals for the Fourth Circuit reversed-in-part, vacated-in-part and affirmed in part a district court decision that found an internet service provider liable for $1 billion in damages for vicarious and contributory copyright infringement. Sony Music Entm’t., et al. v. Cox Commc’ns, Inc., Case No. 21-1168 (4th Cir. Feb. 20, 2024) (Harris, Rushing, JJ., Floyd, Sr. J.) (per curiam).

Sony Music along with 52 other music companies filed suit against Cox Communications in July 2018, alleging both contributory and vicarious liability based on copyright infringement by Cox’s customers. Sony argued that Cox knew that some of its customers used its service to download or distribute songs over the internet without permission but chose not to cancel their subscriptions. The Digital Millennium Copyright Act (DMCA) created a safe harbor for internet service providers in such circumstances but a prior case against Cox held that it did not qualify for the safe harbor because “its repeat infringer policy as implemented was inadequate under the DMCA.” In the present case, the jury found Cox liable for vicarious and contributory infringement of all 10,017 copyrighted works alleged to have been infringed and found that Cox’s infringement was willful. The jury awarded Sony more than $99,000 per work infringed, totaling $1 billion in statutory damages. Cox appealed.

The appeal garnered noteworthy amici in support of both sides. Cox was supported by the Electronic Frontier Foundation, the American Library Association and the Center for Democracy and Technology, among others. Sony was supported by the National Music Publishers’ Association, the Songwriters of North America, the Nashville Songwriters Association International and the Copyright Alliance.

Cox raised many questions of law concerning the scope of secondary liability and what constitutes a compilation or derivative work in the digital age. The Fourth Circuit upheld the jury verdict finding Cox liable for contributory copyright infringement, rejecting Cox’s arguments that its service was also used for lawful activity and that its contribution must amount to aiding and abetting the infringement. The Court explained that “supplying a product with knowledge that the recipient will use it to infringe copyrights is exactly the sort of conduct sufficient for contributory infringement.” The Court concluded that the jury saw sufficient evidence that Cox knew specific users were repeatedly infringing but chose not to terminate their service.

The Fourth Circuit, however, reversed the jury’s verdict of vicarious liability, finding that Cox did not profit from its subscribers’ acts of infringement and so did not meet the legal prerequisite for that form of secondary liability. Reviewing landmark cases on vicarious liability, the Court explained that “the crux of the financial benefit inquiry is whether a causal relationship exists between the infringing activity and a financial benefit to the defendant . . . the financial benefit to the defendant must flow directly from the third party’s acts of infringement to establish vicarious liability.” Since Sony failed to show that Cox profited from its subscribers’ infringing activity, it failed to establish vicarious liability.

The [...]

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Tenth Circuit Contributes Clarity to Contributory Liability in Copyright Infringement

by Eleanor B. Atkins | Nov 9, 2023 | Copyrights

Addressing the elements of contributory copyright infringement, the US Court of Appeals for the Tenth Circuit found that a plaintiff had plausibly alleged contributory copyright infringement when he alleged that the defendants had “caused, materially contributed to, or authorized the direct infringement” of his copyrights. Greer v. Moon, et al., Case No. 21-4128 (10th Cir. Oct. 16, 2023) (Bachrach, Moritz, Rossman, JJ.)

Joshua Moon owns and operates the controversial website, Kiwi Farms, “a site ‘built to exploit and showcase those Moon and his users have deemed to be eccentric and weird,’ [m]any of [whom] are physically or mentally disabled.” Russell Greer, who suffers from a form of facial paralysis, was targeted by Kiwi Farms users after Greer sued Taylor Swift in 2016. In 2017, Greer wrote a book to “explain his side of things,” titled “Why I Sued Taylor Swift and How I Became Falsely Known as Frivolous, Litigious and Crazy,” which he published and copyrighted. In 2019, Greer registered his copyright for his song, “I Don’t Get You, Taylor Swift.” Greer alleged that Kiwi Farms users infringed both works by creating and uploading unauthorized audio recordings of the book, posting links to a full copy of the book on the Kiwi Farms platform and uploading his song to the Kiwi Farms website.

Pursuant to the Digital Millennium Copyright Act, Greer sent Moon a takedown notice, identifying the infringing materials and the location of those unauthorized copies. In response, Moon published the takedown notice and Greer’s contact information on Kiwi Farms and responded to Greer via an email in which Moon “derid[ed]” Greer and refused to remove the copyrighted materials. Shortly thereafter, Greer sued Moon and Kiwi Farms for contributory copyright infringement, among other things. The district court granted the defendants’ motion to dismiss for failure to state a claim, and Greer appealed.

The Tenth Circuit explained that there are “three flavors of secondary liability for copyright infringement”:

Vicarious liability, when a secondary infringer has a financial interest in the exploitation of the copyrighted materials and the ability to supervise the direct infringer
The inducement rule, when the secondary infringer distributes a device that is intended to be used for copyright infringement
Contributory liability, when the secondary infringer “causes or materially contributes to” the direct infringer’s activities.

Greer’s claims were based on contributory liability, which occurs when there is direct infringement of a plaintiff’s copyrighted material(s), the defendant had knowledge of the direct infringement and the defendant “intentionally caused, induced, or materially contributed to the direct infringement.”

There was no dispute that Greer’s pro se complaint met the first two prongs of the test. The district court granted the defendants’ motion to dismiss because it found that Greer failed to plausibly plead the third element of contributory infringement: “It is not enough for contributory liability for a defendant to have merely permitted the infringing material to remain on the website, without having induced or encouraged the initial infringement” (internal quotations omitted).

The Tenth Circuit dismissed the district court’s [...]

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When Are Compulsory Copyright Licenses Compulsory?

by Kavya Rallabhandi | Oct 20, 2022 | Copyrights

The US Court of Appeals for the Second Circuit partially affirmed a district court’s summary judgment order holding that audiovisual recordings of live concerts do not fall within the scope of the Copyright Act’s compulsory license provision while purchasers of audio-only recordings obtain a compulsory license in the copyright of the work fixed by their predecessors/sellers. ABKCO Music, Inc. et al. v. Sagan et al., Case No. 20-3816 (2d Cir. Oct. 6, 2022) (Jacobs, Wesley, Menashi, JJ.)

In 2002, William Sagan purchased, through Norton, a collection of audio and audiovisual live concert recordings from Bill Graham Archives. All three parties are named defendants in this case. The agreement conveyed all intellectual property that the Archives held (from a transaction with Sagan) and included a disclaimer stating that record company and artist approval was required to exploit the recordings. The defendants’ subsequent purchases of other recordings contained similar limited assurance language regarding intellectual property rights. In 2006, the defendants made the entire collection publicly available online for a streaming and downloading fee. A year later, the defendants began using a third-party licensing agent to obtain compulsory licenses under 17 USC § 115 and negotiated licenses from plaintiff music publishers in the audio and audiovisual live concert recordings.

Section 115 of the Copyright Act requires persons seeking to make and distribute phonorecords of a previously published musical work to obtain a compulsory license by providing notice to the copyright owner before distribution and paying government-prescribed royalties. (§ 115(a)(1), (b), (c).) The Copyright Act defines phonorecords as “[m]aterial objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed.” (§ 101.) Section 115’s substantive requirements for duplications of audio/sound recordings fixed by another include requirements that the sound be fixed lawfully, and that duplication be authorized by the copyright owner. (§ 115(a)(1).)

In 2015, the music publishers sued defendants for copyright infringement of 197 musical works posted online without valid compulsory licenses. The music publishers alleged that the defendants did not obtain compulsory licenses for audiovisual works as required by § 115 and that the defendants failed to comply with § 115 substantive compulsory licensing requirements for audio-only works. Defendants argued implied license and equitable estoppel as affirmative defenses. The publishers sought damages and a permanent injunction pursuant to the Copyright Act.

The district court, on summary judgment, ruled that the defendants had no valid license authorizing the reproduction and distribution of the musical works in either audio or audiovisual format, that the defendants had neither an implied license nor any basis for estoppel, and that Sagan (a principal in several of the defendant streaming services) was liable for direct infringement. The district court denied the publishers’ request for an injunction but granted the publishers an award of attorneys’ fees. The defendants appealed from the summary judgment order and the order granting fees and costs. The plaintiffs cross-appealed denial of an injunction.

The Second Circuit affirmed the district court’s holding that the defendants infringed each musical work [...]

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