Technology Law Column

This page has been speech-enabled for Macintosh owners using the Talker Netscape Plug-in. Hit Escape to discontinue speech.

Published in the Chicago Daily Law Bulletin, December 13, 1995, at page 6.

Internet Case Shows Copyright Act Needs Revision.

Copyright 1995 by David Loundy

As Congress contemplates proposed legislation to update the Copyright Act to better account for electronic publishing, courts are hearing cases which illustrate why such reform is necessary. (Unfortunately, as pointed out in my Oct. 12, 1995 Law Bulletin column, the reform needed is not the reform Congress is currently considering).

One federal case at issue is Religious Technology Center v. Netcom On-Line Communications Services, Inc., No. C-95-20091 RMW, which is currently being heard in the Northern District of California by Judge Ronald M. Whyte. The case involves copyright liability for "conduit providers" who provide communication channels to connect users to the Internet.

Plaintiffs Religious Technology Center ("RTC") and Bridge Publications, Inc. own the copyrights on the works of L. Ron Hubbard, science-fiction author and founder of the Church of Scientology. Dennis Erlich is a former minister of the Church of Scientology, who has become a critic of the Church. He's been posting Scientology's secret religious texts to newsgroups available on the Internet. Because these materials are copyrighted by RTC, Erlich is now a defendant in the case.

Erlich gets his access to the Internet newsgroups by way of Tom Klemesrud's bulletin board system. Through this BBS, Erlich posts his messages to Usenet News, and can read others' messages, all of which are stored temporarily on the BBS.

RTC asked Klemesrud to disconnect Erlich in order to stop Erlich's infringements. Klemesrud asked RTC for proof that they owned a copyright in the materials being posted by Erlich. RTC deemed this request unreasonable, and added Klemesrud as a defendant as well.

Finally, RTC moved one link higher in the chain, and approached Netcom On-Line Communications Services, Inc., one of the nation's largest internet service providers, the organization that connects Klemesrud's BBS to the Internet. Netcom responded to RTC saying that it would be impossible to pre-screen Erlich's posts for copyright violations, and in order to kick Erlich off the Internet, it would be necessary to disconnect Klemesrud's BBS (and thus disconnect 500 or so other BBS users as well). Netcom's response also earned it a spot as a defendant.

Judge Whyte's ruling (available on the Internet at addresses the issues of direct, contributory, and vicarious liability on the part of the conduit providers-- Klemesrud and Netcom.

To have a direct infringement of a copyrighted work, there must be an infringement of one of the copyright holder's exclusive rights (17 U.S.C. Section 501). At issue here is the exclusive right "to reproduce the copyrighted work in copies or phonorecords" (17 U.S.C. Section 106(1)). For a copy of a work to be made, the work must be "fixed" in a "tangible means of expression" from which it can be "perceived, reproduced, or otherwise communicated for a period of more than a transitory duration" (17 U.S.C. Section 101). The parties apparently do not contest that such copies exist on both Klemesrud's computer (which archives Usenet News posts for three days) or Netcom's computers (which archive Usenet News posts for eleven days).

Copyright liability is a strict liability offense. There is no intent or knowledge requirement. Even innocent or accidental infringements may produce liability. See, e.g. DeAcosta v. Brown, 146 F.2d 408 (1944), cert. denied, 325 U.S. 862 (1945).

Reproductions of RTC's works were made on both Klemesrud's and Netcom's systems in the course of administering the Usenet News service. In fact, the works were distributed world-wide in a matter of hours. This is a result of the automatic functioning of Netcom's and Klemesrud's computers, as well as all of the other computers that work to distribute Usenet News posts over the Internet. An earlier decision in this case held that Erlich's posting of the copyright material was not likely to be a fair use of the the copyrighted works.

Sounds like a slam-dunk win for the Scientologists on the direct infringement claim, right? Not according to Judge Whyte.

Although the Judge recognized the strict-liability nature of copyright infringements, and that copies are being made by the defendants, he still refused to apply strict liability to find a direct infringement. As he put it:

"Plaintiffs' theory would create many separate acts of infringement and, carried to its natural extreme, would lead to unreasonable liability. It is not difficult to conclude that Erlich infringes by copying a protected work onto his computer and by posting a message to a newsgroup. However, plaintiffs' theory further implicates a Usenet server that carries Erlich's message to other servers regardless of whether that server acts without any human intervention beyond the initial setting up of the system. It would also result in liability for every single Usenet server in the worldwide link of computers transmitting Erlich's message to every other computer." Slip Op. at 9.
Even though direct liability without action on the part of the defendants' is repugnant to Judge Whyte, it is an interpretation the law currently allows. Furthermore, as the Judge even points out, it is what the Commerce Department's Information Infrastructure Task Force has decided is the proper result in exactly such cases, according to its final report on Intellectual Property Rights on the Information Superhighway.

The issue revolves around who is responsible for the copies that are made automatically-- the system operator, who set up the system to make the copies, or the user who started the chain of events that produced the copies. One viewpoint says the system operator is making the copies on its machine, and should be liable.

The other viewpoint says the situation is no different than an unattended photocopier-- the owner of the machine should not be held liable for infringing copies made on the machine.

The potential direct liability under the first viewpoint is so wide-reaching that some people suggest that, with the rise of computer based communication, our whole intellectual property system is destined to collapse. See, John Perry Barlow, The Economy of Ideas: A Framework for Patents and Copyrights in the Digital Age. Wired, 2.03, Mar. 1994 at 89. Clearly a solution is needed, but none of the solutions proposed by Whyte, Barlow or the Commerce Department are satisfactory.

Judge Whyte also examined whether either of the conduit providers may be held liable as contributory infringers. The standard for contributory copyright infringement is met when the defendant "with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir., 1971).

The judge found no question that the defendants aided the distribution of the copyrighted material posted by Erlich. However, Whyte held that there was a question of fact as to whether the defendants had the requisite knowledge of the infringement. While noting that just a claim of infringement is not automatically enough to put a defendant on notice, the defendants did not even look at Erlich's messages when RTC informed the defendants of the post's infringing nature. Importantly, the court held that:

"[w]here a BBS operator cannot reasonably verify a claim of infringement, either because of a possible fair use defense, the lack of copyright notices on the copies, or the copyright holder's failure to provide the necessary documentation to show that there is a likely infringement, the operator's lack of knowledge will be found reasonable and there will be no liability for contributory infringement for allowing the continued distribution of works on its system." Slip Op. at 17.
If a fact-finder agrees that there is no liability in such a situation, many system operators will live much happier lives as a result.

Even without knowledge, a conduit provider may still be vicariously liable for copyright infringements. Here the analysis really gets ugly and too long to be handled in this article (due to conflicting case holdings on similar facts, among other things).

In short, a vicarious infringer is one who has (1) the right and ability to control the infringer's acts, and (2) receives a direct financial benefit from the infringement. Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 306 (2d Cir. 1963).

The vicarious liability claim failed against Klemesrud, due to a lack of proof of Klemesrud's ability to control Erlich's actions. Judge Whyte held that there was a question over Netcom's ability to control Erlich's infringing, due to Netcom's terms of service contract between Netcom and its subscribers (Klemesrud) which allowed Netcom the right to take remedial action against subscribers.

The sticking point was the second issue-- did Netcom receive a direct financial benefit from the infringement? Here, rather than looking at the theory underlying vicarious liability (that the innocent author should not loose out when someone else is either more liable or is otherwise in a better position to insure against infringement), the Court simply picked its favorite of the conflicting cases to justify its result, and found no financial benefit.

This case raises some important issues-- issues that are of grave concern to a growing number of individuals and businesses. It shows up some of the weaknesses in the current Copyright Act. Judge Whyte's opinion addresses one weakness, but leaves open questions of interpretation. Hopefully congress will take the hints it offers, and will send the Commerce Department back to the drawing-board in order to come up with some more appropriate proposals to amend the Copyright Act.

[Technology Law] [E-Law Web Page]