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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Harlan Ellison v. Stephen Robertson, et al.

189 F. Supp.2d 1051, 2002 U.S. Dist. Lexis 4166 (C. Dist. Cal., March 12, 2002), aff'd. in part, reversed in part, remanded by 357 F. 3d 1072 (9th Cir. 2004)

Court granted defendant America Online's motion for summary judgment, and dismissed copyright infringement claims advanced by plaintiff author as a result of the posting of his works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it did not post nor direct the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against it were predicated on its agreement, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The court held that AOL could not be liable for direct copyright infringement, because such passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  The court similarly rejected plaintiff's claim that AOL was liable on a theory of vicarious copyright infringement, because it had neither the right and ability to supervise Robertson's infringing activity, nor a direct financial interest therein.  The court held that AOL's ability to block access (over its systems) to the infringing materials in question did not give it the requisite ability to control the infringing activity.  Rather, because AOL could not prevent Robertson from acting, it did not have the requisite ability to control the infringing activities necessary to make AOL vicariously liable for the acts of copyright infringement Robertson initiated.  Nor did AOL derive the necessary direct financial benefit from this infringing activity.  The court held that this required AOL to receive a substantial or significant benefit from the posting of the Usenet material in question, which the evidence showed it did not receive.

The court did, however, hold that issues of fact precluded it from determining whether AOL could be liable for the acts at issue on a theory of contributory infringement.  Under such a theory, "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL was a contributory infringer, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not received this e-mail, should nonetheless be charged with notice thereof given its designation of the e-mail address to which it was sent with the US Copyright Office.  In reaching this conclusion, the court held that "providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, can constitute a material contribution [to the infringing activities and hence expose the ISP to liability for contributory infringement] when the ISP knows or should know of infringing activity on its system yet continues to aid in [its] accomplishment."

Nonetheless, the court dismissed this claim, holding that AOL was protected therefrom by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The court held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days was an intermediate and transient storage for the purpose of the DMCA, and that it met the other requirements of the DMCA necessary to obtain the protection of this provision.  The court accordingly dismissed plaintiff's claim for contributory copyright infringement against AOL.

Plaintiff Harlan Ellsion is the owner of the copyright in a number of works he authored, many of which are works of science fiction.  In or about April 2000, defendant Stephen Robertson posted a number of plaintiff's works onto the Usenet newsgroup alt.binaries.e-book.  Robertson utilized the services of his local ISP, Tehama County Online, as well as RemarQ Communities, Inc., to post this material.  According to the court "alt.binaries.e-book … seems to have been used primarily to exchange pirated and unauthorized digital copies of text material …".

Defendant America Online ("AOL") is a party to a number of Usenet peer agreements.  Pursuant to these agreements, AOL's servers automatically transmit and receive newsgroup messages from another peer's servers.  Once received, AOL makes these messages available to those of its users and others who access the Usenet newsgroup.  In April 2000, AOL retained messages such as those at issue on its servers for a period of 14 days.

As a result of Robertson's actions, plaintiff's works were posted to the alt.binaries.e-book newsgroup, and were forwarded and copied onto servers operated by various Usenet peers throughout the world, including AOL.

On or about April 17, 2000, plaintiff's attorneys sent AOL a notice via e-mail of copyright infringement arising out of the aforementioned conduct.  AOL did not, however, receive this e-mail.  Plaintiff thereafter commenced this suit.  Shortly thereafter, AOL blocked its users' access to the alt.binaries.e-book newsgroup.

In his suit, plaintiff asserted claims of direct, contributory and vicarious copyright infringement against AOL as a result of the aforementioned conduct.  On AOL's motion for summary judgment, the court dismissed each of these claims.

The court held that the passive involvement of AOL in the infringement in question was insufficient to support a claim of direct copyright infringement.  Relying on the court's holding in Religious Technology Center v. Netcom On-line Communications Services Inc., 907 F. Supp. 1361 (N.D.Cal. 1995) the court held that "AOL's role in the infringement as a passive provider of Usenet access to AOL users cannot support direct copyright infringement liability. … [D]irect infringement liability should be limited to those users, like Robertson, who are responsible for the actual copying."

The court also dismissed plaintiff's claims of vicarious copyright infringement.  A defendant may be held vicariously liable for the infringing activity of a third party when that "defendant has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities."  There was no claim that Robertson acted at AOL's request or pursuant to its direction.  Rather, plaintiff argued that AOL had the requisite ability to control his infringing activity, because it could block its users from accessing the Usenet newsgroup in question, and block its servers from accepting transmission of messages for that group.  The court rejected this argument, holding that "AOL's ability to delete or block access to Robertson's postings of infringing material after those postings had already found their way onto AOL's Usenet servers was insufficient to constitute the right and ability to control the infringing activity as that term is used in the context of vicarious copyright infringement."

The court further held that AOL did not receive the necessary direct financial gain needed to establish a claim of vicarious copyright infringement.  The record before the court demonstrated that usage of all Usenet newsgroups represented a very small percentage of AOL's total member usage.  Plaintiff failed to demonstrate that even a substantial portion of that minimal usage was of the newsgroup in question, or consisted of the exchange of infringing materials.  This holding was supported by the fact that AOL received only 10 complaints when it blocked user access to the alt.binaries.e-books newsgroup.  Thus, this newsgroup did not provide the substantial or significant draw to AOL that was necessary to sustain a claim for vicarious infringement, providing a second ground for the dismissal of this claim.

The court found that issues of fact existed as to whether defendant AOL had committed contributory copyright infringement.  The court nonetheless dismissed this claim, holding AOL was protected therefrom by operation of the safe harbor provision of section 512(a) of the Digital Millennium Copyright Act ("DMCA").

"One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a contributory infringer."  The court held that "the knowledge requirement means that the contributory infringer must know or have reason to know of the direct infringement."  Plaintiff asserted that his attorneys sent an e-mail to AOL notifying it of the infringing activity occurring on the alt.binaries.e-book newsgroup and that AOL did not take any action in response thereto.  Rather, claimed plaintiff, AOL did not take action to prevent the complained of infringement until after the lawsuit in question was filed one week later.  Plaintiff argued that as a result of this failure, AOL was liable for contributory copyright infringement, because it continued to facilitate the infringing activities after receipt of notice thereof by allowing the infringing materials to remain available to users from its servers.

The court found that AOL did not receive the e-mail in question, and as such did not have actual knowledge of the infringing activities until after the commencement of the lawsuit, at which time it promptly took action to prevent further infringement. 

However, the court held that questions of fact existed as to whether AOL should have known of the infringement earlier.  Apparently, the e-mail was sent to an address AOL provided to the Copyright Office for receipt of notifications of infringement under the DMCA.  AOL had subsequently changed the address it used to receive such notices, but had not notified the DMCA, nor made arrangements to forward e-mail notifications sent to the previously given address to this new address.  Such conduct, held the court, could serve as a basis for a holding that AOL should have known of the infringing activities when plaintiff's counsel sent the e-mail in question.  "If AOL could avoid the knowledge requirement through this oversight or deliberate action, then it would encourage other ISPs to remain willfully ignorant in order to avoid contributory copyright infringement liability.  Based on the record before the court a reasonable trier of fact could certainly find that AOL had reason to know that infringing copies of Ellison's works were stored on their Usenet servers."

This prevented the court from dismissing plaintiff's contributory infringement claim because "providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, can constitute a material contribution [to copyright infringement, and hence serve as the basis for a claim of contributory infringement] when the ISP knows or should know of infringing activity on its system yet continues to aid in [its] accomplishment …".

The court nonetheless dismissed this claim, holding that AOL was protected by operation of the safe harbor provisions of section 512(a) of the DMCA.

To be entitled to the protections of section 512(a) of the DMCA, an internet service provider such as AOL must meet the requirements of 512(i).  This section requires that an internet service provider "(a) has adopted and reasonably implement, and informs subscribers 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 systems or network who are repeat infringers; and (b) accommodates and does not interfere with standard technical measures."

There was no dispute that AOL 'accommodates and does not interferes with standard technical measures.'  However, plaintiff asserted that AOL had not implemented the requisite policy regarding repeat infringers.  The court found that AOL had adopted a policy that AOL users cannot make unauthorized copies of content protected by copyright, and that if they did so their accounts could be terminated.  The court found further that AOL's users were notified of this policy. 

Plaintiff argued that AOL was nevertheless not entitled to the protection of section 512(a) because such policy had not been implemented, given that AOL had not terminated a single user's account for repeat copyright infringement, nor even determined how many times a user had to commit copyright infringement to have his account terminated.  Rejecting this argument, the court stated:

As noted above in the discussion of the legislative history of the DMCA, … subsection (i) does not require AOL to actually terminate repeat infringers or even to investigate infringement in order to determine if AOL users are behind it.  That is the province of subsection (c), which provides detailed requirements related to notification of infringement and the ISPs' responsibility to investigate and, in some instances, delete or block access to infringing material on their systems.  Subsection (i) only requires AOL to puts its users on notice that they face a realistic threat of having their internet access terminated if they repeatedly violate intellectual property rights.

Section 512(a) provides protection to internet service providers for copyright infringement claims arising out of their providing facilities for transitory digital network communications (such as e-mail).  The statute provides that "a service provider shall not be liable for monetary relief, or except as provided in subsection (j) for injunctive or other equitable relief, for the infringement of copyright by reason of the provider's transmitting, routing or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of transmitting, routing or providing connections …" if the service provider meet the listed requirements of section 512(a).  These requirement include the fact that (1) the transmission of the material in question is initiated by or at the direction of a person other than the service provider; (2) the transmission, routing or storage is carried out through an automatic technical process without selection of the material by the service provider; (3) the service provider does not select the recipients of the material expect as an automatic response to the request of another person (4) no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network  … for a longer period than reasonably necessary for the transmission and (5) the material is transmitted through the system without modification of its content.

At issue in this case was whether the materials in question were in "intermediate and transient storage" for the purposes of the act and stored "for a longer period than is reasonably necessary" when they were stored on AOL's Usenet servers.  As stated above, AOL's policy in April 2000 was to store Usenet newsgroup postings for a period of 14 days.  The court nonetheless held that such storage was "intermediate and transient" for the purposes of section 512(a), and hence that AOL could fall within the protections of the act if it met the other requirements set forth in section 512(a).  In reaching this conclusion, the court relied on the legislative history of the DMCA, which indicated that it was Congress's intent, in enacting section 512(a), to codify the holding of Religious Technology Center, supra.  There, the service provider who facilitated the provision of the Usenet postings at issue stored them for a period of 11 days, which activity was held insufficient to constitute direct copyright infringement.  Given that evidence of Congress' intent, the court held that "AOL's storage of Robertson's posts on its Usenet servers constitutes intermediate and transient storage that was not maintained … for a longer period than is reasonably necessary for the transmission, routing or provision of connections."

As AOL met the balance of the requirements needed to be entitled to the protections of section 512(a), the court dismissed plaintiff's claim of contributory copyright infringement.  In reaching this conclusion, the court rejected the plaintiff's claims that AOL did not meet these requirements because it only posted some, but not all Usenet Newsgroups, and had peer agreements with only some, but not all Usenet peers.  The better interpretation, held the court, was that the requirements of section 512(a) applied to the specific infringing material in question.  As this material was transmitted automatically, as AOL did not determine who received it, and as AOL did not modify it, AOL met the requirements of section 512(a).  Moreover, even if they applied AOL's treatment of Usenet groups in general, it would still be entitled to the protections of section 512(a), because "the court thinks that an ISP would need to take a greater editorial role than merely choosing not to carry certain newsgroups" to be prevented from benefiting from section 512(a).

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