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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...

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Playboy Enterprises, Inc. v. Russ Hardenburgh, et al.

982 F. Supp. 503 (N.D. Ohio, Nov. 25, 1997)

In this case, defendant Rusty-N-Edie's Inc. ("RNE") operated a bulletin board service which, among other things, gave individuals who paid a subscription fee access to files they could download. Users were only permitted to download a limited number of files a month. Of these files, approximately 50,000 were graphic image files (or "GIFs"), of which approximately 40,000 contained "adult" photographs. In addition to this service, defendant RNE also provided its subscribers with e-mail services, chat lines, advertisements, technical assistance and a dating service. Defendant Hardenburgh was the President and sole shareholder of RNE.

To increase the number of GIFs it could offer its customers, defendants offered subscribers "credits" for each GIF they uploaded on defendant's BBS. These "credits" increased the number of files the user was permitted to download from the BBS each month. Defendants admittedly undertook this promotion in the hopes that it would increase the number of GIFs they had to offer to their subscribers, which in turn would make their service more desirable to current and new subscribers.

GIFs uploaded from subscribers were stored in "an upload file, where an RNE employee briefly checked the new files to ascertain whether they were 'acceptable,' meaning not pornographic, and not blatantly protected by copyright." If the GIFs passed muster, they were made available to all users of defendant's service.

Subscribers, without the consent of plaintiff Playboy Enterprises, Inc. ("Playboy"), uploaded onto defendant's BBS approximately 400 GIFs which contained copies of adult photographs from Playboy Magazine. Plaintiff had copyrights in each of these photos. Defendants contended they had no actual knowledge that photos in which plaintiff possessed copyright were uploaded onto their BBS. Nonetheless, charging that defendants' involvement in such conduct, as set forth above, constituted direct and contributory copyright infringement, as well as violation of section 43(a) of the Lanham Act, plaintiff commenced this action against the defendants.

The court, on plaintiff's motion for summary judgment, agreed that defendants' conduct constituted both direct and contributory copyright infringement. It held that issues of fact existed which precluded determination of plaintiff's Lanham Act claims.

To establish direct copyright infringement, plaintiff must establish both (1) its ownership of a valid copyright and (2) copying by defendants of constituent elements of the work that are original. Plaintiff met this burden.

In addition, plaintiff must also show that defendants used the copyrighted work in any of the ways exclusively reserved to the owner of the work under Section 106 of the Copyright Act, such as public display or distribution.

Most importantly, the court held that "a finding of direct copyright infringement requires some element of direct action or participation ..." in the infringing activities. This, in turn, required the defendant to do more than merely set up and maintain a bulletin board on which infringing images could be up and downloaded. Said the court:

[T]he [copyright act] is cast in terms of activities which are reserved to copyright owners. It follows that an infringer must actually engage in one of those activities in order to directly violate the statute. Setting up a computer bulletin board is not one of those activities. Merely encouraging or facilitating those activities is not proscribed by the [copyright] statute.

Defendants, however, were directly involved in the distribution and display of plaintiff's copyrighted works because of their policy of encouraging uploading GIFs, and their attempts at screening the same for infringing materials. Said the court:

The court finds that Defendants distributed and displayed copies of [Playboy] photographs in derogation of [Playboy's] copyrights. This finding hinges on two crucial facts: (1) Defendants' policy of encouraging subscribers to upload files, including adult photographs, onto the system, and (2) defendants' policy of using a screening procedure in which RNE employees viewed all files in the upload file and moved them into the generally available files for subscribers. These two facts transform Defendants from passive providers of a space in which infringing activities happened to occur to active participants in the process of copyright infringement.

The court further found that the individual defendant, who was the President and sole shareholder of the company which operated the BBS, was also liable for direct copyright infringement. "[A]n individual ... who has the ability to supervise infringing activity and has a financial interest in that activity, or who personally participates in that activity is personally liable for the infringement." Applying this test, the court held the individual defendant personally liable for the infringement, even though there was no evidence that he personally approved the uploading onto the BBS of infringing GIFs. Rather, his position as President, coupled with the authority to control the BBS's content, was sufficient to impose liability upon him. (The court's decision is silent on the issue of the financial benefit the individual defendant derived from the infringing activities).

The court also held the defendants liable for contributory infringement. A party is liable for contributory infringement when, "with knowledge of the infringing activity, [the party] induces, causes or materially contributes to the infringing conduct of another." Of interest here is the court's analysis of the scienter element of contributory infringement. As set forth above, for the purposes of its decision, there was no evidence that defendants had actual knowledge that infringing images were uploaded onto its BBS. Nonetheless, the court found the scienter element met. Said the court:

Defendants had at least constructive knowledge that infringing activity was likely to be occurring on their BBS. ... Playboy Magazine is one of the most famous and widely distributed adult publications in the world. It seems disingenuous for Defendants to assert that they were unaware that copies of photographs from Playboy Magazine were likely to find their way onto the BBS.

Defendants argued that holding them liable for copyright infringement would place an excessive burden on BBS operators to ensure either that pictures uploaded onto their systems by third parties were not protected by copyrighted or were uploaded with appropriate consents. The court rejected this argument. If a BBS operator is going to encourage third parties to upload images onto its system, it must take appropriate steps to ensure that they are not infringing on the copyrights of others.

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