Paramount Pictures Corporation v. ReplayTV, Inc., Joint Stipulation ...

12345678910111213141516171819202122232425262728infringement. See Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304(2d Cir. 1963); Universal City Studios, Inc. v. Sony Corp. of Am., 480 F. Supp.429 (1979). Under this view, the direct infringer’ s payment of a fee to thedefendant that does not fluctuate based on the level of the allegedly infringingactivity generally does not confer the requisite direct financial benefit. Marobie-FL, Inc. v. National Ass’n of Fire Equipment Distributors, 983 F. Supp. 1167(N.D. Ill. 1997).In Fonovisa, the Ninth Circuit held that the requisite “ direct financialbenefit” may also exist where the allegedly infringing goods or activity are the“ draw” for consumers, i.e., that the infringement is so interlinked with consumers’attendance to the defendant’ s place of business such that the defendant can be saidto be profiting directly from the infringement. Fonovisa, 76 F.3d at 262. At issuein Fonovisa was a swap meet owner’ s potential liability for the routine sale ofcounterfeit sound recordings by third-party vendors. Id. at 261. The Ninth Circuitemphasized that the swap meet owner not only received daily rental fees from eachof the vendors who sold infringing goods, but direct payments from consumers inthe form of admission purchases. Id. Given the substantial quantity of infringinggoods offered for sale by these vendors at “ bargain basement prices,” the NinthCircuit concluded that the infringing goods constituted the “ draw” for consumers,such that the defendants’ fees were directly attributable to the infringement. Id.Similarly, in Napster, the Ninth Circuit concluded that the availability on theNapster system of a massive number of infringing music files was the “ draw” forconsumers, which – in light of the district court’ s finding that Napster’ s futurerevenues were “ directly dependent upon ‘increases in [its] user base’ “ – constitutedthe requisite direct financial benefit to Napster. 239 F.3d at 1023.As this Court has recently emphasized, neither Fonovisa nor Napster altered– let alone eliminated – the requirement that the alleged financial benefit must be80