Advanced Copyright Issues on the Internet - Fenwick & West LLP

However, even under an alternative and higher standard of “substantialparticipation,” Sherman is liable. Under this standard, Sherman is only liable ifhe knew of the users’ infringing actions, and yet substantially participated byinducing, causing or materially contributing to the users’ infringing conduct.Netcom, 907 F. Supp. at 1382. In this case, Sherman did more than provide thesite and facilities for the known infringing conduct. He actively solicited users toupload unauthorized games, and provided a road map on his BBS for easyidentification of Sega games available for downloading. Additionally, throughthe same MAPHIA BBS medium, he offered copiers for sale to facilitate playingthe downloaded games. 1158(c) The Peer-to-Peer Filing Sharing Cases(1) The Napster CasesIn December of 1999, the Recording Industry Association of America, Inc. (RIAA), onbehalf of 18 of its members, filed a complaint in federal court in the Northern District ofCalifornia for contributory and vicarious copyright infringement against Napster, Inc., theoperator of a Web site (www.napster.com) designed to enable its members to locate music filesin the MP3 format 1159 stored on the hard disks of other members, and to initiate downloads ofsuch files through a “peer-to-peer” architecture – i.e., transfers directly from the computer of oneuser to the computer of another user without passing through the Napster servers.1. Factual Background. Napster offered to its members a piece of proprietary softwarecalled “MusicShare” for download from its website free of charge. When a Napster user loggedon, the MusicShare software would interact with the Napster server software to connect the userto one of many servers operated by Napster, would read a list of names of MP3 files that the userhad elected to make available on his or her personal computer for sharing with other users (byplacing them in certain designated directories on his or her hard disk known as the “userlibrary”), and would then store the names of those files in an index maintained on the Napsterserver. Once the file names were successfully uploaded to the index, each user library, identifiedby a user name, would become a “location” on the Napster servers. Napster locations wereshort-lived – they were respectively added or purged every time a user signed on or off of thenetwork. Thus, a particular user’s MP3 files designated for sharing would be accessible to otherusers only while that user was online. 1160An account holder could use the search tools included in the MusicShare software to findMP3 files being shared by other users by searching the index containing the names of MP3 files1158 Id. The court further held that because Sega had established contributory liability on the part of Sherman, thecourt need not address whether Sherman was also liable under the theory of vicarious liability. Id.1159 MP3 stands for Motion Picture Expert Group 1, Audio Layer 3. MP3 is an algorithm that compresses a digitalmusic file by a ratio of approximately 12:1, thereby reducing the size of the file so that it more easily andquickly can be downloaded over the Internet. A&M Records Inc. v. Napster Inc., 54 U.S.P.Q.2d 1746, 1747n.1 (N.D. Cal. 2000).1160 A&M Records Inc. v. Napster Inc., 114 F. Supp. 2d 896, 905 (N.D. Cal. 2000).- 266 -