Advanced Copyright Issues on the Internet - Fenwick & West LLP

Napster “when linked to demonstrated infringing use of the Napster system. The record supportsthe district court’s finding that Napster has actual knowledge that specific infringing material isavailable using its system, that it could block access to the system by suppliers of the infringingmaterial, and that it failed to remove the material.” 1238 Again, the Ninth Circuit’s reference to“actual” knowledge raises confusion about the extent to which constructive knowledge can giverise to contributory liability.(ii) The Material Contribution Prong. With respect to the material contributionprong of the contributory liability test, the district court ruled that Napster had materiallycontributed to the infringing acts of its users. For support, the court cited Fonovisa, Inc. v.Cherry Auction, Inc., 1239 in which the owners of copyrights for musical recordings stated acontributory infringement claim against the operators of a swap meet at which independentvendors sold counterfeit recordings, because it would have been difficult for the infringingactivity to take place in the massive quantities alleged without the support services provided bythe swap meet. The district court found that Napster was essentially an Internet swap meet andthat Napster was materially contributing to the infringing activity of its users by supplying theMusicShare software, search engine, servers, and means of establishing a connection betweenusers’ computers. 1240 “Without the support services defendant provides, Napster users could notfind and download the music they want with the ease of which defendant boasts.” 1241On appeal in Napster I, the Ninth Circuit found that the district court had correctlyapplied the reasoning of Fonovisa. “We agree that Napster provides ‘the site and facilities’ fordirect infringement.” 1242 The Ninth Circuit’s view of the material contribution prong appears tobe very broad sweeping, for it would seem that all service providers provide “the site andfacilities” for any direct infringement that may occur on the service. If this is the only test formaterial contribution, it may be difficult for a service provider to use the material contributionprong as a defense to common law contributory liability.10. The Elements of Vicarious Liability and the Duty to Police. 1243 In order to establishvicarious liability for the acts of direct infringement by Napster’s users, the district court notedthat the plaintiffs were required to show that Napster had the right and ability to supervise theinfringing activity of its users and had a direct financial interest in such activity. 1244 Napster1238 Id. at 1022 (citations omitted; emphasis in original). The second element in the second sentence – that Napstercould block access to the system by suppliers of infringing material – hints of a requirement of “control” overthe infringing activity in the contributory liability analysis. As analyzed below with respect to the imposition ofvicarious liability on Napster, a “control” test has generally been relevant only to vicarious liability. It isunclear whether the Ninth Circuit really meant to introduce a new “control” test into contributory liability.1239 76 F.3d 259 (9th Cir. 1996).1240 Napster, 114 F. Supp. 2d at 919-20.1241 Id. at 920.1242 Napster I, 239 F.3d at 1022.1243 Although the issue of online vicarious liability is treated generally in Section III.C.3 below, the vicariousliability issues in the Napster case will be treated here in order, for clarity, to present the entire analysis ofsecondary liability issues involved in the case in a single place.1244 Napster, 114 F. Supp. 2d at 920.- 281 -