Advanced Copyright Issues on the Internet - Fenwick & West LLP

on any theory.” 1440 The Ninth Circuit’s failure to consider an inducement basis for liability, andits affirmance of summary judgment for the defendants, was therefore sufficient grounds forreversal. 1441 Accordingly, the Court found it unnecessary “to add a more quantified descriptionof the point of balance between protection and commerce when liability rests solely ondistribution with knowledge that unlawful use will occur” 1442 – in other words, to furtherexplicate what “substantial” or “commercially significant” means as applied to the quantum ofnoninfringing uses required for Sony’s immunity against imputed intent to apply.Types of Evidence Relevant to Unlawful Intent. What kinds of evidence will besufficient to prove an unlawful intent or object to induce or foster infringement? The Courtnoted the classic examples of “advertising an infringing use or instructing how to engage in aninfringing use.” 1443 With respect to the case at bar, the Court noted much in the record that couldbe used to establish an intent to encourage infringement on the part of the defendants. The Courtfound three features of this evidence particularly notable:Targeting Known Demand for Infringing Activity. First, both Grokster and StreamCastshowed themselves to be aiming to satisfy a known source of demand for copyright infringement– the market comprising former Napster users. 1444 StreamCast’s internal companycommunications and advertising designs were aimed at Napster users. One ad mockup, forexample, stated, “When the lights went off at Napster … where did the users go?” 1445 Aninternal email from a company executive stated, “We have put this network in place so that whenNapster pulls the plug on their free service … or if the Court orders them shut down prior to that… we will be positioned to capture the flood of their 32 million users that will be activelylooking for an alternative.” 1446 Significantly, the Court noted that whether these internalmessages or ads were ever communicated to the public did not disqualify them as valid evidenceof inducement, because they tended to establish the subjective purpose in the minds of thedefendants, particularly when coupled with other evidence of concrete actions taken by thedefendants. 1447 StreamCast and Grokster both distributed an “OpenNap” program, which was aNapster-compatible program for file sharing. Grokster distributed an electronic newslettercontaining links to articles promoting its software’s ability to access popular copyrighted music.1440 Id.1441 Id.1442 Id.1443 Grokster, 125 S. Ct. at 2779.1444 Id. at 2781.1445 Id. Another read, “Napster Inc. has announced that it will soon begin charging you a fee. That’s if the courtsdon’t order it shut down first. What will you do to get around it?” Id. at 2773.1446 Id. StreamCast delivered a press kit containing press articles about its potential to capture former Napsterusers, and it introduced itself to some potential advertisers as a company “which is similar to what Napsterwas.” Id. StreamCast also planned to flaunt the illegal uses of its software; its chief technology officer averredthat “the goal is to get in trouble with the law and get sued. It’s the best way to get in the news.” Id.1447 Id. at 2781. “Even if these advertisements were not released to the public and do not show encouragement toinfringe, they illuminate StreamCast’s purposes.” Id. at 2773 n.7.- 320 -