Advanced Copyright Issues on the Internet - Fenwick & West LLP

(c) The Sabella CaseSimilarly, in Sega Enterprises Ltd. v. Sabella, 76 the court refused to hold a BBS operatorliable for direct infringement of the reproduction right where there was no evidence that theoperator did any unauthorized copying herself. The defendant, Sabella, was the system operatorof a BBS called “The Sewer Line,” which contained a directory called “Genesis,” into whichwere uploaded and downloaded infringing copies of Sega’s video games by subscribers to theBBS. The defendant also sold copiers that enabled users to play Sega games directly fromfloppy disks without the need for a Sega game cartridge, and allowed purchasers of her copiersto download files from her BBS without charge for a certain time period.Although the court agreed that the defendant’s activities were more participatory thanthose of the defendant in Netcom, the court nevertheless found the Netcom court’s logicpersuasive. “Sega has not shown that Sabella herself uploaded or downloaded the files, ordirectly caused such uploading or downloading to occur. The most Sega has shown is thatSabella should have known such activity was occurring, that she sold copiers that played gamessuch as those on her BBS, and that she gave her copier customers downloading privileges on herBBS.” 77 Citing Netcom, the court concluded that “whether Sabella knew her BBS users wereinfringing on Sega’s copyright or encouraged them to do so, has no bearing on whether Sabelladirectly caused the copying to occur.” 78The court did rule, however, that Sabella was liable for contributory infringement. Thecourt cited the Ninth Circuit’s holding in Fonovisa, Inc. v. Cherry Auction, Inc. that “providingthe site and facilities for known infringing activity is sufficient to establish contributoryliability.” 79 The court noted that Sabella provided the BBS as a central depository site for theunauthorized copies of games, and allowed subsequent distribution of the games by user76777879The court also rejected a fair use defense raised by Sherman. With respect to the first fair use factor, thepurpose and character of the use, the court found that Sherman’s activities in encouraging the uploading anddownloading of Sega’s games was clearly commercial. “Sherman intended to profit directly from the contentof the information made available on his BBS because his copier customers could use the game files to play thegames rather than purchase Sega game cartridges. This distinguishes Sherman from the Internet provider inNetcom who did not gain anything from the content of the information available to subscribers.” Id. at 934.With respect to the second fair use factor, the nature of the copyrighted work, the court noted that the Segavideo games were for entertainment uses and involved fiction and fantasy, so that the second factor weighedagainst fair use. Id. The court found that the third factor, the extent of the work copied, weighed against fairuse because BBS users copied virtually entire copyrighted works, and Sherman had not shown any publicbenefit or explanation for the complete copying. Id. at 935. Finally, the court found that the fourth factor, theeffect of the use upon the market, also weighed against fair use. “Even if the users are only playing the gamesin their own homes and even if there are currently only a limited number of users that have copiers, unrestrictedand widespread conduct of this sort would result in a substantial adverse impact on the market for the Segagames.” Id.1997 Copyr. Law. Dec. 27,648 (N.D. Cal. Dec. 18, 1996).Id. at 29,847-48.Id. at 29,848.76 F.3d 259, 264 (9th Cir. 1996).- 32 -