Advanced Copyright Issues on the Internet - Fenwick & West LLP

Napster I court as infringing use – actual notice followed by a failure to correct – was exemplaryand not intended to be an exhaustive list. Under the “reasonable knowledge” standard, othermethods of proving actual and constructive knowledge were possible, although Napster Iadmittedly set the bar for reasonable knowledge quite high. Third, it was significant thatFonovisa considered only a motion to dismiss and not the precise scope of liability. To survive amotion to dismiss, a plaintiff need identify only a specific instance of infringement, whereas thesame facts would be inadequate in proving the precise amount of damages. And fourth, JudgePatel had acknowledged in Fonovisa that broader readings of Napster I were possible, but absenta compelling reason to do so, she was unwilling to read more into it than it stated. 1546Judge Patel then turned to an analysis of the Grokster decision. She noted that the NinthCircuit’s opinion in Grokster had read Napster I more expansively than she had anticipated inFonovisa, reading Napster I to mean that if a defendant could show that its product was capableof substantial or commercially significant noninfringing uses, then constructive knowledge of theinfringement could not be imputed. Judge Patel noted that the Supreme Court rejected the NinthCircuit’s ruling, and that taken as a whole, the Supreme Court’s decision provided for liabilityunder broader circumstances than those permitted under Napster I. She noted that the evidencestressed by the Supreme Court, particularly the defendants’ advertising and marketing strategies– was strikingly similar to the evidence supporting her finding of constructive knowledge inshaping her original, more sweeping injunction in the Napster case. 1547The defendants argued that the Grokster ruling could not be applied retroactively to thecurrent case to render actionable conduct that conformed to the modified preliminary injunctionentered following Napster I, a closed case that was no longer on direct review. Judge Patelrejected this argument, noting that Bertelsmann was a different party than Napster, and theinstant action was not the same as the now-closed original Napster lawsuit. Bertelsmann wasalleged to be separately liable based on its own control over the operation of the Napster system,even if its liability were factually derivative of the same alleged acts of illegal copying byNapster. Accordingly, the court ruled that the plaintiffs were entitled to pursue recovery underthe Grokster theory of liability, which did not require actual or even reasonable knowledge ofspecific infringing files, as well as under the “reasonable knowledge” standard articulated inNapster I. 1548 Accordingly, she denied the defendants’ motion for summary judgment. 1549(d) The CoStar CaseIn CoStar v. Loopnet, 1550 discussed in detail in Section III.C.5(b)(1)(iii) below, the courtaddressed in some detail the knowledge an OSP must have of infringing activity in order to beliable for contributory infringement. In brief summary, the plaintiff argued that once it gave theOSP notice of specific infringements on its system, the OSP was on notice that ongoing1546 Id. at *24-27.1547 Id. at *27-30.1548 Id. at *31-32.1549 Id. at *33.1550 164 F. Supp. 2d 688 (D. Md. 2001), aff’d, 373 F.3d 544 (4 th Cir. 2004).- 340 -