Advanced Copyright Issues on the Internet - Fenwick & West LLP

court noted that because LoopNet’s take down and termination policies had changed over time,to resolve the issue of the adequacy of those procedures, a factfinder would have to focus oneach photograph alleged to be infringing and the policy in effect before the posting of eachphotograph. 1846Financial Benefit. To begin its analysis of the financial benefit prong of the Section512(c) safe harbor, the court, in a significant ruling, noted that, “[r]egardless of whether LoopNetcomplied with the ‘take down’ requirements, a finding that it received a direct financial benefitfrom the infringement automatically would remove it from the safe harbor. … Basically, theDMCA provides no safe harbor for vicarious infringement because it codifies both elements ofvicarious liability.” 1847 The ruling that the DMCA provides no safe harbor for vicariousinfringement seems to contradict the Ninth Circuit’s ruling in the Napster I case, discussed in thenext subsection, in which the Ninth Circuit noted that “[w]e do not agree [with the districtcourt’s ruling] that Napster’s potential liability for contributory and vicarious infringementrenders the Digital Millennium <strong>Copyright</strong> Act inapplicable per se.” 1848The court held that LoopNet did not meet either element of the test for vicarious liability.CoStar had not asserted that LoopNet had any right to control its users beyond its mere ability tocontrol or block access to its site. The court, citing the Hendrickson v. eBay case, held that suchability to block access could not constitute sufficient “right and ability” to control for vicariousliability. The court noted that otherwise one would have the illogical result that the very policyof blocking access and terminating infringers mandated by the DMCA in Section 512(c)(1)(C)would force service providers to lose their immunity by violating § 512(c)(1)(B). 1849 The courtalso ruled that LoopNet did not receive a direct financial benefit from the infringing activitybecause LoopNet did not charge a fee for posting any real estate listing, with or without aphotograph. 1850Contributory Liability Before the Safe Harbor Applicability Date. The court next turnedto an analysis of LoopNet’s contributory liability for activity before December 8, 1999, the datethat LoopNet designated an agent to receive notifications of claimed infringement under theDMCA and therefore first became eligible for the Section 512(c) safe harbor. The court’sdiscussion of common law liability provides a nice analysis of the interplay and differencesbetween the standards of knowledge and policing for infringing activity required under thecommon law versus the DMCA safe harbors.Knowledge for Purposes of Common Law Liability. CoStar argued that once it gaveLoopNet notice of specific infringements, LoopNet was on notice that ongoing infringementswere occurring and had a duty to prevent repeat infringements. LoopNet argued that it could notbe charged with imputed knowledge of future infringements. The court held that the amount of1846 Id. at 703-04.1847 Id. at 704 (citing 3 M. Nimmer & D. Nimmer, Nimmer on <strong>Copyright</strong>, § 12B.04[A][2], at 12B-38 (2001)).1848 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001).1849 CoStar, 164 F. Supp. 2d at 704 & n.9.1850 Id. at 704.- 401 -