Advanced Copyright Issues on the Internet - Fenwick & West LLP

failing to satisfy the requirement of Section 512(d)(1)(B)) 1997 and (ii) “Defendant has failed topersuade this court that subsection 512(d) shelters contributory infringers.” 1998On appeal, the Ninth Circuit reversed this ruling of the district court. The Ninth Circuitnoted that the district court’s ruling that the safe harbor would never apply to a Service Providerthat might otherwise be liable as a contributory infringer was contrary to the legislative historyof the DMCA. 1999 The Ninth Circuit further stated, “We do not agree that Napster’s potentialliability for contributory and vicarious infringement renders the Digital Millennium <strong>Copyright</strong>Act inapplicable per se. We instead recognize that this issue will be more fully developed attrial. At this stage of the litigation, plaintiffs raise serious questions regarding Napster’s abilityto obtain shelter under § 512, and plaintiffs also demonstrate that the balance of hardships tips intheir favor.” 2000The Ninth Circuit noted that the following questions would have to be resolved at trialconcerning whether Napster was entitled to the safe harbor of Section 512(d): “(1) whetherNapster is an Internet service provider as defined by 17 U.S.C. § 512(d); (2) whether copyrightowners must give a service provider ‘official’ notice of infringing activity in order for it to haveknowledge or awareness of infringing activity on its system; and (3) whether Napster complieswith § 512(i), which requires a service provider to timely establish a detailed copyrightcompliance policy.” 20011997 The district court appears to have misapplied Section 512(d)(1)(B). Because Napster had constructiveknowledge of infringing activity, and because Section 512(d)(1)(B) requires that the Service Provider be “notaware of facts or circumstances from which infringing activity is apparent,” the district court reasoned thatNapster could not qualify for the safe harbor of Section 512(d). However, Section 512(d)(1) contains threeprongs, which are stated in the disjunctive, not the conjunctive. Specifically, Section 512(d)(1) requires that theService Provider have no actual knowledge of infringing material or activity (clause (A)), no awareness of factsor circumstances from which infringing activity is apparent (clause (B)), or “upon obtaining such knowledge orawareness, acts expeditiously to remove, or disable access to, the material” (clause (C)). Thus, even if aService Provider has actual or constructive knowledge of infringing activity, so long as the Service Provideracts expeditiously to remove or disable access to the allegedly infringing material upon obtaining suchknowledge, the safe harbor is still available. Napster asserted that in every instance in which it had obtainedknowledge of infringing activity, it had acted expeditiously to block the account of the user who was allegedlysharing infringing material. Napster’s PI Opp. Br., supra note 1173, at 33.1998 A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919 n. 24 (N.D. Cal. 2000).1999 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001) (quoting S. Rep. 105-90, at 40(1998), which stated: “The limitations in subsections (a) through (d) protect qualifying service providers fromliability for all monetary relief for direct, vicarious, and contributory infringement.”). This sentence from thelegislative history was also quoted in a discussion of the scope of the DMCA safe harbors by the court in itsopinion in In re Verizon Internet Services, Inc., 65 U.S.P.Q.2d 1574 (D.D.C. 2003). The court also stated, inthe context of ruling on the scope of the subpoena power under Section 512(h) of the DMCA, that “in exchangefor complying with subpoenas under subsection (h), service providers receive liability protection from anycopyright infringement – direct or vicarious – by their users.” Id. at 1581 n.6.2000 Napster, 239 F.3d at 1025.2001 Id. The bases for the district court’s doubts about whether Napster satisfied Section 512(i) are discussed inSection C.5(b)(1)(i)a. above with respect to the court’s ruling on whether Napster was entitled to the safeharbor of Section 512(a).- 433 -