Advanced Copyright Issues on the Internet - Fenwick & West LLP

The Ninth Circuit noted that, although the CDA does not provide service providers withimmunity from laws pertaining to intellectual property, it does not contain an express definitionof “intellectual property.” Because state laws protecting intellectual property are not uniform,and because material on a website may be viewed across many states at a time, the courtreasoned that permitting the reach of any particular state’s definition of intellectual property todictate the contours of federal immunity under the CDA would be contrary to Congress’expressed goal of insulating the development of the Internet from the various state-law regimes.Thus, in the absence of a definition from Congress, the court construed the term “intellectualproperty” in the CDA to mean “federal intellectual property.” Accordingly, CCBill and CWIEwere eligible for CDA immunity for all of the state claims raised by Perfect 10. 20827. Secondary Liability of Investors(a) The Hummer Winblad/Bertelsmann LitigationFor a discussion of this litigation, see Section III.C.2(c)(8) above.(b) UMG Recordings v. Veoh NetworksThe plaintiffs, who owned rights to copyrighted sound recordings and musicalcompositions allegedly used without authorization by users submitting user-generated content toa site operated by Veoh Networks, sought to hold three of Veoh’s investors secondarily liableunder theories of contributory liability, vicarious liability, and inducement of infringement. InUMG Recordings, Inc. v. Veoh Networks, Inc., 2083 in a decision designated not for publication,the court dismissed the plaintiff’s complaint with leave to amend. With respect to contributoryliability, the court held that merely exercising ownership to select a Board of Directors cannotinvite derivative liability. 2084 “Nor is there a common law duty for investors (even ones whocollectively control the Board) ‘to remove copyrighted content’ in light of the DMCA.” 2085 Thecourt distinguished the Hummer Winblad/Bertelsmann litigation on the ground that the courtthere upheld the complaints against the investors in view of the allegation that the investors hadspecifically ordered that infringing activity take place on the Napster site. With respect tovicarious liability, the court noted there was no direct financial benefit to Veoh’s investors in theform of fees from users or advertisers, and mere potential future increase in financial value of theinvestment was not sufficient. With respect to inducement to infringe, there was no allegationthat the investors encouraged Veoh to infringe directly, thereby distinguishing the Grokstercase. 20862082 Id. at *32-34.2083 2009 U.S. Dist. LEXIS 14955 (C.D. Cal. Feb. 2, 2009).2084 Id. at *11.2085 Id.2086 Id. at *13-18.- 452 -