Live Face on Web, LLC v. Howard Stern Productions, Inc., 2009 WL 723481 (E.D. Pa. 2009)

Live Face on Web, a software firm, designed a product that allowed a company to display a “live” spokesperson on a website.   Live Face alleged that Cameo HD appropriated its software and offered it to Howard Stern Productions.

According to the complaint, Howard Stern Productions put up videos on its website of its show’s cast that were powered by the software.   Live Face brought suit against Cameo HD and Howard Stern Productions for direct copyright infringement.  In addition, Live Face took a flier on contributory and vicarious infringement.   Howard Stern Productions moved to dismiss.

Contributory infringement

(1) direct copyright infringement by a third party; (2) knowledge of the third-party infringement; and (3) a material contribution to the infringement.

Judge McGlaghlin granted the motion to dismiss the claim for contributory infringement, finding that the complaint didn’t allege facts that would show Howard Stern Productions knew of Cameo’s third-party infringement.

Vicarious infringement

(1) direct copyright infringement by a third party; (2) an obvious and direct financial interest in the exploitation of the copyrighted materials; and (3) the right and ability to supervise the infringing activity.

Howard Stern Productions made two arguments in regards to (2) direct financial interest:  first, that the Live Face claim should fail because it didn’t alleged that visitors were drawn to the website specifically because of the ability to infringe; and second, even if Live Face wasn’t required to make such a showing, an allegation merely linking advertising revenue to the number of website users was insufficient to satisfy the element.   Judge McGlaghlin denied the motion to dismiss, finding that Howard Stern Production’s framing of the direct financial interest element was overly narrow:

That these allegations are sufficient at this stage is reinforced by Nimmer’s view of the direct financial interest element. According to Nimmer, courts “seem to have relaxed” the standard over time, and “[i]t seems scarcely an exaggeration to posit that ‘an obvious and direct financial interest’ is now understood to encompass a possible, indirect benefit.’ “ Nimmer on Copyright, § 12.04[A][2]; see also A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir.2001) (finding direct financial interest where defendant’s “future revenue” depended on increases in userbase); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 263 (9th Cir.1996) (finding direct financial interest from admission fees, concession stand sales, and parking fees at the flea market at which the infringing material was available); Shapiro, Bernstein, 316 F.2d at 307 (explaining the line of cases in which infringing activities provide a proprietor with “a source of customers and enhanced income”); Aimster, 252 F.Supp.2d at 655 (finding direct financial interest where every website user had to pay a registration fee, and where the company solicited contributions to the Aimster litigation and also sold posters, jeans, and other Aimster-related merchandise on its website, thus benefiting the defendant’s overall “commercial enterprise”); see also Ellison, 357 F.3d at 1079 (stating that the “essential aspect” of the direct financial interest inquiry is whether there is a causal relationship between the infringing activity and “any financial benefit a defendant reaps, regardless of how substantial the benefit is in proportion to a defendant’s overall profits” (emphasis added)).