Category Archives: Contributory Liability

Copy shop liable for direct infringement from student on-premises copying of course packets

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Filed under Contributory Infringement, Contributory Liability, Secondary Liability

Blackwell Publishing Group, Inc. v. Excel Research Group, LLC 07-12731 (E.D. Mich. 2009).

The Eastern District of Michigan issued a decision on Wednesday that is sure to be controversial. A group of publishers brought suit alleging that a copy shop had infringed thirty-three of their works. The copy shop had accepted course packets from professors; ensured that the course packets were in proper form to be copied; given the packets to students upon request; and provided copy machines for the students to copy the packets.

The twist

If you were looking at this case from afar, you’d probably expect the Court to find the copy shop was secondarily liable for infringing copies made by the students. Instead the Court found the copy shop directly liable for infringement of the publishers 106(1) right to make reproductions and 106(3) right to distribute. Why?

For  four of the thirty-three allegedly infringed works the students were arguably authorized to make copies. The university the students attended had entered into licensing agreements with the publishers that allowed “student copying.” So for at least some of the works, the Court ostensibly believed it had to find that the copy shop directly infringed the publisher’s works to find the copy shop liable.

The Court may have also felt that it could not find the students directly liable for the remaining twenty-nine works under a fair use evaluation.  There can be no secondary liability without direct liability. The copy shop, then, couldn’t be liable without a finding that the students directly infringed the works. I’m not convinced that the outcome of a fair use evaluation, regardless of the outcome, should change in this circumstance if it is being conducted from the point of view of the students or the copy shop, but reasonable minds can reach a contrary conclusion.

106(1) right to reproduce the copyrighted work

In a section labeled “Direct Infringers” the Court wrote the following:

Excel next argues that because it is the students who do the copying, they are the purported infringers and therefore the publishers cannot establish that Excel is an infringer. While “[t]he Copyright Act does not expressly render anyone liable for infringement committed by another,” Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 434 (1984), Excel’s argument ignores the circumstances of the copying.

First, although students press the start button and make a copy of the coursepack, Excel is the source of the reproduction. Excel controls the entire copying process. It retains the “master,” maintains its quality, gives it to a student to copy, and accepts payment. Excel also owns and supplies all of the elements of reproduction – the venue, the copy machines, the paper, and the utilities. Excel staff members are available to assist students in the copying process and also provide binding services if requested. This scenario is vastly different from a student, who happens to obtain a coursepack from a friend or other third party and comes into Excel’s premises and makes a copy. Under this scenario, whether Excel would be liable is a different question. Here, however, it is clear that this is not mere student copying.

From this paragraph and context provided by the rest of the decision we can deduce that the Court found that the copy shop was directly liable for the student copying — that the copy shop was actually making the copies, not the students.  (When the Court conducted its fair use evaluation, it considered the direct infringement by the copy shop and not by the students.)

This creates a groundbreaking and potentially troublesome extension of direct liability. It should be noted that the publisher’s amended complaint primarily asserts infringement claims under secondary liability. There is only one boilerplate sentence that mentions directly liability.

Direct liability verses secondary Liability

Edit: Peter Hirtle raises interesting questions about this case at the LibraryLaw Blog. He points to a provision in the Copyright Act, 17 U.S.C. 108(f), that I should paid more attention to before posting. 108(f) shields libraries from liability stemming from the “unsupervised use of reproducing equipment located on [their] premises,” provided that they post a warning on their duplication machines stating that an individual may be personally liable for using the machine to make infringing copies.  I’ve changed this paragraph to reflect the provision. Mr. Hurtle questions whether this decision eliminates the safe harbor for libraries under 108(f):

It is common for libraries to receive from a faculty member a copy of a course pack and place it on reserve (much as faculty members provided copies of their course packs to Excel).  If a student then borrowed that course pack and copied it on a library photocopy machine, would the library be liable?  Section 108(f) of the Copyright Act protects libraries from charges of contributory infringement for copying done by patrons on library equipment, but could this decision be extended to suggest that libraries, just like Excel, have direct, not contributory, liability  for infringing copies made by students?  If so, the “safe harbor” of 108(f) would evaporate.

I think this analysis is spot on. The Court in Blackwell found that when an entity “retains the ‘master,’ maintains its quality, gives it to a student to copy, and accepts payment,” it is the party making duplications; not a third-party, be it supervised or unsupervised. 108(f) is drafted in broad terms and doesn’t explicitly just provide a shield against secondary liability. But I think that it is possible to make a strong argument that Blackwell has essentially eliminated the 108(f) safe harbor.

106(3) right to distribute copies

The Court also found that the copy shop directly infringed the publisher’s 106(3) distribution right by “renting” their copy of the course packets to the students, even though the students never left the copy shop’s premises. This actually presents a more interesting issue than may appear at first blush.  17 U.S.C. 106(3) grants a copyright owner the exclusive right to “distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” The Copyright Act, however, does not define “distribute.”

William Patry contends that the operative language in 106(3)  is “distribute copies . . . to the public” not “sale or other transfer of ownership, or by rental, lease, or lending.” This makes a difference in the context of selling a house that infringes a copyright owner’s architectural work. If “distribute copies . . . to the public” is the operative language, invoking some kind of motion, then a sale of house, which is merely a change of title, would not be considered an infringing act.

Would the copy shop’s on-site supply of the course packets be considered a distribution under Patry’s reading of 106(3)? For that matter, is Patry’s proposed definition of 106(3) viable in all contexts?

(h/t Mary Minow at Fairly Used Blog)

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Contributory trademark infringement claims against flea market landowner dismissed

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Filed under Contributory Liability, Secondary Liability

Malletier v. The Flea Market, Inc., 2009 WL 1625946 (N.D. Cal. 2009)

Judge Wilken addressed a rather fetching contributory trademark infringement issue last Wednesday. The Flea Market, located in Sacramento, was one of the largest open-air flea markets in the United States. The market stretched 120 acres, had over two thousand vendors, and received approximately four million visitors a year.

Storied fashion designer and manufacturer Louis Vuitton brought suit against The Flea Market, Inc., the operator of the market, and the real estate company that leased the land to the market. The real estate company moved to dismiss arguing that it didn’t have sufficient control over the vendors to be liable for contributory infringement.  The Court dismissed, distinguishing the case from the Ninth Circuit’s holding in Fonovisa, Inc. v. Cherry Auction, Inc, on the grounds that in Fonovisa, the defendant ran the flea market, not just leased the land.

Contributory Infringement

The Court cited Lockheed Martin Corp. v. Network Soultions, Inc., 194 F.3d 980, 983 (9th Cir. 1999) for the test for contributory liability for trademark infringement:

“Contributory infringement occurs when the defendant either intentionally induces a third party to infringe the plaintiff’s mark or supplies a product to a third party with actual or constructive knowledge that the product is being used to infringe the service mark.” Plaintiff does not allege that Defendant induced a third party to infringe. Thus, Plaintiff must show that Defendant supplies a product to a third party with knowledge that the product is being used to infringe the mark. To satisfy the “supplies a product” prong of the test, the court “consider[s] the extent of control exercised by the defendant over the third party’s means of infringement.” Lockheed, 194 F .3d at 984.

The Court then proceeded to distinguish Malletier from Fonovisa:

[I]n Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir.1996), the Ninth Circuit addressed this requirement in the context of flea markets. In that case, Cherry Auction, Inc. operated a swap meet in which vendors paid daily rental fees in exchange for booth space. Cherry Auction supplied parking, conducted advertising and retained the right to exclude any vendor for any reason at any time. Cherry Auction was also aware that vendors in their swap meet were selling counterfeit recordings in violation of the plaintiff’s trademarks and copyrights. The Ninth Circuit held that Cherry Auction was liable for contributory infringement because it “suppl[ied] the necessary marketplace” for the sale of infringing products. Id. at 265; Lockheed, 194 F.3d at 984.

Defendant distinguishes Fonovisa because in that case the defendant both owned and operated the market, whereas here, the property owner, Defendant, and the market operator, The Flea Market, are two separate and distinct entities. As a property owner, Defendant leases land to The Flea Market without exercising any specific, direct control over the Flea Market’s tenants’ business operations. Therefore, Defendant argues, it cannot be liable for having any control over the sale of the infringing products.

Plaintiff has not alleged any facts showing a relationship between Defendant and the vendors. The only facts alleged in the complaint that specifically refer to Defendant state that it and The Flea Market are “closely related to each other and collectively own the land, building, structures and fixtures at the market.” The complaint also states that Defendant receives “substantial sums of money” from The Flea Market’s lease agreements with the market’s tenants and vendors. No case supports the proposition that a property owner may be liable for contributory trademark infringement if it only leases property to a separate and distinct entity, which in turn operates a flea market and rents space to a vendor, which in turn infringes trademarks. Property ownership alone does not establish that Defendant exercised control over the sale of the infringing products.

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