Plaintiffs Religious Technology Center ("RTC") and Bridge Publications, Inc. ("BPI") hold copyrights in the unpublished and published works of L. Ron Hubbard, the late founder of the Church of Scientology ("the Church"). Defendant Dennis Erlich ("Erlich") is a former minister of Scientology turned vocal critic of the Church, whose pulpit is now the Usenet newsgroup alt.religion.scientology ("a.r.s."), an on-line forum for discussion and criticism of Scientology. Plaintiffs maintain that Erlich infringed their copyrights when he posted portions of their works on a.r.s. Erlich gained his access to the Internet through defendant Thomas Klemesrud's ("Klemesrud's") BBS "support.com." [A separate order granted a preliminary injunction against Erlich because plaintiffs had shown a likelihood of success on their copyright infringement claims against him.] Klemesrud is the operator of the BBS, which is run out of his home and has approximately 500 paying users. Klemesrud's BBS is not directly linked to the Internet, but gains its connection through the facilities of defendant Netcom On-Line Communications, Inc. ("Netcom"), one of the largest providers of Internet access in the United States.

After failing to convince Erlich to stop his postings, plaintiffs contacted defendants Klemesrud and Netcom. Klemesrud responded to plaintiffs' demands that Erlich be kept off his system by asking plaintiffs to prove that they owned the copyrights to the works posted by Erlich. However, plaintiffs refused Klemesrud's request as unreasonable. Netcom similarly refused plaintiffs' request that Erlich not be allowed to gain access to the Internet through its system. Netcom contended that it would be impossible to prescreen Erlich's postings and that to kick Erlich off the Internet meant kicking off the hundreds of users of Klemesrud's BBS. Consequently, plaintiffs named Klemesrud and Netcom in their suit against Erlich, although only on the copyright infringement claims.

... For the reasons set forth below, the court grants in part and denies in part Netcom's motion for summary judgment and Klemesrud's motion for judgment on the pleadings….

To establish a claim of copyright infringement, a plaintiff must demonstrate (1) ownership of a valid copyright and (2) "copying" of protectable expression by the defendant. Baxter v. MCA, Inc., 812 F.2d 421, 423 (9th Cir.), cert. denied, 484 U.S. 954, 108 S. Ct. 346, 98 L. Ed. 2d 372 (1987). Infringement occurs when a defendant violates one of the exclusive rights of the copyright holder. 17 U.S.C. § 501(a). These rights include the right to reproduce the copyrighted work, the right to prepare derivative works, the right to distribute copies to the public, and the right to publicly display the work. 17 U.S.C. §§ 106(1)-(3) & (5). The court has already determined that plaintiffs have established that they own the copyrights…. The court also found plaintiffs likely to succeed on their claim that defendant Erlich copied the Exhibit A and B works and was not entitled to a fair use defense. Plaintiffs argue that, although Netcom was not itself the source of any of the infringing materials on its system, it nonetheless should be liable for infringement, either directly, contributorily, or vicariously. Netcom disputes these theories of infringement and further argues that it is entitled to its own fair use defense.

1. Direct Infringement

Infringement consists of the unauthorized exercise of one of the exclusive rights of the copyright holder delineated in section 106. 17 U.S.C. § 501. Direct infringement does not require intent or any particular state of mind, n10 although willfulness is relevant to the award of statutory damages. 17 U.S.C. § 504(c). …

Undisputed Facts

The parties do not dispute the basic processes that occur when Erlich posts his allegedly infringing messages to a.r.s. Erlich connects to Klemesrud's BBS using a telephone and a modem. Erlich then transmits his messages to Klemesrud's computer, where they are automatically briefly stored. According to a prearranged pattern established by Netcom's software, Erlich's initial act of posting a message to the Usenet results in the automatic copying of Erlich's message from Klemesrud's computer onto Netcom's computer and onto other computers on the Usenet. In order to ease transmission and  for the convenience of Usenet users, Usenet servers maintain postings from newsgroups for a short period of time--eleven days for Netcom's system and three days for Klemesrud's system. Once on Netcom's computers, messages are available to Netcom's customers and Usenet neighbors, who may then download the messages to their  own computers. Netcom's local server makes available its postings to a group of Usenet servers, which do the same for other servers until all Usenet sites worldwide have obtained access to the postings, which takes a matter of hours.

Creation of Fixed Copies

… In the present case, there is no question after MAI that "copies" were created, as Erlich's act of sending a message to a.r.s. caused reproductions of portions of plaintiffs' works on both Klemesrud's and Netcom's storage devices. Even though the messages remained on their systems for at most eleven days, they were sufficiently "fixed" to constitute recognizable copies under the Copyright Act. See Information Infrastructure Task Force, Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights 66 (1995) ("IITF Report").

Is Netcom Directly Liable for Making the Copies?

Accepting that copies were made, Netcom argues that Erlich, and not Netcom, is directly liable for the copying…. The court believes that Netcom's act of designing or implementing a system that automatically and uniformly creates temporary copies of all data sent through it is not unlike that of the owner of a copying machine who lets the public make copies with it. Although some of the people using the machine may directly infringe copyrights, courts analyze the machine owner's liability under the rubric of contributory infringement, not direct infringement. Plaintiffs' theory would create many separate acts of infringement and, carried to its natural extreme, would lead to unreasonable liability. It is not difficult to conclude that Erlich infringes by copying a protected work onto his computer and by posting a message to a newsgroup. However, plaintiffs' theory further implicates a Usenet server that carries Erlich's message to other servers regardless of whether that server acts without any human intervention beyond the initial setting up of the system. It would also result in liability for every single Usenet server in the worldwide link of computers transmitting Erlich's message to every other computer. These parties, who are liable under plaintiffs' theory, do no more than operate or implement a system that is essential if Usenet messages are to be widely distributed. There is no need to construe the Act to make all of these parties infringers. Although copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party.

…While it is possible that less "damage" would have been done if Netcom had heeded plaintiffs' warnings and acted to prevent Erlich's message from being forwarded, this is not relevant to its direct liability for copying…. Whether a defendant makes a direct copy that constitutes infringement cannot depend on whether it received a warning to delete the message.

[The court likewise concludes that Netcom is not directly liable for infringement of the public distribution or display rights]

Conclusion

The court is not persuaded by plaintiffs' argument that Netcom is directly liable for the copies that are made and stored on its computer. Where the infringing subscriber is clearly directly liable for the same act, it does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet. Such a result is unnecessary as there is already a party directly liable for causing the copies to be made... . The court does not find workable a theory of infringement that would hold the entire Internet liable for activities that cannot reasonably be deterred... . Because the court cannot see any meaningful distinction (without regard to knowledge) between what Netcom did and what every other Usenet server does, the court finds that Netcom cannot be held liable for direct infringement.

2. Contributory Infringement

Netcom is not free from liability just because it did not directly infringe plaintiffs' works; it may still be liable as a contributory infringer. Although there is no statutory rule of liability for infringement committed by others…. Liability for participation in the infringement will be established where the defendant, "with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (2d Cir. 1971).

a. Knowledge of Infringing Activity

Plaintiffs insist that Netcom knew that Erlich was infringing their copyrights at least after receiving notice from plaintiffs' counsel indicating that Erlich had posted copies of their works onto a.r.s. through Netcom's system. Despite this knowledge, Netcom continued to allow Erlich to post messages to a.r.s. and left the allegedly infringing messages on its system so that Netcom's subscribers and other Usenet servers could access them. Netcom argues that it did not possess the necessary type of knowledge because (1) it did not know of Erlich's planned infringing activities when it agreed to lease its facilities to Klemesrud, (2) it did not know that Erlich would infringe prior to any of his postings, (3) it is unable to screen out infringing postings before they are made, and (4) its knowledge of the infringing nature of Erlich's postings was too equivocal given the difficulty in assessing whether the registrations were valid and whether Erlich's use was fair. The court will address these arguments in turn.

Netcom cites cases holding that there is no contributory infringement by the lessors of premises that are later used for infringement unless the lessor had knowledge of the intended use at the time of the signing of the lease. … Here, Netcom not only leases space but also serves as an access provider, which includes the storage and transmission of information necessary to facilitate Erlich's postings to a.r.s. Unlike a landlord, Netcom retains some control over, the use of its system. Thus, the relevant time frame for knowledge is not when Netcom entered into an agreement with Klemesrud. It should be when Netcom provided its services to allow Erlich to infringe plaintiffs' copyrights. … It is undisputed that Netcom did not know that Erlich was infringing before it received notice from plaintiffs. …

However, the evidence reveals a question of fact as to whether Netcom knew or should have known that Erlich had infringed plaintiffs' copyrights following receipt of plaintiffs' letter. Because Netcom was arguably participating in Erlich's public distribution of plaintiffs' works, there is a genuine issue as to whether Netcom knew of any infringement by Erlich before it was too late to do anything about it. If plaintiffs can prove the knowledge element, Netcom will be liable for contributory infringement since its failure to simply cancel Erlich's infringing message and thereby stop an infringing copy from being distributed worldwide constitutes substantial participation in Erlich's public distribution of the message. …

Netcom argues that its knowledge after receiving notice of Erlich's alleged infringing activities was too equivocal given the difficulty in assessing whether registrations are valid and whether use is fair. Although a mere unsupported allegation of infringement by a copyright owner may not automatically put a defendant on notice of infringing activity, Netcom's position that liability must be unequivocal is unsupportable. … Where works contain copyright notices within them, as here, it is difficult to argue that a defendant did not know that the works were copyrighted. To require proof of valid registrations would be impractical and would perhaps take too long to verify, making it impossible for a copyright holder to protect his or her works in some cases, as works are automatically deleted less than two weeks after they are posted. The court is more persuaded by the argument that it is beyond the ability of a BBS operator to quickly and fairly determine when a use is not infringement where there is at least a colorable claim of fair use. Where a BBS operator cannot reasonably verify a claim of infringement, either because of a possible fair use defense, the lack of copyright notices on the copies, or the copyright holder's failure to provide the necessary documentation to show that there is a likely infringement, the operator's lack of knowledge will be found reasonable and there will be no liability for contributory infringement for allowing the continued distribution of the works on its system.

Since Netcom was given notice of an infringement claim before Erlich had completed his infringing activity, there may be a question of fact as to whether Netcom knew or should have known that such activities were infringing. Given the context of a dispute between a former minister and a church he is criticizing, Netcom may be able to show that its lack of knowledge that Erlich was infringing was reasonable. However, Netcom admits that it did not even look at the postings once given notice and that had it looked at the copyright notice and statements regarding authorship it would have triggered an investigation into whether there was infringement. These facts are sufficient to raise a question as to Netcom's knowledge once it received a letter from plaintiffs on December 29, 1994.

b. Substantial Participation

Where a defendant has knowledge of the primary infringer's infringing activities, it will be liable if it "induces, causes or materially contributes to the infringing conduct of" the primary infringer. Gershwin Publishing, 443 F.2d at 1162. Such participation must be substantial.

Providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, goes well beyond renting a premises to an infringer. See Fonovisa, Inc. v. Cherry Auction, Inc., 847 F.Supp. 1492, 1496 (E.D.Cal. 1994) (finding that renting space at swap meet to known bootleggers not "substantial participation" in the infringers' activities)... . Netcom allows Erlich's infringing messages to remain on its system and be further distributed to other Usenet servers worldwide. It does not completely relinquish control over how its system is used, unlike a landlord. Thus, it is fair, assuming Netcom is able to take simple measures to prevent further damage to plaintiffs' copyrighted works, to hold Netcom liable for contributory infringement where Netcom has knowledge of Erlich's infringing postings yet continues to aid in the accomplishment of Erlich's purpose of publicly distributing the postings. Accordingly, plaintiffs do raise a genuine issue of material fact as to their theory of contributory infringement as to the postings made after Netcom was on notice of plaintiffs' infringement claim.

3. Vicarious Liability

Even if plaintiffs cannot prove that Netcom is contributorily liable for its participation in the infringing activity, it may still seek to prove vicarious infringement based on Netcom's relationship to Erlich. A defendant is liable for vicarious liability for the actions of a primary infringer where the defendant (1) has the right and ability to control the infringer's acts and (2) receives a direct financial benefit from the infringement. Unlike contributory infringement, knowledge is not an element of vicarious liability.

a. Right and Ability To Control

The first element of vicarious liability will be met if plaintiffs can show that Netcom has the right and ability to supervise the conduct of its subscribers. Netcom argues that it does not have the right to control its users' postings before they occur. Plaintiffs dispute this and argue that Netcom's terms and conditions, to which its subscribers must agree, specify that Netcom reserves the right to take remedial action against subscribers. Plaintiffs argue that under "netiquette," the informal rules and customs that have developed on the Internet, violation of copyrights by a user is unacceptable and the access provider has a duty take measures to prevent this; where the immediate service provider fails, the next service provider up the transmission stream must act. Further evidence of Netcom's right to restrict infringing activity is its prohibition of copyright infringement and its requirement that its subscribers indemnify it for any damage to third parties. Plaintiffs have thus raised a question of fact as to Netcom's right to control Erlich's use of its services.

Netcom argues that it could not possibly screen messages before they are posted given the speed and volume of the data that goes through its system. Netcom further argues that it has never exercised control over the content of its users' postings. Plaintiffs' expert opines otherwise, stating that with an easy software modification Netcom could identify postings that contain particular words or come from particular individuals. Plaintiffs further dispute Netcom's claim that it could not limit Erlich's access to Usenet without kicking off all 500 subscribers of Klemesrud's BBS. As evidence that Netcom has in fact exercised its ability to police its users' conduct, plaintiffs cite evidence that Netcom has acted to suspend subscribers' accounts on over one thousand occasions [for commercial advertising, posting obscene materials, and off-topic postings]. Further evidence shows that Netcom can delete specific postings. Whether such sanctions occurred before or after the abusive conduct is not material to whether Netcom can exercise control. The court thus finds that plaintiffs have raised a genuine issue of fact as to whether Netcom has the right and ability to exercise control over the activities of its subscribers, and of Erlich in particular.

b. Direct Financial Benefit

Plaintiffs must further prove that Netcom receives a direct financial benefit from the infringing activities of its users. For example, a landlord who has the right and ability to supervise the tenant's activities is vicariously liable for the infringements of the tenant where the rental amount is proportional to the proceeds of the tenant's sales. However, where a defendant rents space or services on a fixed rental fee that does not depend on the nature of the activity of the lessee, courts usually find no vicarious liability because there is no direct financial benefit from the infringement.... Plaintiffs cannot provide any evidence of a direct financial benefit received by Netcom from Erlich's infringing postings.... Netcom receives a fixed fee. There is no evidence that infringement by Erlich, or any other user of Netcom's services, in any way enhances the value of Netcom's services to subscribers or attracts new subscribers.... Plaintiffs point to Netcom's advertisements that, compared to competitors like CompuServe and America Online, Netcom provides easy, regulation-free Internet access. Plaintiffs assert that Netcom's policy attracts copyright infringers to its system, resulting in a direct financial benefit. The court is not convinced that such an argument, if true, would constitute a direct financial benefit to Netcom from Erlich's infringing activities. Further, plaintiffs' argument is not supported by probative evidence... . Because plaintiffs have failed to raise a question of fact on this vital element, their claim of vicarious liability fails.

4. First Amendment Argument

Netcom argues that plaintiffs' theory of liability contravenes the first amendment, as it would chill the use of the Internet because every access provider or user would be subject to liability when a user posts an infringing work to a Usenet newsgroup. While the court agrees that an overbroad injunction might implicate the First Amendment ... imposing liability for infringement where it is otherwise appropriate does not necessarily raise a First Amendment issue. The copyright concepts of the idea/expression dichotomy and the fair use defense balance the important First Amendment rights with the constitutional authority for "promot[ing] the progress of science and useful arts," U.S. CONST. art. I, § 8, cl. 8... .

5. Fair Use Defense

…In balancing the various factors, the court finds that there is a question of fact as to whether there is a valid fair use defense…. Accordingly, the court does not find that Netcom's use was fair as a matter of law.

C. Conclusion

The court finds that plaintiffs have raised a genuine issue of fact regarding whether Netcom should have known that Erlich was infringing their copyrights after receiving a letter from plaintiffs, whether Netcom substantially participated in the infringement, and whether Netcom has a valid fair use defense. Accordingly, Netcom is not entitled to summary judgment on plaintiffs' claim of contributory copyright infringement. However, plaintiffs' claims of direct and vicarious infringement fail.

Hendrickson v. eBay, Inc.

…eBay provides an Internet website service where over 25 million buyers and sellers of consumer goods and services have come together to buy and sell items through either an auction or a fixed-price format … eBay's website allows sellers to post "listings" (or advertisements) containing descriptions of items they wish to offer for sale; and it allows buyers to bid for items they wish to buy…

On or about December 20, 2000, eBay received a "cease and desist" letter from pro se Plaintiff Robert Hendrickson. The letter advised eBay that Plaintiff dba Tobann International Pictures is the copyright owner of the documentary "Manson." The letter also stated that pirated copies of "Manson" in digital video disk ("DVD") format were being offered for sale on eBay. However, the letter did not explain which copies of "Manson" in DVD format were infringing copies; nor did it fully describe Plaintiff's copyright interest. The letter demanded that eBay cease and desist "from any and all further conduct considered an infringement(s) of [Plaintiff's] right" or else face prosecution "to the fullest extend provided by law."

Promptly after receiving this letter, eBay sent Plaintiff e-mails asking for more detailed information concerning his copyright and the alleged infringing items. eBay advised Plaintiff that he ha[d] to submit proper notice under the DMCA. … “Specifically, we would need you to, among other things, identify the exact items which you believe infringe your rights. In addition, we would need a statement from you, under penalty of perjury, that you own (or are the agent of the owner) the copyrights in the documentary.”

Plaintiff refused to … fill out eBay's Notice of Infringement form. Before filing suit, Plaintiff never provided eBay the specific item numbers that it sought….

Plaintiff alleges that eBay participated in and facilitated the unlawful sale and distribution of pirated copies of "Manson" DVDs by providing an online forum, tools and services to the third party sellers. … [T]he issue raised by Plaintiff's copyright claim is … whether eBay can be held secondarily liable for providing the type of selling platform/forum and services that it provided, however limited or automated in nature, to sellers of counterfeit copies of the film "Manson." Before the Court reaches the merits of that question, the Court must address a preliminary issue: whether the DMCA shields eBay from liability for copyright infringement.

The DMCA "is designed to facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education." S. Rep. No. 105-190, at 1 (105th Congress, 2d Session 1998). Title II of the DMCA, set forth in 17 U.S.C. § 512, "protects qualifying Internet service providers from liability for all monetary relief for direct, vicarious and contributory infringement." Id. at 20. "Title II preserves strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment." Id. at 40.

There is no dispute over whether eBay is an Internet "service provider" within the meaning of Section 512. eBay clearly meets the DMCA's broad definition of online "service provider." See 17 U.S.C. § 512(k)(1)(B) ("the term 'service provider' means a provider of online services or network access, or the operator of facilities therefor").

[The court considered the various categories of 512 safe-harbor] … Subsection (c) limits liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." 17 U.S.C. § 512(c). … Here, because the focus of the copyright claims against eBay concerns infringing activity -- the sale and distribution of pirated copies of "Manson" -- using "materials" posted eBay's website, Section 512(c) would provide eBay a safe harbor from liability if eBay meets the conditions set forth therein.

Three requirements for safe harbor are delineated in Section 512(c)(1). First, the service provider must demonstrate that it does not have actual knowledge that an activity using the material stored on its website is infringing or an awareness of "facts or circumstances from which infringing activity is apparent." 17 U.S.C. § 512(c)(1)(A)(i)-(ii). Alternatively, the service provider must show that it expeditiously removed or disabled access to the problematic material upon obtaining knowledge or awareness of infringing activity. See 17 U.S.C. § 512(c)(1)(A)(iii). Second, the service provider must show it "does not receive a financial benefit directly attributable to the infringing activity" if the service provider has "the right and ability to control such activity." 17 U.S.C. § 512(c)(1)(B). Third, the service provider must show that it responded expeditiously to remove the material that is the subject of infringing activity upon receiving notification of the claimed infringement in the manner described in Section 512(c)(3). 17 U.S.C. § 512(c)(1)(C).

a. The Third Prong of the Test: Notification of the Alleged Infringing Activity

Under the third prong of the test, the service provider's duty to act is triggered only upon receipt of proper notice. See id. Section 512(c)(3) sets forth the required elements for proper notification by copyright holders. First, rights holders must provide written notification to the service provider's designated agent. See 17 U.S.C. § 512(c)(3). …

Preliminary, the Court rejects Plaintiff's argument that he need not submit written notification in the manner described above (i.e., provide the notification referenced in the third prong of the safe harbor test) as long as other facts show the service provider received actual or constructive knowledge of infringing activity. Plaintiff refers to the first prong of the safe harbor test set forth in Section 512(c)(1)(ii) and (iii) in support of this argument. Plaintiff's argument has no merit.

The DMCA expressly provides that if the copyright holder's attempted notification fails to "comply substantially" with the elements of notification described in subsection (c)(3), that notification "shall not be considered" when evaluating whether the service provider had actual or constructive knowledge of the infringing activity under the first prong set forth in Section 512(c)(1). 17 U.S.C. § 512(c)(3)(B)(i). Here, Plaintiff does not dispute that he has not strictly complied with Section 512(c)(3). The question is whether Plaintiff's imperfect attempts to give notice satisfy Section 512(c)(3)'s "substantial[]" compliance requirement.

(1) No Statement Attesting to Good Faith And Accuracy of Claim

Plaintiff's pre-suit "cease and desist" letter and e-mails to eBay do not include several of the key elements for proper notice required by Section 513(c)(3). None of these writings includes a written statement under "penalty of perjury" attesting to the fact "that the information in the notification is accurate . . . [and] the complaining party is authorized to act on behalf of the owner" of the copyright at issue. 17 U.S.C. § 512(c)(3)(A)(vi). Additionally, none of these writings includes a written statement that Plaintiff "has a good faith belief that use of the material in the manner complained of is not authorized." 17 U.S.C. § 512(c)(3)(A)(v). The complete failure to include these key elements in his written communications to eBay, even after eBay specifically asked for these items, renders Plaintiff's notification of claimed infringement deficient under Section 512(c)(3).

(2) Inadequate Identification of Material Claimed to be the Subject of Infringing Activity

Moreover, the record shows that Plaintiff failed to comply substantially with the requirement that he provide eBay with sufficient information to identify the various listings that purportedly offered pirated copies of "Manson" for sale. See 17 U.S.C. § 512(c)(3)(A)(iii). It is true that Plaintiff has informed eBay in writing that counterfeit copies of "Manson" were being offered and sold on eBay's website. However, when eBay requested that Plaintiff identify the alleged problematic listings by the eBay item numbers, Plaintiff refused. Plaintiff contends that it is not his job to do so once he has notified eBay of the existence of infringing activity by eBay sellers.

The Court recognizes that there may be instances where a copyright holder need not provide eBay with specific item numbers to satisfy the identification requirement. For example, if a movie studio advised eBay that all listings offering to sell a new movie (e.g., "Planet X,") that has not yet been released in VHS or DVD format are unlawful, eBay could easily search its website using the title "Planet X" and identify the offensive listings. However, the record in this case indicates that specific item numbers were necessary to enable eBay to identify problematic listings.

Plaintiff has never explained what distinguishes an authorized copy of "Manson" from an unauthorized copy…. A copyright holder must comply with the "written communication" requirement. See 17 U.S.C. § 512(3)(A). The writing requirement is not one of the elements listed under the substantial compliance category. Therefore, the Court disregards all evidence that purports to show Plaintiff gave notice that all DVDs violate his copyright in "Manson."…

In sum, the record in this case shows that proper identification under Section 512(c)(3)(A)(iii) should include the specific item numbers of the listings that are allegedly offering pirated copies of "Manson" for sale. It is undisputed that Plaintiff refused to provide specific item numbers of problematic listings before filing suit. Accordingly, the Court holds that Plaintiff failed to comply substantially with Section 512(c)(3)'s identification requirement.

Consequently, eBay did not have a duty to act under the third prong of the safe harbor test. See 17 U.S.C. § 512(c)(1)(C). Thus, if eBay establishes that it meets the remaining prongs of the safe harbor test, eBay would be entitled to judgment in its favor on the copyright claims.

b. The First Prong of the Test: Actual or Constructive Knowledge

Under the DMCA, a notification from a copyright owner that fails to comply substantially with Sections 512(c)(3)(A)(ii), (iii) or (iv) "shall not be considered under [the first prong of the safe harbor test] in determining whether a service provider has actual knowledge or is aware of the facts or circumstances from which infringing activity is apparent." See 17 U.S.C. § 512(c)(3)(B)(i) & (ii) (emphasis added). As discussed above, Plaintiff's written notifications do not comply substantially with Section (c)(3)(A)(ii)'s adequate identification requirement. Therefore, the Court does not consider those notices when evaluating the actual or constructive knowledge prong of the safe harbor test.

eBay's evidence shows that prior to this lawsuit, it did not have actual or constructive knowledge that particular listings were being used by particular sellers to sell pirated copies of "Manson." The limited information that Plaintiff provided to eBay cannot, as a matter of law, establish actual or constructive knowledge that particular listings were involved in infringing activity. Accordingly, the Court holds that eBay has satisfied the first prong of the safe harbor test under Section 512(c). See 17 U.S.C. § 512(c)(1)(A).

c. The Second Prong of the Test: Right and Ability to Control Infringing Activity

To satisfy the second prong of the test, eBay must show that it "does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity." 17 U.S.C. § 512(c)(1)(B). Because the undisputed facts establish that eBay does not have the right and ability to control the infringing activity, the Court need not evaluate the financial benefit element of this prong.

Plaintiff's only argument on the "ability to control" issue centers on eBay's ability to remove infringing listings (1) after it receives proper notification of infringing activity and (2) upon detecting an "apparent" infringement on its own. Plaintiff argues that the record shows eBay has the right and ability to control the infringing activity because it has removed the listings for the sale of various items in the past, including the listings offering pirated copies of "Manson" (in response to Plaintiff's complaints). Plaintiff's argument has no merit.

First, the "right and ability to control" the infringing activity, as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored in its system. To hold otherwise would defeat the purpose of the DMCA and render the statute internally inconsistent. The DMCA specifically requires a service provider to remove or block access to materials posted on its system when it receives notice of claimed infringement. See 17 U.S.C. §§ 512(c)(1)(C). The DMCA also provides that the limitations on liability only apply to a service provider that has "adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of [users] of the service provider's system or network who are repeat infringers." See 17 U.S.C. § 512(i)(1)(A). Congress could not have intended for courts to hold that a service provider loses immunity under the safe harbor provision of the DMCA because it engages in acts that are specifically required by the DMCA.

Second, eBay's voluntary practice of engaging in limited monitoring of its website for "apparent" infringements under the VeRO program cannot, in and of itself, lead the Court to conclude that eBay has the right and ability to control infringing activity within the meaning of the DMCA. The legislative history shows that Congress did not intend for companies such as eBay to be penalized when they engage in voluntary efforts to combat piracy over the Internet….

Because eBay has established that it meets the test for safe harbor under Section 512(c), eBay is entitled to summary judgment in its favor on the copyright claims. …

ALS Scan, Inc. v. RemarQ Communities, Inc.

RemarQ Communities, Inc., a Delaware corporation, is an online Internet service provider that provides access to its subscribing members. … In providing access to newsgroups, RemarQ does not monitor, regulate, or censor the content of articles posted in the newsgroup by subscribing members. It does, however, have the ability to filter information contained in the newsgroups and to screen its members from logging onto certain newsgroups, such as those containing pornographic material.

Two of the newsgroups to which RemarQ provides its subscribers access contain ALS Scan's name in the titles. These newsgroups -"alt.als" and "alt.binaries.pictures.erotica.als" -- contain hundreds of postings that infringe ALS Scan's copyrights. These postings are placed in these newsgroups by RemarQ's subscribers.

Upon discovering that RemarQ databases contained material that infringed ALS Scan's copyrights, ALS Scan sent a letter, dated August 2, 1999, to RemarQ, stating:

Both of these newsgroups ["alt.als" and "alt.binaries.pictures.erotica.als"] were created for the sole purpose of violating our Federally filed Copyrights and Tradename. These newsgroups contain virtually all Federally Copyrighted images. . . . Your servers provide access to these illegally posted images [**4]  and enable the illegal transmission of these images across state lines.
 

This is a cease and desist letter. You are hereby ordered to cease carrying these newsgroups within twenty-four (24) hours upon receipt of this correspondence . . . .

America Online, Erol's, Mindspring, and others have all complied with our cease and desist order and no longer carry these newsgroups.
 

* * *
 

Our ALS Scan models can be identified at http://www.alsscan.com/modlinf2.html[.] Our copyright information can be reviewed at http://www.alsscan.com/ copyrite.html[.]

For its principal argument, ALS Scan contends that it substantially complied with the notification requirements of the DMCA and thereby denied RemarQ the "safe harbor" from copyright infringement liability granted by that Act. See 17 U.S.C. § 512(c)(3)(A) (setting forth notification requirements). It asserts that because its notification was sufficient to put RemarQ on notice of its infringement activities, RemarQ lost its service-provider immunity from infringement liability. …
In this case, ALS Scan provided RemarQ with information that (1) identified two sites created for the sole purpose of publishing ALS Scan's copyrighted works, (2) asserted that virtually all the images at the two sites were its copyrighted material, and (3) referred RemarQ to two web addresses where RemarQ could find pictures of ALS Scan's models and obtain ALS Scan's copyright information. In addition, it noted that material at the site could be identified as ALS Scan's material because the material included ALS Scan's "name and/or copyright symbol next to it." We believe that with this information, ALS Scan substantially complied with the notification requirement of providing a representative list of infringing material as well as information reasonably sufficient to enable RemarQ to locate the infringing material. To the extent that ALS Scan's claims about infringing materials prove to be false, RemarQ has remedies for any injury it suffers as a result of removing or disabling noninfringing material. See 17 U.S.C. § 512(f), (g).

Accordingly, we reverse the district court's ruling granting summary judgment in favor of RemarQ on the basis of ALS Scan's noncompliance with the notification provisions of 17 U.S.C. § 512(c)(3)(A)(ii) and (iii). Because our ruling only removes the safe harbor defense, we remand for further proceedings on ALS Scan's copyright infringement claims and any other affirmative defenses that RemarQ may have. ….

Online Policy Group v. Diebold

…Defendants Diebold, Inc. and Diebold Election Systems, Inc. (collectively "Diebold") produce electronic voting machines. The machines have been the subject of critical commentary. Both the reliability and verification procedures of the machines have been called into question, in part because not all of the machines provide a means for verifying whether a voter's choice has been recorded correctly. It is undisputed that internal emails exchanged among Diebold employees (the "email archive") contain evidence that some employees have acknowledged problems associated with the machines. According to Diebold, the email archive also contains discussion of "the development of Diebold's proprietary computerized election systems, as well as Diebold trade secret information, and even employees' personal information such as home addresses and cell phone numbers." At some point early in 2003, the entire email archive was obtained and reproduced on the internet by unknown persons, giving rise to the events pertinent to the present motions.

Plaintiffs Nelson Chu Pavlosky and Luke Thomas Smith are students at Swarthmore College. Using internet access provided by Swarthmore, which for present purposes is considered their internet service provider ("ISP"), Pavlosky and Smith posted the email archive on various websites. An on-line newspaper, IndyMedia, published an article criticizing Diebold's electronic voting machines and containing a hyperlink to the email archive. Plaintiff Online Policy Group ("OPG") provides IndyMedia's internet access. OPG, in turn, obtains internet access from an upstream ISP, Hurricane Electric.

In response to the activities of Pavlosky, Smith, and IndyMedia, and in an alleged effort to prevent further public viewing of the email archive, Diebold sent cease and desist letters to many ISPs, including Swarthmore, OPG, and Hurricane, pursuant to the safe harbor provisions of the Digital Millennium Copyright Act ("DMCA"). Swarthmore, OPG, and Hurricane were advised that pursuant to these provisions they would be shielded from a copyright infringement suit by Diebold if they disabled access to or removed the allegedly infringing material. Swarthmore thereafter required Pavlosky and Smith to remove the email archive from their website. At the same time, Hurricane notified OPG that it might be required to terminate OPG's internet access if IndyMedia's hyperlink to the email archive was not removed. Hurricane agreed, however, not to act during the pendency of the present action, and consequently OPG did not disable access to or remove any material.

Diebold has not filed any lawsuits related to publication of the email archive. Plaintiffs Smith, Pavlosky, and OPG nonetheless seek injunctive, declaratory, and monetary relief from this Court, alleging that Diebold's claim of copyright infringement was based on knowing material misrepresentation …

Internet Service Provider Safe Harbor Provisions

Section 202 of the DMCA contains various nonexclusive [FN7] safe harbors designed to limit the liability of ISPs for incidental acts of copyright infringement. It provides immunity to ISPs that satisfy the conditions of eligibility, see 17 U.S.C. § 512(i), "from copyright infringement liability for passive,' automatic' actions in which [an ISP's] system engages through a technological process initiated by another without the knowledge of the" ISP. ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 625 (4th Cir. 2001). Once the ISP has actual knowledge of the infringing material, it loses the safe harbor protections unless it complies with the DMCA.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
FN7 Nothing in the DMCA suggests that Congress intended this statute to constitute the exclusive legal basis for protecting a copyright or defending against allegations of infringement. In fact, 17 U.S.C. § 512(l) provides that "failure to . . . qualify for limitation of liability under this section shall not bear adversely upon the consideration of . . . any other defense."
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17 U.S.C. § 512(a) -- the "conduit" safe harbor -- does not require notice and takedown of any content. Instead, an ISP is not liable for "transmitting, routing, or providing connections, for material through a system or network controlled or operated by or for the service provider" if the ISP did not (1) initiate the transmission, (2) select the material in a nonautomatic way, (3) select the recipients in a nonautomatic way, (4) retain a copy for longer than necessary to transmit it, and (5) modify the material. 17 U.S.C. § 512(a). In contrast, section 512(c) -- the "storage" safe harbor -- does require notice and takedown of allegedly infringing material. This provision
 

gives Internet service providers a safe harbor from liability for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider as long as the service provider can show that: (1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement; (2) it receives no financial benefit directly attributable to infringing activity; and (3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving from the copyright holder a notification conforming with requirements of § 512(c)(3).

ALS Scan, Inc., 239 F.3d at 623. 17 U.S.C. § 512(d) provides a similar safe harbor from liability for copyright infringement resulting from use of "information location tools," which include "hypertext links" ("hyperlinks"). Section 512(g) provides for replacement of the removed material upon counter-notice by the alleged infringer. Upon counter-notice of noninfringement by an ISP subscriber, the ISP may reestablish access to the content without fear of liability. Such replacement generally must be performed within approximately fourteen days. See 17 U.S.C. § 512(g)(2)(C).

17 U.S.C. § 512(f) provides as follows:
Misrepresentations. -- Any person who knowingly materially misrepresents under this section --
 (1) that material or activity is infringing, or
 (2) that material or activity was removed or disabled by mistake or misidentification,
 shall be liable for any damages,  including costs and attorneys' fees, incurred by the alleged infringer, by any copyright owner or copyright owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.

Thus, any person who sends a cease and desist letter with knowledge that claims of infringement are false may be liable for damages.…

Misrepresentation of Copyright Infringement: 17 U.S.C. § 512(f)

1. Publication of some of the contents in the email archive is lawful.

At the hearing on Plaintiffs' motion for preliminary injunction, Diebold's counsel asserted that portions of the email archive contain material that is copyrighted and has no "public interest" value. However, Diebold did not identify and has never identified specific emails that contain copyrighted content, and thus it has not provided evidence to support its counsel's assertion. At the same time, Diebold appears to have acknowledged that at least some of the emails are subject to the fair use doctrine.

The purpose, character, nature of the use, and the effect of the use upon the potential market for or value of the copyrighted work all indicate that at least part of the email archive is not protected by copyright law. The email archive was posted or hyperlinked to for the purpose of informing the public about the problems associated with Diebold's electronic voting machines. It is hard to imagine a subject the discussion of which could be more in the public interest. If Diebold's machines in fact do tabulate voters' preferences incorrectly, the very legitimacy of elections would be suspect. Moreover, Diebold has identified no specific commercial purpose or interest affected by publication of the email archive, and there is no evidence that such publication actually had or may have any affect on the putative market value, if any, of Diebold's allegedly copyrighted material. Even if it is true that portions of the email archive have commercial value, there is no evidence that Plaintiffs have attempted or intended to sell copies of the email archive for profit. Publishing or hyperlinking to the email archive did not prevent Diebold from making a profit from the content of the archive because there is no evidence that Diebold itself intended to or could profit from such content. At most, Plaintiffs' activity might have reduced Diebold's profits because it helped inform potential customers of problems with the machines. However, copyright law is not designed to prevent such an outcome. See, e.g., Acuff-Rose, 510 U.S. at 591-92. Rather, the goal of copyright law is to protect creative works in order to promote their creation. To the extent that Diebold argues that publication of the entire email archive diminished the value of some of its proprietary software or systems information, it must be noted that there is no evidence that Plaintiffs published or linked to the archive in order to profit. Finally, Plaintiffs' and IndyMedia's use was transformative: they used the email archive to support criticism that is in the public interest, not to develop electronic voting technology. Accordingly, there is no genuine issue of material fact that Diebold, through its use of the DMCA, sought to and did in fact suppress publication of content that is not subject to copyright protection.

2. Diebold violated section 512(f) .

Plaintiffs argue that Diebold "knowingly materially misrepresented" that publication of the email archive constituted copyright infringement and thus is liable for damages pursuant t o 17 U.S.C. § 512(f). The parties dispute the meaning of the phrase "knowingly materially misrepresents." Plaintiffs argue that a type of preliminary injunction standard should be applied. That is, the Court should conclude that Diebold violated section 512(f) if it did not have a "likelihood of success" on the merits of a copyright infringement claim when it sent the DMCA letters. Diebold contends that the Court should apply a type of Federal Rule of Civil Procedure 11 ("Rule 11") standard and thus conclude that Diebold did not violate section 512(f) unless sending the DMCA letters was "frivolous." Because the DMCA is of relatively recent vintage, the issue appears to be one of first impression.

The Court concludes that neither standard is appropriate. A requirement that a party have an objectively measured "likelihood of success on the merits" in order to assert claims of copyright infringement would impermissibly chill the rights of copyright owners. At the same time, in requiring a showing of "knowing material misrepresentation," Congress explicitly adopted a standard different from that embodied in Rule 11, which contains a variety of other requirements that are not necessarily coextensive with those set forth in section 512(f). The Court concludes that the statutory language is sufficiently clear on its face and does not require importation of standards from other legal contexts. A party is liable if it "knowingly" and "materially" misrepresents that copyright infringement has occurred. "Knowingly" means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations. See BLACK'S LAW DICTIONARY (8th ed. 2004) (definitions of "knowledge," in particular, "actual" and "constructive" knowledge). "Material" means that the misrepresentation affected the ISP's response to a DMCA letter. See id.

Applying this standard and in light of the evidence in the record, the Court concludes as a matter of law that Diebold knowingly materially misrepresented that Plaintiffs infringed Diebold's copyright interest, at least with respect to the portions of the email archive clearly subject to the fair use exception. No reasonable copyright holder could have believed that the portions of the email archive discussing possible technical problems with Diebold's voting machines were protected by copyright, and there is no genuine issue of fact that Diebold knew  -- and indeed that it specifically intended [FN15: Indeed, Diebold's counsel stated that "the DMCA provides the rapid response, the rapid remedies that Congress had in mind."] -- that its letters to OPG and Swarthmore would result in prevention of publication of that content. The misrepresentations were material in that they resulted in removal of the content from websites and the initiation of the present lawsuit. The fact that Diebold never actually brought suit against any alleged infringer suggests strongly that Diebold sought to use the DMCA's safe harbor provisions -- which were designed to protect ISPs, not copyright holders -- as a sword to suppress publication of embarrassing content rather than as a shield to protect its intellectual property.

…

[The plaintiffs subsequently settled the damages question for $125,000 from Diebold.]

 

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Google DMCA Takedowns: A three-month view

Michael Davis-Wilson, Electronic Frontier Foundation volunteer, June 2, 2005

Abstract: Google receives more than 30 copyright-based takedown demands each month invoking the Digital Millennium Copyright Act. A review of three months of notices shows they cluster in a few big categories: C&Ds from companies and individuals demanding removal of competitors’ sites; C&Ds demanding removal of “cracks” or material copied wholesale; and C&Ds demanding removal of criticism.

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Google has been receiving a growing number of Cease & Desist notices and takedown demands – now averaging 30 a month – in the three years the search engine has been sending notices to Chilling Effects. These notices come from all sorts of complainants offering a wide range of rationales, primarily invoking copyright and the safe harbor provisions of the Digital Millennium Copyright Act (see DMCA Safe Harbor Provisions). Google’s takedown requests offer an interesting opportunity to examine the many different sorts of online activity that receive C&D notices and some common purposes behind those notices. This weather report examined 103 takedown notices sent to Google over a period of three months. (complete list of Google DMCA notices)

Most of the takedown requests sent to Google do not target the company’s content, but user-created content that Google indexes. So why is Google involved at all? Why aren’t these notices just sent directly to the alleged infringers? Clearly, the complainants think that they are more likely to get what they want from Google than they would from the people whose activity they object to.

As a dominant Internet intermediary, Google is accessible where an alleged infringer may be difficult to contact. Some complainants turn to Google only after their attempts to deal directly with alleged infringers or their service providers have failed. Sometimes people don’t acknowledge notices sent to them. If the service provider for the material in question is based in a nation with different intellectual property laws or enforcement, it may ignore notices entirely. For example, one complaint in the database comes from a site operator claiming that his site was mirrored in its entirety by a Russian host who ignored months of complaints, Copyright Owner of Adult Websites Requests Removal of Infringing Content.

What’s more, Google faces strong incentives to respond to complaints of infringement in its search results or hosted content. The DMCA’s safe harbor provisions protect hosts and providers of “information location tools” from monetary liability if they promptly remove allegedly infringing material from their listings. On the flip side, the provisions leave service providers open to suit if they refuse takedown demands. In the face of uncertain liability, Google may find it cheaper to remove a challenged site from its listings. Unfortunately, in many cases, removing a site from Google Search is almost as good as removing it from the Net entirely.

These incentives combine to lead many complainants to frame their takedown demands as copyright complaints. The C&Ds reviewed cluster in a handful of categories: C&Ds from companies and individuals demanding removal of competitors’ sites; C&Ds demanding removal of “cracks” or material copied wholesale; and C&Ds demanding removal of criticism.

The largest group of complaints to Google in the period studied came from companies requesting that websites of their competitors be removed from Google Search. The infringement claim usually turns on some sort of promotional material – advertising language or information about the products or services on offer - but the alleged infringement is rarely central to the company’s business; these are jewelry merchants and safari operators, not publishers or software developers. The claims’ validity varies: some sites targeted for complaint seem to have essentially mirrored the complainant’s site and changed the contact address, while others merely say similar things about similar products. ZSComm.com, a vendor of international phone cards, offers a typical complaint of this type, Hold the phone (cards), claiming that a competitor has misappropriated text from his sales pages:

On http://www.zscomm.com/albania.htm (my website) I have used the following text: "Check out the lowest calling cards rates and phone cards rates below. Click on the calling card name for more details and to purchase. We provide the rates of all of the phone cards to specific countries for convenience." at the top of the page for my visitors.

Regardless of how similar the allegedly infringing page might be, one wonders how many different ways there can be to claim low prices on Albanian phone cards. In many such cases, the similarities would be excused by the "scenes a faire" doctrine, rather than taken as evidence of infringement.

This sort of takedown request is problematic because even when there may be a valid complaint, the notice’s main object often seems to be the elimination of a competitor - indeed, a handful of notices also demand that any harm done to their Google ranking by the allegedly infringing site be reversed, like this one from Greenlife, DMCA complaint again www.namibiatourism.com :

As a result of this, it appears that google has penalized www.honeymoon-safari.net as the site has disappeared from your SERPS, after holding top positions for over 2 years. I would appreciate if you could please remove any penalty from this site asap, as I have never plagiarised or lifted any work or content from others...ever!

The only option available to Google in this situation – removal – suppresses a site entirely when the alleged infringement may be unintentional and could often be remedied entirely by a simple paraphrase.

The second most popular form of notice alleges actual piracy. Unlike the first type of complaint, the allegedly infringed material here is critical to the complainant’s business – cracked software, copied educational materials, etc. The alleged infringer is not usually an established web site, or at least not one within US jurisdiction; instead, the infringers are Usenet posters, bloggers, or foreign warez sites. For this reason, the same complainants appear over and over again, as the material they’re trying to control gets reposted within hours of being taken down. Witness, for example, Microsoft’s unending campaign against people posting product keys for Microsoft software (see e.g. Microsoft Complains About Crack in DVM0day Blog (#3)). In the most extreme case, Star’s Edge Productions has sent in dozens of complaints about a single Usenet poster (Avatar / Star's Edge).

The third, and most troubling, common type of C&D uses takedown policy to quash criticism. In each of these cases, the complaint demands that a site be removed because it says uncomplimentary things about the complainant. Overseas, these complaints usually rely on defamation law. In the US, however, that tactic is less viable; defamation is difficult to prove under US law even against the original poster, and CDA § 230 exempts service providers from liability for defamation committed by their users, rendering all such actions not Google’s problem. Denied the tool of defamation, complainants seeking to suppress criticism turn to intellectual property law. Some complaints claim that the alleged infringer violated their trademarks by mentioning their company by name; others claim that the publication of embarrassing email correspondence violates their copyright. WSI Internet Consulting has maintained that an alleged infringer violated their copyright by redistributing a press release, WSI Seeks Removal of Another Hijacked Press Release :

This matter is identical to the issue we brought to your attention previously on or about March 31st, 2004 whereby the same party had, without our consent, posted a copy of a press release on various other web pages . . . The press release has wrongfully been posted to the following web pages, each of which has been separately identified by search query and infringing web pages described below...

These complaints are disturbing because they appear to be attempts to silence inconvenient speech; in the case of IP-based complaints, they do so using laws that were designed for a different purpose altogether.

The takedown requests that Google receives show us a microcosm of the problems of abuse and overreach in the implementation of intellectual property law. Legal mechanisms intended to protect the owners of IP are often used to suppress competition and quash legitimate speech. When they are used against actual infringement, the remedies available are often excessive, and just as often fail to successfully stop infringement. Dozens of legitimate websites are taken down, and the true pirates keep coming back.