Summaries must be original

When a copyright holder pursues a party that it believes has infringed on its copyright, the

aggrieved party will generally pursue one of three theories of infringement. These theories

have been developed by the federal courts to sort out the various ways by which one could

infringe upon a copyright. These theories are direct, indirect (also known as contributory ),

or vicarious infringement.

Direct Infringement

Direct infringement occurs when the copyright owner can prove legal ownership of the

work in question and that the infringer copied the work without permission. While the

first element is straightforward, the second element is more complex than appears at first

glance. In the context of the copyright protections afforded by law, it is clear that the word

copied must have an expansive definition rather than a narrow one (i.e., copy means more

than an exact replica). At the same time, of course, the definition cannot be so expansive as

to foreclose any works of the same category.

Courts have developed the substantial similarity standard to guide the definition of

copy under copyright laws. Thus, a copyright holder need only prove that the infringer

copied plots, structures, and/or organizations that made the infringing work substantially

similar to the copyrighted work.

Indirect Infringement

Indirect infringement (also known as contributory infringement ) involves three parties:

the copyright owner, the direct infringer, and the facilitator of the infringement.

The theory of indirect infringement is one that holds the facilitator liable for damages.

Therefore, before pursuing a theory of indirect infringement, the copyright owner must

identify the direct infringer. Normally, in order for the facilitator to be liable, the party

must have knowledge (direct or imputed) of the infringement and/or contribute to the

infringement in some material way. In the famous case of A&M Records, Inc. v. Napster,

Inc., 11 a federal appeals court held that Napster’s business model of facilitating a peerto-

peer community for sharing of digital music files constituted contributory infringement

because Napster had the ability to locate infringing material listed on its searchengines and the right to terminate users’ access to the system. Digital file sharing is

discussed more extensively later in this section (see Legal Implications in Cyberspace:

Copyrights in the Digital Age).

Vicarious Infringement

The final copyright infringement theory, vicarious infringement, is similar to the indirect

infringement theory in that they both involve third parties not involved in actual direct

infringement. Vicarious liability is based on agency law (see Chapter 10, “Agency and

Employment Relationships”) and can be used as a theory of liability when the infringing

party (the agent) is acting on behalf of or to the benefit of another party (the principal).

In that case, the principal party is said to be vicariously liable. The copyright owner will

be entitled to remedies against the principal to the same extent as the direct infringer.

Vicarious liability most often occurs in an employer–employee circumstance where the

employee is acting with authority from the employer and commits an act of infringement

that benefits the employer.

The No Electronic Theft Act 12 (NET Act ) of 1997 gave sharper teeth to the Copyright

Act’s previous criminal sanctions. The NET Act provides for criminal liability

for anyone infringing on a copyright by making a reproduction or distribution, including

by electronic means, of one or more copies of a copyrighted work with a total

retail value of more $1,000. Penalties include maximum fines of $250,000 and potential

incarceration. 13

Defense to Infringement Claims: Fair Use

Copyright owners do not enjoy unlimited rights to their work. Rather, the law balances

public interests with the property rights of copyright owners. The most common and powerful

defense is fair use. A landmark case on the fair use defense is the U.S. Supreme

Court’s decision in Universal Studios v. Sony, 14 where the Court ruled that Sony’s manufacturing

and selling of Betamax (the first videocassette tape recording format used in a

home videocassette recorder, or VCR, which was the precursor to digital video recording

technology) was not per se infringement. The Court made clear that Congress did

not give absolute control over all uses of copyrighted materials. Some uses were permitted

and because the device could still be used for “substantial non-infringing uses” the

Court held that Sony was not liable for contributory infringement. This fair use exception,

known as the Sony defense or the Betamax doctrine, was used, unsuccessfully, as the basis

for the defense in the A&M Records v. Napster case (discussed previously in this chapter)

and was reexamined by the U.S. Supreme Court in the MGM v. Grokster case (discussed

later in the chapter). 15 Fair use has also been extended to the use of a work for parody or

satirical purposes. 16

The term fair use has now been codified in the Copyright Act with four specific

(though nonexclusive) guideposts: the purpose and nature of the use, the nature of the

work itself, the amount and substantiality of the material used, and the effect of the use

on the market.

Purpose and Nature of the Use If the use of the work is to further education or scholarship,

courts are more likely to be sympathetic to an assertion of fair use. This does not

mean, however, that whole sections of textbooks or copied videotapes may be used with

impunity. Also, if the use is for some commercially profitable purpose, this will weigh

heavily against the infringer. This is not to say that commercial use is a complete bar to

assertion of fair use.

Nature of the Work If the copyrighted material has not yet been put into the public

domain, fair use is a difficult defense. This is not to say that a complete bar to nonpublic

works exists; newsworthy and factual information are still subject to fair use.

Amount and Substantiality Used Courts essentially analyze the totality of the circumstances

regarding the amount of copyrighted material used compared to the entire

work at issue. Short phrases and limited use of the copyrighted work are often protected

by the fair use defense.

Market Effect Courts are reluctant to allow fair use as a defense (even if the use fits the

other three categories) if a copyright holder demonstrates that the value of a copyrighted

work will be diminished by allowing its use. Fair use cannot impair the marketability or

economic success of the copyrighted work.