THE COMPUTER LAW REPORT


November 6, 1995 [#13]

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JUMPING THE GUN ON SYSOP LIABILITY

[This is the third of a series of articles discussing recommendations made in the report issued September 5, 1995 by President Clinton's Information Infrastructure Task Force. The report is entitled "Intellectual Property and the National Information Infrastructure (NII)," and is commonly referred to as the White Paper.]

The White Paper makes various recommendations for legislative changes which it hopes will grease the onramps to the Information Highway. Besides these overt recommendations, the White Paper also expends considerable effort to analyze the current state of the law.

This analysis of the current state of the law, though presented as objective, often represents the Administration's desired interpretation of legal issues that are as yet unsettled in the courts. In presenting this analysis, the Administration hopes that its interpretations will be adopted by the courts, and affect the outcomes of some cases currently pending.

One area where the White Paper's analysis rises to the level of "recommendation" relates to whether a sysop or online provider should be held liable for unknowingly facilitating the distribution of materials that infringe someone's copyright. This infringment occurs when users of the system upload and download material without permission from the copyright holder.

Where such infringement is occurring, the online operator, theoretically, could be found liable for direct infringement, vicarious infringement, or contributory infringement. Or, the online operator could also be found not liable at all.

Direct infringement is where the defendant directly causes the infringement to occur. The court in Playboy Enterprises Inc. v. Frena found the BBS operator to be directly liable for the display and distribution of Playboy photographs, which were uploaded and downloaded by subscribers, without the knowledge of the operator. If direct infringement is found, then there is strict liability. That means that there will be liability even where the "infringer-operator" had no knowledge that the infringement was occurring.

Vicarious infringement would occur where someone has the "right and ability" to supervise the infringing action of another, even though the supervisor has no knowledge of the infringement. Accordingly, an operator could be found to be vicariously liable if a court determines that it has the right and ability to supervise the activities of the users.

Contributory infringement may be found when one who, with knowledge of the infringing activity, contributes to the infringing conduct of another. An online operator could be found to be a contributory infringer based on the provision of online services and equipment facilitating the direct infringement of the users.

Although the Playboy case found the operator to be directly liable for the infringement, the type of liability, or whether there would even be liability, is currently an unsettled and unclear issue. However, the White Paper gives the impression that this issue is settled and that operators will be directly infringing when subscribers upload and download copyrighted material without their knowledge. The White Paper states affirmatively that "[a]ltering the standards of liability for infringement [for online operators] would be a significant departure from current copyright principles and law and would result in a substantial derogation of the right of copyright owners."

Taking the position that operators will be held to be direct infringers, the White Paper dismisses the following arguments in favor holding operators to a different standard than others: (1) the volume of material on a service provider's system is too large to monitor or screen; (2) even if a service provider is willing and able to monitor the material on its system, it cannot always identify infringing material; (3) failure to shield online service providers will impair communication and availability of information; (4) exposure to liability for infringement will drive service providers out of business, causing the NII to fail; and (5) the law should impose liability only on those who assume responsibility for the activities their subscribers engage in on their system, and not on operators who allow the system to operate without content supervision.

The position that the White Paper promotes, that operators should be strictly liable as direct infringers for the uploading and downloading of copyrighted material, as mentioned, is currently unsettled. By assuming this position, the Administration has been viewed as seeking to influence the following currently pending cases to adopt this position. In one (Sega Enterprises Ltd. v. MAPHIA), the court issued a preliminary injunction against a BBS for allowing and facilitating the unauthorized uploading of Sega's copyrighted video games. In a second case (Frank Music Corp. v. CompuServe), CompuServe is being sued for allegedly allowing the unauthorized uploading and downloading of musical recordings. In third case (Religious Technology Center v. NETCOM), the Church of Scientology is suing a BBS operator and an Internet access provide for allowing the unauthorized uploading of copyrighted materials.

In situations where an operator is truly innocent regarding infringement resulting from the uploading and downloading of copyrighted material, law makers have to determine who should bear the responsibility for and loss of this infringement: the copyright holders, the online operators or the users committing the infringement. The position that the White Paper promotes sides with the copyright holder in the sense that it places the burden on those other than the copyright holder to expend time and effort to protect the copyright holder's interests.


Last updated 95/11/08