June 03, 2005
Judge Patel: Maintaining An Index of Downloadable Files is Not "Distributing" the Files
By John Ottaviani
Although there was some confusion over Judge Patel's May 11th ruling in the Napster investor litigation, her May 31 ruling leaves no doubt that the Section 106(3) distribution right is not infringed merely by maintaining an index of downloadable files.
After Napster was shut down for infringing the record companies' copyrights, the plaintiffs (I'll continue to refer to them here as "the record companies") have continued to pursue the entities that invested in Napster before it ceased operations. The record companies have alleged that, by investing in Napster and assuming control of the operation of Napster file-sharing network, the investors contributorily and vicariously infringed the record companies' copyrights.
In order to find the investors liable for contributory or vicarious infringement, the record companies first have to prove that there was an act of direct copyright infringement. The record companies have offered three theories of direct infringement as a basis for their secondary claims against the investors: (1) that Napster's users who uploaded and made MP3 files available on the Napster network engaged in the unauthorized distribution of the record companies' copyrighted works in violation of Section 106(3) of the Copyright Act; (2) the downloading of MP3 files by Napster users infringe the record companies' exclusive rights to reproduce their copyrighted works under Section 106(1) of the Copyright Act; and (3) that Napster itself violated the record companies' exclusive distribution rights under Section 106(3) by indexing MP3 files that its users posted on the Napster network.
MAY 31 DECISION
Judge Patel shot down the third theory. The investors pointed to a long line of decsions and treatises by copyright professors that state that the "distribution" of a copyrighted work requires the transfer of an identifiable copy of that work, and argued that the record companies had failed to show any proof of actual dissemination of a copyrighted work.
The record companies relied primarily on the Fourth Circuit's 1997 decision in Hotaling, pointing to language that a copyrighted work is "distributed" within the meaning of Section 106(3) whenever it is "made available" to the public without authorization of copyright owner. Judge Patel distinguished the situation in Hotaling from that in Napster, by point out that there was uncontroverted evidence in Hotaling that the defendants had made actual unauthorized copies of the copyrighted materials available to borrowers at its library. Unlike that case, Napster did not have unauthorized works in its "collection". The infringing works never resided on the Napster system. While she probably did not need to go any further, Judge Patel went on to find that, to the extent the Hotaling decision suggests that a mere offer to distribute a copyrighted work gives rise to liability under Section 106(3), that view is inconsistent with the text and legislative history of the Copyright Act. She also reaffirmed her May 17 ruling that the recently passed ART Act did not change the analysis.
Because there was some evidence that at least some of the record companies' copyrighted worked were uploaded and downloaded by Napster users, and genuine disputes over those facts, Judge Patel refused to dismiss the record companies' claims that the investors were liable for secondary copyright infringement under the "uploading" and "downloading" theories.
Eric may disagree with me, but this seems to be the right result, based on the language of Section 106(3). Maintaining an index, without more, is not "distributing."
The investors are not out of the woods, yet, however. The case will proceed with further discovery on the "uploading" and "downloading" theories, and, no doubt, will either settle or result in future decisions. The Supreme Court's anticipated decision in the Grokster case also may bear on the liability of the investors.
Posted by John Ottaviani at June 3, 2005 11:55 AM | Copyright