Offering P2P File-Sharing Software for Downloading May Be Copyright Inducement–David v. CBS Interactive

By Eric Goldman

David v. CBS Interactive Inc., CV 11-9437 DSF (C.D. Cal. July 13, 2012). The complaint.

When the Grokster Supreme Court opinion came out in 2005, there was a lot of confusion about the relationship between copyright “inducement” and contributory/vicarious infringement. Did the Supreme Court announce a new basis of derivative liability, or was inducement just a subset of contributory infringement? We haven’t gotten a crystal-clear answer over the years, but this case provides a resounding one: the court says the defendants in this case may be liable for inducing infringement even though they aren’t liable for contributory or vicarious infringement. Because this case demonstrates that inducement can completely bypass the existing derivative liability scheme, it’s troubling.

The entire lawsuit is crazy. CBS now owns Download.com, a CNET property. Download.com distributed P2P file-sharing software along with a lot of other software. Users who downloaded P2P file-sharing software then used it in unknown ways, but presumably some of them used it to infringe. This sets up a “tertiary liability” claim against Download.com, where the software users are (in theory) the infringers, the P2P software manufacturers are the secondary infringers, and Download.com is a tertiary infringer by supporting the secondary infringer who supports the direct infringer. In case you were wondering, as far as I can tell, Section 512 doesn’t apply because Download.com wasn’t hosting the software at a user’s direction (their editors chose which software to host) and Download.com wasn’t linking to third party websites to complete the downloads (the software was delivered off Download.com’s servers).

The court understood the problems with tertiary liability. Relying heavily on Perfect 10 v. Amazon, the court grants the motion to dismiss the contributory and vicarious copyright infringement claims.

On contributory infringement, the court says that Download.com lacked specific knowledge of users’ infringing acts. Download.com’s general knowledge that users could infringe with P2P file-sharing software wasn’t enough; and the fact that Download.com gave examples of software use to download copyright-protected files didn’t change this element (more on this in a bit). The court further rejects that Download.com made a material contribution to the infringements because Download.com didn’t offer any infringing files from its website, “Defendants could not take simple steps to stop the infringement” because stopping further software downloads wouldn’t cut off infringement by the software already downloaded, and “courts have yet to find contributory liability based on a tertiary actor’s conduct.”

On vicarious infringement, the court says:

Defendants control whether infringing third parties can access the P2P software through their site, but do not have the right to stop users from using the software to download copyrighted material illegally. Similar to the search engine in Perfect-10 Amazon, Defendants exercise control over their index and search results, curating the programs available through their services. This does not equate to control over direct infringement.

This result is consistent with courts’ rejection of other tertiary liability claims. See, e.g., Elsevier v. Chitika and UMG v. Veoh (the ruling involving Veoh’s investors).

OK, so far so good–no tertiary contributory or vicarious infringement. But then the court held that the plaintiffs nevertheless properly alleged an inducement claim based on the following allegations:

Plaintiffs allege that Defendants distributed several P2P programs, and reviewed the programs in relation to other P2P programs known for copyright infringement, such as Napster and Limewire….Plaintiffs also allege that Defendants posted videos to their websites demonstrating how to use specific P2P programs by searching for songs by copyrighted artists, and posted articles and how-to guides that included references to Napster, Limewire, and downloading copyrighted material.

Notice the inference here: Napster and LimeWire were “known for copyright infringement,” so merely comparing a software program to those “bad” actors is verboten? Seriously? The defendants point out the possible free speech implications, but the court doesn’t care:

Defendants here are alleged to have distributed specific P2P software, while simultaneously providing explicit commentary on that software’s effectiveness in infringing copyright. Such behavior moves beyond opinion into the realm of conduct and does not directly implicate any First Amendment issues.

The court then sends a strong–and harsh–message to Download.com that it may want to settle:

This is not a particularly close or challenging case for inducement based on the facts alleged. Here, Defendants are alleged to have taken the unusual and ill-advised steps of distributing software programs that are capable of widespread copyright infringement while simultaneously demonstrating how to infringe copyrights using that software and evaluating the various programs as to their effectiveness in copying copyrighted material….It would not be difficult to avoid liability by either (1) only providing editorial content without distributing the software or (2) distributing the software without demonstrating or advocating its use for violating copyrights. The Court is confident that most reasonable parties could find their way to accomplish their general goals without running afoul of inducement liability.

As far as I can recall, this is the first time an inducement claim has survived when the contributory and vicarious infringement claims were expressly rejected. Am I’m forgetting any case? I believe Arista v. LimeWire and Columbia v. Fung, two flagship inducement defense losses, never completely rejected the contributory or vicarious infringement claims even though their outcomes also turned on inducement.

This case illustrates an ongoing lesson that a defendant’s advertising/marketing can affect the copyright analysis. Inducement allegations often focus on marketing copy, so it’s essential that any player dealing with sensitive copyright issues run all marketing copy by competent counsel. This case further extends inducement to “editorial” content. As the court says, the principle is easy enough to comply with; indeed, I thought by now everyone knows that you should never provide examples demonstrating how to download files under copyright protection–just use public domain examples instead. If Download.com didn’t run a tight enough ship, this judge appears to be eager to throw Download.com under the bus.

I would be more troubled by this ruling if I thought it had any applicability outside the P2P file-sharing context, but I doubt it. Instead, I see this case as yet another P2P exceptionalism case, where copyright law goes into a weird distortion field any time it gets near P2P file-sharing. Basically, P2P file-sharing software has developed such a toxic brand that judges treat anyone who touches it as evil. That’s wrong as a matter of the facts–P2P file-sharing software can be used for both social beneficial and infringing activities–and should be wrong as a matter of law.

Still, any time inducement succeeds on a standalone basis, it just encourages more tertiary liability-style lawsuits both in and outside the P2P file-sharing software context. Just what we need.

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