This primer will discuss three forms of copyright liability under § 106 of the Copyright Act: direct, contributory and vicarious.

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Overview

Here’s a summary of each form.

Direct liability arises when defendant intentionally violates one or more of a copyright owner’s exclusive rights. A copyright owner’s “exclusive rights” includes the right to “reproduce the copyrighted work in copies,” 17 U.S.C. 106(1); “prepare derivative works based upon the copyrighted work,” 17 U.S.C. 106(2); “distribute copies … of the copyrighted work to the public,” 17 U.S.C. 106(3); and “display the copy-righted work publicly,” 17 U.S.C. 106(5).

The copyright law does not expressly provide for contributory and vicarious liability. But these two forms of secondary liability have grown up in the law. Contributory infringement is founded on the tort concept of enterprise liability; and vicarious liability is grounded on the tort concept of respondeat superior.

A defendant will be contributorily liable when it induces or encourages infringing acts by a direct infringer and provides it with the means to infringe. Contributory infringers are thus a direct infringer’s “accomplice” or “aider and abettor.” See Flava Works, Inc. v. Gunter, 689 F.3d 754, 755 (7th Cir. 2012).

Vicarious liability arises where defendant profits from direct infringement while declining to exercise a right to stop or limit it. The vicarious infringer need not have engaged in the infringing activity or even know about it to incur secondary liability.

Contributory and vicarious liability are sometimes confused or conflated. See Epikhin v. Game Insight North America, 2015 US Dist. Lexis 66188, *8 (N.D. Cal. May 20, 2015) (Vicarious infringement claim dismissed where plaintiff simply repeated verbatim his contributory infringement allegations). But as is evident from the above, they are distinguishable.

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), introduced a third form of secondary liability (not discussed here) for inducement of infringement. There the Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Id. at 936-37.

I. Direct Infringement

A. Direct Infringement Is a Strict Liability Offense

Direct liability is strict liability. See CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544, 549 (4th Cir. 2004) (“[T]he Copyright Act does not require that the infringer know that he is infringing or that his conduct amount to a willful violation of the copyright owner’s rights.”); EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 840 F.3d 69, 89 (2d Cir. 2016) (“Copyright infringement is a strict liability offense in the sense that a plaintiff is not required to prove unlawful intent or culpability[.]” ). As a result, innocence is no defense. See Lipton v. Nature Co., 71 F.3d 464, 471 (2d Cir. 1995) (“‘[I]nnocent infringement,’ … does not absolve a defendant of liability for copyright infringement.”).

1. Need for Volitional Conduct

To trigger direct liability, defendant must have engaged in what the courts refer to (but strangely never explicitly define) as “volitional conduct.” Here is an attempt at a definition. “In the context of direct copyright infringement, volition ‘is choosing to engage in an act that causes infringement.’” BWP Media USA Inc. v. Polyvore, Inc., 922 F.3d 42, 52 (2d Cir. 2019). In other words, “‘to establish direct liability under … the Act, something more must be shown than mere ownership of a machine used by others to make illegal copies. There must be actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner.'” Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 130 (2d Cir. 2008).

In the online context an internet service provider (ISP) “acts volitionally when it creates a program designed to infringe copyrighted material and selects the copyrighted material that it copies.” Polyvore, 922 F.3d at 50.

But an ISP will not have engaged in volitional conduct sufficient to trigger liability if it operates an automated, user-controlled website to which third parties transmit infringing copyrighted material onto the ISP’s servers by automated feeds, absent proof that the ISP screened, monitored and even selected the material. See VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 732 (9th Cir. 2019) (“activities …. such as automatic copying, storage, and transmission of copyrighted materials, when instigated by others, do not render an [Internet service provider] strictly liable for copyright infringement.” 

See also Bus. Casual Holdings, LLC v. YouTube, LLC, 2022 U.S. Dist. LEXIS 50166 *7-8 (S.D.N.Y. Mar. 21, 2022) (“In the context of online platforms that host content uploaded or transmitted by third-party users, a platform cannot be liable for direct copyright infringement based on the allegedly infringing activities of its users unless the platform had some ‘deliberate role’ in the alleged infringement, such that the platform morphed from a ‘passive provider of a space in which infringing activities happened to occur to an active participant in the process of copyright infringement.’”). Also see Religious Tech. Ctr. v. Netcom On-Line Commc’n Servs., Inc., 907 F. Supp. 1361, 1370 (N.D. Cal. 1995) (“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.”).

But courts are willing to find volitional conduct if defendant contracted with or directed others to infringe. Thus in EMI Christian Music Grp., Inc., the Second Circuit held that the presence of a human hand was irrelevant where defendant had directed its automated system to copy the art on an album cover any time a user uploaded the album’s music. 840 F.3d at 86. See also Cooley v. Penguin Group (USA), Inc., 31 F.Supp.3d 599 (S.D. N.Y. 2014), holding a photographer liable for direct infringement because he contracted with stock photo agencies to upload infringing images. Id. at 609-10; Capitol Records, LLC v. ReDigi Inc., 934 F. Supp.2d 640, 657 (S.D.N.Y. 2013) (Volitional conduct found where defendant programmed its software to choose copyrighted content which defendant then unlawfully reproduced)

These decisions make sense. So long as there is sufficient human engagement closely related to the infringement, liability should be imposed to further the creative incentive underlying copyright law. See Paul Goldstein, Goldstein on Copyright §7.0.2.3 (3rd Edition, 2022-1 Supp.) (“Goldstein“).

An ISP will also lose its safe harbor immunity from liability under 17 U.S.C. § 512(c)(1) of the Digital Millennium Copyright Act if it receives specific knowledge that the material on its site is infringing and fails to immediately take the material down.

II. SECONDARY LIABILITY

a. Importance of Secondary Liability

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Copyright holders often rely on contributory and vicarious liability because of the difficulty in holding direct infringers accountable. Direct infringers may set up shop in foreign jurisdictions out the reach of our copyright laws. Other times, direct infringers may be anonymous, operating in secret or lack the financial ability to pay a judgment. Further, where music is downloaded by hundreds of downstream infringers or a newsworthy photo goes viral, plaintiff may find it impossible or impracticable to join a multitude of infringers in one or several litigations. Fortunately, plaintiff may target the secondary infringer responsible for the downstream infringement in an action in which the direct infringers do not also have to be joined.

B. Contributory Liability

Contributory infringement stems from the notion that one who directly contributes to another’s infringement should be held accountable. See Demetriades v. Kaufmann, 690 F. Supp. 289, 292 (S.D.N.Y. 1988). Contributory liability will be established where an act of infringement took place and the contributory infringer : (a) knew, or in some circuits, had reason to know of the infringement; and (b) induced, caused or materially contributed to it.

See Gershwin Publishing Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162, (2d Cir. 1971). Thus, “knowledge and participation [are] the touchstones of contributory infringement.” Demetriades, 690 F. Supp. at 293. Innocence of infringement is a defense. See Livnat v. Lavi, 46 U.S.P.Q. 2d 1300, 1303 (S.D.N.Y. 1998) (“One who furnishes a copyrighted work to another but is innocent of any knowledge of the other party’s intended illegitimate use will not be liable” as a contributory infringer). Further, for a contributory claim to have accrued, the direct infringement must have occurred. See Goldberg v. Cameron, 2009 U.S. Dist. LEXIS 59633, at *16, * (N.D. Cal. July 10, 2009).

1. The Knowledge Requirement

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A defendant’s “[g]eneralized knowledge … about the possibility of infringement” by another entity is not enough. Luvdarts, 710 F.3d at 1072. In the 9th Circuit actual knowledge is required, especially in the online context. Perfect 10, Inc. v. Giganews, Inc., 847 F3d. 657 (9th Cir. 2017), stated, a “‘computer system operator’ is liable under a material contribution theory of infringement “if it has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works.” Id. at 671 (emphasis in original). See also A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) (“[A]bsent any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material.” Id. at  1021.

Plaintiff can more easily establish knowledge the closer defendant’s relationship is with the infringing activity. See Leonard v. Stemtech Int’l Inc., 834 F.3d 376, 387 (3d Cir. 2016) (“Stemtech itself created the [infringing] materials containing Leonard’s images, provided the materials to its distributors, and required the distributors to use the materials. Thus, Stemtech knew of its distributors’ infringing activities and plainly took ‘steps that [we]re substantially certain to result in such direct infringement.’”). 

Courts have found the knowledge requirement satisfied where:

2. Willful Blindness

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Willful blindness of specific facts of infringement, not just to infringement generally, will establish the knowledge element needed for contributory liability. But as tempting as it may be to allege willful blindness it is not easy to establish. See In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003). “Allegations of ‘general awareness’ of infringement are not enough.” Harrington v. Pinterest, Inc., 2021 WL 4033031, at *5 (N.D. Cal. Sep. 3, 2021). Also not enough is indifference to whether copyright infringement might be occurring. Luvdarts, 710 F.3d at 1073. Instead, “[a] willfully blind defendant is one who took deliberate actions to avoid confirming suspicions of criminality.” United States v. Heredia, 483 F.3d 913, 918, n.4 (9th  Cir.2007) (en banc, emphasis in original) (distinguishing willful blindness from recklessness or negligence).

To establish willful blindness as a proxy for actual knowledge plaintiff must show that defendant subjectively believed that infringement was likely occurring and intentionally avoided learning about it. Luvdarts, 710 F.3d at 1073. Few plaintiffs have climbed this mountain. Further, a defendant’s take-down procedure dooms a finding of willful blindness. Wallster, Inc. v. Redbubble, Inc., 2022 U.S. Dist. LEXIS 198181, *9 (C.D. Cal. Oct. 21, 2022).

3. The Required Conduct

Two types of conduct by defendant may result in contributory liability: (i) contributing labor or services that assists or encourages the infringement; and (ii) providing machinery or goods that provides the means to infringe. “In both cases, contribution of labor or services or of equipment or materials an element of inducement will also be present, with the contributory act effectively inducing the infringement as well as aiding it,” Goldstein, §8.1 (2020-1 Supplement).

4. The Contribution Must Be Substantial

Further, the amount of the contribution, although not objectively quantifiable, must “substantially” contribute to the direct infringement; and the assistance must bear a direct relationship to the infringer’s acts. Demetriades, 690 F. Supp. at 294 (No contributory infringement where defendant’s calls to the infringers were not for the purpose of providing any “direct assistance in expediting” the infringement; nor did defendants provide the “means or facilities to infringe”).

See also, Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 907 F. Supp. 1361, 1375 (N.D. Cal. 1995) (“[P]articipation [by defendant] must be substantial.”); A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001) (“‘Without the support services defendant provides, Napster users could not find and download the [infringing] music they want with the ease of which defendant boasts.’”). See also Clarida, Copyright Law Deskbook, Ch. 5.IVA. 2 (2nd Edition).

A court will find no contributory infringement where defendant’s conduct did not materially contribute to the direct infringement. For example, in Perfect 10, Inc. v. Visa Int’l Serv., Ass’n, 494 F.3d 788 (9th Cir. 2007), the Ninth Circuit held that credit card companies were not contributorily liable for processing credit card payments to internet sites that continued to infringe plaintiff’s copyrights, even after the companies had received repeated notices of infringement. The court stated that “Perfect 10 has not alleged that any infringing material passes over Defendants’ payment networks or through their payment processing systems, or that Defendants’ systems are used to alter or display the infringing images.” Id. at 796.

Judge Kozinski strongly dissented, stating, “material assistance does not depend on physical contact with the infringing activity. If you lend money to a drug dealer knowing he will use it to finance a drug deal, you materially assist the transaction, even if you never see the drugs. Or, if you knowingly drive a principal to the scene of the crime, you provide material assistance, even if nothing happens during the ride.” Id. at 815.

5. Where the Product Is Capable of Substantial Non-Infringing Uses

Further, as a result of the holding in Sony, courts will likely find no contributory infringement when a product is capable of substantial non-infringing uses and its makers have not attempted to encourage or promote infringing uses of the product.

In that case, the movie studios sought to impose contributory liability on Sony because owners of its Betamax videocassette recorder (“VCR”) used it to illegally copy copyrighted programs; and Sony had constructive knowledge of that activity.

In finding no liability, the Court drew an analogy to the staple article of commerce doctrine from patent law. (A staple article in commerce simply refers to a product or component sold in commerce.) This doctrine precludes contributory patent infringement based on “the sale of a staple article or commodity of commerce suitable for noninfringing use.” Id. at 440. Applying that staple-article doctrine to copyright, the Court held, “the sale of copying equipment … does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.” Id. at 442.

The Court found the VCR met that standard because most of its owners used the VCR principally for noncommercial time-shifting of television programs (recording a TV program for later personal viewing), a use either authorized by the copyright holder or qualified as a fair use. Id. at 443-447. But the Supreme Court in Grokster, later clarified that Sony’s staple-article rule will not preclude liability “where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions [by defendant] directed to promoting infringement.” 545 U.S. at 935.

C. Vicarious Liability

Vicarious copyright infringement places responsibility on those who have profited from the infringement and had the ability to control it. See Napster, 239 F.3d at 1022. Vicarious infringement is also an exception to the corporate veil. In most cases, the veil shields private assets of corporate officers, directors and investors from liability incurred by the corporation. But vicarious infringement pierces that veil to impose personal liability.  

1. Criteria For Vicarious Infringement

Defendant will be liable for vicarious infringement if it has the “right and ability to supervise the infringing activity” and “a direct financial interest in the infringing activity.” Id. at 1022. See C.S.B. Commodities, Inc. v. Urban Trend (HK) Ltd., 626 F. Supp. 2d 837, 858-59 (N.D. Ill. 2009) (Corporate officers liable as vicarious infringers for acts of their corporation where they personally participated and supervised the infringing conduct). Those elements, control and financial interest, are independent requirements; “each must be demonstrated to render the defendant vicariously liable.” See 3 Nimmer on Copyright § 12.04 (2021)

2. Neither Knowledge Nor Intent is Required

Vicarious liability (like direct liability) is a strict liability offense. Therefore, defendant does not have to know of the infringing conduct or have the intent to facilitate it to be guilty of this form of liability. See Playboy Enters., Inc. v. Webbworld, Inc., 991 F. Supp. 543, 553-54 (N.D. Tex. 1997). See also Star Pac. Corp. v. Star Atl. Corp., 574 Fed. Appx. 225, 231 (3d Cir. 2014) (“We agree with the District Court that Lu’s assertions that he did not have knowledge of SAC’s infringing activities are unavailing. On its own, the defendant’s testimony is insufficient to create a genuine issue of material fact in the face of the abundant objective evidence of Lu’s position of authority within SAC.”); Peer Intl. Corp. v. Luna Records, Inc., 887 F. Supp. 560, 565 (S.D.N.Y. 1995) (Defendants “are not shielded from liability even though they have no actual knowledge of the infringement”).

Defendant cannot defend against this form of liability by arguing it was unable to stop the direct infringement. Warner Bros. v. Lobster Pot, Inc., 582 F. Supp. 478, 483 (N.D. Ohio 1984).   

3. Actual Control

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Courts, in determining whether defendant had sufficient control over the infringing conduct, look at three elements: whether defendant exercised control; had the legal right to control or the ability to control.

Occasionally, courts will find actual control over the infringing conduct. See Venus Fashions, Inc. v. ContextLogic, Inc., 2017 U.S. Dist. LEXIS 155748, *73 (M.D. Fla. Jan.17, 2017) (Defendant “developed and is capable of implementing a ‘fingerprinting’ system to detect infringement”). See also Klein & Heuchan, Inc. v. CoStar Realty Info., Inc., 707 F. Supp. 2d 1287, 1297 (M.D. Fla. 2010). Control was demonstrated by defendant providing the infringing independent contractor with “office space,” holding “weekly sales meetings” with the contractor and overseeing the contractor’s real estate “listings.”

But where actual control was lacking, as it often is, courts have found no vicarious liability. See Zillow, dismissing a vicarious infringement claim because defendant lacked the practical ability to police its users’ infringing conduct on defendant’s website. 918 F.3d at 746. Zillow added that the “failure to change [defendant’s] operations to avoid assisting [users] to distribute . . . infringing content . . . is not the same as declining to exercise a right and ability to make [third parties] stop their direct infringement.” Id. See also Luvdarts, rejecting a vicarious claim where defendant had “no way” to supervise their networks to deter copyright infringement. 710 F3d at 1071.

4. Ability to Control

Vicarious liability will likely be found where plaintiff had the ability to supervise or control the direct infringer’s conduct. See Venus Fashions, Inc. v. ContextLogic, Inc., 2017 U.S. Dist. LEXIS 155748, *73 (M.D. Fla. Jan.17, 2017) (Defendant “developed and is capable of implementing a ‘fingerprinting’ system to detect infringement”). See also Webbworld, , 991 F. Supp. at 554 (Ownership of 100% of the business gave the shareholder the right and ability to supervise even though he declined to do so).

The right to supervise or control is not limited to traditional agency relationships such as master-servant or employer-employee. Courts have imposed vicarious infringement liability on a person or entity “even in the absence of an employer-employee relationship . . . if [the person or entity] has the right and ability to supervise the infringing activity.” Gershwin, 443 F.2d at 1162; Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 308 (2d Cir. 1963).

See Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 157 (S.D.N.Y. 2009), defendant’s ability to “to terminate, suspend or restrict users’ subscriptions [to defendant’s site], thereby limiting their access to uploading or downloading content to or from [d]efendant’s servers” was sufficient to show control. See also Motorvations Inc. v. M&M Inc., 59 U.S.P.Q.2d 1847, 1851 (D. Utah 2001) (“A defendant cannot escape vicarious liability simply by neglecting what would otherwise be its ability to supervise infringing conduct by a third party.”).

But simply being a corporate director was not enough to demonstrate the ability to control in Burdick v. Koerner, 988 F. Supp. 1206 (E.D. Wis. 1998). Instead, Burdick found only those directors “sufficiently involved in the day-to-day operation of the company” had the right and ability to control the actions of the corporation. Id. at 1210.

5. Direct Financial Interest in the Infringing Activity

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A direct financial interest will be found where there is a causal relationship between the infringing activity and the financial benefit defendant receives. See Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 398, 435 (S.D.N.Y. 2011).

A court will find a benefit where defendant’s revenue grows as infringement increases. See Arista Records v. Usenet, 633 F. Supp. 2d at 156 (“Here, it is apparent from the record that Defendants earn a direct financial benefit from infringement. First, Defendants’ revenues increased depending on their users’ volume of downloads; thus, the greater the volume of downloads (the majority of which has been shown to be infringing), the greater the Defendants’ income.”).

6. The Financial Benefit May Be Indirect

But the financial benefit need not be tied directly to the sale of infringing goods. For example, in Fonovisa, defendant operated a flea market where vendors sold infringing sound recordings. Although defendant received no portion of the revenue from the counterfeits, the Ninth Circuit held defendant nevertheless reaped a substantial financial benefit “from admission fees, concession stand sales and parking fees, all of which flow directly from customers who want to buy the counterfeit recordings at bargain basement prices.” Fonovisa, 76 F.3d at 263. The court concluded that the financial benefit resulted because the infringing material acts as a “‘draw’” for customers. Id. at  263-64.

Similarly in Napster, 239 F.3d at 1023, a financial benefit was found in the absence of defendant’s direct receipt of revenue from the infringing uploading and downloading of sound recordings on its platform. Instead, it was enough that the increased “quality and quantity of available music” acted “as a ‘draw’ for customers,” increasing Napster’s “userbase” and therefore its “future revenue.” Id.

See also Rams v. Def Jam Recordings, Inc., 202 F. Supp. 3d 376 (S.D.N.Y. 2016), where the court held plaintiffs sufficiently alleged that a recording artist benefited financially from the use of a copyrighted photograph on various marketing and advertising materials, including the album cover of a hit single and its remixes. The court found this conduct played “a role in the song’s, and therefore, [defendant’s] marketability, reaping him direct financial benefits in the form of album sales.” Id. at 385.

7. The Financial Benefit Need Not Be Substantial

Although there must be a financial benefit, it does not have to be “substantial.” See, e.g., Ellison v. Robertson, 357 F.3d 1072, 1079 (9th Cir. 2004); Stemtech, 834 F.3d at 389; Parker v. Google, Inc., 242 Fed. Appx. 833, 837 (3d Cir. 2007). “In fact, to constitute a direct financial benefit, the ‘draw’ of infringement need not be the primary, or even a significant, draw — rather, it need only be ‘a’ draw.” Arista Records v. Usenet, 633 F. Supp. 2d at 157.

8. Claims for Contributory and Vicarious Liability May Overlap

Defendant may be simultaneously liable for contributory and vicarious infringement. Here’s an example. If an ad agency has the ability to control its client’s selection of media, participates in that selection and has an economic stake in the resulting advertising promotion, the agency may be contributorily and vicariously liable. See Gershwin Publg. Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1161-1163 (2d Cir. 1971) (defendant, an artist manager and concert promoter, held liable as vicarious and contributory infringer).

III. How Many Damage Awards Where There Is Joint and Several Liability?

If there are multiple contributory or vicarious liable defendants downstream can plaintiff obtain multiple statutory damage awards against each defendant? The answer to a plaintiff’s dismay is “no.”

§ 504(c)(1) provides that a copyright owner may “recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally.”

Although this section is not a model of clarity, courts it has been construed to allow for “an award” no matter how many infringers are jointly and severally liable. See Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 313 (S.D.N.Y. 2011). There defendants, a music file sharing service, induced some 9,500 users to directly infringe plaintiff’s copyrights in its post-1972 recordings. Plaintiff sought a  separate award of statutory damages with respect to each infringer arguing that defendant was jointly and severally liable with each. The court refused. It stated the Copyright Act intended to treat joint infringers the “same way” as individually liable infringers. “For any individually liable infringer, a plaintiff is entitled to one statutory damage award per work. For any two or more jointly and severally liable infringers, a plaintiff is entitled to one statutory damage award per work.” Id. at 316. Similarly, in Agence Fr. Presse v. Morel, 934 F. Supp 2d 547 (S.D.N.Y. 2013), plaintiff was not permitted to “multiply” its damages based on the number of end-point infringers with whom defendant Agence France and Getty were jointly and severally liable. Id. at  572.

CONCLUSION

In sum, in a global marketplace made possible by digital technology direct infringers may be beyond the reach of copyright holders. In that case copyright holders may need to rely on secondary liability to protect their works. Hopefully this primer, will aid in understanding the elements required to establish that liability.  

Footnotes

[1] § 2016-2023 Andrew Berger