Internet Piracy, and the U.S. Approach to Addressing Online Copyright Violations Donald E. Townsend, Jr. First Secretary for Intellectual PropertyU.S. Patent and Trademark Office US Embassy Moscow

1. Internet Piracy, and the U.S.
Approach to Addressing Online
Copyright Violations
Donald E. Townsend, Jr.
First Secretary for Intellectual Property
U.S. Patent and Trademark Office
US Embassy Moscow

2. History of ISP Liability
• The rise of "file sharing" sites in the U.S. began in the 1990's, with the most
notable example being "Napster". These sites enabled users to actively
infringe copyrights, with the sites profiting via advertising revenue. These
sites greatly concerned copyright holders, and led to ensuing litigation
against numerous sites. However, prior to 1998, there was legal uncertainty
in the U.S. concerning when an internet service provider (ISP) was liable for
copyright infringing activity.
• This uncertainty led to the need for uniform rules that applied to ISPs that
did not know or have reason to know of the infringing activity of their
subscribers and that do not financially benefit from this infringement. ISP's
themselves asked for legislation to address their liability in case such as
Playboy vs. Frena (1993) and RTC vs. Netcom (1995). Accordingly, Section
512 of the U.S. Copyright Law was enacted, as part of the historic DMCA
(Digital Millennium Copyright Act).

3. Digital Millennium Copyright Act
(DMCA)
Enacted in 1998, the DMCA provides limitations to liability (safe harbors) of
ISP's, while providing rightsholder with reasonable procedures for stopping
online infringement as it is occurring. These safe harbors include:
• 512(a): transitory digital network communications
• 512(b): system caching
• 512(c): information residing on systems or networks at direction of users
• 512(d): information location tools
Importantly, under 512 ( c ), the ISP is not free of liability when:
• ISP has actual knowledge that the material is infringing, or is or should be
aware of facts from which infringement is apparent.
– Once ISP obtains this knowledge, it must remove or disable access to the
material.
• ISP is receive direct financial benefit
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4. Direct Liability vs. Secondary
Liability
There are two bases for copyright infringement liability under U.S. law:
• Direct Liability
- (liability for doing an infringing act), and
• Secondary Liability
- (liability for authorizing or somehow contributing to an infringing act).
Internet Service Providers (ISPs) may be direct infringers (e.g., the service
Napster which hosted the computer servers that contained the index of
links to infringing reproductions of the works).
ISPs may also be indirect infringers, in which they are held secondarily
liable for the infringing acts of users of their networks or services, as
illustrated by various file-sharing cases in the U.S such as the well-known
Grokster case.
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5. The Grokster Litigation
• In MGM v. Grokster, lower courts held that distributors of
the Morpheus and Grokster software could not be held
secondarily liable
– Vicarious liability could not attach because the
distributors did not control the computers housing their
systems’ search-index servers
– Contributory liability could not attach because Sony
precluded liability based intent if a device was capable
of substantial noninfringing use
• The Supreme Court reversed, unanimously: It held that
even if devices can pass the Sony test, their distributors
will be secondarily liable if they “intentionally induce”
infringing use of those devices

6. The Grokster Inducement Analysis
• The Supreme Court found “unmistakable” and
“unequivocal” evidence that the distributors of Grokster and
Morpheus software intended to induce infringement
• The Court inferred intent from evidence in the record; three
types of evidence of intent were “particularly notable”
– First, they provided former Napster users with software
that “functions as Napster did”
– Second, they had not used “filtering tools or other
mechanisms to diminish the infringing activity using their
software”
– Third, “the commercial sense of their enterprise turns on
high-volume use, which the record shows is infringing”

7. The Grokster Inducement Analysis
• Grokster held that when a distributor intends to induce
infringing use of a device, it can be secondarily liable for all
infringing acts resulting from “the distribution of a tool
intended for infringing use”
• Grokster also held that consideration of the plaintiffs’
motion for summary judgment in the lower court would be
in order
• Grokster thus reflects a very strong, unanimous
condemnation of the defendants’ conduct

8. Secondary Liability after Grokster
• Intent is always relevant: Secondary liability will be
imposed against anyone who deliberately encourages or
causes copyright infringement
• Secondary liability rules must evolve as technology evolves

9. Thank You!
Questions?
Donald E. Townsend, Jr.
First Secretary for Intellectual Property
U.S. Patent and Trademark Office
US Embassy Moscow
Donald.Townsend@trade.g
ov

10. Thank You!
Questions?
Donald E. Townsend, Jr.
First Secretary for Intellectual Property
U.S. Patent and Trademark Office
US Embassy Moscow
Donald.Townsend@trade.g
ov