ADVANCED COPYRIGHT ISSUES ON THE INTERNET David L. Hayes, Esq.* FENWICK & WEST LLP * Partner and past Chairman of the Intellectual Property Practice Group, Fenwick & West LLP, Mountain View & San Francisco, California. B.S.E.E. (Summa Cum Laude), Rice University (1978); M.S.E.E., Stanford University (1980); J.D. (Cum Laude), Harvard Law School (1984). An early version of this work appeared in David L. Hayes, “Advanced Copyright Issues on the Internet,” 7 Tex. Intell. Prop. L.J. 1 (Fall 1998). The author expresses appreciation to Matthew Becker for significant contributions to Section III.E (“Streaming and Downloading”). © 1997-2015 David L. Hayes. All Rights Reserved. (Updated as of February 2015) TABLE OF CONTENTS I.   INTRODUCTION 13   II.   RIGHTS IMPLICATED BY TRANSMISSION AND USE OF WORKS ON THE INTERNET 14   A.   The Right of Reproduction 14   1.   The Ubiquitous Nature of “Copies” on the Internet 15   2.   Whether Images of Data Stored in RAM Qualify as “Copies” 15   3.   The WIPO Treaties & the European Copyright Directive Are Unclear With Respect to Interim “Copies” 22   (a)   Introduction to the WIPO Treaties & the European Copyright Directive 22   (b)   The WIPO Copyright Treaty 24   (c)   The WIPO Performances and Phonograms Treaty 27   4.   The Requirement of Volition for Direct Liability 29   (a)   The Netcom Case 30   (b)   The MAPHIA Case 32   (c)   The Sabella Case 33   (d)   The Frena Case 34   (e)   The Webbworld Case 35   (f)   The Sanfilippo Case 36   (g)   The Free Republic Case 37   (h)   The MP3.com Cases 39   (i)   The CoStar Case 42   (j)   The Ellison Case 43   (k)   Perfect 10 v. Cybernet Ventures 43   (l)   Field v. Google 44   (m)   Parker v. Google 45   (n)   The Cablevision Case 45   (o)   Arista Records v. Usenet.com 48   (p)   Quantum Systems v. Sprint Nextel 49   (q)   Arista Records v. Myxer 50   (r)   Disney Enterprises v. Hotfile 51   (s)   Perfect 10 v. Megaupload 53   (t)   Wolk v. Kodak Imaging Network 54   (u)   Fox Broadcasting v. Dish Network 54   (v)   Perfect 10 v. Giganews 65   (w)   Capitol Records v. ReDigi 69   (x)   Hearst Stations v. Aereo 71   (y)   In Re Autohop Litigation (Dish Network v. American Broadcasting) 71   (z)   Oppenheimer v. Allvoices 73   (aa)   The Supreme Court’s Aereo Decision 73   (bb)  Gardner v. CafePress 73   - 2 - (cc)   Summary of Case Law 75   5.   The Reproduction Right Under WIPO Implementing Legislation 76   (a)   United States Legislation 76   (1)   The Digital Millennium Copyright Act 76   (2)   Legislation Not Adopted 76   (b)   The European Copyright Directive 78   6.   Peer-to-Peer File Sharing 83   (a)   BMG Music v. Gonzalez 83   (b)   Columbia Pictures v. Bunnell 84   (c)   Sony BMG Music Entertainment v. Tenenbaum 84   (d)   Capitol Records v. Thomas-Rasset 89   7.   The Immunity of the Audio Home Recording Act (AHRA) 92   (a)   The Diamond Multimedia Case 93   (b)   The Napster Cases 93   (c)   The Aimster Case 93   (d)   Atlantic Recording Corp. v. XM Satellite Radio 94   8.   Fair Use Cases 96   (a)   Fox News v. TVEyes 96   B.   The Right of Public Performance 99   1.   Isochronous Versus Asynchronous Transmissions 100   2.   The Meaning of “Publicly” 101   3.   Live Nation Motor Sports v. Davis 101   4.   United States v. ASCAP 102   5.   The Cablevision Case 103   6.   Ringtones – In re Application of Cellco Partnership 105   7.   Arista Records v. Myxer 107   8.   Warner Bros. v. WTV Systems 107   9.   Capitol Records v. MP3tunes 110   10.   American Broadcasting v. Aereo 110   11.   The BarryDriller Case 126   12.   Fox v. FilmOn 128   13.   Hearst Stations v. Aereo 130   14.   Community Television of Utah v. Aereo 132   15.   CBS v. FilmOn 134   16.   Fox Broadcasting v. Dish Network 135   C.   The Right of Public Display 137   1.   The Frena, Marobie-FL, Hardenburgh and Webbworld Cases 138   2.   Kelly v. Arriba Soft 139   3.   Ticketmaster v. Tickets.com 143   4.   Perfect 10 v. Google (aka Perfect 10 v. Amazon) 143   5.   Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey 155   6.   ICG-Internet Commerce Group, Inc. v. Wolf 157   7.   Perfect 10 v. Yandex 157   D.   The Right of Public Distribution 159   - 3 - 1.   The Requirement of a “Copy” 159   (a)   Cases Addressing Whether Mere Posting Is a Distribution 160   (1)   Cases Holding That Mere Posting Is a Distribution 160   (2)   Cases Holding That Mere Posting Is Not a Distribution 164   (3)   Cases Refusing To Decide the Issue 173   (b)   Other Cases Adjudicating the Scope of the Distribution Right 174   (1)   Hearst Stations v. Aereo 174   (2)   Fox Broadcasting v. Dish Network 175   2.   The Requirement of a “Public” Distribution 175   3.   The Requirement of a Rental or Transfer of Ownership 176   4.   The Right of Distribution Under the WIPO Treaties 177   5.   The Right of Distribution Under WIPO Implementing Legislation 178   (a)   United States Legislation 178   (b)   The European Copyright Directive 178   E.   The Right of Importation 178   F.   The New Right of Transmission and Access Under the WIPO Treaties 179   1.   The Right of Communication to the Public in the WIPO Copyright Treaty 180   2.   The Right of Making Available to the Public in the WIPO Performances and Phonograms Treaty 182   3.   The Right of Transmission and Access Under WIPO Implementing Legislation 184   (a)   United States Legislation 184   (b)   The European Copyright Directive 184   G.   New Rights and Provisions Under The Digital Millennium Copyright Act, the European Copyright Directive & Legislation That Did Not Pass 187   1.   Circumvention of Technological Measures and Rights Management Information Under the DMCA 187   (a)   Circumvention of Technological Protection Measures 188   (1)   Prohibition on Conduct 188   (i)   Exemptions Adopted by the Librarian of Congress 189   a.   Scope of the Network Connection Exemption – The TracFone Cases 199   (ii)   Epic Games v. Altmeyer 202   (iii)   Facebook v. Power Ventures 202   (iv)   Bose v. Zavala 203   (v)   MGE UPS Systems v. GE 203   (vi)   Granger v. One Call Lender Services 203   (vii)   Eyepartner v. Kor Media Group 204   (viii)   Granger v. Dethlefs 204   (2)   Prohibition on Devices 205   (i)   Sony Computer Entertainment America v. Gamemasters 206   (ii)   The DirecTV Cases 207   a.   DirecTV, Inc. v. Borow 207   b.   DirecTV, Inc. v. Carrillo 207   - 4 - (iii)   Sony Computer Entertainment America v. Divineo 207   (iv)   Ticketmaster L.L.C. v. RMG Technologies, Inc. 208   (v)   The Tracfone Cases 209   (vi)   Movida Communications, Inc. v. Haifa 210   (vii)   Microsoft Corp. v. EEE Business Inc. 210   (viii)   MDY Industries v. Blizzard Entertainment 210   (ix)   Coupons, Inc. v. Stottlemire 215   (x)   CoxCom, Inc. v. Chafee 216   (xi)   The DISH Network Cases 217   a.   Dish Network v. Sonicview 217   b.   Dish Network v. SatFTA 217   c.   Dish Network v. Dimarco 218   d.   Dish Network v. Sonicview 219   e.   Dish Network v. Alejandri 220   (xii)   Realnetworks v. DVD Copy Control Association. 220   (xiii)   Apple v. Psystar 222   (xiv)   Blizzard Entertainment v. Reeves 225   (xv)   The Craigslist Cases 225   a.   Craigslist v. Naturemarket 225   b.   Craigslist v. Mesiab 226   c.   Craigslist v. Hubert 226   d.   Craigslist v. Branley 227   e.   Craigslist v. Kerbel 227   (xvi)   Echostar v. Viewtech 227   (xvii)   Adobe Systems v. Feather 228   (3)   What Constitutes an Effective Technological Measure 228   (i)   Auto Inspection Services v. Flint Auto Auction 228   (ii)   Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey 229   (iii)   Apple v. Psystar 231   (4)   No Requirements With Respect to Design of a Product 232   (5)   Other Rights Not Affected 232   (6)   Exemption for Nonprofit Organizations and Law Enforcement 233   (7)   Reverse Engineering for Interoperability 233   (i)   Universal City Studios Inc. v. Reimerdes 238   (ii)   Storage Technology Corporation v. Custom Hardware Engineering & Consulting 239   (iii)   Chamberlain Group, Inc. v. Skylink Technologies, Inc. 239   (iv)   Lexmark International, Inc. v. Static Control Components, Inc. 240   (v)   Davidson Assocs. v. Internet Gateway 240   (vi)   Sony Computer Entertainment America v. Divineo 245   (8)   Encryption Research 245   (9)   Protection of Minors 245   (10)  Protection of Personally Identifying Information 245   - 5 - (11)  Security Testing 246   (12)  Copy Restrictions To Be Built Into VCRs and Camcorders 246   (13)  Other Cases Filed Under the Anti-Circumvention Provisions 247   (i)   Sony Computer Entertainment, Inc. v. Connectix, Inc. 247   (ii)   RealNetworks, Inc. v. Streambox Inc. 248   (iii)   Universal City Studios, Inc. v. Reimerdes 252   (iv)   A Related DVD Case Involving Trade Secret Claims – DVD Copy Control Association, Inc. v. McLaughlin (the Bunner case) 257   (v)   A Related DVD Case – Norwegian Prosecution of Jon Johansen 260   (vi)   Another Challenge to the DMCA – The Felten Case. 261   (vii)   Pearl Investments, LLC v. Standard I/O, Inc. 261   (viii)   321 Studios v. Metro Goldwyn Mayer Studios, Inc. 262   (ix)   I.M.S. Inquiry Management Systems, Ltd. v. Berkshire Information Systems, Inc. 264   (x)   Paramount Pictures Corp. v. 321 Studios. 264   (xi)   Macrovision Corp. v. 321 Studios 265   (xii)   Comcast of Illinois X v. Hightech Electronics, Inc. 265   (xiii)   Davidson & Assocs. v. Internet Gateway 266   (xiv)   Agfa Monotype Corp. v. Adobe Sys. 266   (xv)   Egilman v. Keller & Heckman 268   (xvi)   Macrovision v. Sima Products Corp. 269   (xvii)   Nordstrom Consulting, Inc. v. M&S Technologies, Inc. 270   (xviii)   R.C. Olmstead v. CU Interface 270   (xix)   Avaya v. Telecom Labs 271   (xx)   Actuate v. IBM 271   (xxi)   Navistar v. New Baltimore Garage 272   (xxii)   Dice Corp. v. Bold Technologies 273   (14)  Criminal Prosecutions Under the DMCA 273   (i)   The Sklyarov/Elcomsoft Case 273   (ii)   Other Criminal Prosecutions Under the DMCA 274   (iii)   The Requirement of Willfulness – Deliberate Ignorance 275   (15)  Other Uses of the Anti-Circumvention Provisions as a Sword 277   (i)   Lexmark International, Inc. v. Static Control Components, Inc. 278   (ii)   Chamberlain Group, Inc. v. Skylink Technologies, Inc. 284   (iii)   In re Certain Universal Transmitters for Garage Door Openers 290   (iv)   Storage Technology Corporation v. Custom Hardware Engineering & Consulting 290   (b)   Integrity of Copyright Management Information 295   (1)   Definition of CMI 295   (i)   Cases Requiring CMI to be Part of a Technological System or Process 296   - 6 - a.   The IQ Group, Ltd. v. Wiesner Publishing, LLC 296   b.   Textile Secrets Int’l, Inc. v. Ya-Ya Brand Inc. 298   c.   Jacobsen v. Katzer 299   d.   Silver v. Lavadeira 300   (ii)   Cases Not Requiring CMI to be Part of a Technological System or Process 301   a.   McClatchey v. The Associated Press 301   b.   Associated Press v. All Headline News Corp. 301   c.   Fox v. Hildebrand 302   d.   Faulkner Press v. Class Notes 302   e.   Agence France Presse v. Morel 303   f.   Murphy v. Millennium Radio 305   g.   William Wade Waller Co. v. Nexstar Broadcasting 306   (2)   Prohibitions on False CMI and Removal/Alteration of CMI 306   (i)   Cases re Removal or Alteration of CMI 307   a.   Kelly v. Arriba Soft Corp. 307   b.   Thron v. Harper Collins Publishers 308   c.   Gordon v. Nextel Communications 308   d.   Monotype Imaging, Inc. v. Bitstream Inc. 310   e.   Keogh v. Big Lots Corp. 311   f.   Goldman v. Healthcare Management Systems 312   g.   Thomas M Gilbert Architects v. Accent Builders 312   h.   Banxcorp v. Costco 312   i.   Agence France Presse v. Morel 313   j.   Scholz Design v. Custom Homes 314   k.   Personal Keepsakes v. PersonalizationMall.com 314   l.   Frost-Tsuji Architects v. Highway Inn 316   (ii)   Cases re False CMI 318   a.   Schiffer Publishing, Ltd. v. Chronicle Books, LLC 318   b.   Agence France Presse v. Morel 318   c.   Personal Keepsakes v. PersonalizationMall.com 319   (3)   Exceptions and Limitations 319   (c)   Remedies for Violations of Sections 1201 and 1202 320   (1)   Statutory Damages and Disgorgement of Profits for Violations of Section 1201 320   (i)   Sony Computer Entertainment America v. Filipiak 320   (ii)   Sony Computer Entertainment v. Divineo 321   (iii)   Stockwire Research Group v. Lebed 322   (iv)   MDY Industries, LLC v. Blizzard Entertainment, Inc. 322   (v)   Nexon America v. Kumar 322   (vi)   Point 4 Data Corp. v. Tri-State Surgical Supply 323   (2)   Statutory Damages and Disgorgement of Profits for Violations of Section 1202 326   (i)   McClatchey v. The Associated Press 326   (ii)   Goldman v. Healthcare Management Systems 327   - 7 - (iii)   Stockwire Research Group v. Lebed 327   (iv)   Stockart.com v. Engle 328   (v)   Granger v. One Call Lender Services 328   (vi)   Pacific Stock v. MacArthur & Co. 329   (vii)   Agence France Presse v. Morel 329   (3)   Jurisdictional Issues – Blueport Co. v. United States 330   (d)   Alternative Approaches to the DMCA That Did Not Pass 331   (e)   The Battle Between Content Owners and Technology Companies Over Built-In Technological Measures 331   2.   Anticircumvention Provisions Under the European Copyright Directive 332   3.   Anti-Circumvention Provisions in Other Foreign Countries 336   4.   Fair Use 336   (a)   United States Legislation That Did Not Pass 336   (b)   The European Copyright Directive 337   5.   Expansion of Library/Archives Exemptions 338   6.   Distance Education 338   7.   Copying in the Course of Computer Maintenance or Repair 339   8.   Other Provisions of the DMCA 339   (a)   Evaluation of Impact of Copyright Law on Electronic Commerce 339   (b)   Clarification of the Authority of the Copyright Office 340   (c)   Ephemeral Recordings 341   (d)   Statutory Licenses With Respect to Performances of Sound Recordings 341   (e)   Assumption of Contractual Obligations Related to Transfers of Rights in Motion Pictures 342   (f)   Protection of Certain Industrial Designs 342   (1)   Protection of Designs Embodied in Useful Articles 343   (2)   Originality 343   (3)   Exclusions from Protection 343   (4)   Adaptations of Unprotectable Elements 344   (5)   Duration of Protection and Design Notice 344   (6)   Rights of a Design Owner and Limitations 345   (7)   Standard of Infringement 345   (8)   Benefit of Foreign Filing Date 346   (9)   Vesting and Transfer of Ownership 346   (10)  Remedies of Injunctive Relief, Damages, Attorneys’ Fees and Destruction 346   (11)  Private Rights of Action Against Pirated Designs 347   (12)  Relation to Design Patents and Retroactive Effect 347   (g)   Limitation of Liability of Online Service Providers 347   (h)   Subpoenas to Service Providers 347   (1)   Jurisdictional Issues 348   (2)   RIAA v. Verizon Internet Services 348   (3)   The Charter Communications Litigation 351   (4)   Fatwallet v. Best Buy 352   - 8 - (5)   In re Subpoena to University of North Carolina at Chapel Hill 353   (6)   Subpoenas in John Doe Actions 353   (7)   Interscope Records v. Does 1-7 354   (8)   In re Maximized Living 354   9.   Proposed Limitation of Scope of Shrinkwrap and Clickwrap Licenses That Did Not Pass 354   III.   APPLICATION OF COPYRIGHT RIGHTS TO SPECIFIC ACTS ON THE INTERNET 356   A.   Browsing 356   B.   Caching 358   1.   Types of Caching 358   2.   The Detriments of Caching 359   3.   The Netcom Case and Application of the Fair Use Doctrine 361   (a)   Purpose and Character of the Use 361   (b)   Nature of the Copyrighted Work 362   (c)   Amount and Substantiality of the Portion Used 362   (d)   Effect of Use on the Potential Market 363   4.   Cases Adjudicating Caching Under the Fair Use and Implied License Doctrines 365   (a)   Field v. Google 365   (b)   Perfect 10 v. Google (aka Perfect 10 v. Amazon) 368   (c)   Ticketmaster L.L.C. v. RMG Technologies, Inc. 369   (d)   Parker v. Yahoo!, Inc. 370   5.   Other Caching Cases 371   (a)   Facebook v. Power Ventures 371   C.   Liability of Online Service Providers 372   1.   Direct Liability 372   (a)   Louis Vuitton v. Akanoc Solutions 373   (b)   Flava Works v. Gunter 374   (c)   UMG Recording v. Escape Media 375   2.   Contributory Liability 377   (a)   The Netcom Case 377   (b)   The MAPHIA Case 378   (c)   The Peer-to-Peer Filing Sharing Cases 379   (1)   The Napster Cases 379   (2)   The Scour.com Lawsuit 414   (3)   The Aimster/Madster Lawsuits 415   (4)   The StreamCast/Kazaa/Grokster Lawsuits 421   (5)   The Supreme Court’s Grokster Decision 428   (6)   The Grokster Decision on Remand 443   (i)   The Ruling on Liability 443   (ii)   The Permanent Injunction 447   (7)   The Audiogalaxy Case 450   - 9 - (8)   The Hummer Winblad/Bertelsmann Litigation 451   (9)   Arista Records v. Lime Group 454   (d)   The CoStar Case 454   (e)   Ellison v. Robertson 455   (f)   Perfect 10 v. Cybernet Ventures 456   (g)   Perfect 10 v. Visa International 457   (h)   Parker v. Google 459   (i)   MDY Industries v. Blizzard Entertainment 459   (j)   Louis Vuitton v. Akanoc Solutions, Inc. 462   (k)   Arista Records v. Usenet.com 465   (l)   Hermeris v. Brandenburg 465   (m)   Flava Works v. Gunter 467   (n)   Perfect 10 v. Giganews 469   (o)   Masck v. Sports Illustrated 475   (p)   UMG Recording v. Escape Media 476   (q)   Fox Broadcasting v. Dish Network 476   (r)   Summary 476   3.   Vicarious Liability 477   (a)   The Netcom Case and its Progeny 478   (b)   The Napster Cases 479   (c)   Ellison v. Robertson 479   (d)   Perfect 10 v. Cybernet Ventures 479   (e)   The Aimster/Madster Lawsuits 480   (f)   The StreamCast/Kazaa/Grokster Lawsuits 481   (g)   Perfect 10 v. Visa International 483   (h)   Parker v. Google 485   (i)   Louis Vuitton v. Akanoc Solutions 485   (j)   Live Face on Web v. Howard Stern Productions 486   (k)   Arista Records v. Usenet.com 486   (l)   Corbis v. Starr 487   (m)   Arista Records v. Lime Group 488   (n)   Hermeris v. Brandenburg 488   (o)   Luvdarts v. AT&T Mobility 488   (p)   Flava Works v. Gunter 489   (q)   Perfect 10 v. Giganews 490   (r)   Masck v. Sports Illustrated 490   (s)   Disney Enterprises v. Hotfile 490   (t)   UMG Recording v. Escape Media 491   (u)   Gardner v. CafePress 491   4.   Inducement Liability 491   (a)   The Supreme Court’s Grokster Decision 491   (b)   Arista Records v. Usenet.com 491   (c)   Columbia Pictures v. Fung 492   (d)   Arista Records v. Lime Group 498   (e)   Flava Works v. Gunter 503   - 10 -