MAROBIE-FL, INC. d/b/a GALACTIC SOFTWARE, Plaintiff, v.
NATIONAL ASSOCIATION OF FIRE EQUIPMENT DISTRIBUTORS AND
NORTHWEST NEXUS, INC., Defendants.
No. 96 C 2966
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION
983 F. Supp. 1167; 1997 U.S. Dist. LEXIS 18764; 45
U.S.P.Q.2D (BNA) 1236
November 13, 1997, Decided
November 18, 1997, Docketed
MEMORANDUM OPINION AND ORDER
Plaintiff Marobie-FL, Inc. d/b/a Galactic Software has filed a complaint
against defendants National Association of Fire Equipment [**2] Distributors (
"NAFED") and Northwest Nexus, Inc. ("Northwest") for copyright infringement
(Count I) and unfair competition (Count II). Northwest has filed a cross-claim
against NAFED seeking indemnification for any judgment or settlement in favor of
plaintiff and for any attorneys' fees, costs or other expenses it incurs.
Presently before the court are Northwest's motion for summary judgment against
plaintiff on Counts I and II and plaintiff's motion for summary judgment against
both defendants on Count I.
FACTUAL BACKGROUND
The following facts are undisputed except where otherwise noted. Between
September 1993 and March 1994, three volumes of software of "clip art" were
developed and released for use by people in the fire service industry. Computer
clip art consists of ready-made disks of black and white or color line art
drawings and graphics that a computer user can display on his computer and use
as artwork. Plaintiff asserts that it owns valid copyrights for each volume of
the clip art software.
The World Wide Web (the "Web") or the Internet is a network of interconnected
computers linked by communications lines that allows persons with the
appropriate software to [**3] access other computers with their local computer
through the use of a modem. Information on the Web is published in "Web Pages."
A Web Page is a collection of electronic documents which may include text,
graphics, sound, or video. A Web Page may enable the user to place information
on the Web Page or to receive information from the Web Page.
NAFED has a Web Page on the Web. Pursuant to a contract between NAFED and
Northwest, Northwest provided a host computer for NAFED's Web Page and the
access link or connection of NAFED's Web Page to Web users. Earl E. Robisheaux (
"Robisheaux"), the administrator of NAFED's Web Page, placed certain files on
the Northwest computer for NAFED's Web page. Once placed on Northwest's computer
for NAFED's Web page, the files were available to be downloaded by Web users.
Plaintiff claims these files contained its copyrighted clip art.
DISCUSSION
I. SUMMARY JUDGMENT STANDARDS
A movant is entitled to summary judgment under Rule 56 when the moving papers
and affidavits show there is no genuine issue of material fact and the movant is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, [**4] 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986);
Unterreiner v. Volkswagen of America, Inc., 8 F.3d 1206, 1209 (7th Cir. 1993).
Once a moving party has met its burden, the non-moving party must go beyond the
pleadings and set forth specific facts showing there is a genuine issue for
trial. Fed. R. Civ. P. 56(e); Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d
107, 110 (7th Cir. 1990). The court considers the record as a whole and draws
all reasonable inferences in the light most favorable to the party opposing the
motion. Fisher v. Transco Services-Milwaukee, Inc., 979 F.2d 1239, 1242 (7th
Cir. 1992).
A genuine issue of material fact exists when "the evidence is such that a
reasonable jury could return a verdict for the nonmoving party." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505
(1986); Stewart v. McGinnis, 5 F.3d 1031, 1033 (7th Cir. 1993). However, the
nonmoving party "must do more than simply show that there is some metaphysical
doubt as to the material facts." Matsushita Electrical Industrial Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).
"The mere existence of a scintilla [**5] of evidence in support of the
[nonmoving party's] position will be insufficient; [*1172] there must be
evidence on which the jury could reasonably find for the [nonmoving party]."
Anderson, 477 U.S. at 252.
II. COPYRIGHT INFRINGEMENT (COUNT I)
To establish a claim of copyright infringement, plaintiff must demonstrate
(1) ownership of a valid copyright and (2) "copying" n1 of original constituent
elements of the work. See Harris Custom Builders, Inc. v. Hoffmeyer, 92 F.3d
517, 519 (7th Cir. 1996), cert. denied, 136 L. Ed. 2d 842, 117 S. Ct. 956
(1997). Violation of any of the exclusive rights of the copyright owner
constitutes infringement. 17 U.S.C. § 501(a). These exclusive rights include the
right to reproduce the work, the right to prepare derivative works based on the
work, the right to distribute copies of the work to the public, and the right to
display the work publicly. 17 U.S.C. § 106(1)-(3) & (5).
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n1 In this context, "copying" is "shorthand for the infringing of any of the
copyright owner's five exclusive rights." S.O.S., Inc. v. Payday, Inc., 886 F.2d
1081, 1085 n.3 (9th Cir. 1989).
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Plaintiff claims that NAFED infringed its copyrights when NAFED's agent
Robisheaux, after obtaining files containing plaintiff's clip art from an
unknown source, copied the files onto the hard drive of his computer and then
copied the files onto the hard drive of Northwest's computer by transmitting
them over the Internet, thereby making the files available for distribution
through NAFED's Web Page. Plaintiff's allegations against Northwest are slightly
more complicated. When an Internet user requests a file that is posted on NAFED
's Web Page, Northwest's computer sends the information in the requested file to
the user's local computer or Internet address. This process is known as
"downloading" a file. The files on NAFED's Web Page are stored in the hard drive
of Northwest's computer. According to Northwest, when the information in a
requested file is sent to an Internet user, the information passes in electronic
form through the Random Access Memory ("RAM") of its computer. Plaintiff claims
that Northwest directly infringed its copyrights each time an Internet user
downloaded one or more of the files containing plaintiff's clip art because,
each time, Northwest's computer "copied" [**7] the files from its hard drive
to its RAM. Plaintiff also claims Northwest is liable for contributory
infringement. n2
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n2 Although plaintiff does not claim Northwest is vicariously liable for
copyright infringement, this issue will be addressed below because Northwest
seeks summary judgment in its favor on this theory of liability.
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A. INFRINGEMENT BY NAFED
Plaintiff seeks summary judgment against NAFED on Count I on a theory of
direct infringement. Direct infringement does not require any particular state
of mind. 17 U.S.C. § 501(a); Playboy Enterprises, Inc. v. Frena, 839 F. Supp.
1552, 1559 (M.D. Fla. 1993) ("Intent or knowledge is not an element of
infringement, and thus even an innocent infringer is liable for infringement").
Accordingly, to establish direct infringement by NAFED, plaintiff need only
demonstrate that it owns a valid copyright and that NAFED violated one or more
of its exclusive rights as the copyright owner. Harris Custom Builders, 92 F.3d
at 519. "A certificate of registration [**8] from the U.S. Register of
Copyrights constitutes prima facie evidence of the validity of a copyright."
Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 507 (7th Cir.
1994). Plaintiff has presented a copy of the copyright registration certificate
for each of the three volumes of its clip art software. Neither NAFED nor
Northwest disputes the validity of these copyrights. Rather, NAFED claims that
plaintiff has failed to show that it is a proper claimant.
The registration certificate for the first volume of clip art states that the
authors of the work are Arnold B. Green ("Green") and Aloysius J. Polaneczky (
"Polaneczky") and that the copyright claimant is Marobie-FL, Inc. -- the
plaintiff in this case. The registration certificate for the second volume of
clip art also states that authors of the work are Green and Polaneczky and that
plaintiff is the copyright claimant. The registration certificate for the third
volume of [*1173] clip art states that the author of the work is Green and
that plaintiff is the copyright claimant. Only "the legal or beneficial owner of
an exclusive right under a copyright is entitled . . . to institute an action
for any infringement of that [**9] particular right committed while he or she
is the owner of it." 17 U.S.C. § 501(b). A plaintiff in an infringement case who
is not the author of the copyrighted work must therefore "establish a
proprietary right through the chain of title in order to support a valid claim
to the copyright." Motta v. Samuel Weiser, Inc., 768 F.2d 481, 484 (1st Cir.
1985). NAFED claims that Marobie-PA, Inc. -- a Pennsylvania corporation that
preceded Marobie-FL, Inc. -- was the corporation in existence when the clip art
software was developed and the corporation that initially sold the clip art
software. Although all three registration certificates indicate that plaintiff
obtained ownership of the copyright from the authors by assignment, NAFED
complains that plaintiff has failed to submit any independent evidence of an
assignment to it from either the authors or Marobie-PA, Inc.
A plaintiff's chain of title from the author is presumed by reason of the
registration certificate where the plaintiff obtained an assignment of rights
prior to registration. 4 Melville B. Nimmer and David Nimmer, Nimmer on
Copyright, § 13.01[A]. In the instant case, plaintiff obtained an assignment of
rights from [**10] the authors prior to registration. Plaintiff's chain of
title may therefore be presumed. NAFED's allegations regarding Marobie-PA, Inc.
are irrelevant because there is no evidence that Marobie-PA, Inc. ever owned the
copyrights. Moreover, plaintiff has submitted with its reply brief documentation
of an assignment to it of the rights and interests in the clip art software. n3
Accordingly, plaintiff has demonstrated that it owns valid copyrights for the
three volumes of clip art software and that it is a proper claimant.
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n3 Plaintiff claims to have produced evidence of the assignments in
discovery.
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Plaintiff has also satisfied the second element of direct infringement:
violation of one or more of its exclusive rights as the copyright owner. NAFED
admits that Robisheaux obtained copies of files containing plaintiff's clip art
and placed the files onto the hard drive of his computer. NAFED also admits that
Robisheaux placed the files onto the NAFED Web Page by copying them onto to the
hard drive of Northwest's computer. [**11] These actions constitute a
violation of plaintiff's exclusive right to reproduce the clip art. See Sega
Enterprises Ltd. v. Maphia, 948 F. Supp. 923, 931-32 (N.D. Cal. 1996) (copies
made each time Sega computer program files uploaded to or downloaded from
computer bulletin board service); Playboy Enterprises, Inc. v. Frena, 839 F.
Supp. 1552, 1556 (M.D. Fla. 1993) (uploading files containing digitized copies
of plaintiff's copyrighted photographs onto computer bulletin board service
constituted unauthorized reproduction); 2 Melville B. Nimmer and David Nimmer,
Nimmer on Copyright, § 8.08[A][1] ("input of a work into a computer results in
the making of a copy, and hence . . . such unauthorized input infringes the
copyright owner's reproduction right").
The placement of the files containing the clip art on NAFED's Web Page also
violated plaintiff's exclusive right to publicly distribute the clip art. See
Playboy, 839 F. Supp. at 1556-57 (operator of computer bulletin board service
which included files containing digitized copies of plaintiffs copyrighted
photographs was liable for unauthorized public distribution). n4 NAFED denies
that anyone other than Robisheaux [**12] or Green actually downloaded and
received any files containing plaintiff's clip art from NAFED's Web Page. NAFED
admits, however, that once the files were uploaded, they were available for
downloading by Internet users and that the Northwest server transmitted the
files to some Internet users when requested. Thus, unless a genuine issue of
material fact exists with respect to an affirmative defense that would relieve
NAFED of liability, plaintiff is [*1174] entitled to summary judgment against
NAFED on Count I on a theory of direct infringement. NAFED raises three
affirmative defenses.
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n4 The operator in Playboy was also found liable for violating the plaintiff
's exclusive right to publicly display copies of its work. Id. Although
plaintiff does not allege NAFED violated its right to publicly display the clip
art, NAFED appears to liable for violating this right as well.
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The first affirmative defense raised by NAFED is the innocent infringer
defense. Although innocent intent does not relieve a defendant of liability
[**13] for infringement, any person who "innocently infringes a copyright, in
reliance upon an authorized copy . . . from which the copyright notice has been
omitted and which was publicly distributed by authority of the copyright owner .
. . incurs no liability for actual or statutory damages . . . for any infringing
acts committed before receiving actual notice that registration for the work has
been made . . . if such person proves that he or she was misled by the omission
of notice." 17 U.S.C. § 405(b). NAFED claims that it qualifies as an innocent
infringer because Robisheaux believed that the clip art was not copyrighted
because there was no copyright notice on the clip art itself or on the disks
containing the clip art files Robisheaux obtained. NAFED also argues that the
fact that Robisheaux obtained disks without a copyright notice that nevertheless
contained the clip art files raises an issue of fact as to whether plaintiff
sold some disks without a copyright notice.
NAFED cannot qualify as an innocent infringer as a matter of law because the
defense may be raised only when the infringer relied on an authorized copy that
omitted the copyright notice. In this case, Robisheaux relied [**14] on
unauthorized copies of plaintiff's clip art files. Although the individual clip
art images did not bear a copyright notice, notice should not be considered
omitted because, as plaintiff points out, the individual images are not the
subject of the copyright; the volumes of clip art were copyrighted as
compilations. It is undisputed that plaintiff's clip art software was
accompanied by a single copy licensing agreement that prohibited use on a
computer network and use on more than one computer or terminal at a time. It is
also undisputed that each individually packaged diskette sold by plaintiff
contained a label containing a copyright notice. n5
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n5 NAFED tries to limit its admission of this fact by stating that it "is
without knowledge or information to determine whether [the assertion] is true as
to 'every diskette.'" Plaintiff provides evidence to support its assertion that
every disk contained a copyright notice. Because NAFED fails to deny plaintiff's
assertion, it is deemed admitted pursuant to Local General Rule 12.
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The fact that the disks used by Robisheaux did not bear a copyright notice
does not indicate that plaintiff may have sold some disks without a copyright
notice as NAFED suggests. According to his own testimony, Robisheaux responded
to an e-mail from an unknown person who was offering to provide clip art to
anyone who wanted it. Pursuant to this unknown person's instructions, Robisheaux
mailed a number of blank disks to a location he no longer recalls. When the
disks were returned to him, they contained the clip art files. The disks
Robisheaux received did not bear a copyright notice because they were his own
blank disks. The absence of copyright notices, as well as the suspicious manner
in which the files were obtained, constitutes ample evidence that the copies
were unauthorized. NAFED fails to present any evidence to the contrary.
Accordingly, NAFED cannot qualify as an innocent infringer. See Act Young
Imports. Inc. v. B and E Sales Co., Inc., 667 F. Supp. 85, 87 (S.D.N.Y. 1986)
(plaintiff entitled to summary judgment on infringement claim because defendant
failed to refute plaintiff's evidence that copy relied upon was unauthorized).
The second affirmative defense raised [**16] by NAFED is estoppel. NAFED
argues that plaintiff should be estopped from seeking actual damages from NAFED
because plaintiff failed to affix copyright notices to any of the individual
clip art images thereby causing Robisheaux to rely on their absence. "Estoppel
applies only if the copyright owner is aware of the infringing conduct yet acts
in a way that induces the infringer reasonably to rely upon such action to his
detriment." Bourne Co. v. Hunter Country Club, Inc., 990 F.2d 934, 937 (7th Cir.
1993) (citing Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1228 (7th Cir.
1991)). NAFED fails to present any evidence that plaintiff was aware of NAFED's
alleged infringement prior to Green's discovery [*1175] of the clip art on
NAFED's Web Page in March 1996. NAFED also fails to point to any conduct by
plaintiff after Green's discovery that induced NAFED to reasonably rely to its
detriment. On the contrary, it is undisputed that plaintiff's counsel notified
Northwest and NAFED on or around April 18, 1996, that there were infringing
copies of its clip art files on NAFED's Web Page. Plaintiff's failure to place
copyright notices on the individual clip art images cannot be considered [**17]
because the decision not to put copyright notices on the individual images was
made when the software was first created and sold. Even if this decision were
considered, any reliance on the absence of copyright notices on the individual
images would be unreasonable in light of the suspicious nature of Robisheaux's
acquisition of the files and the fact that the volumes of clip art, not the
individual images, are the subject of the copyrights. Estoppel is, therefore,
inapplicable.
The third and final affirmative defense raised by NAFED is fair use. NAFED
argues that summary judgment in plaintiff's favor is inappropriate because the
issue of whether the fair use affirmative defense applies to NAFED's conduct
depends on disputed issues of fact. The doctrine of fair use was codified at 17
U.S.C. § 107, which provides:
the fair use of a copyrighted work . . . for purposes such as
criticism, comment, news reporting, teaching (including multiple
copies for classroom use), scholarship, or research, is not an
infringement of copyright. In determining whether the use made of a
work in any particular case is a fair use the factors to be considered
shall include -- (1) the purpose and [**18] character of the use,
including whether such use is of a commercial nature or is for
nonprofit educational purposes; (2) the nature of the copyrighted
work; (3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and (4) the effect of the
use upon the potential market for or value of the copyrighted work.
Whether a use qualifies as a permissible fair use under § 107 is a mixed
question of law and fact. Harper & Row Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 560, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985). Nevertheless, when
"there are no material factual disputes that impede [the] determination of fair
use," summary judgment is appropriate. Wright v. Warner Books, Inc., 953 F.2d
731, 740 (2d Cir. 1991).
The first factor -- "the purpose and character of the use, including whether
such use is of a commercial nature" -- weighs in favor of plaintiff. NAFED is a
non-profit organization and did not did not receive any compensation for placing
the clip art on its Web Page. Yet, its conduct may still be considered
commercial. See Television Digest, Inc. v. United States Telephone Association,
841 F. Supp. 5, 9-10 [**19] (D.D.C. 1993) (finding non-profit national trade
association's duplication and distribution of copyrighted newsletter was not
non-profit use). "The crux of the profit/nonprofit distinction is not whether
the sole motive of the use is monetary gain but whether the user stands to
profit from exploitation of the copyrighted material without paying the
customary price." Harper & Row, 471 U.S. at 562. It is undisputed that NAFED
obtained copies of plaintiff's clip art files for free although they ordinarily
cost money. It is undisputed that NAFED placed these files on its Web Page and
made them available free of cost to its members and other Internet users. It is
also undisputed that NAFED uses its Web Page for the commercial purposes of
promoting the association (whose members pay dues) and generating advertising
revenue. The clip art files enhanced the Web Page and furthered these commercial
purposes; they were clearly not placed on the Web Page for the purposes of
criticism, comment, news reporting, teaching, scholarship, or research. In fact,
according to Robisheaux's testimony, NAFED promoted its Web Page in its
publications and specifically referred to the "full color graphics, [**20]
photos and other appealing images" on the Web Page.
The second factor -- "the nature of the copyrighted work" -- also weighs in
favor of plaintiff. "This factor recognizes that some types of works are closer
to the core of intended copyright protection than others, [*1176] and as a
result the scope of the fair use exception is broader for informational works
than for creative works." Belmore v. City Pages, Inc., 880 F. Supp. 673, 678 (D.
Minn. 1995) (citing Harper & Row, 471 U.S. at 563-64). NAFED argues that the
fact Green used diagrams and images from outside sources to create the clip art
software makes the works "factual" as opposed to creative. The fact that Green
drew on outside sources when he created the clip art compilations does not make
the compilations factual or informational. On the contrary, the clip art
compilations are clearly creative works: it is undisputed n6 that Green: (1)
selected only some of the many images he gathered; (2) converted the images into
electronic format by "scanning" them; (3) named the scanned images; (4) edited
and modified each image, pixel by pixel, to achieve the appearance he desired;
(5) colored each of the images; and (6) organized the [**21] images by placing
the files into various directories.
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n6 Once again, NAFED attempts to avoid admitting various factual assertions
by plaintiff relating to Green's creation of the volumes of clip art by stating
it is "without sufficient knowledge or information to admit or deny" the
assertions. Because NAFED fails to deny these assertions, they are deemed
admitted pursuant to Local General Rule 12.
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The third factor -- "the amount and substantiality of the portion used in
relation to the copyrighted work as a whole" -- also weighs in favor of
plaintiff. NAFED argues that it copied less than all of plaintiff's copyrighted
work because there were only three volumes of plaintiff's clip art on NAFED's
Web Page, even though five volumes of such clip art exist. NAFED's argument is
without merit. Each volume of clip art was copyrighted as an independent work.
This court has already determined that NAFED copied the first three volumes in
their entirety.
The fourth factor -- "the effect of the use upon the potential market [**22]
for or value of the copyrighted work" -- weighs in favor of plaintiff as well.
"The focus of this factor is whether the defendant's new work will be a 'market
substitute' for the copyrighted material." Belmore, 880 F. Supp. 673 at 679
(citing Harper & Row, 471 U.S. 539 at 563-64). Because this court determined
that NAFED's use of plaintiff's clip art was commercial, an adverse effect or
the likelihood of an adverse effect on the potential market for the copyrighted
work may be presumed. Sony Corp. of America, Inc. v. Universal City Studios,
Inc., 464 U.S. 417, 451, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984).
Thus, a consideration of each of the four factors enumerated in § 107
indicates NAFED's use of plaintiff's clip art was not a fair use. NAFED does not
present any other facts that might negate the evidence already considered. n7
Accordingly, the court finds as a matter of law that NAFED's conduct did not
constitute a fair use under § 107. Because there are no genuine issues of
material fact with respect to any of the affirmative defenses raised by NAFED,
plaintiff's motion for summary judgment against NAFED on Count I is granted.
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n7 Although NAFED asserts its status as an innocent infringer should be
considered, the court has already determined that NAFED's infringement was not
entirely innocent.
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B. INFRINGEMENT BY NORTHWEST
Plaintiff seeks summary judgment against Northwest on Count I on theories of
direct infringement and contributory infringement. Northwest seeks summary
judgment against plaintiff on Count I on theories of direct infringement,
contributory infringement and vicarious liability.
1. Direct Infringement
Northwest argues it cannot be held liable for the direct infringement of
plaintiff's copyrights for two reasons. First, Northwest argues that the
transmission of the information in a requested file in electronic form through
the RAM of its computer does not constitute "copying" as a matter of law. Under
the Copyright Act (the "Act") "copies" are defined as "material objects . . . in
which a work is fixed by any method now known or later developed, and from which
the work [*1177] can be perceived, reproduced, or otherwise communicated,
either directly or with the aid of a machine or device." 17 U.S.C. § 101. "A
work is 'fixed' in a tangible medium of expression when its embodiment in a copy
. . . is sufficiently permanent or stable to permit it to be perceived,
reproduced, or otherwise communicated for a period of more than transitory
duration." Id. [**24] Northwest claims it made no "copy" because the
information from plaintiff's clip art files was never "fixed" in its computer's
RAM.
The court finds Northwest's argument unpersuasive in light of several cases
that discuss the nature of information in RAM. In MAI Systems Corp. v. Peak
Computer, Inc., 991 F.2d 511, 518-19 (9th Cir. 1993), the Court of Appeals for
the Ninth Circuit held that a "copy" for the purposes of the Act is made when a
computer program is transferred from a computer storage device such as Read Only
Memory ("ROM") n8 to RAM. The MAI court found that the copyrighted software
program at issue was "fixed" in RAM because the computer user was able to view a
representation of the program's information, including the system error log,
after loading the program into the computer's RAM. Id. at 518. In Religious
Technology Center v. Netcom On-Line Communication Services., Inc., 907 F. Supp.
1361 (N.D. Cal. 1995), the district court applied the reasoning of MAI to a
scenario analogous to that presented in the instant case. In Religious
Technology Center, plaintiffs brought an infringement action against the
operator of a computer bulletin board service [**25] (the "operator") and an
Internet access provider (the "provider") because an individual bulletin board
subscriber (the "subscriber") was posting portions of their copyrighted work
onto his local bulletin board where it could be read and from which it was
distributed to other bulletin boards. The subscriber posted his messages in the
following manner. First, the subscriber connected to the operator's bulletin
board using a telephone and modem. The subscriber then transmitted his messages
to the operator's computer. According to a prearranged pattern established by
the provider's software, the subscriber's initial act of posting a message
resulted in the automatic copying of the subscriber's message from the operator
's computer onto the provider's computer and onto other computers in the
community of electronic bulletin board services, commonly known as the Usenet.
Relying on MAI, the court in Religious Technology Center determined that "copies
" within the meaning of the Act were created on both the operator's computer and
the provider's computer in the course of transmission. Id. at 1368.
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n8 External and internal hard disks are also storage devices. See Advanced
Computer Services of Michigan, Inc. v. MAI Systems Corp., 845 F. Supp. 356, 362
(E.D. Va. 1994). Relying on MAI Systems Corp. v. Peak Computer, Inc., the court
in Advanced Computer Services held that a computer program, "in the form of
electrical impulses in RAM, is adequately 'fixed' to qualify as a 'copy' for
purposes of the Act" because "once a software program is loaded into a computer
's RAM, useful representations of the program's information or intelligence can
be displayed on a video screen or printed out on paper." Id. at 363.
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In the instant case, plaintiff claims its copyrighted information was
transmitted from the hard drive of Northwest's computer to Internet users.
Northwest does not claim that the copy that existed in its hard drive was the
copy sent to an Internet user. On the contrary, Northwest itself asserts that
its computer "automatically serves up a copy of the requested file" when a file
is asked for by an Internet user. It is that copy in the RAM of Northwest's
computer that is transmitted to the Internet user. Northwest argues that this
copy is not a "copy" under the Act because it is not "fixed." Northwest argues
that it is not "fixed" because the information is transmitted "through" RAM and
over the Internet at high speed in the electronic form of bytes. According to
Northwest, this process of duplication and transmission happens so quickly that
"typically only a portion of a file is in RAM at any one time."
"A work is 'fixed' in a tangible medium of expression when its embodiment in
a copy . . . is sufficiently permanent or stable to permit it to be perceived,
reproduced, or otherwise communicated for a period of more than transitory
duration." 17 U.S.C. § 101. Yet, a "copy" under the [**27] Act need not be
potentially perceptible with the naked eye. [*1178] On the contrary, a "copy"
is a "material object[] . . . in which a work is fixed by any method now known
or later developed, and from which the work can be perceived, reproduced, or
otherwise communicated, either directly or with the aid of a machine or device."
17 U.S.C. § 101. In the instant case, the copy created by Northwest's computer
can be perceived with the aid of a machine or device, namely, the Internet user
's computer. Although the information in a file is transmitted in pieces,
Northwest itself states that "the smaller units are reunited, and the files
arrive at the requester's Internet address," and that the Internet user may then
view the information by "loading the graphic images into some computer program
capable of displaying the formatted image."
Northwest argues that the copying element was found satisfied in Religious
Technology Center because the electronic data at issue remained on the computer
for days and in MAI because the electronic data at issue remained on the
computer long enough to check an error log by viewing it on the computer screen.
In the instant case, the information does [**28] not remain in the RAM of
Northwest's computer, but is immediately transmitted over the Internet.
Nevertheless, Northwest's argument fails. The fact that a copy is transmitted
after it is created, or even as it is created, does not change the fact that
once an Internet user receives a copy, it is capable of being perceived and thus
"fixed." Accordingly, the court rejects Northwest's argument that its computer
did not "copy" plaintiff's files when they were requested by Internet users.
Northwest's second argument why it cannot be held liable for the direct
infringement of plaintiff's copyrights is based on Religious Technology Center.
In that case, the court held that although "copies" were made, the operator of
the bulletin board service and the Internet access provider were not liable for
direct infringement. Religious Technology Center, 907 F. Supp. at 1369-73.
Unlike the defendants in MAI, the court reasoned, neither the operator nor the
provider initiated the copying; their systems were merely used to create a copy
by a third party. Id. at 1369-71. Similarly, the court found that only the
subscriber should be liable for causing the display or distribution [**29] of
the copyrighted work because the actions of the operator and the provider were
"automatic and indiscriminate." Id. at 1371-72. Thus, Northwest argues it cannot
be held liable for direct infringement because if any copying, distribution or
display of plaintiff's work occurred, it was caused not by Northwest, but by
Internet users.
Northwest's second argument is persuasive. Plaintiff argues that Northwest,
unlike the Internet access provider in Religious Technology Center, serves as
more than just a gateway to the Internet because Northwest actually stores the
files in NAFED's Web Page in its hard drive. Although plaintiff correctly points
out that Northwest provides a service somewhat broader than the service provided
by the Internet access provider in Religious Technology Center, the court
nevertheless finds that Northwest only provided the means to copy, distribute or
display plaintiff's works, much like the owner of a public copying machine used
by a third party to copy protected material. Like a copying machine owner,
Northwest did not actually engage in any of these activities itself.
Accordingly, Northwest may not be held liable for direct infringement.
2. [**30] Contributory Infringement
Although Northwest did not directly infringe plaintiff's works, it may be
liable for contributory infringement. Liability for contributory infringement
will be imposed when a defendant, with knowledge of the infringing activity,
induces, causes or materially contributes to the infringing conduct of another.
Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996)
(quoting Gershwin Publishing Corp., 443 F.2d 1159 at 1162). Participation by the
defendant must be substantial. Apple Computer, Inc. v. Microsoft Corp., 821 F.
Supp. 616, 625 (N.D. Cal. 1993), aff'd, 35 F.3d 1435 (9th Cir. 1994).
Based on the evidence presented, it is unclear whether Northwest knew that
any material on NAFED's Web Page was copyrighted and, if it did know, when it
knew. The degree to which Northwest monitored, [*1179] controlled, or had the
ability to monitor or control the contents of NAFED's Web Page is also unclear.
These disputed issues of material fact preclude summary judgment for either
party on this theory of liability.
3. Vicarious Liability
Plaintiff does not claim, either in its complaint or briefs, that Northwest
is vicariously liable for [**31] copyright infringement. Nevertheless, the
court will briefly address this issue since Northwest seeks summary judgement in
its favor on this theory of liability. "[A] defendant is vicariously liable for
copyright infringement if it has 'the right and ability to supervise the
infringing activity and also has a direct financial interest in such activities.
'" Hard Rock Cafe Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143,
1150 (7th Cir. 1992) (quoting Gershwin Publishing Corp. v. Columbia Artists
Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)). As mentioned above, the
degree to which Northwest monitored, controlled, or had the ability to monitor
or control the contents of NAFED's Web Page is unclear. However, it is
undisputed that NAFED paid Northwest a one-time set-up fee of $ 20 and that
since that time NAFED has paid Northwest a flat fee of $ 67.50 each quarter. It
is also undisputed that the fee Northwest receives has never changed based on
how many people visit NAFED's Web Page or what is accessed. In other words,
NAFED's infringement did not financially benefit Northwest. Accordingly,
Northwest cannot be held vicariously liable for NAFED's infringement. [**32]
See Religious Technology Center v. Netcom On-Line Communication Services., Inc.,
907 F. Supp. 1361, 1376-77 (N.D. Cal. 1995).
In sum, Northwest may not be held liable for infringement on theories of
direct infringement or vicarious liability. Disputed issues of material fact,
however, preclude summary judgment in any party's favor on a theory of
contributory infringement. Accordingly, plaintiff's motion for summary judgment
against Northwest on Count I is denied, and Northwest's motion for summary
judgment against plaintiff on Count I is granted with respect to direct
infringement or vicarious liability, but denied with respect to contributory
infringement.
C. WILLFULNESS
In several of its briefs, plaintiff argues that NAFED and Northwest willfully
infringed its copyrights. In the Seventh Circuit, a finding of willfulness is
justified if the infringer knows that its conduct is an infringement or if the
infringer has acted in reckless disregard of the copyright owner's right.
Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 511-12 (7th
Cir. 1994) (quoting Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1020
(7th Cir. 1991)). A finding of willfulness, [**33] however, is also a factual
determination. International Korwin Corp. v. Kowalczyk, 855 F.2d 375, 380 (7th
Cir. 1988). Robisheaux claims he did not know that the clip art files he placed
on NAFED's Web Page were copyrighted. Thus, a finding of willfulness against
NAFED requires a determination of Robisheaux's credibility. Summary judgment on
the issue is, therefore, inappropriate. Lipton v. Nature Co., 71 F.3d 464, 472
(2d Cir. 1995). The disputed issues of material fact that exist regarding
Northwest's knowledge and Northwest's ability to monitor or control the contents
of NAFED's Web Page also preclude a summary finding of willfulness against
Northwest.
II. UNFAIR COMPETITION (COUNT II)
Northwest seeks summary judgment against plaintiff on Count II on the grounds
that plaintiff's common law claim for unfair competition is preempted by § 301
of the Act. Although NAFED has not formally filed a motion seeking summary
judgment against plaintiff on Count II, it too argues that plaintiff's unfair
competition claim is preempted by § 301 of the Act. Plaintiff responded to NAFED
's argument by referring the court to its response to Northwest's argument. In
light of the [**34] similarity of the arguments presented by Northwest and
NAFED on this issue, the court will treat NAFED as having joined in Northwest's
motion for summary judgment on Count II.
[*1180] 17 U.S.C. § 301 provides in relevant part:
On and after January 1, 1978, all legal or equitable rights that are
equivalent to any of the exclusive rights within the general scope of
copyright as specified by section 106 in works of authorship that are
fixed in a tangible medium of expression and come within the subject
matter of copyright as specified by sections 102 and 103, whether
created before or after that date and whether published or
unpublished, are governed exclusively by this title. Thereafter, no
person is entitled to any such right or equivalent right in any such
work under the common law or statutes of any State.
17 U.S.C. § 301(a). Thus, two conditions must be met for a right under state
law to be preempted: (1) the work in which the right is asserted must be fixed
in tangible form and come within the subject matter of copyright and (2) the
right must be equivalent to any of the rights specified in § 106. Baltimore
Orioles, Inc. v. Major League Baseball Players Association, [**35] 805 F.2d
663, 674 (7th Cir. 1986) (citations omitted). Plaintiff does not dispute that
its clip art software is fixed in tangible form and comes within the subject
matter of copyright. Rather, plaintiff argues that the right it asserts is
broader than the rights specified in § 106.
"A right under state law is 'equivalent' to one of the rights within the
general scope of copyright if it is violated by the exercise of any of the
rights set forth in § 106." Id. at 676. In other words, "a right is equivalent
to one of the rights comprised by a copyright if it 'is infringed by the mere
act of reproduction, performance, distribution or display.'" Id. at 677 (quoting
Melville B. Nimmer and David Nimmer, Nimmer on Copyright, § 1.01[B][1]). To
avoid preemption, the state claim must incorporate an "extra element" that
"changes 'the nature of the action so that it is qualitatively different from a
copyright infringement claim.'" Computer Associates International, Inc. v.
Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992) (quoting Mayer v. Josiah Wedgwood
& Sons, Ltd., 601 F. Supp. 1523, 1535 (S.D.N.Y. 1985)). Plaintiff argues that
the inclusion and promotion of its clip [**36] art on NAFED's Web Page deceived
the public as to the origin, affiliation and sponsorship of its clip art.
Plaintiff therefore asserts that its unfair competition claim includes the extra
element of public deception. In support of its position, plaintiff cites Nash v.
CBS, Inc., 704 F. Supp. 823 (N.D. Ill. 1989) (finding claim under the Illinois
Uniform Deceptive Trade Practices Act ("UDTPA") (which codified the common law
of unfair competition) was not preempted under § 301 because the UDTPA's goal of
consumer protection was distinct from the Act's goal of securing authors'
intellectual property rights), aff'd, 899 F.2d 1537 (7th Cir. 1990).
Plaintiff's argument is unpersuasive. Plaintiff's copyright infringement
claim and unfair competition claim are based on the same conduct: the
unauthorized copying and distribution of its clip art on NAFED's Web Page. There
are no new allegations of likelihood of consumer confusion in Count II. In fact,
there are no new allegations at all in Count II. The two paragraphs that make up
Count II in its entirety read as follows: "[Plaintiff] realleges and
incorporates herein paragraphs 1 through 32 of this Complaint. By virtue of the
aforementioned [**37] acts, Defendants have engaged in unfair competition with
[plaintiff]."
In any event, the inherent misrepresentation that accompanies the
unauthorized copying and distribution of another's copyrighted work is not
enough. Courts have refused to conclude that an allegation of misrepresentation
based solely on an alleged infringer's act of displaying, selling, or promoting
the infringing work as his or her own creation, is sufficient to remove a state
based claim from the preemptive reach of 17 U.S.C. § 301(a)." Fasa Corporation
v. Playmates Toys, Inc., 869 F. Supp. 1334, 1361-62 (N.D. Ill. 1994). "The fact
that the defendants were selling the allegedly infringing works under their own
names -- and, hence, implicitly misrepresenting the origin of the works or
causing confusion in the consuming public -- did not alter the analysis . . . .
this fact was not regarded as so qualitatively altering the nature of the
underlying infringement as to take the state based claims out of the preemptive
scope of copyright." Id. at 1363.
[*1181] Generally, unfair competition claims premised on "passing off" are
not preempted by the Act. Id. at 1362. Plaintiff, however, has not alleged
"passing [**38] off" which "involves 'the selling of a good or service of one's
own creation under the name or mark of another.'" Web Printing Controls Co. Inc.
v. Oxy-Dry Corp., 906 F.2d 1202, 1203, n.1 (7th Cir. 1990) (quoting Smith v.
Montoro, 648 F.2d 602, 604 (9th Cir. 1981)). The conduct plaintiff alleges is
more like "reverse passing off" which "occurs 'when a person removes or
obliterates the original trademark, without authorization, before reselling
goods produced by someone else,'" Web Printing, 906 F.2d at 1203, n.1 (quoting
Smith, 648 F.2d 602 at 605), or when someone simply "sells plaintiff's products
as its own." Waldman Publishing Corp. v. Landoll, Inc., 848 F. Supp. 498, 500-01
(S.D.N.Y. 1994), vacated in part on other grounds, 43 F.3d 775 (2d Cir. 1994).
Claims premised on reverse passing off are preempted under the Act. See Fasa
Corporation v. Playmates Toys, Inc., 869 F. Supp. 1334, 1361-64 (N.D. Ill.
1994). The court in Nash -- the sole case upon which plaintiff relies -- did not
adequately consider the distinction between passing off and reverse passing off.
Thus, the two conditions for preemption are satisfied, and plaintiff's common
law unfair competition [**39] claim is preempted under § 301 of the Act.
Accordingly, Northwest and NAFED's motion for summary judgment against plaintiff
on Count II is granted.
CONCLUSION
Plaintiff's motion for summary judgment against NAFED on Count I is granted.
Plaintiff's motion for summary judgment against Northwest on Count I is denied.
Northwest's motion for summary judgment against plaintiff on Count I is granted
with respect to direct infringement and vicarious liability, but denied with
respect to contributory infringement. Northwest and NAFED's motion for summary
judgment against plaintiff on Count II is granted. This matter is set for a
report on status December 4, 1997, at 9:00 a.m., at which time the parties are
directed to present a definitive discovery plan.
ENTER:
November 13, 1997
Robert W. Gettleman
United States District Judge