• The recording companies primarily rely upon the decision of the Court of Appeals for the Fourth Circuit in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997). Hotaling involved a library that made several unlawful copies of the plaintiff’s copyrighted work and sent them to its branch offices around the country. The public was unable to check out the unlawful copies because they were in microfiche form, but could use them within the libraries. The library did not keep records on the public’s use of noncirculating microfiche, so the plaintiff was unable to prove that anyone had actually used the unlawful copies.

The defendant library therefore argued that, at most, the plaintiff had proven only an offer to distribute the copyrighted material, not actual distribution. The court disagreed. It acknowledged that ordinarily “a party must show that an unlawful copy was disseminated ‘to the public.’”

F.2d at 434; 2 NIMMER, supra, § 8.11[A] (1996)).

In the library’s case, however, proof of specific instances of use by the public was “impossible to produce because the infringing library ha[d] not kept records of public use.” Id. at 204. If the court were to require proof of specific instances of public use in that situation, “a copyright holder would be prejudiced by a library that does not keep records of public use, and the library would unjustly profit by its own omission.” Id. at 203. The court thought it important that the

plaintiff had already proven that the library made unlawful copies and placed them in its branch libraries. It deemed the library to have distributed those unlawful copies when it “list[ed] the work in its index or catalog system, and [made] the work available to the borrowing or browsing public.”

Our circuit has not applied Hotaling to impose directly liability on persons making unauthorized copies of copyrighted works available to the public through online filesharing systems.

• The recording companies point to language in A&M Records, Inc. v. Napster, Inc., where the court stated that “Napster users who upload file names to the search index for others to copy violate plaintiffs’ distribution rights.”

The court cited no precedent and offered no analysis in explanation of that statement. Its review of the issue was cursory because neither party disputed that Napster users were using the system to disseminate actual, unauthorized copies of copyrighted works to the public. Id. The central issue in the case was secondary liability for the creators of the Napster file-sharing system.

• In a later case, Perfect 10, Inc. v. Amazon.com, Inc., the court grouped the holdings of Hotaling and Napster together based upon a factual similarity; in both cases “the owner of a collection of works . . . [made] them available to the public.”

Only in such a situation could the holding of Hotaling potentially apply to relieve the plaintiff of the burden to prove actual dissemination of an unlawful copy of the work. The defendant in the case did not own a collection of copyrighted works or communicate them to the public, so the court found Hotaling inapplicable.

However, the court did hold that “the district court’s conclusion [that distribution requires an ‘actual dissemination’] is consistent with the language of the Copyright Act.”

District courts have struggled to determine whether the requirement to prove actual dissemination or Hotaling should apply to cases of alleged copyright infringement through online file-sharing. The majority of district courts have rejected the recording companies’ “making available” theory because Hotaling is inconsistent with the Copyright Act. (“Respectfully, Hotaling did not cite any precedent in holding that making copyrighted works available to the public constitutes infringement . . . [its] interpretation, even if sound public policy, is not grounded in the statute.

Two courts have concluded that making a work available on a file-sharing network does constitute distribution. (Universal City Studios Prods. LLP v. Bigwood and Motown Record Co. v. DePietro)

To be clear, we do not conclude that the mere presence of copyrighted sound recordings in Duty’s share file constitutes copyright infringement. We have an incomplete understanding of the Kazaa technology at this stage.

The court agrees with the great weight of authority that § 106(3) is not violated unless the defendant has actually distributed an unauthorized copy of the work to a member of the public. The statute provides copyright holders with the exclusive right to distribute “copies” of their works to the public “by sale or other transfer of ownership, or by rental, lease, or lending.” 17 U.S.C. § 106(3). Unless a copy of the work changes hands in one of the designated ways, a “distribution” under § 106(3) has not taken place.

Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder’s exclusive right of distribution.

On its own, however, it does not prove that the copy changed hands. It only shows that the defendant attempted to distribute the copy, and there is no basis for attempt liability in the statute, no matter how desirable such liability may be as a matter of policy.

An offer to distribute does not constitute distribution

The recording companies disagree, arguing that although the term “distribution” is not explicitly defined by the statute, it is synonymous with the term “publication,” which the statute defines to include “[t]he offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display.” 17 U.S.C. § 101.

Therefore, the argument goes, if Howell offered to distribute the copyrighted works to the public for purposes of further distribution, he distributed the works within the meaning of § 106(3). Some support for equating the two terms does exist.

The Supreme Court has observed that § 106(3) “recognized for the first time a distinct statutory right of first publication, which had previously been an element of the common-law protections afforded unpublished works.” Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 552 (1985). The Court noted that the legislative history of the statute confirms that “Clause (3) of section 106 establishes the exclusive right of publications.”

Relying on these authorities, several courts have held that the terms publication and distribution are synonymous, so where a defendant’s act fulfills the definition of “publication” provided by the statute, it also constitutes a “distribution” under § 106(3).

However, the definition of publication provided by the statute is essentially a codification of case law concerning the effect of first publication on an author’s intellectual property rights. It is not clear that the terms publication and distribution are synonymous outside the context of first publication, which was the subject of discussion in Harper & Row. As one court has put it, the definition of publication in § 101 of the statute makes clear that all distributions to the public are publications, but it does not state that all publications are distributions. London-Sire Records,

The statute’s definition of publication includes distribution of copies . . . to the public and

offering to distribute copies . . . for purposes of further distribution.

The inverse proposition, that all “publications” are “distributions,” appears nowhere in the statute or the legislative history. Moreover, the definition of “publication” in § 101 is truly unhelpful in explicating the meaning of the term “distribution” used in § 106(3). Read as the record companies suggest, the definition would state that a “distribution” is a “distribution” or an “offering to distribute.” One cannot assume that the terms are absolutely synonymous in the face of such an unsatisfactory definition.

The scope of the term distribution is only defined within § 106(3) itself, as a “sale or other transfer of ownership” or a “rental, lease, or lending” of a copy of the work. The plain meaning of that section requires an identifiable copy of the work to change hands in one of the prescribed ways for there to be a distribution. It is untenable that the definition of a different word in a different section of the statute was meant to expand the meaning of “distribution” and liability under § 106(3) to include offers to distribute. Courts should not impute such an oblique method to Congress. Rather, courts are to give meaning to Congress’ choice to use the word “distribution” in § 106(3) rather than the expressly defined term “publication.” See Padash v. INS. (refusing to “import the definition” of one term onto another because “the use of different words or terms within a statute demonstrates that Congress intended to convey a different meaning for those words”)

A plain reading of the statute indicates that a publication can be either a distribution or an offer to distribute for the purposes of further distribution, but that a distribution must involve a “sale or other transfer of ownership” or a “rental, lease, or lending” of a copy of the work. The recording companies have not proved an actual distribution of 42 of the copyrighted sound recordings at issue, so their motion for summary judgment fails as to those recordings.

Howell may not be responsible for any distribution

The recording companies’ investigator, MediaSentry, did download 12 of the copyrighted sound recordings from Howell’s computer. The recording companies assert that they have proven actual distribution for at least those 12 recordings. Amicus curiae,Electronic Frontier Foundation (“EFF”), responds that a copyright owner cannot infringe its own copyright, so its agent also cannot infringe the copyright owner’s rights when acting on the owner’s behalf.

EFF has not cited a single case to the contrary. The closest they come is a case that states that a copyright owner cannot prove actual damages if infringing copies were sold only to the owner’s agent. Higgins v. Detroit Educ. TV Found., 4 F. Supp. 2d 701, 705 (E.D. Mich. 1998).

In this suit, the recording companies have requested statutory damages, not actual damages, and it is well recognized that “[a] plaintiff may elect statutory damages ‘regardless of the adequacy of the evidence offered as to his actual damages.’”

Nevertheless, the record in this case does not conclusively indicate that Howell was responsible for making the 12 downloaded recordings publicly available.

A reasonable trier of fact could conclude that it was Howell who placed the copyrighted files into his shared file folder; Howell admitted that he downloaded KaZaA onto the computer, that he created the KaZaA user account through which the files were made available to the public, and that he authorized sharing other types of files. On the other hand, Howell has sworn that he did not place the copyrighted sound recordings in the shared folder, has testified that other users of the computer could be responsible, and has identified evidence purportedly showing that the Kazaa program was, without his authorization, making files not in the shared folder available for download. Viewing all the evidence in the light most favorable to Howell, there exists a disputed issue of fact regarding Howell’s responsibility for sharing the files. Accordingly, the recording companies’ motion for summary judgment is also denied with respect to the 12 copies downloaded by MediaSentry.

Insufficient evidence of primary versus secondary liability

The recording companies motion for summary judgment also fails because they have not proved that a KaZaA user who places a copyrighted work into the shared folder distributes a copy of that work when a third-party downloads it.

Under their theory, a KaZaA user transfers a copy of the work to a third party and is therefore liable as a primary infringer of the distribution right. However, in the KaZaA system the owner of the shared folder does not necessarily ever make or distribute an unauthorized copy of the work. The owner certainly does not distribute the copy that resides in the shared folder, for that copy never leaves its location on the owner’s hard drive. Rather, a copy of the copy in the shared folder is made.

If the owner of the shared folder simply provides a member of the public with access to the work and the means to make an unauthorized copy, the owner is not liable as a primary infringer of the distribution right, but rather is potentially liable as a secondary infringer of the reproduction right. See PATRY, supra, § 13:11.50 at 13-26 to 13-27

(Explaining that technically, “third parties are reaching into the individuals’ hard drive and taking an electronic file,” so “the individual who has the work on his or her hard drive [can potentially be sued] for contributory infringement of the reproduction right” but not primary infringement of the distribution right).

The courts and commentators have recognized that making a copyrighted work and the facilities to copy it available to another implicates contributory, not direct, liability for copyright infringement. 3 NIMMER, supra, § 12.04[A][3][b], at 12–87 (2007).

For example, where a business rents customers video cassettes and a room for viewing the cassette, the business is liable for contributory infringement, not direct infringement, of a copyright holder’s public performance right. Columbia Pictures Indus., Inc. v. Aveco, Inc, 800 F.2d 59, 62 (3rd Cir. 1986).

The recording companies’ motion is based solely on Howell’s direct liability for violating the distribution right. Their motion fails because they have not explained the architecture of the KaZaA file-sharing system in enough detail to determine conclusively whether the owner of the shared folder distributes an unauthorized copy (direct violation of the distribution right), or simply provides a third-party with access and resources to make a copy on their own (contributory violation of the reproduction right). See A&M Records v. Napster, Inc., 239 F.3d 1004, 1012 (9th Cir. 2001) (explaining that in the Napster system, it is the requesting user’s computer that establishes a connection with the host user and downloads a copy of the contents).

Furthermore, if contributory liability applies, the recording companies must still prove that a third-party actually obtained an unauthorized copy of the work to impose liability on Howell. The statutory basis for such contributory liability is found in the Copyright Act of 1976’s provision to a copyright holder of the exclusive rights “to do and to authorize” certain acts listed in § 106, including distribution. 17 U.S.C. § 106.

Our circuit has noted that use of the phrase “‘to authorize’ was simply a convenient peg on which Congress chose to hang the antecedent jurisprudence of third party liability.”

Subafilms, Ltd. v. MGM-Pathe Commc’ns Co. It “was not meant to create a new form of liability for ‘authorization’ that was divorced completely from the legal consequences of authorized conduct.” Id. at 1092. Our circuit therefore agrees that a defendant can only be held contributorily liable if a direct or primary infringement has been proved.

Conclusion

The court is not unsympathetic to the difficulty that Internet file-sharing systems pose to owners of registered copyrights. Even so, it is not the position of this court to respond to new technological innovations by expanding the protections received by copyright holders beyond those found in the Copyright Act.

The judiciary’s reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology. In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests.

IT IS THEREFORE ORDERED that the Motion for Summary Judgment (Doc. # 30) is denied.

DATED this 28th day of April, 2008.

Atlantic v. Howell – case arguments