Intellectual property: piracy for sale: vicarious and contributory copyright infringement: Arista Records v. Flea World, 356 F. Supp. 2d 411

Journal of High Technology Law, The, July, 2006 by Sheri Archidiacono

INTRODUCTION

The purpose of the United States Copyright Act is to balance the competing interests of fostering scientific and artistic innovation through widespread public dissemination of ideas and expressions while providing authors with exclusive rights in their works as an incentive to create such works as to prevent monopolies over such ideas. (1) Article I, Section 9, Clause 8 of the U.S. Constitution provides that Congress has the power "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." (2) As technology has advanced into the digital age, the introduction of new copying capabilities brings cries of infringement and piracy from established media distributors including record labels and motion picture companies. (3) Due to an influx of cases brought by such media moguls, courts have found it necessary yet difficult to apply traditional legal theories to conflicts that arise due to high technology; such as imposing tort based secondary liability to copyright infringement. (4) Further, courts have purposefully avoided making amendments to copyright law and instead have fervently relied on Congress to make transformations in accordance with the advancement of new technology. (5)

In response to this technological growth, Congress enacted the Digital Millennium Copyright Act (hereinafter "DMCA") in 1998 to "facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education". (6) Title II of the DMCA, known as the safe harbor provision, shields Internet Service Providers (hereinafter "ISP"), from secondary copyright liability for the infringing acts of its users. (7) A service provider is immune from monetary judgments against it but may subject to limited injunctive relief if it meets the statutory requirements set forth by the DMCA. (8) The DMCA has emerged as the major means to regulate the unlawful dissemination of digital music. In examining that very issue in the recent case of Arista Records, Inc. v. Flea World, Inc. (9), a federal court held that the Defendant's claimed defense of the DMCA safe harbor provision for ISPs was not applicable to an outdoor farmer's market because a farmer's market falls outside the scope and legislative intent of "Internet Service Provider" as set out in the DMCA. (10)

FACTS

In January of 2005, The United States District Court for the District of New Jersey heard Arista Records v. Flea World, Inc., in which it examined the issues of vicarious and contributory copyright infringement with regards to the sale infringing compact discs and cassette tapes. (11) The Plaintiffs, Arista Records, (hereinafter Arista), along with thirteen other member companies of the Recording Industry Association of America, ("RIAA"), brought suit against the Flea World flea market in June of 2003 for copyright infringement based on theories of both contributory and vicarious liability. The Defendants, Flea World, located in Columbus, New Jersey, owned one of the largest outdoor flea markets on the East Coast. (12) Many of Flea World's vendors sold pirate and counterfeit compact discs and cassette tapes in violation of federal copyright and state laws. (13) Flea World provided the facilities, space, and services necessary for its vendors to operate. (14) Arista claimed that Flea World was aware of, materially contributed to, and obtained a direct financial benefit from the sale of such infringing goods at its Farmer's Market. (15) Arista further complained that although Flea World supervised and controlled its premises, it did not prevent the sale of unlawful recordings. Alternatively, it assisted and facilitated the sale of over 7,500 pirated recordings. (16) Therefore, Flea World should be held vicariously and contributorily liable for copyright infringement. (17)

Although Flea World conceded that illegal sales took place and it did in fact provide the means for the sale of such imitation products, it claimed several affirmative defenses notwithstanding, including the safe harbor provision of the DMCA. (18) Flea World responded to Arista's claims via a counterclaim based on false light, defamation, trade libel and copyright misuse all of which were dismissed. (19) The court denied Flea World's motion for reconsideration from an order that struck a number of its prior asserted affirmative defenses including damages caused by third parties, corporate immunity, no legal duty to provide police investigations, and first sale doctrine. (20) However, the mainstay of Flea World's liability rested within the theories of vicarious and contributory copyright infringement. (21)

HISTORY

Although the Copyright Act does not expressly impose liability on anyone other than direct infringers, courts now recognize that under certain circumstances, vicarious or contributory liability is applicable. Generally, a Plaintiff can base his or her copyright infringement suit on the theories of direct infringement and/or secondary/third party liability. (22) Direct infringement results from the actions of an individual who copies all or a substantial portion of a work without authorization by the author or the copying does not fall within one of the exceptions as carved out within the Copyright Act. (23) Secondary liability or indirect infringement occurs when another party either aids in or is responsible for the directly infringing act or actor. (24) The two applicable principles of secondary liability, which find their roots in traditional tort law, are contributory and vicarious copyright infringement. (25) Vicarious liability will be enforced when one (a) has the "right and ability" to control infringing conduct and (b) receives a material, financial benefit from the infringement. (26) Contributory liability examines the correlation between a third party and one who directly infringes. (27) Such liability will be applied when a third party knowingly causes, instigates, or materially assists another's infringing conduct. (28) In the similar case of Fonovisa v. Cherry Auction, the United States District Court for the Eastern District of California court reversed and remanded, holding that a defendant flea market was vicariously liable for copyright infringement because it had both control over direct infringers as well as a material financial interest in the infringing activity. (29) The court also held that contributory copyright infringement was established since the defendants "knowingly contributed to the infringement by providing the site for the activity." (30) Lastly, the court supported its claim that contributory infringement existed by stating that the defendants were "willfully blind" to the ongoing infringement. (31) The court in Flea World were faced with the same issue and held in a similar fashion.