Protection From Additional Liabilities
Once a company is found ineligible for DMCA safe harbor, it is vulnerable to be found liable for copyright infringement claims. Copyright holders may pursue secondary liabilities such as vicarious, contributory or induced infringement.
Secondary liabilities are sought when the user who posted the infringing materials is not available or cannot be found. To find a company vicariously liable, the copyright holder must prove 1) the defendant directly benefited financially from the infringing activity, 2) the defendant had the right and ability to supervise or control the infringing activity and 3) the defendant failed to exercise that right and ability.[i] To find a company contributorily liable, the copyright holder must prove 1) the defendant knew or had reason to know of the infringing activity and 2) the defendant intentionally induced or materially contributed to the user’s infringing behavior.[ii] In Joint Stock Co. “Channel One Russia Worldwide” v. Russian TV Co., the Southern District of New York found that plaintiff Joint Stock Co. satisfied the requirement that the defendant knew or had reason to know of infringing activity when it alleged Russian TV Co. provided unlicensed content at far lower prices to subscribers than it provided authorized content.[iii] Finally, a defendant may be liable for inducement of copyright infringement if it “distributes a device with the object of promoting its use to infringe copyright” and has taken affirmative steps to foster infringement.[iv] Courts evaluate four elements, called the Grokster III test, to determine whether inducement of copyright infringement applies: 1) distribution of a device or product (such as an internet platform), 2) acts of infringement, 3) object promoting use to infringe copyright and 4) causation.[v]
Individual liability is sought when copyright holders want to hold owners or employees of OSPs liable for the infringement. The Eleventh Circuit defines a liable individual as “a corporate officer who directs, controls, ratifies, [or] participates in … the infringing activity.”[vi] In Babbit Elecs., Inc. v. Dynascan Corp the Eleventh Circuit held the corporate officers jointly and personally liable for their participation in the corporation’s counterfeiting activities. Holding liable owners or employees who permit infringement or directly infringe on the copyright themselves effectively removes the corporate veil that usually protects individuals from personal affiliation with their legal entities.
An OSP that is found liable for copyright infringement in any manner will be penalized. Continue Reading