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Trademark or Copyright Infringement on the Internet

Background Notes

Overview: Copyright and Trademark: A Primer

In simple terms, copyright is the body of law that confers ownership of certain expressions of ideas, and protects certain exclusive rights of the owner of such an expression, including the right to reproduce the copyrighted work, the right to prepare derivative works, the right to distribute copies to the public, and the right to publicly display the work. The ownership and associated rights are said to pertain not to an idea itself, which must remain circulating in the marketplace, but to the copyright holder's particular expression of the idea in a copyrighted work, which he may protect. Since copyright law may be implicated whenever a protected work is duplicated in any fashion, its potential impact on Internet activity is profound.

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A common defense to claims of copyright infringement is that of "fair use." Under this doctrine, if a defendant can show that its use of the protected work was for noncommercial purposes, that the work was unpublished, that it was primarily informative rather than creative in nature, that a relatively small portion of the work was used, and/or that the use did not diminish the potential market for, or value of, the protected work, the defendant may be able to avoid liability.

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Trademark is the narrower body of law that confers ownership of a distinctive name or other symbol associated with a particular product or business, and used to identify and distinguish the product or business in the marketplace. Use of another's trademark may subject a defendant to liability if the use is likely to cause confusion or mistake among, or outright deception of, the public as to the origin of the goods or services at issue. See e.g.Brookfield Communications, Inc. v. West Coast Entertainment Corp., No. 98-56918 (Ninth Circuit, April 22, 1999)(preliminary injunction granted against use of mark "moviebuff" by defendant despite defendant's claim of senior use and prior registration of name).

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Defenses against a claim of trademark infringement are similar to those available in copyright infringement cases. In fact, the "fair use" doctrine has probably been the most successful defense in Internet-related cases to date, as demonstrated by Playboy Enterprises, Inc. v. Terri Welles, 7 F.Supp. 2d 1098 (S.D. Cal. 1998) and discussed by the Ninth Circuit Court of Appeals in Brookfield. up

Both trademark and copyright infringement are governed primarily--though not necessarily exclusively--by federal law.

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Liability for Another's Infringement

Liability for copyright or trademark infringement is not limited to the primary infringer, but may extend to persons who have, in some significant way, facilitated the infringement. Such indirect liability typically falls into one of two categories. First, a defendant who has knowledge of another's copyright infringement, and "induces, causes or materially contributes to" the activity, may be liable for what is commonly referred to as "contributory infringement." E.g., Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984). Similarly, a defendant who intentionally induces another to infringe a trademark, or who supplies a product knowing that the recipient is using the product to engage in trademark infringement, may be liable for contributory infringement. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982).

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Second, a defendant who has the right and ability to control the acts of an infringer, and who receives a direct financial benefit from the infringement, may be liable for what is referred to as "vicarious infringement," even without a showing that the defendant had knowledge of the infringement. E.g., Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963).

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Courts have sought to apply these doctrines in two primary areas of Internet activity. First, Network Solutions, Inc. has thus far avoided liability for registering domain names that allegedly infringed plaintiffs' trademarks. See Lockheed Martin Corp. v. Network Solutions, Inc., 1997 WL 721899 (C.D. Cal. Nov. 17, 1997); Academy of Motion Picture Arts and Sciences v. Network Solutions, Inc., 1997 WL 810472 (C.D. Cal. Dec. 22, 1997) (denying preliminary injunction).

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In Lockheed, the court held that NSI did not "use" the plaintiff's trademark, as required for direct infringer liability, by merely registering the mark as a domain name. Furthermore, NSI's conduct did not qualify as contributory infringement, even though it knew of Lockheed's claims that the domain names were infringing. The court concluded that "[b]ecause NSI's involvement with potentially infringing uses of domain names is remote," it would be inappropriate to hold it liable for contributory infringement absent a showing of "unequivocal knowledge that a domain name was being used to infringe a trademark." Such knowledge did not exist in this case, the court held, given that the mark in question had numerous unprotected generic uses, and that NSI had little access to information from which it could discern whether the uses by domain-name registrants overlapped with Lockheed's and were likely to cause consumer confusion.

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The second group of cases involves liability arising from copyright infringement on bulletin board services ("BBS's"). The Church of Scientology has twice been unsuccessful in obtaining preliminary injunctive relief against BBS's which used copyrighted works by church founder L. Ron Hubbard in efforts to publicize criticism of the church. In Religious Technology Center v. FACTNET, Inc., 901 F. Supp. 1519 (D. Colo. 1995), the court suggested that the defendants would likely be able to show that the copying of the church's works by their nonprofit organization was a "fair use" (as described above), and thus to avoid liability.

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In Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), the church sued both the operators of a BBS and Internet access-provider Netcom. The court held that Netcom could not be held liable for direct infringement, since its role in the process of disseminating the allegedly infringing works was "not unlike that of the owner of a [public] copying machine." Netcom could also not be regarded as a vicarious infringer, since it may have had a "right to control" its subscribers, but there was no evidence that it had received a "direct financial benefit" from the infringement. However, the court concluded, Netcom might be held liable as a contributory infringer, since it continued to host the BBS (and thus, in the court's view, "materially contributed to" its activities) after it had received notice of the church's claim of infringement. The court made clear that liability might still be avoided if Netcom could establish a fair-use defense. Furthermore, given the unlikelihood that the infringement claim would ultimately succeed as to Netcom (or the BBS provider himself), the church was not entitled to a preliminary injunction.

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The game manufacturer Sega has had better success obtaining relief against BBS's that facilitate the copying of its games. In Sega Enterprises Ltd. v. Sabella, 1996 WL 780560 (N.D. Cal. Dec. 18, 1996), Sega obtained summary judgment and a permanent injunction based on a theory of contributory copyright infringement asserted against a BBS provider. The court concluded that the defendant had ample reason to know that her BBS was being used to copy Sega games--indeed, she had encouraged the activity and, as in the Netcom case discussed above, had "materially contributed to" the activity by providing the "site and facilities" for it, and more. Nor could she establish a fair-use defense, given the commercial and damaging nature of the copying. The same court applied almost identical reasoning, with the same result, in another decision issued the same day. Sega Enterprises Ltd. v. Maphia, 948 F. Supp. 923 (N.D. Cal. Dec. 18, 1996).

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The magazine publisher Playboy has succeeded in having BBS providers held liable for direct, and not merely contributory, infringement. In Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993), the court found no meaningful distinction, for copyright-law purposes, between the conduct of BBS users in copying and uploading protected photographs, and the passive role played by the defendant BBS provider in facilitating the activity. The court in Playboy Enterprises, Inc. v. Russ Hardenburgh, Inc., 1997 WL 755031 (N.D. Ohio Nov. 25, 1997), was willing to acknowledge that direct infringement required some volitional act by a BBS provider, but found the necessary volition in the case before it, where the defendant provider had established an incentive program giving users downloading "credit" for photographs they uploaded, and where the defendant's employees had viewed and organized the uploaded materials.

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Finally, courts have signaled a willingness to extend the reasoning of the BBS cases to other kinds of Internet businesses. In Marobie-FL, Inc. v. National Association of Fire Equipment Distributors, 1997 WL 709747 (N.D. Ill. Nov. 13, 1997), the court held both the proprietor of a World Wide Web site containing copies of infringing works and the operator of the website's host computer could be held liable for the infringement, where there was some evidence that the host operator had knowledge of the infringing activity, and did nothing in response.

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