Direct and Indirect Copyright Infringement
Under copyright laws, not only can a person who is committing the direct acts of infringement be held liable for copyright infringement, but also a third party (e.g., business, person) can be held liable for indirect copyright infringement.
For example, Section 106 of the United States Copyright Act gives the owner of the copyrighted work six rights the owner can exclusively exercise or authorize a third party to exercise on his or her behalf. These exclusive rights include: (1) right of reproduction; (2) right to prepare derivative works; (3) right to distribute copies; (4) public performance rights; (5) public display rights; and (6) right to have a digital audio transmission for sound recordings. When a person infringes on one of these rights, then a copyright infringement action is bound to take place.
A copyright infringement action can happen not only against the person who is directly carrying out the infringing action, but also against the person who is indirectly infringing those copyrights. The courts have created two theories of indirect liability. The two theories each have their own requirements for what is necessary to be held indirectly liable.
The first theory is called vicarious liability. There are three factors used to determine if a person can be held liable under vicarious liability. First, it needs to be proven that someone else was a direct infringer. Second, it needs to be shown that the person has both the right and ability to supervise the infringing activities that are taking place. It can either be that the person has a legal right or a practical right. Third, it needs to be proven that the person or entity is getting a direct benefit from the infringing activities. The courts have interpreted this factor very broadly.
The second theory is called contributory copyright infringement. For this theory, you need to show that the alleged copyright infringer aided the process with knowledge. There are three factors used to determine if a person can be held liable. First, it needs to be proven that someone else was a direct infringer. Second, it needs to be proven that the potential contributory copyright infringer had knowledge of the infringing activity. The knowledge requirement can be either actual knowledge or constructive knowledge. Constructive knowledge means that a person does not need to know of the infringing activity. Instead, all that is required to have constructive knowledge is any knowledge of infringing activity that a person who used reasonable care or diligence would have had in the first place. For example, a person cannot purposefully avoid knowing about any infringing activity to avoid liability. Third, it needs to be shown that they materially contributed to the infringing activities. The courts have found that providing the site or facility where the infringing activity occurs is enough to satisfy this third factor. This means that just providing a building or rental space to someone committing direct infringement would qualify.
What is necessary to be found liable of indirect liability is important to both the copyright owner and the potential indirect infringer. It is important for the copyright owner to know about indirect infringement, so he or she can pursue the claims against those that may be liable. It is important for a potential indirect infringer to know if they are opening themselves up to liability through the course of their business. An example can found in Fonovisa, Inc. v. Cherry Auction, Inc. In that case, there was a company that operated a swap meet and rented booth space to people who were selling pirated versions of CDs. The court found that this would be enough for both vicarious liability and contributory copyright infringement.
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