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	Recent Case Law Prompts All Website Owners and Operators to Implement an Intellectual Property Protection Policy Business  By Kent M. Clayton Decisions rendered in several recent cases arising out of California-based lawsuits, including Metro-Goldwyn Mayer Studios, Inc. v. Grokster, Ltd., 125 S.Ct. 2764 (2005), Perfect 10 v. Amazon.com, Inc., 487 F.3d 701 (9th Cir. 2007) and Perfect 10 v. Google, Inc., 416 F.Supp.2d 828 (C.D. Cal. 2006), serve as clear warnings to all website owners and operators that their failure to have processes in place to monitor and react to what goes on at their websites can expose them to secondary liability for copyright infringement. Secondary copyright infringement liability can arise where one party enables or facilitates copyright infringement conducted by another party. Prior Legal Background Previous case law (in particular, Sony Corp. of America v. Universal City Studios, Inc.) has to date provide a “safe harbor” for website owners and operators against secondary copyright infringement where there: are substantial non-infringing uses of a product or service such that the copyright infringement that takes place using such product or service is not the “overwhelming” or “large” use of it; and there is a meaningful revenue stream through the usage of the device from sources other than infringement. Since the Sony decision, courts have generally been reluctant to hold website owners and operators liable for secondary copyright infringement when the website owner or operator has acted quickly to remove any allegedly infringing material or content once it has become aware of the presence of such allegedly infringing material or content on its website. Effect of Recent Case Law The Grokster and Perfect 10 cases have further clarified the Sony safe harbor by holding that website owners and operators are subject to secondary copyright infringement liability where there is actual knowledge that specific infringing material is being made available at or through their website and they fail to take simple measures to prevent further damage to copyrighted works by terminating access to infringing works at or through its website. However, these cases have also introduced a secondary copyright infringement doctrine referred to as “active inducement” where the website owner or operator utilizes a technological device to actively or intentionally induce infringing conduct but fails to take action to stop the infringing conduct when it has the right and ability to do so, even where the website owner or operator initially lacks knowledge of the infringement. In other words, the product or service fosters the infringing activity through substantial promotional activity or provides a significant revenue stream to the infringing party and the product or service is not utilized for or is not capable of commercially significant non-infringing uses. In the Grokster case, the business model of Grokster was based on encouraging users of their peer-to-peer software to connect to other users of the software in order to find and download copyright-protected content and generating revenue from the placement on its website of advertising targeted at such users. The court found Grokster liable of secondary copyright infringement under such circumstances because of (i) the active and intentional inducement by Grokster of the infringing conduct and (ii) the magnitude of the infringing uses of the Grokster software compared to non-infringing uses. In contrast, in the Perfect 10 cases, the plaintiff, a publisher of adult content, claimed that Amazon and Google were liable for secondary copyright infringement based upon the display of thumbnail images created by their search engines and the display of corresponding full-size images on unauthorized third party websites which were accessible by clicking on the thumbnail images at the Amazon and Google websites. Amazon and Google prevailed in the litigation because of (i) the absence of active or intentional inducement on the part of Amazon or Google, (ii) the existence of substantial non-infringing uses of the software found at the Amazon and Google websites and (iii) the efforts of Amazon and Google to eliminate or reduce infringing uses pursuant to their respective strenuously enforced policies. Protecting Against Secondary Copyright Infringement Liability Accordingly, the clear mandate from these recent cases is for website owners and operators to adopt and implement a policy that prescribes the procedures to be taken in order to minimize exposure to secondary liability for copyright infringement. Obviously, consistent with prior existing case law, a key provision of any such policy would be the prompt removal of any allegedly infringing content or termination of any allegedly infringing conduct (e.g., the removal of click-on hyperlinks to third party websites which display infringing content) after the presence of such content or conduct comes to the attention of the website owner or operator. Each website owner or operator should therefore also ensure that its Terms of Use or Legal Notices website subpage provides, among other things, for a process by which users can contact the website owner or operator when the user observes apparently infringing content or conduct present at or through their website (often done through a legal disclaimer referencing the pertinent provisions of the Digital Millenium Copyright Act of 1998, as amended). Other actions to be taken as part of a suitable intellectual property protection policy depend on the nature of the product or service being promoted by the website and the software and other technological processes used by the website. Website owners and operators are therefore advised to consult with a competent business attorney familiar with technology and new media legal issues to formulate an intellectual property protection policy that is appropriate for them. This Article is published as a service to our clients and friends. It is intended for informational purposes only and is not intended to constitute advertising, solicitation or legal advice. © 2007 Kent M. Clayton. All Rights Reserved. Back
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