[x-pubpol] USA: Vicarious copyright infringement requires a showing of supervision or control

[Joly MacFie]

http://www.lexology.com/library/detail.aspx?g=89be6c55-8f3a-434b-96eb-5244ad7033ae

In an opinion that elaborates on the degree of third-party supervision
required in order to attach vicarious copyright infringement liability, the
U.S. Court of Appeals for the Ninth Circuit Court upheld a decision that
dismissed claims of vicarious copyright infringement against the major
wireless networks for content distributed over their networks. The
plaintiffs failed to plead a claim of copyright infringement because there
was no identification of any system of supervision in place for the
wireless carriers to influence, affect, or control what content its users
were sharing on multimedia messaging service networks. *Luvdarts, LLC et
al. v. AT&T Mobility et al.*, Case No. 11-55497 (9th Cir., Mar. 25, 2013)
(O’Scannlain, J.).

The plaintiffs, Luvdarts and Digipie, are in the business of creating,
publishing and selling commercial multimedia messaging content for
distribution over a wireless network, including content such as greeting
cards, advertisements, news, coupons and games. Luvdarts attaches a notice
to each piece of content it sells, indicating that each message it sells
can only be shared once. Cell phone users ignored the notice, however, and
widespread re-sharing of Luvdarts’ content occurred over major wireless
carrier networks. Luvdarts’, accordingly, brought a copyright action
against AT&T, Verizon Wireless, Sprint and T-Mobile, alleging that these
carriers were liable for between $8 billion and $10 billion worth of
damages under a theory of vicarious copyright infringement.

After the district court dismissed the complaint for failure to state a
claim on which relief can be granted, the plaintiff’s appealed. The 9th
Circuit agreed with the district court, concluding that Luvdarts failed to
state a claim under a vicarious liability theory by not alleging that the
wireless carriers had at least some capacity to supervise the end users’
actions in resharing Luvdarts’ content.

The 9th Circuit elaborated on the doctrine of vicarious liability under *A&M
Records v. Napster*. Vicarious copyright liability only attaches if a party
has the “right and ability to supervise the infringing activity” and “‘a
direct financial interest’ in the activity.” Here, the wireless carriers
had no way of supervising the use of their networks for the resharing of
Luvdarts’ content. Luvdarts’ allegations—that the wireless carriers
*could* implement
a supervisory system—was insufficient to state a claim of vicarious
copyright infringement. In that respect, Luvdarts failed to explain “what
that system is, how it would function, or how much implementing such a
system would cost.”

The 9th Circuit also summarily dismissed Luvdarts’ assertion of
contributory copyright infringement against the wireless carriers, noting
that Luvdarts failed to allege that the wireless carriers had the requisite
specific knowledge of the resharing of messages. Luvdarts’ complaint also
failed to allege that the wireless carriers took active steps to avoid
learning that content was being reshared, apparently under a theory of
willful blindness.

Ultimately, the 9th Circuit agreed that Luvdarts’ did not properly plead,
and could not prevail, on its claims of vicarious or contributory
infringement.




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