I. INTRODUCTION ........................................................................ 598
II. CONTRIBUTORY LIABILITY: THE PUBLIC GOOD AND STATUTORY LIMITATIONS ............................................... 601
A. Defining Contributory Liability ........................................ 601
B. The Copyright Clause and Congress 's Balancing Act .................................................................... 602
C. Expanding Beyond the Language of the Copyright Act .................................................................... 605
D. Why Liability for Contributory Infringement Makes Sense ...................................................................... 608
III. LIMITATIONS OF CONTRIBUTORY LIABILITY .......................... 610
A. Sony 's Safe Harbor: Borrowing from the Patent Act .......................................................................... 610
B. File-Sharing Services: Further Defining the Knowledge Requirement .................................................... 614
1. The Ninth Circuit: Requiring Actual Knowledge ....... 614
a. Identifying Requisite Knowledge: Napster 's Service Versus Sony 's Product ............. 617
b. How Napster 's Actual Knowledge Requirement Advances Constitutional Purpose ................................................................. 618
2. The Seventh Circuit: Requiring Constructive Knowledge .................................................................. 619
a. Sony 's Inapplicability to A imster 's Service .......... 620
b. Idle Advancement Toward the Public Good ......... 621
c. Why Aimster 's Constructive Knowledge Requirement Does Not Work for Dual-Use Technologies or Advance the Progress of Science and Art ..................................................... 622
iv. inducement theory: implications for Contributory Liability ..................................................... 623
A. Grokster 's Inducement Liability ....................................... 623
B. The Resulting Gap between Inducement Theory and Contributory Liability .................................... 628
V. Resolving the Gap ............................................................... 630
A. What Grokster Means to the Knowledge Requirement ..................................................................... 630
B. Actual Knowledge Better Furthers the Purpose of Copyright Law ................................................ 632
Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution.
- Albert Einstein1
I. INTRODUCTION
Some men make a living by stealing and distributing what other men have worked to create - "Immature poets imitate; mature poets steal; bad poets deface what they take, and good poets make it into something better, or at least something different."2 While copyright law attempts to protect a person's creativity and ingenuity by penalizing anyone who infringes a copyrighted work,3 technological innovations have made infringement liability more complex. The ever-increasing efficiency and versatility of the internet have spawned numerous file-sharing networks,4 making distribution of another person's property - such as books, music, and photographs - as simple as clicking a few buttons. This comes at little or no cost to the distributor, while potentially depriving the creator of benefits flowing from his creative genius. Yet, not all internet-based file sharing is negative. Take, for example, two contrasting situations:
* Freelance journalist Anna, wishing to branch into fictional writing, distributes a digital collection of works, containing original as well as plagiarized material, over an internet-based file distribution network provided by Distribute, Inc.
* Bandeo, a Grammy-nominated alternative rock band recently released from its record contract, distributes its newest album on the same internet-based file distribution network provided by Distribute, Inc. The popularity of the album results in Bandeo signing a new record contract and going on to win two Grammy Awards.5
These examples demonstrate an illegitimate and legitimate distribution of copyrighted material over the internet through a third-party service. There is nothing illegal or unethical about Bandeo' s method of self-distribution. In fact, Bandeo and the music-listening population benefitted greatly from the distribution. In contrast, Anna, by distributing the copyrighted work of another and holding it out as her own, has participated in copyright infringement.6 In both situations, Distribute, Inc. provided the means for distribution. Surely Distribute, Inc. 's involvement with Bandeo 's success promoted a private and arguably public good, and others in Bandeo 's situation may be encouraged to act similarly. Nevertheless, Distribute, Inc. 's involvement with Anna's infringing activity could preclude others like Bandeo from utilizing Distribute, Inc. 's services in the future.
Distribute, Inc. 's potential liability for Anna's illegal actions rests on the theory of contributory liability. Based in the law of copyright, contributory liability extends copyright infringement culpability to third-parties when, with knowledge of the other person's infringement, the third-party contributes to acts of infringement or provides the means to do so.7 hi recent years, however, judicial implementation of contributory liability principles has resulted in a circuit split regarding the level of knowledge the thirdparty must possess in order to be secondarily liable for copyright infringement.8 Most recently, in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd,9 the Supreme Court sidestepped the issue of contributory liability.10 As a result, unresolved issues remain for service providers like Distribute, Inc. First, the potential liability of service providers whose services are capable of both legal and illegal uses is uncertain. Second, because of this uncertainty, providers may be discouraged from creating innovative services that promote beneficial activity."
The judicial expansion of contributory liability - along with the introduction of separate theories of secondary infringement liability - has limited its effectiveness and predictability.1 This Note suggests that a standard that requires actual knowledge, rather than constructive knowledge, better protects "the Progress of Science and useful Arts,"13 promotes unforeseen uses of new technologies,14 and is the proper basis for determining third-party liability in copyright infringement. That is, in order for a third-party provider of a dual-use service15 to be secondarily liable for the direct infringement of another person, the third-party must actually know of the other person's infringement.16 Without such actual knowledge, a service capable of non-infringing uses would not be liable under contributory liability. 7
In order to understand the distinction between actual and constructive knowledge, it is necessary to understand the origins of contributory liability and how courts have applied the law. Thus, Part II explains contributory infringement and discusses its importation into copyright law through the Copyright Clause of the U.S. Constitution and the Copyright Act of 1976. Part III traces courts' attempts to develop boundaries of liability to achieve the balance envisioned in the Constitution and by Congress. Part IV explores the similar doctrine of inducement, as implemented by the Supreme Court in Groteter, as it provides insight into the Supreme Court's stance on the limits of contributory liability. Part V concludes that Grokster supports a standard requiring actual knowledge rather than constructive knowledge and further explains why an actual knowledge requirement is the better approach to remedy gaps in contributory liability.
II. Contributory Liability: The Public Good and Statutory Limitations
A. Defining Contributory Liability
A contributory infringer is "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another."18 In a more holistic context, "contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another."1 The contributor's action as a function of the entire infringement process is what determines his liability.20 To understand fully the development of the law and its necessary limitations, it is imperative to consider the origin and history of copyright law generally.
B. The Copyright Clause and Congress 's Balancing Act
Since its federal codification in 1790,21 the scope of copyright law in the United States has developed substantially. While the Copyright Act of 1790 protected only maps, charts, and books, copyright laws have since expanded to protect an author's ownership interest in numerous tangible forms, including musical compositions, photography, and works of the fine arts. 2 Revisions in 1831 expanded copyright's scope to include musical compositions.23 The 1909 revision of the Copyright Act, which still serves as the foundation for modern copyright law, extended copyright protection to unpublished works.2 Continuing developments in technology, however, limited the 1909 Copyright Act's applicability, which necessitated the 1976 revisions to the Copyright Act.25 To address those developments adequately, the 1976 revisions extended copyright protection to "original works of authorship," combating any speculation that Congress had exhausted its authority under the Constitution by using the previous language "writings of an author."26
Still, despite the its continually expanding scope, the heart of copyright legislation lies in the Constitution.27 Article I, Section 8, Clause 8 of the United States Constitution ("the Copyright Clause") grants Congress the power "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."28 Accordingly, every congressional action must align with the Copyright Clause's purpose of promoting science and useful arts.29
At first blush, copyright law may appear as nothing more than a secured private benefit. Although private benefit is a fundamental element of copyright, the primary purpose of the limited monopoly granted to the copyright holder is to benefit the public through the author's creative genius30 - the copyright holder's personal gain is a "secondary consideration."31 The ideology is that ensuring the artist some form of personal benefit will encourage him to share his creativity with the public, thereby stimulating the public reservoir of writing and invention32 and "facilitat[ing] the flow of ideas in the interest of learning."33 This benefits the public twofold: initially upon the creation of the work, and in the future once the limited monopoly expires and the work enters the public domain.34 Recall, for example, the Bandeo hypothetical presented in the introduction.35 Bandeo derived a benefit from distributing its copyright work- namely, a new record contract and future success. Bandco's private benefit subsequently stimulated public artistry and creativity, thereby promoting the progress of useful arts. Thus, although secondary to the public benefit, the secured private benefit has a significant role in promoting the public's access to creativity.
Congress, then, must legislate in a manner that strikes a balance between the author's interest in controlling the use and distribution of his work and the public's interest in "the free flow of ideas, information, and commerce."36 As Justice Breyer explained in a dissenting opinion,
For present purposes, then, we should take the following as well established: that copyright statutes must serve public, not private, ends; that they must seek to promote the [pjrogress of knowledge and learning; and that they must do so both by creating incentives for authors to produce and by removing the related restrictions on dissemination after expiration of a copyright's limited [tjime . . . .37
To determine how Congress should go about reaching that balance, the Judiciary Committee for the Copyright Act of 1909 proposed two questions: "First, how much will the legislation stimulate the producer and so benefit the public; and, second, how much will the monopoly granted be detrimental to the public?"38 Accordingly, if Congress properly constructs the author's exclusive rights, then the public benefit will outweigh the author's private burden.39
C. Expanding Beyond the Language of the Copyright Act
The Copyright Act of 1976,40 as codified in the United States Code, Title 17 ("the Copyright Act"), embodied a "law which ma[de] fundamental and pervasive changes in the U.S. copyright system."41 Currently, as it did in 1976, the Copyright Act's language explicitly provides for only one form of liability - liability resulting from one's own direct action.42 The owner of a copyright, or one authorized by the owner, has the exclusive right to reproduce and distribute his original work.43 Accordingly, anyone who violates one of the owner's exclusive rights infringes the copyright, and the owner can bring an action against the infringer for the violation.44
Save one inapplicable exception,45 there is no provision in the Copyright Act providing for secondary liability for indirect acts of third parties;46 therefore, courts' reasoning for implementing secondary liability theories must lie outside the language of the Copyright Act.47 Because "[t]he remedies for infringement 'are only those prescribed by Congress,'"48 there is immediate tension with judicial implementation of a separate theory of liability for secondary infringers. Even though Congress is not omniscient, it has the power to enact legislation that will accommodate changing circumstances and technological advances, and courts have consistently deferred to Congress when such innovations change the copyright market.49
Courts' justifications for indirect liability rest in the fact that the "immediate effect" of copyright law is to give copyright owners temporary exclusive control, "but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts."5 Thus, when the Copyright Act's express language is ambiguous, courts must default to the legislatively envisioned balance between private and public interest and apply the law in a manner that furthers the public good.51 Correspondingly, the Supreme Court has held that the "absence" of express contributory liability language in the Copyright Act does not preclude third party liability for indirect actions.52 Although the exclusion of secondary liability from the Copyright Act - in light of Congress's express inclusion in the Patent Act53 - is suspect, the owner's ability to "authorize" reproduction and distribution of original works left room for courts to find third parties who cause or permit direct infringement secondarily liable to the owner.54n that light, it is not surprising that courts have begun recognizing contributory liability as a practical aspect of copyright law.55
D. Why Liability for Contributory Infringement Makes Sense
Even though the Copyright Act does not expressly provide for contributory liability, in light of constitutional and statutory interpretation, it is reasonable to allow copyright owners to seek relief against the persons directly infringing their exclusive rights as well as third-parties who occasion the direct infringement.56 Infringement is a tort,57 which makes its common law application relevant to determining the scope of the Copyright Act.5 It is, in effect, holding the contributing third party liable as an aider and abettor.59 If a third party knowingly provides a direct actor with the means to infringe a copyright, and that third party escapes liability because contributory infringement is not expressly stated in the Copyright Act, then the copyright owner's private benefit is weakened, and the progress of science and arts is hampered.
As an example, suppose Cody, Doug, and Erin illegally copy Bandco's new album and distribute it on Share, Inc.'s filesharing network. Cody, Doug, and Erin are direct infringers, and the Copyright Act allows Bandeo to seek remedy against them for violating its exclusive right. This undoubtedly protects Bandco's rights and advances the public good and the progress of science and arts.60 Even so, the situation may prove cumbersome if the members of Bandeo live in California, Cody in New York, Doug in Idaho, and Erin in Georgia.61 Vindication of Bandco's exclusive rights, though expressly enforceable, now potentially requires three lawsuits. If, however, Bandeo could enforce its exclusive rights against Share, Inc., then Bandeo gets its private benefit and removes the direct infringers' means of infringing. Relating back to the Copyright Clause, punishing Share, Inc. - under the right circumstances - may promote the progress of science and art just as much as punishing Cody, Doug, and Erin individually would. The reality is that so long as printers, scanners, and CD-burners exist, unauthorized copying will persist. Consequently, protecting Bandco's limited monopoly necessitates policing the distribution of those unauthorized copies. With so many copies of copyrighted works being distributed illegally, it is much more efficient to hold third parties who provide the means to distribute the works liable for copyright infringement.63 Thus, in theory, finding Share, Inc. liable makes sense. Nonetheless, the effectiveness of contributory liability hinges on courts identifying and applying a workable set of limitations.
III. Limitations of Contributory Liability
A. Sony 's Safe Harbor: Borrowing from the Patent Act
One of the early landmark decisions concerning contributory liability is the 1984 Supreme Court opinion in Sony Corp. of America v. Universal City Studios, Inc. Although Sony embodied much more than a discussion of contributory infringement,65 it established the present foundation for determining file-sharing network providers' liability. Sony Corp. produced an early-stage VCR, Betamax, which consumers were using to record television broadcasts for later viewing.66 Walt Disney Studios ("Disney") and Universal Studios ("Universal") sought to hold Sony Corp. liable for the infringing activities of its customers.67 In terms of contributory liability's definition, Disney and Universal's case appeared straightforward.68 Sony Corp. knew, constructively,69 that some of its customers would likely use Betamax for copyright infringement because Betamax was the only means through which the consumers could record television programs.
Nevertheless, the Supreme Court did not characterize Sony Corp.'s liability strictly in terms of knowledge.71 Instead, the Court borrowed the "staple article of commerce" doctrine from the Patent Act72 and considered the potential ramifications of finding liability when a product was capable of dual-use - that is, a product capable of both infringing and non-infringing uses.73 In the Court's analysis, the staple article of commerce doctrine was, in effect, a balancing test.74 Quoting from the Patent Act, the Court concluded that "a 'staple article or commodity of commerce suitable for substantial non[-]infringing use' is not contributory infringement."75 In the context of copyright law, the Court reasoned that the staple article of commerce doctrine sought to find the balance between a copyright holder's effective - "not merely symbolic" - protection of his limited exclusive rights against infringement and the rights of others to engage in legitimate, non-infringing activity.76 If the product or service is capable of substantial noninfringing uses, the Court made clear that it would not presume that the provider knew of or intended to promote infringement simply because its product or service was capable of infringing use.77
Without specifying how much non-infringing use constitutes "substantial" use, the Supreme Court found Sony Corp. not liable because consumers' personal recordings for later viewing were commercially significant.78 The Court reasoned that Disney and Universal had "no right to prevent other copyright holders from authorizing [the activity] for their programs." The Supreme Court emphasized that other producers' authorizations of consumers' recording for later use did not prevent Disney and Universal from pursuing those consumers for direct infringement; however, "in an action for contributory infringement . . . , the copyright holder may not prevail unless the relief that he seeks affects only his programs, or unless he speaks for virtually all copyright holders with an interest in the outcome."80
In the end, the Sony decision advanced two important concepts. First, it furthered constitutional principles - to promote the progress of science and art.81 The Supreme Court, faced with a problem unaddressed in the Copyright Act, reverted to the purpose of copyright law and balanced the copyright owner's rights with advancement of science and arts for the public good.82 The public's access to a useful technology won. In today's terms, this is an easy decision - the VCR changed the way people watch television and opened up a new consumer market.83 Nevertheless, the Supreme Court in 1985 had no way of knowing the VCR's potential. Its decision rested on the fact that Sony Corp. showed that the public could use Betamax in substantial non-infringing ways, and Disney and Universal still had a cause of action against the directly infringing consumers.84 Had the decision gone the other way, Disney and Universal would have received an extra layer of recourse, but the public would no longer have access to an industry-altering technology.
Second, the Sony decision helped establish that constructive knowledge is not enough to constitute contributory liability. Sony Corp. knew that Betamax was capable of recording copyrighted works off the air.85 Still, such knowledge was not enough to make it liable when its product was capable of non-infringing use.86 The underpinning of the Court's reasoning was that a consumer could use most anything to infringe a copyright.87 It would have been against common sense and "beyond judicial management" to police any article that a consumer might have used for infringing purposes.88 The Sony Court recognized that basing liability on Sony Corp.'s knowledge that some consumers might have used Betamax to infringe copyrights would have foreclosed any potential benefits of the product.89 Though such a restrictive requirement would secure a secondary level of recourse for the copyright owner, it would greatly discourage technological innovation out of fear of liability for another person's actions. This, in turn, would greatly impede the progress of science and arts.90 Imagine if the Supreme Court had decided that constructive knowledge was the requirement: VCR's would no longer exist! Consequently, the Sony decision seems to suggest that contributory liability as it relates to third-party providers of dual-use products and services must require more than constructive knowledge.91
B. File-Sharing Services: Further Defining the Knowledge Requirement
1 . The Ninth Circuit: Requiring Actual Knowledge
More than fifteen years after the Supreme Court's Sony decision, contributory liability began making its mark on another technological innovation - internet-based file-sharing networks. In a publicity-garnering case, A &M Records, Inc. v. Napster, Inc.,92 the Ninth Circuit found Napster, Inc., creator and facilitator of an internet-based file-sharing network, liable as a contributory infringer for the illegal uploads and downloads of its users. Napster, Inc.' s file-sharing network model allowed users to create a list of their files on Napster, Inc.' s central server.94 Thus, although Napster, Inc.'s users did not store and access the files on Napster, Inc.' s server, users had to index the files on their individual computers on Napster, Inc.'s centralized server in order for other users to access those files.95 A&M Records, Inc. brought suit against Napster, Inc. for its users' direct copyright infringement.96 In its response, Napster, Inc., reasoning that its consumers' infringing use did not negate its service's legitimate uses, claimed protection under Sony's staple article of commerce doctrine.
On appeal from a district court ruling in favor of A&M Records, Inc., the Ninth Circuit disagreed with the district court's analysis of infringing uses.98 First, the court of appeals noted that the Sony Court, under the staple article of commerce doctrine, did not attribute the required knowledge to Sony Corp. simply because its Betamax was capable of infringing and non-infringing uses.99 Likewise, the Ninth Circuit, stressing the importance of present and future uses, found that Napster, Inc.'s service was capable of substantial non-infringing use. 00 The distinction, the court reasoned, between Sony and Napster, was that Napster, Inc. continuously maintained its internet program.101 Thus, whereas Napster Inc.' s writing the file-sharing program and making it available to consumers was similar to Sony Corp.'s manufacturing a VCR, the Ninth Circuit opined that Napster, Inc.' s continued facilitation of its service put it outside the boundaries of the staple article of commerce doctrine.102 This latter maintenance gave the Ninth Circuit enough evidence to hold that Napster, Inc. had both actual and constructive knowledge of its users' direct infringement.103 Nonetheless, even though both actual and constructive knowledge were present, the court stated that it was Napster, Inc.' s "actual, specific knowledge of direct infringement" that prevented the company from avoiding liability.104
a. Identifying Requisite Knowledge: Napster 's Service Versus Sony 's Product
In light of Napster's application of Sony and contributory liability to a service rather than a product, it makes further sense to require actual, specific knowledge of direct infringement in order to be liable as a contributory infringer.105 The Ninth Circuit viewed Napster, Inc.'s liability through facilitation of a service as a logical outgrowth of Sony's staple article of commerce protection.106 The important distinction rested, not in the differences between a product and a service, but in the different levels of knowledge that manufacturing a product and maintaining a service requires. 07 In other words, Napster, Inc.'s liability was not a result of its merely maintaining a service - its liability resulted from the actual knowledge of infringing activity it gained through maintaining that service.
For example, suppose Sony Corp., instead of selling Betamax outright, loaned it to consumers on a per use basis.109 Assume that Sony Corp. set up a procedure whereby the consumer would call Sony Corp. with a request to use Betamax to record a certain television program. In response, Sony Corp. would hand the consumer Betamax and say, "That program will be on Channel 7 at 5:00 p.m." Betamax would still be the same machine, capable of the same functions; however, this type of service would provide Sony Corp. with an entirely different level of knowledge relating to consumers' use for its product.110
Essentially, this is what Napster, Inc. was doing - loaning its product to consumers on a per use basis. Though its product was capable of non-infringing use and classified under Sony's safeharbor, its knowledge made it liable for contributory infringement.111 Napster, Inc.'s consistent interaction with its users' requests and files exposed it to actual, specific knowledge of direct infringement, and it could not hide behind Sony's liability with that level of knowledge.112
b. How Napster's Actual Knowledge Requirement Advances Constitutional Purpose
Similar to the Sony decision, Napster, Inc.' s liability based on actual knowledge furthered the constitutional purpose of copyright protection: the promotion of the progress of science and useful arts. On one hand, holding a third-party liable because he is aware that his product or service is capable of infringing copyrights and may be used for such purposes is too tenuous.114 On the other hand, allowing that third-party to skirt liability when, through facilitation of its product, it learns of specific acts of infringement is considerable leeway that would equally inhibit the promotion of science and art.115 An innovative technology with legitimate uses is in line with the greater good of advancing the public's access to innovation.116 The copyright holder has no right to foreclose the product's potential, especially when he has an action against the direct infringer.117 However, in a situation where the third-party provider through its product knowingly and purposefully aligns himself with the direct infringer's actions, the derived public good is questionable.
The best way to promote the public good is to secure the private party a limited monopoly; the private party's secured benefit merely takes a back seat when it affects the public's access to a new technology with established legitimate use. This does not mean, however, that a third-party provider can knowingly assist another party in directly infringing the copyright owner's rights simply because the product also has non-infringing uses. Therefore, the line established by Napster is this: if a third-party provider's product is used to infringe copyrights, the third-party is not contributorily liable if it can show the product is capable of substantial non-infringing uses; however, if the third-party provider has actual, specific knowledge of directly infringing use and has taken no action to cure such use, the third-party is liable as a contributory infringer despite its products non-infringing capabilities.
2. The Seventh Circuit: Requiring Constructive Knowledge
After Napster, Inc.'s fall, the recording industry targeted other internet-based file-sharing networks.119 The Seventh Circuit case In re Aimster Copyright Litigation120 is especially noteworthy because it set up a federal circuit split regarding the requisite level of knowledge for contributory liability. 12 Whereas the Ninth Circuit required actual, specific knowledge,122 the Seventh Circuit in Aimster only required constructive knowledge, or that the provider should have known of the direct infringement.123 This level of knowledge - analogous to an ostrich burying its head in the sand124 - accepts that the contributing party did not have actual knowledge, but he is liable as if he did.
The fact that Aimster provided encryption software to all of its users, which was the primary difference between its program and Napter, Inc.'s program, occasioned the Seventh Circuit's reliance on constructive knowledge in Aimster.126 When a user sent a request for a file across Aimster' s server, the only person that could decrypt the information was the computer furnishing the sought file.1 7 Accordingly, Aimster claimed that it could not identify the transferred files, which prevented it from obtaining the actual knowledge required for contributory infringement.128 The court rejected this argument, reasoning that Aimster could not avoid liability "by using encryption software to prevent [ifjself from learning what surely [it] strongly suspectfed] to be the case: that the users of [its] service - maybe all the users of [its] service - [were] copyright infringers."129 The court reasoned that, although encryption alone does not make a provider a contributory infringer, Aimster could not use its encryption to shield itself from actual knowledge.130
a. Sony 's Inapplicability to A imster 's Service
On its face, the Seventh Circuit's reasoning does not align well with the Sony Court's unwillingness to impute the required level of knowledge to a dual-use technology; however, as the Aimster court pointed out, Sony's liability shield did not apply to Aimster,132 which makes its reliance on constructive knowledge less convincing. The Seventh Circuit noted that Sony's statement that a product need only be capable of substantial non-infringing use133 did not mean that Aimster could avoid liability by showing its product could be used in non-infringing ways.134 At the time of Sony, consumers were already using Sony Corp.'s Betamax in noninfringing ways.135 Thus, the court opined that this laid the foundation for the Supreme Court's analysis in Sony of whether those uses were substantial}36 By contrast, the Seventh Circuit noted that there was no evidence that Aimster' s software was being used for anything but infringing copyrights. Without substantial noninfringing uses, the court concluded that Aimster' s program did not even qualify as a staple article of commerce and thus fell outside of Sony's safe harbor.138
b. Idle Advancement Toward the Public Good
From a policy standpoint, if Aimster did not even qualify for Sony's dual-use protection, then the Seventh Circuit's reliance on constructive knowledge in Aimster did little to further define contributory liability's limitations or promote the progress of science and art because Aimster would have been liable under either level of requisite knowledge. Sony recognized that Betamax was beneficial to the progress of science and art and would not allow Disney and Universal's private gains to override the public good.139 Napster recognized that the public good was not promoted by allowing a third-party provider to knowingly contribute to direct copyright infringement and avoid liability because the product was also capable of non-infringing use.140 Aimster established that if the exclusive apparent use of the product was to infringe copyrights, then constructive knowledge was adequate to establish contributory liability.141 Without a non-infringing use, the public good has little to no interest in the product because it does nothing to promote the progress of science and art.142
In circumstances where a copyright holder's interests are balanced against a product with exclusively infringing uses, the holder's private benefit should win out no matter what the knowledge requirement. The moment the record companies notified Aimster of their cause of action, Aimster had specific knowledge of infringing activity. At that point, regardless of encryption, unless Aimster subsequently cured the directly infringing activity,143 it would still have had a difficult time escaping liability under the actual knowledge standard of liability. 144 Therefore, the Seventh Circuit's constructive knowledge distinction had little true value because, without a non-infringing use, Aimster had no supporting arguments under either theory and would have been liable to the record companies as a contributory infringer.
c. Why Aimster 's Constructive Knowledge Requirement Does Not Work for Dual-Use Technologies or Advance the Progress of Science and Art
This Note proposes that the crucial flaw of Aimster' s constructive knowledge requirement is this: should Aimster have been proven capable of non-infringing use, a constructive knowledge standard would have risked imputing liability on Aimster solely because of its design - that is, because it encrypted its services.145 This reasoning would be contrary to the Sony Court's reasoning that it would not assign the requisite level of knowledge to a provider simply because it made a product capable of infringing uses as well as non-infringing uses.146 Even though the Seventh Circuit noted that encryption on its own would not necessitate liability, the court's language implied that because Aimster used encryption software, it must have been hiding itself from what the court thought it should have already known: that many of its users were copyright infringers.147 If, instead, an actual knowledge standard applied, Aimster would still have had to cure the infringing activity in order to avoid contributory liability because it would have received notice as soon as the record companies brought the action.148 This approach would likely yield the same result, but the court's reasoning would have been aligned with that of the Supreme Court in Sony. By applying an actual knowledge requirement, the Seventh Circuit would have been favoring the progress of science and art through innovative technology rather than favoring the private benefit of the record companies.149 As the purpose of copyright law is to promote the public good through the progress of science and art, the Seventh Circuit should have sought to protect present and future innovative technology by requiring actual knowledge for liability.
IV. INDUCEMENT THEORY: IMPLICATIONS FOR CONTRIBUTORY LIABILITY
A. Grokster 's Inducement Liability
In 2005, the Supreme Court had another opportunity to define the limitations of contributory liability - this time in the case of Metro-Goldwyn-Mayer Studios, Inc. v. Grower Ltd. In Grower, Metro-Goldwyn-Mayer Studios, Inc. ("MGM") sued "peer-to-peer" network151 providers Grokster, Ltd. and StreamCast for the infringing activities of their users.152 Although Grokster, Ltd. and StreamCast did not know which files were being exchanged at what time, the companies knew of some users' specific infringement activity153 and, in fact, actively encouraged its users' infringing activity.154 While the Ninth Circuit granted summary judgment in favor of Grokster, Ltd. and StreamCast based on Sony's safe harbor,155 the Supreme Court reversed and found the providers liable by focusing on their inducement to infringe as a precursor to contributory liability.
To set up its reliance on inducement, the Groteter Court summarized the extent of its Sony decision: when a product is '"good for nothing else' but infringement," there is no harm in assuming that the provider intended to infringe the copyrights; however, when the product is capable of infringing and non-infringing use, liability must rest on "more acute fault than the mere understanding that some of one's products will be misused."156 Thus, the Groteter Court stated that Sony's rule "[left] breathing room for innovation and a vigorous commerce."
The Court noted, however, that in Sony there was no evidence of Sony Corp. inducing or promoting infringing uses, and without such evidence, the only means for the Sony Court to find liability was contributory infringement.158 The fact set in Sony, the Court continued, did not negate other theories of liability, however.159 Therefore, even though Grokster, Ltd. and StreamCast were capable of non-infringing activity,160 the Court opined that Sony did not protect the parties from being liable for inducing their users to directly infringe copyrights. On this point, the Supreme Court postponed its discussion of Sony's scope, expressly declining to define the limitations of the staple article of commerce doctrine.162 Instead, it transitioned into a discussion and application of inducement theory liability.
The Supreme Court explained the scope of inducement liability, stating that when there is evidence that a provider actively promotes infringement through use of its product, the provider effectively removes itself from any protection under Sony. 63 Nevertheless, to stay in line with Sony's protection of dual-use technologies, the Court required "purposeful, culpable expression and conduct" in order to be liable under an inducement theory.164 In this way, it noted that a provider's knowledge that its product may be used to infringe copyrights would not be enough to support liability, "and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful purpose."165 On this foundation, the Court held that Grokster, Ltd. 's and StreamCast's own actions "disqualified" the providers from Sony's protection.166
B. The Resulting Gap between Inducement Theory and Contributory Liability
At their hearts, Sony and Grohter are means to the same end. In both cases, the Supreme Court recognized that copyright law exists in a continual balance between private secured benefit and the public's access to new information and creativity.167 Although it is Congress's role to weigh that balance, technological change can alter the circumstances of the copyright market, leaving the courts to determine the best application of the law to the facts before them.168 In Sony and Groteter, the Court chose to borrow two different doctrines from patent law in order to fill the gaps in the Copyright Act.169
Unfortunately, the cooperation of the staple article of commerce doctrine and inducement theory liability leaves a substantial hole in liability for contributory infringement. Sony's protection only requires that a product be capable of non-infringing uses.171 Once the provider shows those uses, it will not be liable unless it is acutely aware of infringing activity.172 Inducement theory liability, on the other hand, requires the provider to actively encourage infringing activity.173 As a result, if a provider ensures that its product is capable of substantial non-infringing uses - either presently or in the future - and is cautious to not internally or externally promote the product's capacity for infringing uses, then the provider will not be liable under Sony or Grower, even if it intended all along for its product to assist in copyright infringement.174
Thus, while Grower remedied the specific problem of active inducement, it did not fill all of the existing holes in contributory liability. The question still remains: to what extent can a provider know that its product may be used for infringing purposes before it falls outside of Sony's safe harbor? On one hand, if the requirement is constructive knowledge, then the gap between Sony and Grower shrinks, but the risk of foreclosing innovative, useful technologies increases.175 On the other hand, if the requirement is actual knowledge, the law would favor innovative technologies, but potentially ill-willed providers would be able to hide under Sony's umbrella without fear of being removed by Grower}16 Although the Grower Court declined to define Sony further, its opinion provides insight into the Court's stance on the staple article of commerce doctrine's boundaries.
V. RESOLVING THE GAP
A. What Grokster Means to the Knowledge Requirement
Despite its leaving the circuit split between the Seventh and Ninth Circuits intact,177 the Supreme Court's language in Grower suggests that Sony offers providers whose products are capable of non-infringing use broad, rather than narrow, protection:
In sum, where an article is "good for nothing else" but infringement, there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to infringe. Conversely, the doctrine absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than the mere understanding that some of one's products will be misused. It leaves breathing room for innovation and a vigorous commerce.178
The Court's language '"good for nothing else' but infringement" implies that any amount of non-infringing use should be considered a potential legitimate public interest.179 This is not to suggest that any legitimate use that the provider can think up will suffice. Nevertheless, if the product is "good" for any noninfringing activity - substantial in the present or future - such activity should afford the provider protection unless it has "acute fault" amounting to more than a "mere understanding" that some consumers will infringe copyrights with its product.181
This language appears contradictory to constructive knowledge's "blind-eye" theory that suggests that a provider should be liable simply because he should have known of the infringing activity. Even if the Seventh Circuit believes that constructive and actual knowledge should be held to the same standard, they are not the same state of mind. One with actual knowledge "knows"; one with constructive knowledge "suspects."184 Accordingly, the Groteter Court's language suggests that a provider suspecting that its customers will use its product to infringe copyrights is not enough to bring the provider into Sony's "limited" instance of liability. However, a provider that actually knows of specific infringing conduct and still provides or maintains its product to the infringing consumer would be an instance of "acute fault." In that limited situation, the non-infringing uses of the provider's product would not be enough to shield it from liability. Despite its limited circumstances of liability, the Grower Court reasoned that Sony "leaves breathing room for innovation and vigorous commerce." Therefore, the Supreme Court's language not only implies that Sony envisioned an actual knowledge requirement, but also that actual knowledge's stricter threshold is justified under the purpose of copyright law as a whole.
B. Actual Knowledge Better Furthers the Purpose of Copyright Law
In a digital age where technological innovation occurs at an accelerated pace, creative persons should have the opportunity to develop their creative genius without fear of liability. Concurrently, the law must afford copyright holders a remedy for the violation of their rights.186 Actual knowledge, as opposed to constructive knowledge, should be the required level of knowledge for a finding of contributory liability because it better accommodates this balance.187
The purpose of copyright law is to "promote the Progress of Science and useful Arts" for the good of the public.188 Although the best way to secure the public benefit is granting authors and creative minds limited monopolies to their genius, their private benefit must defer to the public advancement of information, ideas, and technology.189 Implementing an actual knowledge standard in contributory liability furthers that goal by allowing third-party providers more leniency to innovate and create new technologies without fear of liability for their customers' infringing actions.190 Even so, if those providers have actual, specific knowledge of thencustomers' infringing activity, or if they actively induce the infringing activity, the law will not provide them with protection.191 An actual knowledge standard does not allow for blatant disregard of a copyright owner's secured rights; it simply recognizes the impact that innovative technologies can have on the public's access to information and creativity and protects those technologies accordingly.192
On the contrary, should courts implement a constructive knowledge requirement, providers of useful products risk liability for understanding that some of their customers will likely use these products to infringe copyrights.193 Admittedly, this would occasion fewer opportunities for infringing parties with means to meet their desired end; however, this risk would also discourage people from releasing innovative products to the public and hamper the progress of science and art. The law should err on the side of allowing the public access to an innovative technology at the expense of securing a secondary private benefit.194
As a final example, consider Anna, Bandeo and Distribute, Inc. again.195 Anna distributed original copyrighted works as well as plagiarized copyrighted works on Distribute, Inc.'s file-sharing network, and Bandeo distributed its copyrighted music on the same network. Under the current law, Distribute, Inc.'s service is a dual-use technology. Nevertheless, Distribute, Inc.'s liability hinges on an ambiguous level of his knowledge concerning Anna's illegal activity. In today's society, Distribute, Inc., as the provider of an internet-based file-sharing network, undoubtedly knows that some of its users will use the service to infringe copyrights. There has been entirely too much publicity concerning Napster, Inc. and other services to assume otherwise. If constructive knowledge is all that is required, a court may terminate Distribute, Inc.'s service for Anna's infringing action and thereby preclude Bandeo and others like it from using the service legitimately. On the contrary, requiring actual knowledge would shield Distribute, Inc. from liability and protect Bandco's use. As a result, the public benefits directly from Distribute, Inc.'s technology - and indirectly from Bandco's success due to Distribute, Inc.'s service - and the copyright owner can still pursue Anna for direct copyright infringement.
As Albert Einstein suggested, knowledge is a practical concept with limitations - one can only learn what already exists.196 Imagination, however, inspires creativity and progress beyond what one presently perceives.197 As copyright law seeks to spur such progress, only actual, specific knowledge and aid of another person's wrongs should impede the imaginations of our country's creators and authors.
1. Albert Einstein, The Expanded Quotable Einstein 8 (Alice Calaprice ed., Princeton Univ. Press 2000) (1929).
2. T.S. ELIOT, The Sacred Wood, in THE SACRED WOOD AND MAJOR Early Essays 72 (Dover Publ'ns, Inc. 1998) (1920).
3. See discussion infra Part II. B.
4. For purposes of this Note, "file-sharing network" means a computer program that uses an internet connection in order to transfer electronic files from one computer to another.
5. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154 (9th Cir. 2004), rev 'd, 545 U.S. 913 (2005).
6. Collateral to the original author's rights against copyright infringement is the right of attribution - that is, the right of the author to be attributed as the author. See 17 U.S.C. � 106A (2006). While not germane to the central argument of this Note, it is appropriate to indicate that this right, though controversial, exists as an academic parallel to copyright and is of particular importance in the area of journalism as used in the hypothetical. See 3 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT � 8D.03[A][2][c], at 8D^2 (2010) ("True plagiarism is an ethical, not a legal offense .... Plagiarism occurs when someone falsely claims someone else 's words, whether copyrighted or not, as his own. Of course, if the plagiarized work is protected by copyright, the unauthorized reproduction is also a copyright infringement." (quoting Kindergartners Count, Inc. v. DeMoulin, 249 F. Supp. 2d 1233, 1251-52 (D. Kan. 2003))).
7. See discussion infra Part H.A.
8. See discussion infra Part III.B.
9. 545 U.S. 913 (2005).
10. Instead, the Court invoked a separate theory of liability based on inducement. See discussion infra Part III.A.
11. See discussion infra Part IV.B.
12. See discussion infra Part IV.B.
13. U.S. Const, art. I, � 8, cl. 8.
14. See infra note 5 1 and accompanying text.
15. See infra text accompanying note 73. As used throughout this Note, a dual-use product or service refers to a product or service that is capable of being used in a manner that constitutes copyright infringement as well as a manner that does not constitute copyright infringement.
16. See infra note 1 04 and accompanying text.
17. See infra note 77 and accompanying text.
18. Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971) (footnote omitted); see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005) ("One infringes contributorily by intentionally inducing or encouraging direct infringement . . . .").
19. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984).
20. Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 397 (1968) (noting that "mere quantitative contribution cannot be the proper test to determine copyright liability"); see also Matthew Bender & Co. v. West Publ'g Co., 158 F.3d 693, 706 (2d Cir. 1998) ("Two types of activities that lead to contributory liability are: (i) personal conduct that encourages or assists the infringement; and (ii) provision of machinery or goods that facilitate the infringement.").
21. Benjamin W. Rudd, U.S. Copyright Office, Notable Dates in American Copyright, 1783-1969, at 138 (1969) [hereinafter Notable Dates in COPYRIGHT], available at http://www.copyright.gov/history/dates.pdf.
22. U.S. Copyright Office, General Guide to the Copyright Act of 1976, at 3:1-3 (1977) [hereinafter General Guide], available at http://www.copyright.gov/reports/guide-to-copyright.pdf; Notable Dates in Copyright, supra note 21, at 138^tO.
23 . Notable Dates in Copyright, supra note 2 1 .
24. Id. at 141.
25. General Guide, supra note 22, at 1 : 1 . Although the 1976 version of the Copyright Act did expand the breadth of copyright protection, the purpose behind the Copyright Act remained the same. See H.R. REP. No. 94-1476 (1976), reprinted in Legislative History for Copyright Act of 1976, 17 U.S.C.S. Appx. (LEXIS).
26. General Guide, supra note 22, at 3:1-2.
27. See Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 346 (1908) ("[C]opyright property ... is wholly statutory, and depends upon the right created under the acts of Congress passed in pursuance of the authority conferred under article I, � 8, of the Federal Constitution . . . ."); Thompson v. Hubbard, 131 U.S. 123, 151 (1889) ("This right of action [for copyright infringement], as well as the copyright itself, is wholly statutory, and the means of securing any right of action ... are only those prescribed by congress.").
28. U.S. CONST, art. I, � 8, cl. 8. Of note is that the Constitution's identification of "authors" includes assignees of the author's rights. See Stenographic Rep. ofConf. on Copyright, 1st Sess. 54 (1905), (stmt, of Samuel J. Elder) ("When you come down to the question of who oan [sic] take out copyright you are confined by the language of the Constitution to authors and by the broadening of the idea that the courts have given it te [sic] the assignees of authors."), reprinted in 1 LEGISLATIVE HISTORY OF THE 1909 COPYRIGHT ACT pt. C, at 54 (E. Fulton Brylawski & Abe Goldman eds., 1976) .
29. H.R. REP. No. 2222, at 6-7 (1909), reprinted in 6 LEGISLATIVE History of the 1909 Copyright Act pt. S, at 6-7 (E. Fulton Brylawski & Abe Goldman eds., 1976).
30. Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932); see also H.R. Rep. No. 2222, at 7, reprinted in 6 LEGISLATIVE HISTORY OF THE 1909 Copyright Act pt. S, at 7 (E. Fulton Brylawski & Abe Goldman eds., 1976) ("The enactment of copyright legislation by Congress ... is not based upon any natural right that the author has in his writings, . . . but upon the ground that the welfare of the public will be served and progress of science and useful arts will be promoted ....").
31. United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948). This is not to downplay the importance or effectiveness of the conferred right. It merely suggests that the overarching purpose of copyright law is to benefit the public, and, economically, compensating the copyright owner is the best way to induce him to permit public access to his specific talent. See Mazer v. Stein, 347 U.S. 201, 219 (1954) ("The economic philosophy behind the clause empowering Congress to grant . . . copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in 'Science and useful Arts.'"); Paramount Pictures, Inc., 334 U.S. at 158 ("It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius.").
32. H.R. REP. No. 2222, at 7 (1909), reprinted in 6 LEGISLATIVE History of the 1909 Copyright Act pt. S, at 7 (E. Fulton Brylawski & Abe Goldman eds., 1976).
33. Eldred v. Ashcroft, 537 U.S. 186, 247 (2003) (Breyer, J., dissenting) (quoting H.R. REP. No. 100-609, at 22 (1988)).
34. Id.
35. See supra text accompanying notes 3-6.
36. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984).
37. Eldred, 537 U.S. at 247-48 (Breyer, J., dissenting) (internal quotation marks omitted) (reasoning that congressional expansion of copyright duration exceeded its power under the Copyright Clause).
38. H.R. REP. NO. 2222, at 7, reprinted in 6 LEGISLATIVE HISTORY OF the 1909 Copyright Act pt. S at 7 (E. Fulton Brylawski & Abe Goldman eds., 1976).
39. Id.
40. Copyright Act of 1976, Pub. L. 94-553, 90 Stat. 2541 (codified as amended at 17 U.S.C. � 101-810 (1976)).
4 1 . General Guide, supra note 22, at 1 :3.
42. See infra notes 43-44 and accompanying text.
43. 17 U.S.C. � 106 (2006). In its entirety, Section 106 provides the copyright owner the following rights:
(1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
Id. Copyright protections apply to "original works of authorship fixed in any tangible medium of expression." 17 U.S.C. � 102(a) (2006). Works of authorship include: "(1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works." Id.
44. 17 U.S.C. � 501(a)-(b) (2006). The remedies available to the copyright owner include "an injunction to restrain the infringer from violating his rights, the impoundment and destruction of all reproductions of his work made in violation of his rights, a recovery of his actual damages and any additional profits realized by the infringer or a recovery of statutory damages, and attorney's fees." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433-34 (1984); see also 17 U.S.C. � 502-505 (2006).
45. The Semiconductor Chip Protection Act of 1984 created the sole provision providing for contributory liability and does not apply to copyrighted works generally. 3 Nimmer & NiMMER, supra note 6, � 12.04[A], at 12-71. For codified language of exception, see 17 U.S.C. � 905 (2006).
46. Sony Corp. of Am. , 464 U.S. at 434.
47. See infra text accompanying notes 50-55.
48. Sony Corp. of Am., 464 U.S. at 431 (quoting Thompson v. Hubbard, 131 U.S. 123, 151 (1889)).
49. Id.
50. Id. at 432 (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156(1975)).
51. Id. at 431-32; Twentieth Century Music Corp., 422 U.S. at 156 ("When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose.").
52. Sony Corp. of Am., 464 U.S. at 435.
53. See 35 U.S.C. � 271(b) (2006).
54. 3 NlMMER & NlMMER, supra note 6, � 1 2.04[A], at 12-71.
55. See, e.g., In re Aimster Copyright Litig., 334 F.3d 643, 645^16 (7th Cir. 2003) (identifying the "impracticability or futility of a copyright owner[] suing a multitude of individual infringers" as reason for allowing the owner to sue a third-party contributor).
56. Sony Corp. of Am. , 464 U.S. at 435 n. 1 7.
57. Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F. Supp. 399, 403 (S.D.N.Y. 1966); see also Leo Feist, Inc. v. Young, 138 F.2d 972, 975 (7th Cir. 1943); Ted Browne Music Co. v. Fowler, 290 F. 751, 754 (2d Cir. 1923).
58. Screen Gems-Columbia Music, Inc., 256 F. Supp. at 403 (stating that "common law concepts of tort liability are relevant in fixing the scope of the statutory copyright remedy"); see also Kalem Co. v. Harper Bros., 222 U.S. 55, 63 (1911) (noting that without the third party's contribution to the direct infringement, the direct infringement would have been impossible; therefore, the contributing third party is "liable on principles recognized in every part of the law").
59. Aimster, 334 F.3d at 645-46.
60. Remember that the Constitution embodies the belief that benefiting the author is the best way to ensure public access to his creativity. See supra note 3 1 .
61. Admittedly, this is a geographically extreme example, but the availability and breadth of the internet makes it feasible.
62. See Recording Indus. Ass 'N of Am., 2004 Year-End Anti-Piracy Statistics (2004) (stating that the RIAA seized over seventeen million illegal cassette tapes, CDs, CD-Rs, and videotapes between 2002 and 2004); Recording Indus. Ass'n of Am., 2005 Commercial Piracy Statistics (2005) (stating that in 2004 and 2005, the RIAA seized nearly seven thousand CD copying machines and other computer equipment).
63. See Int'l Fed'n of the Phonographic Indus., IFPI Digital Music Report 2008, at 19 (2008), available at http://www.ifpi.org/content/library/ dmr2008.pdf ("[G]iven the volume and the role [file-sharing] plays in distribution to other piracy engines such as blogs and cyberlockers, [file-sharing networks are] still the primary target of industry anti-piracy actions.").
64. 464 U.S. 417 (1984).
65. Specifically, the Sony Court dealt at length with the issue of fair use, as codified in the United States Code, 17 U.S.C. � 107 (2006). See Sony Corp. of Am., A(A U.S. at 447-56. While an important aspect of copyright law, fair use is beyond the scope of this Note.
66. Sony Corp. of Am., 464 U.S. at 422-24. In this context, Betamax could be used in two primary ways: (1) "time-shifting," which allowed consumers to record programs for viewing at a later time and subsequently erase the program from the tape; (2) consumers could record programs to build personal libraries, id. at 423. The latter activity constitutes copyright infringement.
67. Id. at 420.
68. Universal City Studios v. Sony Corp. of Am., 659 F.2d 963, 975 (9th Cir. 1981) ("One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a contributory infringer. There can be no doubt that [Sony Corp.] meetfs] this definition.") (citation omitted) (internal quotation marks omitted), rev 'd, A(A U.S. 41 7 (1984).
69. Nothing suggests that Sony Corp. had actual, specific knowledge that its customers would use Betamax to infringe copyrights. The Ninth Circuit stated only that Sony Corp. "knew" that consumers would use Betamax to duplicate copyrighted programs because that was its "most conspicuous" use. Universal City Studios, 659 F.2d at 975-76. Because Sony Corp. knew that the device could record programs from television, it should have known of the infringement. Id. Thus, the Ninth Circuit concluded that Sony Corp. "intended, expected, [and] encouraged" the infringing use, and thereby found liability appropriate. Id. at 975.
70. Id. at 975-76 ("The record establishes that [Sony Corp.] knew and expected that Betamax's major use would be to record copyrighted programs off-the-air. Second, there is no doubt that [Sony Corp.] ha[s] met the other requirements for contributory infringement - ]inducing, causing, or materially contributing to the infringing conduct of another.").
71. Sony Corp. of Am., 464 U.S. at 439; see also Alfred C. Yen, Sony, Tort Doctrines, and the Puzzle of Peer-to-Peer, 55 Case W. Res. L. Rev. 815, 830-31 (2005).
72. Sony Corp. of Am. , 464 U.S. at 439-42.
73. Id. at 440-42; see also Yen, supra note 7 1 , at 830-3 1 .
74. Sony Corp. of Am. , 464 U.S. at 442.
75. Id. at 440 (quoting 35 U.S.C. � 271(c) (1982)). The "staple article of commerce" doctrine is codified in the United States Code, 35 U.S.C. � 271 (2006). The Court noted that although copyright law and patent law "are not identical twins," their similarities made patent law an appropriate source from which to borrow. Sony Corp. of Am., 464 U.S. at 439 & n. 1 9.
76. Sony Corp. of Am. , 464 U.S. at 442.
77. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 931 (2005); Sony Corp. of Am., 464 U.S. at 442. This reluctance to impute intent is a by-product of patent law's treatment of the "staple article of commerce" doctrine. Grokster, 545 U.S. at 932; Sony Corp. of Am., 464 U.S. at 441. If a product can only be used in ways covered by a patent, then there is no reason not to assume that the provider intended to infringe the patent. Grokster, 545 U.S. at 932. Conversely, if the product can be used in a way not covered by the patent, then the patent owner cannot "extend his monopoly beyond the limits of his specific grant" to take control of the product's production and use. Sony Corp. of Am., 464 U.S. at 441.
78. Sony Corp. of Am., 464 U.S. at 442. At trial, Sony Corp. presented evidence that religious, sports, and educational programming had considerable present and future use. Id. at 444. Of note is the testimony of Fred Rogers of Mister Rogers' Neighborhood. At the time of the Sony case, over three million families watched Mister Rogers' Neighborhood daily. Rogers had zero objections to noncommercial home recording. In fact, he thought the practice would be very beneficial to families in the midst of everyday life. Id. at 445.
79. Id. at 442. Even though Disney and Universal were both large players in their industry, their combined market share was less than ten percent. Id. at 443. The Court noted that finding Sony liable would have had a "significant impact" on the remaining viewing authence and prevented an activity that "may enlarge the total viewing authence." Id.
80. Id. at 446. The Supreme Court footnoted that television producers derived their benefit from advertising revenues. Thus, in other contexts, "[i]t may be rare for large numbers of copyright owners to authorize duplication of their works without demanding a fee from the copier." Id. at 447 n.28. Still, it does not matter whether the decision to authorize is economically reasonable to the courts so long as the authorization creates a substantial use. Id. Therefore, in the context of internet-based file-sharing networks, the test should be whether the sharing network facilitates a substantial market for authorized uses of copyrights.
8 1 . See supra text accompanying note 28.
82. See supra text accompanying note 28.
83. To alleviate any sympathy for Disney and Universal, the home video industry took in revenue of over twenty-four billion dollars in 2004 alone. Disney's Finding Nemo, the best-selling DVD of all time, grossed twenty-eight million dollars in DVD sales in 2004 alone. Mike Snider, DVD Continues Spinning Success, USA TODAY, Jan. 6, 2005, http://www.usatoday.com/life/movies/ news/2005-0 1 -05-dvd-sales-inside_x.htm.
84. See Sony Corp. of Am., 464 U.S. at 446-47.
85. See supra note 69 and accompanying text; see also Sony Corp. of Am., 464 U.S. at 426 (noting that "Sony [Corp.J's advertising was silent on the subject of possible copyright infringement," but Betamax's instruction manual stated that some recordable materials may be copyrighted, and "[unauthorized recording of such material may be contrary to the provisions of the United States copyright laws") (citation omitted).
86. See Sony Corp. of Am. , 464 U.S. at 437-39.
87. See Universal City Studios, Inc. v. Sony Corp. of Am., 480 F. Supp. 429, 461 (D.C. CaI. 1979), rev'dbySony Corp. of Am., A(A U.S. 417 (1984).
88. Id. For example, suppose an "entrepreneur" goes into a movie theater armed with a video camera in order to duplicate the film and sell it for profit. Without the video camera, it would be impossible to duplicate the film. Undoubtedly, the video camera manufacturer knew that many consumers would use its product to record motion, and it is well known that many people utilize video cameras improperly. Most people - save the producing company whose film the recording party filmed - would not believe the video camera manufacturer liable.
89. See Sony Corp. of Am. , 464 U.S. at 438-4 1 , 446.
90. See supra text accompanying notes 32-33.
91 . See infra text accompanying note 1 55.
92. 239 F.3d 1004 (9th Cir. 2001).
93. Id. at 1021-22.
94. This sparked the development of "peer-to-peer" networks. A "peerto-peer" network allows computer users to access files on other users' computers directly, instead of accessing files stored on a centralized server. See MetroGoldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919-20 (2005).
95. Napster, 239 F.3d at 101 1 . Napster, Inc.'s system showed the files of only those users who were logged-in to the server. Id. at 1012. Once a user made a request for a specific file, the Napster, Inc. server retrieved the internet protocol address of the user's computer with the sought file and connected the seeking computer to the sought computer. Id.
96. Id. at 1011.
97. Id. at 1020.
98. Id. at 1021.
99. Id.; see also supra note 77 and accompanying text.
100. Napster, 239 F.3d at 1021. Specifically, Napster, Inc. provided a "New Artists Program," which gave new artists free exposure without the hassle of agents and promotion fees. See 3 Nimmer & Nimmer supra note 6, � 12.04[A][3][b][ii], at 12-94.
101. Napster, 239 F.3d at 1020-21.
102. Id. at 1020-22; see also 3 NIMMER & NIMMER, supra note 6, � 12.04[A][3][b][ii], at 12-95.
103. Napster, 239 F.3d at 1020 & n.5 (noting that Napster, Inc. had "actual knowledge because: (1) a document authored by Napster[, Inc.] co-founder Sean Parker mentioned 'the need to remain ignorant of users' real names and IP addresses 'since they are exchanging pirated music'; and (2) the Recording Industry Association of America . . . informed Napster[, Inc.] of more than 12,000 infringing files, some of which [were] still available," and Napster, Inc. had "constructive knowledge because: (a) Napster[, Inc.] executives have recording industry experience; (b) they have enforced intellectual property rights in other instances; (c) Napsterf, Inc.] executives have downloaded copy-righted songs from the system; and (d) they have promoted the site with 'screen shots listing infringing files'").
104. Id. at 1020 ("[I]n an online context, evidence of actual knowledge of specific acts of infringement is required to hold a computer system operator liable for contributory copyright infringement. . . . [A]bsent any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material."); see also Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (holding "that a computer system operator can be held contributorily liable if it 'has actual knowledge that specific infringing material is available using its system,' and can 'take simple measures to prevent further damage' to copyrighted works, yet continues to provide access to infringing works") (citations omitted); Religious Tech. Ctr. v. Netcom On-Line Commc'n Serv., Inc., 907 F. Supp. 1361, 1374 (N.D. CaI. 1995) (suggesting that imputing actual knowledge is acceptable if the third-party provider receives notice of specific infringing acts and lets the infringing actions continue).
105 . Napster, 239 F.3d at 1021 .
106. See supra notes 99-104 and accompanying text.
107. See supra note 102 and accompanying text.
108. See supra notes 103-104 and accompanying text.
109. See supra notes 66-70 and accompanying text.
110. See Napster, 239 F.3d at 1020-22 (noting that there exists a culpable difference between a product's capabilities and the provider's continued service ofthat product with knowledge of infringing activity).
111. Id. at 1020-21.
112. Id. at 1021-22; see also supra note 95.
113. See supra text accompanying notes 27-29.
114. See supra notes 76-77 and accompanying text.
115. This is not to suggest that receiving notice is the final straw in liability. It is the third party's continued service regardless of the direct infringement that shores up liability - even when the third party's product is capable of noninfringing uses. See cases cited supra note 104.
116. See infra text accompanying notes 156-157.
117. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 446 (1984).
118. See supra text accompanying notes 32-34.
119. 3 NIMMER & NIMMER, supra note 6, �12.04[A][3][b][ii], at 12-95.
120. 334 F.3d 643 (7th Cir. 2003).
121. See id. at 649 ("We therefore agree . . . that the Ninth Circuit erred in [Napster] in suggesting that actual knowledge of specific infringing uses is a sufficient condition for deeming a facilitator a contributory infringer.").
122. See cases cited supra note 104.
123. Aimster, 334 F.3d at 650 ("Willful blindness is knowledge, in copyright law ... as it is in the law generally."); United States v. Giovannetti, 919 F.2d 1223, 1228 (7th Cir. 1990) (stating that where "there is evidence that the defendant, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings," he can still be liable because "[a] deliberate effort to avoid guilty knowledge is all the guilty knowledge the law requires"); United States v. Josefik, 753 F.2d 585, 589 (7th Cir. 1985) (explaining that "'intentionally' avoiding] knowledge implies more than carelessness" and is enough to constitute knowledge).
124. See Giovannetti, 919 F.2d at 1228 ("[Ostriches] do not just fail to follow through on their suspicions of bad things. They are not merely careless birds. They bury their heads in the sand so that they will not see or hear bad things. They deliberately avoid acquiring unpleasant knowledge.").
125. AMPAT/Midwest, Inc. v. IU. Tool Works, Inc., 896 F.2d 1035, 1042 (7th Cir. 1990) ("[A] person who plays ostrich may be held to have acted deliberately: to know, and to want not to know because one suspects, may be, if not the same state of mind, the same degree of fault.").
126. Aimster, 334 F.3d at 646-47. Like Napster, Inc., Aimster's server did not store the uploaded files; all files were stored on individual users' computers. Id.
127. Id. at 646.
128. Id. at 650.
129. Id.
130. Id.
131. See supra text accompanying note 99.
132. Aimster, 334 F.3d at 651-53.
133. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 442 (1984).
134. Aimster, 334 F.3d at 65 1 .
135. Sony Corp. of Am., A(A U.S. at 424.
136. Id. at 442-47.
137. Aimster, 334 F.3d at 653. The court laid out five examples of potential non-infringing uses but emphasized that there was no evidence showing that any of Aimster's users ever utilized Aimster for those purposes, much less that any such uses were substantial. Id. at 652-53. Dual-use technologies require courts to weigh the respective uses, but when the provider evidences no substantial non-infringing uses, a balancing test is unnecessary. Id. at 649-50.
138. See supra text accompanying note 75.
139. See supra Part III.A.
140. See supra Part III.B.1.
141 . See supra Part III.B.2.
142. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 932 (2005).
143. As an internet service provider, Aimster maintained and facilitated its servers. Thus, even though its service was encrypted, it was required to eliminate, or at least attempt to eliminate, the infringing activity upon notice in order to avoid liability. See cases cited supra note 104.
144. The court stated that even if Aimster could have avoided liability by showing substantial non-infringing uses, it would still have had to show that it would have been "disproportionately costly" for Aimster to cure the infringing uses. In re Aimster Copyright Litig., 334 F.3d 643, 653 (7th Cir. 2003). Because Aimster did not show how encryption "effective against the service provider itself was beneficial to the service, the court again concluded that Aimster' s only intent for the encryption was to shield itself from actual knowledge in hopes of falling under Sony's safe harbor. Id. (emphasis omitted).
145. See id. at 650 ("[B]y using encryption software to prevent [ifjself from learning what surely [it] strongly suspects to be the case: that the users of [its] service-maybe all the users of [its] service-are copyright infringers.") (emphasis omitted).
146. See supra text accompanying note 99.
147. See supra text accompanying note 129.
148. See cases cited supra note 104.
149. See supra text accompanying notes 30-34.
150. 545 U.S. 913 (2005).
151. Unlike Napster, Inc. and Aimster, "peer-to-peer" networks do not index the users' files on a centralized server. The file indexes are stored on each individual computer, and a user seeking a particular file communicates directly to those computers indexing the sought file. See id. at 919-20; supra note 94.
1 52. Grokster, 545 U.S. at 920-2 1 .
153. Not only did the companies assist their users in utilizing downloaded copyrighted files, but also MGM Studios notified them of eight million copyrighted files existing on the companies' networks. Id. at 923.
154. Id. at 923-24 ("The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement."). Both companies marketed their product as successors to Napster, Inc.'s user-base. Id. at 925. Specifically, StreamCast advertised its service as a direct alternative to Napster, Inc., boasting that getting into legal trouble was the best way to get advertising for its product. Id. Grokster, Ltd. 's inducement consisted of utilizing search engine programs to reference its service whenever someone searched for "Napster" or "[fjree filesharing." Id.
155. The Ninth Circuit held that Grokster, Ltd. and StreamCast were not hable under Sony because their products were capable of non-infringing uses. Id. at 927. As such, the providers must have had actual, specific knowledge of infringement and made no action to cure that infringement in order to be liable. Id. The Ninth Circuit stated that neither Grokster, Ltd. nor StreamCast had knowledge because of their decentralized system. Id. at 928. Because the users searched, retrieved, and stored their own files, Grokster, Ltd. and StreamCast' s only involvement was distributing a product, similar to Sony Corp. 's distribution of Betamax. Id. As Sony Corp. was not liable under those circumstances, the Ninth Circuit held that Grokster, Ltd. and StreamCast were not liable.
The difference between the Ninth Circuit's holding in Grokster and its holding in Napster is slight but central. In Napster, the Ninth Circuit held that Napster, Inc. had knowledge because of its continual maintenance of its system. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1020-22 (9th Cir. 2001). In that case, the users indexed their files on Napster, Inc.'s central server. In order to access a file from another user's computer, the seeking user must search Napster, Inc.'s master index. Napster, Inc.'s server then connected the two users' computers to facilitate the file transfer. Napster, Inc.'s knowledge, then, resulted from its maintaining the index and facilitating the transfer. However, in Grokster, Grokster, Ltd. did not have a central server indexing the files. Its product operated by allowing each individual computer to index its own files and connect with another user's computer. Grokster, Ltd., unlike Napster, Inc., did not actually facilitate the transfers; it simply provided the means, analogous to Sony Corp.'s distribution of Betamax.
156. Grokster, 545 U.S. at 932-33 (quoting Canda v. Mich. Malleable Iron Co., 124 F. 486, 489 (6th Cir. 1903)).
157. Id. at 933.
158. Id at 931.
159. Id. at 934.
160. One specific example was the band Wilco, who, among thousands of other artist, distributed its music through file-sharing networks. MetroGoldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154, 1161 (9th Cir. 2004), rev'd, 545 U.S. 913 (2005). Wilco, having recently been dropped by its record label, released its newest album through Grokster, Ltd. 's service. Id. The popularity of the album resulted in Wilco signing a new record contract and going on to win two Grammy awards. Id.
161. Grower, 545 U.S. at 933-34. This view overruled the Ninth Circuit's application of Sony. See Grower, 380 F.3d at 1162. The Ninth Circuit held that without actual knowledge of infringing activity at the time of contribution, the provider of a product capable of non-infringing use cannot be held liable. Id. The Supreme Court expressly stated that the Ninth Circuit's view of Sony was error in the sense that it expanded Sony's limitations on imputing intent to all theories of liability. Grokster, 545 U.S. at 934.
162. Id. at 933-34. Although the majority declined to expound further, Grofater's two concurring opinions dealt at length with Sony's limitations.
In her concurrence, Justice Ginsburg stressed that Sony did not require clarification on how much use was "substantial" use because most of its customers engaged in non-infringing activity. Id. at 943-44 (Ginsburg, J., concurring). Despite the district court and Ninth Circuit finding Grokster, Ltd. 's and StreamCast's non-infringing uses "substantial," Justice Ginsburg thought that any non-infringing uses, present and future, were "dwarfed" by the total number of files shared on the networks. Id. at 948. As a result, the Ninth Circuit limited Sony "to a hardly ever category" that the circumstances of the case do not support. Id. at 944 n.l.
Conversely, Justice Breyer agreed with the Ninth Circuit's application of Sony. Id. at 949 (Breyer, J., concurring) ("The Court's opinion in Sony and the record evidence (as described and analyzed in the many briefs before us) together convince me that the Court of Appeals' conclusion has adequate legal support."); 3 NlMMER & NlMMER, supra note 6, � 12.04[A][3][b][ii], at 12-100. In his view, the emphasis of the Sony decision is that a product only needs to be capable of substantial non-infringing use. The Sony Court only identified approximately nine percent of authorized programming and held such use substantial. Grokster, 545 U.S. at 951 (Breyer, J., concurring). As ten percent of noninfringing files located on Grokster, Ltd.'s and StreamCast's networks are noninfringing, the district court and Ninth Circuit were justified in deeming such uses substantial - especially considering that number could expand in the future. Id. at 952, 955.
Moreover, Justice Breyer considered the "real question" of Grower to be whether the Court should modify Sony. Id. at 956. In his view, it should not, because Sony has protected new technologies, a strict interpretation would "significantly weaken that protection," and that weakening would outweigh the copyright related benefits. Id. at 956-65; 3 NiMMER & NlMMER, supra note 6, � 12.04[A][3][b][ii], at 12-101 to 12-102. Therefore, Sony "makes it difficult for courts to find secondary liability where new technology is at issue" excepting cases where "the product in question will be used almost exclusively to infringe copyrights" or there is inducement as defined by the majority opinion. Groteter, 545 U.S. at 957 (Breyer, J., concurring).
163. Groteter, 545 U.S. at 935 (majority opinion) ("[A] showing that infringement was encouraged overcomes the law's reluctance to find liability when a defendant merely sells a commercial product suitable for some lawful use ___ "); see also Kalem Co. v. Harper Bros., 222 U.S. 55, 62-63 (191 1) (stating that where a "defendant not only expected but invoked by advertisement" its product's infringing use, "[i]t is liable on principles recognized in every party of the law"); Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir. 1988) ("[A] person infringes by actively and knowingly aiding and abetting another's direct infringement."); W. Page Keeton, et al., Prosser and Keeton on the LAW OF Torts 37 (5th ed. 1984) ("There is a definite tendency to impose greater responsibility upon a defendant whose conduct was intended to do harm, or was morally wrong.").
Inducement theory, like the staple article of commerce doctrine, is codified in patent law. See Grohter, 545 U.S. at 935-36 & nn.10-1 1 ("For the same reasons that Sony took the staple-article doctrine of patent law as a model for its copyright safe-harbor rule, the inducement rule, too, is a sensible one for copyright.").
164. Grokster, 545 U.S. at 937. The Court also noted that a finding of liability under inducement theory still requires an underlying direct infringement. Id. at 940.
165. Id. at 937.
166. Id. at 938. In this section, the Court specifically points out three actions sufficient for disqualification: (1) the compames' purposefully targeting Napster, Inc.'s old user-base; (2) the companies' failure to adopt any form of software eliminating or reducing infringing activity; (3) the companies' profit from advertising appearing while users are downloading files. Id. at 939-40. As to the third action, the Court notes that renting advertising space alone would not be sufficient for liability, but viewed in context of the other evidence, it is appropriate. Id. at 940.
167. Id. at 928 ("The more artistic protection is favored, the more technological innovation may be discouraged; the administration of copyright law is an exercise in managing the tradeoff."); Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (stating that copyright law involves a balance between the "interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand").
168. See supra notes 50-52 and accompanying text.
169. As discussed, the Supreme Court maintains that copyright and patent law, though separate bodies of law, are similar enough to justify borrowing from one to aid the application of the other. See supra note 75. Still, the Court's reliance on separate bodies of law is not universally praised. See 3 NlMMER & NlMMER, supra note 6, � 12.04[A][5][c], at 12-117. ("The best way to construe the Copyright Act is to refer to provisions of the Copyright Act in the context of the legislative history by which they were adopted, not by reference to a separate statute. Yet Grokster constitutes binding precedent that, unless revisited by the Supreme Court or jettisoned by Congress, governs throughout the United States.").
170. 3 NlMMER & NlMMER, supra note 6, � 12.04[A][5][b], at 12-1 16.1 to 116.2.
171. See supra note 77 and accompanying text.
1 72. See supra note 1 56 and accompanying text.
173. See supra notes 163-165 and accompanying text. Despite the differences between Sony's protective doctrine and Grokster's inducement theory, inducement theory liability is not wholly considered an "innovation," but merely an "elaboration" of contributory infringement. 3 Nimmer & Nimmer, supra note 6, � 12.04[A][4][b], at 12-114 to 116. Remember that contributory liability ensnares one who "induces, causes or materially contributes to the infringing conduct of another." See supra note 18 and accompanying text (emphasis added). Accordingly, inducement liability could qualify as a subcategory under contributory liability. The difference, however, is that Sony based its analysis on the capabilities of the product itself. 3 Nimmer & Nimmer, supra note 6, � 12.04[A][4][b], at 12-114 to 116. Grokster focused on the provider's intent apart from the product's capabilities. Id. Whereas Grokster only requires the provider's inducing actions and direct infringement, regardless of whether the inducement actually caused the infringement, Sony would require that the provider's inducement actually induced the direct infringement. Id. This distinction appears arbitrary on its face, but it would possibly result in two different outcomes applied to the facts of Grokster. StreamCast's inducement was largely internal. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 925 (2005). As such, it is unlikely that MGM could have shown that the interoffice promotion and advertisement concepts actually induced direct infringement, and StreamCast would not be liable despite its blatant disregard for copyright holders' rights. Grokster, Ltd. 's inducement was less straight forward, involving coding intended to steer consumers toward its product. Id. This action may have actually induced a user to download Grokster and subsequently infringe copyrights, but MGM would likely have a difficult time coming up with evidence that concretely establishes that fact.
174. 3 NlMMER & NlMMER, supra note 6, � 12.04[A][5][b], at 12-1 16.1 to 116.2.
175. The Grower Court's summary of the Sony decision implies that there is a directly proportional relationship between the amount of knowledge required for liability and the amount of "breathing room" for new technologies. See supra text accompanying notes 156-157.
176. See supra text accompanying notes 156-157.
177. While most circuits have remained silent on an explicit preference for an actual or constructive knowledge requirement for contributory liability, the Fifth Circuit has sided with the Seventh Circuit and interpreted Sony as solely requiring constructive knowledge. Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 262 (5th Cir. 1988). Furthermore, it is of note that some district courts located in the remaining circuit jurisdictions have recognized a constructive knowledge requirement as well. See, e.g., Arista Records LLC v. USENET.com, Inc., 633 F. Supp. 2d 124, 154 (S.D.N. Y. 2009) ("The requisite knowledge for contributory infringement liability may be actual or constructive. Turning a 'blind eye' to infringement has also been found to be the equivalent of knowledge. Thus, knowledge of specific infringements is not required to support a finding of contributory infringement.") (citations omitted); Encore Entm't, LLC v. KIDdesigns, Inc., No. 3:03 1 129, 2005 U.S. Dist. LEXIS 44386, at *49 (M.D. Tenn. Sept. 14, 2005) (stating that the level of knowledge required "to prove contributory liability . . . may be either actual or constructive"); Venegas-Hernandez v. Peer, No. 01-1215 (JAF), 2004 U.S. Dist. LEXIS 28622, at *79 (D.P.R. May 19, 2004) (stating that where "[defendants have proffered evidence . . . suggesting that they had no constructive knowledge" of the act, the court could not "find that . . . [defendants had the requisite knowledge ... to constitute contributory infringement"); CoStar Group Inc. v. Loopnet, Inc., 164 F. Supp. 2d 688, 705 (D. Md. 2001) ("Here, the question is whether [plaintiffs] notice of claimed infringement was sufficient to satisfy the knowledge prong of the test for contributory infringement either by providing actual knowledge, a 'red flag' that infringement was occurring, or constructive knowledge.").
178. Grohter, 545 U.S. at 932-33 (citations omitted).
1 79. Id at 932 (quoting Canda v. v. Mich. Malleable Iron Co., 124 F. 486, 489 (6th Cir. 1903)).
1 80. See supra notes 133-138 and accompanying text.
181. Grokster, 545 U.S. at 932-33.
182. See supra note 123 and accompanying text.
1 83. See supra note 125 and accompanying text.
184. See supra note 125 and accompanying text.
185. Groteter, 545 U.S. at 933.
186. See supra Part ILB.
1 87. See supra Parts III, I V. A.
188. See supra note 28 and accompanying text.
1 89. See supra note 33 and accompanying text.
190. See supra Part I V.B.
191. See swpra Part IV.B.
192 . See supra Part V. A.
193. See supra notes 64-77 and accompanying text.
194. As copyright law is primarily purposed for the progress of science and arts for the public good, providing copyright owners with wide-scope recourse against third-party service providers whose products may be the next VCR is not promotion of the public good. In some instances, it is more so the protection of an individual's pocket book. Specific to internet-based file-sharing networks, providing a second level of remedy to the record companies holding the music copyrights - in the form of an injunction against the provider - may actually disfavor the artists behind the music. Consider the following excerpt:
Self-distribution is an option for recording artists attempting to avoid a long-term recording contract or for artists who are unwilling to subject themselves to an experimental program. Digital distribution can allow artists to reach numerous potential buyers without ever signing a recording contract with a major record company. Self-distribution may work best for new artists without contractual obligations to a record company and top-selling artists that have completed their contract and wish to terminate their business relationship with a record company. . . .
A comparison of traditional distribution to digital distribution suggests that a radical change in recording contracts is unlikely. Record companies can, and likely will, stall the implementation of digital distribution for their financial security. . . . . . . .
. . . Record companies have fostered legislative and technological methods to prevent copyright infringement, but some have proven unsuccessful because these companies fear loss of revenue and market position.
Revella Cook, The Impact of Digital Distribution on the Duration of Recording Contracts, 6 VAND. J. Ent. & Tech. L. 40, 45^49 (2003) (citations omitted). But see Int'l Fed'n of the Phonographic Indus., IFPI Digital Music Report 2009, at 18 (2009), available at http://www.ifpi.org/content/library/ dmr2009-real.pdf ("While technology has made 'do it yourself releases possible, in reality these have, to date, been largely the preserve of a few longestablished acts.").
1 95 . See supra Part I.
196. See supra note 1 and accompanying text.
197. See supra note 1 and accompanying text.
[Author Affiliation]
JASON G. MCCUISTION*
[Author Affiliation]
* Juris Doctor Candidate, May 201 1, The University of Memphis, Cecil C. Humphreys School of Law, University of Memphis Law Review, Senior Staff Member. The author would like to thank Emeritus Professor of Law Daniel Wanat of The University of Memphis, Cecil C. Humphreys School of Law and Shea Oliver for their comments and guidance throughout the writing process.
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