BWP Media USA, Incorporated, et al v. T & S Software Associates, Inc

Filing

PUBLISHED OPINION FILED. [16-10510 Affirmed ] Judge: JES , Judge: EBC , Judge: LHS Mandate pull date is 04/17/2017 [16-10510]

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

FILED
No. 16-10510

March 27, 2017
Lyle W. Cayce
Clerk

BWP MEDIA USA, INCORPORATED, doing business as Pacific Coast News;
NATIONAL PHOTO GROUP, L.L.C.,
Plaintiffs - Appellants
v.
T & S SOFTWARE ASSOCIATES, INCORPORATED,
Defendant - Appellee

Appeal from the United States District Court
for the Northern District of Texas
Before SMITH, CLEMENT, and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
This appeal is about whether “volitional conduct” is required to establish
a claim for direct copyright infringement. Defendant T&S Software Associates,
an internet service provider, hosted an internet forum on which third-party
users posted images that infringed copyrights owned by plaintiffs BWP Media
USA and National Photo Group.
secondary copyright infringement.

The plaintiffs sued T&S for direct and
The district court granted summary

judgment in favor of T&S. The plaintiffs appeal the district court’s directinfringement holding. We AFFIRM.

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FACTUAL AND PROCEDURAL BACKGROUND
T&S hosts a website that includes a public forum called “HairTalk.”
Users of the forum may post content, share comments, ask questions, and
engage in online interactions with other users on a range of topics including
hair, beauty, and celebrities. Use of HairTalk is governed by terms of service
providing that “any photo containing . . . celebrities . . . or any copyrighted
image (unless you own the copyright) is not permitted.” Every time someone
logs on to HairTalk, the user must agree to these terms. Also, each page of the
website includes a “contact us” link, which allows anyone to contact the website
to report objectionable content. During the relevant time period, T&S did not
have an agent designated to receive notices of content that should be removed
as required to qualify for the statutory safe harbor of the Digital Millennium
Copyright Act (“DMCA”). The specific section on the protections arising from
naming an agent is 17 U.S.C. § 512(c).
Plaintiffs BWP Media USA and National Photo Group (collectively,
“BWP”) are registered owners of various celebrity photographs.

Three

photographs owned by BWP were posted by third-party users on HairTalk
without BWP’s permission. They depicted Ke$ha, Julianne Hough, and Ashlee
Simpson. BWP sued for copyright infringement. The suit claimed that T&S
was liable for its users’ infringement because it failed to designate a registered
agent under Section 512.

T&S learned of the photographs upon

commencement of this suit and promptly removed them. The district court
granted summary judgment in favor of T&S as to both direct and secondary
infringement. BWP appeals the district court’s judgment only as to T&S’s
direct-infringement liability.

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DISCUSSION
We review a grant of summary judgment de novo, applying the same
standard as the district court. Ibe v. Jones, 836 F.3d 516, 526 (5th Cir. 2016).
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” FED. R. CIV. P. 56(a). Here, there is no factual dispute; the
case turns on the proper interpretation of the Copyright Act. We review the
district court’s interpretation of the Act de novo. Comput. Mgmt. Assistance
Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 399–400 (5th Cir. 2000).
The determinative issue on appeal is whether volitional conduct is
required to prove a claim of direct infringement. Our answer starts with the
text of the Copyright Act. The Act gives a copyright owner “the exclusive
right[]” to “reproduce the copyrighted work” and “display” it “publicly.” 17
U.S.C. § 106(1), (5). “Anyone who violates any of the exclusive rights of the
copyright owner as provided by section[] 106 . . . is an infringer . . . .” Id.
§ 501(a). Thus, a plaintiff generally must prove two elements to establish
infringement: “(1) ownership of a valid copyright, and (2) copying of constituent
elements of the work that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv.
Co., 499 U.S. 340, 361 (1991).
When there is a question as to who infringed, the analysis can turn on
whether the type of infringement is direct or secondary. Direct liability is
imposed on those who “trespass[] into [the copyright owner’s] exclusive domain
by using or authorizing the use of the copyrighted work . . . .” Sony Corp. of
America v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984). Secondary
infringement involves liability for actions of third parties. See Metro-Goldwyn-

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Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). Only direct
infringement is at issue on this appeal.
In direct-infringement cases, courts have trended toward requiring
volitional conduct. This requirement first came to the fore in 1995 when a
California district court held that an ISP serving as a passive conduit for
copyrighted material was not liable for direct infringement. See Religious
Tech. Ctr. v. Netcom On-Line Commc’n Servs., 907 F. Supp. 1361 (N.D. Cal.
1995). There, a user posted copyrighted works to an online bulletin board. Id.
at 1365.

The owners of the copyrighted works, seeking compensation for

infringement, sued the operator of the bulletin-board service and the ISP that
the operator used to access the internet.

Id.

The court reasoned that

“[a]lthough copyright is a strict liability statute, there should still be some
element of volition or causation which is lacking where a defendant’s system is
merely used to create a copy by a third party.” Id. at 1370.
Accordingly, the court rejected the plaintiffs’ argument that the ISP
stored and thereby copied the copyrighted works: “Where the infringing
subscriber is clearly directly liable for the same act, it [would] not make sense
to adopt a rule that could lead to the liability of countless parties whose role in
the infringement [was] nothing more than setting up and operating a system
that is necessary for the functioning of the Internet.” Id. at 1372. The court
did “not find workable a theory” that would hold online parties, such as ISPs,
liable “for activities that cannot reasonably be deterred.” Id. Thus, because
the Netcom plaintiffs could not show that either the ISP or bulletin-board
service was actively involved in the infringement, the court held neither was
liable as a direct infringer. Id. at 1372–73, 1381–82.
Other courts followed.

The Fourth Circuit was an early adopter of

Netcom and the volitional-conduct requirement. CoStar Grp., Inc. v. LoopNet,
Inc., 373 F.3d 544, 551 (4th Cir. 2004). There, the copyright owner sued an
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ISP, LoopNet, for direct infringement after “CoStar’s copyrighted photographs
were posted by LoopNet’s subscribers on LoopNet’s website.” Id. at 546. Like
the copyright owners in Netcom, CoStar argued its “photographs were copied
into LoopNet’s computer system,” and so LoopNet was strictly liable, even
though LoopNet’s actions were passive. Id. The court disagreed. It held
instead that because LoopNet, as an ISP, was “simply the owner and manager
of a system used by others who [were] violating CoStar’s copyrights and [was]
not an actual duplicator itself, it [was] not directly liable for copyright
infringement.” Id.
The Fourth Circuit also rejected the argument that “any immunity for
the passive conduct of an ISP such as LoopNet must come from the safe harbor
immunity provided by the Digital Millennium Copyright Act (‘DMCA’), if at all,
because the DMCA codified and supplanted the Netcom holding.” Id. at 548.
Netcom, the court concluded, “grounded its ruling principally on its
interpretation of § 106 of the Copyright Act as implying a requirement of
‘volition or causation’ by the purported infringer,” not only on pragmatic
concerns or a gap in the law. Id. at 549. The court commended Netcom’s
approach in part because the Act “requires conduct by a person who causes in
some meaningful way an infringement.” Id. Thus, “to establish direct liability
under §§ 501 and 106 of the Act, something more must be shown than mere
ownership of a machine used by others to make illegal copies.” Id. at 550.
Instead, “[t]here must be actual infringing conduct with a nexus sufficiently
close and causal to the illegal copying that one could conclude that the machine
owner himself trespassed on the exclusive domain of the copyright owner.” Id.
In a developing line of authority, every circuit to address this issue has
adopted some version of Netcom’s reasoning and the volitional-conduct
requirement. See, e.g., Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 666–67
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(9th Cir. 2017); Leonard v. Stemtech Int’l Inc, 834 F.3d 376, 387 (3d Cir. 2016);
Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 131 (2d Cir. 2008). 1
BWP argues we should not step into this line because the Supreme
Court’s 2014 decision in Aereo rejected both the Netcom line of cases and the
volitional-conduct requirement generally. See American Broadcasting Cos. v.
Aereo, Inc., 134 S.Ct. 2498 (2014). In that case, Aereo was sued for allegedly
infringing the petitioners’ exclusive right to perform their copyrighted works
publicly under Section 106(4) “by selling its subscribers a technologically
complex service that allow[ed] them to watch television programs over the
Internet at about the same time as the programs [were] broadcast over the
air.” 2 Id. at 2503. The first issue was whether Aereo “perform[ed].” Id. at
2504.

The Supreme Court compared Aereo’s service to the community-

antenna-television (“CATV”) systems that Congress had meant to bring within
the Act’s scope via a set of 1976 amendments. 3 Id. Although it acknowledged

We recognize, as other courts have, that “the word ‘volition’ in this context does not
really mean an ‘act of willing or choosing’ or an ‘act of deciding’ . . . .” Giganews, 847 F.3d at
666. One court decided the word “stands for the unremarkable proposition that proximate
causation historically underlines copyright infringement liability no less than other torts.”
Id. (quotation marks omitted). It also has been held that “volition requires a relationship
between the system owner and the copyrighted work that will permit the owner to prevent
infringement of the work without the necessity of monitoring the behavior of third parties.”
Robert C. Denicola, Volition and Copyright Infringement, 37 CARDOZO L. REV. 1259, 1276
(2016). At the very least, the Act “requires conduct by a person who causes in some
meaningful way an infringement.” CoStar, 373 F.3d at 549 (emphasis omitted).
1

Aereo’s system allowed a subscriber to select a show from Aereo’s website, after
which Aereo’s system, consisting of thousands of antennas in a centralized warehouse,
responded as follows. First, a server tuned an antenna, dedicated to one subscriber alone, to
the broadcast carrying the selected show. Next, a transcoder translated the signals received
into data that could be transmitted over the internet. A server would save that data into a
subscriber-specific folder and then begin streaming the show onto the subscriber’s screen
once a few seconds of programming had been saved. This continued until the subscriber
watched the entire show. See Aereo, 134 S. Ct. at 2503.
2

The CATV provider used a system of antennas on hills to “amplif[y] and modulate[]
[copyrighted local TV] signals in order to improve their strength and efficiently transmit
3

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that Aereo’s subscribers selected the content to be performed, the Court
concluded that “[g]iven Aereo’s overwhelming likeness to the cable companies
targeted by the 1976 amendments, this sole technological difference between
Aereo and traditional cable companies does not make a critical difference . . . .”
Id. at 2507. Then, after also concluding that Aereo performed “publicly,” the
Court held Aereo was liable for infringement. Id. at 2508. The Court never
addressed whether Aereo’s conduct was volitional, resting its holding instead
on the similarities between the CATV systems and Aereo’s system.
We find the dissent to be helpful in understanding the decision. Justice
Scalia concluded that Aereo could not be held directly liable because, among
other things, it did not engage in volitional conduct. Id. at 2512 (Scalia, J.,
dissenting). To him, whether a defendant may be held directly liable “[m]ost
of the time . . . will come down to who selects the copyrighted content: the
defendant or its customers.” Id. at 2513. He then offered a comparison:
A comparison between copy shops and video-on-demand
services illustrates the point. A copy shop rents out photocopiers
on a per-use basis. One customer might copy his 10-year-old’s
drawings—a perfectly lawful thing to do—while another might
duplicate a famous artist’s copyrighted photographs—a use clearly
prohibited by § 106(1). Either way, the customer chooses the
content and activates the copying function; the photocopier does
nothing except in response to the customer’s commands. Because
the shop plays no role in selecting the content, it cannot be held
directly liable when a customer makes an infringing copy.
Video-on-demand services, like photocopiers, respond
automatically to user input, but they differ in one crucial respect:

them to [the home TV sets of its] subscribers.” Aereo, 134 S. Ct. at 2504. The subscriber
could choose any program he wanted to watch by turning the knob on his TV set. In two prior
cases, the Court had held CATV providers were not infringers, but Congress amended the
Copyright Act in 1976 “in large part to reject the Court’s holdings in” those cases. Id. at 2505.
Congress clarified that “both the broadcaster and the viewer of a television program ‘perform,’
because they both show the program’s images and make audible the program’s sounds.” Id.
at 2506 (emphasis omitted).

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They choose the content. When a user signs in to Netflix, for
example, ‘thousands of . . . movies and TV episodes’ carefully
curated by Netflix are ‘available to watch instantly.’ That selection
and arrangement by the service provider constitutes a volitional
act directed to specific copyrighted works and thus serves as a
basis for direct liability.
Id. at 2513 (alteration and citation omitted).
Justice Scalia concluded that Aereo was neither one of his examples;
instead, it was like “a copy shop that provides its patrons with a library card,”
providing both the technology and indirect access to the content. Id. at 2514.
Because such a shop does not itself choose the content, it does not act with the
requisite volition and thereby does not directly infringe. Id. Neither, he
concluded, did Aereo. Id.
The Court rejected this argument primarily because Aereo’s service was
not materially distinguishable from the CATV systems. Id. at 2507. The Court
did not, though, explicitly reject Justice Scalia’s formulation of the volitionalconduct requirement. Indeed, it noted that “[i]n other cases involving different
kinds of service or technology providers, a user’s involvement in the operation
of the provider’s equipment and selection of the content transmitted may well
bear on whether the provider performs within the meaning of the Act.” Id.
The systems used by Aereo and the CATVs were just too similar for such
factors to matter in that case.
BWP argues that when the majority rejected Justice Scalia’s dissenting
copy-shop argument as “mak[ing] too much out of too little,” id. at 2507, it at
least eroded the volitional-conduct requirement. We disagree. As the Ninth
Circuit recently concluded, Aereo “did not expressly address the volitionalconduct requirement for direct liability under the Copyright Act, nor did it
directly dispute or comment on Justice Scalia’s explanation of the doctrine.”
Giganews, 847 F.3d at 667. Thus, “it would be folly to presume that Aereo
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categorically jettisoned [the volitional-conduct requirement] by implication,”
both because Aereo itself distinguished between engaging in activity and
merely supplying equipment and because it limited its holding to the
technology at issue. Id. (quotation marks omitted). We likewise conclude that
“[t]he volitional-conduct requirement is consistent with the Aereo majority
opinion . . . .” See id.
Before leaving Aereo, we also distinguish its facts. When a copy-shop
owner makes a photocopier available to customers, but a customer brings in
the copyrighted work and makes the copy himself, the infringing conduct is
attributable only to the customer. That is because the copy-shop owner does
not reproduce the work but “merely supplies equipment that allows others to
do so.” See Aereo, 134 S. Ct. at 2504. Aereo did not just provide equipment. It
also provided access and the means to transmit the infringing material. See
id. at 2506–07.
The facts here are much closer to those in the Netcom line of cases than
those in Aereo. Although Aereo and T&S both provided a service that others
could use to infringe, only Aereo played an active role in the infringement.
That role was to route infringing content to its users. True, its users would
request the content, but they did not merely utilize Aereo’s service to store
infringing content they obtained elsewhere. Aereo, not its users, provided the
means to obtain and transmit copyrighted performances. Aereo’s involvement,
in other words, was more than passive. Cf. Aereo, 134 S. Ct. at 2507.
The same cannot be said of T&S’s conduct. T&S hosts the forum on
which infringing content was posted, but its connection to the infringement
ends there. The users posted the infringing content. Unlike Aereo, T&S did
not provide them access to that content. Holding T&S directly liable thus
raises the same concern as it did in Netcom: “it does not make sense to adopt a
rule that could lead to the liability of countless parties whose role in the
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infringement is nothing more than setting up and operating a system that is
necessary for the functioning of the Internet.” See Netcom, 907 F. Supp. at
1372. Like Netcom and unlike Aereo, T&S and the infringing content are not
linked by volitional conduct. It cannot be said that T&S’s conduct “cause[d] in
some meaningful way an infringement.” See CoStar, 373 F.3d at 549.
BWP also argues that because Netcom predated the DMCA, its analysis
is no longer good law. The particular argument is that the safe-harbor rules of
Section 512(c) created the exclusive method of protecting an arguably innocent
ISP: if a user directs the storage of copyrighted material on a service provider’s
system, the ISP has no liability if (1) the provider lacks knowledge of the
infringement, (2) does not receive direct financial benefits from the storage, (3)
“acts expeditiously to remove, or disable access to,” the infringing material once
learning of it, and (4) “has designated an agent to receive notifications of
claimed infringement[.]” 17 U.S.C. § 512(c).
T&S does not qualify for Section 512(c)’s safe harbor, as it never
designated an agent. To BWP, adopting the volitional-conduct requirement
would render Section 512(c)’s safe harbor meaningless. BWP also argues that
adopting the requirement would disincentivize DMCA compliance by
benefitting those ISPs that choose not to satisfy Section 512(c)’s requirements.
T&S points out that Section 512 includes a caveat: “The failure of a
service provider’s conduct to qualify for limitation of liability under this section
shall not bear adversely upon the consideration of a defense by the service
provider that the service provider’s conduct is not infringing under this title or
any other defense.” See § 512(l). T&S argues that this means the DMCA does
not abrogate the volitional-conduct requirement.
The Fourth Circuit addressed this argument in CoStar. It too faced the
argument that because “Congress ‘codified’ Netcom in the DMCA . . . it can
only be to the DMCA that we look for enforcement of those principles.” CoStar,
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373 F.3d at 552 (alterations in original). The court disagreed, judging that
CoStar’s argument was “belied by the plain language of the DMCA itself”:
Even though the DMCA was designed to provide ISPs with a safe
harbor from copyright liability, nothing in the language of § 512
indicates that the limitation on liability described therein is
exclusive. Indeed, [Section 512(l)] provides explicitly that the
DMCA is not exclusive . . . . Given that the statute declares its
intent not to “bear adversely upon” any of the ISP’s defenses under
law, including the defense that the plaintiff has not made out a
prima facie case for infringement, it is difficult to argue, as CoStar
does, that the statute in fact precludes ISPs from relying on an
entire strain of case law holding that direct infringement must
involve conduct having a volitional or causal aspect.
Id. The court also referred to the canon of construction for abrogation of the
common law: “When Congress codifies a common-law principle, the common
law remains not only good law, but a valuable touchstone for interpreting the
statute, unless Congress explicitly states that it intends to supplant the
common law.” Id. at 553.
So the Fourth Circuit held that the “DMCA’s safe harbor for ISPs [is] a
floor, not a ceiling, of protection.”

Id. at 555.

Rather than altering the

volitional-conduct requirement, “[t]he DMCA has merely added a second step
to assessing infringement liability for [ISPs], after it is determined whether
they are infringers in the first place under the preexisting Copyright Act.” Id.
In other words, whether there is volitional conduct is the first step of
establishing infringement under Sections 106 and 501. See id. Only if the
plaintiff shows such infringement are courts to analyze whether the ISP
nonetheless falls within Section 512’s safe harbor. See id. 4

Accord Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1158 n.4 (9th Cir. 2007)
(“[T]he DMCA does not change copyright law; rather, ‘Congress provided that the DMCA’s
limitations of liability apply if the provider is found to be liable under existing principles of
law.’” (alteration omitted) (quoting Ellison v. Robertson, 357 F.3d 1072, 1077 (9th Cir. 2004)));
BWP Media USA Inc. v. Polyvore, Inc., No. 13-CV-7867(RA), 2016 WL 3926450, at *6
4

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We agree with the Fourth Circuit’s analysis on this point. BWP also
argues that retaining the volitional-conduct requirement diminishes Section
512(c)’s usefulness in direct-infringement cases. That may be, but it does not
in secondary-infringement cases. See, e.g., Perfect 10, Inc. v. Amazon.com, 508
F.3d 1146, 1175 (9th Cir. 2007). Textual meaning and incentives to comply
both remain.
***
We adopt the volitional-conduct requirement in direct-copyrightinfringement cases. BWP does not contend that T&S did, in fact, engage in
such conduct. Thus, the district court properly granted summary judgment in
favor of T&S. AFFIRMED.

(S.D.N.Y. July 15, 2016) (“In light of this unambiguous statutory language and clear
legislative history, the Court rejects Plaintiffs’ argument that, in passing the DMCA,
Congress intended to subject ISPs to different standards of copyright liability than nonISPs.”).

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