Transcript Standard Setting in High

Class 15
Copyright, Winter, 2015
Third-Party Liability
Randal C. Picker
James Parker Hall Distinguished Service Professor of Law
The Law School
The University of Chicago
773.702.0864/[email protected]
Copyright © 2005-14 Randal C. Picker. All Rights Reserved.
Third Party Liability Relevant Law

Two Step Process
Establish
primary liability
Establish secondary liability of third party
July 18, 2015
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Third Party Liability Relevant Law

Copyright Act does not explicitly render
anyone liable for infringements committed by
another
Contrast
to Patent Act, which does
Common Law in the Copyright Context
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Evaluating Different Uses

Time Shifting
Private

Librarying
Private

home copying: watch and re-record
home copying for repeated viewing
Copying Business
Copy
off the air and rent/sell tapes for home
consumption
July 18, 2015
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Consent to Use

How should we evaluate consent to use in this
case?
Mr.
Rogers: “You are an important person just the
way you are. You can make healthy decisions.”
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Evaluating Fair Use

Doing the four factors:
1.
The purpose and character, including whether
the use is commercial
2. Nature of the copyrighted work
3. Amount of the work used in relation to the
copyrighted work as a whole
4. The effect on the potential market for or value
of the copyrighted work
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Evaluating Fair Use

Across the Three Cases
Factors
2 and 3 will be unchanging
1 and 4 may change from case to case

Understanding Commercial Use
An
effort to make money vs. a transaction that
substitutes for a commercial transaction
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Evaluating Fair Use

The Potential Market Value of the Copyrighted
Work
The
Broadcast TV Market
 Fast-forwarding over commercials?
 Repeats and syndication after first broadcast
The Video Rental and Sales Market
 Doesn’t copying substitute directly for this
market?
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Allocating Liability

The Role of Third-Party Liability
When
should we add third-party liability to firstparty liability?
Does that depend on how we enforce first-party
liability?
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Two Theories

Vicarious Liability
When
one party has control over another and also
enjoys a direct financial benefit from infringement
No knowledge required.
Flea market (control: kick them out; benefit:
patronage)
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Contributory Copyright
Infringement

Statement of Gershwin Publishing Corp. v.
Columbia Artists Management, Inc., 443 F.2d
1159, 1162 (2d Cir. 1971):
“[O]ne
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.”
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35 USC 271

(a)
Except
as otherwise provided in this title, whoever
without authority makes, uses or sells any
patented invention, within the United States during
the term of the patent therefor, infringes the
patent.
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35 USC 271

(b)
Whoever
actively induces infringement of a patent
shall be liable as an infringer.
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35 USC 271

(c)
Whoever
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sells a component of a patented
machine, manufacture, combination or
composition, or a material or apparatus for use in
practicing a patented process, constituting a
material part of the invention, knowing the same to
be especially made or especially adapted for use
in an infringement of such patent, and not a staple
article or commodity of commerce suitable for
substantial noninfringing use, shall be liable as a
contributory infringer.
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The Sony Test

Says the Court
“Accordingly,
the sale of copying equipment, like
the sale of other articles of commerce, does not
constitute contributory infringement if the product
is widely used for legitimate, unobjectionable
purposes. Indeed, it need merely be capable of
substantial noninfringing uses.”
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In Sony: Two Key Issues

Third party liability, either vicarious or
contributory
Premised

on underlying violation by consumers
No underlying violation, as consumers
engaged in fair use
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Design Incentives

Hypo
Suppose
Sony could have spent $10 to eliminate
all infringing uses of the VCR

Under Sony, would it have an incentive to do
so?
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The Design of the VCR

Consider the design choices for the VCR:
Recorder
rather than just pre-recorded tape player
Fast forward button
No capability for recognizing “jamming” signals to
prevent recording

Should Sony have been liable for these design
choices?
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Design Incentives

Hypo
Suppose
product generates $10 million in
beneficial noninfringing uses and $1000 in
infringing uses
Suppose producer could spend $5 to eliminate
$1000 in infringing uses

How would we revise Sony to address this?
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Use and Design

Weak Relationship between Use-Based Tests
and Design Incentives
Sony:
Substantial noninfringing uses
 So long as you have those, extent of infringing
uses irrelevant
 No incentive to redesign to eliminate infringing
uses
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Use and Design
Primary
Use Test
 Suppose no third-party copyright liability so long
as primary use of product is noninfringing
 What incentives for design to eliminate infringing
uses?
• Only at margin
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Use and Design

Bottom Line?
Address
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design duties separately from use
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Limits of the Decision

Justice Blackmun’s Second Footnote
“This
case involves on the home recording for
home use of televisions broadcast free over the
airwaves. No issue is raised concerning cable or
pay television, or the sharing or trading of tapes.”

What turns on the fact the broadcasts are free?
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Implementing Consent

Should we implement a consent regime
for
copying?
for redistribution?

Blackmun Again
“Sony
may be able, for example, to build a VTR
that enables broadcasters to scramble the signal
of individual programs and ‘jam’ the unauthorized
recording of them”
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