the copyrighted work (in fact, it may bear little or no resemblance to the copyrighted work upon which it was based). The initial input of the copyrighted work into the user's computer may be an infringement of the copyright owner's reproduction right, but the infringing (or noninfringing) nature of the resulting work is less clear. Although courts traditionally rely on a "substantial similarity" test to determine infringement liability including with regard to the derivative works right neither the meaning of "derivative work" nor the statutory standard for infringement appears to require an infringing derivative work to be substantially similar.344 b. INFRINGING IMPORTATION - - The exclusive right to distribute copies or phonorecords includes the right to limit the importation of copies or phonorecords of a work acquired outside the United States into the U.S. without the authority of the copyright owner. Such unauthorized importation, whether it be of pirated items (i.e., "copies or phonorecords made without any authorization of the copyright owner")346 or "gray market" products (i.e., those copies or 345 344 An infringer is anyone who violates "any of the exclusive rights" of the copyright owner. 17 U.S.C. § 501(a) (Supp. V 1993). One of the exclusive rights is "to prepare derivative works based upon the copyrighted work." 17 U.S.C. § 106(2) (1988). A "derivative work" is a work "based upon one or more preexisting works, such as a... condensation, or any other form in which a work may be recast, transformed, or adapted." 17 U.S.Č. § 101 (1988) (definition of "derivative work"). The Ninth Circuit has suggested that "a work is not derivative unless it has been substantially copied from the prior work." See Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir. 1984) (emphasis added). It is unclear, however, whether the court is suggesting that a derivative work must be substantially similar to the prior work or that it simply must incorporate in some form a portion of the prior work, as noted in the legislative history. See HOUSE REPORT at 62, reprinted in 1976 U.S.C.C.A.N. 5675. The court noted that there is "little available authority" on infringement of the derivative works right. See Litchfield at 1357. 346 HOUSE REPORT at 169-70, reprinted in 1976 U.S.C.C.A.N. 5785. phonorecords legally produced overseas for foreign distribution, but not authorized for the U.S. market),347 is an infringement of the distribution right. 348 There are three exceptions to the importation right, which include a "suitcase" exception that exempts importation for the private use of the importer of one copy of a work at a time or of articles in the personal baggage of travelers entering the United States.3 349 The applicability of the importation provisions to the transmission of works into the United States via the NII (or GII) may be debated. Nevertheless, the importation right is an outgrowth of the distribution right, both of which refer 347 Id. (Section 602 covers "unauthorized importation of copies or phonorecords that were lawfully made"). 348 See T.B. Harms Co. v. Jem Records, Inc., 655 F. Supp. 1575 (D.N.J. 1987); Parfums Givenchy, Inc. v. C&C Beauty Sales, Inc., 832 F. Supp. 1378 (C.D. Cal. 1993). Courts are divided as to whether the first sale doctrine limits the ability of copyright owners to enforce the importation rights (as it does with respect to the domestic distribution right). Compare BMG Music v. Perez, 952 F.2d 318, 319 (9th Cir. 1991) (first sale doctrine does not circumscribe importation rights under Section 602) with Sebastian Int'l, Inc. v. Consumer Contacts (PTY) Ltd., 847 F.2d 1093, 1097 (3d Cir. 1988) (contra). 349 See 17 U.S.C. § 602(a) (1988) (subsection does not apply to "(1) importation of copies or phonorecords under the authority or for the use of the Government of the United States or of any State or political subdivision of a State, but not including copies or phonorecords for use in schools, or copies of any audiovisual work imported for purposes other than archival use; (2) importation, for the private use of the importer and not for distribution, by any person with respect to no more than one copy or phonorecord of any one work at any one time, or by any person arriving from outside the United States with respect to copies or phonorecords forming part of such person's personal baggage; or (3) importation by or for an organization operated for scholarly, educational, or religious purposes and not for private gain, with respect to no more than one copy of an audiovisual work solely for its archival purposes, and no more than five copies or phonorecords of any other work for its library lending or archival purposes, unless the importation of such copies or phonorecords is part of an activity consisting of systematic reproduction or distribution, engaged in by such organization in violation of the provisions of section 108(g) (2)"); HOUSE REPORT at 170, reprinted in 1976 U.S.C.C.A.N. to "copies or phonorecords."350 A data stream can contain a copyrighted work in the form of electronic impulses, but those impulses do not fall within the definition of "copies" or "phonorecords." Therefore, it may be argued that the transmission of a reproduction of a copyrighted work via international communication links fails to constitute an "importation" under the current law, just as it is less than clear that a domestic transmission of a reproduction of a work constitutes a distribution of a copy under a literal reading of the Copyright Act.351 c. CONTRIBUTORY AND VICARIOUS LIABILITY Direct participation in infringing activity is not a prerequisite for infringement liability, as the Copyright Act grants to copyright owners not only the right to exercise the exclusive rights, but also the right "to authorize" the exercise of those rights. The inclusion of the right "to authorize" was "intended to avoid any questions as to the liability of contributory infringers" those who do not directly exercise the copyright owner's rights, but "authorize" others to do so. Other than the reference to a copyright owner's right "to authorize" exercise of the exclusive rights, however, the Copyright Act does not mention or define "contributory infringement" or "vicarious liability," the standards for which have developed through case law 353 352 350 351 See discussion of transmissions and the distribution right supra pp. 67-69. 352 See HOUSE REPORT at 61, reprinted in 1976 U.S.C.C.A.N. 5674. There must be a direct infringement upon which contributory infringement or vicarious liability is based. 353 The concepts of contributory and vicarious liability are well-established in tort law. Contributory infringement of intellectual property rights was first codified in patent law. See 35 U.S.C. § 271(c) (1988). If someone has the "right and ability" to supervise the infringing action of another, and that right and ability "coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials -- even in the absence of actual knowledge" that the infringement is taking place the "supervisor" may be held vicariously liable for the infringement.354 Vicarious liability is based on a connection to the direct infringer (not necessarily to the infringing activity). The best known copyright cases involving vicarious liability are the "dance hall" cases, where vicarious liability was found when dance hall owners allowed the unauthorized public performance of musical works by the bands they hired, even when the owners had no knowledge of the infringements and had even expressly warned the bands not to perform copyrighted works without a license from the copyright owners. 355 "Contributory infringement" may be found when "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of 354 Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) (holding that company that leased floor space to phonograph record department was liable for record department's sales of "bootleg" records despite absence of actual knowledge of infringement, because of company's beneficial relationship to the sales). 355 See, e.g., Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (7th Cir. 1929); Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Ass'n, Inc., 554 F.2d 1213 (1st Cir. 1977); KECA Music, Inc. v. Dingus McGee's Co., 432 F. Supp. 72 (W.D. Mo. 1977). Indeed, the "cases are legion which hold the dance hall proprietor liable for the infringement of copyright resulting from the performance of a musical composition by a band or orchestra whose activities provide the proprietor with a source of customers and enhanced income. He is liable whether the bandleader is considered, as a technical matter, an employee or an independent contractor, and whether or not the proprietor has knowledge of the compositions to be played or any control over their selection." Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) (citing some 10 cases). another."356 Contributory infringement is based on a connection to the infringing activity (not necessarily to the direct infringer). A contributory infringer may be liable based on the provision of services or equipment related to the direct infringement. SERVICES Liability may be based on the provision of services related to the infringement. Courts have found contributory infringement liability, for instance, when a defendant chose the infringing material to be used in the direct infringer's work, 358 and vicarious liability when a defendant was responsible for the day-to-day activities where the infringement took place. 359 EQUIPMENT Infringement liability may also be based on the provision of equipment or other instrumentalities or goods used in or related to the infringement. However, the 360 356 Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971) (holding management firm's authorization of clients' performances of copyrighted compositions to be contributory infringement). 357 A library is exempted from liability for the unsupervised use of reproducing equipment located on its premises provided that the equipment displays a copyright law notice. 17 U.S.C. § 108(f)(1) (1988). This exemption does not apply to the user of such equipment, and no other provider of equipment enjoys any statutory immunity. See 17 U.S.C. § 108(f)(2) (1988). 358 See Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 366 (9th Cir. 1947) (rejecting defendant's argument that as an employee, he was not responsible for his employer's decision to use infringing material, in light of defendant's personal selection and appropriation of the protected material). 359 See Boz Scaggs Music v. KND Corp., 491 F. Supp. 908, 913 (D. Conn. 1980) (finding defendant liable based on own admission of responsibility and control over radio performances of protected works). 360 See, e.g., Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 845-47 (11th Cir. 1990). |