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an uploading subscriber, a BBS operator and an Internet access provider. The Working Group believes it is

at best premature to reduce the liability of any type of service provider in the NII environment. On-line service providers currently provide a number of services. With respect to the allowance of uploading of material by their subscribers, they are, in essence, acting as an electronic publisher. In other instances, they perform other functions. No one rule may be appropriate. If an entity provided only the wires and conduits -- such as the telephone company, it would have a good argument for an exemption if it was truly in the same position as a common carrier and could not control who or what was on its system.99 The same could be true for an on-line service provider who unknowingly transmitted encrypted infringing material.

It would be unfair -- and set a dangerous precedent -to allow one class of distributors to self-determine their liability by refusing to take responsibility. This would encourage intentional and willful ignorance. Whether or not they choose to reserve the right to control activities on their systems, they have that right. Service providers

expect compensation for the use of their facilities and the works thereon -- and have the ability to disconnect subscribers

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See Religious Technology Center v. NETCOM, No. C95-20091 (N.D. Cal.) (verified first amended complaint filed March 3, 1995).

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Under the Communications Act of 1934, a common carrier is required to furnish service to the public upon reasonable request. See 47 U.S.C. $ 201. A common carrier is defined as "any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio...." See 47 U.S.C. $ 153(h). The Supreme Court examined this somewhat circular definition and found that a common carrier in the communications context is one that "makes a public offering to provide (communications facilities] whereby all members of the public who choose to employ such facilities may communicate or transmit intelligence of their own design and choosing ...." See Federal Communications Commission v. Midwest Video Corp., 440 U.S. 689, 701 (1979) (citing Report and Order, Industrial Radiolocation Service, Docket No. 16106, 5 F.C.C.2d 197, 202 (1966)).

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who take their services without payment. They have the same ability with respect to subscribers who break the law.

Exempting or reducing the liability of service providers prematurely would choke development of marketplace tools that could be used to lessen their risk of liability and the risk to copyright owners, including insuring against harm caused by their customers, shifting responsibility for infringement to the infringing subscriber through indemnification and warranty agreements, licensing (including collective license agreements), educating their subscribers about infringement and using technological protections, such as tracking mechanisms.

Circumstances also vary greatly among service providers. A bulletin board is simply a computer that the owner allows to be accessed by others using their computers and modems. One needs only a personal computer, a modem, a phone line, and some software to go into business -- at a cost of less than $2,000. There are small, non-profit and large, commercial operators. There are those that try to prevent and react when notified and those that encourage infringing activity. Different service providers play different roles and those roles are changing and being created virtually every day. At this time in the development and change in the players and roles, it is not feasible to identify a priori those circumstances or situations under which service providers should have reduced liability. However, it is reasonable to assume that such situations could and should be identified through discussion and negotiation among the service providers, the content owners and the government. We strongly encourage such actions in the interest of providing certainty and clarity in this emerging area of commerce.

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See P. GOLDSTEIN, COPYRIGHT $ 1.15 at 45 (1989) ("[a]n intermediary can to some extent protect itself by shifting or sharing the risk of infringement through a warranty from the author that he originated the work in question or through an errors and omissions insurance policy").

Implementation of preventative measures, compliance with the law, and development of technological mechanisms to guard against infringement must be encouraged. Service providers should have incentive to make their subscribers more aware of copyright law and to react promptly and appropriately to notice by copyright owner that infringing material is available on their systems. Service providers should make clear that infringing activity is not tolerated on the system and reserve the right to remove infringing material or disconnect the subscriber who participated in the placement of it on the system.

e. CIVIL REMEDIES

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Various remedies are available to copyright owners in infringement actions. A copyright owner may seek a preliminary or permanent injunction to prevent or restrain infringement. Courts generally grant permanent injunctions where liability is established and there is a threat of continuino? impounding of all copies or phonorecords at any time an action is pending. ** As part of a final judgment, the court may order the destruction (or any other "reasonable disposition") of the infringing copies or phonorecords.39

) At any time before final judgment is rendered, a copyright owner may elect to recover actual damages and profits of the infringer or be awarded statutory damages.

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Superhype Publishing, Inc. v. Vasiliou, 838 F. Supp. 1220, 1226 (S.D. Ohio 1993).

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17 U.S.C. S 504 (1988). Statutory damages generally are not available if the infringement occurred before the effective date of registration of the work, unless the infringement occurred after first publication and registration was made within three months of first publication. See 17 U.S.C. $ 412 (1988 &

Actual damages may be awarded in the amount of the copyright owner's losses plus any profits of the infringer attributable to the infringement (that are not taken into account in the calculation of the losses).399

Statutory damages may be awarded in an amount between $500 to $20,000 per work infringed. 400

If an infringer can show that he or she was not aware and had no reason to believe that the activity constituted an infringement, the court may find there was an innocent infringement. 401 Such a finding is a factual determination, and does not absolve the defendant of liability for the infringement. 402 It does, however, give the court discretion to reduce the amount of damages awarded to the copyright

403 owner.

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D.C. Comics Inc. v. Mini Gift Shop, 912 F.2d 29, 35 (2d Cir. 1990); Innovative Networks, Inc.v. Satellite Airlines Ticketing, Inc., 871 F. Supp. 709, 721 (S.D.N.Y. 1995). However, the court must remit statutory damages if (1) the infringer "believed and had reasonable grounds for believing" that the use was a fair use, and (2) the infringer was a nonprofit educational institution, library or archives (or its employee or agent) and infringed the reproduction right or a public broadcasting entity (or a person who "as a regular part of the nonprofit activities" of a public broadcasting entity) that infringed by performing a published nondramatic literary work or reproducing a transmission program embodying a performance of such work. See 17 U.S.C. $ 504(c)(2) (1988).

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See 17 U.S.C. $ 504(c)(2) (1988) ("where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court ... may reduce the award of statutory damages to a sum of not less than $200"); D.C. Comics Inc., supra note 402, at 35 (defendant's lack of business sophistication and absence of copyright notice on copies were basis for a finding of innocent infringement and statutory damages of only $200). A person who is misled and innocently infringes by relying on the lack of a copyright notice on a copy of a work that was lawfully publicly distributed before March 1, 1989, is not liable for any damages (actual or statutory) for infringements committed before actual notice of registration of the work is received. 17 U.S.C. $ 405(b) (1988). The court may allow, however, the

If a copyright owner can show that the infringement was willful, the court may increase statutory damages up to a maximum of $100,000.904 An infringement may be found to be willful if the infringer had knowledge that the activity constituted infringement or recklessly disregarded the possibility of infringement. 405

Courts have discretion to allow the recovery of full costs by or against any party other than the United States or its officer. Courts may also award reasonable attorney's fees to the prevailing party under certain circumstances.

f. CRIMINAL OFFENSES

Criminal sanctions are levied against infringers if the infringement was willful and for

purposes

of commercial advantage or private financial gain. 08 Criminal proceedings must begin within three years after the criminal action arose. Where there is a conviction, the court must order the forfeiture and destruction or other disposition of all infringing copies and "all implements, devices, or

recovery of any of the infringer's profits attributable to the infringement. Id.

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Twin Peaks Prods., Inc. v. Publications Int'l, Ltd., 996 F.2d 1366, 1382 (2d Cir. 1993); Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1020 (7th Cir.), cert. denied, 502 U.S. 861 (1991). 406

17 U.S.C. S 505 (1988). 407

Id.; see also Roth v. Pritikin, 787 F.2d 54, 57 (2d Cir. 1986) (attorney's fees generally awarded to prevailing plaintiffs because Copyright Act is intended to encourage suits to redress infringement); Chi-boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1230 (7th Cir. 1991) (attorney's fees and costs serve to deter infringement, dissuade defendant's disdain for copyright law, and encourage plaintiffs to bring colorable claims against infringers). No attorney's fees may be awarded for an infringement of copyright before its registration unless, in the case of published works, the infringement occurred after first publication and registration was made within three months of first publication. 17 U.S.C. S 412 (1988 & Supp. V 1993).

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