1254 714 FEDERAL REPORTER, 2d SERIES 1980 amendments reflect Congress' receptivity to new technology and its desire to encourage, through the copyright laws, continued imagination and creativity in computer programming. Since we believe that the district court's decision on the preliminary injunction was, to a large part, influenced by an erroneous view of the availability of copyright for operating system programs and unnecessary concerns about object code and ROMs, we must reverse the denial of the preliminary injunction and remand for reconsideration. D. Irreparable Harm [11] The district court, without any extended discussion, found that Apple had not made the requisite showing of irreparable harm, stating "Apple is better suited to withstand whatever injury it might sustain during litigation than is Franklin to withstand the effects of a preliminary injunction." 545 F.Supp. at 812, 825. In so ruling, the district court failed to consider the prevailing view that a showing of a prima facie case of copyright infringement or reasonable likelihood of success on the merits raises a presumption of irreparable harm. See, e.g., Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d 607, 620 (7th Cir.), cert. denied, U.S. 103 S.Ct. 176, 74 L.Ed.2d 145 (1982); Wainwright Securities Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 94 (2d Cir.1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978); Klitzner Industries, Inc. v. H.K. James & Co., 535 F.Supp. 1249, 1259 (E.D.Pa.1982); Custom Decor, Inc. v. Nautical Crafts Inc., 502 F.Supp. 154, 157 (E.D.Pa.1980). A copyright plaintiff who makes out a prima facie case of infringement is entitled to a preliminary injunction without a detailed showing of irreparable harm. See 3 Nimmer on Copyright § 14.06[A], at 14-50, 14-51 & n. 16 (collecting authorities). [12] The CONTU Final Report recognized that "[t]he cost of developing computer programs is far greater than the cost of their duplication." CONTU Report at 11. Apple introduced substantial evidence of the considerable time and money it had invested in the development of the computer programs in suit. Thus even without the presumption of irreparable harm generally applied in copyright infringement cases, the jeopardy to Apple's investment and competitive position caused by Franklin's wholesale copying of many of its key operating programs would satisfy the requirement of irreparable harm needed to support a preliminary injunction. See Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d at 620; Custom Decor, Inc. v. Nautical Crafts Inc., 502 F.Supp. 154, 157 (E.D.Tenn.1980); Herbert Rosenthal Jewelry Corp. v. Zale Corp., 323 F.Supp. 1234, 1238 (S.D.N.Y.1971). [13] In Kontes Glass Co. v. Lab Glass, Inc., 373 F.2d 319, 320-21 (3d Cir.1967), this court appeared to adopt an inverse relationship approach to the irreparable harm issue, suggesting that the strength of the required showing of irreparable injury varies inversely with the strength of plaintiff's showing of a likelihood of success on the merits. See Midway Mfg. Co. v. BandaiAmerica, Inc., 546 F.Supp. 125, 141-42 (D.N.J.1982). In Kontes, we were not presented with a case in which copyrighted material central to the essence of plaintiff's operations was concededly copied, as we are here. We believe the Kontes approach is best suited to those cases where the injury, from copying can be fairly considered minimal, limited or conjectural. In those circumstances it provides flexibility in applying the equitable remedy of preliminary injunctions through evaluation of the irreparable harm factor. Normally, however, the public interest underlying the copyright law requires a presumption of irreparable harm, as long as there is, as here, adequate evidence of the expenditure of significant time, effort and money directed to the production of the copyrighted material. Otherwise, the rationale for protecting copyright, that of encouraging creativity, would be undermined. As Judge Broderick stated in Klitzner Industries, Inc. v. H.K. James & Co., 535 F.Supp. at 1259-60: 1255 Since Congress has elected to grant certain exclusive rights to the owner of a copyright in a protected work, it is virtually axiomatic that the public interest can only be served by upholding copyright protections and, correspondingly, preventing the misappropriation of the skills, creative energies, and resources which are invested in the protected work. [14] Nor can we accept the district court's explanation which stressed the "devastating effect" of a preliminary injunction on Franklin's business. If that were the correct standard, then a knowing infringer would be permitted to construct its business around its infringement, a result we cannot condone. See Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d at 620; cf. Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1333 (7th Cir.1977) (trademark infringement), cert. denied, 434 U.S. 1070, 98 S.Ct. 1252, 55 L.Ed.2d 772 (1978). The size of the infringer should not be determinative of the copyright holder's ability to get prompt judicial redress. findings with regard to them. On remand, they can be considered by the district court in the first instance who can also decide the extent to which they are relevant, if at all, to a preliminary injunction. V. For the reasons set forth in this opinion, we will reverse the denial of the preliminary injunction and remand to the district court for further proceedings in accordance herewith. KEYNUMBER SYSTEM E. Additional Issues Franklin has raised a number of issues concerning Apple's compliance with various statutory formalities such as registration, notice and deposit. It has challenged, in a pending motion to dismiss, the copyrights of the eleven works in suit which were deposited in object code format, and which were registered under the Copyright Office's "rule of doubt." 9 Franklin challenges three programs, i.e. Apple Integer Basic, Autostart ROM and DOS 3.3, on the ground that they or their predecessors were published without the requisite notice. We do not reach these issues on appeal nor do we consider Franklin's claim that Apple's misuse of its copyrights bars their enforcement. The district court did not consider these claims in denying the motion for preliminary injunction. There are no factual 9. Apparently the Register of Copyrights utilizes its rule of doubt when the deposit of a computer program is made in object code form be NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Lumber Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNITED STATES Syllabus SONY CORPORATION OF AMERICA ET AL. v. UNIVERSAL CITY STUDIOS, INC., ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 81-1687. Argued January 18, 1983-Reargued October 3, 1983Decided January 17, 1984 Petitioner Sony Corp. manufactures home video tape recorders (VTR's), and markets them through retail establishments, some of which are also petitioners. Respondents own the copyrights on some of the television programs that are broadcast on the public airwaves. Respondents brought an action against petitioners in Federal District Court, alleging that VTR consumers had been recording some of respondents' copyrighted works that had been exhibited on commercially sponsored television and thereby infringed respondents' copyrights, and further that petitioners were liable for such copyright infringement because of their marketing of the VTR's. Respondents sought money damages, an equitable accounting of profits, and an injunction against the manufacture and marketing of the VTR's. The District Court denied respondents all relief, holding that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works and did not constitute copyright infringement, and that petitioners could not be held liable as contributory infringers even if the home use of a VTR was considered an infringing use. The Court of Appeals reversed, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief. Held: The sale of the VTR's to the general public does not constitute contributory infringement of respondents' copyrights. Pp. 10–36. (a) The protection given to copyrights is wholly statutory, and, in a case like this, in which Congress has not plainly marked the course to be followed by the judiciary, this Court must be circumspect in construing the scope of rights created by a statute that never contemplated such a calculus of interests. Any individual may reproduce a copyrighted work п SONY CORP. v. UNIVERSAL STUDIOS, INC. Syllabus for a "fair use"; the copyright owner does not possess the exclusive right to such a use. Pp. 10-16. (b) Kalem Co. v. Harper Brothers, 222 U. S. 55, does not support respondents' novel theory that supplying the "means" to accomplish an infringing activity and encouraging that activity through advertisement are sufficient to establish liability for copyright infringement. This case does not fall in the category of those in which it is manifestly just to impose vicarious liability because the "contributory" infringer was in a position to control the use of copyrighted works by others and had authorized the use without permission from the copyright owner. Here, the only contact between petitioners and the users of the VTR's occurred at the moment of sale. And there is no precedent for imposing vicarious liability on the theory that petitioners sold the VTR's with constructive knowledge that their customers might use the equipment to make unauthorized copies of copyrighted material. 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, or, indeed, is merely capable of substantial noninfringing uses. Pp. 16-22. (c) The record and the District Court's findings show (1) that there is a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcast time-shifted by private viewers (i. e., recorded at a time when the VTR owner cannot view the broadcast so that it can be watched at a later time); and (2) that there is no likelihood that timeshifting would cause nonminimal harm to the potential market for, or the value of, respondents' copyrighted works. The VTR's are therefore capable of substantial noninfringing uses. Private, noncommercial timeshifting in the home satisfies this standard of noninfringing uses both because respondents have no right to prevent other copyright holders from authorizing such time-shifting for their programs, and because the District Court's findings reveal that even the unauthorized home time-shifting of respondents' programs is legitimate fair use. Pp. 22-35. 659 F. 2d 963, reversed. STEVENS, J., delivered the opinion of the Court in which BURGER, C. J., and BRENNAN, WHITE, and O'CONNOR, JJ., joined. BLACKMUN, J., filed a dissenting opinion in which MARSHALL, POWELL, and REHNQUIST, JJ., joined. NOTICE: This opinion is subject to formal revision before publication in the SUPREME COURT OF THE UNITED STATES No. 81-1687 SONY CORPORATION OF AMERICA, ET AL., PETI- ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT [January 17, 1984] JUSTICE STEVENS delivered the opinion of the Court. Petitioners manufacture and sell home video tape recorders. Repondents own the copyrights on some of the television programs that are broadcast on the public airwaves. Some members of the general public use video tape recorders sold by petitioners to record some of these broadcasts, as well as a large number of other broadcasts. The question presented is whether the sale of petitioners' copying equipment to the general public violates any of the rights conferred upon respondents by the Copyright Act. Respondents commenced this copyright infringment action. against petitioners in the United States District Court for the Central District of California in 1976. Respondents alleged that some individuals had used Betamax video tape recorders (VTR's) to record some of respondents' copyrighted works which had been exhibited on commercially sponsored television and contended that these individuals had thereby infringed respondents' copyrights. Respondents further maintained that petitioners were liable for the copyright infringment allegedly committed by Betamax consumers because of petitioners' marketing of the Betamax VTR's. Re 'The respondents also asserted causes of action under state law and § 43(a) of the Trademark Act of 1946, 60 Stat. 441, 15 U. S. C. § 1125(a). |