The copyright dilemma involving online service providers: problem solved ... for now.

• Author: Beams, Christian C.M.

1. INTRODUCTION

   Much has changed in the world of communications in the last several years. A quarter century ago, the suggestion of watching year-old motion pictures at home was almost laughable. The concept of a computer that could be manufactured to fit within a room was still taking shape. Society would not see personal computers become truly prominent until the late 1980s. The notion of an Internet or World Wide Web-sized database was unthinkable.

   Times have indeed changed. Year-old movies are watched on videotape, and some computers are manufactured to fit in the palm of a hand. Gone are libraries' card catalogs, as online computer terminals have replaced them. Legal research can actually be done at home. Like it or not, the Information Age is here, and its technology is advancing at a lightning-quick rate.

   With the prominence and exponential growth of the World Wide Web over the last six years(1) and the increasing ease of uploading and downloading text, graphics, and software, copyright law had found itself behind the technological times.(2) Should a company that provides Internet access (online service provider or OSP) be held directly liable for the copyright infringing acts of a customer? How would an answer to that question be altered if such a company had no idea that infringing acts were taking place?

   In mid-July 1997, a bill was introduced by Representative Howard Coble of North Carolina to combat this problem.(3) Over the next year, this bill was hotly debated in subcommittee hearings, with OSPs on one side and copyright holders on the other. On October 28, 1998, the Digital Millennium Copyright Act (DMCA) was enacted into law.(4) Within it lies the "Online Copyright Infringement Liability Limitation" (Title II of the DMCA(5)), the end result of the evolution of the Coble Bill. Title II is not determinant of liability, rather it provides a defense that can be applied "if the provider is found to be liable under existing principles of law."(6) As the title of the new statute indicates (referring, albeit fifteen months early, to the "Millennium"), it is exactly what the copyright law needed to maintain its relevance in today's Internet world.

   This Note begins (Part II) with a basic introduction to the tort of copyright infringement generally and as applied to OSPs prior to the passage of the DMCA. This Part concludes with an analysis of whether the copyright law, as it stood, presented a problem at all. In Part III, this Note turns to Congress's solution to the "problem"--the Digital Millennium Copyright Act. It analyzes the evolution of the DMCA from the original Coble Bill through the text of the newly enacted law. It describes the concerns on both sides of the debate and illustrates how Congress kept both viewpoints in mind when composing the final draft of the DMCA. Finally, this Note turns to Title II of the DMCA, discussing specific provisions of the new law. This Note concludes that the DMCA is not "a solution in search of a problem" at all.(7) Rather, it is a necessary amendment to the copyright law, bringing it up to date as the year 2000 draws ever closer.(8)

2. THE TORT OF COPYRIGHT INFRINGEMENT PRE-DMCA

   1. Copyright Infringement Generally

      Copyright infringement, briefly defined, is a violation of at least one of the six exclusive rights set out in section 106 of the Copyright Act.(9) Section 501(a) provides that should any of these rights be violated (notwithstanding defenses provided in sections 106 through 118(10)), the violating person is deemed "an infringer of the copyright or right of the author, as the case may be."(11) The policy behind the copyright law is to provide incentive to authors to create and disseminate works to the public without fear that those works will be copied and used to the credit and financial gain of someone else.

      Courts divide this relatively broad definition into three categories: direct infringement, vicarious infringement, and contributory infringement. Direct infringement is the affirmative action of violating an author's exclusive rights under section 106 of the Copyright Act.(12) Contributory infringement generally occurs when one knowingly supervises the infringing acts of another and the observer stands to benefit from the infringement.(13) Vicarious infringement "occurs when the defendant has the right or power to supervise the acts of the direct infringer, and has a financial stake in the infringing acts, even though the defendant had no knowledge of, or did not directly participate in, the infringing acts."(14)

      For decades, these torts shaped copyright law. For example, if a book was sold that was a carbon-copy of one written years earlier by someone else (who held a copyright in it), the person who copied the book without permission would be liable for direct infringement. If such a person did so within the scope of his or her employment and the employer had a financial stake in the acts, the employer could be held vicariously liable. If the company knew that infringing activity was occurring, it could be liable for contributory infringement. It is relatively easy to see how these three definitions work together. However, the 1990s brought a means of communication to the forefront of popularity that had never been imagined, other than by academics. This massive database known as the World Wide Web would present an entirely new means for people to advertise their products, communicate with one another, and easily download material and place it elsewhere without permission.

   2. Copyright Infringement on the World Wide Web: Application to Service Providers

      The first reaction of scholars and lawmakers upon the growth of this new means of communication was, in essence, to do nothing. Obviously, only holding a subscriber liable for infringement is unlikely to compensate the copyright owner fully. Consequently, the deep pocket of the service provider offers an alluring opportunity for the infringed party to get the damages that person feels he or she deserves.

      1. The Early Cases

         When such a suit was brought and it became known that the OSP knew of the infringing activity and did nothing to stop it, courts were quick in finding the entity liable for contributory infringement. The policy for this rule was obvious: The whole purpose of copyright law--giving incentive to authors to bring creative works into the public market--would go by the wayside if service providers were permitted to allow their customers to infringe as much or as little as they saw fit. Thus, this part of copyright infringement law did not present any unfairness to service providers. A case involving the trading of unauthorized video games online provides a good illustration.

         In Sega Enterprises Ltd. v. MAPHIA,(15) Sega, a major manufacturer and distributor of computer video game systems and programs, brought suit against MAPHIA, an electronic bulletin board (BBS)(16) and its system operator, Chad Scherman.(17) Scherman acknowledged that MAPHIA users were permitted to upload and download Sega games with an authorization password.(18) The evidence also indicated that Scherman ran MAPHIA from his home, using his own computer software and hardware.(19) Essentially, he was his own service provider. Because he knowingly allowed users to upload and download unauthorized copies of Sega video games, he was found liable for contributory copyright infringement.(20)

         While Sega Enterprises involved a BBS and not the Internet or World Wide Web, it is not beyond the stretch of imagination that its holding could have been extended to OSPs as well. Admittedly, in the short history of OSP copyright infringement, there have been no cases involving infringement on a Web site where the provider admitted (or was found) to have had knowledge of the unlawful activity.(21) Nevertheless, this seems to be good law. If the OSP knew of infringing activity and did nothing to stop it, the company (or individual) is, basically, sanctioning the activity and should be found liable (and would be so found under the DMCA).

         However, when courts in this area could not find knowledge of infringing activity on the part of the OSP (thus being unable to establish prima facie contributory infringement), they looked to and found liability under direct infringement. Thus, regardless of knowledge, service providers were forced to pay damages for the infringing activities of their customers. A case involving Playboy Enterprises shows that an online operator, prior to the passage of the DMCA, could be found liable for copyright infringement even when such a person had no knowledge of infringing activity.(22)

         In Playboy Enterprises, Inc. v. Frena, George Frena, an operator of a BBS, was sued as a result of infringing photographic images that were displayed on his service.(23) For a fee, anyone could log on to his bulletin board service and look at these pictures. Frena did not upload any of Playboy's photographs onto his system and was not aware of any infringing activity on the part of his subscribers.(24) He stated that as soon as he was made aware of the infringing activity, he removed the unlawful photographs and began monitoring his BBS so as to prevent additional infringing photographs from being uploaded.(25) Once he was made aware of the unlawful activity taking place on his BBS, Frena seemed to do everything within his power to remedy the situation and took further steps to ensure that such action did not happen again. However, he was found liable for direct copyright infringement.(26) Quoting the court: "There is no dispute that Defendant Frena supplied a product containing unauthorized copies of a copyrighted work. It does not matter that Defendant Frena claims he did not make the copies itself."(27)

         Although one could argue, probably quite successfully, that due to the small size of his BBS, Frena could have monitored his system from its inception to ensure that infringing activity did not occur, such a rule...