From mech@eff.org Thu Nov 30 15:50:48 1995 Received: (from mech@localhost) by eff.org (8.6.12/8.6.6) id PAA13684; Thu, 30 Nov 1995 15:50:48 -0800 Date: Thu, 30 Nov 1995 15:50:48 -0800 From: Stanton McCandlish Message-Id: <199511302350.PAA13684@eff.org> X-within-URL: http://www.theta.com/goodman/netcom1.html To: mech@eff.org, ssteele@eff.org Subject: netcom1.html Status: RO JUDGE FINDS ACCESS PROVIDERS CAN BE HELD RESPONSIBLE AND LIABLE FOR INFRINGING INTERNET POSTINGS -- Netcom and BBS operator sent to trial -- Summary and excerpts of decision follow: An attempt by access provider Netcom On-Line Services and Bulletin Board Service (BBS) operator Tom Klemesrud to claim that they have no responsibility for postings made by users of their systems has failed. On November 21, 1995, Judge Ronald Whyte of the U.S. District Court for the Northern District of California denied Netcom's and Klemesrud's motions for summary judgement in a copyright infringement suit filed by two Church of Scientology organizations, Religious Technology Center and Bridge Publications, Inc. The Church had brought suit against Netcom, Klemesrud and Internet user Dennis Erlich. In September, the judge enjoined Erlich from unauthorized postings of the Church's copyrighted materials, finding essentially that Erlich had violated the law and could not rely on a "fair use" defense. This later, 32-page ruling is a major blow to Netcom and Klemesrud. They had hoped they could evade liability for their part in Erlich's copyright infringements, however, they now have to face trial on the issue. It is a decisive victory for the Church of Scientology which has maintained all along that access providers and BBS operators have a responsibility to take action to halt infringements once these are brought to their attention. The court clearly rejected Netcom's claim that it merely provides a passive channel of communication like a common carrier and is thus comparable to a phone company. The judge stated that "... Netcom does more than just 'provide the wire and conduits.' Further, Internet providers are not national monopolies that are bound to carry all the traffic that one wishes to pass through them, as with the usual common carrier." In a keynote sentence, the judge established that "Netcom has not justified its copying plaintiffs' works to the extent necessary to establish entitlement to summary judgment in light of evidence that it knew that Erlich's use was infringing and had the ability to prevent its further distribution." Netcom had argued that the reason it had not taken action to halt Erlich's infringements was because they did not have unequivocal proof of the copyrights from the Church. The judge was not at all persuaded by this argument. The judge first reiterated that "Plaintiffs Religious Technology Center (RTC) and Bridge Publications, Inc. (BPI) hold copyrights in the unpublished and published works of L. Ron Hubbard, the late founder of the Church of Scientology." He then continued to explain, "To require proof of valid registrations would be impractical and would perhaps take too long to verify, making it impossible for a copyright holder to protect his or her works in some cases, as works are automatically deleted less than two weeks after they are posted." Finally, Judge Whyte succinctly summed up Netcom's responsibility: "Netcom allows Erlich's infringing messages to remain on its system and be further distributed to other Usenet servers worldwide. It does not completely relinquish control over how its system is used... Thus, it is fair, assuming Netcom is able to take simple measures to prevent further damage to plaintiff's copyrighted works, to hold Netcom liable for contributory infringement where Netcom has knowledge of Erlich's infringing postings yet continues to aid in the accomplishment of Erlich's purpose of publicly distributing the postings." The Church had also asserted that Netcom has the right and ability to supervise the conduct of its subscribers, an argument that the judge found had definite merit: "Further evidence of Netcom's rights to restrict infringing activity is its prohibition of copyright infringement and is requirement that its subscribers indemnify it for any damage to third parties.... As evidence that Netcom has in fact exercised its ability to police its users' conduct, plaintiffs cite evidence that Netcom has acted to suspend subscribers' accounts on over one thousand occasions... Further evidence shows that Netcom can delete specific postings. The court thus finds that plaintiffs have raised a genuine issue of fact as to whether Netcom has the right and ability to exercise control over the activities of its subscribers, and of Erlich in particular." Judge Whyte was unconvinced by Netcom's First Amendment argument. As he ruled in his September decision which enjoined Erlich from unauthorized postings of copyrighted Scientology scriptures, the judge pointed out that "imposing *liability* for infringement where it is otherwise appropriate does not necessarily raise a First Amendment issue. The copyright concepts of the idea\expression dichotomy and the fair use defense balance the important First Amendment rights with the constitutional authority for 'promot[ing] the progress of science and useful arts....'" Several references to Erlich throughout the ruling reiterate the court's findings that he will probably fail in his defense. "The court has already found that Erlich was not likely entitled to his own fair use defense, as his postings contained large portions of plaintiffs' published and unpublished works quoted verbatim with little added commentary", Judge Whyte wrote. In addition, the judge made general statements indicating that copyright protections apply equally to the Internet as they do to other written works. He stated, "Although the copyright laws were developed before digital works existed, they have certainly evolved to include such works, and this court can see no reason why works should deserve less protection because they are in digital form, especially where, as here, they were not put in such form by plaintiffs [Religious Technology Center and Bridge Publications Inc.]" Judge Whyte also rejected Netcom's fair use defense, noting that, "... the court does not find that Netcom's use was fair as a matter of law." The court dismissed Klemesrud's summary judgment motion with what are essentially identical arguments: "Despite the warnings, Klemesrud allegedly refused to assist plaintiffs in compelling Erlich to stop his postings and refused to stop receiving, copying, transmitting and publishing the postings. To state a claim for contributory infringement, plaintiffs must allege that Klemesrud knew of or should have known of Erlich's infringing actions at the time they occurred and yet substantially participated by 'induc[ing], caus[ing] or materially contribut[ing] to the infringing conduct' of Erlich... For the reasons discussed in connection with Netcom's motion, the court finds plaintiffs' pleadings sufficient to raise an issue of contributory infringement." This is probably the single most decisive ruling on the issue of access providers' responsibility issued by a court to date. The judge has rejected the "it's nothing to do with me" attitude of Netcom and BBS operator Klemesrud and ordered the case to trial. This new ruling makes it practically certain that east coast access provider Digital Gateway Systems (DGS) will face trial, as a defendant in a near-identical case brought by RTC and BPI in the Eastern District of Virginia.