PILLSBURY MADISON & SUTRO RANDOLF J. RICE #083712 BARBARA R. SHUFRO #128857 MELISSA A. BURKE #171710 Ten Almaden Boulevard San Jose, CA 95113-2226 Telephone: (408) 947-4000 Attorneys for Defendant NETCOM ON-LINE COMMUNICATION SERVICES, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA RELIGIOUS TECHNOLOGY CENTER, a ) California non-profit corporation; ) No. C95-20091 RMW and BRIDGE PUBLICATIONS, INC., a ) California non-profit corporation, ) ) Plaintiffs, ) Date: April 14, 1995 ) Time: 9:00 a.m. vs. ) Courtroom: 6 ) Before the Honorable NETCOM ON-LINE COMMUNICATION ) Ronald M. Whyte SERVICES, INC., a Delaware ) corporation; DENNIS ERLICH, an ) individual; and TOM KLEMESRUD, an ) individual, dba CLEARWOOD DATA ) SERVICES, ) ) Defendants. ) _____________________________________) MEMORANDUM OF POINTS AND AUTHORITIES OF DEFENDANT NETCOM ON-LINE COMMUNICATION SERVICES, INC. IN SUPPORT OF MOTION TO DISMISS OR, IN THE ALTERNATIVE, SUMMARY JUDGMENT TABLE OF CONTENTS Page I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . 1 II. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . 1 III. ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . 4 A. Standard of review . . . . . . . . . . . . . . . . 5 B. NETCOM's actions do not create liability for copyright infringement as a matter of law. . . . 5 1. NETCOM is not a contributory infringer as a matter of law . . . . . . . . . . . . . . . 8 a. NETCOM's "knowledge" is qualitatively different than the type of knowledge courts require in the contributory infringement context . . . . . . . . . 9 b. NETCOM did not substantially participate in the alleged infringement. . . . . . 12 2. NETCOM is not vicariously liable as a matter of law. . . . . . . . . . . . . . . . . . . 14 a. NETCOM had no control over Erlich's alleged infringing activities. . . . . 15 b. NETCOM does not financially benefit from the content of what is posted through its system . . . . . . . . . . . . . . 18 C. Imposing liability upon NETCOM would contravene the First Amendment. . . . . . . . . . . . . . . 18 D. NETCOM's use, if any, constitutes fair use . . . . 19 1. The purpose and character of the use. . . . . 21 2. Nature of copyrighted work. . . . . . . . . . 23 3. Amount of copying . . . . . . . . . . . . . . 24 4. Effect on the market for plaintiffs' work . . 24 III. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . 25 TABLE OF AUTHORITIES Page(s) Cases Apple Computer, Inc. v. Microsoft Corp., 821 F. Supp. 616 (N.D. Cal. 1993), aff'd, 35 F. 3d 1435 (9th Cir. 1994), cert. denied, 115 S. Ct. 1176 (1995) . . . . . . . . . . . . . . . . . . . . . . .12 Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832 (Fed. Cir. 1992) . . . . . . . . . .21, 22, 23 Balestreri v. Pacifica Police Dep't, 901 F.2d 696 (9th Cir. 1988). . . . . . . . . . . . . . . 5 Berlin v. E.C. Publications, Inc., 329 F.2d 541 (2d Cir. 1964) . . . . . . . . . . . . . . .18 Bevan v. CBS, 329 F. Supp. 601 (S.D.N.Y. 1971). . . . . . . . . . .15, 17 Campbell v. Acuff-Rose, 114 S. Ct. 1164 (1994). . . . . . . . . . . . . . . . . .20 Casella v. Morris, 820 F.2d 362 (11th Cir. 1987) . . . . . . . . . .10, 13, 16 D.C. Comics Inc. v. Mini Gift, 912 F.2d 29 (2d Cir. 1990). . . . . . . . . . . . . . . . 7 Deutsch v. Arnold, 98 F.2d 686 (2nd Cir. 1938) . . . . . . . . . . . . . 9, 15 E.F. Johnson Co. v. Uniden Corp. of America, 623 F. Supp. 1485 (D.C. Minn. 1985) . . . . . . . . . . .22 Fonovisa, Inc. v. Cherry Auction, Inc., 847 F. Supp. 1492 (E.D. Cal. 1994). . . . 8, 12, 13, passim Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) . . . . . . . . . . . . . . . . . . .12 Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (2d Cir. 1971). . . . . . . .8, 9, 10, passim Harper & Row Publishers v. Nation Enterprises, 471 U.S. 539, 105 S. Ct. 2218 (1985). . . . . . . . .20, 21 Hustler Magazine, Inc. v. Moral Majority, Inc., 606 F. Supp. 1526 (C.D. Cal. 1985), aff'd 796 F.2d 1148 (9th Cir. 1986). . . . . . . . . . . . . . . . . . .21 Italian Book Corp. v. Am. Broad. Companies, 458 F. Supp. 65 (S.D.N.Y. 1978) . . . . . . . . . . .21, 22 Laguna Pub. Co. v. Golden Rain Foundation, 131 Cal. App. 3d 816 (1982) . . . . . . . . . . . . . . .19 N.A.D.A. Service Corp. v. Business Data of Virginia, 651 F. Supp. 44 (E.D. Va. 1986) . . . . . . . . . . . . .20 New Era Publications v. Carol Pub. Group, 904 F.2d 152 (2d Cir. 1990) . . . . . . . . . . . . . . .23 Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993). . . . . . . . . . . . 8 Robert Stigwood Group, Ltd. v. Hurwitz, 462 F.2d 910 (2d Cir. 1972) . . . . . . . . . . . . . . . 9 Robins v. Pruneyard Shopping Center, 23 Cal. 3d 899 (1979), aff'd, 447 U.S. 74 (1980). . . . .19 Roy Export Co. v. Trustees of Columbia University, 344 F. Supp. 1350 (1972). . . . . . . . . . . . . . . . .17 Rural Tel. Serv. v. Feist Publications, 663 F. Supp. 214 (D. Kan. 1987) . . . . . . . . . . . . .19 Sega Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994) . . . . . . . . . .10, 13 Sega v. Accolade, 977 F.2d 1510 (9th Cir. 1992) . . . . . . . . . . . .22, 23 Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963) . . . . . . . 9, 14, 15, passim Shelton v. Tucker, 364 U.S. 479 (1960) . . . . . . . . . . . . . . . . . . .19 Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984) . . . . . . . . . . . .8, 9, 14, passim Stewart v. Abend, 495 U.S. 207 (1990) . . . . . . . . . . . . . . . . . . .20 Twentieth Century v. Aiken, 422 U.S. 151, 95 S. Ct. 2044 (1975) . . . . . . . . . . .21 Statutes and Codes Federal Rules of Civil Procedure Rule 12(b)(6) . . . . . . . . . . . . . . . . . . . . .1, 5 United States Code Title 17, Section 107 . . . . . . . . . . . . . . . .20, 22 Rules and Regulations Federal Rules of Civil Procedure Rule 12(c). . . . . . . . . . . . . . . . . . . . . . . . 5 Rule 56(c). . . . . . . . . . . . . . . . . . . . . . . . 5 Other Authorities 3 Nimmer On Copyright, Section 13.05[A]. . . . . . . . . . . . . . . . . . .21, 24 R.T. Nimmer, The Law of Computer Technology,  15.11B at S15-36 (2d ed. 1994). . . . . . . . . . . . . 8 L. Rose, NETLAW (Osborne McGraw Hill 1995) at 91-2 . . . . . . 8 P. Goldstein, Copyright (1985), Section 6.1, p. 708 . . . . . . . . . . . . . . . . . . .14 P. Goldstein, Copyright (1989), Section 6.3 . . . . . . . . . . . . . . . . . . . . . . .15 Section 10.2.1. . . . . . . . . . . . . . . . . . . .22, 23 Section 10.3. . . . . . . . . . . . . . . . . . . . . . .23 Restatement (Second) of Torts, Section 876(b) (1977) . . . . . . . . . . . . . . . . . .18 Sean Gonzalez, Routes to the Net, PC Magazine, Feb. 21, 1995, at 166 . . . . . . . . . . . . . . . . . . 2 Defendant NETCOM ON-LINE COMMUNICATION SERVICES, INC. ("NETCOM") submits this memorandum of points and authorities in support of its motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). I. INTRODUCTION. Plaintiffs seek the imposition of a permanent injunction against NETCOM premised on a theory of liability that has never previously been recognized by a court, or to NETCOM's knowledge, even presented to a court for consideration. Plaintiffs are demanding an unprecedented extension of copyright infringement liability that, if accepted by this Court, would impact, and possibly create liability for, each of the estimated 36 million users of the Internet./1/ ---------- /1/ On February 14, 1995, plaintiffs served NETCOM with a verified complaint and a host of related pleadings seeking, inter alia, a temporary restraining order ("TRO") against all defendants, a writ of seizure against defendant Dennis Erlich, a protective order and an order sealing the Court's record of this lawsuit. At the order to show cause hearing on February 21, 1995, the Court dissolved the TRO with respect to NETCOM and questioned whether NETCOM was "an appropriate defendant" to the action. 2/21/95 Transcript at 7:9-12. ---------- NETCOM demonstrates below that there is no legal basis upon which to premise a finding of liability against it. Accordingly, NETCOM requests that the Court dismiss all causes of action against it without leave to amend. II. BACKGROUND. NETCOM is an Internet access provider. Declaration of Rick Francis (herein "Francis Decl.")  2. The Internet is a worldwide network of private and public computer networks, which can be accessed by anyone through telephones, computers and facsimile machines. The Internet was organized by the U.S. government in the 1970s to insure that a communications system would be in place in the event of a national emergency. Because of this, the Internet is organized as a "web" with every link reachable by many routes. Many Internet network sites are government or university based. NETCOM maintains the hardware and computer software necessary for ordinary personal computer users to connect to the Internet. Id. at  3 & 4. The proper metaphor for online access providers, such as NETCOM, is a telephone service; it is an information transmission and exchange system, available to anyone with access and proper equipment, for transmitting data to anyone else on the Internet./2/ ---------- /2/ See, e.g., Sean Gonzalez, Routes to the Net, PC Magazine, Feb. 21, 1995, at 166 ("Now that anyone can use the Internet, how do you access it? What you need is a new type of utility company - an Internet provider."). ---------- Access providers, and the Internet network, are merely the vehicle used for transmissions between users all over the world. Access providers should not be held accountable for the behavior of millions of Internet users, just as telephone companies are not responsible for the content of the information they carry. NETCOM leases access to the Internet by providing computer software to its subscribers that allows them to use the NETCOM gateway to access the Internet. Francis Decl. The NETCOM Terms and Conditions (available online) state, in relevant part, NETCOM will provide services on its host computing systems to individual account holders . . . NETCOM Services are defined as the use by the account holder of computing, telecommunications, software, and information services provided by NETCOM . . . NETCOM Services include access to the complete USENET discussions groups (news groups). Castleman Decl., filed 3/8/95, Exh. C (emphasis added). Because NETCOM charges its subscribers a flat fee per month, it does not profit from the content, or even the amount, of material that it carries on its system. NETCOM provides access to the Internet, at a relatively low-cost, standard monthly fee of $17.50 for a shell account (which requires knowledge of the UNIX operating system), or $19.95 per month for a graphical, more user-friendly customer interface. Francis Decl., Exh. 1. NETCOM derives no incremental benefit from what is posted on the Internet system by its subscribers, or what is retrieved. Francis Decl.,  7. NETCOM would receive the same monthly fee if its subscribers made no postings whatsoever. Id. Under the terms of their agreement with NETCOM, subscribers can use NETCOM facilities to access USENET newsgroups--electronic "meeting places"--organized around particular subjects. Subscribers can post to a certain group by designating its name on their message (in this case, "alt.religion.scientology"). In this way, everyone on the Internet who is interested in the same subject, no matter where in the world they are located, can post and receive messages on the subject matter of the particular news group. Francis Decl.,  5, 9. NETCOM is one of tens of thousands of local server sites for USENET postings, including universities and government facilities. Each local server makes available what is posted to a group of other USENET servers, which in turn does the same, until all server sites obtain access to the posting. USENET postings are "resident" on the computer facilities at NETCOM, in machine readable form, in order to accomplish the subscriber's intended posting to participating USENET sites. All USENET postings, from wherever the are posted, are resident on virtually all USENET servers as a function of the USENET system. Id. NETCOM does not post or control the contents of the information posted or its destination. NETCOM does not control where, when or whether the information may be "downloaded." NETCOM does not provide the means for downloading the information. NETCOM, through a fixed-rental agreement, leases the equipment necessary to enable its subscribers to communicate on the Internet, including USENET. Francis Decl.,  10./3/ ---------- /3/ NETCOM competitors include AlterNET, CERFnet, DIGEX, PANIX, The Pipeline, The Well, The World and a number of smaller access providers. NETCOM is unlike America Online, CompuServe, GEnie or Prodigy, services which also, or primarily, attempt to provide content-based services to subscribers. Francis Decl.,  11. ---------- III. ARGUMENT. The ramifications of a finding of liability against a passive transmitter like NETCOM would be dramatic and, in practical effect, would fundamentally alter the function of the Internet. At the same time, a decision to dismiss NETCOM as a party to this lawsuit will not leave the Church of Scientology without a remedy, if in fact the Court determines infringement has occurred. Rather, the presence of the party directly responsible for the alleged postings guarantees the Church an opportunity to seek redress if the circumstances so warrant. To advance their demand for an extension of copyright liability, plaintiffs have made every effort to collapse two issues that are analytically distinct: (1) whether NETCOM is personally liable as a direct, contributory or vicarious copyright infringer, and, if not, (2) whether NETCOM is legally obliged to take any actions against third parties accused, but not adjudicated, of infringing. In this regard, NETCOM believes the Court should not allow plaintiffs' allegations, disputed by NETCOM, that it is technologically feasible for NETCOM to design remedial sanctions for use against a third party infringer to color its determination of whether a basis for liability against NETCOM exists in the first instance. A. Standard of review. Federal Rule of Civil Procedure 12(b)(6) enables a party to move to dismiss a claim against it on the ground that the allegations contained therein "fail to state a claim upon which relief can be granted." A motion to dismiss may be granted where the moving party shows that the pleading contains a complete "lack of a cognizable legal theory" or the "absence of sufficient facts alleged under a cognizable theory." Balestreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). NETCOM is entitled to dismissal of plaintiffs' first and second causes of action because the facts, as alleged, do not support a finding of copyright infringement liability against it. In addition, and because there is no legal basis upon which a finding of liability against NETCOM can be premised, the Court should not afford plaintiffs leave to amend./4/ ---------- /4/ In the alternative, if the Court finds it necessary to consider extrinsic evidence to determine the viability of plaintiffs' claims, NETCOM demonstrates below that there is no genuine issue of disputed material fact and, accordingly, summary judgment is appropriate. Fed. R. Civ. P.  12(c) & 56(c). ---------- B. NETCOM's actions do not create liability for copyright infringement as a matter of law. In paragraphs 25(a) and (b) of their Complaint, plaintiffs make the following allegations to support their claim that NETCOM is liable for direct copyright infringement: (a) When subscribers to Netcom, whether they be individuals or other computer networks, post messages to Usenet newsgroups from Netcom's computer, the messages transmit to every other computer on the Internet which subscribe to the concerned newsgroup. . . . Subscribers to other access providers on the Internet send similar messages which are also distributed to every computer on the Internet which subscribes to the concerned Usenet newsgroup; (b) Each access provider on the Internet which subscribes to Usenet newsgroups, including Netcom, copies messages which are addressed to newsgroups that they subscribe to, to a semi-permanent computer storage medium. . . . Compl. at  25(a)&(b) (emphasis added). Contrary to plaintiffs' allegations, NETCOM itself does not post the material in question or engage in any affirmative act of copying. Instead, the transmission of a message through NETCOM's Usenet server site results solely from the affirmative acts of the individual user of the USENET. By addressing a message to a particular USENET newsgroup, the USENET user initiates a sequence of events whereby the message is transmitted from his or her personal computer to--in the case of a user who relies on NETCOM to gain Internet access--NETCOM's USENET server site and then from there to the next local USENET server site in the transmission chain and so on. Ultimately, every one of the tens of thousands of local USENET server sites throughout the world receives a complete set of all the messages posted to the newsgroups it carries since the last transmission relay, regardless of the messages' points of origin. Francis Decl.,  5. This process occurs not because the user directly subscribes to the local server site, but because the local server site serves as a temporary host of all messages posted to all newsgroups to which it provides access. In the same vein, NETCOM automatically receives all messages addressed to the newsgroups it hosts on its server. Thus, any transmission of Erlich's allegedly infringing messages from his personal computer through NETCOM's USENET server site to the next USENET server site in the chain is the direct result of Erlich's designation of his message for transmission to the alt.religion.scientology USENET newsgroup and not any direct act of NETCOM./5/ ---------- /5/ Plaintiffs' multitude of declarations confirm these facts. See, e.g., Castleman Decl., at  8 ("[Erlich] starts up his computer and causes it to load and run . . ."),  18 ("If Mr. Erlich chooses to post a response . . . he presses the appropriate key and the BBS displays an empty message screen . . .."),  23 ("Mr. Klemesrud's computer will . . . call the NETCOM host computer . . . . In this case, however, no human is involved, and the two machines exchange date according to a prearranged pattern") (emphasis added). ---------- In this respect, NETCOM's "role" in Erlich's activities is qualitatively no different from the role of the tens of thousands of USENET server sites who host the alt.religion. scientology newsgroup on their servers. They also receive and transmit Erlich's messages because they are a link in the USENET transmission chain. Accordingly, if NETCOM were considered to be a direct infringer because of the computer dissemination of USENET messages on the Internet, such a theory of liability would apply to the over 10,000 USENET sites and, possibly, the millions of USENET participants. Plaintiffs cannot avoid this breathtaking result by pledging to limit their lawsuits for direct infringement only to those USENET servers who have knowledge of infringing activities because, unlike contributory infringement, "knowledge" is not a necessary element of direct infringement. D.C. Comics Inc. v. Mini Gift, 912 F.2d 29 (2d Cir. 1990). For NETCOM to be liable for what others post on its leased computer facilities, therefore, NETCOM must be either contributorily or vicariously liable for the activity of its subscriber./6/ ---------- /6/ One district court has found that a BBS may be liable for direct copyright infringement, if it stores copyrighted material on its database and allows subscribers to download and copy the material without the permission of the copyright owner. Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993). Neither Sega, discussed infra, nor Frena involve an access provider to the Internet. In addition, Frena appears to be a largely fact-driven decision in that it involved a BBS which routinely made available to its subscribers photographs of an adult nature. Further, the defendant's file terms for these photographs, "Playboy" and "Playmate," indicated the defendant did in fact clearly know of the infringement. Finally, Frena has been roundly criticized as incorrectly decided. "[G]iven its questionable reasoning, it is unlikely even to be viewed by other courts for guidance in copyright matters, . . . the case report makes no mention of a First Amendment defense by Frena's attorney . . . the judge [may not have been] presented with perhaps the most important reason not to hold a system operator liable for infringement without knowledge: Such liability could cause system operators to bog down message traffic on their systems while checking for possible infringements, resulting in a "chilling effect" prohibited by the First Amendment, something the courts must seek to avoid." L. Rose, NETLAW at 91-2 (Osborne McGraw Hill 1995). Similarly, Nimmer concludes that a finding of infringement is not appropriate in cases where "the information service is less directly involved in the enterprise of creating unauthorized copies . . . ." R.T. Nimmer, The Law of Computer Technology,  15.11B at S15-36 (2d ed. 1994). Frena does not bind this court. ---------- Neither is appropriate here. 1. NETCOM is not a contributory infringer as a matter of law. Contributory liability requires two elements (1) knowledge of the copyright infringing activity and (2) substantial participation in the infringing conduct./7/ ---------- /7/ Some courts have also included "ability to control" in this analysis, discussed, infra, with respect to vicarious liability. For example, in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984) the Court recognized the longstanding rule that the status of contributory infringer traditionally has been given only to those who, with knowledge of the infringing activity, were "in a position to control the use of the copyrighted works by others and had authorized the use without permission from the copyright owner." ---------- Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971); Fonovisa, Inc. v. Cherry Auction, Inc., 847 F. Supp. 1492, 1496 (E.D. Cal. 1994). "Contributory infringement" may be found only when "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Gershwin, 443 F.2d at 1162. There is no mechanical test with which to ascertain the existence of contributory infringement. Rather, "the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another." Sony Corp., 464 U.S. at 435 (emphasis added). NETCOM's activity does not meet this test. a. NETCOM's "knowledge" is qualitatively different than the type of knowledge courts require in the contributory infringement context. NETCOM leases the use of its equipment to its subscribers. In cases involving the lessor/lessee relationship, courts have looked to the lessor's knowledge at the time the lease is commenced in considering an allegation of contributory infringement. Deutsch v. Arnold, 98 F.2d 686 (2nd Cir. 1938) (no liability where landlord lets premises without knowledge of impending infringement); Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) (approving Deutsch); Robert Stigwood Group, Ltd. v. Hurwitz, 462 F.2d 910 (2d Cir. 1972) (theater operator not liable where it did not know of infringement at time of lease). Similarly here, NETCOM had no knowledge whatsoever of defendant Erlich's alleged plans at the time it leased its facilities to defendant Klemesrud. In comparison, a review of the cases in which liability for contributory infringement has been found illustrates that the level of knowledge that is required is lacking here. In the seminal case of Gershwin, 443 F.2d 1159, for example, the Second Circuit found a concert promoter contributorily liable for the unauthorized performance of copyrighted compositions at concerts it sponsored. In so holding, the court underscored that the promoter knew in advance of the challenged concerts that the artists would perform copyrighted compositions without authorization and yet "deliberately made no effort to obtain copyright clearance for [the works] . . . ." Id. at 1161./8/ ---------- /8/ See also Casella v. Morris, 820 F.2d 362, 364-65 (11th Cir. 1987) (knowledge element met in an action by a songwriter for the unauthorized use of a series of songs one of the defendants had hired him to compose; defendant's willful refusal to pay the songwriter the licensing fees due and his subsequent decision to sell the rights in those songs to a third party, along with the franchise rights to a restaurant chain where the songs were to be performed, demonstrated that the defendant "knew" of the planned infringement before it occurred); Sega Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679, 683 (N.D. Cal. 1994) (defendant who operated a BBS for the purpose of enabling subscribers to "upload" and "download" Sega videogames for unauthorized copying was liable as a contributory infringer given his active encouragement of the infringing conduct; court noted that the uploading and downloading was "particularly known" to the operator who "specifically solicited this copying and expressed the desire that [the] video game programs be placed on the MAPHIA bulletin board for downloading purposes"). ---------- In contrast, NETCOM's "knowledge" of Erlich's alleged infringing conduct is qualitatively different. As to the postings themselves, NETCOM has no advance knowledge of and does not participate in when or whether Erlich intends to post information to the Internet, or who or whether any one will read the information. Courts have not found the knowledge requirement to be satisfied on such facts. Moreover, subsequent to being contacted by plaintiff, NETCOM is in virtually the same position. NETCOM "knows" that there is a heated dispute transpiring between the Church of Scientology and one of its former ministers turned vocal critic, whom plaintiffs call "the renegade Erlich." Pltfs.' MP&A in Supp. of Prelim. Inj. at 19:17. NETCOM knows that the Church contends Erlich has infringed its copyrights. NETCOM also knows that Erlich vigorously denies that his postings constitute copyright infringement. NETCOM does not know whether the uses are in fact actionable against Erlich./9/ ---------- /9/ See discussion of insufficiency of copyright registrations in NETCOM's Opp. to Renewed Motion for Prelim. Inj. ---------- The insubstantial nature of NETCOM's knowledge is underscored by the herculean efforts plaintiffs have had to undertake to support their allegations that Erlich is infringing. The magnitude of these efforts also belies plaintiffs' repeated contention that, if required by the Court to police Erlich's activities, NETCOM's burden would be minimal. Id. at 11:15-27. More specifically, although plaintiffs moved for a TRO on February 8, 1995, they were unable at the show cause hearing, held fourteen days later, to answer the Court's basic questions concerning the scope and content of Erlich's postings in relation to the alleged protected works. 2/21/95 Transcript at 13:20-14:23; 16:25-17:8. It was not until sixteen days after having moved for a TRO that a half dozen lawyers could supply the voluminous documentation (quite literally 20 pounds) necessary to support the decisions that plaintiffs' demand NETCOM make daily and instantaneously. In sum, the nature of NETCOM's knowledge contrasts sharply with the certain, unequivocal knowledge possessed by the defendants in the cases discussed above, upon which a court could reasonably require a party to act or risk liability for contributory infringement. In addition, even where unequivocal knowledge is proven, plaintiff must also show substantial participation by the defendant in order to state a claim. b. NETCOM did not substantially participate in the alleged infringement. When considering a claim for contributory infringement, a court must consider the materiality of the alleged contribution. See, e.g., Gershwin, 443 F.2d at 1162 ("one who . . . materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer"). The test for materiality does not lend itself to quantitative precision; rather, "[r]esolution of the issue . . . depends upon a determination of the function that [the alleged infringer] plays in the total process." Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 396-97 (1968); see also Apple Computer, Inc. v. Microsoft Corp., 821 F. Supp. 616, 625 (N.D. Cal. 1993) ("the participation of the alleged contributory infringer must be 'substantial'"). In Fonovisa, Inc. v. Cherry Auction, Inc., the court granted the motion to dismiss of defendants, who operated a local "swap meet" and rented space to vendors who engaged in infringing activity, even though the defendants knew of the activity and took no action. 847 F. Supp. at 1492. Indeed, the Fresno County Sheriff's Department had raided the swap meet, seized 38,014 counterfeit tapes and notified defendants that violations were continuing to occur, all before the lawsuit was filed. Id. at 1494-95. Although the court recognized that defendants were aware of the infringing activities occurring on their leased premises, the court concluded this type of "knowledge" did not support the imposition of contributory liability on the defendants in the absence of a concomitant exercise of control. The court found that because the defendants did not promote, advertise or encourage the sale of counterfeit products, no liability for the vendors could attach. "Merely renting booth space is not 'substantial participation' in the vendors' infringement activities." Id. at 1496. In an analysis that applies with equal force here, the district court underscored that even though Cherry Auction was in the business of running a swap meet, it was not in the business of "directing" what would be sold there, noting: Cherry Auction's so-called "role" would have been the same if vendors rented the space to just sit on. There is no way to infer from the complaint that Cherry Auction acted in concert with the vendors to accomplish the common purpose or plan of selling counterfeits. Any "participation" was passive, at most, and not nearly "substantial" enough to warrant defendants the label of joint tortfeasors. Id. at 1496. Similarly here, while NETCOM is in the business of providing access to the Internet, it is not in the business of "directing" what will be posted there. NETCOM merely leases its premises to subscribers who wish to communicate on the Internet and does not in any way select, edit or benefit from what they post./10/ ---------- /10/ Review of cases where liability has been found further reveals that NETCOM's role does not "materially contribute" to Erlich's alleged infringement. In Gershwin, for example, the Second Circuit underscored the "pervasive participation" of the concert promoter in the infringing conduct of the acts it promoted. Gershwin, 443 F.2d at 1163. Specifically, the court noted that the fact that the promoter sponsored the creation of local concert associations to provide audiences for the infringing artists "amply support[s] the district court's finding that it 'caused this copyright infringement.'" Id.; see also Sega, 857 F. Supp. at 683 ("materiality" element satisfied given the BBS operator's practice of directly soliciting and encouraging users to copy Sega's games from his database); Casella, 820 F.2d at 365 (unauthorized sale of plaintiff's copyrighted songs "could not have been consummated without the consent and participation of" defendant). ---------- NETCOM's "role" in Erlich's alleged infringement is in stark contrast to the "pervasive participation" courts require before liability for contributory infringement will lie./11/ ---------- /11/ Plaintiffs' suggestion that NETCOM's "unwillingness to take action" against Erlich satisfies the "pervasive participation" requirement, literally turns the requirement on its head. (Pls.' MP&A in Supp. of Prelim. Inj. at 15:15-16). ---------- Rather than directing, authorizing or actively participating in Erlich's allegedly infringing activities, NETCOM simply serves as a passive transmitter of his and millions of other messages conveyed throughout the Internet. The fact that NETCOM is just one of dozens of providers of Internet access and just one of thousands of USENET server sites throughout the world illustrates the immateriality of its contribution to Erlich's conduct. Plaintiffs' suggestion that NETCOM's practice of retaining USENET messages for a period of days constitutes substantial "encouragement" of Erlich's activities misconstrues the import of the requirement. Pls.' MP&A in Supp. of Prelim. Inj. at 2:5-7; 16:21-23. By necessity, NETCOM treats all USENET messages alike and according to subscribers instructions, not with the intent of purposefully aiding Erlich's alleged violations within the meaning of the contributory infringement doctrine, but rather to ease transmission of the messages and for the convenience of USENET users. Francis Decl., 5. 2. NETCOM is not vicariously liable as a matter of law. Plaintiffs have not contended that NETCOM is vicariously liable for the alleged infringement of Erlich, nor could they given the present facts./12/ ---------- /12/ Unlike contributory infringement where liability turns on the defendant's relationship to the direct infringement, vicarious liability rests on the defendant's relationship to the direct infringer. P. Goldstein, Copyright,  6.1 at 708 (1989). ---------- Because courts do not always clearly delineate the lines between vicarious liability and contributory infringement, however, the cases involving vicarious liability are also instructive. See, e.g., Sony Corp., 464 U.S. at 435 n.17. To state a claim for vicarious liability a plaintiff must demonstrate that the third party had the right and ability to control the infringer and received a direct financial benefit from the infringement. Shapiro, 316 F.2d at 307 (liability arises "when the right and ability to supervise coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials"). Both criteria are absent in this case. a. NETCOM had no control over Erlich's alleged infringing activities. The "dancehall/landlord" cases, in which the doctrine has its genesis, illuminate that the element of "control" is absent here. See P. Goldstein, Copyright,  6.3 at 721-22 (1989). ("The landlord-tenant and dance hall cases retain their authority today".) Courts routinely have held that a landlord is not vicariously liable for a tenant who engages in copyright infringement simply by reason of such a relationship, if the landlord (1) let the property without notice of the impending infringement; (2) at a fixed rental rate; and (3) exercised no supervision over the tenant. See, Deutsch, 98 F.2d at 688 (lessor not liable for tenant's use of premises to operate a handwriting analysis business that wrongfully used plaintiff's copyrighted analysis chart); Sony Corp., 464 U.S. at 437./13/ ---------- /13/ In contrast, in the dancehall cases, lounge owners have frequently been held vicariously liable for the infringing activities of musical acts because of their ability to police the music performed at their establishments and the fact that they receive a direct financial benefit from the infringement. See, e.g., Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (7th Cir. 1929); Shapiro, 316 F.2d at 307. ---------- Similarly, a sponsor of a radio or television program who exerts no control over program content is not liable for infringing material contained in the program. See Bevan v. CBS, 329 F. Supp. 601, 610 (S.D.N.Y. 1971) (sponsors of a program that infringed a manuscript not vicariously liable absent the "power to supervise and control the content of the infringing program"); Nat'l Ass'n of Performing Artists v. Wm Penn B. Co., 38 F. Supp. 531 (E.D. Pa. 1941) (defendant advertisers not liable where none had right to or did exercise any control in selection of records)./14/ ---------- /14/ A review of the case law outside of the "dancehall/landlord" genre where vicarious liability has been found are also helpful to contrast the type of control necessary for a finding of liability with NETCOM's total lack of control over the underlying and allegedly infringing conduct. In Casella, for example, the court underscored that the defendant had full control over the inappropriate use of the copyrighted songs because he executed the sale of the songs to a third party knowing that it would subsequently infringe upon them. 820 F.2d at 365. Similarly, in Shapiro the Second Circuit held that a department store owner was liable for its record concessionaire's sale of bootleg record albums based in part on the fact that the owner retained ultimate supervision and control over the concessionaire's employees. 316 F.2d at 308; see also Gershw in, 443 F.2d at 1163 (court emphasized that the vicarious infringer was in a position to police the infringing conduct of the artists it promoted). ---------- NETCOM's "control" over Erlich is qualitatively different and unlike the respondeat superior relationship that forms the basis of vicarious liability. NETCOM does not and cannot supervise Erlich's messages before they are posted./15/ ---------- /15/ Plaintiffs claim that a software change would permit NETCOM to block all posting by Erlich until NETCOM could review them. NETCOM has never before "pre-screened" postings, does not currently have the software to do so, and believes this proposed procedure is unworkable for the reasons explained herein. Francis Decl., 12. See also discussion of insufficiency of copyright registrations in NETCOM's Opp. to Renewed Motion for Prelim. Inj. It would be necessary to entirely change the functioning of the USENET system in order to monitor information that is posted to it. Moreover, under plaintiffs' theory, prior review of the material itself would constitute a copyright violation. ---------- Given the speed and volume of the digital messages transmitted via the USENET, it is impossible for passive access providers, like NETCOM, to attempt to exercise editorial control over the content of individual messages./16/ ---------- /16/ There are approximately 150 megabytes, or 150 million key strokes of information, passing over NETCOM's transmission lines per day. ---------- Plaintiffs' use of NETCOM's terms and conditions as evidence that NETCOM has the right and ability to control the content of Erlich's postings is specious. Pls.' MP&A in Supp. of Prelim. Inj. at 15:10-12. The terms and conditions do not say, nor could they given the technological realities, that NETCOM will screen for violations in advance of posting. They simply reserve to NETCOM the contractual right to take remedial action once it has established that a violation of one of the terms and conditions has occurred. Plaintiffs cannot use NETCOM's reservation of rights to establish that NETCOM has the duty to control individual users within the meaning of the vicarious liability doctrine. See Bevan, 329 F. Supp. at 610 (dismissing use of "bare contractual provision" giving sponsors the right to review broadcasts in advance as evidence of "power to supervise"). Finally, plaintiffs' suggestion that NETCOM should undertake to design software whereby Erlich's messages could be permanently blocked from the Internet similarly misses the import of the vicarious liability doctrine./17/ ---------- /17/ Additionally, such a "perpetual" prior restraint could never withstand scrutiny under the First Amendment. See NETCOM's Opp. to Pltf.' Renewed Prel. Inj. ---------- Indeed, in Fonovisa, the court considered and rejected the argument that the power to refuse to deal with an infringer is equivalent to the power to control an infringer, noting: The argument that defendants could have "policed" the vendors by refusing to lease spaces to them has only specious appeal . . . Without question, Cherry Auction has sovereignty over the [swap] meet's grounds and can refuse a vendor . . . But this is not supervisory power in the context of vicarious infringement. Cherry Auction's sovereignty over its property does not liken it to being the vendors' employer in the respondeat superior sense. 847 F. Supp. at 1497. b. NETCOM does not financially benefit from the content of what is posted through its system. Fixed fee rentals of the type NETCOM maintains with its subscribers are not construed to be financially derivative of the alleged act of infringement, because the fee remains the same regardless of the nature, extent, or lack thereof, of use of the premises. Roy Export Co. v. Trustees of Columbia University, 344 F. Supp. 1350, 1353 (1972) (University not vicariously liable for an unauthorized showing of film; although it had the ability to control the use of its premises and equipment, which it allowed students to reserve, it received no financial benefit from the showing of the film); see also Fonovisa, 847 F. Supp. at 1496 (swap meet operators neither supervised nor profited from infringing vendors' sales); Restatement (Second) of Torts, comment on  876(b) (1977) ("The assistance of or participation by the Defendant may be so slight that he is not liable for the act of another"). C. Imposing liability upon NETCOM would contravene the First Amendment./18/ ---------- /18/ For a more extensive discussion of the First Amendment ramifications of the action plaintiffs' urge upon this Court, see NETCOM's Opp. to Pltfs.' Renewed Motion for Prelim. Inj. ---------- The construction of the Copyright Act urged by plaintiffs could impair the First Amendment rights of millions of Internet users. Plaintiffs' construction would dramatically chill of use of the Internet, because every access provider or user would be subject to liability merely because a subscriber posted infringing material to a USENET newsgroup. This chilling effect contravenes the First Amendment and directly undermines the very purpose of the copyright law. Berlin v. E.C. Publications, Inc., 329 F.2d 541, 543-44 (2d Cir. 1964). Moreover, plaintiffs' claim against NETCOM is inconsistent with the constitutional requirement that regulation of speech be narrowly tailored, rather than pursued by means that "broadly stifle fundamental personal liberties when the end can be more narrowly achieved." Shelton v. Tucker 364 U.S. 479, 488 (1960)./19/ ---------- /19/ Finally, if plaintiffs' interpretation of the Copyright Act were accepted, NETCOM would be presented with an insoluble dilemma. If NETCOM acted unilaterally to deprive users of access, it could potentially be subjected to liability for doing so. The California courts have recognized a cause of action to enjoin a private party from violating free speech rights (Robins v. Pruneyard Shopping Center, 23 Cal. 3d 899 (1979), aff'd, 447 U.S. 74 (1980)), as well as to recover damages for their abridgement (Laguna Pub. Co. v. Golden Rain Foundation, 131 Cal. App. 3d 816 (1982)). ---------- D. NETCOM's use, if any, constitutes fair use. Plaintiffs allege that, although NETCOM itself does not post any of the allegedly infringing material to USENET newsgroups, NETCOM violates their copyrights by maintaining its subscribers' USENET newsgroup postings on its server for eleven days./20/ ---------- /20/ Virtually all USENET sites, including major universities and U.S. government sites, maintain all USENET newsgroup postings on their servers for a short period of time including those posted from other sites. Francis Decl.,  5. ---------- NETCOM disputes that the nonvolitional transmission of messages though a lease agreement can be construed to be an act of copying. Assuming arguendo it is construed in such a manner, such use is clearly protected by the fair use doctrine./21/ ---------- /21/ NETCOM does not address in this motion the second layer of fair use analysis applicable to plaintiffs' allegations, whether the use made by Mr. Erlich is fair use. ---------- Not every copy of a protected work constitutes infringement. The fair use doctrine allows a person other than the owner of a copyright to use copyrighted material in a reasonable manner without consent, notwithstanding the monopoly granted to the owner of the copyright. Rural Tel. Serv. v. Feist Publications, 663 F. Supp. 214 (D. Kan. 1987)./22/ ---------- /22/ The fair use doctrine is codified in section 107 of the Copyright Act, 17 U.S.C.  107, which provides in pertinent part: In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-- (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of the above factors. ---------- Use that does not materially impair the marketability of copyrighted work will be deemed fair. N.A.D.A. Service Corp. v. Business Data of Virginia, 651 F. Supp. 44 (E.D. Va. 1986) (copying of copyrighted guide to create tapes is fair use; defendant sold tapes, not guide). The U.S. Supreme Court applied the fair use doctrine to then newly-created technology in Sony Corp., 464 U.S. 417./23/ ---------- /23/ Sony is one of four U.S. Supreme Court decisions treating the issue of fair use. The others are: Campbell v. Acuff-Rose, 114 S. Ct. 1164 (1994) (2 Live Crew parody of the copyrighted song is a fair use); Stewart v. Abend, 495 U.S. 207 (1990) (use of magazine story as basis for a movie is not fair use); Harper & Row Publishers v. Nation Enterprises, 471 U.S. 539, 105 S. Ct. 2218 (1985) (prepublication of about-to-be published autobiography is not fair use). ---------- In that case, the court found that the manufacturers of Betamax video tape recorders ("VTRs"), the means by which infringing copies could be made, were not liable for copyright infringement. The Court characterized as unprecedented the respondents' attempt to impose copyright liability upon the distributors of copying equipment, and found that because the public also used the VTRs for a legitimate purpose, "there is no basis in the Copyright Act upon which respondents can hold petitioners liable for distributing VTRs to the general public." Id. at 421. The Court relied, in part, upon the public's interest in accessing the new technology as a basis for its decision. Id. at 439-40./24/ ---------- /24/ "The legislative history of section 107 suggests that courts should adapt the fair use exception to accommodate new technological innovations." Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832, 843 (Fed. Cir. 1992) citing H.R. Rep. No. 1476, 94th Cong., 2d Sess. 66 (1976), reprinted in U.S.C.C.A.N. 5659, 5679-80; see also Twentieth Century v. Aiken, 422 U.S. 151, 156, 162, 95 S. Ct. 2044 (1975) (radio broadcast of copyrighted music played on four speakers in small fast-food restaurant is not a copyright violation and would be too impractical to enforce); ("When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of [its] basic purpose.") ---------- Individual application of the fair use statutory factors also militate in favor of a decision on behalf of NETCOM. 1. The purpose and character of the use. This factor strongly favors NETCOM. In applying this factor, courts look to the benefit that the "copier" is deriving from the copy. Harper & Row Publishers, Inc., 471 U.S. at 562; 3 Nimmer On Copyright  13.05[A] at 13-70. Here NETCOM derives no benefit whatsoever. NETCOM is in the business of providing communication facilities to Internet users. NETCOM's profits are tied to the content of the messages that subscribers communicate. NETCOM's "use" of the allegedly copyrighted material serves a function different than that of the plaintiffs, a factor strongly favoring fair use. Hustler Magazine, Inc. v. Moral Majority, Inc., 606 F. Supp. 1526 (C.D. Cal. 1985), aff'd 796 F.2d 1148 (9th Cir. 1986) (no liability for mailing copies of Hustler's copyrighted parody of Rev. Jerry Falwell as part of fundraising appeal); Italian Book Corp. v. Am. Broad. Companies, 458 F. Supp. 65, 70 (S.D.N.Y. 1978) (where a subsequent use is not in competition with copyrighted use, and subsequent use does not lessen value, fair use defense is generally sustained). NETCOM's "use" of the material in no way competes with plaintiffs' use: NETCOM is intending to allow electronic communication, not to profit from the dissemination of L. Ron Hubbard's works. Courts have found that the public benefit from access to or development of a new technology outweighs the interest of the copyright owner, if the user is not actually marketing an infringing work. Atari Games Corp., 975 F.2d at 843 (copying that occurs in "reverse engineering object code to discern the unprotectible ideas . . . is fair use"); see also Sega v. Accolade, 977 F.2d 1510, 1523 (9th Cir. 1992) ("we are free to consider the public benefit resulting from a particular use notwithstanding the fact that the alleged infringer may gain commercially")./25/ ---------- /25/ In numerous other cases, the high social value relative to the losses suffered by the proprietor have been held to override the copyright interest at issue. See Italian Book Corp., 458 F. Supp. at 71 (news broadcast of parade that included portions of plaintiff's copyrighted song is fair use); H.R. Rep., 73 (urgency of preserving pictures made before 1924 dictates that making of duplicate copies for archival purposes is fair use); E.F. Johnson Co. v. Uniden Corp. of America, 623 F. Supp. 1485, 1501 n.17 (D.C. Minn. 1985) (analyzing code is standard industry practice); H.R. Rep. 74 (reproduction of excerpt by calligrapher for client does not represent an infringement). ---------- Through the fair use exception, Congress has sought to protect discourse and access to information, and the mechanisms through which they occur. Congress has stated that use for purposes of criticism, comment, news reporting, teaching, scholarship or research is fair use. 17 U.S.C.  107. Criticism, comment, and news reporting implicate the political values of a free marketplace of ideas. Teaching, scholarship and research implicate the cultural and social values of an educated public. Goldstein, Copyright,  10.2.1, p. 206. "At the highest level of generalization, all of these uses characteristically involve situations in which the social, political and cultural benefits of the use will outweigh any consequent losses to the copyright proprietor and in which the time and expense of negotiations . . . will often foreclose a negotiated transaction." Id. at 204-5. "Fair use . . . is but one of several doctrines designed to ensure the free flow of ideas." Id. at  10.3, p. 242. The use alleged to be infringing in this case falls squarely within the policy underlying fair use. The Internet, the "Information Superhighway," is the publicly acknowledged communication system of the future. The public interest in the functioning of the Internet as a communication vehicle for the 21st century has been acknowledged at all levels of the political spectrum. Plaintiffs ask NETCOM to determine whether a copyright violation has occurred in an extremely complex factual circumstance. As stated in Fonovisa, imposing this level of liability on what is essentially a utility provider will significantly impact whether providers can continue to provide inexpensive access to the public at all. It will impose the burden and requirement of "Intellectual Property Patrol" on those unable to accomplish it. Fonovisa, 847 F. Supp. at 1497 (E.D. Cal. 1994) 2. Nature of copyrighted work. Works of fiction receive greater protection than works that have strong factual elements. Sega, 977 F.2d at 1524. At least one court has characterized some or all of these works to be factual and, therefore, entitled to lesser protection. New Era Publications v. Carol Pub. Group, 904 F.2d 152 (2d Cir. 1990). In cases where the defendant is not using the work for the same purpose as the author, courts generally review this factor in the context of whether the copying is necessary to accomplish the public purpose discussed in factor one. Sega, 977 F.2d at 1526. Atari Games Corp., 975 F.2d at 844. "It is sometimes necessary . . . to advert to the defendant's usage simultaneously with the nature of the plaintiff's work. The benefit of this factor to the plaintiff is minimal where the use is of a different character, even if the work is highly protected. 3 Nimmer, supra, pp. 13-177. In this case, because NETCOM's alleged use is entirely different than plaintiffs', and because the use is required to accomplish the wider purpose of Internet access, this factor favors NETCOM, even if the work were found to be highly protected./26/ ---------- /26/ Although the scope of fair use is narrower with unpublished works, Congress has recently amended the statute to counter undue reliance by courts upon this factor, and to insure that such a finding does not preclude application of the fair use defense where warranted by the other factors. See n. 21, supra. ---------- 3. Amount of copying. It is not clear what amount of material has been posted or whether L. Ron Hubbard's philosophy should be considered a single body of work. Because the titles of the registration certificates do not correspond to the items at issue (compare McShane Decl., Exh. A and Exh. H), apparently plaintiffs allege that only portions have been copied in many instances. Even use of an entire work, however, does not preclude a finding of fair use. Sony Corp., 464 U.S. at 449-50; 104 S. Ct. at 792. 4. Effect on the market for plaintiffs' work. This has been termed the most important of the four factors in determining "fair use." 3 Nimmer, supra,  13.05[A], pp. 13-76. In this case, NETCOM's conduct in no way affects the market for these works. These works are in essence the "scriptures" of a religious group. There is no allegation or evidence that anyone will decide not to participate in the Scientology religion because they can view these religious materials over the Internet. In fact, the contrary is equally likely to be true. Applying the above factors, if plaintiffs do state a claim for direct infringement against NETCOM, NETCOM's use is a nonvolitional, noncompeting use, which does not affect plaintiffs' market and furthers a highly important societal function. Accordingly, such use is protected by the doctrine of fair use. IV. CONCLUSION. For the foregoing reasons, NETCOM's motion to dismiss should be granted without leave to amend. Dated: March /13/, 1995. By /s/_[Randolf Rice]___ Attorneys for Defendant NETCOM ON-LINE COMMUNICATION SERVICES, INC.