Ellison v. Robertson

189 F. Supp. 2d 1051 (2002)

Harlan ELLISON, an individual Plaintiff(s),
v.
Stephen ROBERTSON, an individual; America Online, Inc., a corporation; Remarq Communities, Inc., a corporation; Critical Path, Inc., a corporation; "Citizen 513," an individual; and Does 1 through 10, Defendant(s).

No. CV 00-04321 FMC.

United States District Court, C.D. California.

March 13, 2002.

Glen L. Kulik, Gottesman & Mouton, Sherman Oaks, CA, Charles E. Petit, Charles E. Petit Law Offices, Urbana, IL, for Plaintiff.

Daniel Scott Schecter, Catherine S. Lee, Cristian Stauffer Torres, Latham & Watkins, Los Angeles, CA, for Defendant.

ORDER GRANTING DEFENDANT AOL'S MOTION FOR SUMMARY JUDGMENT

COOPER, District Judge.

Introduction

When an overenthusiastic fan uploads his favorite author's novels to a newsgroup on the internet, what is the liability of an internet service provider, such as AOL, for allowing the books to reside for two weeks on their USENET server? The impact of the Digital Millenium Copyright Act on this issue presents a question of first impression in the Ninth Circuit

I. Procedural Posture

This matter is before the Court on (1) Defendant AOL's Motion for Summary Adjudication, filed June 4, 2001; (2) Defendant AOL's Motion for Summary Judgment, filed November 26, 2001; and (3) Plaintiff's Motion for Summary Adjudication, filed November 27, 2001. This matter came on for hearing on February 4, 2002. The parties were in possession of the Court's tentative decision to grant Summary Judgment to Defendant AOL. Following oral argument, the matter was taken under submission. For the reasons set forth below, the Court hereby GRANTS summary judgment in favor of AOL.^[1]

II. Background

A. Factual History

Plaintiff Harlan Ellison is the author of many works of fact and fiction, particularly science fiction. He is the owner of the valid copyrights to most if not all of those works and has registered his copyrights in accordance with all applicable laws. Some of his fictional works, however, have been copied and distributed on the internet without his permission.

Some time in late March or early April 2000, Stephen Robertson scanned a number of Ellison's fictional works in order to convert them to digital files. Thereafter, Robertson uploaded and copied the files onto the USENET newsgroup "alt.binaries.e-book." Robertson accessed the internet through his local internet services provider, Tehama County Online ("TCO"); his USENET service was provided by RemarQ Communities, Inc. ("RemarQ"). The USENET, an abbreviation of "User Network," is an international collection of organizations and individuals (known as `peers') whose computers connect to each other and exchange messages posted by USENET users.^[2] Messages are organized into "newsgroups," which are topic-based discussion forums where individuals exchange ideas and information.^[3] Users' messages may contain the users' analyses and opinions, copies of newspaper or magazine articles, and even binary files containing binary copies of musical and literary works. "Alt.binaries.e-book", the newsgroup at issue in this case, seems to have been used primarily to exchange pirated and unauthorized digital copies of text material, primarily works of fiction by famous authors, including Ellison.

Peers in USENET enter into peer agreements, whereby one peer's servers automatically transmit and receive newsgroup messages from another peer's servers. As most peers are parties to a large number of peer agreements, messages posted on one USENET peer's server are quickly transmitted around the world. The result is a huge informational exchange system whereby millions of users can exchange millions of messages every day.

AOL has been a USENET peer since 1994, and its USENET servers automatically transmit and receive newsgroup messages from at least 41 other peers. AOL estimates that its peer servers receive 4.5 terabytes of data in more than twenty-four million messages each week from AOL's peers. This data is automatically transmitted to and received by AOL's USENET servers, which are computers that are accessed by AOL's users when they reach the USENET system through AOL's newsgroup service. In late March and early April 2000, when Robertson posted the infringing copies of Ellison's works, AOL's retention policy provided for USENET messages containing binary files to remain on the company's servers for fourteen days.

After Robertson uploaded the infringing copies of Ellison's works to the alt.binaries.e-book newsgroup, they were then forwarded and copied throughout USENET onto servers all over the world, including those belonging to AOL. As a result, AOL users had access to the alt.binaries.e-book newsgroup containing the infringing copies of Ellison's works. As these infringing copies were in binary file form, they would have remained on AOL's servers for approximately fourteen days.

On or about April 13, 2000, Plaintiff learned of the infringing activity and contacted counsel. After researching the notification procedures of 17 U.S.C. § 512, the Digital Millennium Copyright Act ("DMCA"), Plaintiff's counsel sent an e-mail on April 17, 2000, to TCO's and AOL's agents for notice of copyright infringement. Plaintiff received an acknowledgment of receipt from TCO, but no response from AOL, which claims never to have received that e-mail.

On April 24, 2000, Plaintiff filed suit against AOL and other Defendants. After having been served by Plaintiff on April 26, 2000, AOL blocked its users' access to alt.binaries.e-book.

B. Procedural History

On April 24, 2000, Plaintiff filed his original complaint with this Court. Shortly thereafter, on May 30, 2000, Plaintiff filed a First Amended Complaint. On June 1, 2000, a consent judgment was entered in which one of the Defendants, Stephen Robertson, agreed to pay Plaintiff the sum of $3,648.96. Plaintiff in turn dismissed Robertson from the lawsuit. On July 27, 2000, the Court issued an Order granting in part and denying in part Defendant AOL's Motion to dismiss.

On September 26, 2000, Plaintiff filed a second amended complaint ("SAC") against America Online, Inc. ("AOL"), RemarQ Communities, Inc. (RemarQ), Critical Path, Inc. ("CP") (RemarQ's parent company), Citizen 513, and Does on October 27, 2000, alleging the following causes of action:

(1) Direct Copyright Infringement against all Defendants;

(2) Contributory Infringement against all Defendants;

(3) Vicarious Infringement against RemarQ, CP, and AOL;

(4) Unfair Competition in Violation of Section 43(a) of the Lanham Act against all Defendants; and

(5) Trademark Dilution under Section 43(c) of the Lanham Act against all Defendants except Robertson and AOL.

On November 28, 2001, Plaintiff dismissed his Lanham Act claims as against AOL. On January 18, 2002, Plaintiff dismissed Defendant RemarQ from the case, the two parties having reached a settlement agreement. And on January 25, 2002, Plaintiff similarly dismissed his action against Defendant Critical Path.

On November 26, 2001, AOL filed a Motion for summary judgment, alleging that Plaintiff had failed to set forth prima facie cases of copyright infringement, and also claiming various defenses under the DMCA. On November 27, 2001, Plaintiff filed his own Motion for summary adjudication of his contributory and vicarious copyright infringement claims against AOL. This Order addresses all three of those Motions.^[4]

III. Standard

Summary judgment is proper only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. Rule Civ. Pro. 56(c); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Whether a fact is material is determined by looking to the governing substantive law; if the fact may affect the outcome, it is material. Id. at 248, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202.

If the moving party meets its initial burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Mere disagreement or the bald assertion that a genuine issue of material fact exists does not preclude the use of summary judgment. Harper v. Wallingford, 877 F.2d 728 (9th Cir.1989).

The Court construes all evidence and reasonable inferences drawn therefrom in favor of the non-moving party. Anderson, 477 U.S. at 255, 106 S. Ct. 2505; Brookside Assocs. v. Rifkin, 49 F.3d 490, 492-93 (9th Cir.1995).

IV. Discussion

A. Plaintiff's case against AOL for copyright infringement

AOL contends that Plaintiff cannot establish the prima facie elements of his direct, contributory, and vicarious copyright infringement claims against it, and therefore summary adjudication is appropriate. Plaintiff disputes AOL's contentions and asserts that he is entitled to summary adjudication of his contributory and vicarious copyright infringement claims.

1. Direct copyright infringement

"Plaintiffs must satisfy two requirements to present a prima facie case of direct infringement: (1) they must show ownership of the allegedly infringed material and (2) they must demonstrate that the alleged infringers violated at least one exclusive right granted to copyright holders under 17 U.S.C. § 106." A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (2001).

It is undisputed that Plaintiff owns valid copyrights for most, if not all, of the allegedly infringed works identified in his Complaint.^[5] And if AOL were found to have copied any of Ellison's works then it might have violated, for example, his exclusive rights to reproduction and distribution. See 17 U.S.C. § 106(1), (3). AOL contends, however, that it has not in any way copied Ellison's works. In his second amended complaint Plaintiff alleges that AOL made copies of his works on its USENET servers after receiving the USENET messages posted by Robertson, and that one binary file containing a copied work remained on AOL's servers for ten days after Plaintiff's counsel sent the company a Notification of Infringement e-mail.^[6]

In his Opposition to AOL's Motion for summary judgment, however, Ellison does not respond to AOL's argument that there was no direct copyright infringement. Accordingly, it appears that he has abandoned his direct infringement claim against AOL. Regardless, AOL's role in the infringement as a passive provider of USENET access to AOL users cannot support direct copyright infringement liability. See Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361, 1372-73 (N.D.Cal.1995). In Netcom, the court held that the defendant, an internet services provider like AOL, could not be found guilty of direct copyright infringement based on copies of works that were made and stored on its USENET servers. See id; accord ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 622 (4th Cir.2001); Costar Group, Inc. v. Loopnet, Inc., 164 F. Supp. 2d 688, 696 (D.Md.2001). The Netcom Court stated that assigning direct copyright infringement liability to ISPs would be pointless:

These parties [the ISPs], who are liable under plaintiff's theory, do no more than operate or implement a system that is essential if Usenet messages are to be widely distributed. There is no need to construe the [Copyright] Act to make all of these parties infringers.

Id. at 1369-70. The court based this decision on its conclusion that "[t]he court does not find workable a theory of direct infringement that would hold the entire Internet liable for activities that cannot reasonably be deterred." Id. at 1372. While the Netcom court left open the possibility that an ISP with USENET messages on its servers might be guilty of contributory infringement under certain circumstances, it held that direct infringement liability should be limited to those users, like Robertson, who are responsible for the actual copying. See id. at 1372-73;

The Court agrees with the analysis of the court in Netcom. Accordingly, summary adjudication of Plaintiff's direct copyright infringement claim against AOL is granted.

2. Contributory copyright infringement

"[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a `contributory' infringer ... Put differently, liability exists if the defendant engages in personal conduct that encourages or assists the infringement." A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 (2001) (internal quotations and citations omitted). "The absence of such language in the copyright statute does not preclude the imposition of liability for copyright infringement on certain parties who have not themselves engaged in the infringing activity. For vicarious liability is imposed in virtually all areas of the law, and 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. v. Universal City Studios, Inc., 464 U.S. 417, 435, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984).

(i) Knowledge

The knowledge requirement means that the contributory infringer must "know or have reason to know of direct infringement." Id. at 1020 (internal quotations omitted). Plaintiff argues that AOL actually knew about the infringing copies of his works on their USENET servers based on the email that his attorney sent to AOL on April 17, 2000. But AOL claims never to have received that e-mail and asserts that it was first put on notice of infringement when it was served with a copy of Plaintiff's initial complaint. The Court accepts AOL employees' assurances that they never received the e-mail,^[7] and finds Plaintiff's argument somewhat puzzling given his professed belief, supported in detail in his briefs, that his attorney's e-mail was not received because AOL had provided the Copyright Office with an incorrect e-mail contact address, and his attorney had relied on that address when trying to contact AOL. Accordingly, the Court finds that AOL did not have actual knowledge of the infringement before being served by Ellison.

On the other hand, Ellison presents substantial evidence suggesting that AOL should have known about the infringement prior to being served. First, AOL's failure to receive the April 17, 2000, e-mail is its own fault. Inexplicably, AOL had changed its contact e-mail address from "copyright@aol.com" to "aolcopyright@aol.com" in fall 1999, but waited until April 2000 to notify the Copyright Office of this change. As a result, the complaints of individuals such as Ellison's attorney, who obtained AOL's e-mail address from the Copyright Office and attempted to notify AOL of infringement occurring on its servers were routed to the defunct account. Nor did AOL make provision for forwarding to the new address e-mails sent to the defunct account. AOL has declined to explain why it delayed months before notifying the Copyright Office of its change in e-mail addresses. If AOL could avoid the knowledge requirement through this oversight or deliberate action, then it would encourage other ISPs to remain willfully ignorant in order to avoid contributory copyright infringement liability. Based upon the record before the Court, a reasonable trier of fact could certainly find that AOL had reason to know that infringing copies of Ellison's works were stored on their Usenet servers.

In addition, AOL received further information about the infringement occurring on the USENET newsgroup accessible to AOL users from John J. Miller. Miller noticed a number of apparently unauthorized copies of various authors' works on the newsgroup and called AOL to report the suspicious activity, although he probably mentioned only works by authors other than Ellison. Even though it is not clear that Miller's phone call can be fairly said to have put AOL on notice of the infringing activity (he spoke only with low-level customer service representatives, it's not clear whether he expressly mentioned the alt.binaries.e-book newsgroup, and he did not follow up on the customer service representative's advice by sending AOL an e-mail setting forth the details of his complaint), it is another piece of evidence which might lead a reasonable trier of fact to conclude that AOL should have known about the infringement of Ellison's copyrights occurring in its newsgroup. For example, a reasonable trier of fact might conclude that AOL should have transferred Miller to speak with an employee with knowledge of AOL's copyright infringement policies instead of directing him to an e-mail address.^[8]

(ii) Material contribution to the infringement

AOL correctly points out that it did not induce or encourage Robertson to directly infringe Ellison's copyrights. Plaintiff, however, maintains that AOL materially contributed to infringement by participating in USENET peering agreements which resulted in making the infringing copies of Ellison's works available to millions of AOL users. Plaintiff analogizes AOL's conduct to that of Napster, which was held to constitute a material contribution to infringement. See Napster, 239 F.3d at 1022. The Court of Appeals in Napster based its holding on the district court's finding that "[w]ithout the support services defendant provides, Napster users could not find and download the music they want with the ease of which defendant boasts." Id. (quoting A & M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919-920 (N.D.Cal.2000)). As such, Napster was providing the "`site and facilities' for direct infringement." Napster, 239 F.3d at 1022. By analogy, Plaintiff alleges that AOL provided the site and facilities for direct infringement by storing infringing copies of Ellison's works on its USENET servers and providing its users with access to those copies.

In response, AOL contends that its mere provision of USENET access to its users, as a matter of law, is far too attenuated from the actual infringing activity to constitute a material contribution. In support it points to section 512(m) of the DMCA, which provides that an ISP does not have to monitor its service or affirmatively search for infringing activity on its network in order to qualify for any of the limitation-on-liability safe harbors.

The Court agrees with the findings of the court in Netcom that "[p]roviding a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing" can constitute a material contribution when the ISP knows or should know of infringing activity on its system "yet continues to aid in the accomplishment of Erlich's [the direct infringer's] purpose of publicly distributing the postings." Netcom, 907 F.Supp. at 1375. The court noted that "Netcom allows Erlich's infringing messages to remain on its system and be further distributed to other Usenet servers worldwide." Id.; see also Napster, 239 F.3d at 1021 (approving the Netcom Court's conclusion regarding Netcom's potential liability for contributory infringement); 3 NIMMER ON COPYRIGHT § 12B.01[A], at 12B-9 n. 50 ("Given that Netcom declined to cancel Erlich's messages, if plaintiffs could show that it had knowledge of their infringing character, it would make a strong showing for contributory infringement.").

In Netcom the court dealt with a situation in which the ISP had actual knowledge of the presence of infringing material on its USENET servers. Here, by contrast, there is a triable issue of fact as to whether AOL should have known of the infringing material on the alt.binaries.e-books newsgroup based on the e-mail sent to it by Plaintiff's counsel and the Miller phone call. Although there is some difference between an ISP actually knowing of infringement and ignoring requests to remedy the situation and an ISP remaining ignorant of infringement through its own fault and taking no action, the Netcom decision cannot be distinguished on that basis. To do so would invite ISPs to remain willfully ignorant of infringement on their servers (through the creation of unchecked notification e-mail addresses and other means), and would frustrate the careful balance struck by Congress when it enacted the DMCA.

In addition, Netcom is not legally distinguishable on the basis that AOL had no real connection with Robertson, whereas Netcom played a significant role in connecting Erlich, the direct infringer, to the Internet. Although a trier of fact might consider this difference in reaching the conclusion that AOL did not make a material contribution to Robertson's underlying infringement, that difference cannot alone transform a triable issue of fact into a determination suitable for summary adjudication. Netcom analyzed the ISP's behavior after the infringement had already occurred, and with regard to contributory infringement, the court's central concern was the ISP's decision to leave the infringing messages on its system even after receiving the plaintiff's infringement complaint. Similar concerns provide the basis for plaintiff's contributory infringement claim against AOL.

Accordingly, the Court finds that Plaintiff has demonstrated a triable issue of fact as to whether AOL materially contributed to the direct infringement of Ellison's copyrights by others.

3. Vicarious copyright infringement

"In the context of copyright law, vicarious liability extends beyond an employer/employee relationship to cases in which a defendant `has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.'" Napster, 239 F.3d at 1022 (quoting Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d. Cir.1971)). "Unlike contributory infringement, knowledge is not an element of vicarious liability." Netcom, 907 F.Supp. at 1375 (citing to 3 NIMMER ON COPYRIGHT § 12.04[A][1], at 12-70).

1. Right and ability to supervise the infringing activity

AOL maintains that it did not possess the right or ability to supervise Robertson's infringing acts because of the automated nature of its participation in the USENET system. Robertson never used the AOL system to upload the infringing copies of Plaintiff's works, and his posting was just one of millions of USENET postings that AOL servers automatically receive from peers each week.

Plaintiff, on the other hand, contends that the Ninth Circuit's recent decision in Napster defeats AOL's position. In Napster, the Court found that Napster's "ability to block infringers' access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise." Id. at 1023. AOL had the same capacity to block infringers' access to its USENET servers, Plaintiff argues, as demonstrated by AOL's successful blocking of the alt.binaries.e-book newsgroup from access by AOL users upon receiving notice of Plaintiff's lawsuit. Further support comes from Netcom. In Netcom, the court found there was a triable issue of fact as to an ISP's right and ability to control and supervise infringement on its system. The court also stated that whether the ISP's ability to terminate the accounts of infringers and to block access to or delete infringing material "occurred before or after the abusive conduct is not material to whether Netcom can exercise control." Id. at 1376.

AOL disputes the Napster analogy. The Napster system, AOL argues, was closed and afforded Napster the right and ability to control infringing parties because only Napster members could access and commit infringement on the system. By contrast, AOL's after-the-fact ability to remove or block access to infringing activities by non-AOL users such as Robertson does not constitute an ability to control or supervise. Robertson accessed USENET from outside of AOL, and AOL had no ability to effectively control his infringement.

AOL also points to the recent decision in Hendrickson v. Ebay in support of its contention that it did not possess the right and ability to control the infringing activity. See Hendrickson v. Ebay, 165 F. Supp. 2d 1082 (C.D.Cal.2001). In Ebay, the district court held that "the `right and ability to control' the infringing activity, as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored on its system." Id. at 1093. The court reasoned that because the DMCA specifically requires ISPs to remove or block access to infringing materials in order to avail themselves of the limitation on liability found in subsection 512(c), the "right and ability to control" must mean something more than the ability to delete or block access to infringing materials after the fact. See id. Otherwise, "a service provider loses immunity under the safe-harbor provision of the DMCA because it engages in acts that are specifically required by the DMCA." Id. at 1094.

The Ebay court's analysis somewhat overstates the predicament (ISPs not receiving a financial benefit directly attributable to the infringing activity would not face this "catch-22"), but it does raise an interesting point, namely: ISPs that do receive a financial benefit directly attributable to the infringing activity and that wish to avail themselves of subsection (c)'s safe harbor are required by 512(c)(1)(C) to delete or block access to infringing material. Yet in taking such action they would, in Plaintiff's analysis, be admitting that they have the "right and ability to control" infringing activity, which under 512(c)(1)(B) would prevent them from qualifying for the subsection (c) safe harbor. It is conceivable that Congress intended that ISPs which receive a financial benefit directly attributable to the infringing activity would not, under any circumstances, be able to qualify for the subsection (c) safe harbor. But if that was indeed their intention, it would have been far simpler and much more straightforward to simply say as much. The Court does not accept that Congress would express its desire to do so by creating a confusing, self-contradictory catch-22 situation that pits 512(c)(1)(B) and 512(c)(1)(C) directly at odds with one another, particularly when there is a much simpler explanation: the DMCA requires more than the mere ability to delete and block access to infringing material after that material has been posted in order for the ISP to be said to have "the right and ability to control such activity."

The DMCA did not simply rewrite copyright law for the on-line world. Rather it crafted a number of safe harbors which insulate ISPs from most liability should they be accused of violating traditional copyright law.^[9] And the legislative history expressly states that "new Section 512 does not define what is actionable copyright infringement in the on-line environment ... [t]he rest of the Copyright Act sets those rules." H.R. Rep. 105-551(II), at p. 64 (July 22, 1998). Nonetheless, there is much to be gained from defining and analyzing certain terms and concepts consistently throughout copyright law, including the DMCA. And when Congress chooses to utilize exact phrases that have a specialized legal meaning under copyright law (i.e. "the right and ability to control infringing activity"),^[10] and gives those phrases a certain meaning in one context (i.e. under the DMCA, the ability to delete or block access to infringing materials after the infringement has occurred is not enough to constitute "the right and ability to control"), Congress's choice provides at least persuasive support in favor of giving that phrase a similar meaning when used elsewhere in copyright law.

Moreover, the right and ability to control the infringing behavior in AOL's case was substantially less than that enjoyed by the ISP in Netcom. There, the ISP was one of two entities responsible for providing the direct infringer with access to the Internet. See Netcom, 907 F.Supp. at 1365-66. As a result, by taking affirmative steps against the other entity involved, the ISP had the ability to target the infringer himself and deny him access to the Internet. By contrast, AOL had no such ability to go after Robertson personally here. Rather, it found itself in the same situation as every other ISP in the world that had entered into peer agreements which included the alt.binaries.e-book newsgroup. It could delete or block users' access to the infringing postings, but it could not do anything to restrict the infringing activity at the root level.

The Court holds that AOL's ability to delete or block access to Robertson's postings of infringing material after those postings had already found their way onto AOL's USENET servers was insufficient to constitute "the right and ability to control the infringing activity" as that term is used in the context of vicarious copyright infringement.

2. Direct financial benefit

Even if AOL had the right and ability to control Robertson's infringing activity, it would not be liable for vicarious copyright infringement because it did not derive a direct financial benefit from that activity. "Financial benefit exists where the availability of infringing material `acts as a "draw" for customers.'" Napster, 239 F.3d at 1023 (quoting Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir.1996)).

Ellison maintains that AOL's provision of access to USENET newsgroups does act as a draw for customers. Like e-mail or instant massaging, USENET access is one of the many services AOL provides in order to lure new customers and retain old ones, Ellison urges. According to Plaintiff, AOL's situation is indistinguishable from that in Napster, where the Court of Appeals held that "[a]mple evidence supports the district court's finding that Napster's future revenue is directly dependent upon `increases in userbase.'" Id. at 1023.

Plaintiff's argument ignores the requirement that any alleged financial benefit must be direct. AOL did not receive any financial compensation from its peering agreements and participation in USENET. And USENET usage constitutes a very small percentage, 0.25%, of AOL's total member usage; any "draw" to one particular newsgroup, such as alt.binaries.e-book, is minuscule and remote, as the pro rata "draw" of any single newsgroup (AOL carries more than 43,000 total) constitutes approximately 0.00000596% of AOL's total usage. Moreover, the relevant subset of activity is not simply USENET newsgroup usage, but that portion of USENET usage which is related to copyright infringement. By way of example, only ten of AOL's more than 20 million users inquired when AOL blocked all access to alt.binaries.e-book on April 28, 2000.

USENET postings containing infringing copies of copyrighted works cannot be characterized as a significant "draw" for customers. USENET usage constitutes a very small percentage of total AOL usage, and Plaintiff has failed to produce any evidence suggesting that a significant portion of even that minimal usage entails the illegal exchange of files containing copyrighted material. In this way AOL's situation is radically different from that of Napster, whose service was devoted to the exchange of mp.3 music files which usually contained unauthorized copies of copyrighted material. Making it easier to exchange infringing copies of music files was Napster's main draw:

And here the evidence establishes that a majority of Napster users use the service to download and upload copyrighted music. This, in fact, should come as no surprise to Napster since that really, it's clear from the evidence in this case and the early records that were divulged in discovery, was the purpose of it.

A&M Records, Inc. v. Napster, Inc., 2000 WL 1009483, at *1 (N.D.Cal. July 26, 2000) (transcript of the proceedings). By contrast, only a tiny fraction of AOL usage has anything to do with USENET, and only a substantially smaller subset of that usage appears to have anything to do with infringing copyrights.

Fonovisa presents another case in which courts have required that the sale or distribution of infringing materials must be a significant draw to customers in order for vicarious copyright liability to apply. In Fonovisa, the defendant operated a swap meet at which third-party vendors routinely sold counterfeit recordings that infringed on the plaintiff's copyrights. Id. at 260. For example, a single 1991 Sheriff's department raid had netted more than 38,000 pirated recordings. "The facts alleged by Fonovisa ... reflect that the defendants reap substantial financial benefits from admission fees, concession stand sales and parking fees, all of which flow directly from customers who want to buy the counterfeit recordings at bargain basement prices." Id. at 263. "In short, in Fonovisa, a symbiotic relationship existed between the infringing vendors and the landlord." Adobe Systems Incorporated v. Canus Productions, Inc., 173 F. Supp. 2d 1044 (C.D.Cal.2001) (discussing Fonovisa).^[11]

By contrast, the record before the Court demonstrates that USENET usage related to copyright infringement constitutes a minuscule portion of AOL usage. The financial benefit accruing to AOL from such infringing usage, if any benefit exists at all, is too indirect and constitutes far too small a "draw" to fairly support the imposition of vicarious copyright liability on AOL. Moreover, as with the discussion of AOL's "right and ability to control,", the DMCA provides at least persuasive support for interpreting "direct financial benefit" to require something more than the indirect, insignificant financial benefits that may have accrued to AOL as a result of copyright infringement on its USENET servers. The legislative history of the DMCA provides:

In determining whether the financial benefit criterion [of section 512(c)(1)(B)] is satisfied, courts should take a common-sense, fact-based approach, not a formalistic one. In general, a service provider conducting a legitimate business would not be considered to receive a `financial benefit directly attributable to the infringing activity' where the infringer makes the same kind of payment as non-infringing users of the provider's service.

H.R. Rep. 105-51(II), at p. 54 (July 22, 1998). Accordingly, summary adjudication for AOL of Plaintiff's claim for vicarious copyright infringement is granted.

B. DMCA Limitations on Liability

AOL claims to qualify for two of the DMCA's "safe-harbor" provisions, subsection (a), Transitory digital network communications, and subsection (c), Information residing on systems or networks at direction of users. See 17 U.S.C. § 512(a), (c). These safe harbors do not confer absolute immunity upon ISPs, but do drastically limit their potential liability based on specific functions they perform (e.g. user-directed information storage). See generally 17 U.S.C. § 512. A party satisfying the requirements for one of the safe harbors cannot be liable for monetary relief, or, with the exception of the rather narrow relief available under subsection (j), for injunctive or other equitable relief for copyright infringement. See id.

1. Section 512(i)

In order to avail itself of any of section 512's limitation-onliability safe harbors, AOL must also satisfy the two requirements laid out in section 512(i). Section 512(i) provides that all safe-harbor provisions established by the DMCA shall apply to a service provider only if the service provider:

(A) has adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers; and

(B) accommodates and does not interfere with standard technical measures.

17 U.S.C. § 512(i)(1).

Furthermore, in order for an ISP to comply with subsection (i) and avail itself of one of the DMCA's safe harbors, the ISP must have adopted, reasonably implemented, and notified its members of the repeat infringer termination policy at the time the allegedly infringing activity occurred. Doing so after the infringing activity has already occurred is insufficient if the ISP seeks a limitation of liability in connection with that infringing activity. As explained by the district court in Napster, to hold otherwise would be defeat the whole purpose of subsection (i):

Napster attempts to refute plaintiffs' argument by noting that subsection (i) does not specify when the copyright compliance policy must be in place. Although this characterization of subsection (i) is factually accurate, it defies the logic of making formal notification to users or subscribers a prerequisite to exemption from monetary liability. The fact that Napster developed and notified its users of a formal policy after the onset of this action should not moot plaintiffs' claim to monetary relief for past harms.

Napster, 2000 WL 573136 at * 9 (original emphasis).

On its face, subsection (i) is only concerned with repeat-infringer termination policies, and not with copyright infringement in general. Nonetheless, Plaintiff urges that any reasonable policy whose goal is to put repeat infringers on notice that they face possible termination must necessarily include some procedures for actually identifying such individuals in the first place, such as a mechanism whereby the public can notify an ISP of copyright infringement occurring on its system. A termination policy could not be considered "reasonably implemented" if the ISP remained willfully ignorant of users on its system who infringe copyrights repeatedly. Although the text of section 512(i) could conceivably support such an interpretation, the legislative history demonstrates that Congress's intent was far more limited regarding subsection (i)^[12]:

the Committee does not intend this provision to undermine the principles of new subsection (l)^[13] or the knowledge standard of new subsection (c) by suggesting that a provider must investigate possible infringements, monitor its service, or make difficult judgments as to whether conduct is or is not infringing. However, those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access.

H.R. Rep. 105-551(II), at p. 61 (July 22, 1998) (emphasis added); see also S.Rep. 105-190, at p. 51-52 (May 11, 1998) (providing verbatim the same explanation of subsection(i)). In the face of such clear guidance from the legislative history of the DMCA, subsection (i) cannot be interpreted to require ISPs to take affirmative steps to investigate potential infringement and set up notification procedures in an attempt to identify the responsible individuals. Accordingly, many of Plaintiff's argument regarding subsection (i) are irrelevant to determining whether AOL had reasonably implemented a policy for termination of repeat infringers.^[14]

It is undisputed that AOL satisfies prong (B) based on its accommodation and non-interference with standard technical measures. And AOL presents evidence to support the conclusion that is has also met the requirements of prong (A). AOL's Terms of Service, to which every AOL member must agree before becoming a member, includes a notice that AOL members may not make unauthorized copies of content protected by copyrights, trademarks, or any other intellectual property rights. They also notify members that their AOL accounts could be terminated for making such unauthorized copies.

Plaintiff contends, however, that AOL cannot satisfy prong (A) of subsection 512(i)(1) because although the ISP has presented substantial evidence of compliance, most of that evidence comes from March 2001, nearly a year after the infringing conduct occurred. AOL's percipient witness, Elizabeth Compton, testified that AOL's procedures for notifying its users that their access could be terminated if they were to infringe others' copyrights has not changed substantively since April 2000. However, Plaintiff challenges the credibility and competency of Ms. Compton, whose grasp of the technical side of AOL's copyright infringement procedures was decidedly less than expert.

In addition, Plaintiff notes that although AOL claims to have complied with subsection (i) and adopted and reasonably implemented polices aimed at terminating repeat infringers, Compton testified that no individual has ever been terminated for being a repeat infringer. Given the millions of AOL users, Plaintiff argues, this lack of even a single termination for repeat infringement is evidence that AOL has failed to fulfill its obligation to reasonably implement its subsection(i) termination policy. Moreover, Compton testified at her deposition that at the time of the infringement, AOL had not precisely defined how many times a user had to be guilty of infringement before that user could be classified as a "repeat infringer." Plaintiff claims this is further evidence that AOL had failed to comply with the reasonable-implementation requirement of subsection (i).

As noted above in the discussion of the legislative history of the DMCA, however, subsection (i) does not require AOL to actually terminate repeat infringers, or even to investigate infringement in order to determine if AOL users are behind it.^[15] That is the province of subsection (c), which provides detailed requirements related to notification of infringement and the ISPs' responsibility to investigate and, in some instances, delete or block access to infringing material on their systems. Subsection (i) only requires AOL to put its users on notice that they face a realistic threat of having their Internet access terminated if they repeatedly violate intellectual property rights.

Plaintiff has attacked the credibility and competence of Elizabeth Compton, and in particular challenges her assertion that the AOL's procedures for compliance with subsection (i) have not changed substantively since April 2000. But most of Plaintiff's "attacks" only demonstrate that Ms. Compton did not understand the technical means by which access to infringing material on AOL's servers may be blocked or by which an AOL user's Internet access could be terminated. While such shortcomings might be relevant when weighing her testimony regarding AOL's compliance with subsection (c), they are not relevant when considering the much less stringent (and less technical) requirements of subsection (i). And although Plaintiff disputes Compton's claim that AOL's notification policy has not changed, he has not produced any evidence to the contrary. "When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. Proc. 56(e).

Accordingly, the Court holds that AOL had satisfied the requirements of 17 U.S.C. § 512(i) at the time of the alleged infringement of Ellison's copyrights.

2. Section 512's limitations on liability (a) through (d)

Section 512(n) explicitly provides that each of the four limitation-on-liability safe harbors found in subsections (a) through (d) "describe separate and distinct functions for purposes of applying this section." Id. As a result, "[w]hether a service provider qualifies for the limitation of liability in any one of the subsections shall be based solely on the criteria in that subsection, and shall not affect a determination of whether the service provider qualifies for the limitations on liability under any other such subsection." Id. The DMCA's legislative history provides the following instructional example:

Section 512's limitations on liability are based on functions, and each limitation is intended to describe a separate and distinct function. Consider, for example, a service provider that provides a hyperlink to a site containing infringing material which it then caches on its system in order to facilitate access to it by its users. This service provider is engaging in at least three functions that may be subject to the limitation on liability: transitory digital network communications under subsection (a), system caching under subsection (b), and information locating tools under subsection (d).

H.R. Rep. 105-551(II), at p. 65 (July 22, 1998). In this example, if the service provider met the threshold requirements of subsection (i), "then for its acts of system caching it is eligible for that limitation on liability with corresponding narrow injunctive relief. But if the same company is committing an infringement by using information locating tools to link its users to infringing material, then its fulfillment of the requirements to claim the system caching liability limitation does not affect whether it qualifies for the liability limitation for information location tools." 3 NIMMER ON COPYRIGHT § 12B.06[A], at 12B-53, 54.

Although AOL performs many Internet-service-provider-related functions, Plaintiff's claims against AOL are based solely on its storage of USENET messages on its servers and provision of access to those USENET messages to AOL users and others accessing the AOL system from outside.

AOL claims that it is eligible under both subsections (a) and (c) for a limitation on liability regarding Plaintiff's claims against it.

3. Subsection (a)'s limitation on liability

AOL contends that it meets all the criteria for the limitation-on-liability safe harbor found in subsection (a), which provides:

(a) Transitory digital network communications.—A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for the infringement of copyright by reason of the provider's transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of transmitting, routing, or providing connections, if -

(1) the transmission of the material was initiated by or at the direction of a person other than the service provider;

(2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider;

(3) the service provider does not select the recipients of the material except as an automatic response to the request of another person;

(4) no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections; and

(5) the material is transmitted through the system without modification of its content.

Subsection (a) does not require ISPs to remove or block access to infringing materials upon receiving notification of infringement, as is the case with subsections (c) and (d).

On the other hand, the term "service provider" is defined more restrictively for subsection (a) than it is throughout the rest of section 512. See 17 U.S.C. § 512(k). "As used in subsection (a), the term `service provider' means an entity offering the transmission, routing, or providing of connections for digital online communication, between or among points specified by a user, of material of the user's choosing, without modification to the content of the material as sent or received."^[16]Id. In effect, this definition merely restates a number of the requirements that are already set forth in subsection (a). Therefore, Plaintiff's contention that AOL does not meet the restrictive definition of a "service provider" as subsection (k) defines that term for subsection (a) does not need to be addressed separately from Plaintiff's arguments that AOL cannot satisfy the requirements of subsection (a). The Court addresses each of those requirements in turn.

Plaintiff argues that AOL's USENET servers do not engage in "intermediate and transient storage" of USENET messages such as the one posted by Robertson. Instead, AOL stores USENET messages containing binary files on its servers for up to fourteen days.^[17] AOL, however, claims that the USENET message copies are "intermediate." AOL's role is as an intermediary between the original USENET user who posts a message, such as Robertson, and the recipient USENET users who later choose to view the message.

By itself, the term "intermediate and transient storage" is rather ambiguous. And it is unclear from reading the DMCA whether AOL's storage of USENET messages containing binary files on its servers for fourteen days in order to make those messages accessible to AOL users constitutes "intermediate and transient storage." Certain functions such as the provision of e-mail service or Internet connectivity clearly fall under the purview of subsection (a); other functions such as hosting a web site or chatroom fall under the scope of subsection (c). The question presented by this case is which subsection applies to the function performed by AOL when it stores USENET messages in order to provide USENET access to users. Faced with the ambiguous language in the statute itself, the Court looks to the DMCA's legislative history for guidance in interpretation. The only real guidance is provided in the House Judiciary Committee Report. See H.R. Rep. 105-551 (May 22, 1998).

The Court is mindful that reliance on the Report issued by the House Judiciary Committee, "the body that traditionally vets copyright legislation",^[18] is somewhat problematic. The Report's section-by-section analysis was based on an early version of the DMCA which differs in a number of ways from the final version that was eventually enacted by Congress. And the Court recognizes that "even if the language of a given feature [in the earlier version of the bill] does ultimately follow through to the Digital Millennium Copyright Act, the meaning may be different in the context of a law containing vastly more provisions than the [earlier version]." 3 NIMMER ON COPYRIGHT § 12B.01[C], at 12B-19. Nonetheless, the Court believes that the analysis in the House Judiciary Committee Report provides the clearest guidance concerning Congress' intent.

At the time the first House Report was issued, the Committee was considering a version of the bill that differs in many ways from the final version that was eventually enacted into law as the DMCA. However, the previous version's language regarding "the intermediate storage and transmission of material" is very similar to the "intermediate and transient storage of that material" language that is found in the final version of the DMCA. Moreover, the portion of subsection (a) in the previous version, having to do with maintaining material on the system, is also extremely similar to the corresponding language found in the enacted version of the DMCA at 512(a)(4).^[19] Although other aspects of the bill changed substantially before the final version was enacted into law, the language dealing with the "intermediate storage" did not. Accordingly, the section-by-section analysis found in the First House Report is relevant to interpreting whether AOL's storage of USENET messages in order to provide USENET access to AOL users constitutes (1) "intermediate and transient storage" of (2) copies that are not "maintained on the system or network ... for a longer period than is reasonably necessary for the transmission, routing, or provision of connections." 17 U.S.C. § 512(a), (a)(4).

The First House Report answers both of those questions with a resounding yes:

The exempted storage and transmissions are those carried out through an automatic technological process that is indiscriminate—i.e., the provider takes no part in the selection of the particular material transmitted—where the copies are retained no longer than necessary for the purpose of carrying out the transmission. This conduct would ordinarily include forwarding of customers' Usenet postings to other Internet sites in accordance with configuration settings that apply to all such postings...

This exemption codifies the result of Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D.Cal.1995) ("Netcom"), with respect to liability of providers for direct copyright infrigement.^[20] See id. at 1368-70. In Netcom the court held that a provider is not liable for direct infringement where it takes no `affirmative action that [directly results] in copying ... works other than by installing and maintaining a system whereby software automatically forwards messages received from subscribers ... and temporarily stores copies on its system.' By referring to temporary storage of copies, Netcom recognizes implicitly that intermediate copies may be retained without liability for only a limited period of time. The requirement in 512(a)(1) that "no copy be maintained on the system or network ... for a longer period than reasonably necessary for the transmission" is drawn from the facts of the Netcom case, and is intended to codify this implicit limitation in the Netcom holding.

H.R. Rep. 105-551(I), at p. 24. (emphasis added).

In Netcom, infringing USENET postings were stored on Netcom's servers for up to eleven days, during which those postings were accessible to Netcom users. See Netcom, 907 F.Supp. at 1368. In AOL's case, messages containing binary files, such as the message posted by Robertson, were stored on AOL's servers for up to fourteen days. While "intermediate copies may be retained without liability for only a limited period of time," the three-day difference between AOL's USENET storage and that of Netcom is insufficient to distinguish the two cases.

Accordingly, the Court finds that AOL's storage of Robertson's posts on its USENET servers constitutes "intermediate and transient storage" that was not "maintained on the system or network ... for a longer period than is reasonably necessary for the transmission, routing, or provision of connections."

While this issue presented the central disagreement regarding AOL's qualifications for subsection(a)'s limitation-onliability safe harbor, the parties also dispute whether AOL satisfies other requirements set forth in subsection (a).

(1) the transmission of the material was initiated by or at the direction of a person other than the service provider

It is clear that the transmission of Robertson's newsgroup message was not initiated by or at the direction of AOL. In fact, Plaintiff does not appear to even dispute this conclusion. (Plaintiff's Separate Statement of Genuine Issues at II(3), 6/4/2001 Motion for summary judgment).

(2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider

Plaintiff claims that AOL selects the material that is transmitted, routed, and stored in its USENET groups. Namely, AOL decides which newsgroups its subscribers may access through its newsgroup service.

AOL did not select the individual postings on the alt.binaries.e-book newsgroup, let alone the handful of infringing Robertson posts. 512(a)(2) is concerned with "selection of the material," meaning the allegedly infringing material, not material generally. By focusing on AOL's decision to not carry every single newsgroup conceivably available, Plaintiff is attempting to slip from the specific to the general, despite the fact that subsection (a) is concerned with the specific material giving rise to the Plaintiff's claims against AOL.

Even if Plaintiff were right, and AOL's treatment of USENET messages in general was the relevant inquiry, AOL's failure to carry every newsgroup available would not disqualify it from subsection (a)(2). Although this would present a closer call, the Court thinks that an ISP would need to take a greater editorial role than merely choosing not to carry certain newsgroups. Although the legislative history states that "subsection (a)(2) means the editorial function of determining what material to send, or the specific sources of material to place on-line," H.R. Rep. 105-551(II) (July 22, 1998), the better interpretation of (a)(2) is that the ISP would have to choose specific postings, or perhaps block messages sent by users expressing opinions with which the ISP disagrees. If an ISP forfeits its ability to qualify for subsection (a)'s safe harbor by deciding not to carry every USENET newsgroup or web site possible, then the DMCA would have the odd effect of punishing ISPs that choose not to carry, for example, newsgroups devoted to child pornography and prostitution, or web sites devoted to ritual torture.^[21] Given the concern Congress has shown in other bills for children's access to obscene materials online, it would be absurd to conclude that Congress intended such a result with regard to the DMCA.

(3) the service provider does not select the recipients of the material except as an automatic response to the request of another person

Plaintiff argues that AOL selects the recipients of the material because it chooses to engage in USENET peering agreements with some entities but not with others. First, as with (a)(2), Plaintiff's argument fails because section 512(a) is concerned with AOL's selection of the recipients of the material in question in this lawsuit, i.e. Robertson's infringing posts. It is clear that AOL did not select certain recipients for that material. Rather, it was accessible to any AOL user through AOL's USENET newsgroup server. Second, and also analogous to (a)(2), the better interpretation is that AOL would have to direct material to certain recipients (e.g. all AOL members whose names start with "G") but not others. If AOL were to lose its ability to qualify for subsection(a)'s safe harbor because it has peer agreements with some entities but not with others, then the DMCA would appear to place an affirmative obligation on AOL to enter into peering arrangements with every conceivable peering entity in the world. This could not have been what Congress' intent.

(5) the material is transmitted through the system without modification of its content

Plaintiff does not seriously contest that AOL does not modify the content of newsgroup messages stored on its servers and transmitted through its system. Moreover, Plaintiff has presented no evidence that AOL in any way modified the content of Robertson's infringing posts.

The Court hereby finds that AOL qualifies for the limitation-on-liability provided under subsection 512(a).^[22]

V. Conclusion

The Court hereby GRANTS Defendant AOL's Motion for summary judgment. This Order disposes of Motions # 109, 152, and 156 on the Court's Docket for this Matter.

NOTES

[1] AOL also filed a fourth Motion for summary judgment or adjudication focusing on the extent of damages that would be available to Ellison if he were to prevail on his copyright infringement claims against AOL. Because the Court grants AOL's Motion for summary judgment on the merits, we need not reach the issue of damages.

[2] Although the USENET is closely affiliated to the internet, the two are distinct. There is no specific network that is the USENET. Instead, Usenet traffic flows over a wide range of networks, including the internet.

[3] There are newsgroups devoted to such diverse topics as "science fiction writers" and "New York Mets baseball."

[4] Plaintiff claims that AOL's Motion for summary judgment is improper because its arguments regarding its compliance with subsections 512(a) and (i) were raised for the first time in its first summary judgment Motion's Reply brief, which was filed on September 5, 2001. Even assuming arguendo that AOL raised certain issues for the first time in its Reply brief, Plaintiff cannot claim that he was prejudiced in any way. First, Plaintiff had ample opportunity to respond in connection with AOL's second Motion for summary judgment (filed November 26, 2001) and with Plaintiff's own Motion for summary adjudication (filed November 27, 2001). And second, the Court granted Plaintiff permission to file a supplemental brief specifically in response to AOL's September 5, 2001 Reply, and Plaintiff did so, filing its supplemental brief on December 10, 2001. At this point, all the issues before the Court have been fully briefed, and no party can claim surprise, prejudice, or unfair treatment. Moreover, if the Court were to reject AOL's Motion for summary judgment on the grounds that certain matters were raised for the first time in its September 5, 2001, Reply brief, that would merely delay the inevitable and force the parties to file the same boxes of papers with the Court yet again.

[5] AOL claims that Ellison does not own a valid registered copyright for the audiowork "The Voice From the Edge," and that Ellison only registered his copyright for "Count the Clock That Tells the Time" two months after AOL blocked access to the alt.binaries.e-book site in late April 2000, but makes no similar allegations relating to any of the other works cited by Plaintiff.

[6] In its Opposition to Ellison's Motion for summary judgment and its Reply brief to its own Motion for summary judgment, AOL for the first time contends that Ellison has produced no evidence indicating that infringing copies of his works were located on AOL's USENET servers. In particular, AOL argues that the consent decree entered into by Ellison and co-Defendant Robertson cannot be asserted against AOL as evidence of Robertson's placing of infringing materials onto the alt.binaries.e-book newsgroup where, per AOL's USENET peer agreements' protocol, they were transferred and copied onto AOL's servers. Even assuming arguendo that the consent decree does not have any preclusive effect as against AOL, it does constitute evidence that a reasonable trier of fact could rely on. And although AOL labels the consent decree inadmissible hearsay, it is an order entered and signed by the Court, and therefore qualifies as a hearsay exception under, at least, Fed.R.Evid. Rule 803(8).

In addition, the deposition testimony of Susan Paris presents extremely strong circumstantial evidence that infringing copies of works (including some of Ellison's works) were, in fact, posted on and downloaded from the alt.binaries.e-book newsgroup.

[7] Plaintiff has provided no evidence that AOL actually did receive the email. To the contrary, Plaintiff's former counsel states that while she received an acknowledgment of receipt for her April 17, 2000, email from TCO, no such acknowledgment came from AOL.

[8] It is not clear if Miller was directed by AOL customer service representatives to the correct e-mail address or the same defunct address where Ellision's attorney sent her e-mail.

[9] The DMCA provides that "[t]he failure of a service provider's conduct to qualify for limitation of liability under this section shall not bear adversely upon the consideration of a defense by the service provider that the service provider's conduct is not infringing under this title or any other defense." 17 U.S.C. § 512(l); see also 3 NIMMER ON COPYRIGHT § 12B.06[B].

[10] See 3 NIMMER ON COPYRIGHT § 12B.04[A][2] ("The combination of each of these twin factors of financial benefit and ability to control [found in section 512(c)(1)(B)] codifies both elements of vicarious liability").

[11] In Adobe, the district court reasoned that although some of the language in Fonovisa is quite broad, the Ninth Circuit had implicitly recognized that vicarious copyright liability was only appropriate where the infringing activity was a substantial draw, i.e. "substantial numbers of customers are drawn to a venue with the explicit purpose of [obtaining] counterfeit goods." Adobe, 173 F.Supp.2d at 1050. The Adobe Court noted that unless the counterfeit goods constituted "the main customer `draw' to the venue, Fonovisa would provide essentially for the limitless expansion of vicarious liability into spheres wholly unintended by the court." Id. at 1051. While the provision of unauthorized copies of copyrighted material need not necessarily be the main customer draw, the infringing activity must be at least a substantial draw. As the Adobe decision points out, to hold otherwise would provide essentially for the limitless expansion of vicarious liability. For ISPs, the vicarious copyright infringement doctrine might start to resemble strict liability for any material that somehow finds its way onto the ISP's servers.

[12] The House Report was analyzing a version of the DMCA that was slightly different from the version finally enacted by Congress and signed by President Clinton in late 1998. Accordingly, what is now subsection (i) was then subsection (h). However, subsection (i) is not substantively different from subsection (h), and both contain the same requirement that ISPs adopt, implement, and inform subscribers of a termination policy for repeat infringers. Therefore, the legislative history analyzing subsection (h) is equally relevant to subsection (i).

[13] In the version of the DMCA actually enacted, subsection (l)'s equivalent is now found at subsection (m).

[14] These arguments are, however, relevant to determining whether AOL complied with the requirements of subsection (c).

[15] As such, the "realistic threat of losing [Internet] access" that Congress wishes ISPs to impress upon would-be infringers remains just that—a mere threat—unless the ISP decides to implement procedures aimed at identifying, investigating, and remedying infringement in hopes of meeting the requirements of subsection (c)'s safe harbor. Such an arrangement makes a certain amount of sense. If subsection (i) obligated ISPs to affirmatively seek out information regarding infringement and then investigate, eradicate, and punish infringement on their networks, then most if not all of the notice and takedown requirements of the subsection (c) safe harbor would be indirectly imported and applied to subsections (a) and (b) as well. This would upset the carefully balanced, "separate function—separate safe harbor—separate requirements" architecture of the DMCA.

[16] By contrast, for the purposes of the rest of section 512, the term `service provider' is defined more broadly as "a provider of online services or network access, or the operator of facilities therefor." 17 U.S.C. § 512(k)(2)

[17] Plaintiff has presented evidence suggesting that despite AOL's 14-day storage protocol, certain USENET messages containing binary files might have resided on AOL's servers for up to thirty-one days, but he makes no claim that such was the case with the messages containing infringing copies of his works (nor with any other infringing messages in the alt.binaries.e-book newsgroup). When deciding whether AOL qualifies for subsection (a)'s limitations on liability, the Court considers only the allegedly infringing postings.

[18] 3 NIMMER ON COPYRIGHT § 12B.01[C], at 12B-18.

[19] The version considered by the House Judiciary Committee, at 512(a)(C) states that "(C) no copy of the material thereby made by the provider is maintained on the provider's system or network in a manner ordinarily accessible to anyone other than the recipients anticipated by the person who initiated the transmission, and no such copy is maintained on the system or network in a manner ordinarily accessible to such recipients for a longer period than is reasonably necessary for the transmission."

The final version of the DMCA provides, at subsection 512(a)(4), that "(4) no copy of the material made by the service provider in the course of such intermediate and transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections."

[20] Any argument that this codification of Netcom's facts regarding intermediate storage was only meant to apply to direct infringement, and not to vicarious or contributory infringement, is forestalled by subsection (2) of the version of the bill then under consideration by the Judiciary Committee. For subsection (2) makes it clear that the same limitations on liability that apply under subsection (1) for direct infringement also apply to "contributory infringement or vicarious liability, based solely on conduct described in paragraph (1)." See H.R. Rep. 105-551(I), at p. 8. In effect, subsection (2) provided that regardless of a plaintiff's theory of infringement— direct, contributory, or vicarious—it was the underlying conduct of the ISP, i.e. the function it was performing, that is central to determining whether the ISP qualifies for a limitation on liability. The section-by-section analysis said this of subsection (2): "Paragraph 512(a)(2) exempts a provider from any type of monetary relief under theories of contributory infringement or vicarious liability for the same activities for which providers are exempt from liability for direct infringement under paragraph 512(a)(1). This provision extends the Netcom holding with respect to direct infringement to remove monetary exposure for such limited activities for claims arising under doctrines of secondary liability. Taken together, paragraphs (1) and (2) mean that providers will never be liable for any monetary damages for this type of transmission of material at the request of third parties or for intermediate storage of such material in the course of the transmission." H.R. Rep. 105-551(I), at p. 25.

[21] ISPs would also be punished for making the economic decision not to provide access to newsgroups and other sites for which there was no user demand.

[22] Accordingly, we need not reach the arguments presented by the parties regarding AOL's satisfaction of the requirements of subsection 512(c).