In the
United States Court of Appeals
for the Ninth Circuit

Ellison v. Robertson et al.

Harlan Ellison, a natural person,
plaintiff and appellant,

v.

Stephen Robertson, an individual;
RemarQ Communities, Inc., a corporation;
Critical Path, Inc., a corporation;
and Does 1 Through 10,defendants,
 
America Online, Inc., defendant and appellee.

No. 02-55797

On appeal from the United States District Court
for the Central District of California, Western Division
U.S.D.C. No. 00-04321 FMC (RCx)
Honorable Florence-Marie Cooper, Judge

Principal Brief of Appellant
Harlan Ellison

TABLE OF CONTENTS

TABLE OF AUTHORITIES

STATEMENT OF JURISDICTION

ISSUES PRESENTED FOR REVIEW

STANDARD OF REVIEW

STATEMENT OF THE CASE

STATEMENT OF FACTS

SUMMARY OF THE ARGUMENT

ARGUMENT

I.      AOL IS LIABLE FOR VICARIOUS COPYRIGHT INFRINGEMENT.

A. Standard of Review.

B. The District Court Decision Ignores the Historical Importance of the Doctrine of Vicarious Liability, and Impermissibly Rewrites Copyright Law for the "On-line World."

C. AOL Had the Right and Ability to Supervise the Infringing Activity on its Service.

D. AOL Had a Direct Financial Interest in the Infringing Activity.

E. Triable Issues of Fact Preclude Summary Judgment for AOL on Vicarious Liability.

II.    AOL DOES NOT QUALIFY FOR ANY LIMITATION ON LIABILITY UNDER THE DMCA BECAUSE ITS POLICIES AND PRACTICES DO NOT SATISFY THE REQUIREMENTS OF SECTION 512(i).

A. Standard of Review.

B. The DMCA Does Not Create ISP Immunity.

C. At a Minimum, There Is a Triable Issue of Fact Whether Defendant AOL's Policies and Procedures Were "Reasonably Implemented" Consistent With 512(i).

1. Inconsistencies Between AOL's Policies and Actions, and AOL's Provision of Misleading and Inaccurate Contact Information, Bar a Conclusion That Its Policies and Procedures Were "Reasonably Implemented."

2. AOL's Admitted Failure to Terminate Any User as a Repeat Infringer Belies a "Reasonably Implemented" Policy.

D. Because AOL's Policies and Procedures Were Not "Reasonably Implemented," It Cannot Avail Itself of Any DMCA Limitation on Liability.

III.  AOL DOES NOT QUALIFY FOR THE LIMITATION ON LIABILITY PROVIDED BY SECTION 512(a) CONCERNING TRANSITORY COMMUNICATIONS.

A. Standard of Review.

B. The DMCA Distinguishes Between Stored and Transitory Communications.

C. AOL's USENET Services Are Not "Transitory Digital Network Communications."

1. AOL's USENET Services Select Material, Inconsistent With 512(a)(2).

2. AOL's USENET Services Store Material, Inconsistent With 512(a)(4).

D. AOL's USENET Servers Do Not Qualify for the DMCA's Safe Harbor for Stored Communications.

E. AOL Does Not Qualify for Any DMCA Limitation on Liability.

CONCLUSION

STATUTORY ADDENDUM


TABLE OF AUTHORITIES

Cases

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) ("Napster II")

A&M Records, Inc., v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000) ("Napster I")

Adobe Sys. Inc. v. Canus Prods., Inc., 173 F. Supp. 2d 1044 (C.D. Cal. 2001)

ALS-Scan, Inc., v. RemarQ Communities, Inc., 239 F.3d 619 (4th Cir. 2001)

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)

Brookside Assocs. v. Rifkin, 49 F.3d 490 (9th Cir. 1995)

Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252 (9th Cir. 2001)

Ellison v. Robertson et al., 189 F. Supp. 2d 1051 (C.D. Cal. 2002)

Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068 (9th Cir. 2000)

Harman v. Apfel, 211 F.3d 1172 (9th Cir.), cert. denied, 121 S. Ct. 628 (2000)

Hendrickson v. eBay, 165 F. Supp. 2d 1082 (C.D. Cal. 2001)

Playboy Enters., Inc. v. Webbworld, Inc., 986 F. Supp. 1171 (N.D. Tex. 1997)

Religious Technology Center v. Netcom On-Line Communication Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ("Netcom")

Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963)

Statutes

17 U.S.C. 101

17 U.S.C. 512

17 U.S.C. 512(a)

17 U.S.C. 512(b)

17 U.S.C. 512(c)

17 U.S.C. 512(d)

17 U.S.C. 512(i)

17 U.S.C. 512(j)

17 U.S.C. 512(k)

17 U.S.C. 512(l)

17 U.S.C. 512(m)

17 U.S.C. 512(n)

28 U.S.C. 1292

28 U.S.C. 1331

28 U.S.C. 1338(a)

Other Authorities

Digital Millennium Copyright Act, H.R. Rep. 105-551 (I) (1998)

Fed. R. App. P. 4

Fed. R. Civ. P. 5(b)

Fed. R. App. P. 32

Fed. R. Civ. P. 54

Fed. R. Civ. P. 56

Ninth Cir. R. 32-1

Ninth Cir. R. 32-2

Senate Judiciary Committee, Digital Millennium Copyright Act of 1998, S. Rep. 105-190 (1998)

U.S. Const. Art. I, 8, cl. 8

STATEMENT OF JURISDICTION

Jurisdiction in the district court (Hon. Florence-Marie Cooper, J.) was founded on federal questions raised by the Copyright Act, 17 U.S.C. 101 et seq., pursuant to both general federal question jurisdiction under 28 U.S.C. 1331 and specific jurisdiction granted the federal courts in 28 U.S.C. 1338(a).

This Court has jurisdiction over this appeal from a final judgment on summary proceedings by the district court issued on April 8, 2002. 28 U.S.C. 1292; Fed. R. Civ. P. 54. This appeal was timely filed on May 7, 2002. Fed. R. App. P. 4.

ISSUES PRESENTED FOR REVIEW

1.      Did the district court correctly conclude that defendant America Online, Inc. ("AOL") could not be held liable for vicarious copyright infringement? (Ellison v. Robertson, et al., 189 F. Supp. 2d 1051, 1060-64 (C.D. Cal. 2002); raised at Doc. 151, Rec. 1:211)

2.      (a)  Do the policies and procedures of an Internet service provider ("ISP") satisfy the requirements of 17 U.S.C. 512(i) when the ISP provides inaccurate and misleading contact information required by 17 U.S.C. 512(c)(2)? (Ellison at 1064-66; Doc. 109, Rec. 1:202)

         (b)  Did the district court correctly conclude that AOL satisfied the requirements of 17 U.S.C. 512(i) through a "reasonable implementation" of a policy to deal with repeat copyright infringers? (Ellison at 1064-66; Doc. 109, Rec. 1:202)

3.      Are internet newsgroup ("USENET") communications known to be stored on an ISP's news servers for general access eligible for the limitations on liability for "transitory communications" under 17 U.S.C. 512(a)? (Ellison at 1066-72; Doc. 109, Rec. 1:202)

STANDARD OF REVIEW

Orders granting summary judgment are reviewed de novo on appeal. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). All facts are to be construed in the light most favorable to the nonmoving party, Plaintiff and Appellant Harlan Ellison ("Ellison"). Id. at 1257. The district court's interpretations of the Copyright Act, as interpretations of law, are reviewed de novo in any procedural context. Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1073 (9th Cir. 2000) (copyright matters). De novo review considers the issues anew, without deference to findings of law below. Harman v. Apfel, 211 F.3d 1172, 1175 (9th Cir.), cert. denied, 121 S. Ct. 628 (2000).

Summary judgment may be granted only when the moving party — defendant-appellee America Online, Inc. ("AOL") in this instance — demonstrates that the pleadings and evidence "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. R. Civ. P. 56(c). The moving party has the burden of demonstrating the absence of a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). A genuine issue of fact is one that can reasonably be resolved in favor of either party. Id., at 250-51. Although a conclusory allegation or "mere scintilla" of evidence is not sufficient to create a material issue of fact, evidence that could be believed by a reasonable trier of fact, and could cause a reasonable trier of fact to believe that the movant's asserted facts are incorrect, is sufficient to defeat a motion for summary judgment. Id. at 250-57. All evidence and reasonable inferences from that evidence must be construed in favor of Ellison, the nonmoving party. Id. at 244; Brookside Assocs. v. Rifkin, 49 F.3d 490, 492-93 (9th Cir. 1995).

STATEMENT OF THE CASE

Plaintiff and Appellant Harlan Ellison ("Ellison") filed his complaint, alleging infringements of his copyrights and trademarks, against defendants Stephen Robertson ("Robertson"), RemarQ Communities, Inc. ("RemarQ"), America Online, Inc. ("AOL"), and Does 1-10 in the United States District Court for the Central District of California on April 24, 2000. Record Extracts ("Rec."), Volume 1: Page 181. The Copyright Office was informed that date of the pending action. Id. Ellison filed a First Amended Complaint on May 30, 2000, for the purpose of adding Critical Path, Inc. ("Critical Path"), a successor in interest to RemarQ, as an additional named defendant. Rec. 1:183.

Robertson consented to judgment against him on June 1, 2000, in which he admitted the conduct forming the underlying direct infringement. Rec. 1:183.

AOL filed a motion to dismiss or in the alternative for summary adjudication on June 15, 2000. Rec. 1:183. RemarQ and Critical Path filed a joint motion to dismiss or in the alternative for summary judgment on July 12, 2000. Rec. 1:185. Judge Cooper granted AOL's motion, over Ellison's opposition, in part and without prejudice on July 28, 2000. Rec. 1:189. Ellison applied for leave to file a Second Amended Complaint on September 26, 2000. Rec. 1:193. Leave was granted over AOL's opposition on October 27, 2000. Rec. 1:195. While allowing leave to file the Second Amended Complaint, Judge Cooper denied the pending joint motion of RemarQ and Critical Path to dismiss or for summary adjudication as moot. Id.

RemarQ and Critical Path filed a second joint motion to dismiss or in the alternative for summary judgment on November 20, 2000. Rec. 1:195. AOL filed its second motion to dismiss or in the alternative for summary judgment on November 22, 2000. Rec. 1:197. On January 12, 2001, Judge Cooper denied both motions and required defendants to answer the Second Amended Complaint. Rec. 1:199. RemarQ and Critical Path jointly answered the Second Amended Complaint on January 29, 2001. Rec. 1:201; AOL answered the Second Amended Complaint on February 5, 2001. Id.

AOL filed its third motion for summary judgment on June 4, 2001. Rec. 1:202, asserting that the Digital Millennium Copyright Act, codified at 17 U.S.C. 512(a) ("DMCA"), prevented a finding of liability against AOL. The parties took extensive discovery concerning this motion. While this third motion was pending, Ellison reached a settlement agreement with RemarQ and Critical Path. Rec. 1:209. AOL then filed two additional motions for summary judgment on November 26, 2001. AOL's fourth motion asserted an additional defense under the DMCA, 17 U.S.C. 512(c), and also asserted that it could not be found liable for either contributory or vicarious infringement of Ellison's copyrights. Rec. 1:211.[note 1] Its fifth motion attempted to limit damages available to Ellison. Id. Ellison filed a cross-motion for summary judgment on liability on November 27, 2001. Id.

Judge Cooper heard oral argument on the four pending motions for summary judgment — AOL's third, fourth, and fifth motions, and Ellison's motion — on February 4, 2002. Rec. 1:221. She issued an order granting in part and denying in part AOL's motions, and denying Ellison's motion, on March 18, 2002. Id., published as Ellison v. Robertson et al., 189 F. Supp. 2d 1051 (C.D. Cal. 2002); however, this order did not include an appealable final judgment. Final judgment issued by separate order on April 8, 2002. Rec. 1:223. This appeal was timely filed on May 7, 2002. Rec. 1:224.

STATEMENT OF FACTS

Ellison is the author of many works of fact and fiction. Ellison v. Robertson et al., 189 F. Supp. 2d 1051, 1053 (C.D. Cal. 2002).[note 2] This matter concerns seventeen works of short fiction, which are individually registered and were infringed both separately and in part through a collection. Unlike many copyright actions, there is no question as to whether the works were directly infringed, as the direct infringer has admitted his culpability. Rather, the question here is whether AOL is secondarily liable under the theory of vicarious infringement and whether AOL is entitled to any limitation on liability under the DMCA.[note 3]

The Unauthorized Copying

In late March of 2000, Stephen Robertson, an "overenthusiastic fan" of Ellison's writing, Ellison, 189 F. Supp. 2d at 1053, used an optical scanner to make digital copies of several of Ellison's most famous works. He did not have permission to make these copies. Neither did he have permission to post these copies on the Internet. However, that is exactly what he did.

Robertson posted the infringing works under a pseudonym as separate messages on the Internet newsgroup alt.binaries.e-book. Id.; Rec. 1:1-8. Internet newsgroups, often called USENET (short for "user network"), are distributed systems. An individual posts a message to a newsgroup by sending it to a news server. Ellison, 189 F. Supp. 2d at 1053; Rec. 1:46-47, 51-53. Through an automated process, the message is then sent quickly (but not instantaneously or immediately) to other news servers through a process known as "peering." Thus, all news servers with which the original news server has a peering agreement will receive the message within a matter of minutes. In turn, other individuals may choose to retrieve the message from their own news servers for as long as the news server retains the message, typically a matter of a few weeks but occasionally longer. Rec. 1:46-47, 51-53; Ellison, 189 F. Supp. 2d at 1054.

Smaller, local internet service providers ("ISPs") often outsource their USENET operations to another organization specializing in USENET access. This enables the smaller ISPs to remain competitive with larger ISPs, such as defendant AOL, by providing access to thousands of USENET newsgroups without investing in the hardware, software, and personnel to manage this service. This is exactly what Robertson's ISP, Tehama County Online, had done, having contracted with defendant RemarQ to provide USENET services for its subscribers. Ellison, 189 F. Supp. 2d at 1053. The infringing messages thus went from Robertson to RemarQ's USENET server, and then became available to other USENET servers — including those of AOL — through the peering process in very short order. Id.; see also Rec. 1:52-53.

In turn, any RemarQ or AOL subscriber (whether directly or through an outsourcing arrangement similar to that between Tehama County Online and RemarQ) could then access the newsgroup alt.binaries.e-book and, in a minute or so, obtain a complete copy of such award-winning stories as Ellison's "The Deathbird." Rec. 1:45-48. A number of AOL subscribers observed Ellison's works on AOL's USENET server. At least one AOL subscriber contacted AOL's customer service department to inform AOL of the infringements of Ellison's works, among others, in early April 2000. Rec. 1:121; Ellison, 189 F. Supp. 2d at 1054. Ellison, who did not use the Internet at all and was not an AOL subscriber, was informed of the infringements in mid-April 2000.

Ellison's Response to the Infringements

Ellison's counsel, M. Christine Valada, confirmed the infringing materials were available on AOL's USENET servers and sent "takedown notices" pursuant to the Digital Millennium Copyright Act, codified at 17 U.S.C. 512, via electronic mail to the addresses of several ISPs as supplied in the Copyright Office's online database, available at http://www.loc.gov/copyright/onlinesp. See 17 U.S.C. 512(c)(2) (mandating that ISPs who assert DMCA limitations on liability provide contact information to the Copyright Office for posting online). Valada received a number of responses to her e-mail message. Ellison, 189 F. Supp. 2d at 1054; Rec. 1:105-07. One such response was a "bounce" notice (invalid address or otherwise undeliverable) from Tehama County Online. Valada responded to this bounce notice by further research, and was able the next business day to reach a responsive address at Tehama County Online. Tehama County Online ultimately provided Robertson's identity to Valada. Ellison, 189 F. Supp. 2d at 1054; Rec. 1:62, 105-07.

Other ISPs responded by removing or blocking access to the specified infringements. However, Valada did not receive any response — substantive or a bounce message — from either RemarQ or AOL. After another week had elapsed, Valada filed this action in the Central District of California, naming Robertson, RemarQ, and AOL as defendants. Ellison, 189 F. Supp. 2d at 1054; Rec. 1:181.

AOL's Delayed Response

AOL had added the newsgroup alt.binaries.e-book to its USENET servers in 1999 at the request of several of its subscribers. Its employee responsible for managing the availability of newsgroups had received a number of requests for access to the newsgroup, determined that adding the newsgroup would enhance AOL's USENET services, and added the newsgroup to its servers. Rec. 2:98, 143-46.[note 4] Even a cursory examination of the headers listed on the newsgroup would have disclosed that virtually all of the messages with binary files attached purported to include copyrighted works. As Judge Cooper noted below, alt.binaries.e-book "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." Ellison, 189 F. Supp. 2d at 1053-54.

AOL responded to the filing of this lawsuit by blocking subscriber access to alt.binaries.e-book. Id. at 1054; Rec. 2:113. AOL contends that its DMCA Agent did not receive any notification from Valada prior to service of the lawsuit upon AOL. Ellison, 189 F. Supp. 2d at 1054. Valada had relied upon the e-mail address displayed on the Copyright Office's website, as required by the DMCA (17 U.S.C. 512(c)(2)), to address her e-mail notification. The address she retrieved in mid-April was copyright@aol.com. However, defendant AOL had changed this address six months earlier to aolcopyright@aol.com, but had not notified the Copyright Office of the change until approximately the time that Valada retrieved the address from the Copyright Office's online directory. Ellison, 189 F. Supp. 2d at 1058; see also Rec. 1:62, 105-07, Rec. 2:126-30. This need not have caused difficulties, as AOL could have forwarded messages received at copyright@aol.com automatically (and instantaneously) to aolcopyright@aol.com. Rec. 2:135-36. However, AOL did not do this, nor did it have anyone check whether the "obsolete" address was receiving DMCA notifications or other correspondence, nor did it deactivate the address. Had the address been deactivated so that it was invalid, it would have generated a bounce notice to Valada, notifying her to do further research to find another means to contact AOL's DMCA Notification Agent — just as she had done with Tahama County Online.

Accordingly, on April 24, 2000, Ellison brought suit and the underlying litigation commenced. Rec. 1:181.

SUMMARY OF THE ARGUMENT

The district court found Plaintiff and Appellant Harlan Ellison ("Ellison") had a right to a jury trial on the issue of contributory copyright infringement, but dismissed his vicarious infringement claim. Ellison v. Robertson, et al., 189 F. Supp. 2d 1051, 1057-64 (C.D. Cal. 2002). Ellison contests the district court's finding on vicarious infringement. The district court further found Defendant and Appellee America Online, Inc. ("AOL") may invoke limitations on liability provided by the Digital Millennium Copyright Act, codified at 17 U.S.C. 512, ("DMCA"). Ellison also appeals this ruling. All rulings were made on cross-motions for summary judgment, and are to be reviewed de novo.

The two elements of vicarious infringement in the online environment are the Internet Service Provider's ("ISP") right and ability to supervise the conduct on its service, and a direct financial interest in the infringing activity. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2000) ("the right and ability to block subscriber's access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise.") AOL employees testified they "blocked" or "hid" the offending newsgroup, alt.binaries.e-book, from access by AOL subscribers. AOL was able to voluntarily turn the "feed" from the peer computer service on and off at will. AOL removed the offending newsgroup, alt.binaries.e-book, once AOL was served with the Complaint. Whether AOL had the right and ability to supervise the conduct on its service is a triable issue of fact not properly disposed of on summary judgment.

Concerning direct financial interest, the district court penalized Ellison because AOL is so large and offers many non-infringing services to its subscribers. Just because AOL's sole focus is not the provision of infringing materials does not mean the infringing material it provided in this case fails to constitute a "draw" for purposes of establishing AOL's direct financial interest in the particular infringing activity at issue.

Ellison appeals two aspects of the district court's ruling concerning the DMCA: AOL's eligibility for any DMCA limitation on liability, and the particular limitation on liability allowed.

Ellison asserted below, and the district court found, that 17 U.S.C. 512(i) sets forth a threshold requirement that an ISP must meet before it receives immunity under the DMCA at all. The requirement is that the ISP must have a reasonably implemented policy for the termination of repeat infringers. Whether AOL had a reasonably implemented policy in place at the time of the alleged infringements is doubtful for several reasons. First, an AOL employee testified AOL had never completely eliminated a newsgroup from access as a result of a DMCA notification or terminated an account due to repeat infringers. However, the Fourth Circuit had noted in ALS-Scan, Inc. v. RemarQ Communities, Inc., 239 F. 3d 619 (4th Cir. 2001), that AOL had removed a newsgroup in response to a cease and desist letter several months prior to the infringements of which Ellison complained. Second, AOL provided misleading contact information which directed contact to an electronic mail address that it was not checking, and may not have even worked. Ellison asserts the district court's ruling that Ellison had a right to a jury trial on contributory infringement, finding that AOL's defunct contact information placed a barrier between copyright holders and AOL's DMCA agent, is evidence of an "unreasonably" implemented policy under 512(i). Finally, AOL never defined how to classify a user as a "repeat infringer," nor had it ever terminated any subscriber on that basis. Ellison, 189 F. Supp. 2d at 1066. A reasonable jury could find that AOL did not have a reasonably implemented policy to address repeat infringers. Without a reasonable policy, AOL cannot invoke any limitation on liability under the DMCA.

Section 512(a) of the DMCA allows an ISP to limit its liability for infringements via "transitory digital network communications." The communications at issue in this case do not fall within that definition. First, AOL selects material. The "peering" arrangements AOL entered into were done so with reference to the content of the newsgroups that would be provided by the peer. While the district court held this type of selection was too general, the Senate Judiciary Committee referred to an "editorial function of determining . . . the specific sources of material to place online (e.g., a radio station)." S. Rep. 105-190 at 42 (1998). The Committee's reasoning indicates that newsgroups do not qualify for this particular limitation on liability.

Further, the communications containing the infringing material were "stored" by AOL "for a longer period than reasonably necessary for the transmission." 17 U.S.C. 512(a)(4). The language of the statute, when read together with the legislative history, suggests that where a message does not have an intended recipient at the time it is sent, and must therefore be stored on an ISP server for an indeterminate period, it should be considered a "stored" and not a transitory communication. "Stored" communications fall within the bounds of 512(c), not 512(a). The district court did not rule upon AOL's motion in the alternative under 512(c).

This Court should therefore reverse the district court's rulings on vicarious liability and the DMCA and remand for further proceedings.

ARGUMENT

Ellison contests two findings of the district court in its rulings on the parties' cross-motions for summary judgment. Although the district court confirmed the evidence would allow a reasonable trier of fact to conclude AOL was liable for contributory copyright infringements of Ellison's works, it nonetheless granted AOL's motion for summary judgment on Ellison's vicarious infringement claims. Ellison, 189 F. Supp. 2d at 1057-64. Ellison believes the district court's ruling on vicarious infringement was incorrect, and respectfully requests this Court reverse the lower court's decision.

The district court also granted AOL's motion for summary adjudication of its eligibility for a limitation on liability under the DMCA, holding AOL's policies and procedures satisfied the prerequisites of 512(i) for application of the DMCA to any theory of limitation, Ellison, 189 F. Supp. 2d at 1064-66, and that the USENET communications at issue in this matter qualified for the limitation on liability afforded by the DMCA for transitory communications. Id. at 1067-72; contra ALS-Scan, Inc., v. RemarQ Communities, Inc., 239 F.3d 619 (4th Cir. 2001) (holding USENET communications are stored communications under the DMCA). Ellison respectfully requests that this Court reverse each holding.

I.   AOL IS LIABLE FOR VICARIOUS COPYRIGHT INFRINGEMENT.

Secondary infringers may be held liable for copyright infringement, which may be premised on the separate doctrines of vicarious and contributory liability. Vicarious liability for copyright infringement exists where a defendant "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities." A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2000) ("Napster II"). The district court incorrectly found against Ellison on vicarious infringement. Ellison, 189 F. Supp. 2d at 1060-64.

A. Standard of Review.

Review of this issue is de novo on appeal. All facts must be construed in the favor of Ellison, the non-moving party. See complete discussion (same for all issues in this matter) infra at 3. The issue was ruled upon below at Ellison, 189 F. Supp.2d at 1060-64.

B. The District Court Decision Ignores the Historical Importance of the Doctrine of Vicarious Liability, and Impermissibly Rewrites Copyright Law for the "On-line World."

The Second Circuit addressed the historical underpinnings of vicarious liability for copyright infringement in Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963). In that case, cited with approval by the Ninth Circuit in Napster II, a music publishing company sued two defendants: a department store, H.L. Green Company ("Green"), and a licensee which operated the phonograph record department within the department store, Jalen Amusement Company ("Jalen"). Id. The district court found Jalen liable as a direct infringer, but did not impose liability on Green as a vicarious infringer. Reversing, the Second Circuit held:

The imposition of liability upon the Green Company, even in the absence of an intention to infringe or knowledge of infringement, is not unusual. As one observer has noted, 'Although copyright infringements are quite generally termed piracy, only a minority of infringers fly the Jolly Roger.'… While there have been some complaints concerning the harshness of the principle of strict liability in copyright law… courts have consistently refused to honor the defense of absence of knowledge or intention. The reasons have been variously stated. '[T]he protection accorded literary property would be of little value if… insulation from payment of damages could be secured… by merely refraining from making inquiry.'… 'It is the innocent infringer who must suffer, since he, unlike the copyright owner, either has an opportunity to guard against the infringement (by diligent inquiry), or at least the ability to guard against the infringement (by an indemnity agreement… and/or by insurance).

Id. at 308 (citations omitted.)

While the district court here stated, "The DMCA did not simply rewrite copyright law for the on-line world," Ellison, 189 F. Supp. 2d at 1061, its opinion does exactly that. It encourages conduct decried in Shapiro — an infringer's ability to escape liability as long as they claim to be stealing only by accident, and then only a little. The steady erosion of copyright holder's rights must be stemmed before rights holders conclude attempting to protect their work has become impossible and simply stop creating, thereby frustrating the core purpose of copyright: to encourage creativity for the public good. U.S. Const. Art. I, 8, cl. 8.

C. AOL Had the Right and Ability to Supervise the Infringing Activity on its Service.

The Ninth Circuit recently found that Napster had both the "right and ability to supervise" conduct on its service and a "direct financial interest" in the infringing activity. Napster II, 239 F.3d at 1023. This Court held "[t]he ability to block infringers' access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise." Id. (emphasis added.) Here, two AOL witnesses, Aimee Palmer and Rob Wilson ("Wilson"), both testified they "blocked" or "hid" alt.binaries.e-book from access by AOL subscribers. Rec. 2:104-06, 155-59. Correspondence between AOL employees indicates the ability to block access to newsgroups:

[I]t has been determined that we should block access to the newsgroup we discussed a little while ago based on a report that copyright infringing activity is occurring in the newsgroup on a wide scale. It is alt.binaries.e-book. Can you please block it ASAP, and let me know when the block is in place?

Rec. 2:113.

This Court further held, "The district court correctly determined that Napster had the right and ability to police its system and failed to exercise that right to prevent the exchange of copyrighted material." Napster II, 239 F.3d at 1023. AOL entered into the peering agreement with RemarQ voluntarily. Rec. 2:140-44, 147, 151-52. No one forced AOL to accept the alt.binaries.e-book newsgroup in a peering agreement with RemarQ. It is undisputed that AOL accepted the "feed" containing alt.binaries.e-book from August 17, 1999 to April 28, 2001, and did not block any specific postings contained in that newsgroup, accepting the entire feed. Rec. 2:146-52. Robertson posted Ellison's works on alt.binaries.e-book on March 26, 2000, Rec. 1:63, meaning that every infringing posting on alt.binaries.e-book would have been available to AOL's subscribers for the period AOL maintained that newsgroup on its servers. Just as AOL's peering agreement with RemarQ could be entered into voluntarily, it could also be terminated voluntarily by AOL. Rec. 2:140. This ability to turn peering arrangements "on and off" further indicates AOL's ability to supervise infringing conduct on its service.

The district court cases relied upon by the court below on the issue of "right and ability to control" are unpersuasive. Hendrickson v. eBay, 165 F. Supp. 2d 1082 (C.D. Cal. 2001), concluded 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 (emphasis added). This contradicts this Court's holding in Napster II without apparent consideration of it. Moreover, the reasoning of Hendrickson fails to first consider the question of vicarious liability before considering whether the DMCA applies: It merged the two inquiries. This is the ultimate example of "rewriting copyright law for the on-line world," an exercise the lower court here disavows. Under either the flawed reasoning of Hendrickson or the correct standard of Napster II, the evidence Ellison developed in this case reflects AOL had the right and ability to control the infringing activity.

The district court relies on Religious Technology Center v. Netcom On-Line Communications Services, Inc., 907 F. Supp. 1361, 1372-73 (N.D. Cal. 1995), for the proposition that the defendant in that case had an even greater opportunity to control the infringing behavior because, "the ISP was one of two entities responsible for providing the direct infringer with access to the Internet." Ellison, 189 F. Supp. 2d at 1062. Ellison avers this is not the appropriate inquiry. Just as the district court in Hendrickson merged the vicarious liability inquiry and the DMCA inquiry, so too does the district court here.

The lower court decision eviscerates the historically strict standard of vicarious liability by somehow requiring the secondary infringer to be able to "restrict the infringing activity at the root level." Ellison, 189 F. Supp. 2d at 1062. The H.L. Green department store had no more ability to restrict the "root level" infringements of the sound recordings at issue there than AOL does to restrict root level infringements here. There has never been a requirement that the secondary infringer be able to control the infringements at the "root level." This requirement is contrary to forty years of established case law beginning with Shapiro and continuing through Napster. Another district court made this point as follows:

Although [defendants] do not deny that Messrs. Ives and Ellis had control over the operation of the Neptics website, they maintain that the evidence fails to establish that Messrs. Ives and Ellis had the right and ability to supervise the conduct of those who initially posted Playboy's copyrighted images to the Internet.

Defendants' argument seems to miss the point. That defendants had no control over those responsible for originally uploading the infringing images onto the Internet is not relevant to the issue of defendants' control over their infringing activity. The only relevant question regarding the element of control is whether defendants had the right and ability to control what occurred on the Neptics website. The court finds that they did. Defendants' arguments to the contrary, including their contention that they lacked control because the process was automated, are unavailing.

Playboy Enterprises, Inc. v. Webbworld, Inc., 986 F. Supp. 1171, 1177 (N.D. Tex. 1997). AOL had the right and ability to control whether the infringing material in this case resided on its system or not, and a trier of fact should have been allowed to consider the question of AOL's vicarious liability on that basis.

D. AOL Had a Direct Financial Interest in the Infringing Activity.

In Napster, the Ninth Circuit held, "[f]inancial benefit exists where the availability of infringing material acts as a 'draw' for customers," Napster II, 239 F.3d at 1023. One of AOL's 10-Q statements filed with the Securities and Exchange Commission admit that "[s]ales and marketing expenses include the costs to acquire and retain subscribers, the operating expenses associated with the sales and marketing organizations and other general marketing costs." Rec. 1:127(emphasis added). The 10-Q also states that "[f]or the three months ended March 31, 2000, subscription services revenues increased… 33%, over the three months ended March 31, 1999… At March 31, 2000, the Company had approximately 22.2 million AOL service subscribers…" Rec. 1:126. Without question, attracting subscribers to its service is central to AOL's core business and revenue generation.

AOL subscribers can avail themselves of a variety of services through their subscription, including accessing newsgroups from AOL's servers. Rec. 1:129. AOL produced a representative sample of e-mails from some of its subscribers who either wondered what happened to, or were upset about the removal of, the alt.binaries.e-book newsgroup in April of 2000. Rec. 2:114-23. For example, one subscriber stated,

I was just wondering if there was something wrong that I'm not aware of with the alt.binaries.e-book newsgroup. The last four or five days, I've been unable to get in to read the messages… What's wrong?

Rec. 2:114. Another subscriber stated,

[p]lease be aware, I am an adult… I control access and I know what I am doing. So, please don't give me a response that has nothing to do with my actual question. I have been accessing a newsgroup that suddenly is not accessible.… What happened? The newsgroup is alt.binaries.e-book.

Rec. 2:115. These representative samples indicate AOL's subscribers were using AOL's service to access alt.binaries.e-book, the unauthorized source for Ellison's works. The district court noted there were at least ten such inquiries from AOL subscribers. Ellison, 189 F. Supp. 2d at 1062. A reasonable jury could infer that if ten people were upset enough to actually write in about the abrupt removal of the pirate newsgroup, there were many more who were affected, but either unable or unwilling to lodge a formal complaint — particularly where, as here, they were partaking of a newsgroup offering pirated copies of copyrighted works.

The Ninth Circuit noted that "Napster's future revenue is directly dependent upon increases in user-base." Napster II, 239 F.3d at 1023. AOL employee Wilson testified that AOL enters into peering arrangements with companies like RemarQ to better serve AOL's subscribers. Rec. 2:143-46. As noted, revenues from subscriptions are an important part of AOL's business. AOL receives a direct financial benefit from the infringing conduct Ellison alleges in this case. The main problem with the district court's analysis of this issue is it defines too broadly the activity which may serve as a "draw" to the consumer. The district court essentially penalizes Ellison because AOL offers so many services to its customers and measures draw in the context of every one of those services. Ellison, 189 F. Supp. 2d at 1062.

In Adobe Sys. Inc. v. Canus Prods., Inc., 173 F. Supp. 2d 1044 (C.D. Cal. 2001), the court, on consideration of disputed evidence, found a triable issue of fact as to whether the infringing products constituted a draw to a software fair. Ellison asserts a triable issue of fact exists whether the infringing material on alt.binaries.e-book constituted a draw to AOL's service. To the extent Adobe was construed by the district court to require a "substantial" draw, both Ellison and Adobe are wrong.

If this were to become the standard, then any ISP that provides a broad range of services to users — of which most services are non-infringing and some (or even one) of which is infringing — will never be liable for vicarious infringement, and the doctrine will be rendered a nullity. If vicarious liability requires that a service must focus solely upon providing infringing material, as did Napster, major ISP's such as AOL will be able to "steal a little" in proportion to the vast scope of their legitimate services, without fearing the consequences of a copyright holder's action for vicarious infringement. This would indeed rewrite vicarious liability for the on-line world.

E. Triable Issues of Fact Preclude Summary Judgment for AOL on Vicarious Liability.

The district court erred in not analyzing vicarious liability separately from the DMCA. Under the law of this circuit, AOL had the right and ability to control access to alt.binaries.e-book. A reasonable jury could find that AOL did obtain a direct financial benefit from providing alt.binaries.e-book to its customers. Summary judgment for AOL on vicarious liability was therefore improper and should be reversed.

II.  AOL DOES NOT QUALIFY FOR ANY LIMITATION ON LIABILITY UNDER THE DMCA BECAUSE ITS POLICIES AND PRACTICES DO NOT SATISFY THE REQUIREMENTS OF SECTION 512(i).

Whatever the particular theory of copyright liability, AOL urges this Court to find that AOL cannot be found liable to Ellison under the transitory communications provisions of the DMCA.[note 5] To grant such relief, this Court must address the technical question of whether USENET communications are "transitory" or "stored" — but only if defendant AOL may claim any protection from the DMCA by first satisfying the threshold requirements of 512(i).

As Judge Cooper correctly noted, the DMCA requires an ISP to satisfy certain factual predicates set forth 512(i) before it can receive any protection under the DMCA at all. Ellison, 189 F. Supp.2d at 1064-65. However, the district court did not properly consider evidence in the record indicating that AOL did not, or at minimum that a reasonable trier of fact could find that AOL did not, satisfy those factual predicates. The district court's grant of summary judgment to defendant AOL therefore must be reversed.

A. Standard of Review.

Review of this issue is de novo on appeal. All facts must be construed in the favor of Ellison, the non-moving party. See complete discussion (same for all issues in this matter) infra at 3. The issue was ruled upon below at Ellison, 189 F. Supp. 2d at 1064-66.

B. The DMCA Does Not Create ISP Immunity.

The DMCA provides only "[l]imitations on liability relating to material online," not "immunity" or even a "defense." The most logical means of understanding the statute is to work from its last subsection ( 512(n)) forward toward its beginning, because the later sections are general in nature, while the DMCA's specific focus on the actual technology of the Internet is concentrated in the four subsections at the beginning. Therefore, Part II of this brief will address subsection (i), with discussion of subsection (a) and the relevant technology deferred to Part III.

Beginning, then, at the end of the DMCA, the statute requires that each of the first four subsections of the DMCA — two of which, subsections (a) and (c), are at issue in this matter — be examined independently. 17 U.S.C. 512(n). That is, if a particular communication does not meet the requirements for treatment as a "transitory" communication under subsection (a), the communication nonetheless may meet the requirements for treatment as a "stored" communication under subsection (c), and vice versa.

Working forward, the DMCA states that an ISP is not required to "monitor[] its service or affirmatively seek[] facts indicating infringing activity." 17 U.S.C. 512(m)(1). What this section does not say is that an ISP may choose to ignore infringements when it does obtain "facts indicating infringing activity," whether through its own efforts or from third parties. Although the ISP need not be an "Internet cop," neither may it disclaim all responsibility. Had Congress meant the latter, it could have said so much more simply, but did not.

Plaintiffs have raised and continue to raise significant questions under [ 512], including: … (2) whether copyright owners must give a service provider "official" notice of infringing activity in order for it to have knowledge or awareness of infringing activity on its system; and (3) whether Napster complies with 512(i), which requires a service provider to timely establish a detailed copyright compliance policy.

Napster II, 239 F.3d at 1025.[note 6]

DMCA subsections (j) (detailed limitations on injunctive relief), (k) (definition of "service provider"), and (l) (determination of application of the DMCA does not affect availability of copyright defenses) do not significantly affect this matter at this stage, except insofar as their detail further demonstrates that the DMCA is not an immunity statute.

C. At a Minimum, There Is a Triable Issue of Fact Whether Defendant AOL's Policies and Procedures Were "Reasonably Implemented" Consistent With 512(i).

The qualifications in 512(i) are prerequisites to any limitation on liability under the DMCA:

(1) Accommodation of Technology. — The limitations on liability established by this section 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;…

17 U.S.C. 512(i) (emphasis added). AOL has not demonstrated that it satisfies these conditions.

1. Inconsistencies Between AOL's Policies and Actions, and AOL's Provision of Misleading and Inaccurate Contact Information, Bar a Conclusion That Its Policies and Procedures Were "Reasonably Implemented."

Although AOL was not a defendant in the matter, the Fourth Circuit's opinion in ALS-Scan indicates that AOL had removed a newsgroup from its servers in mid-1999 when confronted with a newsgroup's rampant piracy:

Both of these newsgroups ["alt.als" and "alt.binaries.pictures.erotica.als"] were created for the sole purpose of violating our Federally filed Copyrights and Tradename. These newsgroups contain virtually all Federally Copyrighted images…. Your servers provide access to these illegally posted images and enable the illegal trans mission of these images across state lines.

This is a cease and desist letter. You are hereby ordered to cease carrying these newsgroups within twenty-four (24) hours upon receipt of this correspondence….

America Online, Erol's, Mindspring, and others have all complied with our cease and desist order and no longer carry these newsgroups.

ALS-Scan, 239 F.3d at 620-21 (ellipses in original, emphasis added) (quoting letter dated August 2, 1999 from ALS-Scan to RemarQ). AOL thus appears to have encountered the problem of pirate newsgroups several months prior to the infringements at issue in this case, and responded in a manner that would have satisfied Ellison: removing access to the groups without forcing the victim to resort to litigation.

Only after the filing of this lawsuit did AOL actually remove alt.binaries.e-book from its news servers. See Rec. 1:19; Rec. 2:155-156. This is not consistent with the policy AOL has presented as in effect at the time of the infringements (or the filing of this lawsuit), because that policy did not provide for removal of USENET newsgroups. Rec. 2:50-51. Neither is it consistent with the testimony of AOL's designated contact person for DMCA notifications, Elizabeth Compton. See Rec. 2:13. Ms. Compton denied that defendant AOL had ever either completely eliminated a newsgroup from access as a result of a DMCA notification or terminated an account due to repeat infringements, Rec. 2:53-55. A jury should have been allowed to test the credibility of these assertions against the factual finding in ALS-Scan that AOL had previously eliminated a newsgroup from access in response to a mere letter from a claimant.

AOL's policies and procedures might possibly have changed between mid-1999, when its hosting of the ALS-Scan newsgroups became an issue, and the infringements at issue in this matter in early 2000. Assuming, arguendo, that AOL's actions in each instance were consistent with the policy in effect at that time, the policy must have changed away from removal of newsgroups that are devoted to piracy between mid-1999 and early 2000. A reasonable trier of fact could find that this indicates AOL did not have a "reasonably implemented" policy, but instead a selective and haphazard one: sometimes AOL removes entire pirate newsgroups in response to a letter, as in ALS-Scan, and other times waits until a lawsuit such as the instant case is filed to take any action.

The DMCA is predicated upon copyright holders providing notice of infringements to ISPs. ISPs are not expected to actively police every message, file, or reference on their systems. Conversely, ISPs may not play ostrich:

The DMCA's protection of an innocent service provider disappears at the moment the service provider loses its innocence, i.e., at the moment it becomes aware that a third party is using its system to infringe. At that point, the Act shifts responsibility to the service provider to disable the infringing matter, "preserving the strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment." H.R. Conf. Rep. No. 105-796, at 72 (1998), reprinted in 1998 U.S.C.C.A.N. 649.

ALS-Scan, 239 F.3d at 625; accord, Senate Judiciary Committee, Digital Millennium Copyight Act of 1998, S. Rep. 105-190 at 20 (1998) (same language as quoted from House Conference Report). Only one part of the DMCA discusses how copyright holders can notify an ISP of infringements:

The limitations on liability established in this subsection apply to a service provider only if the service provider has designated an agent to receive notifications of claimed infringement described in paragraph (3), by making available through its service, including on its website in a location accessible to the public, and by providing to the Copyright Office, substantially the following information:

(A) the name, address, phone number, and electronic mail address of the agent.

(B) other contact information which the Register of Copyrights may deem appropriate.

17 U.S.C. 512(c)(2) (emphasis added). The district court correctly noted that failure to comply with this subsection could very well bar application of the safe harbor for stored communications found in 512(c). However, the District Court also failed to see the implications of this provision for the overall reasonableness of an ISP's implementation of its policies. Ellison, 189 F. Supp. 2d at 1066.

This cannot be correct. The DMCA attempts to balance the rights of copyright holders to redress for and prevention of copyright infringements with the function of ISPs as wide-reaching methods of exchanging information. The ISP is not required to actively police its system, seeking and destroying every potential copyright infringement. That would be an unreasonable burden, and Ellison does not seek to impose such a burden. The facts of this case, however, demonstrate that AOL made it impossible for copyright holders seeking to follow the DMCA's only notification procedures to provide the requisite knowledge to AOL requiring AOL to take any action to protect the holders' rights.

Robertson admitted posting the infringing material prior to April 8, 2000. Rec. 1:2. This is consistent with the file dates on the materials. The material was available on AOL's system prior to April 8, 2000. Rec. 1:113-14, 118. Prior to April 8, 2000, the public contact information posted by AOL pursuant to the DMCA with the Copyright Office was inaccurate, and deceptively so: it directed contact to an electronic mail address that it was apparently not checking, and may not have even worked. Rec. 2:78-83, 130-37. AOL had changed the address publicly posted prior to April 8, 2000 from copyright@aol.com to aolcopyright@aol.com in November 1999, but had not forwarded this change to the Copyright Office. Rec. 2:59-73. AOL had the capability to forward material from the inaccurate address to a preferred address. Rec. 2:153-54. For whatever reason, AOL chose not to do so. Rec. 2:59-73.

AOL contends that Ellison's counsel did not actually send the notice, because she could not produce a "notice of receipt" indicating success of e-mail delivery. Other responses to Ellison's counsel's e-mail of 17 April 2000 included a bounce notice from TCO Online, Robertson's service provider. Rec. 1:63-64, 105-07, indicating that the message was in fact sent. The receipt of such a bounce notice from TCO, but not from AOL, when the message was sent to a purportedly defunct e-mail address at AOL, further indicates an unreasonable implementation. AOL relies upon a "non-receipt" defense, but its system apparently does not, or did not, notify senders of non-receipt. AOL's "ostrich defense" is inconsistent with the electronic filing procedures adopted for the federal courts during the pendency of this matter, which provide that an electronic filing is presumed received absent positive indication of non-receipt. Fed. R. Civ. Proc. 5(b)(2)(D) ("[s]ervice by electronic means is complete on transmission" (emphasis added)); id. at 5(b)(3) (service by electronic means is not effective "if the party learns that the attempted service did not reach the person to be served"). Ellison's counsel first learned of AOL's contention that the "attempted service did not reach" its agent after filing this matter in the district court.

As the district court correctly found in its discussion of contributory infringement, AOL placed an invisible barrier between copyright holders and its DMCA agent: a non-working e-mail address that sent notification messages into a black hole.

…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.

Ellison, 189 F. Supp. 2d at 1058.

The district court did not apply this factual finding to the reasonable implementation of policy required by 512(i). Ellison, 189 F. Supp. 2d at 1066. This results from a misunderstanding of the dual functions of 512(c)(2) possibly caused by the unclear structure of the statute. Section 512(c) establishes a detailed method for notification of ISPs with which copyright holders must "substantially comply" if they wish to force the removal of "stored communications." 17 U.S.C. 512(c)(3). The copyright holder must send this notification to the DMCA agent, defined in 512(c)(2). This is the only definitive method provided in the DMCA for the copyright holder to contact the ISP and be assured that the notification is going to the "right" person. Thus, 512(c)(2) performs two distinct functions: it helps define how knowledge gets from the copyright holder to the ISP that triggers ISP responsibility to take action, and it provides a designated contact point at the ISP for notices of copyright infringements. Only the first of these functions is unique to the "stored communications" safe harbor of 512(c). Other safe harbors have independent provisions denying the safe harbor if the ISP has actual knowledge of the infringing material. 17 U.S.C. 512(b)(2)(E); 17 U.S.C. 512(d)(1)(A); 17 U.S.C. 512(e)(1).

The converse case demonstrates why the notification point in 512(c)(2) must be accurate to constitute a reasonable policy. If one accepts that this notification address matters only to stored communications, one must also accept that the copyright holder must be able to accurately and definitively determine whether a particular infringement is a stored communication, or something else. Nothing in the statute appears to require such technical knowledge on the part of the third-party copyright holder, who very well may (as in this case) have no familiarity with the Internet at all, let alone be a customer of the ISP in question. Ellison's counsel attempted to treat the USENET communications at issue in this matter as stored communications. Another circuit has found that this is the correct characterization of USENET messages stored on a USENET server. ALS-Scan, 239 F.3d at 619. A trier of fact could find that an ISP requiring this degree of technical knowledge by the copyright holder constitutes an "ostrich defense" of willful ignorance — a defense inconsistent with the purposes of the statute. ALS-Scan, 239 F.3d at 625; accord, S. Rep. 105-190 at 20 (1998); see also Part I supra.

Whether complete failure to provide contact data would somehow still allow a service provider to claim the limitation on liability available under subsection (a) is not before this Court. What is instead at issue is whether, when the service provider provides inaccurate and deceptive contact information, the service provider has "reasonably implemented" its DMCA plan. Ellison's counsel relied upon AOL's statutorily imposed duty to designate an accurate e-mail address for contact, but AOL's designation was deceptive. Whether intentional or not, the deceptive contact information cannot be construed as consistent with a "reasonably implemented" policy for dealing with repeat infringers, because it acts to prevent the ISP from ever finding out about repeat infringers.

Neither acting inconsistently with the established policy and procedures nor eviscerating the ability of copyright holders to notify AOL of infringing materials evinces a "reasonable implementation" of the DMCA. The statute's system of limitations on liability is predicated upon direct and relatively informal notice to service providers of infringement by copyright holders. See ALS-Scan, 239 F.3d at 622-26; Napster I, 114 F. Supp. 2d at 918.

2. AOL's Admitted Failure to Terminate Any User as a Repeat Infringer Belies a "Reasonably Implemented" Policy.

Upon obtaining notice of infringements, the ISP is expected to act upon the notice. Subsection (i) requires ISPs to develop and reasonably implement "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," 17 U.S.C. 512(i)(1)(A).

One would expect that an ISP of AOL's size would have been forced to use this policy to terminate a number of users. Internet-based copyright piracy is not a cottage industry, but instead a major concern, as shown by the very existence of the DMCA. See A&M Records, Inc., v. Napster, Inc., 114 F. Supp.2d 896, 918 (N.D. Cal. 2000) ("Napster I") ("Plaintiffs… demonstrate that defendant had actual notice of direct infringement because the RIAA informed it of more than 12,000 infringing files…"); see also ALS-Scan, 239 F.3d at 621 (noting uncontroverted claim that over 10,000 copyrighted images were pirated in two USENET newsgroups in a matter of months). The court below correctly found that AOL, based on testimony of its own employee, had neither terminated any subscriber as a repeat infringer nor even bothered to define who might qualify as a repeat infringer.

[Elizabeth] Compton [AOL's agent for DMCA notification] testified that no individual has ever been terminated for being a repeat infringer…. 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."

Ellison, 189 F. Supp. 2d at 1066.

The district court, however, failed to construe this factual finding in plaintiff's favor. Brookside Assocs., 49 F.3d at 492-93. A reasonable trier of fact could infer that testimony that the policy was not defined and had never, in any event, resulted in termination of a single user is not a "reasonably implemented" policy, because it does not create a "realistic threat of having their Internet Access terminated if they repeatedly violate intellectual property rights." Ellison, 189 F. Supp. 2d at 1066. The foundation for this misinterpretation is the district court's confusion of the overriding requirements of 512(i)(1), that apply to "this section" (emphasis added), with the nature of the particular safe harbors provided in other parts of the DMCA:

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. 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.

Ellison, 189 F. Supp. 2d at 1066 (footnote omitted, discussed infra). This statement clearly confuses the requirement to block access to particular material found in 512(c) with the requirement to block access to particular users who repeatedly infringe material that is the subject of 512(i)(1)(A). If, as later held by the district court, 189 F. Supp.2d at 1066, the requirements of 512(c)(2) (discussed infra at 37 et seq.) really have no impact upon the meaning of 512(i), neither can one excuse the clear language that the overall policy must apply to users in 512(i)(1)(A) by reference to legislative history and safe-harbor provisions in 512(c) that concern particular infringements — not particular infringers.

The district court attempted to reconcile these concerns by explicitly separating the functions of each subsection of the DMCA.

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.

Ellison, 189 F. Supp. 2d at 1066 n.15; cf. 17 U.S.C. 512(n). This explanation, however, is unsatisfying. Section 512(i) is not a "separate requirement," as it applies to "this section" ( 512). No matter which safe harbor an ISP might wish to invoke, it must satisfy the requirements of 512(i). The evidence can be fairly interpreted to mean that AOL did not actively and reasonably implement any safe harbor, thus failing to satisfy 512(i).

Even if the statute's language remained unclear, the legislative history indicates that ISPs retain the responsibility to do something when they become aware of infringements:

[A] service provider need not monitor its service or affirmatively seek facts indicating infringing activity… in order to claim this limitation on liability (or, indeed any other limitation provided by the legislation). However, if the service provider becomes aware of a "red flag" from which infringing activity is apparent, it will lose the limitation of liability if it takes no action.

S. Rep. 105-190 at 44 (1998) (emphasis added). For the purposes of 512(i)(1)(A), it is less important how an ISP becomes aware of infringements than whether the ISP takes appropriate action once aware. The ISP does not need to actively seek out infringements by its subscribers, S. Rep. 105-190 at 52. However, the threat to repeat infringers that they may lose their access must be "realistic." Id. It defies logic, and contradicts the evidence, to consider a policy as providing a "realistic threat" that not once, across millions of users and in the face of substantial DMCA activity such as ALS-Scan, 239 F.3d at 620-21, resulted in termination of any subscriber as a repeat infringer. A jury should be allowed to consider whether or not this constitutes a "reasonably implemented" policy.

D. Because AOL's Policies and Procedures Were Not "Reasonably Implemented," It Cannot Avail Itself of Any DMCA Limitation on Liability.

AOL's policies and procedures, for the three independent reasons discussed supra, do not satisfy the requirements of 512(i). Thus, AOL may not avail itself of any DMCA limitation on liability. "The limitations on liability established by this section shall apply to a service provider only if the service provider…" 17 U.S.C. 512(i)(1) (emphasis added). Therefore, this Court does not need to determine whether USENET communications are "transitory" or "stored" communications when stored on an ISP's USENET server for 14 days or longer, but only whether a reasonable jury should be allowed to consider the factual question of whether AOL's policies and procedures for DMCA compliance were "reasonably implemented."

III. AOL DOES NOT QUALIFY FOR THE LIMITATION ON LIABILITY PROVIDED BY SECTION 512(a) CONCERNING TRANSITORY COMMUNICATIONS.

Even if AOL establishes general eligibility for the protections of the DMCA, the undisputed evidence it offers in support of its motion for summary judgment must demonstrate it meets all of the criteria for one of the five specific classes of DMCA limitations on liability. AOL claims USENET communications can be classified as "transitory," and that AOL satisfies all of the requirements for application of the "transitory communications" limitation provided for by 512(a). However, as the Fourth Circuit previously recognized in ALS-Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619 (4th Cir. 2001), USENET communications simply are not transitory as to the recipients of the messages, but instead must be treated as stored communications under 512(c).[note 7] The evidence in the record also fails to unequivocally demonstrate that AOL actually meets the other requirements of 512(a). Therefore, the district court's grant of summary judgment to AOL under 512(a) was improper and must be reversed. Reversal would also avoid creating a needless conflict with the Fourth Circuit on this issue.

A. Standard of Review.

Review of this issue is de novo on appeal. All facts must be construed in the favor of Ellison, the non-moving party. See complete discussion (same for all issues in this matter) infra at 3. The issue was ruled upon below at Ellison, 189 F. Supp. 2d at 1066-72.

B. The DMCA Distinguishes Between Stored and Transitory Communications.

Section 512(c) provides:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider…

17 U.S.C. 512(c)(1).[note 8] The language of 512(c) seems to include USENET newsgroups. The material is stored on the USENET server at the direction of users other than the ISP itself, in the form of individual messages, and the stored messages are accessible to anyone who has access to that particular USENET server. Accord, ALS-Scan, 239 F.3d at 623 (concerning the USENET newsgroups alt.als and alt.binaries.erotica.als, "[t]he liability-limiting provision applicable here, 17 U.S.C. 512(c), gives Internet service providers a safe harbor…"). AOL asserted, however, and the district court held, that a different safe harbor, 512(a), applies to the USENET newsgroup alt.binaries.e-book:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for 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 such transmitting, routing, or providing connections, if…

17 U.S.C. 512(a). The district court, without citation to or apparent consideration of the Fourth Circuit's analysis of the same issue in ALS-Scan, 619 F.3d at 623, held:

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."

Ellison, 189 F. Supp. 2d at 1070 (quoting 17 U.S.C. 512(a)).

C. AOL's USENET Services Are Not "Transitory Digital Network Communications."

Careful examination of the nature of the USENET will reveal that USENET servers do not provide "transitory" communications to an ISP's subscribers, but are instead stored communications. AOL's particular USENET system also falls outside other requirements of 512(a). Thus, the district court's conclusion that AOL could qualify for the transitory communications limitation on liability provided by 17 U.S.C. 512(a) was incorrect as a matter of law, rendering its grant of summary judgment to AOL on that ground improper. See Fed. R. Civ. P. 56(c).

The evidence in this case focuses the inquiry upon two specific aspects of the "transitory communications" limitation: selection of materials, 17 U.S.C. 512(a)(2), and storage of messages, 17 U.S.C. 512(a)(4). If either aspect of AOL's USENET services falls outside the statutory definitions, AOL may not claim this particular DMCA limitation on liability, because the conditions are conjunctive. 17 U.S.C. 512(a)(4) (ending in "and," making the five conditions conjunctive).

1. AOL's USENET Services Select Material, Inconsistent With 512(a)(2).

A service provider to claim the transitory communications limitation on liability only if:

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;…

17 U.S.C. 512(a)(2). AOL clearly engages in such selection. As AOL's own employees testified, news peering arrangements include consideration of exactly what newsgroups will be available. Rec. 2:146-48. AOL's employees explicitly consider content when determining whether to add a given newsgroup:

Q. And what do you base your decision to add a news group on?

A. I accept requests from AOL members via the news master screen name or via internal AOL news groups where they're able to post suggestions.

And I will also, occasionally, look at active files of other USENET news providers who make their active file available on the web. I'll look at their active file and compare it to ours to get a general idea of what might be new.

Rec. 2:98. This is consistent other testimony by an AOL employee:

Q. When AOL selects news groups or selects peers to enter into arrangements with, does it select them based on what AOL believes its members would be interested in?

A. That's one of the things, yes.

Q. What are some of the other criteria?

A. I'm sorry, can we clarify criteria for what?

Q. For selecting a peer.

A. A peer. So similar to the examples I gave earlier, if it routes the — if it transits the messages quicker, that's one criteria for selection. The other is that the peer has — carries groups that we do not yet carry. And most of those are local content, like the Japan example I gave earlier.

Rec. 2:145-47.

AOL admits that it selects newsgroups based on various criteria, including considerations of content, as outlined above. However, the district court held this willing inclusion and selection of newsgroups does not meet the definition of "selecting" material found in 512(a)(2). Although the court conceded AOL "decides which newsgroups its subscribers may access through its newsgroup service," Ellison, 189 F. Supp. 2d at 1071, the district court determined that interpreting this decision as selection of material "attempt[s] 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." Id. The Senate Judiciary Committee did not make such a distinction:

The Committee intends the term "selection of the material" in subsection (a)(2) to reflect an editorial function of determining what material to send, or the specific sources of material to place online (e.g., a radio station), rather than "an automatic technical process" of responding to a command or request, such as one from a user, an Internet location tool, or another network.

S. Rep. 105-190 at 42 (1998) (emphasis added).

The Judiciary Committee's definition is also much truer to the common-sense notion that a parent engages in "selection of material" for his or her child by blocking access to specific sources of inappropriate material, such as locking out "adult" channels on the cable TV box. Similarly, a librarian selects material when she determines which books will be in the library's collection, perhaps excluding books whose Dewey Decimal System call numbers fall in the range 340 to 347 because she does not intend to operate a law library. The plain meaning of "selection" mandates that AOL's newsgroup functions fail to qualify for protection under 512(a). The reference to "radio stations" in the Committee's definition is consistent with this conclusion; holding that selection relates only to particular messages is not.

The district court's rationale for refusing to accept this conclusion is implied at the end of its discussion of the selection of materials issue:

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.

Ellison, 189 F. Supp. 2d at 1071; see also Id. at 1071 n.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."). This conclusion assumes that USENET newsgroups can only be protected under the DMCA if they are treated as "transitory communications" under 512(a). However, as the Fourth Circuit has previously held, USENET newsgroups can instead be treated as stored communications. ALS-Scan, 239 F.3d at 622-24. Thus, the lower court's reticence to treat AOL's decisions regarding which newsgroups to offer subscribers as "selection of material" because such treatment might eliminate all protection of ISPs under the DMCA for USENET communications is unfounded. All AOL need do to claim DMCA limitations on liability for USENET communications is to qualify for the stored-communications limitation in 512(c). That it cannot do so on these facts is an entirely separate question. See Part III.D infra.

2. AOL's USENET Services Store Material, Inconsistent With 512(a)(4).

The DMCA uses the terms "transitory" and "transient" without explicit definition, apparently meaning these terms require that:

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…

17 U.S.C. 512(a)(4). USENET services simply do not meet these requirements. Although one aspect of the USENET — the process known as "peering" — might meet the definition, the functional aspects that allow users to post and retrieve messages over an extended period of time do not.

Each person who accesses a USENET server is accessing one on which she has an account. The material travels between servers in a process known as "peering." Peering is an explicit agreement between two news providers through which they establish links between their news servers. When a new message is posted on a given news server, it sends a signal to all of the news servers with which it has peering agreements, describing the new message. The receiving peers then determine whether they want to receive that message. Rec. 1:52; cf. Rec. 2:93-98, 99-103, 107-12; Ellison, 189 F. Supp. 2d at 1053-54. In one sense, this is an automatic process, as no user or operator must tell a news server "it's time to do your peering exchange now." In another sense, it is not: peering arrangements are negotiated between ISPs, by human beings. See Palmer dep. at Rec. 2:92, 93.

The paradigmatic example of a "transient or intermediate communication" is, as the Senate Judiciary Committee makes clear, e-mail:

The Committee intends subsection (a)(4) to cover copies made of material while it is en route to its destination, such as copies made on a router or mail server, storage of a web page in the course of transmission to a specific user, store and forward functions, and other transient copies that occur en route. The term ''ordinarily accessible'' is intended to encompass stored material that is routinely accessible to third parties.…[T]he term does not include copies made by a service provider for the purpose of making the material available to other users.

S. Rep. 105-190 at 42 (1998) (emphasis added). Although neither the statute itself nor any part of the legislative history is entirely clear, reading the two together indicates that "transient and intermediate storage" of a communication assumes the message already has an identifiable recipient at the time of its sending. Two examples illustrate this distinction.

First, Sally, an Internet user who does not have an AOL account, wants to read AOL's home page. The chain of communications would look something like this:

Sally's machine

("please send me http://www.aol.com")

to

Internet router(s) and server(s)

("please send Sally a copy of http://www.aol.com")

to

www.aol.com

("send Sally a copy of this webpage")

to

Internet router(s) and server(s)

("send Sally this data, a copy of www.aol.com")

to

Sally's machine

("here is a local copy of www.aol.com to read")

Section 512(a) concerns the two steps labeled "Internet router(s) and server(s)," because they do exactly what is described in 512(a)(4). However, 512(a) does not concern itself with Sally herself, as she is the ultimate user, or with the material stored at www.aol.com, which is a stored communication covered by 512(c) because it is accessible to all persons who request it.

Communication using the USENET is slightly more complex than the World Wide Web. Unlike the Web, a given USENET message generally exists on more than one server simultaneously. A sample transaction might look like this:

Long John Silver's machine

("upload this binary file to alt.binaries.e-book as an attachment")

to

ISP's routers

("store Long John Silver's file on the USENET server")

to

ISP's USENET server

("store Long John Silver's file and exchange it with peers")

to

AOL's USENET server

("store Long John Silver's file received from peers")

This is only half of the communication process, though, as nobody has yet read Long John Silver's message. Reynard, an AOL subscriber, sees Long John Silver's message and wants to read the contents:

Reynard's machine

("send me a copy of Long John Silver's message")

to

AOL's routers

("send a copy of Long John Silver's message to Reynard")

to

AOL's USENET server

("send a copy of Long John Silver's message to Reynard")

to

AOL's routers

("send this copy of Long John Silver's message to Reynard")

to

Reynard's machine

("here is a local copy of Long John Silver's message to read")

See Rec. 1:51, 52-53; 2:145-50; Ellison, 189 F. Supp. 2d at 1053-54. In this transaction, 512(a) concerns itself with the routers in question, which maintain only temporary copies of messages between specific addressees. However, anyone with an AOL account can read the message on AOL's USENET server; it therefore falls not under 512(a), but 512(c). See Rec. 1:46-47, 51-54; Rec. 2:160-62; ALS-Scan, 239 F.3d at 622-24 (applying 512(c) to USENET servers). This is consistent with later comments by the Senate Judiciary Committee when considering the DMCA:

[I]n the course of moving packets of information across digital online networks, many intermediate and transient copies of the information may be made in routers and servers along the way. Such copies are created as an automatic consequence of the transmission process. In this context, "intermediate and transient" refers to such a copy made and/or stored in the course of a transmission, not a copy made or stored at the points where the transmission is initiated or received.

S. Rep. 105-190 at 43 (1998) (emphasis added).

The district court, however, focused on the "codification of Netcom" language in another part of the legislative history, H.R. Rep. 105-551(I) at 24 (1998), citing Religious Technology Center v. Netcom On-Line Communication Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ("Netcom"). Ellison, 189 F. Supp. 2d at 1069-70. This led to an unnecessary consideration of "how long" something must be in storage before it is no longer "intermediate or transient":

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.

Id. at 1070. Ellison respectfully suggests this is entirely the wrong inquiry. The district court emphasized the House Report's language concerning what became 512(a)(4), claiming the statutory language "is drawn from the facts of the Netcom case, and is intended to codify this implicit limitation in the Netcom holding." Ellison, 189 F. Supp. 2d at 1070, quoting H.R. Rep. 105-551(I) at 24 (1998) (emphasis removed for clarity). However, if the correct inquiry is based on how close the storage period is to eleven days, Congress could have said just that. It did not. Instead, it vaguely phrased the inquiry as "for a longer period than reasonably necessary for the transmission." Congress' use of such indistinct language makes sense for two reasons.

First, with the rapidly advancing technology of the Internet, the period of time "reasonably necessary for the transmission" will undoubtedly change. The DMCA is structured by the ISP's perception of the function of a communication, not by the particular technological limitations of methods used to implement that function.

Second, the reality of the Internet is that it is a method for people to exchange information via computer networks. People do go on vacation, sometimes for more than two weeks. Thus, establishing a strict time limit on the latency of material in "transient or intermediate storage" might well defeat the intent of 512(a) in an unpredictable manner. Consider, for example, an infringing message sent by e-mail to an individual who is spending a year overseas in the Peace Corps, and cannot access his e-mail server for months at a time. Under the district court's reasoning, a two- or three-month latency on the e-mail server might be sufficient "to distinguish the two cases," thereby eliminating the ISP's ability to invoke 512(a) in the face of the Senate Judiciary Committee's specific inclusion of e-mail in the scope of 512(a).

Instead, the proper inquiry — as required by the statutory language — is how long is "reasonably necessary" to route a specific transmission. As the sample transmissions noted above make clear, the USENET servers are not involved in "routing transmissions," but in storing them for later retrieval by other than the "anticipated recipient" — the USENET newsgroup, as messages are addressed to newsgroups, not individuals. That the latency period for messages on a USENET server is selected by the server's operator and based upon the estimated storage requirements — not the amount of time necessary for the message to be transmitted, or even the amount of time that it is believed the message will be useful to unspecified potentially interested readers — reinforces this conclusion. Rec. 1:46-47; S. Rep. 105-190 at 41 (1998) ("Subsections [512](a)(1) through (5) limit the range of activities that qualify under this subsection to ones in which a service provider plays the role of a 'conduit' for the communications of others").

D. AOL's USENET Servers Do Not Qualify for the DMCA's Safe Harbor for Stored Communications.

Although the district court did not rule upon AOL's alternate assertion of the stored communications limitation provided in 17 U.S.C. 512(c), Ellison, 189 F. Supp. 2d at 1072 n.22, even a cursory examination of the conditions for ISP eligibility for that safe harbor reveals that AOL's USENET server system fails to qualify.

Perhaps easiest to understand is AOL's failure to meet even the basic eligibility conditions established in 512(c). As discussed supra, AOL had not properly designated an accurate means of contacting its agent for notification in the Library of Congress' database at the time of the infringements, or even at the time Ellison's counsel Valada attempted to determine who that agent was by referring to the database. The district court correctly noted that this consideration might present significant difficulties for AOL in its evaluation of AOL's motion under 512(c). Ellison, 189 F. Supp. 2d at 1065 n.14. Ellison submits this procedural lapse is an absolute bar to providing AOL with the benefit of the DMCA's limitations on liability for stored communications. 17 U.S.C. 512(c)(2).

Even aside from its procedural default, AOL's USENET services do not qualify for any limitation on liability for stored communications because AOL had the requisite knowledge to remove the communications, but did not do so in an "expeditious" fashion. An ISP may claim the stored communications limitation on liability only if it:

(i)   does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii)  in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material…

17 U.S.C. 512(c)(1)(A). However, AOL both had actual knowledge of the infringements and was aware of facts or circumstances from which infringing activity was apparent.

Shortly after Robertson posted the infringing messages, John Miller — an AOL subscriber — contacted AOL's customer support representatives and complained about infringements, specifically pointing them to alt.binaries.e-book. Rec. 1:121-22. Further, Ellison's counsel's notification to AOL — which it did not receive through its own fault, Ellison, 189 F. Supp. 2d at 1058 — was even more specific. AOL thus knew that the infringing material existed on its USENET servers, which alone prevents application of the limitation on liability in 512(a).

Further, AOL was aware of "facts or circumstances from which the infringement is apparent." AOL's employee responsible for managing newsgroups admitted to adding the alt.binaries.e-book in response to customer requests after reviewing it to see whether it would be appropriate. Rec. 2:25. Even a cursory glance at the headers in the newsgroup — the default view when one visits a newsgroup, regardless of the particular software used to access the newsgroup — would have demonstrated copyright infringement on a scale comparable to that in the Napster matter. Even if Mr. Miller's conversations with AOL's customer support personnel did not provide actual knowledge of the infringements, they certainly provided knowledge that made the infringements apparent. At no time prior to the filing of this matter did AOL act to remove or block access to the infringing material. If it had, Mr. Miller would not have been able to retrieve the infringing material from AOL's USENET servers.

AOL is thus unable to invoke the DMCA limitations on liability for stored communications provided for in 512(c).

E. AOL Does Not Qualify for Any DMCA Limitation on Liability.

The DMCA requires that an ISP that wishes to invoke one of its limitations on liability must demonstrate the infringing communication falls within one of several substantive classes. AOL asserted, and the district court agreed, that the USENET communications at issue in this matter qualify as "transitory digital network communications" under 512(a). As demonstrated above, this is not correct; USENET communications must be treated as "stored communications" under 512(c). Accord, ALS-Scan, 239 F.3d at 622-25. AOL also claimed eligibility for the "stored communications" limitation on liability, although the district court did not rely on this argument in its decision. On the facts of this matter, AOL's USENET services did not meet the requirements for that limitation at the time of the infringements. The district court's holding that AOL is entitled to limitations on liability under any section of the DMCA must therefore be reversed.

CONCLUSION

Ellison requests this Court reverse the determinations of the district court that AOL may not be found liable for vicarious copyright infringement, that AOL's policies and procedures satisfy the requirements of 17 U.S.C. 512(i), and that AOL's provision of USENET services to its members qualifies for the limitation on liability provided by 17 U.S.C. 512(a). If necessary, Ellison also requests this Court hold AOL may not avail itself of any limitation on liability afforded by 17 U.S.C. 512(c).

Respectfully submitted this twenty-third day of August, 2002.
John H. Carmichael
Brigit K. Connelly
Charles E. Petit
Kulik, Gottesman, and Mouton, LLP Law Office of Charles E. Petit
Attorneys for Plaintiff and Appellant

Notes

  1. Ellison had voluntarily withdrawn his trademark claims (Rec. 1:213).
  2. For the Court's convenience in light of the sealed portion of the record, Ellison cites to the published decision below for those factual findings he believes are accurately and fully stated in the opinion.
  3. The district court found that but for a limitation on liability under the DMCA, Ellison would have been entitled to a jury trial on contributory infringement. Ellison, 189 F. Supp. 2d at 1057-60.
  4. Volume 2 of the record excerpts has been filed under seal. Rec. 2:1.
  5. Defendant AOL also asserted that the stored communications provisions of the DMCA, 17 U.S.C. 512(c), also apply. However, the district court explicitly did not rule upon this assertion. Ellison, 189 F. Supp.2d at 1072 n.22.
  6. Ironically, a corporate affiliate of defendant AOL is a member of one of organizations that pursued Napster II, claiming that the DMCA does not protect a provider of a service devoted to piracy from liability under circumstances disturbingly similar to those in this matter. See Part III infra.
  7. Apart from 512(a) and (c), AOL has not raised a defense under any other subsection of the DMCA; neither does any subsection not discussed in Part II supra apply to this matter.
  8. The complete text of 512(c) may be found in the Statutory Addendum to this brief at pages A-4 through A-6 inclusive.

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