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

Amici Curaie Brief of
The Business Software Alliance
Urging Reversal

TABLE OF CONTENTS

INTERESTS OF AMICI

ARGUMENT

I.      The District Court Erred in Holding That Section 512(i) Does Not Require Service Providers Actually to Implement a Repeat Infringer Termination Policy in Order to Qualify for the Safe Harbors of Sections 512(a)–(d).

A. The District Court Did Not Follow the Plain Language of Section 512(i).

B. The District Court's Reliance on Legislative History to Override the Plain Language of the Statute Was Misplaced.

II.    The District Court Erred in Holding That Storing and Providing Access to Infringing Material for Fourteen Days Falls Within the "Mere Conduit" Safe Harbor of Section 512(a).

A. The District Court Did Not Follow the Plain Language of Section 512(a).

B. The District Court Misinterpreted the Legislative History.

CONCLUSION


STATEMENT OF INTEREST

The members of the Business Software Alliance ("BSA") have a vital interest in the proper, balanced interpretation and application of the safe harbor provisions of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. 512, both as copyright holders that make use of the DMCA in responding to infringements of copyrights to their software programs and, in some cases, as service providers that may benefit from the liability protections embodied in those safe harbors. [note 1] BSA urges this Court to reverse certain holdings of the district court interpreting Sections 512(a) and (i) of the DMCA.

Since 1988, the BSA has been the voice of the world's software, hardware, and Internet sectors before governments and with consumers in the international marketplace. Its members represent the fastest growing industry in the world. BSA educates computer users on software copyrights and cyber security, advocates public policy that fosters innovation and expands trade opportunities, and fights software piracy. BSA members include Autodesk, Borland, CNC Software/Mastercam, IBM, Intuit, Macromedia, Microsoft, Sybase, Symantec and Unigraphic Solutions (an EDS company), as well as other companies. [note 2]

The BSA was formed out of recognition that preventing the unlawful reproduction and distribution of software constitutes one of the fundamental economic imperatives of building and maintaining a healthy U.S. software industry. That struggle is an ongoing one, and losses attributable to such infringing activities remain very substantial, accounting for billions of dollars annually. [note 3]

An increasing percentage of these losses are due to unauthorized reproduction and distribution over online networks, including such activities that take place within the USENET Internet service. BSA and its members rely on Section 512 of the DMCA as a key element in their efforts to reduce the losses associated with Internet-based infringement by working closely with service providers to block access to infringing material and activity. The BSA actively monitors infringing activity occurring on the Internet, including within USENET groups, and relies upon the provisions of the DMCA to send notices to protect its members' intellectual property against online infringement.

ARGUMENT

This Court reviews the district court's grant of summary judgment de novo. Suzuki Motor Corp. v. Consumers Union of U.S., Inc., 292 F.3d 1192, 1198-99 (9th Cir. 2002). In doing so, this Court must "determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Id. at 1199; Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). In this case, the district court made two significant errors of law in granting summary judgment to the defendant, America Online ("AOL").

First, the district court erred in holding that Section 512(i) of the DMCA did not require AOL to implement its repeat infringer termination policy in order to qualify for any of the liability limitations set forth in Sections 512(a)–(d). Section 512(i) expressly provides that these liability limitations "shall apply… only if the service provider 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… of subscribers… who are repeat infringers." 17 U.S.C. 512(i) (emphasis added). In holding that AOL could satisfy this provision by merely adopting a repeat infringer termination policy and notifying its subscribers of that policy—without actually having "implemented" that policy—the district court failed to follow the plain language of Section 512(i). Instead, the court should have made a determination as to whether AOL had in fact implemented its repeat infringer policy, and done so reasonably, and gone further with its DMCA analysis only if this precondition was met.

Even if the court had properly required and found that AOL had reasonably implemented its policy, the district court further disregarded the DMCA's plain language in holding that AOL's storage of infringing material on its servers for fourteen days for the purpose of allowing any AOL user to search for and retrieve such postings fell under Section 512(a) rather than 512(c) of the DMCA. Section 512(a) by its terms applies only to acts of "transmitting, routing, or providing connections for" potentially infringing material, and to the "intermediate and transient storage" of such material if such storage takes place "in the course of" a transmission. Id. 512(a). Moreover, Section 512(a)(4) expressly excludes the storage of copies that are made "ordinarily accessible to anyone other than anticipated recipients" or are stored "for a longer period than is reasonably necessary for the transmission, routing, or provision of connections" to such anticipated recipients. Id.

Under the statute's plain language, Section 512(a) applies to copies that are incidental to end-to-end transmissions. It does not apply to copies such as those AOL stored on its servers in order to allow millions of AOL users—none of whom were designated by the sending party—to search for and retrieve such copies in the same way that they would search for material on any Internet web site. Such activities fall instead under Section 512(c), which ensures that copyright holders have the opportunity to limit the damage caused by such availability and retrieval through specified notice-and-takedown procedures. The district court erred in failing to follow the plain language of the statute, instead looking to the DMCA's legislative history. It then compounded this error by misinterpreting that legislative history, which in any event confirms that Congress intended a service provider's storage of infringing material in order to make such material available for viewing and download by its subscribers to fall under Section 512(c) of the DMCA rather than Section 512(a).

I.      The District Court Erred in Holding That Section 512(i) Does Not Require Service Providers Actually to Implement a Repeat Infringer Termination Policy in Order to Qualify for the Safe Harbors of Sections 512(a)–(d).

The DMCA was enacted to address some of the special challenges that arise in addressing copyright infringement in the online environment. The statute reflects an effort by Congress to draw a reasonable balance between the legitimate interests of copyright holders in protecting their works from unauthorized copying and distribution and the need to avoid imposing undue burdens on online service providers, who must be given considerable flexibility in their operations in order to enable online networks to operate effectively. Under the statutory regime, service providers are entitled to limitations on their liability for the infringing activities of their users if—and only if—they satisfy certain requirements. Those requirements are limited in scope but are critically important to ensuring that providers work with copyright holders to mitigate the damage caused by the infringing activities of users. The district court's decision in this case disregarded the carefully crafted language of the statute and, as a result, upset the balance of interests that Congress created.

A. The District Court Did Not Follow the Plain Language of Section 512(i).

Sections 512(a)–(d) of the DMCA provide limitations on liability—or "safe harbors"—to online service providers engaged in certain activities and under certain conditions. Service providers gain entry to these safe harbors when they satisfy the threshold "Conditions of Eligibility" in Section 512(i), which provides in relevant part:

The limitations on liability established by this section [i.e., Section 512] 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… who are repeat infringers…

17 U.S.C. 512(i)(1) (emphasis added). Thus, Section 512(i) has three distinct requirements. First, a service provider must have "adopted" a repeat infringer termination policy. Second, it must have "reasonably implemented" that policy. And third, it must "inform[] subscribers" of that policy. See Perfect 10, Inc. v. Cybernet Ventures, Inc., No. CV 01-2595LGB(SHX), 2002 WL 731721, at *20 (C.D. Cal. Apr. 22, 2002).

The district court's decision in this case read the second requirement out of the statute, thereby excusing service providers from "reasonably implement[ing]" their repeat infringer termination policies. Instead, the court held that Section 512(i) requires nothing more from service providers than communicating to subscribers "a mere threat" to terminate repeat infringers. Ellison v. Robertson, 189 F. Supp. 2d 1051, 1066 n.15 (C.D. Cal. 2002). In so doing, the court failed to follow the well-established rule of statutory construction that "[s]tatutes must be interpreted, if possible, to give each word some operative effect." Walters v. Metropolitan Educ. Enter., Inc., 519 U.S. 202, 209 (1997); see also In re Orange County, 262 F.3d 1014, 1019 (9th Cir. 2001) (same); United States v. Robles-Rodriguez, 281 F.3d 900, 904 (9th Cir. 2002) ("It is a basic rule of statutory construction that '[o]ne provision of a statute should not be interpreted in a manner that renders other sections of the same statute inconsistent, meaningless, or superfluous.'") (quoting United States v. Fiorillo, 186 F.3d 1136, 1153 (9th Cir. 1999)). Another district court in this Circuit has more recently recognized that the words "reasonably implemented" in Section 512(i) must be given some meaning. See Perfect 10, 2002 WL 731721, at *22 (interpreting Section 512(i) to hold that, "[w]hen confronted with 'appropriate circumstances,'… service providers should reasonably implement termination").

Because the district court did not follow the express requirement of Section 512(i) that service providers "reasonably implement" a repeat infringer termination policy in order to qualify for the safe harbors of Sections 512(a)–(d), the court's holding on that issue should be reversed.

B. The District Court's Reliance on Legislative History to Override the Plain Language of the Statute Was Misplaced.

In holding that Section 512(i) requires nothing more than "a mere threat" by service providers to terminate repeat infringers, the district court relied primarily on the following passage from a Report issued by the House Commerce Committee:

[T]he Committee does not intend this provision [i.e., Section 512(i)] to undermine the principles of new subsection (l) or the knowledge standard of new subsection (c) by suggesting that a provider must investigate possible infringements, monitor its service, or make difficult judgments as to whether conduct is or is not infringing. However, those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing access.

See 189 F. Supp. 2d at 1065 (quoting H.R. Rep. No. 105-551(II), at 61 (July 22, 1998)) (emphasis added). The district court's reliance on this passage was incorrect in several respects.

First, it is well established that courts should not look to legislative history where the statutory text is clear, and should never rely on legislative history to override the statute's plain language. In this case, while people may fairly disagree over what constitutes "reasonable" implementation under Section 512(i), there can be no dispute that Section 512(i) does in fact require that service providers have "implemented" a repeat infringer termination policy in order to qualify for the statutory safe harbors. See, e.g., Costar Group, Inc. v. Loopnet, Inc., 164 F. Supp. 2d 688, 703-04 (D. Md. 2001) (denying service provider's motion for summary judgment due to factual dispute over whether provider's implementation of repeat infringer termination policy under 512(i) was "reasonable and effective"). Whatever "reasonably implement" may mean in this context, it does not mean "do nothing." As this Court has often held, "'if the language of a statute is clear and there is no ambiguity, then there is no need to 'interpret' the language by resorting to the legislative history or other extrinsic aids.'" United States v. Neville, 985 F.2d 992, 995 (9th Cir. 1993) (quoting Church of Scientology of California v. U.S. Dept. of Justice, 612 F.2d 417, 421 (9th Cir. 1979)); accord Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) ("'[W]e do not resort to legislative history to cloud statutory text that is clear.'") (quoting Ratzlaf v. United States, 510 U.S. 135, 147-48 (1994)). Thus, the district court's reliance on legislative history to override the plain, unambiguous language of Section 512(i) was improper.

Second, the legislative history quoted by the district court makes clear that Congress did in fact intend Section 512(i) to require service providers actually to implement a repeat infringer termination policy in order to qualify for the safe harbors of Sections 512(a)–(d). As the last sentence of the quoted language reflects, Congress intended that "those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access." S. Rep. No. 105-190, at 52 (May 11, 1998) (emphasis added). Under the district court's construction of Section 512(i), the threat of termination need not be "realistic;" rather, it need only be "mere." A threat is not "realistic," however, if there is no risk that it will be acted upon—that is, if the threat can always remain (in the court's words) a "mere" threat. The court's holding plainly does not require service providers to do anything to implement a repeat infringer termination policy.

The district court also erred in reasoning that the quoted legislative history reflects some kind of Congressional ambivalence over the "reasonably implemented" requirement of Section 512(i). 189 F. Supp. 2d at 1064-66. This passage merely expresses Congress's intention that Section 512(i) not be interpreted in a manner that would conflict with Section 512(m). That section provides in relevant part that operation of the safe harbors should not be made conditional upon "a service provider monitoring its service or affirmatively seeking facts indicating infringing activity." 17 U.S.C. 512(m). This provision was added to allay concerns that Section 512 might be interpreted in a manner that would require service providers affirmatively to seek out infringing activity or to monitor every communication passing over their networks for evidence of such activity.

There is no inherent conflict, however, between relieving service providers of an obligation to monitor communications over their systems and requiring them reasonably to implement a repeat infringer termination policy. Active monitoring is hardly the only manner through which a service provider could become aware of repeat infringement by its users. For example, under the district court's holding, service providers could willfully ignore evidence presented to them by rights holders and turn a blind eye to repeated, even flagrant, acts of infringement and still satisfy the eligibility conditions set forth in Section 512(i). Such a result would undermine BSA's antipiracy efforts along with those of other copyright holders and their representatives, clearly contravening Congress's intent. [note 4]

Nor was the district court correct in fearing that having service providers implement policies for terminating repeat infringers would "indirectly import[]" the notice-and-takedown provision of Section 512(c) to Section 512(a). 189 F. Supp. 2d at 1066 n.15. This conclusion confuses the very different mandates and purposes of Sections 512(c) and (i). Section 512(i) requires service providers to implement a termination policy as to "subscribers and account holders," but does not require service providers to take any action with respect to infringing material. Sections 512(b), (c), and (d), by contrast, require service providers "expeditiously to remove, or disable access to," infringing material, but impose no duty with respect to treatment of subscribers or account holders. Thus, one provision addresses infringing material, while the other addresses users who engage in infringing activities. Requiring service providers to "reasonably implement" a repeat infringer termination policy under Section 512(i)—as the statutory text plainly requires and as Congress manifestly intended—does not impose any obligation to take down content in response to notices of the type provided for under Sections 512(b)–(d).

Far from conflicting with the other provisions of the statute, the literal meaning of Section 512(i) that the district court rejected is critical to a full realization of the congressional purpose underlying the statute. In enacting the DMCA, Congress sought to relieve service providers of the burdens that would flow from being subject to unrestricted liability for the infringing activities of their users, but it also sought to create statutory incentives for service providers to take those steps—such as implementing policies regarding repeat infringers—that they are uniquely positioned to take and can take with limited cost and disruption to their overall services. To ensure that service providers have sufficient flexibility in implementing such policies, Congress built safeguards directly into the statutory text by providing that such implementation need only be "reasonabl[e]" and that termination of repeat infringers need occur only in "appropriate circumstances."

In sum, because the district court erred in holding that Section 512(i) does not require service providers actually to implement a repeat infringer termination policy, its summary judgment ruling on this issue should be reversed.

II.    The District Court Erred in Holding That Storing and Providing Access to Infringing Material for Fourteen Days Falls Within the "Mere Conduit" Safe Harbor of Section 512(a).

After concluding (erroneously) that AOL met the threshold safe harbor requirements under Section 512(i), the district court next considered whether, for purposes of the activities at issue in this case, AOL was subject to the notice-and-takedown provisions of Section 512(c) of the statute instead of the "mere conduit" safe harbor of Section 512(a). [note 5] The district court's conclusion that AOL's storage of infringing material on its servers for fourteen days—during which time tens of millions of AOL users had unlimited access to download this material—fell under Section 512(a) rather than Section 512(c) failed to follow the plain language of the statute.

A. The District Court Did Not Follow the Plain Language of Section 512(a).

Section 512(a) applies to service providers only to the extent they engage in "transmitting, routing, or providing connections for" infringing material. 17 U.S.C. 512(a). Where service providers also store copies of such material, their activities fall outside the scope of Section 512(a) unless these copies are limited to the "intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections." Id. Thus, where a service provider stores copies of infringing material for any purpose other than the onward transmission of that material to the anticipated recipients, these activities fall outside the scope of Section 512(a). If other types of storage are to qualify for any safe harbors, they must do so under Section 512(b), (c), or (d).

Section 512(a)(4) further limits the scope of the Section 512(a) safe harbor by specifying that it will apply only if:

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

Id. 512(a)(4). Thus, where a service provider either: (i) makes infringing material "ordinarily accessible to anyone other than anticipated recipients"; or (ii) maintains a copy "for a longer period than is reasonably necessary" to transmit the material to these anticipated recipients, the provider's activities are excluded from the scope of Section 512(a).

As the court below observed, "[t]he question presented by this case is which subsection [of Section 512] applies to the function performed by AOL when it stores USENET messages in order to provide USENET access to users." 189 F. Supp. 2d at 1068. The court was not considering, and BSA does not dispute, that AOL could qualify for Section 512(a) protection for transient copies of the posting made within its system as a technical by-product of re-transmitting USENET postings to other USENET peers, provided that these copies were not accessible to anyone other than the operators of the USENET peers that were the intended recipients of the re-transmissions. Instead, what the court had under consideration was the proper status of the copies of the posting that AOL stored for the purpose of allowing unlimited access to its users. Contrary to the district court's characterization of Section 512(a) as "ambiguous," id., the unequivocal statutory language makes it clear that storage of copies for this additional purpose falls outside the scope of Section 512(a).

First, AOL's storage of USENET postings for the purpose of providing access did not constitute "intermediate and transient storage… in the course of… transmitting, routing, or providing connections." 17 U.S.C. 512(a) (emphasis added). The record demonstrates that AOL stored copies of USENET postings on its servers for fourteen days for the specific purpose of making this material accessible to the search requests of AOL users—not for the purpose of transmitting this material to other USENET peers. [note 6] These stored copies were no longer "in the course of" being transmitted anywhere. Once AOL stored this material for purposes other than mere transmission, routing, or connection, its activity fell outside the limited scope of Section 512(a).

AOL's storage also fell outside Section 512(a) because it made the USENET postings "ordinarily accessible to [users] other than anticipated recipients." Id. 512(a)(4). As the district court observed, "[i]t is clear that AOL did not select certain recipients for th[is] material. Rather, it was accessible to any AOL user through AOL's USENET newsgroup server." 189 F. Supp. 2d at 1071. Indeed, the USENET system does not limit access to a pre-defined group of recipients, "anticipated" or otherwise. Rather, USENET postings are accessible to anyone who can connect to a USENET server—which in practice means anyone with Internet access. See Declaration of Dennis McClain-Furmanski (Exhibit 208), 17. Thus, transmission of the infringing material at issue was not limited to "anticipated recipients."

It cannot seriously be maintained that the universe of Internet users who can access USENET postings qualify as "anticipated recipients" within the meaning of Section 512(a)(4), simply because a person posting to a USENET group anticipates or desires that some unknown number of people will access, view, and download the posted material. To have some meaning, this statutory text must impose some limits. It does so by embracing point-to-point transmissions and other "push" scenarios where the content provider designates the recipients of the material—not where, as here, the recipients themselves decide whether or not to download, or "pull," the material to their own computers. As the district court noted, certain functions "such as hosting a web site or chatroom fall under the scope of subsection (c)" rather than (a). 189 F. Supp. 2d at 1068. Yet web sites and chatrooms are exactly the same as the USENET in this regard—the party posting material clearly anticipates that people will search for and view or download their postings, but cannot know at the time of posting which of the millions of Internet users will in fact do so and "pull" their content.

Interpreting "anticipated recipients" in Section 512(a)(4) to encompass all Internet users would effectively bring all online content within the phrase "ordinarily accessible to… anticipated recipients." Under this interpretation, any service provider hosting a web site that allows user postings but deletes them within at least fourteen days could argue that it need not observe the notice-and-takedown provisions of Section 512(c) because copies of infringing material posted to its site are merely incidental to a transmission by the posting party to each and every user that visits and downloads material. This would render Section 512(a)(4) meaningless, for it would not exclude any online content from the scope of Section 512(a). As this Circuit has repeatedly held, "[i]t is a basic rule of statutory construction that '[o]ne provision of a statute should not be interpreted in a manner that renders other sections of the same statute inconsistent, meaningless, or superfluous.'" Robles-Rodriguez, 281 F.3d at 904.

The plain language of Section 512(a)(4) on this point is reinforced by Section 512(k). That subsection defines the term "service provider" for purposes of Section 512(a) as "an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing." 17 U.S.C. 512(k)(1). [note 7] In this case, because it was the recipients of the infringing USENET posting at issue—and not the user who originally posted the material—who specified the points to which this material was ultimately re-transmitted, AOL was not acting as a "service provider" within the narrower meaning of Section 512(a) with respect to the activities at issue, as opposed to the broader definition of "service provider" applicable to Sections 512(b)–(d).

This is not to suggest that there was no safe harbor available to AOL. [note 8] Instead, the district court should have ruled that AOL's storage of the posting for access by its users fell under Section 512(c), which offers a safe harbor for service providers that engage in 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." Id. 512(c)(1). See, e.g., ALS Scan, Inc. v. Remarq Communities, Inc., 239 F.3d 619, 620, 622-23 (4th Cir. 2001) (applying Section 512(c) safe harbor to service provider that stored newsgroup postings for between eight and ten days for the purpose of providing access to these postings).

Had the district court properly classified AOL's storage of the posting for access by its users as subject to Section 512(c), AOL would still have had the ability to limit its liability, but would have come within the notice-and-takedown provisions of Section 512(c), which require service providers "expeditiously to remove, or disable access to," infringing material upon notice of the infringement. 17 U.S.C. 512(c)(1)(C). Congress did not include a notice-and-takedown provision in Section 512(a), presumably because it realized that service providers engaging in Section 512(a) activities—namely, the onward transmission of online material—would not retain copies of infringing material in their networks long enough to enable them to remove or block access to such material in response to notice from a copyright holder. Nor would they make them generally accessible to search requests by internet users, raising the prospect of geometrically increasing harm the longer the copy is stored. But where notice-and-takedown is feasible and will prevent such broader harm—with respect to service provider activities falling under Section 512(b), (c), and (d)—Congress made the operation of these safe harbors conditional upon satisfaction of their notice-and-takedown provisions. See id.; see also id. 512(b)(2)(E); (d)(3).

Despite the unequivocal statutory language that clearly placed AOL's storage of the posting for access by its users outside the scope of Section 512(a), the district court, focusing almost entirely on the words "intermediate and transient storage" in Section 512(a), concluded that these words were "ambiguous" and therefore looked to the legislative history. See 189 F. Supp. 2d at 1066-72. This Court has repeatedly held that courts "must interpret the [statutory] language as it is written, 'giv[ing] effect, if possible, to every clause and word of a statute.'" In re Orange County, 262 F.3d 1014,1019 (9th Cir. 2001) (quoting Williams v. Taylor, 529 U.S. 362, 404 (2000)). Here, the district court failed to give any effect to several key provisions of Section 512(a). Had it done so, the court would have concluded that AOL's storage of infringing material in order to provide its users with access to this material fell outside the scope of Section 512(a), without proceeding to the legislative history. See Neville, 985 F.2d at 995 (9th Cir. 1993) ("'[I]f the language of a statute is clear and there is no ambiguity, then there is no need to 'interpret' the language by resorting to the legislative history or other extrinsic aids.'") (quoting Church of Scientology of California, 612 F.2d at 421).

Because the plain language of the statute clearly excludes AOL's activities from the scope of Section 512(a), the district court's holding should be reversed.

B. The District Court Misinterpreted the Legislative History.

As a consequence of its erroneous determination that the text of Section 512(a) was ambiguous, the district court went on to consider the legislative history, and from that, concluded that AOL's actions fell exclusively under Section 512(a). Even if the court's decision to consider the legislative history had been correct, that history provides insufficient basis for the district court's holding. The legislative history strongly supports the statute's plain language that Section 512(a) applies only to transmission—and to the storage of material only where it is incidental to a transmission—but not, as in this case, where a service provider stores copies of material for the purpose of making that material accessible to its subscribers. Thus, Congress stated:

The Committee intends [Section 512(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.

H.R. Rep. No. 105-551(II), p. 51 (July 22, 1998) (emphasis added). This passage makes clear that different actions by a service provider, and different copies of infringing material, may fall under different safe harbors depending on the nature of the action, even if both actions are taken in connection with the same type of Internet service. As the district court readily acknowledged, it is clear that a service provider hosting a web site would fall under 512(c), and therefore be subject to that section's notice-and-takedown provisions. 189 F. Supp. 2d at 1068. Yet the legislative history also suggests that if that same service provider made an incidental copy of a web page in the course of transmitting it to a specific user that has "pulled" it, that activity would fall under Section 512(a).

Similarly, AOL in its role as an Internet access provider may be protected by Section 512(a) for incidental copies that it makes in the course of transmitting a new USENET posting to a USENET peer, or in forwarding postings to USENET peers. But AOL falls under a different provision—Section 512(c)—when it stores a copy of that USENET posting on one of its servers for the purpose of allowing its millions of users to search for and download the posting. As Congress observed in another passage of legislative history ignored by the district court, "[t]he term ['ordinarily accessible' under Section 512(a)] does not include copies made by a service provider for the purpose of making the material available to other users." S. Rep. No. 105-190, at 42 (May 11, 1998) (emphasis added). [note 9] This legislative history confirms that, in enacting Section 512(a), Congress said what it meant: namely, that Section 512(a) provides a safe harbor only to transmissions and to intermediate and transient storage that takes place "in the course of" such a transmission.

The district court did not cite or rely upon any of these Congressional statements. Instead, the court relied exclusively on two paragraphs of a House Report commenting on an earlier version of a bill that ultimately became the DMCA. 189 F. Supp. 2d at 1069. The Report begins with the same straightforward principles found throughout the legislative history:

The exempted storage and transmissions [under Section 512(a)] are those carried out through an automatic technological process that is indiscriminate—i.e., the provider takes no part in the selection of the particular material transmitted—where copies are retained no longer than necessary for the purpose of carrying out the transmission. This conduct would ordinarily include forwarding of customers' Usenet postings to other Internet sites in accordance with configuration settings that apply to all such postings.…

Id. at 1069-70 (emphasis added) (quoting H.R. Rep. No. 105-551(I), at 24 (May 22, 1998)). Once again, this language confirms the plain language of the statute, i.e., that storage of USENET postings falls within the ambit of Section 512(a) only when associated with transmission "to other Internet sites" (other USENET peers, not individual users) and only to the extent it is "no longer than necessary for the purpose of carrying out the transmission."

The district court, however, focused on a subsequent passage in the Report that stated:

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

See 189 F. Supp. 2d at 1070 (quoting H.R. Rep. No. 105-551(I), at 24 (May 22, 1998)) (emphasis by the court). The district court interpreted this language as expressing a congressional intent that, so long as the storage is temporary, as in Netcom, Congress intended Section 512(a) to apply.

Even leaving aside the clear conflict between this conclusion and the express language of the statute, the district court simply misread this passage. In the quoted language, the Committee did not suggest that it was offering an interpretation that would expand the reach of section 512(a). To the contrary, the quoted language clearly stated the Committee's intent to limit the safe harbor provided under what later became section 512(a) by requiring that the transmission-related storage be "temporary." Thus, far from expanding the statutory language to apply section 512(a) treatment to any storage that can be characterized as "temporary," the Committee was confirming its strong intent that even storage activities that otherwise would fit under section 512(a) would be entitled to the safe harbor of that provision only if they were temporary in nature. Nothing in this language indicates any congressional intent to abrogate the other equally critical and clear elements of Section 512(a)—including that any such storage takes place "in the course of" transmitting the material, and that the service provider does not make the material "ordinarily accessible to anyone other than anticipated recipients."

That this latter interpretation more accurately reflects Congress's intent is reinforced by text that appears immediately following the passage quoted above, in which the Committee once again confirmed that, "[t]aken together, paragraphs (1) and (2) [of Section 512(a)] mean that providers will never be liable for monetary damages for this type of transmission of material at the request of third parties or for intermediate storage of such material in the course of the transmission." H.R. Rep. No. 105-551(I), at 24 (May 22, 1998) (emphasis added).

The district court's holding on this issue ultimately rests on the remarkable conclusion that this single reference in the legislative history indicated an intent on the part of Congress to incorporate the Netcom holding into the DMCA in its entirety—and then to expand that holding to secondary liability as well as direct liability. Neither the language of the Report nor simple logic supports this conclusion. Netcom held that a service provider that transmitted and temporarily stored USENET postings could not be held liable for direct copyright infringement. 907 F.Supp. at 1367-73. It is correct, as the district court observed, that Congress expressed an intent that the safe harbor provided under section 512(a) apply to both direct and secondary liability. 189 F. Supp. 2d at 1070 n.20. It is also correct, as discussed above, that the House Report cited an intent to codify the implicit holding of Netcom that storage activities cannot be exempted from liability unless they are "temporary." But it is a huge leap to conclude that Congress therefore intended to codify all aspects of the Netcom holding, to interpret that holding as itself broadly exempting any storage so long as it is "temporary," and then to apply that liberal exemption even to claims of secondary liability. The DMCA is far more than a simple codification of Netcom. It is, rather, a complex statutory regime that subdivides the actions of Internet service providers in ways not considered by the Netcom court and that imposes prerequisites to its safe harbors that were neither contemplated nor discussed in Netcom. Most importantly, the court's misinterpretation would destroy the careful balance struck by Congress requiring service providers to cooperate with copyright holders in removing access to infringing material upon proper notice when it is stored for downloading by millions of Internet users.

In the end, the district court appears to have been led astray here by an excessively narrow focus on two facts: (1) that AOL is involved in transmitting USENET postings and (2) that AOL's (separate) storage of the information for access by users usually does not exceed fourteen days. Neither of these facts is ultimately germane here—the first because it relates to a different activity than the one at issue and the second because the assertedly "temporary" nature of the storage, while necessary for classification of the activity under section 512(a), is not sufficient for that purpose. The plain language of Section 512(a) expressly excludes AOL's storage of infringing material in order to provide all AOL users with the ability to search for and retrieve this material, and nothing in the legislative history supports a contrary result. Accordingly, the district court's judgment should be reversed.

CONCLUSION

For the reasons stated above and in the briefs of appellants, the district court's order entering summary judgment for AOL should be reversed.
 

Respectfully Submitted,
 

Sonya D. Winner

Evan R. Cox

Daniel J. Hirsch

COVINGTON & BURLING

One Front Street

San Francisco, California 94111

Telephone: (415) 591-6000

Fax: (415) 955-6572

Attorneys for the Business Software Alliance

August 30, 2002

Notes

  1. Section 512 of the Copyright Act, Title 17, codifies Title II of the DMCA, designated the "Online Copyright Infringement Limitation Act," See Pub. L. 105-304, 112 Stat. 2877 (1998).
  2. Additional information can be found at http://www.bsa.org
  3. BSA estimates that approximately one in four software programs used in the U.S., and more than one in three programs world-wide, have been copied without authorization, representing a loss to copyright owners and their authorized distributors of approximately $11 billion dollars in license fees annually. See International Planning and Research Corporation, Seventh Annual BSA Global Software Piracy Study (June 2002), available at http://www.bsa.org/usa/globallib/. This economic impact extends far beyond the software industry. Studies show that, in 2000 alone, software piracy cost the U.S. economy 118,000 jobs, $5.6 billion in lost wages, and $1.6 billion in lost tax revenues. 2001 State Software Piracy Study, conducted by International Planning and Research Corporation.
  4. See, e.g., Perfect 10, 2002 WL 731721, at *23 ("The Court does not read section 512 to endorse business practices that would encourage content providers to turn a blind eye to the source of massive copyright infringement…. [O]nline service providers are meant to have strong incentives to work with copyright holders. The possible loss of the safe harbor provides that incentive and furthers a regulatory scheme in which courts are meant to play a secondary role to self-regulation.") (emphasis in original).
  5. Although the phrase "mere conduit" does not appear in Section 512 itself, this phrase is often used to describe the safe harbor in Section 512(a). See, e.g., A&M Records,Inc. v. Napster, Inc., 2000 WL 1170106 (N.D. Cal., Aug. 10, 2000) (Memorandum and Order Re Admissibility of Expert Reports), at *10.
  6. See, e.g., Declaration of Dennis McClain-Furmanski (Exhibit 208), 13-14 (noting that, while "pass through" servers that merely transmit USENET messages to other USENET peers delete any copies of these messages as soon as the messages are transmitted, where a service provider also intends to make these messages accessible to its users, it will normally store more permanent copies of these messages on separate servers).
  7. For purposes of Sections 512(b)–(d), Section 512(k) defines "service provider" more broadly to include "a provider of online services or network access." 17 U.S.C. 512(k)(2).
  8. Indeed, AOL claimed that its activities fell under both Section 512(a) and Section 512(c). See 189 F. Supp. 2d at 1067.
  9. See also S. Rep. No. 105-190, at 41 (May 11, 1998) ("[I]ntermediate and transient' [under Section 512(a)] refers to such 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.").

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