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BWP Media USA, Inc. v. T & S Software Associates, Inc.

United States Court of Appeals, Fifth Circuit

March 27, 2017

BWP MEDIA USA, INCORPORATED, doing business as Pacific Coast News; NATIONAL PHOTO GROUP, L.L.C., Plaintiffs - Appellants
v.
T & S SOFTWARE ASSOCIATES, INCORPORATED, Defendant-Appellee

         Appeal from the United States District Court for the Northern District of Texas

          Before SMITH, CLEMENT, and SOUTHWICK, Circuit Judges.

          LESLIE H. SOUTHWICK, Circuit Judge:

         This appeal is about whether "volitional conduct" is required to establish a claim for direct copyright infringement. Defendant T&S Software Associates, an internet service provider, hosted an internet forum on which third-party users posted images that infringed copyrights owned by plaintiffs BWP Media USA and National Photo Group. The plaintiffs sued T&S for direct and secondary copyright infringement. The district court granted summary judgment in favor of T&S. The plaintiffs appeal the district court's direct-infringement holding. We AFFIRM.

         FACTUAL AND PROCEDURAL BACKGROUND

         T&S hosts a website that includes a public forum called "HairTalk." Users of the forum may post content, share comments, ask questions, and engage in online interactions with other users on a range of topics including hair, beauty, and celebrities. Use of HairTalk is governed by terms of service providing that "any photo containing . . . celebrities . . . or any copyrighted image (unless you own the copyright) is not permitted." Every time someone logs on to HairTalk, the user must agree to these terms. Also, each page of the website includes a "contact us" link, which allows anyone to contact the website to report objectionable content. During the relevant time period, T&S did not have an agent designated to receive notices of content that should be removed as required to qualify for the statutory safe harbor of the Digital Millennium Copyright Act ("DMCA"). The specific section on the protections arising from naming an agent is 17 U.S.C. § 512(c).

         Plaintiffs BWP Media USA and National Photo Group (collectively, "BWP") are registered owners of various celebrity photographs. Three photographs owned by BWP were posted by third-party users on HairTalk without BWP's permission. They depicted Ke$ha, Julianne Hough, and Ashlee Simpson. BWP sued for copyright infringement. The suit claimed that T&S was liable for its users' infringement because it failed to designate a registered agent under Section 512. T&S learned of the photographs upon commencement of this suit and promptly removed them. The district court granted summary judgment in favor of T&S as to both direct and secondary infringement. BWP appeals the district court's judgment only as to T&S's direct-infringement liability.

         DISCUSSION

         We review a grant of summary judgment de novo, applying the same standard as the district court. Ibe v. Jones, 836 F.3d 516, 526 (5th Cir. 2016). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Here, there is no factual dispute; the case turns on the proper interpretation of the Copyright Act. We review the district court's interpretation of the Act de novo. Comput. Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 399-400 (5th Cir. 2000).

         The determinative issue on appeal is whether volitional conduct is required to prove a claim of direct infringement. Our answer starts with the text of the Copyright Act. The Act gives a copyright owner "the exclusive right[]" to "reproduce the copyrighted work" and "display" it "publicly." 17 U.S.C. § 106(1), (5). "Anyone who violates any of the exclusive rights of the copyright owner as provided by section[] 106 . . . is an infringer . . . ." Id. § 501(a). Thus, a plaintiff generally must prove two elements to establish infringement: "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

         When there is a question as to who infringed, the analysis can turn on whether the type of infringement is direct or secondary. Direct liability is imposed on those who "trespass[] into [the copyright owner's] exclusive domain by using or authorizing the use of the copyrighted work . . . ." Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984). Secondary infringement involves liability for actions of third parties. See Metro-Goldwyn- Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). Only direct infringement is at issue on this appeal.

         In direct-infringement cases, courts have trended toward requiring volitional conduct. This requirement first came to the fore in 1995 when a California district court held that an ISP serving as a passive conduit for copyrighted material was not liable for direct infringement. See Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., 907 F.Supp. 1361 (N.D. Cal. 1995). There, a user posted copyrighted works to an online bulletin board. Id. at 1365. The owners of the copyrighted works, seeking compensation for infringement, sued the operator of the bulletin-board service and the ISP that the operator used to access the internet. Id. The court reasoned that "[a]lthough copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party." Id. at 1370.

         Accordingly, the court rejected the plaintiffs' argument that the ISP stored and thereby copied the copyrighted works: "Where the infringing subscriber is clearly directly liable for the same act, it [would] not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement [was] nothing more than setting up and operating a system that is necessary for the functioning of the Internet." Id. at 1372. The court did "not find workable a theory" that would hold online parties, such as ISPs, liable "for activities that cannot reasonably be deterred." Id. Thus, because the Netcom plaintiffs could not show that either the ISP or bulletin-board service was actively involved in the infringement, the court held neither was liable as a direct infringer. Id. at 1372-73, 1381-82.

         Other courts followed. The Fourth Circuit was an early adopter of Netcom and the volitional-conduct requirement. CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544, 551 (4th Cir. 2004). There, the copyright owner sued an ISP, LoopNet, for direct infringement after "CoStar's copyrighted photographs were posted by LoopNet's subscribers on LoopNet's website." Id. at 546. Like the copyright owners in Netcom, CoStar argued its "photographs were copied into LoopNet's computer system, " and so LoopNet was strictly liable, even though LoopNet's actions were passive. Id. The court disagreed. It held instead that because LoopNet, as an ISP, was "simply the owner and manager of a system ...


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