Mobile Phone Carriers not Indirectly Liable for Text Message Copyright Infringement
The Plaintiffs Luvdarts LLC and Davis-Reuss, Inc. produce and sell greeting card style messages which are sent using a mobile phone's Multimedia Messaging Service (MMS). Within the electronic greeting cards is a notice that the greeting card may be shared only once. There is not, however, any copy protection preventing someone from sharing the greeting card numerous times. Not surprisingly, users ignore the one-time share notice and share the greeting cards with lots of people.
Luvdarts decided to sue the mobile phone carries for vicarious and contributory copyright infringement for providing the means that its customers use to share the electronic greeting cards.
As the Supreme Court has observed, the Copyright Act does not explicitly render a third person liable for another person's infringement. Sony Corp. of Am. v. Universal City Studios, 464 U.S. 417, 434 (1984). The doctrines [of contributory and vicarious liability] pressed here "emerged from common law principles and are well established in the law." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). Vicarious infringement occurs when one profits from direct infringement while declining to exercise a right to stop or limit it, and contributory infringement liability requires "inducing or encouraging" direct infringement. Id.
Luvdarts first tried to argue that the carriers were liable for vicarious liability.
Vicarious liability attaches if the Carriers had both the (1) "right and ability to supervise the infringing activity" and (2) "a direct financial interest" in the activity.
Here, Luvdarts argued that while the carries do not supervise the infringing activity, they could easily do so with a "metadata system of digital rights management." The court disagreed that this satisfies the "right and ability to supervise" prong.
Luvdarts fails to cite any authority to support this proposition, which runs contrary to our precedent. In Napster, this court held that "right and ability to supervise" should be evaluated in the context of a system's "current architecture." Napster Inc., 239 F.3d at 1024. Moreover, as we noted in Perfect 10, Inc. v. Amazon.com, Inc., resting vicarious liability on the Carriers' failure to change their behavior would tend to blur the distinction between contributory liability and vicarious liability. 508 F.3d 1146, 1175 (9th Cir. 2007) ("[I]n general, contributory liability is based on the defendant's failure to stop its own actions which facilitate third-party infringement, while vicarious liability is based on the defendant's failure to cause a third party to stop its directly infringing activities.").
Because Luvdarts failed to support the first prong of vicarious liability, the court declined to address the second prong, i.e. whether the carries have a direct financial interest in the activity (which -- in the case of over-priced multimedia text messages -- the carriers absolutely have a direct finical interest).
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