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

Case: 16-10510 Document: 00513928012 Page: 1 Date Filed: 03/27/2017

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

March 27, 2017

No. 16-10510

Lyle W. Cayce

Clerk

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.

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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.

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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-

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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

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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 used by others who [were] violating CoStar’s copyrights and [was]

not an actual duplicator itself, it [was] not directly liable for copyright

infringement.” Id.

The Fourth Circuit also rejected the argument that “any immunity for

the passive conduct of an ISP such as LoopNet must come from the safe harbor

immunity provided by the Digital Millennium Copyright Act (‘DMCA’), if at all,

because the DMCA codified and supplanted the Netcom holding.” Id. at 548.

Netcom, the court concluded, “grounded its ruling principally on its

interpretation of § 106 of the Copyright Act as implying a requirement of

‘volition or causation’ by the purported infringer,” not only on pragmatic

concerns or a gap in the law. Id. at 549. The court commended Netcom’s

approach in part because the Act “requires conduct by a person who causes in

some meaningful way an infringement.” Id. Thus, “to establish direct liability

under §§ 501 and 106 of the Act, something more must be shown than mere

ownership of a machine used by others to make illegal copies.” Id. at 550.

Instead, “[t]here must be actual infringing conduct with a nexus sufficiently

close and causal to the illegal copying that one could conclude that the machine

owner himself trespassed on the exclusive domain of the copyright owner.” Id.

In a developing line of authority, every circuit to address this issue has

adopted some version of Netcom’s reasoning and the volitional-conduct

requirement. See, e.g., Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 666–67

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(9th Cir. 2017); Leonard v. Stemtech Int’l Inc, 834 F.3d 376, 387 (3d Cir. 2016);

Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 131 (2d Cir. 2008). 1

BWP argues we should not step into this line because the Supreme

Court’s 2014 decision in Aereo rejected both the Netcom line of cases and the

volitional-conduct requirement generally. See American Broadcasting Cos. v.

Aereo, Inc., 134 S.Ct. 2498 (2014). In that case, Aereo was sued for allegedly

infringing the petitioners’ exclusive right to perform their copyrighted works

publicly under Section 106(4) “by selling its subscribers a technologically

complex service that allow[ed] them to watch television programs over the

Internet at about the same time as the programs [were] broadcast over the

air.” 2 Id. at 2503. The first issue was whether Aereo “perform[ed].” Id. at

2504. The Supreme Court compared Aereo’s service to the community-

antenna-television (“CATV”) systems that Congress had meant to bring within

the Act’s scope via a set of 1976 amendments. 3 Id. Although it acknowledged

1We recognize, as other courts have, that “the word ‘volition’ in this context does not

really mean an ‘act of willing or choosing’ or an ‘act of deciding’ . . . .” Giganews, 847 F.3d at

666. One court decided the word “stands for the unremarkable proposition that proximate

causation historically underlines copyright infringement liability no less than other torts.”

Id. (quotation marks omitted). It also has been held that “volition requires a relationship

between the system owner and the copyrighted work that will permit the owner to prevent

infringement of the work without the necessity of monitoring the behavior of third parties.”

Robert C. Denicola, Volition and Copyright Infringement, 37 CARDOZO L. REV. 1259, 1276

(2016). At the very least, the Act “requires conduct by a person who causes in some

meaningful way an infringement.” CoStar, 373 F.3d at 549 (emphasis omitted).

2Aereo’s system allowed a subscriber to select a show from Aereo’s website, after

which Aereo’s system, consisting of thousands of antennas in a centralized warehouse,

responded as follows. First, a server tuned an antenna, dedicated to one subscriber alone, to

the broadcast carrying the selected show. Next, a transcoder translated the signals received

into data that could be transmitted over the internet. A server would save that data into a

subscriber-specific folder and then begin streaming the show onto the subscriber’s screen

once a few seconds of programming had been saved. This continued until the subscriber

watched the entire show. See Aereo, 134 S. Ct. at 2503.

The CATV provider used a system of antennas on hills to “amplif[y] and modulate[]

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[copyrighted local TV] signals in order to improve their strength and efficiently transmit

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that Aereo’s subscribers selected the content to be performed, the Court

concluded that “[g]iven Aereo’s overwhelming likeness to the cable companies

targeted by the 1976 amendments, this sole technological difference between

Aereo and traditional cable companies does not make a critical difference . . . .”

Id. at 2507. Then, after also concluding that Aereo performed “publicly,” the

Court held Aereo was liable for infringement. Id. at 2508. The Court never

addressed whether Aereo’s conduct was volitional, resting its holding instead

on the similarities between the CATV systems and Aereo’s system.

We find the dissent to be helpful in understanding the decision. Justice

Scalia concluded that Aereo could not be held directly liable because, among

other things, it did not engage in volitional conduct. Id. at 2512 (Scalia, J.,

dissenting). To him, whether a defendant may be held directly liable “[m]ost

of the time . . . will come down to who selects the copyrighted content: the

defendant or its customers.” Id. at 2513. He then offered a comparison:

A comparison between copy shops and video-on-demand

services illustrates the point. A copy shop rents out photocopiers

on a per-use basis. One customer might copy his 10-year-old’s

drawings—a perfectly lawful thing to do—while another might

duplicate a famous artist’s copyrighted photographs—a use clearly

prohibited by § 106(1). Either way, the customer chooses the

content and activates the copying function; the photocopier does

nothing except in response to the customer’s commands. Because

the shop plays no role in selecting the content, it cannot be held

directly liable when a customer makes an infringing copy.

Video-on-demand services, like photocopiers, respond

automatically to user input, but they differ in one crucial respect:

them to [the home TV sets of its] subscribers.” Aereo, 134 S. Ct. at 2504. The subscriber

could choose any program he wanted to watch by turning the knob on his TV set. In two prior

cases, the Court had held CATV providers were not infringers, but Congress amended the

Copyright Act in 1976 “in large part to reject the Court’s holdings in” those cases. Id. at 2505.

Congress clarified that “both the broadcaster and the viewer of a television program ‘perform,’

because they both show the program’s images and make audible the program’s sounds.” Id.

at 2506 (emphasis omitted).

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They choose the content. When a user signs in to Netflix, for

example, ‘thousands of . . . movies and TV episodes’ carefully

curated by Netflix are ‘available to watch instantly.’ That selection

and arrangement by the service provider constitutes a volitional

act directed to specific copyrighted works and thus serves as a

basis for direct liability.

Id. at 2513 (alteration and citation omitted).

Justice Scalia concluded that Aereo was neither one of his examples;

instead, it was like “a copy shop that provides its patrons with a library card,”

providing both the technology and indirect access to the content. Id. at 2514.

Because such a shop does not itself choose the content, it does not act with the

requisite volition and thereby does not directly infringe. Id. Neither, he

concluded, did Aereo. Id.

The Court rejected this argument primarily because Aereo’s service was

not materially distinguishable from the CATV systems. Id. at 2507. The Court

did not, though, explicitly reject Justice Scalia’s formulation of the volitional-

conduct requirement. Indeed, it noted that “[i]n other cases involving different

kinds of service or technology providers, a user’s involvement in the operation

of the provider’s equipment and selection of the content transmitted may well

bear on whether the provider performs within the meaning of the Act.” Id.

The systems used by Aereo and the CATVs were just too similar for such

factors to matter in that case.

BWP argues that when the majority rejected Justice Scalia’s dissenting

copy-shop argument as “mak[ing] too much out of too little,” id. at 2507, it at

least eroded the volitional-conduct requirement. We disagree. As the Ninth

Circuit recently concluded, Aereo “did not expressly address the volitional-

conduct requirement for direct liability under the Copyright Act, nor did it

directly dispute or comment on Justice Scalia’s explanation of the doctrine.”

Giganews, 847 F.3d at 667. Thus, “it would be folly to presume that Aereo

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categorically jettisoned [the volitional-conduct requirement] by implication,”

both because Aereo itself distinguished between engaging in activity and

merely supplying equipment and because it limited its holding to the

technology at issue. Id. (quotation marks omitted). We likewise conclude that

“[t]he volitional-conduct requirement is consistent with the Aereo majority

opinion . . . .” See id.

Before leaving Aereo, we also distinguish its facts. When a copy-shop

owner makes a photocopier available to customers, but a customer brings in

the copyrighted work and makes the copy himself, the infringing conduct is

attributable only to the customer. That is because the copy-shop owner does

not reproduce the work but “merely supplies equipment that allows others to

do so.” See Aereo, 134 S. Ct. at 2504. Aereo did not just provide equipment. It

also provided access and the means to transmit the infringing material. See

id. at 2506–07.

The facts here are much closer to those in the Netcom line of cases than

those in Aereo. Although Aereo and T&S both provided a service that others

could use to infringe, only Aereo played an active role in the infringement.

That role was to route infringing content to its users. True, its users would

request the content, but they did not merely utilize Aereo’s service to store

infringing content they obtained elsewhere. Aereo, not its users, provided the

means to obtain and transmit copyrighted performances. Aereo’s involvement,

in other words, was more than passive. Cf. Aereo, 134 S. Ct. at 2507.

The same cannot be said of T&S’s conduct. T&S hosts the forum on

which infringing content was posted, but its connection to the infringement

ends there. The users posted the infringing content. Unlike Aereo, T&S did

not provide them access to that content. Holding T&S directly liable thus

raises the same concern as it did in Netcom: “it does not make sense to adopt a

rule that could lead to the liability of countless parties whose role in the

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infringement is nothing more than setting up and operating a system that is

necessary for the functioning of the Internet.” See Netcom, 907 F. Supp. at

1372. Like Netcom and unlike Aereo, T&S and the infringing content are not

linked by volitional conduct. It cannot be said that T&S’s conduct “cause[d] in

some meaningful way an infringement.” See CoStar, 373 F.3d at 549.

BWP also argues that because Netcom predated the DMCA, its analysis

is no longer good law. The particular argument is that the safe-harbor rules of

Section 512(c) created the exclusive method of protecting an arguably innocent

ISP: if a user directs the storage of copyrighted material on a service provider’s

system, the ISP has no liability if (1) the provider lacks knowledge of the

infringement, (2) does not receive direct financial benefits from the storage, (3)

“acts expeditiously to remove, or disable access to,” the infringing material once

learning of it, and (4) “has designated an agent to receive notifications of

claimed infringement[.]” 17 U.S.C. § 512(c).

T&S does not qualify for Section 512(c)’s safe harbor, as it never

designated an agent. To BWP, adopting the volitional-conduct requirement

would render Section 512(c)’s safe harbor meaningless. BWP also argues that

adopting the requirement would disincentivize DMCA compliance by

benefitting those ISPs that choose not to satisfy Section 512(c)’s requirements.

T&S points out that Section 512 includes a caveat: “The failure of a

service provider’s conduct to qualify for limitation of liability under this section

shall not bear adversely upon the consideration of a defense by the service

provider that the service provider’s conduct is not infringing under this title or

any other defense.” See § 512(l). T&S argues that this means the DMCA does

not abrogate the volitional-conduct requirement.

The Fourth Circuit addressed this argument in CoStar. It too faced the

argument that because “Congress ‘codified’ Netcom in the DMCA . . . it can

only be to the DMCA that we look for enforcement of those principles.” CoStar,

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373 F.3d at 552 (alterations in original). The court disagreed, judging that

CoStar’s argument was “belied by the plain language of the DMCA itself”:

Even though the DMCA was designed to provide ISPs with a safe

harbor from copyright liability, nothing in the language of § 512

indicates that the limitation on liability described therein is

exclusive. Indeed, [Section 512(l)] provides explicitly that the

DMCA is not exclusive . . . . Given that the statute declares its

intent not to “bear adversely upon” any of the ISP’s defenses under

law, including the defense that the plaintiff has not made out a

prima facie case for infringement, it is difficult to argue, as CoStar

does, that the statute in fact precludes ISPs from relying on an

entire strain of case law holding that direct infringement must

involve conduct having a volitional or causal aspect.

Id. The court also referred to the canon of construction for abrogation of the

common law: “When Congress codifies a common-law principle, the common

law remains not only good law, but a valuable touchstone for interpreting the

statute, unless Congress explicitly states that it intends to supplant the

common law.” Id. at 553.

So the Fourth Circuit held that the “DMCA’s safe harbor for ISPs [is] a

floor, not a ceiling, of protection.” Id. at 555. Rather than altering the

volitional-conduct requirement, “[t]he DMCA has merely added a second step

to assessing infringement liability for [ISPs], after it is determined whether

they are infringers in the first place under the preexisting Copyright Act.” Id.

In other words, whether there is volitional conduct is the first step of

establishing infringement under Sections 106 and 501. See id. Only if the

plaintiff shows such infringement are courts to analyze whether the ISP

nonetheless falls within Section 512’s safe harbor. See id. 4

4 Accord Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1158 n.4 (9th Cir. 2007)

(“[T]he DMCA does not change copyright law; rather, ‘Congress provided that the DMCA’s

limitations of liability apply if the provider is found to be liable under existing principles of

law.’” (alteration omitted) (quoting Ellison v. Robertson, 357 F.3d 1072, 1077 (9th Cir. 2004)));

BWP Media USA Inc. v. Polyvore, Inc., No. 13-CV-7867(RA), 2016 WL 3926450, at *6

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We agree with the Fourth Circuit’s analysis on this point. BWP also

argues that retaining the volitional-conduct requirement diminishes Section

512(c)’s usefulness in direct-infringement cases. That may be, but it does not

in secondary-infringement cases. See, e.g., Perfect 10, Inc. v. Amazon.com, 508

F.3d 1146, 1175 (9th Cir. 2007). Textual meaning and incentives to comply

both remain.

***

We adopt the volitional-conduct requirement in direct-copyright-

infringement cases. BWP does not contend that T&S did, in fact, engage in

such conduct. Thus, the district court properly granted summary judgment in

favor of T&S. AFFIRMED.

(S.D.N.Y. July 15, 2016) (“In light of this unambiguous statutory language and clear

legislative history, the Court rejects Plaintiffs’ argument that, in passing the DMCA,

Congress intended to subject ISPs to different standards of copyright liability than non-

ISPs.”).

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