Statutory Liability

Universal City Sturios vs Sony Corp, United States Court of Appeals, Ninth Circuit. - 659 F.2d 963 Argued and Submitted Feb. 6, 1981.Decided Oct. 19, 1981.Rehearing and Rehearing In Banc Denied Jan. 12, 1982 Overturned by the Supreme Court but the arguments here are interesting concerning liability. Excerpts ¶72 First, it seems apparent that the district court was much too strict in requiring appellants to establish its degree of harm.(FN11) Our sentiments are the same as those of one of the dissenters in Williams & Wilkins Co. who stated, "Although the court states that it rejects the trial determinations as to both actual and potential damage to plaintiff, I think the opinion shows that the court's conclusion is based primarily on its finding that plaintiff failed to prove actual damages." 487 F.2d at 1367 (Cowen, C. J., dissenting). (Emphasis added.) That is simply too great a burden to impose on copyright plaintiffs. Nimmer has suggested that "the central question in the determination of fair use is whether the infringing work tends to diminish or prejudice the potential sale of plaintiff's work." 3 Nimmer, supra, § 13.05(E)(4)(c) at 13-84. (Emphasis added) (Footnote omitted.)(FN12) Under this sort of standard, it seems clear that appellants should have prevailed. Since the copies made by home videorecording are used for the same purpose as the original, a finding of fair use is not justified.(FN13 The district court seems to recognize, on several occasions, that appellants will have to take affirmative steps to compete with the appropriated versions of their work. That such competition is necessary supports appellants' allegations of harm; at the least, it makes clear that the "infringing" activity tends to prejudice the potential sale of appellants' work. It is clear that home users assign economic value to their ability to have control over access to copyrighted works. The copyright laws would seem to require that the copyright owner be given the opportunity to exploit this market. ¶73 Second, we do not believe that the district court paid sufficient attention to the fact that it is extremely difficult for a copyright plaintiff to prove harm from the activities of specific defendants. 3 Nimmer, supra, § 13.05(E)(4) (c). As Nimmer states, "Far from this justifying a defense of fair use, failure to prove damages will in the usual case give rise to a minimum statutory damages liability. It is only when the general dissemination of an allegedly infringing work by all potential defendants, and without limitation as to the number of reproductions, and volume of users would still not adversely affect the plaintiff's potential market that a conclusion of fair use may be justified." Id. at 13-84.(FN14) The district court quoted, in what seemed to be an approving manner, similar sentiments from one of Nimmer's law review articles, but the court clearly did not use this rationale in deciding the fair use question. The court, in analyzing the fourth fair use factor, did not pay sufficient attention to the cumulative effect of mass reproduction of copyrighted works made possible by videorecorders. It seems clear that absent an inquiry which takes into consideration the full scope of the "infringing" practice, copyright plaintiffs, in cases of this sort, would face insuperable obstacles to the protection of their rights. And, where one looks at the full scope of the activity in question, it seems clear that it tends to diminish the potential market for appellants' works. ¶77 (in part) A copyright defendant's "innocence" does not absolve him of liability; it only affects the remedies available. (FN17) For example, the statute provides for a reduction of statutory damages if the infringer "was not aware and had no reason to believe that his or her acts constituted an infringement of copyright," 17 U.S.C. § 504(c)(2), and a remission of statutory damages, in limited circumstances, if the "infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use." Id. In this context, a defendant's mistake as to the legal consequences of his actions does not constitute an excuse for an infringement. It is only necessary that a copyright defendant have knowledge of the infringing activity. (FN13) Put another way, because the copies serve the same function as the original, the "functional test" suggests that fair use is not available. 3 Nimmer, supra, § 13.05(B); Metro-Goldwyn-Mayer, Inc. v. Showcase Atlanta Cooperative Productions, Inc., 479 F.Supp. 351 (N.D.Ga.1979)

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