cyberlaw informer #68

Welcome to the 68th issue of the Mishpat Cyberlaw Informer - Law on the Internet newsletter from http://mishpat.net

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In this issue:

1. Introduction

2. Help Support the Cyberlaw Informer

3. Copyright Infringement Notice and ISP Safe Harbor

4. The Cyberlaw Reader

5. Cyberlaw Resource Review - AustLII

6. Computer & Internet Law News and Updates

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1. Introduction

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I would like to welcome the many new subscribers who joined the Cyberlaw Informer since the previous issue, bringing the total number of subscribers to more than 4,000!

Last issue's note about "funding" the Cyberlaw Informer led to some interesting queries and comments from several readers. I have added some information on how you can help support the Cyberlaw Informer just below this introduction.

ISP liability for content stored on its servers is one of the cyberlaw issues that has received the most attention in the past few years. Under the American Digital Millenium Copyright Act (DMCA) an ISP is protected by a "safe harbor" from copyright allegations, as long as it follows several steps, including the removal of infringing material after being notified by the copyright holder. What constitutes notification under the DMCA? This issue's feature article will give the answer recently provided by the U.S. 4th Circuit Court of Appeals.

As usual you will find the recommended cyberlaw reader and the cyberlaw resource review sections, as well as a very detailed cyberlaw news summary at the end of this newsletter.

I hope you enjoy reading the newsletter. Comments, tips, and articles are always welcome. Send them to mailto:editor@mishpat.net

The Mishpat Cyberlaw Informer Archive (issues 1-63) is located at: http://mishpat.net/cyberlaw/archive

You can recommend resources and discuss various cyberlaw topics at the message boards http://mishpat.net/cgi-bin/bbs/UltraBoard.pl Please note that there is no need to register in order to post messages, but signing up will allow you to use features such as auto-notification of replies to your posts.

Feel free to use any of the material, or forward the newsletter to a friend. Just don't forget to mention that they can subscribe to the Cyberlaw Informer by visiting http://CyberlawInformer.com

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2. Help Support the Cyberlaw Informer

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As you all probably understand, running the Cyberlaw Informer (CI) requires many resources, mainly time and networking resources. The CI is a free resource and will stay free, as I believe it is important to provide all with the ability to access legal information.

The question is therefor how the costs of providing free information can be covered. I believe that there are several answers to that question.

In this issue I will present two solutions geared towards corporate and law firm manager readers. In the next issue I'll announce an additional solution that will enable each one of you to receive premium information at minimal costs (and again, the CI is staying absolutely free).

If you are interested in any of the two following options please contact me at editor@mishpat.net

A. Newsletter and Website Sponsorships

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Do you want to reach a highly targeted readership of more than 4,000 law and IT professionals worldwide reading the CI, and the hundreds who visit our websites every day? Do you want your ad associated with the high quality content on the CI?

If your answer is positive then simply order text ads in the CI and/or banner advertising on the Mishpat.Net website. As a special bonus, all those placing an order before June 1^st 2001 will receive a special 33% extra advertising space for free (e.g. if you order three ads in the CI you get an extra one for free)!

For advertising rates and further information, please contact me at editor@mishpat.net

B. Content Syndication

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Does your firm publish a newsletter (electronic or printed) sent out to clients and affiliates? Does your firm maintain its own website?

If your firm does any of the above then you know that content is the king - readers and visitors are interested in quality and updated information. You also probably know that producing the high quality information your clients are looking for is a time and resource consuming task.

Now you can start licensing all the original CI content (i.e. not the guest articles) including the feature articles, news summaries, resource reviews and more. Participants of the CI syndication program can pass all the material on to their readers/visitors as their own content, without mentioning the CI as the source, ad free, and without limitation to the parts used (e.g. if you practice intellectual property, you can choose only to use the IP items). CI licensors can also edit the materials to match their needs.

For information regarding the syndication program, please contact me at editor@mishpat.net

Thank you all for your help and attention, and for being loyal readers of the Cyberlaw Informer.

Yours truly,

Yedidya (Didi) Melchior

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3. Copyright Infringement Notice and ISP Safe Harbor

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One of the most complicated Cyberlaw issues is Internet Service Provider (ISP) liability for content uploaded to its servers by its users. The question arises in three different contexts: liability for illegal content (such as child pornography), liability for defamatory content, and liability for copyright infringing material. This article discusses aspects of the third question - ISP liability for infringing content posted on its servers.

The problem arises from the fact that the ISP usually has no control over the materials a third-party users uploads to its servers, and over the messages posted in newsgroups and chat rooms hosted on the servers. However, the ISP does usually have the ability to remove a message or file from the server once notified of its content, or block a user from further postings.

Under the American Digital Millenium Copyright Act (DMCA), ISPs are granted a "safe harbor". The safe harbor is a partial immunity which ISPs receive as long as they adhere to certain rules, including the obligation to remove infringing material after being notified by the copyright holder.

But what should the notification to the ISP include in order to force the ISP to remove the material? In a recent case, the U.S. 4th Circuit Court of Appeals tackled this and other questions.

Factual Background

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ALS Scan Inc. is engaged in the business of creating and marketing "adult" photographs for which it holds the copyrights.

RemarQ Communities Inc. is an Internet service provider providing its subscribing members with access to newsgroups hosted on its servers. According to RemarQ, its users post over one million articles a day. RemarQ does not monitor, regulate, or censor the content of articles posted in the newsgroup by subscribing members. It does, however, have the ability to filter information contained in the newsgroups and to screen its members from logging onto certain newsgroups.

Two of the newsgroups to which RemarQ provides its subscribers access contain ALS's name in the titles "alt.als" and "alt.binaries.pictures.erotica.als". These newsgroups contain hundreds of postings that infringe ALS's copyrights placed in these newsgroups by RemarQ's subscribers.

Upon discovering that RemarQ databases contained material that infringed ALS's copyrights, ALS sent a cease and desist letter to RemarQ, ordering the ISP to cease carrying these newsgroups within 24 hours.

RemarQ responded by refusing comply with ALS's demand but advALS that it would eliminate individual infringing items from these newsgroups if ALS identified them "with sufficient specificity".

ALS Scan answered that RemarQ had included over 10,000 copyrighted images belonging to ALS Scan in its newsgroups over the period of several months and that these newsgroups have apparently been created by RemarQ users for the express sole purpose of illegally transferring and disseminating ALS copyrighted photographs.

ALS filed suit alleging violations of the Copyright Act, the Digital Millennium Copy right Act (DMCA), as well as unfair competition. ALS alleged that RemarQ possessed actual knowledge that the newsgroups contained infringing material but had refused to remove or block access to the material.

RemarQ filed a motion to dismiss the complaint stating that it was prepared to remove articles posted in its newsgroups if the allegedly infringing articles were specifically identified.

The district court ruled on RemarQ's motion, finding that RemarQ could not be held liable for direct copyright infringement merely because it provided access to a newsgroup containing infringing material, and that RemarQ could not be held liable for contributory infringement because ALS failed to comply with the notice requirements set forth in the DMCA

ALS appealed the ruling to the 4^th U.S. Circuit court of appeals.

Direct Copyright Infringement Claim

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The district court relied on the landmark ruling in Religious Technology Center v. Netcom On-Line Communication Services Inc., which concluded that when an Internet provider serves, without human intervention, as a passive conduit for copyrighted material, it is not liable as a direct infringer. The Netcom court reasoned that it does not make sense to adopt a rule that could lead to liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet. The court added that it would not be workable to hold the entire Internet liable for activities that cannot reasonably be deterred.

ALS asked the court to follow Playboy Enterprises Inc. v. Frena, which held a computer bulletin board service provider liable for the copyright infringement, contrary to Netcom, when it failed to prevent the placement of plaintiff's copyrighted photographs in its system, despite the lack of any proof that the provider had any knowledge of the infringing activities.

Judge Niemeyer, writing for a unanimous appeals court, noted that not only is the Netcom court reasoning more persuasive, the DMCA codified the Netcom principles, thus providing certainty that Netcom will be the law of the land.

The DMCA distinguishes between direct infringement and secondary liability, treating each separately. As to direct infringement, liability is ruled out for passive, automatic acts engaged in through a technological process initiated by another.

Accordingly ALS direct infringement claims where dismissed.

Safe Harbor

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ALS contended that it substantially complied with the notification requirements of the DMCA and thereby denied RemarQ the "safe harbor" from copyright infringement liability granted by the DMCA.

RemarQ argued that it did not have knowledge of the infringing activity according to the DMCA, because ALS failed to identify the infringing works and never provided RemarQ or the district court with the identity of the pictures forming the basis of its copyright infringement claim.

Title II of the DMCA, designated the "Online Copyright Infringement Limitation Act" defines limitations of liability for copyright infringement to which Internet service providers might otherwise be exposed. The Act defines a service provider broadly and both parties agreed that RemarQ is an Internet service provider for purposes of the DMCA.

Under the DMCA, Internet service providers are granted a safe harbor from liability for infringement of copyright, by storage at the direction of a user, of material that resides on a system or network controlled by the service provider, as long as the service provider can show that it has met all three of the following requirements:

(1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement;

(2) it receives no financial benefit directly attributable to infringing activity; and

(3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving notification from the copyright holder.

The district court concluded that ALS's notice was defective in failing to comply strictly with two of the six requirements of a notification set out in the DMCA:

(1) ALS's notice did not include a list of infringing works contained on the RemarQ site and

(2) the notice did not identify the infringing works in sufficient detail to enable RemarQ to locate and disable them.

RemarQ further claimed that not all materials at the offending news groups contained material to which ALS held the copyrights. ALS responded by stating that the two news groups in question were created solely for the purpose of publishing and exchanging ALS's copyrighted images.

The appeals court explained the balance of interests in the DMCA. According to the court, the DMCA was enacted both to preserve copyright enforcement on the Internet and to provide immunity to service providers from copyright infringement liability for "passive," "automatic" actions in which a service provider's system engages through a technological process initiated by another without the knowledge of the service provider.

This immunity, however, is not presumptive, but granted only to "innocent" service providers who can prove they do not have actual or constructive knowledge of the infringement. The DMCA's protection of an innocent service provider disappears at the moment the service provider loses its innocence, i.e., at the moment it becomes aware that a third party is using its system to infringe. At that point, the Act shifts responsibility to the service provider to disable the infringing matter.

The DMCA requires that a copyright owner put the service provider on notice in a detailed manner but allows notice by means that comport with the prescribed format only "substantially," rather than perfectly.

The Act states: "To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following . . . ."

In addition to substantial compliance, the notification requirements are relaxed to the extent that, with respect to multiple works, not all must be identified -- only a "representative" list. And with respect to location information, the copyright holder must provide information that is "reasonably sufficient" to permit the service provider to locate this material. The subsection specifying the requirements of a notification does not seek to burden copyright holders with the responsibility of identifying every infringing work -- or even most of them -- when multiple copyrights are involved. Instead, the requirements are written so as to reduce the burden of holders of multiple copyrights who face extensive infringement of their works.

Thus, the appeals court ruled that when a letter provides notice equivalent to a list of representative works that can be easily identified by the service provider, the notice substantially complies with the notification requirements.

In this case, ALS provided RemarQ with information that:

(1) identified two news groups created for the sole purpose of publishing ALS's copyrighted works,

(2) asserted that virtually all the images at the two sites were its copyrighted material, and

(3) referred RemarQ to two web addresses where RemarQ could find pictures of ALS's models and obtain ALS's copyright inform.

In addition, it noted that material at the scould be identified as ALS's material because the material included ALS's "name and/or copyright symbol next to it."

The court ruled that with this information, ALS substantially complied with the notification requirement of providing a representative list of infringing material as well as information reasonably sufficient to enable RemarQ to locate the infringing material.

The court added that to the extent that ALS's claims about infringing materials prove to be false, RemarQ has remedies for any injury it suffers as a result of removing or disabling non-infringing material.

Accordingly, the appeals court reversed the district court's ruling and remanded the case to the district court for further proceedings.

The full ruling in ALS Scan Inc. v RemarQ Communities is available at:

http://laws.lp.findlaw.com/4th/001351.html