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17.21 Derivative Liability—Contributory Infringement—Elements and Burden of Proof

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17.21 SECONDARY LIABILITY—CONTRIBUTORY INFRINGEMENT—ELEMENTS
AND BURDEN OF PROOF

A defendant may be liable for copyright infringement engaged in by another if [he] [she] [it ] knew or had reason to know of the infringing activity and intentionally [induced] [materially contributed to] that infringing activity. 

If you find that [name of direct infringer] infringed the plaintiff’s copyright in [allegedly infringed work], you must determine whether [name of alleged contributory infringer] contributorily infringed that copyright. The plaintiff has the the burden of proving both of the following elements by a preponderance of the evidence: 

1. the defendant knew or had reason to know of the infringing activity of [name of direct infringer]; and

2. the defendant intentionally [induced] [materially contributed to] [name of direct infringer’s] infringing activity. 

[The defendant’s intent to induce the infringing activity must be shown by clear expression of that intent or other affirmative steps taken by the defendant to encourage.] 

If you find that [name of direct infringer] infringed the plaintiff’s copyright and you also find that the plaintiff has proved both of these elements, your verdict should be for the plaintiff. If, on the other hand, the plaintiff has failed to prove either or both of these elements, your verdict should be for the defendant. 

Comment 

Theabove instruction is based on Fonovisa, Inc. v. Cherry Auction, Inc. 76 F.3d 259, 261-63 (9th Cir.1996), Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir.2004), and MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 937-38 (9th Cir. 2010), as amended on denial of reh’g (Feb. 17, 2011), opinion amended and superseded on denial of reh’g, No. 09-15932, 2011 WL 538748 (9th Cir. Feb. 17, 2011). 

In Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), the Supreme Court held that one who distributes a device with the object of promoting its use to infringe a copyright may be liable for the resulting acts of infringement by third parties, even if the device is capable of substantial noninfringing use. Id. at 2780. The Court characterized this as the inducement rule. Id. This rule was refined and formalized into four elements in Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020 (9th Cir.2013). See id. at 1032 (listing these "four elements: (1) the distribution of a device or product, (2) acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation"); see also Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 795 (9th Cir.2007) (describing inducement rule and material contribution test as "non-contradictory variations on the same basic test"). 

In the online context, a computer system operator may be liable under a material contribution theory if the operator has actual knowledge of specific infringement, can take simple measures to prevent further infringement, and yet fails to do so. See Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 671 (9th Cir.2017). 

The bracketed language paraphrases the test for inducement set forth in Grokster, 545 U.S. at 919, 936-37 (2005) and reiterated in Columbia Pictures, 710 F.3d at 1032. The court should include this language if there is a dispute regarding whether the defendant took sufficient action, or any action, demonstrating its intent to encourage infringement. See, e.g., id. at 1035-36 ("As for the necessary ‘clear expression or other affirmative steps’ evidence indicative of unlawful intent, the most important is Fung’s active encouragement of the uploading of torrent files concerning copyrighted content."). 

The sale of a product or device that has the potential to infringe (such as a home video recorder) does not constitute contributory infringement if the product is capable of a substantial non-infringing use. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 442 (1984); Grokster, 545 U.S. at 939 n.12.