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Secondary Liability And Remedies Outline

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24. Secondary Liability and Remedies
Secondary Liability/ Indirect Infringement
MML 384-94, 723-48, 811-23, 1044-54; 35 U.S.C. § 271(b)-(c); 17 U.S.C. § 512,(c)
 Mostly would be better to sue the infringer, but direct liability may be difficult to monitor, expensive,
may be suing customers, brings uncertainty
 For: can only fully protect creator if there is liability, incentive to create
 Against: Society benefits may exceed someone's right to go after indirect liability

Unclear on when does it stop, what are the limits and boundaries of indirect liability

May deter good things, e.g. new technologies
Patent P.384-94
 Previously aiding and abetting  1952 Act splits into 2 types:
 (a) Contributory Infringement

35 USC §271(c)
 "Whoever offers to sell or sells within the United States or imports into the United
States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process,
constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer."
 (1) component
 (2) materiality
 (3) knowledge requirement
 (4) uses for component o

C.R. Bard, Inc. v. Advanced Cardiovascular Systems, Inc. (Fed. Cir. 1900)
 Facts: P argues that D's medical system is adapted for use by a surgeon in a surgery in a manner that infringes its patented medical treatment  therefore D is a contributory infringer + actively induces infringement of P's patent
 Patentee didn't sue direct infringer are a group of doctors, but the manufacturing company, as it is easier and look better + statutory exemption that sergeants cannot be used for employing certain medical methods.
 Rule: 35 USC s.271(c) liable as a contributory infringer if:

1. sells a component of a patented machine,

2. constituting a material part of the invention,

3. knowing it would be adapted for use in an infringement, and

limit liability to prevent a lot of third party to be directly liable

some may not have constructive knowledge

4. no substantial non-infringing use

also, if there are no other real use for it, infer intent
 Issue: whether the ACS catheter has no use except through practice of the patented method
 Held: multiple ways to use  substantial non-infringing uses for the ACS catheter 
D not liable for contributory infringement  reversed summary judgment finding
ACS a contributory infringer under § 271 1 (b) (Active) Inducement o

35 USC §271(b) "Whoever actively induces infringement of a patent shall be liable as an infringer."  S.271(b) Elements:

1. Intent (can be circumstantial), and

2. Providing instructions (or otherwise aiding)

o

Global-Tech Appliances, Inc. v. SEB S.A (Supreme Court 2011)
 Facts: SEP patented its deep fryer in the US  Pentalpha developed for and sold to
Sunbeam a deep fryer (by copying the SEB) in HK  Sunbeam resold in the US 
SEB sued. Pentalpha argues it has no actual knowledge of infringement to "induce"
 Held: Tightened intent requirement:
 Willful blindness is sufficient

1. D must subjectively believe that there is a high probability that a fact exists and

2. D must take deliberate actions to avoid learning of that fact
 S.271(b) requires knowledge that the induced acts constitute patent infringement
 Deliberate indifference to a known risk that a patent exists is not appropriate standard under s.271(b)
 Willful blindness is just as culpable as actual knowledge

o o

S.271(b) Elements:

1. Intent (can be circumstantial), and

Intent that there is a specific patent (not just specific intent to do the actions)
o Willful blindness would suffice:
 Sufficient evidence showing knowledge of patent itself +
infringing it
 D objective believe that there might be an infringement +
deliberate action to avoid learning that fact
 Knowing it exists + chance that there might be a patent

contributory infringer knew that he was causing another person to engage in something was both patented and infringing

"willful blindness: defendant
 (1) "subjectively believe[s] that there is a high probability"
that a patent exists and that the defendant's acts infringe that patent; and
 (2) "take[s] deliberate actions to avoid learning" about those facts.

2. Providing instructions (or otherwise aiding)


S.271(c) explicitly tell knowledge requirement  active inducement and contributory infringement was together  should read them the same

Rubrics cube case: method and instructing people would count
But must be active: not just to publish info about patent, or failure to prevent

2 Copyright P.723-48
Legislative history of indirect copyright liability
- Pre 1976 Act

May 31, 1790 Act §6 "Any person or persons who shall print or publish any manuscript,
without the consent and approbation of the author or proprietor thereof . . . shall be liable to suffer and pay to the said author or proprietor all damages occasioned by such injury."
 19th century: Court introduced "tort" "joint tort feasors" "joint liabilities"
o 1909 Act §1 "Any person entitled thereto… shall have exclusive right: (a) to print.. the copyright work"; §101 "If any person shall infringe the copyright in any work protected..
such person shall liable: (a) to an injunction"Early 20th century: Copyright liability: copyright infringement is a tort  court look to general principles of tort liability in determining the scope of indirect copyright liability 1) Respondeat Superior: Employers liable for infringing acts of their employees (even without express authority or even against orders)
2) Vicarious Liability: Liability extended to those who profit from infringing activity where an enterprise has the right and ability to prevent infringement. 2 elements: (1) third party right and ability to supervise; and (2) direct financial interest 3) Contributory liability: one who, with knowledge of the infringing activity, induces, causes or materially contributes may be held liable as a contributory infringer1976 Act:
o § 106 "the owner of copyright… has exclusive right to do and to authorise any of the following: (1) to reproduce the © work"
 Use of the phrase "to authorise" is intended to avoid any questions as to the liability of contributory infringers

§ 501 "anyone who violates any of the exclusive rights of the copyright owner… is an infringer of the copyright"
 A well-established principle of copyright law is that a person who violates any of the exclusive rights… is an infringer, including persons who can be considered related or vicarious infringers

1976 affirmed 2 types of liabilities:

1. Vicarious liability a) Right and ability to supervise the infringing activity b) Holds a direct financial interest in infringement c) No need for actual knowledge d) Not just an employee/employer relationship

2. Contributory Infringement a) Knowledge of infringing activity (knowledge of specific instances of infringement)
b) Induces causes or materially contributes to direct infringing acts

Contributory Infringement: P.727
- Sony Coporation of America v Universal City Studio, Inc. (Supreme Court 1984)
o Facts: a group of movie studios sued the maker of video cassette recorders (VCRs) for contributory copyright infringement because consumers bought VCRs and used them to tape movies and other programming broadcast by TV stations.
3 o

o

o

 Prof: since end users of VCR are infringers, difficult to sue
Held: for D reversed CA's judgement
 One who supplies the way to accomplish an infringing activity and encourages that activity through advertisement is not liable for copyright infringement.
 If product capable for non-infringing uses, not liable even if it is widely used for infringing uses
 Court must balance the encouraging and rewarding of authors to create new works with the public good
 The only contact is between D and VTR users, at the moment of sale
 no precedent for imposing vicarious liability on the theory that D sold VTRs with constructive knowledge that its customers might use the equipment to make Unauthorised copies of copyrighted material
 selling copying equipment doesn't constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes, or actually,
is merely capable of substantial non-infringing uses
 A large portion of the public's use of VTRs does not implicate copyright; and time-shifting (most common use) constitutes a fair use
 Not court's job to apply laws that have not yet been written
Dissent: majority is deferring to congressional action in face of major technological advancements  court is evading hard issues when they arise in the area of copyright law
 Test for indirect liability for copyright infringement: based on whether the primary use of technology is infringing.
 Which D would have prevailed, given majority's determination that the predominant use of VTRs (time-shifting) constituted fair use.
Prof: both patent law is designed to protect incentive of the owner, and to stop others from using the creation in another way (similar to Copyright law that doesn't want to prevent dissemination of creative work)Napster's Peer-to-peer network technology case [P.734]:
o Facts: Napster centrally kept an index of users  user send query to Napster  Napster send location of the song  request song from Peer to Peer  requestor gets copy of song from its peer  Records sued Napster for contributory infringement

Held for P: D's direct knowledge of copyright infringement by users of its software and its ability to control such activities through the index of file names maintained on its central servers created a responsibility to remove links to infringing content and engage in efforts to police its network  Napster went into bankruptcy

Prof: How is it different from Sony? Napster designed the software + continue to interact with user to aid infringementLater, people developed a Super node Model:
MGM Studios Inc. v. Grokster, Ltd. (Supreme Court 2005)
o Facts: Only maintain structure of all users logged on  when user ask for a song, would go to all online users  peer-to-peer connections without involving a centralized index of songs:
o Issue: under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product

4 o

Held: one who distributes a device with the object of promoting its use to infringe copyright,
shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties
 Sony applied: no liability for marketing a product that is "capable of substantial non-infringing use"
 "Mere knowledge of infringing potential would not be enough for liability,
nor would ordinary acts incident to product distribution, such as offering customers technical support."
 BUT: if with intent to induce (promoting infringement) 
 Intent: promoting infringement (intent to induce) as shown by clear expression or other affirmative steps taken to foster infringement.
 Only purposeful, culpable expression and conduct
 There is active inducement (passive inducement is not enough)
 Profiting, staggering degree of infringement 100M download
 Sony: won't impute intent of infringement, but still liable if intent is found somewhere else (actively inducing infringement) (like in Patent law)

o

Unresolved issue: what is "substantial" non-infringing case
 Overwhelming infringement
 No reasonable prospect of substantial non-infringing use likely to develop over time
 Anecdotal evidence of non-infringing use
 "capable" of substantial or commercially significant non-infringing uses

Copyright: Online Service Provider Safe Harbors P.811-23
- Who is the responsible actor? Liable for © infringement

Clear lability: user

Grey area: networking server provider

No liability: scanner company, computer company
- Bases for © liability

Direct liability

Indirect liability 5 -

Contributory
 Knowledge of infringing activity
 Induce, causes, or materially contributes to direct infringing activity of another
 Vicarious
 Right and ability to control direct infringer's acts
 Receives a direct (or possibly indirect) financial benefit from the infringer
Digital Millennium Copyright Act (DMCA): Safe Harbor

If someone tries to decrypt  liable under new provision

17 USC s. 512
 Safe harbor from liability for:
1) Transmitting material 2) System caching 3) Storing material 4) Linking
 Eligibility
 Adopt, implement, and inform subscribers of termination policy for repeat infringers
 Adopt standard technical measures used by copyright owners to identify and protect copyrighted works
 But subject to subpoena to identify infringement

Some suggest 3D printing invention (lower cost to copy patent) may do the same to patent law
Viacom Int'l, Inc. v. YouTube (2d Cir. 2012)
o Facts: P sued YouTube for direct and secondary copyright infringement based on the public performance, display and reproduction of 79,000 videos on YouTube's website
 P argued D was not entitled to safe harbor protection under DMCA for airing the clips as D was aware or chose a blind eye to the fact that these clips infringed P's copyrights

Held for D: YouTube is qualified for DMCA  Case send back to DC (which found no specific knowledge  D won)
1) DMCA § 512 safe harbor requires knowledge or awareness of specific infringing activity 1) the provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it "acts expeditiously to remove, or disable access to,
the material 2) actual knowledge = subjective belief 3) facts/ circumstances = objective reasonable standard 2) common law willful blindness doctrine may be used to show knowledge or awareness of specific instances of infringement under the DMCA
1) whether the DMCA abrogates the common law doctrine of willful blindness,
which equates willful blindness with knowledge 2) willful blindness is where the person is aware of a high probability of the fact in dispute and consciously avoids confirming that fact.

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