the right and ability to control the infringing activity for purposes of common law vicarious
liability.^2281
With respect to the financial benefit prong of vicarious liability, the district court held
that AOL received no direct financial benefit from the infringing activity. The court ruled that
the direct financial benefit prong requires a showing that a “substantial” proportion of a
defendant’s income be directly linked to infringing activity.^2282 AOL did not receive any
financial compensation from its peering agreements and participation in Usenet, and the
availability of Usenet did not act as a “draw” for customers under the Napster I case. In
particular, the court noted that any “draw” to a particular newsgroup, such as alt.binaries.e-book,
was miniscule, as the pro rata “draw” of a single newsgroup was only about 0.00000596% of
AOL’s total usage (there were 43,000 total newsgroups available through AOL). Usenet usage
constituted a very small percentage of total AOL usage, and the plaintiff had not produced any
evidence that a significant portion of even that minimal usage entailed the illegal exchange of
copyrighted material.^2283 Accordingly, the court granted summary judgment to AOL on the
plaintiff’s claim for vicarious liability.^2284
On appeal, the Ninth Circuit affirmed the finding of no vicarious liability, although the
Ninth Circuit disagreed with the district court’s ruling that to establish a direct financial benefit,
the plaintiff must show that a “substantial” proportion of a defendant’s income be directly linked
to infringing activity. The Ninth Circuit stated that it is sufficient if infringing activity is a
“draw” for customers, and there is no requirement that such draw be “substantial.”^2285 “The
essential aspect of the ‘direct financial benefit’ inquiry is whether there is a causal relationship
between the infringing activity and any financial benefit a defendant reaps, regardless of how
substantial the benefit is in proportion to a defendant’s overall profits.”^2286
The Ninth Circuit ruled that the plaintiff had not submitted sufficient evidence to raise a
triable issue of fact under the direct financial benefit prong, and in the course of its discussion,
fleshed out what sort of evidence would be required to show that infringing activity on a
particular site constitutes a “draw” to that site:
We recognize, of course, that there is usually substantial overlap between aspects
of goods or services that customers value and aspects of goods or services that
ultimately draw the customers. There are, however, cases in which customers
value a service that does not “act as a draw.” Accordingly, Congress cautions
courts that “receiving a one-time set-up fee and flat periodic payments for service
... [ordinarily] would not constitute receiving a ‘financial benefit directly(^2281) Id. at 1061-62.
(^2282) Id. at 1062-64.
(^2283) Id. at 1062-63.
(^2284) Id. at 1064.
(^2285) Ellison v. Robertson, 357 F.3d 1072, 1078-79 (9th Cir. 2004).
(^2286) Id. at 1079 (emphasis in original).