(ii) “Defendant has failed to persuade this court that subsection 512(d) shelters contributory
infringers.”^2853
On appeal, the Ninth Circuit reversed this ruling of the district court. The Ninth Circuit
noted that the district court’s ruling that the safe harbor would never apply to a Service Provider
that might otherwise be liable as a contributory infringer was contrary to the legislative history of
the DMCA.^2854 The Ninth Circuit further stated, “We do not agree that Napster’s potential
liability for contributory and vicarious infringement renders the Digital Millennium Copyright
Act inapplicable per se. We instead recognize that this issue will be more fully developed at
trial. At this stage of the litigation, plaintiffs raise serious questions regarding Napster’s ability
to obtain shelter under § 512, and plaintiffs also demonstrate that the balance of hardships tips in
their favor.”^2855
The Ninth Circuit noted that the following questions would have to be resolved at trial
concerning whether Napster was entitled to the safe harbor of Section 512(d): “(1) whether
Napster is an Internet service provider as defined by 17 U.S.C. § 512(d); (2) whether copyright
owners must give a service provider ‘official’ notice of infringing activity in order for it to have
knowledge or awareness of infringing activity on its system; and (3) whether Napster complies
with § 512(i), which requires a service provider to timely establish a detailed copyright
compliance policy.”^2856
b. Perfect 10 v. Cybernet VenturesThe second case to adjudicate the Section 512(d) safe harbor was the case of Perfect 10,
Inc. v. Cybernet Ventures, Inc.^2857 As discussed in Section III.C.6(b)(1)(iii)d. above, the court
concluded that the defendant Cybernet was not entitled to any of the Section 512 safe harbors
because it had failed to satisfy the predicate requirements of Section 512(i). Nevertheless, the
court, in a one sentence ruling also concluded that there was “a residual chance that Cybernet
infringing activity, it had acted expeditiously to block the account of the user who was allegedly sharing
infringing material. Napster’s PI Opp. Br., supra note 1631, at 33.(^2853) A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919 n. 24 (N.D. Cal. 2000).
(^2854) A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001) (quoting S. Rep. 105-90, at 40 (1998),
which stated: “The limitations in subsections (a) through (d) protect qualifying service providers from liability
for all monetary relief for direct, vicarious, and contributory infringement.”). This sentence from the legislative
history was also quoted in a discussion of the scope of the DMCA safe harbors by the court in its opinion in In
re Verizon Internet Services, Inc., 65 U.S.P.Q.2d 1574 (D.D.C. 2003). The court also stated, in the context of
ruling on the scope of the subpoena power under Section 512(h) of the DMCA, that “in exchange for complying
with subpoenas under subsection (h), service providers receive liability protection from any copyright
infringement – direct or vicarious – by their users.” Id. at 1581 n.6.
(^2855) Napster, 239 F.3d at 1025.
(^2856) Id. The bases for the district court’s doubts about whether Napster satisfied Section 512(i) are discussed in
Section C.5(b)(1)(i)a. above with respect to the court’s ruling on whether Napster was entitled to the safe harbor
of Section 512(a).
(^2857) 213 F. Supp. 2d 1146 (C.D. Cal. 2002).