Sega has not shown that Sherman directly caused the copying, Sherman cannot be
liable for direct infringement.^79(c) The Sabella CaseSimilarly, in Sega Enterprises Ltd. v. Sabella,^80 the court refused to hold a BBS operator
liable for direct infringement of the reproduction right where there was no evidence that the
operator did any unauthorized copying herself. The defendant, Sabella, was the system operator
of a BBS called “The Sewer Line,” which contained a directory called “Genesis,” into which
were uploaded and downloaded infringing copies of Sega’s video games by subscribers to the
BBS. The defendant also sold copiers that enabled users to play Sega games directly from
floppy disks without the need for a Sega game cartridge, and allowed purchasers of her copiers
to download files from her BBS without charge for a certain time period.
Although the court agreed that the defendant’s activities were more participatory than
those of the defendant in Netcom, the court nevertheless found the Netcom court’s logic
persuasive. “Sega has not shown that Sabella herself uploaded or downloaded the files, or
directly caused such uploading or downloading to occur. The most Sega has shown is that
Sabella should have known such activity was occurring, that she sold copiers that played games
such as those on her BBS, and that she gave her copier customers downloading privileges on her
BBS.”^81 Citing Netcom, the court concluded that “whether Sabella knew her BBS users were
(^79) Id. (citations to Netcom omitted). An earlier opinion in the case, issued in conjunction with the granting of a
preliminary injunction to Sega, although somewhat unclear in its holding, seemed to suggest that the defendants
could be held liable for direct infringement, at least for the unauthorized copies being uploaded through the
bulletin board, although not for the subsequent downloading of copies by user of the bulletin board. See Sega
Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679, 683 (N.D. Cal. 1994). The court in the later opinion, however,
disavowed this interpretation of its earlier opinion. With respect to its earlier order granting a preliminary
injunction, the court stated, “To the extent that order can be read to suggest that Sherman may be liable for
direct copyright infringement, it is clarified and superseded by this order.” Sega Enterprises Ltd. v. MAPHIA,
948 F. Supp. 923, 932 n.5 (N.D. Cal. 1996).
The court also rejected a fair use defense raised by Sherman. With respect to the first fair use factor, the
purpose and character of the use, the court found that Sherman’s activities in encouraging the uploading and
downloading of Sega’s games was clearly commercial. “Sherman intended to profit directly from the content of
the information made available on his BBS because his copier customers could use the game files to play the
games rather than purchase Sega game cartridges. This distinguishes Sherman from the Internet provider in
Netcom who did not gain anything from the content of the information available to subscribers.” Id. at 934.
With respect to the second fair use factor, the nature of the copyrighted work, the court noted that the Sega
video games were for entertainment uses and involved fiction and fantasy, so that the second factor weighed
against fair use. Id. The court found that the third factor, the extent of the work copied, weighed against fair
use because BBS users copied virtually entire copyrighted works, and Sherman had not shown any public
benefit or explanation for the complete copying. Id. at 935. Finally, the court found that the fourth factor, the
effect of the use upon the market, also weighed against fair use. “Even if the users are only playing the games
in their own homes and even if there are currently only a limited number of users that have copiers, unrestricted
and widespread conduct of this sort would result in a substantial adverse impact on the market for the Sega
games.”Id.
(^80) 1997 Copyr. Law. Dec. ¶ 27,648 (N.D. Cal. Dec. 18, 1996).
(^81) Id. at 29,847-48.