and it was therefore important that it not permit inducement liability’s relatively lax causation
requirement to enlarge the scope of copyright to encompass control over an article of commerce,
such as technology capable of substantial non-infringing uses. The court noted the following
limitations flowing out of the Grokster case. Mere knowledge of infringing potential or of actual
infringing uses does not subject a product distributor or service provider to liability. When
dealing with corporate or entity defendants, the relevant intent must be that of the entity itself, as
defined by traditional agency law principles; liability cannot be premised on stray or
unauthorized statements that cannot fairly be imputed to the entity. In addition, if an entity
begins providing a service with infringing potential at time A, but does not appreciate that
potential until later and so does not develop and exhibit the requisite intent to support
inducement liability until time B, it would not be held liable for the infringement occurring
between times A and B. Relatedly, an individual or entity’s unlawful objective at time B would
not be a virus that infects all future actions.^2215 “People, companies, and technologies must be
allowed to rehabilitate, so to speak, through actions actively discouraging the infringing use of
the product, lest the public be deprived of the useful good or service they are still capable of
producing.”^2216
Fung argued that, because other individuals and entities provided services identical to
those he offered, causation, even in the relatively loose sense the court had articulated, could not
be assumed. He argued that if a user obtained a torrent from a source other than his web sites, he
could not be held liable for the infringement that resulted. The court rejected this argument,
noting that Fung’s services encompassed more than the provision of torrent files. His trackers
managed traffic for torrent files, obtained from his owns sites as well as other torrent sites, which
enabled users to download copyrighted content. If the plaintiffs could show a sufficient causal
connection between users’ infringing activity and the use of Fung’s trackers, the fact that torrent
files were obtained from elsewhere could not relieve Fung of liability. The court noted that it
need not decide the degree to which Fung could be held liable for having caused infringements
by users of his sites or trackers. The only issue presently before the court was the permanent
injunction, which did not in this case depend on the exact calculation of infringing use as a basis
for a claim of damages. Thus, Fung’s causation arguments were left to the district court to
consider when calculating damages. Accordingly, the Ninth Circuit affirmed the district court’s
grant of summary judgment to the plaintiffs on the issue of Fung’s liability for inducement.^2217
After the Ninth Circuit’s decision, Fung agreed to a $110 million judgment and to shut
down his web site by Oct. 23, 2013.^2218
(^2215) Id. at 1037-38.
(^2216) Id. at 1038.
(^2217) Id. at 1038-39.
(^2218) “Website at Center of Copyright Infringement Action Agrees to Shut Down World Wide,” BNA’s Patent,
Trademark & Copyright Journal (Oct. 17, 2013), available as of Oct. 17, 2013 at
http://iplaw.bna.com/iprc/display/simple_doc_display.adp?fedfid=37305808&vname=ptdbulallissuesdib&jd=a0
e2n9r2f6&split=0#a0e2n9r2f6.