also ruled that LoopNet did not receive a direct financial benefit from the infringing activity
because LoopNet did not charge a fee for posting any real estate listing, with or without a
photograph.^2456
Contributory Liability Before the Safe Harbor Applicability Date. The court next turned
to an analysis of LoopNet’s contributory liability for activity before December 8, 1999, the date
that LoopNet designated an agent to receive notifications of claimed infringement under the
DMCA and therefore first became eligible for the Section 512(c) safe harbor. The court’s
discussion of common law liability provides a nice analysis of the interplay and differences
between the standards of knowledge and policing for infringing activity required under the
common law versus the DMCA safe harbors.
Knowledge for Purposes of Common Law Liability. CoStar argued that once it gave
LoopNet notice of specific infringements, LoopNet was on notice that ongoing infringements
were occurring and had a duty to prevent repeat infringements. LoopNet argued that it could not
be charged with imputed knowledge of future infringements. The court held that the amount of
policing for future infringements LoopNet would be required to do would depend upon the level
of knowledge it possessed:
There is a critical interplay between the level of knowledge possessed by LoopNet
as a result of CoStar’s notices and the amount of policing, deterrence and removal
demanded of LoopNet to avoid being liable for contributory infringement. If
CoStar’s notice to LoopNet gave LoopNet a broad scope of knowledge that
infringements were occurring, then it creates a high level of policing necessary by
LoopNet to avoid inducing infringement.The issue of the adequacy of LoopNet’s removal policy is different at this stage
than it was when assessing its adequacy for the purposes of the DMCA safe
harbor. In the safe harbor context, the removal policy had adequately to remove
infringing or allegedly infringing material. If LoopNet met the standard following
notice it was shielded from damages liability by the safe harbor. In the context of
assessing liability for contributory infringement, the question is not whether
LoopNet adequately removed the infringing material, but whether, at some point,
it created an inducement to put infringing material up on the site.^2457The court noted that, while LoopNet’s continued control over access to its site made it
more similar to the swap meet owner in the Fonovisa case or the BBS operator in the Maphia
case than to the mere seller of goods in the Sony case, there were elements of knowledge in the
Fonovisa and Maphia cases that the court found not present in the instant case. Instead, the court
analogized to the Netcom case, finding that LoopNet’s circumstances resided “in that gray
middle range of cases in which the service provider has information suggesting, but not
conclusively demonstrating, that subscribers committed infringement. ... Netcom stands for the
(^2456) Id. at 704.
(^2457) Id. at 706.