New Jersey Law Journal,
July 23, 2001
Copyright 2001 American Lawyer Newspapers Group, Inc.
New Jersey Law Journal
July 23, 2001
LENGTH: 2211 words
HEADLINE: Intellectual Property Infringement by ISPs Internet service
providers could be liable for infringement under the Digital Millennium
BYLINE: JONATHAN BICK (www.BickLaw.com)
THE AUTHOR IS AN ADJUNCT PROFESSOR OF INTERNET LAW AT PACE LAW SCHOOL
AND RUTGERS LAW SCHOOL. HE IS ALSO THE AUTHOR OF 101 THINGS YOU NEED
TO KNOW ABOUT INTERNET LAW (RANDOM HOUSE 2000).
*Three years ago, Congress passed the Digital Millennium Copyright Act
and established a safe harbor for Internet site operators and service
providers that limited or eliminated liability for using content, or
for linking to another Web site that contained content, that infringed
on a copyright. As a result, thousands of businesses flocked to the
Internet. A recent court of appeals decision, however, stuck a pin in
the balloon when it held that an Internet service provider could be
liable for infringement -- even if it had fully complied with the DMCA.
*As a result of this decision, ISPs may no longer rely on the safe-harbor
provisions of the DMCA to protect them from infringement liability.
In particular, the immunity will not apply to an ISP that has been put
on notice of infringing activity on its system, even if the notice is
insufficient. Thus, the DMCA's protection of an innocent service provider
disappears at the moment the service provider is informed that a third
party is using its system to infringe.
*In a case of first impression, ALS Scan, Inc. v. RemarQ Communities,
Inc., 239 F.3d 619, (4th Cir. 2001), the Fourth Circuit held recently
that despite the defendant's compliance with the safe harbor provisions,
it was not allowed to exploit the immunity defense offer by the DMCA.
Such judicial action suggests that thousands of companies should reconsider
their liability for Internet content; the DMCA's safe harbor may no
longer be safe.
*Before enactment of the DMCA, courts were able to hold ISPs liable
for copyright infringements committed by their subscribers. The argument
supporting such liability claims was that the risk of copyright infringement
is simply a byproduct of Internet services offered by ISPs.
*Under the principles of enterprise liability, ISPs should internalize
losses resulting from the risk of copyright infringement as a cost of
doing business. See George L. Priest, The Invention of Enterprise Liability:
A Critical History of the Intellectual Foundations of Modern Tort Law,
14 J. LEGAL STUD. 461, (1985) (relating the rise of enterprise liability
as a theory of tort law). In other words, by exposing an ISP to infringement
litigation, ISPs would be deterred from engaging in such infringement.
*In addition, three copyright doctrines offer reasonable support for
the general idea of ISP liability. First, the ISPs' control of the hardware
and software that stores and transmits copies of copyrighted material
may be enough to make ISPs directly liable as copyright infringers,
with or without a finding of liability against the user. Second, the
relationship between an ISP and its customers gives rise to an ISP's
vicarious liability. Third, an ISP might face contributory liability
if it knowingly provides Internet service to a subscriber who is committing
*In spite of these theories, Congress was convinced that ISPs should
not be liable under certain circumstances and created the DMCA, which
creates four limitations on liability for copyright infringement by
site operators and service providers. These limitations effectively
resulted in a complete bar on monetary damages for direct, contributory
and vicarious infringement and also restricted the availability of injunctive
relief. See 17 U.S.C. ' 512.
*The DMCA grants the protection of this safe harbor if the site operator
or service provider lacks actual knowledge of the material's infringing
nature and is not aware of facts or circumstances from which infringing
activity is apparent. It should be noted in order to claim the protections
of these safe harbors, site operators and service providers are not
required to monitor the Web sites to which they link or to affirmatively
seek facts indicating infringing activity.
*Once aware of infringement, however, the Internet site operator must
act rapidly to remove the infringing material in accordance with the
notice and take-down provisions of the DMCA.
*In ALS Scan, the Fourth Circuit reversed the District Court when it
found that an ISP, which was given an infringement notice that substantially
complied with the act, "may not rely on a claim of defective notice
to maintain the immunity defense provided by the safe harbor."
In short, the court found that the ISP could be liable for copyright
infringement even though it had complied with the DMCA's requirements.
*ALS Scan, Inc. maintained an Internet site where subscribers could
pay for access to copyrighted adult images. Defendant RemarQ Communities
Inc. provided a system where users could post materials. ALS sued RemarQ
after it refused to block access to users posting infringing copies
of ALS photographs. The U.S. District Court for the District of Maryland
granted summary judgment to RemarQ, after finding that RemarQ was entitled
to immunity as an ISP under the DMCA and ALS failed to comply with the
"notice and takedown" provisions of the DMCA.
*The District Court in this matter held that RemarQ was not liable for
contributory infringement because ALS Scan failed to comply with the
notice requirements set forth in the DMCA, 17 U.S.C. ' 512(c)(3)(A).
ALS Scan contended that the District Court erred in dismissing its direct
copyright infringement claim.
*In rejecting ALS Scan's direct infringement claim, the District Court
relied on the decision in Religious Technology Center v. Netcom On-Line
Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), which
concluded that when an Internet provider serves, without human intervention,
as a passive conduit for copyrighted material, it is not liable as a
*ALS argued that the better reasoned position, contrary to that held
in Netcom, is presented in Playboy Enterprises, Inc. v. Frena, 839 F.
Supp. 1552 (M.D. Fla. 1993), which held a computer bulletin board service
provider liable for the copyright infringement when it failed to prevent
the placement of plaintiff's copyrighted photographs in its system,
despite any proof that the provider had any knowledge of the infringing
*In reversing the District Court, the Fourth Circuit disregarded the
safe- harbor nature of the immunity set forth in the DMCA by finding
that copyright holders need only substantially comply with notice requirements
set by Congress. This finding was made despite the fact that it is stated
in the DMCA: "To be effective under this subsection, a notification
of claimed infringement must be a written communication provided to
the designated agent of a service provider that includes substantially
the following." 17 U.S.C. ' 512(c)(3)(A).
*In this case, even though the ISP had received defective notice of
infringing materials on its system, it could not avail itself of the
DMCAs safe harbor because the court found that substantial compliance
with the act's notice requirements was sufficient.
*Title II of the DMCA limits copyright infringement liability for Internet
service providers. In particular, provisions are made for limiting liability
for copyright infringement resulting from transitory digital network
communications, system caching and information residing on networks
at the direction of users, as well as information location tools, including
*The DMCA's so-called safe harbor for online service providers and Internet
service providers is a statutory exchange of action for immunity. Congress
used the safe-harbor provision to provide a strong incentive for OSPs
and ISPs to control their users at the request of allegedly aggrieved
right holders. This action was in exchange for the negation of their
own possible liability. As a result, OSPs and ISPs are required to take
down content when notified by the allegedly aggrieved right holder.
*No remuneration for the ISPs or OSPs was contemplated other than immunity.
A grant of a motion for summary adjudication under 17 U.S.C. '512(a),
the safe- harbor provision of the DMCA, was contemplated as the major
benefit for complying with the DMCA.
*ALS Scan admitted that it did not comply with the DMCA. RemarQ claimed
that due to the inadequate compliance with the DMCA it had no way of
knowing what to eliminate. This claim was substantiated by a finding
that the infringing material in question was commingled with noninfringing
*Nevertheless, rather than giving the statutory immunity associated
with compliance with all the safe-harbor requirements, the court found
that the safe-harbor provision only provides substantial rather than
perfect immunity. The case was remanded for further proceedings on ALS
Scan's copyright claims and any additional affirmative defenses from
*The DMCA adds a new section to the remedies chapter of the Copyright
Act. This new section (512) exempts online service and access providers
from liability for damages for copyright infringement and significantly
reduces the scope of injunctive relief. This section only is applicable
if the providers meet the statute's cumulative factors assessing the
independence of the providers from the infringing content they transmit
or host. Failure to comply with '512 does not by itself subject the
service provider to liability for copyright infringement; '512 offers
a safe harbor, but a nonqualifying provider must still be proved to
have infringed and may still invoke traditional copyright and other
*The DMCA explicitly provides limitations on liability for ISPs regarding
copyright infringement. Section 512(a) as amended by the DCMA states
that an ISP is not liable for copyright infringement "by reason
of the provider's transmitting, routing, or providing connections for,
material through a system or network controlled or operated by or for
the ISP, or by reason of the intermediate and transient storage of that
material" in performing this service.
*This limitation is conditioned on six factors: (1) the transmission
being at the request of a person or entity other than the ISP; (2) the
selection of the material transmitted by a person or entity other than
the ISP; (3) the selection of the recipient of the material transmitted
by a person or entity other than the ISP; (4) the ISP not maintaining
a copy accessible to anyone other than the requesting party; (5) the
ISP not maintaining a copy longer than is reasonably required for the
transmitting, routing, or provision of connections; and (6) the ISP
transmitting material without modification.
*The plain meaning of '512(a) insulates ISPs from claims of contributory
copyright infringement resulting from aiding users in accessing material
on the Web. Section 512(b) limits ISPs' liability regarding system caching,
which involves storing a copy of material in the system as a result
of a request. In particular, '512(b)(1) provides that an ISP is not
liable "for infringement of copyright by reason of the intermediate
and temporary storage of material on a system or network controlled
or operated by or for the service provider."
*This language protects ISPs from claims of direct infringement for
storing copies, or equivalently reproductions, of the work on the ISP
systems as a result of a user's request. This protection is conditioned
on: (1) the material having been made available on the Web by someone
other than the ISP; (2) the material being transmitted at the direction
of someone other than the ISP; and (3) the storage occurring as part
of an automatic process for the purpose of making it available to the
*In addition, the ISP must not alter the material, must comply with
any requirements imposed by the person making the material available
on the Web and must ensure that any access requirements such as passwords
for users are met. Further, the ISP must disable access expeditiously
if notified that the material was made available without authorization
of the copyright holder.
*But beware: The Fourth Circuit's finding appears to contravene the
intent of Congress. ALS Scan is a most significant case for ISPs and
copyright holders because it severely limits the benefits associated
with the DMCA. It is likely to have an immediate chilling effect on
*It has a secondary impact as well, with respect to judicial action.
Normally, courts refrain from changing any publicly available statutory
standard adopted in good faith to implement the requirements of the
law. This is particularly true when the provision in question is known
in the congressional record to be a safe harbor.
*Finally, this case could have the effect of reducing the incentive
for networks to police themselves and may result in an increase in judicial
*The court understood that the issue was whether an Internet service
provider enjoys a safe harbor from copyright infringement liability
when it is put on notice of infringement activity on its system by an
imperfect notice. Thus, it knew that it was dismantling a safe harbor.
LOAD-DATE: July 23, 2001