The much-watched proceeding, testing the robustness of copyright
in the digital age, has taken yet another twist. In Capital
Records Inc. v. Thomas, a federal judge in Minnesota
has nullified the jury's $222,000 judgment against a woman who
"made available" downloads of copyrighted music in the
share folder of her computer via the peer-to-peer (P2P)
file-sharing application Kazaa. The jury had found that the woman
wilfully infringed 24 of the plaintiffs' sound recordings and
awarded them $9,250 for each wilful infringement.
On his own motion, US District Court Judge Michael Davis ruled
that he had made a manifest error of law in his instructions to the
jury. He had told the jurors that "the act of making
copyrighted sound recordings available for electronic distribution
on a peer-to-peer network, without license from the copyright
owners, violates the copyright owners' exclusive right of
distribution, regardless of whether actual distribution has
been shown" (our emphasis).
On a reassessment of the law, the judge concluded that the US
Copyright Act required proof of an "actual
dissemination" to ground distribution liability. In light of
his error, the judge vacated the judgment and ordered a new
McCarthy Tétrault Notes:
On its face, this decision is a defeat for the plaintiff
copyright owners. However, this ruling has at least three
significant silver linings for Canadian rights-holders seeking to
enforce their rights against parties who upload unauthorized copies
of works to shared folders for dissemination through P2P
The ruling does not affect the possibility of plaintiffs to
assert the reproduction right against individuals who copy files to
shared folders for the purpose of distributing them.
The judge concluded that copyright holders can prove an actual
dissemination by having investigative firms capture and chronicle
downloads as users on P2P networks. This conclusion scuttled the
attempt of defendant's counsel and amici curiae
(friends of the court) to argue that the investigators'
downloads were in fact "authorized" uses. In so ruling,
the judge drew on case law deeming the investigator's
assignment to be part of the copyright owner's attempt to stop
infringement, and found that the act of placing copyrighted
materials on a network specifically designed for easy, unauthorized
copying substantially assisted an infringing act.
The judge left the door open to circumstantial proof of an
actual dissemination of copyrighted work over a network. This
suggests that plaintiffs will be able to identify facts or
circumstances that would indicate a likelihood that an unauthorized
distribution occurred by reason of making a file available on a
shared public folder. Such facts or circumstances might include
expert technical reports or statistical studies, long-standing use
of a P2P network, examination of log files or other forensic
evidence, or the intentional removal of such evidence from a
personal computer. As case law develops, these categories will
While Capital Records Inc. v. Thomas is
limited to claims of infringement against a single uploader, these
findings may also aid in creating a foundation for broader-based
authorization or joint or contributory liability theories in order
to stem more systemic acts of Internet-based piracy.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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