Last month, a New York district court refused to dismiss most of
the copyright infringement claims asserted against a website
operator based on an allegation that the website linked to an
infringing copy of plaintiff's software stored on a
third-party's servers. (Live Face on Web, LLC v. Biblio Holdings
LLC, 2016 WL 4766344 (S.D.N.Y., September 13, 2016)).
The software at issue allows websites to display a video of a
personal host to welcome online visitors, explaining the
website's products or services and, ideally, capturing the
attention of the visitor and increasing the site's
"stickiness." A website operator/customer
implements the software by embedding an HTML script tag to its
website code to link the website to a copy of the software on the
customer's server or an outside server. When a user's
browser retrieves a webpage, a copy of the software is allegedly
stored on the visitor's computer in cache.
The plaintiff claimed that the defendant used an infringing
version of its software to display the welcome video on its
website. The defendant countered that, in good faith, it
hired a web developer to implement this functionality, that the
developer represented that it had exclusive rights to its software,
and that the software was not hosted by the defendant.
At this early stage of the litigation, the court allowed the
claim of direct copyright infringement to go forward. Based
upon the allegations in the complaint, the court reasoned that the
infringing software was automatically saved into the cache or RAM
of website visitors that resulted in the display of the
spokesperson video on their screens – actions that
sufficiently allege distribution of the infringing software.
The court noted, however, that defendant may have a viable
defense (based on the landmark 2007 Perfect 10 decision)
that the act of inline linking to infringing copies of software
hosted and distributed by a third party does not constitute direct
infringement – in essence, because the infringing software
was stored and distributed from a third-party web developer's
servers, defendant cannot be deemed a direct infringer.
However, the court felt that the issue was not adequately briefed
and required additional discovery. Another issue that
required additional discovery was defendant's argument that any
storage of the infringing software on users' systems was only
for a "transitory duration" and not sufficiently
"fixed" as to create an infringing copy under controlling
Second Circuit precedent; again, the court stated that "to the
extent that the duration of storage on users' systems is
relevant, it presents an issue of fact."
Regarding secondary liability, the court dismissed the
plaintiff's contributory infringement claim, finding nothing in
the complaint suggesting that defendant had knowledge it was using
an infringing version of plaintiff's software or that it
otherwise materially contributed to the infringing conduct. Yet,
the court allowed the vicarious liability claim to proceed, finding
that the complaint plausibly alleged that defendant controlled the
allegedly unlawful distribution of software to website visitors and
arguably benefited from the increased web traffic.
The dispute is an interesting one, as it highlights some of the
more evolving areas of copyright law that crop up when content or
software is delivered over the web or from remote servers. As
mentioned by the court, the involvement of defendant's outside
web developer "may be significant in determining
defendants' ultimate liability," particularly in
determining any potential damages and whether plaintiff might only
garner a minimal statutory award.
Ultimately, the lesson is that lawyers need to be in synch with
tech developers as new initiatives are developed. Although it
is not clear from the opinion, one would expect that the
defendant's contract with its developer might have contained
appropriate intellectual property representations and indemnities.
Even so, as a practical matter, this case illustrates the value of
doing reasonable diligence when third party software will be an
important part of one's online presence.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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