Did the Founding Fathers envision we'd all be digital sharecroppers under Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)?
From Sony Discos, Inc. v. E.J.C. Family Partnership, 2010 WL 1270342, 4 -5 (S.D.Tex. 2010)
If Cole had been even minimally polite, perhaps this suit would never have been filed, and in hindsight, Cole would probably agree that the cost of the offered training was far less than that of litigation. His arguably bad choices are not, however, willful blindness.
A flea market owner does not have the duty to police his vendors, or enforce the producers' copyrights. Clearly, if Cole induced or caused a sale of infringing music, he would be liable. If Cole knew of a particular infringing sale-at the time of the sale-and chose to ignore it, he might be liable. His assertion that he didn't have time to do it and his refusal to consider alternatives does not mean Cole was willfully blind to the vendors' infringing activities. He was not indifferent. On the contrary, he cared very much about the extra work he would have to do to enforce Sony's copyrights.
The essential trade in the Copyright Act is monopoly and policing: the grant of exclusivity comes with the duty to protect it. The Act does not grant the holder the windfall of both monopoly and reimbursement for its maintenance.
Source: Charlotte M. Yonge Young Folks' History of England (Boston: D. Lothrop & Co., 1879)
CONCLUSION
Shapiro and its progeny reveal the danger of misapplying unbounded common-law principles to a statutory scheme that needs neither supplementation nor gap-filling to protect intellectual property. The Copyright Act has existed since 1790, and never in its six iterations has it mentioned vicarious or contributory liability. One must be wary when a lone circuit court in 1963, with one fell swoop, creates a new category of copyright liability.
If vicarious and contributory liability are here to stay, each element must be addressed rigorously and exclusively. The “right and ability to control” the infringer's act cannot be inferred from boilerplate contract language. “Financial benefit” must stem from the infringing goods themselves, not from a flat rate received from infringers and non-infringers alike. “Knowledge” must mean awareness of repeat infringing sellers, rather than past sellers who may never be seen again. “Material contribution” must mean promoting and sustaining infringing activities, not merely providing a site on which some infringing activity may occur. Gutting these elements of their meaning threatens many traditional American marketplaces by imposing impracticable requirements. It also gives copyright holders a windfall by allowing them to manufacture liability with insufficient evidence. At its core, this suit has nothing to do with copyright infringement. It is an attempt to pass the cost of protecting one's copyright to middlemen and, ultimately, to consumers.
Sony is understandably concerned with the unauthorized sale and distribution of copyrighted music. They are welcome to hire full-time investigators at Cole's flea market to increase enforcement of their copyrights. What they may not do is hold Cole liable for illicit sales by third-party, unsupervised vendors-from whom he profits indirectly, if at all-simply because the sales occurred on his land.
Sony will take nothing from Cole.
Them's fightin' words - EFF will be loving this decision. Only in Texas can you ignore those damned lawyer letters and not risk your ranch.
