COOPERATIVE An association or corporation established for the purpose of providing services on a nonprofit basis to its shareholders or members who own and control it. The nature and functions of cooperatives differ considerably—suc h as purcha sing coop- eratives, consumer cooperatives, and marketing cooperatives. In the context of agriculture, a farmers’ cooperative refers to an organization of farmers residing in the same locale that is established for their mutual benefit in regard to the cultivation and harvest of their products, the purchase of farm equipment and supplies at the lowest possible cost, and the sale of their products at the maximum possible price. The term cooperative also signifies the ownership of an apartment building by a nonprofit corporation that holds title to it and the property upon which it is situated. Stock in the corporation is allotted among the apartment units on the basis of their relative value or size. The right of occupancy to a particular apart- ment is granted to each cooperative member, who purchases the shares assigned to the desired unit. The member subsequently receives a long-term proprietary lease to that unit. The rent payable pursuant to the lease is that member’s proportionate share of the expenses the corporation incurs in operating the cooper- ative—such as insurance, taxes, mainte nance, management, and debt service. The cooperative concept evolved in New York City during the early 1900s as a mode of accommodating the public’s desire for home ownership; it subse- quently expanded to other large urban centers. In order to finance the pur chase or construction of the cooperative building, the cooperative places a blanket mortgage on the property, which is pledged to support the given debt. Lenders usually are hesitant to accept an individual member’s stock and proprietary lease as security for a long-term loan. The members’ lien (a claim on property to satisfy a debt) on the lease would be subordinate to the blanket mortgage on the property. The purchaser of a cooperative apartment usually must have suffi- cient cash available to pay for the stock allotted to the unit he or she wishes to obtain. The initial price of the stock generally does not exceed the amount required for a DOWN PAYMENT on a single-family residence. As cooperative members accumulate equity (the value of property exceeding the total debts on it) in their stock, subsequent purchasers must either have a substantial amount of cash available or locate a seller who is willing to recoup the equity in installments over several years. Cooperative members are also financially dependent on each other. The existence of a single blanket mortgage paid by rent receipts means that if several members default in their rent payments, the corporation might not have sufficient funds to pay a mortgage loan install- ment. Foreclosure will ensue in regard to the entire membership unless it acts to satisfy the default. Although special reserves and assess- ments are generally employed to cover such a contingency, the available funds might be inadequate to prevent default. COOPERATIVES See CONDOMINIUMS AND COOPERATIVES. COPYRIGHT Copyright covers a bundle of intangible rights granted by statute to the author or originator of certain literary or artistic productio ns, whereby, for a limited period, the exclusive privilege is given to that person (or to any party to whom he or she transfers ownership) to make copies of the same for publication and sale. A copyright is a legal device that gives the creator of a literary, artistic, musical, or other creative work the sole right to publish and sell that work. Copyright owners have the right to control the reproduction of their work, includ- ing the right to receive payment for that reproduction. An author may grant or sell those rights to others, including publishers or record- ing companies. Violation of a copyright is called infringement. Copyright is distinct from other forms of creator protection such as patents, which give inventors exclusive rights over use of their inventions, and trademarks, which are legally protected words or symbols or certain other distinguishing features that represent products or services. Similarly, whereas a patent protects the application of an idea, and a trademark protects a device that indicates the provider of particular services or goods, copyright protects the expres- sion of an idea. Whereas the operative notion in patents is novelty, so that a patent represents GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 198 COOPERATIVE some invention that is new and has never been made before, the basic concept behind copyright is originality, so that a copyright represents something that has originated from a particular author and not from another. Copyrights, patents, and trademarks are all examples of what is known in the law as INTELLECTUAL PROPERTY. As the media on which artistic and intellec- tual works are recorded have changed with time, copyright protection has been extended from the printing of text to many other means of recording original expressions. Besides books, stories, periodicals, poems, and other printed literary works, copyright may protect computer programs; musical compositions; song lyrics; dramas; dramatico-musical compositions; pic- torial, graphic, and sculptural works; architec- tural works; written directions for pantomimes and choreographic works; motion pictures and other audiovisual works; and sound recordings. History of Copyright Law U.S. copyright law grew out of English COMMON LAW and statutory law. When the printing press was developed in the fifteenth century, rights for the reproduction of written works extended to printers rather than to authors. In England, a printers’ guild, the Stationers’ Company, claimed for itself the exclusive right—in effect, a monopoly—on written works. It was not until 1710 that Parliament passed a statute relating to copyright. That law, called the Statute of Anne, established authors’ rights to control the repro- duction of their work after it was published. It also created a term of protection of 28 years from the date of publication. After that time, an author’s work entered the PUBLIC DOMAIN,mean- ing that anyone could print or distribute it without obtaining the author’spermissionor paying a royalty, or fee, to the author. Other European countries developed similar laws in the late eighteenth and early nineteenth centuries. Under the British system, the author retained a common-law right to ownership of his or her work until publication. After publication, copyright was established as a statutory right, protected by the Statute of Anne. U.S. copyright law retained this distinction between prepublica- tion common-law rights and postpublication statutory rights, until 1976. By the late eighteenth century, the protec- tion of intellectual property as a means of advancing the PUBLIC INTER EST was considered important enough to receive mention in the U.S. Constitution. The Patent and Copyright Clause (U.S. Const., art. I, § 8, cl. 8) empowers Congress “[t]to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Congress passed its first copyright statute in 1790 and has revised copyright law four times, in 1831, 1870, 1909, and 1976. Revisions in the copyright law have been driven largely by commercially significant changes in technology. In 1802, for example, graphic prints came under copyright protection, establishing the notion that the Constitution’s language regarding copyright not be interpreted to apply literally to “Writings” alone. In 1831 musical compositions were incorporated into copyright protection, and in 1870 paintings, statues, and other works of fine art were placed under copyright protection. The distinction between common-law pro- tection for unpublished works and statutory Copyright Registration by Subject Matter, 2007 a (in thousands) SOURCE: U.S. Copyright Office, Annual Report of the Register of Copyrights, 2007. Sound recordings 53.6 Renewals 1.4 Works of the visual arts d 89.3 Monographs b 198.6 Serials 52.6 a Includes published and unpublished works. b Includes traditional books, computer software, and machine readable works. c Includes dramatic works, musical works, choreography, pantomimes, motion pictures, and filmstrips. d Two-dimensional works of fine or graphic art, including prints and art reproductions; sculptural works; technical drawings and models; photographs; commercial prints and labels; works of applied arts, cartographic works; and multimedia works. Works of the performing arts c 130.6 ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION COPYRIGHT 199 FORM TX For a Nondramatic Literary Work UNITED STATES COPYRIGHT OFFICE REGISTRATION NUMBER TX TXU EFFECTIVE DATE OF REGISTRATION Month Day Year DO NOT WRITE ABOVE THIS LINE. IF YOU NEED MORE SPACE, USE A SEPARATE CONTINUATION SHEET. TITLE OF THIS WORK ᭢ PREVIOUS OR ALTERNATIVE TITLES ᭢ PUBLICATION AS A CONTRIBUTION If this work was published as a contribution to a periodical, serial, or collection, give information about the collective work in which the contribution appeared. Title of Collective Work ᭢ If published in a periodical or serial give: Volume ᭢ Number ᭢ Issue Date ᭢ On Pages ᭢ Copyright Form Copyright Office fees are subject to change. For current fees, check the Copyright Office website at www.copyright.gov, write the Copy- right Office, or call (202) 707-3000. NOTE Under the law, the "author" of a "work made for hire" is generally the employer, not the employee (see instruc- tions). For any part of this work that was "made for hire" check "Yes" in the space provided, give the employer (or other person for whom the work was prepared) as "Author" of that part, and leave the space for dates of birth and death blank. NAME OF AUTHOR ᭢ DATES OF BIRTH AND DEATH Year Born ᭢ Year Died ᭢ Was this contribution to the work a AUTHOR'S NATIONALITY OR DOMICILE WAS THIS AUTHOR'S CONTRIBUTION TO "work made for hire"? Name of Country THE WORK ٗ Yes Citizen of ᭤ Anonymous? ٗ Yes ٗ No ٗ No Domiciled in ᭤ Pseudonymous? ٗ Yes ٗ No NATURE OF AUTHORSHIP Briefly describe nature of material created by this author in which copyright is claimed. ᭢ NAME OF AUTHOR ᭢ DATES OF BIRTH AND DEATH Year Born ᭢ Year Died ᭢ Was this contribution to the work a AUTHOR'S NATIONALITY OR DOMICILE WAS THIS AUTHOR'S CONTRIBUTION TO "work made for hire"? Name of Country THE WORK ٗ Yes Citizen of ᭤ Anonymous? ٗ Yes ٗ No ٗ No Domiciled in ᭤ Pseudonymous? ٗ Yes ٗ No NATURE OF AUTHORSHIP Briefly describe nature of material created by this author in which copyright is claimed. ᭢ NAME OF AUTHOR ᭢ DATES OF BIRTH AND DEATH Year Born ᭢ Year Died ᭢ Was this contribution to the work a AUTHOR'S NATIONALITY OR DOMICILE WAS THIS AUTHOR'S CONTRIBUTION TO "work made for hire"? Name of Country THE WORK ٗ Yes Citizen of ᭤ Anonymous? ٗ Yes ٗ No ٗ No Domiciled in ᭤ Pseudonymous? ٗ Yes ٗ No NATURE OF AUTHORSHIP Briefly describe nature of material created by this author in which copyright is claimed. ᭢ YEAR IN WHICH CREATION OF THIS DATE AND NATION OF FIRST PUBLICATION OF THIS PARTICULAR WORK WORK WAS COMPLETED If the answer to either of these questions is "Yes," see detailed instructions. OR { If the answer to either of these questions is "Yes," see detailed instructions. OR { OR { If the answer to either of these questions is "Yes," see detailed instructions. This information must be given in all cases. Complete this information Month ᭤ Day ᭤ Year ᭤ ONLY if this work has been published. ᭣ Year ᭣ Nation APPLICATION RECEIVED ONE DEPOSIT RECEIVED TWO DEPOSITS RECEIVED FUNDS RECEIVED COPYRIGHT CLAIMANT(S) Name and address must be given even if the claimant is the same as the author given in space 2. ᭢ TRANSFER If the claimant(s) named here in space 4 is (are) different from the author(s) named in space 2, give a brief statement of how the claimant(s) obtained ownership of the copyright. ᭢ DO NOT WRITE HERE OFFICE USE ONLY See instructions before completing this space. 1 a 2 3 4 b a b c MORE ON BACK ᭤ • Complete all applicable spaces (numbers 5-9) on the reverse side of this page. DO NOT WRITE HERE • See detailed instructions. •Sign the form at line 8. Page 1 of ________ pages [continued] GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 200 COPYRIGHT DO NOT WRITE ABOVE THIS LINE. IF YOU NEED MORE SPACE, USE A SEPARATE CONTINUATION SHEET. Copyright Form 5 a FORM TX EXAMINED BY CHECKED BY ٗ CORRESPONDENCE Yes FOR COPYRIGHT OFFICE USE ONLY PREVIOUS REGISTRATION Has registration for this work, or for an earlier version of this work, already been made in the Copyright Office? ٗ Yes ٗ No If your answer is "Yes" why is another registration being sought? (Check appropriate box.) ᭢ a. ٗ This is the first published edition of a work previously registered in unpublished form. b. ٗ This is the first application submitted by this author as copyright claimant. c. ٗ This is a changed version of the work, as shown by space 6 on this application. If your answer is "Yes" give: Previous Registration Number ᭤ Year of Registration ᭤ DERIVATIVE WORK OR COMPILATION Preexisting Material Identify any preexisting work or works that this work is based on or incorporates. ᭢ Material Added to This Work Give a brief, general statement of the material that has been added to this work and in which copyright is claimed. ᭢ DEPOSIT ACCOUNT If the registration fee is to be charged to a Deposit Account established in the Copyright Office, give name and number of Account. Name ᭢ Account Number ᭢ CORRESPONDENCE Give name and address to which correspondence about this application should be sent. Name/Address/Apt/City/State/ZIP ᭢ Area code and daytime telephone number ᭤ Fax number ᭤ Email ᭤ CERTIFICATION* I, the undersigned, hereby certify that I am the of the work identified in this application and that the statements made by me in this application are correct to the best of my knowledge. Typed or printed name and date ᭢ If this application gives a date of publication in space 3, do not sign and submit it before that date. Date ᭤ Handwritten signature (X) ᭢ X ٗ author ٗ other copyright claimant ٗ owner of exclusive right(s) ٗ authorized agent of Name of author or other copyright claimant, or owner of exclusive right(s) ᭡ Check only one ᭤ { Certificate will be mailed in window envelope to this address: Name ᭢ Number/Street/Apt ᭢ City/State/ZIP ᭢ Fees are subject to change. For current fees, check the Copyright Office website at www.copyright.gov, write the Copyright Office, or call (202) 707-3000. YOU MUST: • Complete all necessary spaces • Sign your application in space 8 SEND ALL 3 ELEMENTS IN THE SAME PACKAGE: 1. Application form 2. Nonrefundable filing fee in check or money order payable to Register of Copyrights 3. Deposit material MAIL TO: Library of Congress Copyright Office 101 Independence Avenue, S.E. Washington, D.C. 20559-6000 6 7 8 9 a a a See instructions before completing this space. *17 U.S.C. § 506(e): Any person who knowingly makes a false representation of a material fact in the application for copyright registration provided for by section 409, or in any written statement filed in connection with the application, shall be fined not more than $2,500. Rev: June 2002—20,000 Web Rev: June 2002 Printed on recycled paper U.S. Government Printing Office: 2000-461-113/20,021 ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION COPYRIGHT 201 protection of published works received increas- ing criticism in the twentieth century, particu- larly as the notion of publication changed greatly with technological innovations in com- munication. Congress removed this distinction in the landmark Copyright Act of 1976 (17 U.S. C.A. § 102[a]). According to this statute, an author receives copyright protection as soon as a work is recorded in a concrete way, for example, when it is written on a piece of paper, recorded on an audiotape, or stored on a computer disk. Any unauthorized copying of the work is subject to an infringement suit and criminal charges. The 1976 act also allows copyright protection of works that derive from the original, such as motion pictures, CD-ROM multimedia editions, and other adaptations. These subsequent creations are known as derivative works. Many features of the 1976 act make U.S. copyright law conform more to INTERNATIONAL COPYRIGHT standards, particularly with regard to the duration of copyright protection and to the formalities of copyright deposit, registration, and notice. These changes have been greatly influ- enced by the most important international copyright treaty, the Berne Convention for the Protection of Literary and Artistic Works (828 U.N.T.S. 221, S. Treaty Doc. No. 99-27). In 1988, the United States passed the Berne Convention Implementation Act (102 Stat. 2853), which made the nation an official member of the treaty as of 1989. Section 2(a) of this act holds that provisions of the treaty are not legally binding in the United States without domestic legislation that specifically implements them. U.S. copyright law has continued to evolve toward greater conformity with international copyright standards. In the 1990s, for example, the Berne Conv ention added 20 years to the minimum standard for copyright duration, changing it to the length of the author’s life plus 70 years. U.S. copyright law followed suit in 1998, with the passage of the Sonny Bono Copyright Term Extension Act. Copyrightable Works The 1976 Copyright Act provides that copyright protection “subsists … in original works of authorship fixed in any tangible medium of expression, now known or later developed” (17 U.S.C.A. § 102(a)). Thus, virtually any form of fixed recording is protected, no matter how new the technology. Originality is the most important quality needed by a work in order for it to receive copyright protection. Originality is not depen- dent on the work’s meeting any standard of aesthetic or artistic quality. Thus, a work need not be fine art to be copyrightable. Works that Are Not Copyrightable Copyright protects the expression of an idea or vision, not the idea itself. In legal terminology, this concept is called the idea-expression dichot- omy, and it has been an important feature of legal reasoning related to copyright. Ideas, procedures, processes, systems, methods of operation, concepts, principles, and discoveries are not within the scope of copyrig ht protec- tion. Other works that are not copyrightable are words and short phrases, including slogans; blank forms for recording information (such as bank checks); and works containing no original authorship (such as standard calendars or simple phone listings). Some works are not copyrightable because they are not fixed in a tangible medium. These include unrecorded dance choreography and unrecorded speeches, lectures, and other vocal performances. Although typefaces are tangible, they traditionally have been regarded as lying outside copyright protect ion. A dramatic char- acter is not copyrightable. Holders of a Copyright A copyright is initially owned by the author or authors of the work, except in the case of a “work for hire.” A work for hire can arise in two situations: (1) where an employee creates a work within the scope of his or her employ- ment, in which case the employer owns the copyright to the work upon its creation; (2) where two parties enter a written agreement designating the creation as a work for hire and the work falls within one of nine specific categories of work designated by copyright law. If the work does not fit one of the specified categories, it will not be a work for hire even if the parties have called it one. In such a case, the author or authors retain the copyright, and transfer must be accomplished through a written assignment of copyright. Where there is a valid work for hire, the employer who owns the copyright has the same rights as any copyright holde r, including the right to initiate an action for copyright infringement. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 202 COPYRIGHT The ownership of a copyright, or the ownership of any of the five exclusive rights afforded by a copyright (discussed later in this entry), can be transferred to another and is regarded as PERSONAL PROPERTY upon the death of the copyright holder. Copyright ownership and ownership of the material object in which the copyrighted work is embodied are two entirely separate legal entities. Furthermore, transfer of an object and transfer of the copyright to that object are separate, independent transactions, neither of which, by itself, has any effect on the other. Therefore, transfer of a material object, such as an original manuscript, photograph negative, or master tape recording, does not transfer the copyright to that work. Likewise, transfer of the copyright to a work does not require transfer of the original copy of the work. Exclusive Rights Copyright affords an author a number of exclusive rights: (1) the exclusive right to Copyright Law in Action: Basic Books v. Kinko’s Graphics Corp. C B opyright cases typically involve disputes between competing private interests: an author against someone who has copied the author’s work without permission. Ho wever, the outcome of such cases often has significant repercussions for the general public as well. One such case with significant public effect wa s Basic Books v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991), which dealt with the question of whether photocopy stores may sell copie d excerpts of books to college students withou t authorization from the books’ publishers. The decision i n the case ultimately affected the price that the public must pay for access to copyrighted information. Many college and university students purchase photocopied materials from copy stores in associa- tion with courses they are taking. Usually consisting of chapters or sections taken from different books or journals, these photocopied materials enable students to r ead from a wide v ariety of sources without having to purchase a larg e number of books. By the late 1980s, book publishers realized they were losing sales owing to such photocopying. As a result, several publ ishers, including Basic Books, Inc., filed a lawsuit in federal court against one of the largest photocopy firms in t he United States—Kinko’s Graphics Corporation, a company that in 1989 had more than two hundred loc ations and annual sales of $54 million. At issue in the case was the question of who may profit from the reproduction of an author’s work, particularly with regard to the practice that Kinko’s called anthologizi ng, which is the copying of book excerpts into course “packets” sold to college students. The publishers, the plaintiffs in the case, maintained that Kinko’s violated t he Copyri ght Act of 1976 (17 U.S.C.A. § 101 et seq.), by failing to secure permission to reprint the excerpts included in course packets and, in turn, pay the necessary fees involved, part of which would be passed on to the authors of the books. Kinko’s claime d that its sale of the excerpts was an example of the kind of fair use t hat is allowed by the Copyright Act. Citing the commercial interests involved— namely, the fact that Kinko’s made a significant amount of money from the sale of course packets, and that packet sales competed with book sales— the court found that Kinko’s w as guilty of copyright infringement. I t ordered the company to pay $500,000 in damages to the publishers and issue d an order forbi dding it to prep are anthologies without securing permission from and prepaying fees to the appropriate publishers. Basic Books was a victory for the publishers and autho rs of books that are excerpted for course anthologies. As for Kinko’s, it now has to pay fees to publishers, but it is able to pass on those costs to customers in the form of higher price s. Does this mean that students are the losers in this case? In the short run, yes, because they will pay more for their course materials. But in the long run, students and the rest of society may derive more benefit, even if it is indirect, from a system that rewards authors for thei r intellectual labor. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION COPYRIGHT 203 reproduce, or copy, the work; (2) the exclusive right to prepare new works that derive from the copyrighted work; (3) the exclusive right to distribute the work to the public by sale or other arrangement; (4) the exclusive right to perform the work publicly; and (5) the exclusive right to display the work publicly. The first two rights, involving reproduction and derivatio n, are infringed whether violated in public or in private or whether violated for profit or not. The last three rights are infringed only when violated publicly, that is, before a “substantial number of persons” outside of family and friends (17 U.S.C.A. § 101). All of the exclusive rights afforded by copy- right may have significant economic value. For example, derivative works, which may include translations, dramatizations, films, recordings, and abridgments, can offer substantial rewards to the author. An author may sell, license, or transfer one or all of the exclusive rights. Duration of Ownership Under the original provisions of the Copyright Act of 1976, copyright protection of an authored work extended through the life of the author and to fifty years after the author’s death. However, in a major piece of legislation, Congress extended copyright terms in 1998 in the Sonny Bono Copyright Term Extension Act, Pub. L. No. 105-298, 112 Stat. 2827 (17 U.S.C.A. §§ 101 et seq.). Title I defines the terms of the copyright extension, while Title II provides a “music licensing exemption for food service or drinking establishments.” This portion of the law is also known as the Fairness in Music Licensing Act of 1998. The duration of copyright law under the 1998 act was extended for all copyrighted materials. Works created on January 1, 1978, or after are protected from the time the work was “fixed in a tangible medium of expression.” The term is for life of the creator plus seventy years. If the creator is a corporatio n, then the term is 95 years from publication or 120 years from the date of creation, whichever is shorter. Works published between 1923 and 1963 are protected, if they were published with notice, for 28 years and can be renewed for 67 years. If not renewed, they will fall into the public domain. Materials that were published during this period without notice were entered into the public domain upon publication. Items published between 1964 and 1977 are protected if they were published with notice. They are protected for 28 years, and the copyright has been automatically extended for 67 years. Works created before January 1, 1978, but not published, are protected for the life of the creator plus seventy years or until December 31, 2002, whichever is later. Materials created before January 1, 1978, but published between then and December 31, 2002, are protected for the life of the creator plus seventy years or until December 31, 2002, whichever is later. Libraries, archives, museums, and scholars expressed concerns about the 20-year extension. Items created in 1923 would have passed into the public domain on January 1, 1999, if the law had not been changed. At the beginning of 2000, works created in 1924 would have fallen under the public domain. The act’s opponents argued that original scholarly research would be hampered by the extension. In answer to those concerns, a special clause was included in the Copyright Term Extension Act for libraries, archives, and nonprofit educational institutions. Such institutions are permitted to “reproduce, distribute, displ ay, or perform in facsimile or digital form” acopyof any copyrighted, published work during the last 20 years of its term “for purposes of preserva- tion, scholarship, or research.” However, the work must not be used in such a manner if it “can be obtained at a reasonable price.” The changes in the duration of copyrights were made partly to keep pace with the evolution of European copyright laws. In 1995, Europe extended its copyrig ht protection to life of the creator plus 70 years, but in the United States it remained the life of the creator plus 50 years. Copyright Infringement Copyright infringement involves any violation of the exclusive rights of the copyright owner. It may be unintentional or intentional. When unintentional, it is called innocent infringe- ment. An example of innocent infring ement occurred when former Beatle George Harrison created his song “My Sweet Lord.” Harrison was found to have unconsciously copied the tune of another song, “He’sSoFine,” by the Chiffons and thus was liable for infringement (Bright Tunes Music Corp. v. Harrisongs Music, 420 F. Supp. 177 [S.D.N.Y. 1976]). Vicarious or related GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 204 COPYRIGHT infringement refers to those who profit indi- rectly from the infringement of copyright, as in the case of a theater owner who profits from booking a band that illegally performs copy- righted works. Because evidence of direct copying or PLAGIARISM of an authored work is difficult to obtain, infringement of copyright is usu ally established through CIRCUMSTANTIAL EVIDENCE. Such evidence typically must show a substantial similarity between the original and the copy, as well as prove that the copier had access to the original. This means that where two works are similar or identical, there is nevertheless no infringement if each work was produced through the original and independent work of its creator. An infringer is not relieved of liability by crediting the source or the creator of the infringed work. Although infringement does not require that even a large portion of the work be similar, it does require that a substan- tial part be similar. It is irrelevant if the copied work is an improvement of the original work. The Copyright Act of 1976 recognizes a copyright not only in a publisher’scollective work, but also a separate copyright for each author’s contribution to the work. With the growth in the use of electronic databases and disks for storing data, some freelance authors began to object to their articles being sold to companies that produced these databases and disks. The Supreme Court, in New York T imes v. Tasini, 533 U.S. 483, 12 1 S . C t. 2381, 150 L. Ed. 2d 500 (2001), held that the act protects the copyrights of the writers, rejecting an argument by the publishers that the CONVERSION of the original works to an electronic format constituted a “revision” of the collective work, which would have been permissible under the Copyright Act. Secondary Liability: Contributory and Vicarious Infringement A copyright owner may bring infringement actions not only against the person actually engaging in the unauthorized use of an exclu- sive right held by a copyright owner, but also against contributory and vicarious infringers. The Copyright Act makes no specific provision for extending the range of liability in this fashion, but both contributory and vicarious infringe- ment have been a part of copyright JURISPRU- DENCE for many decades, and both doctrines are increasingly invoked by plaintiffs in infringe- ment cases, par ticularly when it would be costly and complicated to proceed against a host of direct infringers, as is the case with copyright infringement on the INTERNET. The Supreme Court endorsed and applied the law of contributory copyright liability in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984), also known as the Betamax case. The PLAINTIFF film studio contended that the manufacturer-distributor of a popular brand of videotape recorder was responsible for contrib- utory infringement, based on the direct in- fringement allegedly committed by home-users of the video-recorder. The Court concluded that even though contributory liability is not mentioned in the Copyright Act, recognition of contributory liability is essential to protecting a copyright owner’s exclusive rights. Contributo- ry liability, the Court said, is akin to such liability in tort cases more generally, which treat a person who knowingly participates in TORTIOUS act as jointly and severally liable with the primary TORTFEASOR. The Court essentially endorsed the definition contained in an earlier and still frequently cited lower court decision: “[O]ne who, with knowledge of the infringing activity, induces, causes, or materially contri- butes to the infringing conduct of another, may be held liable as a contributory infringer.” Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159 (2d Cir. 1971). The Supreme Court cautioned, however, that the manufacturers and sellers of videotape machines could not be liable merely because they had constructive knowledge that their purchasers might use the equipment to make infringing copies. Instead, the Court held that selling videotape recorders would not constitute con- tributory infringement “if the product is widely used for legitimate, unobjectionable purposes. Indeed it need merely be capable of substantial noninfringing uses.” Because many copyright owners of television programs do not object to home videotaping, and because even unautho- rized home videotaping, for time-shifting pur- poses, is a fair use, the Court concluded that the Betamax video recorder was capable of substan- tial noninfringing uses. Sony’ssaleofsuch equipment to the general public thus did not constitute contributory infringement of copyright owners’ exclusive use, the Court concluded. By contrast, VICARIOUS LIABILITY can be imposed on defendants who wield sufficient authority and influence over a direct copyright GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION COPYRIGHT 205 infringer, even if the defendants do not themselves induce, cause, or materially contrib- ute to direct infringement. For example, in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996), the plaintiff held copyrig hts in Hispanic music recordings and claimed infringement on the part of the operators of a flea market where third-party vendors routinely sold counterfeit recordings. The vendors of the counterfeit recordings rented space for their booths from the DEFENDANT Cherry Auction, and Cherry Auction advertised, supplied parkin g, provided refreshments, and retained the right to exclude any vendor for any reason. The U.S. Court of Appeals for the Ninth Circuit upheld the secondary-infringement claims, citing four justifications: (1) Cherry Auction had the ability to control the activities of the direct infringers via its undisputed right to exclude vendors; (2) Cherry Auction reaped “substantial financial benefits” from admission fees, concession stand sales, and parking fees, all of which flowed directly from customers who wanted to buy the counterfeit recordings at bargain basement prices; (3) Cherry Auction provided the “site and facilities” (i.e., space, utilities, parking, advertising, plumbing, and customers) for the infringing activity; and (4) Cherry Auction admitted knowledge of the infringing activity. It was only a matter of time before these principles and precedents were applied to cases involving allegations of secondary infringement on the part of Website operators who provide file-sharing software that can be used to facilitate the unauthorized exchange of music and video recordings on the Internet. The first important decision was made by the U.S. Court of Appeals for the Ninth Circuit in A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). Napster had gained notoriety by inventing and making available its MusicShare software that enabled Internet users to duplicate or distribute copyrighted songs in mp3 format without paying any fees. Almost all of the songs were copyrighted by someone other than Napster, and Napster never asked for or received permission to copy the songs. Howev- er, the songs were stored on centralized Napster servers, and it was only via Napster software that Napster users could download copies of the songs to their own personal computers or distribute copies to other users. The ease of the system resulted in the rapid and widespread use of Napster by the public. The ninth circuit concluded that individual Napster users were directly infringing (by duplicating and distributing copyright- protected music and recordings) and were not engaging in fair use and that Napster, Inc. was secondarily liable. The court found contributory infringement: “Napster has actual knowledge that specific infringing material is available using its system, [Napster] could block access to the system by suppliers of the infringing material, and [Napster] failed to remove the material.” Napster also provided the “site and facilities” to assist distributing and downloading the recordings, the court stressed. As for vicarious infringement, the court said that Napster had the ability to locate infringing material on its search indices and the right to terminate users’ access to the system; it also derived ever-increasing advertising revenues as more users were drawn to its Website through the appeal of free music. Although Napster lost its case, new technol- ogy forced copyright owners back to court. Unlike the music-sharing software at issue in Napster, which required users to log-in to Napster servers where the mp3 files were stored , the new music-sharing software enabled user s to share songs directly with each other without the need for assistance from a third-party intermediary. Known as peer-to-peer (p2p) software, this software, too, was free. The software makers made money by inserting ads inside the software. This music-sharing tech- nology was challenged in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 125 S. Ct. 2764, 162 L. Ed. 2d 781 (U.S. 2005). The defendant software maker attempted to defend its business model by invoking the Betamax decision, arguing that its software was capable of substantial noninfringing uses, for example, the swapping of uncopyrighted mate- rial. But the Supreme Court rejected this argument, holding that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” In the Betamax case, the Court observed, Sony’s sale of its video recorder did not demonstrate that Sony pos- sessed any knowledge of infringing uses by its customers. In Grokster, however, the Court continued, not only was the defendant aware of its customers’ infringing uses, the defendant’s GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 206 COPYRIGHT business plan and advertising were explicitly designed to encourage unlawful private copying, particularly by those who had been forced to leave Napster as a result of the adverse judgment against it in the ninth circuit. The Court also rejected the defendant’s contention that a finding of secondary liability would significantly interfere with the development of new electronic technologies. The Court said its holding in Grokster “premises liability on purposeful, CULPABLE expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.” Two years after the Supreme Court issued its decision in Grokster, the battle front in the digital age of copyright moved from copy- righted songs to copyrighted videos. YouTube. com, the video sharing Website, allows users to upload and share video clips and view them in the MPEG-4 format. The Website was launched in 2005, and a year later it was purchased by Google. In 2007 Viacom, an American media conglomerate, sued YouTube and Google for copyright infringement, alleging causes of action for both vicarious and contributory infringement. Brought in the U.S. District Court for the Southern District of New York, the suit alleged that the defendants created a library containing more than 160,000 video clips of copyrighted Viacom programming (television shows, mo- tion pictures, and music videos) without seeking permission or paying any fees before making the videos available to Website visitors. Viacom demanded that the clips be removed from the site and sought $1 billion in damages, or about $1 for each time one of their copyrighted videos had been viewe d. By way of defense, YouTube and Google argued that they were protected under sections 512(c)–(d) and (i)–(j) of the Digital Millennial Copyright Act of 1998 (DMCA), which, among other things, limits the terms of injunctions and bars copyright-damage awards against online service providers who meet certain criteria. Those criteria include that the online service provider (1) perform a qualified storage or search function for online users; (2) lack actual or IMPUTED KNOWLEDGE of infringing activity; (3) receive no financial benefit directly from such activity; (4) act promptly to remove or disable access to infringing activity; (5) adopt and publicize a policy of terminating repeat offenders; and (6) accommodate and avoid interference with standard measures employed by copyright owners to identify or protect their works. Although as of late 2009 the case had not been decided on the merits, the district court had issued some important rulings. First, the court denied Viacom’s motion to add a clai m for PUNITIVE DAMAGES. Second, the court ordered Google to produce the contents of YouTube’s logging database, which contains data concern- ing each time a YouTube video is viewed on the YouTube Website or through embedding a third-party Website. The Logging Database records each instance a video is watched, the unique login ID of the user who watched it, the time when the user started to watch the video, the user’s Internet protocol address, and the unique identifier for the video. Third, the court denied Viacom’s motion to compel the defen- dants to disclose two key pieces of computer code underlying the YouTube Website on grounds that they are trade secrets and disclo- sure of them could devastate the defendants’ business. As the case moved forward, most legal experts expected the parties to resolve the case via OUT-OF-COURT SETTLEMENT. Some legal obser- vers even suggested that Viacom and Google might use a settlement to forge an ongoing business relationship. Remedies for Infringement Because the owner loses the value of a copyright when infringement occurs, relief is often sought through filing a lawsuit in federal court. If infringement is established, the court can grant preliminary and permanent injunctions or court orde rs that restrain the offending party from continuing to infringe the copyright. The court may also award monetary damages as a remedy for copyright infringement. The copy- right owner can recover for actual financial losses and any additional profits that the infringer earned from the infringement. The copyright owner may instead choose to receive statutory damages, which range from a minimum of $250 to a maximum of $10,000. The court may adjust these limits based on the innocence or willfulness of the infringer. Inno- cent infringers may prove their GOOD FAITH and may have damages reduced to as little as $100, whereas willful infringers may be punished by the court with damages as high as $50,000. Courts may also impound and even destroy illicit reproductions of copyrighted works. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION COPYRIGHT 207 . works. Works of the performing arts c 130 .6 ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION COPYRIGHT. Government Printing Office: 2000-461-1 13/ 20,021 ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION COPYRIGHT. initiate an action for copyright infringement. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 202 COPYRIGHT The ownership of a copyright, or the ownership of any of the five exclusive rights afforded