A comparison between the English and Australian approach on authorization and the US secondary liability theories reveals very similar factors being considered in all the jurisdictions. While the law on authorization does not hold one liable for merely enabling or assisting or even encouraging others to commit infringement in the absence of ability to prevent infringement, the rule of Sony194 in the US operates to exempt one from liability for mere distribution of a product capable of substantial lawful use which is used to commit copyright infringement. The rule of Sony may be seen as a refusal to impose liability on a distributor who has no ability to control the manner in which the product may be used by the public, which could be infringing or non-infringing use. The consideration of the nature of relationship between the parties under the law on authorization focuses on the defendant’s knowledge of the primary infringer’s conduct and the extent of the defendant’s participation or involvement in the primary infringement. This resonates with the
194 Supra n 48.
University
109
knowledge and material contribution requirements under the US contributory liability theory. The factors of whether the defendant’s equipment or service constitutes the means to infringe and the inevitability of infringement are similar to the consideration of a defendant’s material contribution under the US contributory liability theory.
The defendant’s ability to control or prevent infringement is also a common element in the law on authorization and the US secondary liability theories, in particular, vicarious liability. Arguably, this is also pertinent to the knowledge requirement under the contributory liability theory, though perhaps not a major factor. Likewise, the consideration on whether the defendant has undertaken any step to prevent infringement is common in all the jurisdictions. Indeed, this factor appears to correspond closely with the inducement rule in Grokster195 which concentrates on the defendant’s
purposeful and active acts of promoting infringement, instead of adopting measures to curb infringement.
One notable difference between the law on authorization and the US approach lies in the fact that the latter is comprised of different secondary liability theories of which each mandates the fulfilment of certain requirements. These requirements include knowledge and material contribution for the establishment of contributory liability; direct financial interest and right as well as ability to control for the establishment of vicarious liability; and ‘purposeful, culpable expression and conduct’ evidencing intent to induce infringement for inducement liability. Seen in this way, the law on authorization is less rigid than the US approach as the factors discussed earlier are not exhaustive. In contrast, the US secondary liability theory may not be successfully shown in the absence of one of the necessary elements.
195 Supra n 171.
University
110
The law on authorization considers whether the technology or product distributed by the defendant is the means to infringe and the inevitability of these to infringe. In doing so, the law on authorization looks at the current state of the technology. Conversely, the US Sony rule examines the liability of technology providers with regard to the potential, apart from actual, lawful uses of Betamax video cassette recorders. In this way, the foresightful approach of the US should be commended for its consideration not only of the actual and current uses of a technology but the potential benefits as well.196 As one may observe from the development of Betamax video cassette
recorders, when copyright owners sued the manufacturer of Betamax video cassette recorders, none of them knew or thought that the recorders had the potential to result in the flourishing of video tape and rental markets, which benefit the copyright owners.
Having said so, it does not mean that the law on authorization cannot be developed to achieve the same result, if the judges choose to do so. Besides, it should also be noted that the inducement rule in Grokster, by finding fault with intent to cause infringement, has diminished the reach of the
Sony rule and thus reduced the consideration of the potential and actual lawful use of a technology.
Nonetheless, the inducement rule in Grokster is advantageous in another way. Since the rule requires the showing of positive or deliberate conduct in fostering infringement on the part of the distributor, it is clear that the US law finds fault with the conduct of the distributor in promoting infringing uses made of the technology, instead of what the technology can, and may, do.197 Under the law on authorization, it would seem extremely difficult for decentralized P2P operators to avoid liability as constructive knowledge of infringement198 and mere indifference or
196 As Yen observed, ‘History teaches us that society rarely appreciates the full benefits of new technologies immediately upon their invention.’ See Yen, A. C., ‘Sony, Tort Doctrines, and the Puzzle of Peer-to-Peer’, 55 Case W. Res. (2004) 815 at 832.
197 See Douglas, supra n 145 and Ginsburg, J. C. & Ricketson, S., supra n 189.
198 Under the US law, constructive knowledge is not good enough to hold one accountable for contributory infringement: see In Re Aimster
Copyright Litigation, supra n 145. By the application of the Sony rule, no constructive knowledge may be imputed on the distributor if the
product is capable of substantial non-infringing uses: Sony, supra n 48.
University
111
inactivity199 about infringement will be sufficient. In contrast, decentralized P2P operators will not be imputed with constructive knowledge because P2P file sharing is likely to be deemed as capable of substantial non-infringing uses by virtue of the rule in Sony and may be able to escape responsibility in the US, provided there is no ‘purposeful, culpable expression and conduct’,200 such as expressive marketing strategies or advertisements highlighting the potential of infringing uses.
The absence of any attempt to implement filtering systems or other technological means to reduce infringing uses could be a hurdle for P2P operators to evade liability in both jurisdictions. Failure to do so may lead to the conclusion that P2P operators omit to prevent infringement despite their power to do so and thus constitutes ‘authorization’ as in Sharman;201 and ‘intentional facilitation’
of infringements as in Grokster.202 However, it is submitted that such failure per se may not attract liability in the US position as the evidence of intent to induce infringements in Grokster was not built on this factor alone.203 As such, it has been commented that P2P operators under the law on authorization will be under an ongoing design duty to ensure proper exercise of their power to restrain infringement by their users204 whereas their counterparts’ design duty in the US
jurisdiction is limited to the initial design as to ensure their product or service is capable of substantially non-infringing uses. The duty placed on P2P operators in the US is to forbear from being engaged in ‘purposeful, culpable expression and conduct’205 to induce infringement by their
users. This duty is separate from the duty with regard to the product’s or service’s design. Instead,
199 The contributory theory under the US law requires material contribution, instead of mere inactivity or omission: see In Re Aimster Copyright
Litigation, supra n 145 and A & M Records, Inc. v Napster, Inc., supra n 7.
200 Grokster, supra n 171. 201 Supra n 106. 202 Supra n 171.
203 As discussed earlier, the evidence of intent to induce infringements in Grokster included the advertisements aiming to attract former Napster users and that the advertising revenue obtained by the service providers depended on the scope of the software usage.
204 See Lee, supra n 190. The Australian court in Sharman, supra n 106, instructed the service providers to include ‘non-optional keyword filter technology’ in their software supplied to new users and/or to place maximum pressure on the existing users to upgrade their software to the new version with the said filter technology; or to implement flood filtering on their system.
205 Grokster, supra n 171.
University
112
this duty is concerned with the way in which P2P operators conduct business or promote their products or services, instead of the design of their products or service. In this way, the US approach may cater for greater freedom in innovation as compared to the law on authorization.