Addressing the issue of an internet service provider’s liability for copyright infringement of materials posted on its website, the U.S. Court of Appeals for the Fourth Circuit recently affirmed a district court’s grant of summery judgment in favor of the ISP where it posted the infringing materials at the direction of a customer. CoStar Group, Inc. v. LoopNet, Inc., Case No. 03-1911, 2004 U.S. App. LEXIS 12123 (4th Cir. June 21, 2004).
The defendant, LoopNet, is an ISP whose website allows subscribers, generally real estate brokers, to post listings of commercial real estate on the internet. The plaintiff, CoStar Group, is a national provider of commercial real estate information which maintains a database of information on commercial real estate markets and commercial properties. Although not an ISP in the traditional sense, LoopNet provides a "web hosting service" that allows users to post real estate listings, many of which include photographs of the properties, on its website. When submitting listings to LoopNet, users complete a form agreeing to the site’s terms and conditions. If the user also intends to include photographs with the listing, he or she is required to agree to further terms and conditions, expressly verifying that all necessary authorization to post the photograph has been obtained from the copyright owner. After a photograph has been submitted, a staff member at LoopNet reviews the photograph to determine if it actually depicts commercial real estate, and if it displays any obvious evidence that another party owns the copyright, such as a copyright notice or other textual indication.
CoStar brought suit for copyright infringement when it determined that some of its copyrighted photographs were posted by LoopNet subscribers on the LoopNet website. The district court granted LoopNet’s motion for summary judgment concluding that LoopNet had not engaged in direct infringement because as an ISP, LoopNet is merely the owner and manager of a system used by others who are violating CoStar’s copyrights and not performing the actually copying itself.
On appeal, the Fourth Circuit affirmed the decision, noting its preference for the approach of the court in Netcom which requires "volition or causation" on the part of the alleged infringer. Under these circumstances, the court did not believe that LoopNet’s actions of cursorily reviewing the photographs before posting them rose to the level of infringing conduct required by the Copyright Act. The court analogized LoopNet’s actions as similar to those of the owner of a traditional copying machine whose customers operate the machine themselves to make the copies.
Additionally, the court addressed CoStar’s argument that the Digital Millennium Copyright Act (DMCA) supplanted Netcom, and thus LoopNet’s defense must rely exclusively on the ISP safe harbor immunity provided therein. The Court disagreed with this interpretation and held that the DMCA safe harbor provision should only come into play when it is determined that an ISP is liable for copyright infringement. In this case, LoopNet’s passive conduct did not rise to the level of infringement, and therefore the DMCA analysis was not necessary.
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