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OIL Casebook Topic VI: Copyright
This section considers copyright issues on the internet.
  • 1 OIL Casebook: Intro to Copyright

    • 1.1 Intellectual Property and the National Information Infrastructure (1995) - Excerpts on Copyright Subject Matter

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      Intellectual Property

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      and the

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      National Information Infrastructure

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      The Report of the Working Group on Intellectual Property Rights

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      Bruce A. Lehman

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      Assistant Secretary of Commerce and

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      Commissioner of Patents and Trademarks

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      Chair

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      Information Infrastructure Task Force

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      Ronald H. Brown

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      Secretary of Commerce

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      Chair

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      September 1995

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      http://www.uspto.gov/web/offices/com/doc/ipnii/
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      31

      2.   Subject Matter and Scope of Protection

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      a.   Eligibility for Protection

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               The subject matter eligible for protection under the Copyright Act is set forth in Section 102(a):

      34

      Copyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.[1]

      35

      From this provision, the courts have derived three basic requirements for copyright protection -- originality, creativity and fixation.[2]

      36

               The requirements of originality and creativity are derived from the statutory qualification that copyright protection extends only to "original works of authorship."[3]  To be original, a work merely must be one of independent creation -- i.e., not copied from another.  There is no requirement that the work be novel (as in patent law), unique or ingenious.  To be creative, there must only be a modicum of creativity.  The level required is exceedingly low; "even a slight amount will suffice."[4] 

      37

               The final requirement for copyright protection is fixation in a tangible medium of expression.  Protection attaches automatically to an eligible work of authorship the moment the work is sufficiently fixed.[5]  A work is fixed "when its embodiment in a copy or phonorecord . . . is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."[6]

      38

               Congress provided considerable room for technological advances in the area of fixation by noting that the method of fixation in copies or phonorecords may be "now known or later developed."[7]  The Copyright Act divides the possible media for fixation into "copies" and "phonorecords":

      39

      "Copies" are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.[8]

      40

      "Phonorecords" are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.[9]

      41

               According to the House Report accompanying the Copyright Act of 1976, Congress intended the terms "copies" and "phonorecords" to "comprise all of the material objects in which copyrightable works are capable of being fixed."[10]

      42

               The form of the fixation and the manner, method or medium used are virtually unlimited.  A work may be fixed in "words, numbers, notes, sounds, pictures, or any other graphic or symbolic indicia"; may be embodied in a physical object in "written, printed, photographic, sculptural, punched, magnetic, or any other stable form"; and may be capable of perception either "directly or by means of any machine or device 'now known or later developed.'"[11]

      43

               In digital form, a work is generally recorded (fixed) as a sequence of binary digits (zeros and ones) using media specific encoding.  This fits within the House Report's list of permissible manners of fixation.[12]  Virtually all works also will be fixed in acceptable material objects -- i.e., copies or phonorecords.  For instance, floppy disks, compact discs (CDs), CD-ROMs, optical disks, compact discs-interactive (CD-Is), digital tape, and other digital storage devices are all stable forms in which works may be fixed and from which works may be perceived, reproduced or communicated by means of a machine or device.[13]

      44

               The question of whether interactive works are fixed (given the user's ability to constantly alter the sequence of the "action") has been resolved by the courts in the context of video games and should not present a new issue in the context of the NII.  Such works are generally considered sufficiently fixed to qualify for protection.[14]  The sufficiency of the fixation of works transmitted via the NII, however, where no copy or phonorecord has been made prior to the transmission, may not be so clear. 

      45

               A transmission, in and of itself, is not a fixation.  While a transmission may result in a fixation, a work is not fixed by virtue of the transmission alone.  Therefore, "live" transmissions via the NII will not meet the fixation requirement, and will be unprotected by the Copyright Act, unless the work is being fixed at the same time as it is being transmitted.[15]  The Copyright Act provides that a work "consisting of sounds, images, or both, that are being transmitted" meets the fixation requirement "if a fixation of the work is being made simultaneously with its transmission."[16]  To obtain protection for a work under this "simultaneous fixation" provision, the simultaneous fixation of the transmitted work must itself qualify as a sufficient fixation.

      46

               A simultaneous fixation (or any other fixation) meets the requirements if its embodiment in a copy or phonorecord is "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."[17]  Works are not sufficiently fixed if they are "purely evanescent or transient" in nature, "such as those projected briefly on a screen, shown electronically on a television or cathode ray tube, or captured momentarily in the 'memory' of a computer."[18]  Electronic network transmissions from one computer to another, such as e-mail, may only reside on each computer in RAM (random access memory), but that has been found to be sufficient fixation.[19] 

      47

      b.   Published and Unpublished Works

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               Historically, the concept of publication has been a major underpinning of copyright law.  Under the dual system of protection which existed until the 1976 Copyright Act took effect, unpublished works were generally protected under state law.  Published works, on the other hand, were protected under Federal copyright law.[20]  On the effective date of the 1976 Act, Federal copyright protection became available for unpublished as well as published works.[21]  The concept of publication thus lost its "all-embracing importance" as the threshold to Federal statutory protection.[22] 

      49

               However, while the importance of publication has been reduced through amendment to the law (e.g., granting Federal protection to unpublished works and removing the notice requirement for published works), the status of a work as either published or unpublished still has significance under the Copyright Act.  For example:

      50

           only works that are published in the United States are subject to mandatory deposit in the Library of Congress;[23]

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           deposit requirements for registration with the Copyright Office differ depending on whether a work is published or unpublished;[24]

      52

           the scope of the fair use defense may be narrower for unpublished works;[25]

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           unpublished works are eligible for protection without regard to the nationality or domicile of the author;[26]

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           published works must bear a copyright notice if published before March 1, 1989;[27] and

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           certain limitations on the exclusive rights of a copyright owner are applicable only to published works.[28]

      56

               The Copyright Act provides a definition of "publication" to draw the line between published and unpublished works:

      57

      "Publication" is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending.  The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication.  A public performance or display of a work does not of itself constitute publication.[29]

      58

      The definition uses the language of Section 106 describing the exclusive right of distribution, and was intended to make clear that "any form of dissemination in which a material object does not change hands -- performances or displays on television, for example -- is not a publication no matter how many people are exposed to the work."[30]  It also makes clear that the distribution must be "to the public."[31]  In general, the definition continues principles that had evolved through case law under previous copyright laws,[32] including the doctrine of limited publication.[33]  The doctrine was developed by courts to save works from losing copyright protection when copies of the work were only distributed to a restricted number of people and for a restricted purpose without a copyright notice.[34]  Those works would not be considered distributed to the public (i.e., published) and, therefore, not subject to the notice requirement.  Although the notice requirement has been eliminated, and thus the most critical justification for the doctrine, the few cases dealing with publication since 1989 suggest that courts will continue to apply the doctrine of limited publication.[35]

      59

      c.   Works Not Protected

      60

               Certain works and subject matter are expressly excluded from protection under the Copyright Act, regardless of their originality, creativity and fixation.  Titles, names, short phrases, and slogans generally do not enjoy copyright protection under the Copyright Act.[36]  Other material ineligible for copyright protection includes the utilitarian elements of industrial designs;[37] familiar symbols or designs; simple geometrical shapes; mere variations of typographic ornamentation, lettering or coloring; and common works considered public property, such as standard calendars, height and weight charts, and tape measures and rulers.

      61

               Copyright protection also does not extend to any "idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied" in such work even if it meets the criteria for protection.[38]  Thus, although a magazine article on how to tune a car engine is protected by copyright, that protection extends only to the expression of the ideas, facts and procedures in the article, not the ideas, facts and procedures themselves, no matter how creative or original they may be.  Anyone may "use" the ideas, facts and procedures in the article to tune an engine -- or to write another article on the same subject.  What may not be taken is the expression used by the original author to describe or explain those ideas, facts and procedures.[39]

      62

      Copyright does not prevent subsequent users from copying from a prior author's work those constituent elements that are not original -- for example . . . facts or materials in the public domain -- as long as such use does not unfairly appropriate the author's original contributions.[40]

      63

               This idea/expression dichotomy "assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work."[41]  Although it "may seem unfair that much of the fruit of the [author's] labor may be used by others without compensation," it is "a constitutional requirement" -- the "means by which copyright advances the progress of science and art."[42]

      64

               As a matter of law, copyright protection generally is not extended under the Copyright Act to works of the U.S. Government.[43]  Therefore, nearly all works of the U.S. Government -- including this Report -- may be reproduced, distributed, adapted, publicly performed and publicly displayed without infringement liability in the United States under its copyright laws.[44]  While the Copyright Act leaves most works created by the U.S. Government unprotected under U.S. copyright laws, Congress did not intend for the section to have any effect on the protection of U.S. government works abroad.[45]

      65


      [1]          17 U.S.C. § 102(a) (1988 & Supp. V 1993).  The Copyright Act specifically excludes from protectible subject matter any "idea, procedure, process, system, method of operation, concept, principle or discovery" even if it meets the criteria for protection.  See 17 U.S.C. § 102(b) (1988).  The Copyright Act also preempts any grant of equivalent rights for works of authorship within the specified subject matter.  Section 301 provides:

      On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title.  Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

      17 U.S.C. § 301(a) (1988).

      [2]          Many courts consider creativity to be an element of originality.  For purposes of discussion, we examine originality and creativity as separate requirements.

      [3]          See 17 U.S.C. § 102(a) (1988 & Supp. V 1993).  The statutory qualification is derived from Congress' limited Constitutional authority to grant copyright protection to "authors" for their "writings."  See U.S. Const., art. I, § 8, cl. 8.

      [4]          Feist, supra note 36, at 345 ("vast majority of works make the grade quite easily, as they possess some creative spark").

      [5]          Copyright protection literally begins when, for instance, the ink dries on the paper.  There are no prerequisites, such as registration or affixation of a copyright notice, for obtaining or enjoying copyright protection.

      [6]          17 U.S.C. § 101 (1988) (definition of "fixed").

      [7]          See 17 U.S.C. § 102(a) (1988 & Supp. V 1993).

      [8]          17 U.S.C. § 101 (1988) (definition of "copies").

      [9]          17 U.S.C. § 101 (1988) (definition of "phonorecords").

      [10]        House Report at 53, reprinted in 1976 U.S.C.C.A.N. 5666-67.  This Report generally uses the term "copy" or "copies" to refer to copies and phonorecords except in those instances where the distinction is relevant.

      [11]        House Report at 52, reprinted in 1976 U.S.C.C.A.N. 5665-66.

      [12]        See id.

      [13]        See, e.g., Stern Electronics, Inc. v. Kaufman, 669 F.2d 852, 855 (2d Cir. 1982) (putting work in "memory devices" of a computer "satisf[ies] the statutory requirement of a 'copy' in which the work is 'fixed'").

      [14]        See, e.g., Atari Games Corp. v. Oman, 888 F.2d 878 (D.C. Cir. 1989).

      [15]        Unfixed broadcasts are not within the subject matter of Federal copyright law.  Therefore, protection of such works is not preempted and may be provided by state statutory or common law.  See 17 U.S.C. § 301 (1988 & Supp. V 1993).

      [16]        See 17 U.S.C. § 101 (1988) (definition of "fixed"); see also Baltimore Orioles, Inc. v. Major League Baseball Players Assoc., 805 F.2d 663, 668 (7th Cir. 1986) (telecasts that are videotaped at the same time that they are broadcast are fixed in tangible form), cert. denied, 480 U.S. 941 (1987); National Football League v. McBee & Bruno's, Inc., 792 F.2d 726, 731-32 (8th Cir. 1986) ("the legislative history [of the Copyright Act] demonstrates a clear intent on the part of Congress to resolve, through the definition of 'fixation' . . ., the status of live broadcasts, using -- coincidentally but not insignificantly -- the example of a live football game").  It is understood that the "fixation" must be made or authorized by the author.

      [17]        17 U.S.C. § 101 (1988) (definition of "fixed").

      [18]        House Report at 53, reprinted in 1976 U.S.C.C.A.N. 5666-67.

      [19]        See Advanced Computer Services of Michigan Inc. v. MAI Systems Corp., 845 F. Supp. 356, 363 (E.D. Va. 1994) (conclusion that program stored only in RAM is sufficiently fixed is confirmed, not refuted, by argument that it "disappears from RAM the instant the computer is turned off"; if power remains on (and the work remains in RAM) for only seconds or fractions of a second, "the resulting RAM representation of the program arguably would be too ephemeral to be considered 'fixed'"); Triad Systems Corp. v. Southeastern Express Co., 1994 U.S. Dist. LEXIS 5390, at *15-19 (N.D. Cal. March 18, 1994) (“[C]opyright law is not so much concerned with the temporal ‘duration’ of a copy as it is with what that copy does, and what it is capable of doing, while it exists.  ‘Transitory duration’ is a relative term that must be interpreted and applied in context.”). 

      [20]        See Wheaton v. Peters, 33 U.S. (1 Peters) 591, 662-63 (1834).

      [21]        See 17 U.S.C. § 104 (1988 & Supp. V 1993).  Prior to 1978, certain unpublished works, particularly dramatic works and musical compositions, could obtain Federal copyright protection through registration with the Copyright Office.  Since 1978, all otherwise eligible unpublished works are protected under Federal law.  See 17 U.S.C. § 104(a) (1988 & Supp. V 1993). 

      [22]        House Report at 129, reprinted in 1976 U.S.C.C.A.N. 5745.

      [23]        17 U.S.C. § 407 (1988).  "[T]he owner of copyright or of the exclusive right of publication in a work published in the United States shall deposit, within three months after the date of publication -- (1) two complete copies of the best edition; or (2) if the work is a sound recording, two complete phonorecords of the best edition, together with any printed or other visually perceptible material published with such phonorecords."  17 U.S.C. § 407(a) (1988).  The deposit requirements are not conditions of copyright protection, but failure to deposit copies of a published work may subject the copyright owner to significant fines.  See 17 U.S.C. § 407(a), (d) (1988).

      [24]        See 17 U.S.C. § 408(b) (1988) ("the material deposited for registration shall include -- (1) in the case of an unpublished work, one complete copy or phonorecord; (2) in the case of a published work, two complete copies or phonorecords of the best edition; (3) in the case of a work first published outside the United States, one complete copy or phonorecord as so published; (4) in the case of a contribution to a collective work, one complete copy or phonorecord of the best edition of the collective work"). 

      [25]        The first factor of the fair use analysis -- the nature of the copyrighted work -- generally weighs against a finding of fair use if the work is unpublished.  See Harper & Row, supra note 34.  In 1992, Congress was prompted to amend Section 107 by the near determinative weight courts were giving to the unpublished nature of a work.  See Act of October 24, 1992, Pub. L. 102-492, 1992 U.S.C.C.A.N. (106 Stat.) 3145 (adding to the fair use provisions, "The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.").

      [26]        17 U.S.C. § 104(a) (1988 & Supp. V 1993); House Report at 58, reprinted in 1976 U.S.C.C.A.N. 5671 (Section 104(a) "imposes no qualification of nationality and domicile with respect to unpublished works"); see also 17 U.S.C. § 104(b) (1988 & Supp. V 1993) (national origin requirements for published works).

      [27]        17 U.S.C. § 405 (1988 & Supp. V 1993).  For such works, failure to include a copyright notice risks total loss of copyright protection.  See id.  Works published after March 1, 1989 (the effective date of the Berne Implementation Act) may (but are not required to) bear a copyright notice identifying the year of publication and the name of the copyright owner.  See 17 U.S.C. § 401 (1988 & Supp. V 1993).

      [28]        See generally 17 U.S.C. §§ 107 - 120 (1988 & Supp. V 1993).  See, e.g., 17 U.S.C. § 118 (1988 & Supp. V 1993) (compulsory license is available for the use of certain published works in connection with noncommercial broadcasting).

      [29]        17 U.S.C. § 101 (1988) (definition of "publication").

      [30]        See House Report at 138, reprinted in 1976 U.S.C.C.A.N. 5754.  See also discussion of transmissions and the "distribution" of copies infra pp. 67-69, 217-20.

      [31]        See, e.g., Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir.), supplemented, reh'g denied, 818 F.2d 252, cert. denied, 484 U.S. 890 (1987) (copyrighted letters did not lose unpublished status by placement in library); WPOW, Inc. v. MRLJ Enterprises, 584 F. Supp. 132 (D.D.C. 1984) (filing of work with federal agency did not constitute publication).

      [32]        See 1 M. Nimmer & D. Nimmer, Nimmer on Copyright § 4.04 (1994) (hereinafter Nimmer on Copyright).  In a couple of aspects, the concept of publication was broadened to include the authorization of offers to distribute copies in a commercial setting and the distribution to certain middlemen, such as retailers, motion picture exhibitors and television stations.  See Paramount Pictures Corp. v. Rubinowitz, 217 U.S.P.Q. 48, 50 (E.D.N.Y. 1981) (discussing evolution of definition of publication); National Broadcasting Co., Inc. v. Sonneborn, 630 F. Supp. 524, 532-33 (D. Conn. 1985).

      [33]        See 1 Nimmer on Copyright § 4.13[B]; Kunycia v. Melville Realty Co. Inc., 755 F. Supp. 566, 574 (S.D.N.Y. 1990).

      [34]        See White v. Kimmell, 193 F.2d 744, 746-47 (9th Cir. 1952).  Before the notice requirement was eliminated, the Copyright Act generally provided for the invalidation of the copyright in a work if copies of the work were distributed to the public, under the authority of the copyright owner, without a copyright notice.  In virtually all instances where limited publication was applied, the distribution was noncommercial in nature. 

      [35]        See Academy of Motion Picture Arts and Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1451-54 (9th Cir. 1991) (distribution of personalized Oscar statuettes to select group of distinguished artists constituted limited publication); Lish v. Harper's Magazine Found., 807 F. Supp. 1090, 1102 (S.D.N.Y. 1992) (letter distributed to members of class remained unpublished).

      [36]        See 37 C.F.R. § 202.1(a) (1994); see also, e.g., Takeall v. PepsiCo Inc., 29 U.S.P.Q.2d 1913, 1918 (4th Cir. 1993) (unpublished) (holding phrase "You Got the Right One, Uh-Huh" is not copyrightable and, thus, was not infringed by commercial using phrase "You Got the Right One Baby, Uh-Huh").  While short phrases may not be copyrightable standing alone, they may be protected as part of a larger, copyrighted work.  See, e.g., Dawn Assocs. v. Links, 203 U.S.P.Q. 831, 835 (N.D. Ill. 1978) (holding phrase "When there is no room in hell . . . the dead will walk the earth" to be an integral part of a copyrighted advertisement, and defendant's unauthorized use of it demonstrated likelihood of success on the merits of infringement suit); Grand Upright Music Ltd. v. Warner Bros. Records, Inc., 780 F. Supp. 182, 183-85 (S.D.N.Y. 1991) (finding lyric "alone again" to be protected as part of a copyrighted work and infringed by defendant rap artist's "sampling").  Short phrases may also be eligible for trademark protection if used to identify goods or services.

      [37]        In Mazer v. Stein, the Supreme Court held that works of art which are incorporated into the design of useful articles, but which can stand by themselves as art works separate from the useful articles, are copyrightable.  See 347 U.S. 201, 214-17 (1954).  See also 17 U.S.C. § 101 (defining "useful article" as "an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information); 17 U.S.C. § 101 (in the definition of "pictorial, graphic, and sculptural works" noting that "the design of a useful article . . . shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article").  The House Report indicates that the required separability may be physical or conceptual.  See House Report at 55, reprinted in 1976 U.S.C.C.A.N. 5668; see also Kieselstein-Cord v. Accessories By Pearl, Inc., 632 F.2d 989, 993 (2d Cir. 1980).

      [38]        17 U.S.C. § 102(b) (1988); see Feist, supra note 36, at 359 ("facts contained in existing works may be freely copied"); Harper & Row, supra note 34, at 547 ("no author may copyright facts or ideas").

      [39]        The ideas are not protected; the expression is.  Baker v. Seldon, 101 U.S. 99, 103 (1879); Beal v. Paramount Pictures Corp., 20 F.3d 454, 458-59 (11th Cir.), cert. denied, 115 S. Ct. 675 (1994); see also Harper & Row, supra note 34, at 547-48 ("copyright is limited to those aspects of the work -- termed 'expression' -- that display the stamp of the author's originality").  The line between idea and expression is not easy to draw.  The distinction is not that one is fixed and the other is not -- they are both fixed in the copyrighted work of authorship.  At some point, the idea becomes detailed enough to constitute expression.  Judge Learned Hand explained:

      Upon any work . . . a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out.  The last may perhaps be no more than the most general statement of what the [work] is about, and at times might consist only of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the [author] could prevent the use of his "ideas," to which, apart from their expression, his property is never extended.

      Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir. 1930).

      [40]        Harper & Row, supra note 34, at 548.

      [41]        Feist, supra note 36, at 349-50 (citing Harper & Row, supra note 34, at 556-57).

      [42]        Feist, supra note 36, at 349-50.

      [43]        17 U.S.C. § 105 (1988).  There are limited exceptions to this noncopyrightability provision.  For instance, the Secretary of Commerce is authorized to secure copyright on behalf of the United States "in all or any part of any standard reference data which he prepares or makes available" under the Standard Reference Data Program.  See 15 U.S.C. § 290(e) (1988).  Works of the U.S. Postal Service, such as designs on postage stamps, are also copyrightable by the Postal Service.  See House Report at 60, reprinted in 1976 U.S.C.C.A.N. 5674 ("the Postal Service could . . . use the copyright law to prevent the reproduction of postage stamp designs for private or commercial non-postal services").  Copyright interests transferred to the U.S. Government by assignment, bequest or otherwise may be held and enforced by it.  See 17 U.S.C. § 105 (1988).

      [44]        A work of the U.S. Government is a work "prepared by an officer or employee of the United States Government as part of that person's official duties."  17 U.S.C. § 101 (definition of "work of the United States Government").  Although the wording of this definition is not identical to that of a "work made for hire," the concepts "are intended to be construed in the same way."  House Report at 58, reprinted in 1976 U.S.C.C.A.N. 5672.  See discussion of works made for hire infra notes 134-36 and accompanying text.

      [45]        See House Report at 59, reprinted in 1976 U.S.C.C.A.N. 5672.

    • 1.2 Copyright Act: 17 U.S. Code § 102 - Subject matter of copyright: In general

      (a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:
      (1) literary works;
      (2) musical works, including any accompanying words;
      (3) dramatic works, including any accompanying music;
      (4) pantomimes and choreographic works;
      (5) pictorial, graphic, and sculptural works;
      (6) motion pictures and other audiovisual works;
      (7) sound recordings; and
      (8) architectural works.
      (b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.
    • 1.3 Copyright Act: 17 U.S. Code § 106 - Exclusive rights in copyrighted works

      Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
      (1) to reproduce the copyrighted work in copies or phonorecords;
      (2) to prepare derivative works based upon the copyrighted work;
      (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
      (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
      (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
      (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
    • 1.4 MAI Systems Corp. v. Peak Computer, Inc.

      1

      991 F.2d 511 (1993)

      2
      MAI SYSTEMS CORPORATION, a Delaware corporation, Plaintiff-Appellee,
      v.
      PEAK COMPUTER, INC., a California corporation; Vincent Chiechi, an individual; Eric Francis, an individual, Defendants-Appellants.
      MAI SYSTEMS CORPORATION, a Delaware corporation, Plaintiff-Appellee,
      v.
      PEAK COMPUTER, INC., a California corporation; Vincent Chiechi, an individual; Eric Francis, an individual, Defendants-Appellants.
      3

      Nos. 92-55363, 93-55106.

      4

      United States Court of Appeals, Ninth Circuit.

      5

      Argued and Submitted June 4, 1992.
      Submitted February 24, 1993.[1]
      Decided April 7, 1993.

      6

      [512] [513] William J. Robinson, Graham & James, Los Angeles, CA, for plaintiff-appellee.

      7

      James W. Miller, Musick, Peeler & Garrett, Los Angeles, CA, for defendants-appellants.

      8

      BEFORE: PREGERSON, BRUNETTI, and FERNANDEZ, Circuit Judges.

      9

      Argued and Submitted June 4, 1992 in No. 92-55363.

      10

      Submitted February 24, 1993 in No. 93-55106.[1]

      11
      BRUNETTI, Circuit Judge:
      12

      Peak Computer, Inc. and two of its employees appeal the district court's order issuing a preliminary injunction pending trial as well as the district court's order issuing a permanent injunction following the grant of partial summary judgment.

      13
      I. FACTS
      14

      MAI Systems Corp., until recently, manufactured computers and designed software to run those computers. The company continues to service its computers and the software necessary to operate the computers. MAI software includes operating system software, which is necessary to run any other program on the computer.

      15

      Peak Computer, Inc. is a company organized in 1990 that maintains computer systems for its clients. Peak maintains MAI computers for more than one hundred clients in Southern California. This accounts for between fifty and seventy percent of Peak's business.

      16

      Peak's service of MAI computers includes routine maintenance and emergency repairs. Malfunctions often are related to the failure of circuit boards inside the computers, and it may be necessary for a Peak technician to operate the computer and its operating system software in order to service the machine.

      17

      In August, 1991, Eric Francis left his job as customer service manager at MAI and joined Peak. Three other MAI employees joined Peak a short time later. Some businesses that had been using MAI to service their computers switched to Peak after learning of Francis's move.

      18
      II. PROCEDURAL HISTORY
      19

      On March 17, 1992, MAI filed suit in the district court against Peak, Peak's president Vincent Chiechi, and Francis. The complaint includes counts alleging copyright infringement, misappropriation of trade secrets, trademark infringement, false advertising, and unfair competition.

      20

      MAI asked the district court for a temporary restraining order and preliminary injunction pending the outcome of the suit. The district court issued a temporary restraining order on March 18, 1992 and converted it to a preliminary injunction on March 26, 1992. On April 15, 1992, the district court issued a written version of the preliminary injunction along with findings of fact and conclusions of law.

      21

      The preliminary injunction reads as follows:

      22

      A. Defendants [and certain others] are hereby immediately restrained and enjoined pending trial of this action from:

      1. infringing MAI's copyrights in any manner and from using, publishing, copying, selling, distributing or otherwise disposing [514] of any copies or portions of copies of the following MAI copyrighted computer program packages: "MPx," "SPx," "GPx40," and "GPx70" (collectively hereinafter, "The Software");

      2. misappropriating, using in any manner in their business including advertising connected therewith, and/or disclosing to others MAI's trade secrets and confidential information, including, without limitation, The Software, MAI's Field Information Bulletins ("FIB") and Customer Database;

      3. maintaining any MAI computer system, wherein:

      (a) "maintaining" is defined as the engaging in any act, including, without limitation, service, repair, or upkeep in any manner whatsoever, that involves as part of such act, or as a preliminary or subsequent step to such act, the use, directly or indirectly, of The Software, including, without limitation, MAI's operating system, diagnostic, utility, or other software;

      (b) "use" is defined as including, without limitation, the acts of running, loading, or causing to be run or loaded, any MAI software from any magnetic storage or read-only-memory device into the computer memory of the central processing unit of the computer system; and

      (c) "computer system" is defined as an MAI central processing unit in combination with either a video display, printer, disk drives, and/or keyboard;

      4. soliciting any MAI computer maintenance customer pursuant to Francis' employment contracts with MAI;

      5. maintaining any contract where customer information was obtained by Francis while employed by MAI pursuant to Francis' employment contract with MAI;

      6. using in any manner in their business, or in advertising connected therewith, directly or indirectly, the trademarks MAI, BASIC FOUR, and/or MAI Basic Four, the letters MAI (collectively, the "MAI Trademarks") or any mark, word, or name similar to or in combination with MAI's marks that are likely to cause confusion, mistake or to deceive;

      7. committing any act which otherwise infringes any of the MAI Trademarks;

      8. advertising, directly or indirectly, that MAI Basic Four is part of Peak's Product line, that Peak has "satellite facilities," and/or that Peak's technicians are "specifically trained on the latest hardware releases of MAI;" and

      9. engaging in any other acts that amount to unfair competition with MAI.

      B. IT IS FURTHER ORDERED that Defendants [and certain others] shall hereby, pending trial in this action:

      1. provide a full accounting of all MAI property, including all copyrighted works presently in their possession; and

      2. retain any fees paid to them by any MAI maintenance client and place any such fees in an interest bearing escrow account pending final determination of the action at trial or further order of this Court.

      23

      We stayed the preliminary injunction in part by an order of June 9, 1992 which provides:

      24

      The preliminary injunction issued by the district court on April 15, 1992 is stayed to the following extent:

      Section (A)(1), enjoining defendants from "infringing MAI's copyrights in any manner and from using, publishing, copying, selling, distributing, or otherwise disposing of any copies or portions of copies" or certain MAI software, is stayed to the extent that it prohibits defendants from operating MAI computers in order to maintain them.

      Section A(2), enjoining defendants from misappropriating MAI trade secrets, is stayed to the extent that it prohibits defendants from operating MAI computers in order to maintain them.

      Section A(3), enjoining defendants from "maintaining any MAI computer system," is stayed in its entirety, including subsections (a), (b), and (c).

      Section (B), ordering defendants to "provide a full accounting of all MAI property" and to retain fees paid to them [515] by "any MAI maintenance client" in an escrow account, is stayed in its entirety, including subsections (1) and (2).

      The remainder of the district court's preliminary injunction shall remain in effect. This order shall remain in effect pending further order of this court.

      25

      In January, 1993, we denied a motion by Peak to stay the district court proceedings. The district court then heard a motion for partial summary judgment on some of the same issues raised in the preliminary injunction. The district court granted partial summary judgment for MAI and entered a permanent injunction on the issues of copyright infringement and misappropriation of trade secrets on February 2, 1993 which provides:

      26

      A. Defendants [and certain others] are hereby permanently enjoined as follows:

      1. Peak [and certain others] are permanently enjoined from copying, disseminating, selling, publishing, distributing, loaning, or otherwise infringing MAI's copyrighted works, or any derivatives thereof, including those works for which registrations have issued, and works for which registrations may issue in the future. The "copying" enjoined herein specifically includes the acts of loading, or causing to be loaded, directly or indirectly, any MAI software from any magnetic storage or read only memory device into the electronic random access memory of the central processing unit of a computer system. As used herein, "computer system" means an MAI central processing unit in combination with either a video display, printer, disk drives, and/or keyboard.

      MAI's copyrighted works, and their derivatives, for which registrations have issued include:

               Work          Cert. of Reg. No.          Date IssuedBOSS/IX SOFTWAREVERSION 7.5B*20        TX 3 368 502                 12/16/91BOSS/VS LEVEL 7A*42    TXU 524 424 (Supp.)           7/01/92DIAGNOSTICS            TXU 507 015 (Basic)           3/09/92BOSS/VS LEVEL 7.5B     TXU 524 423 (Supp.)           7/01/92DIAGNOSTICS            TXU 507 013 (Basic)           3/09/92

       

      Additional MAI copyright registrations are listed on Exh. A hereto.

      2. (a) Peak and Francis [and certain others] are permanently enjoined from misappropriating, using in any manner in their business, including advertising connected therewith, and/or disclosing to others MAI's trade secrets, as that term is used in California Civil Code § 3426.1(d). MAI's trade secrets, for purposes of this injunction, shall include, but not be limited to the following: MAI's software, MAI's Field Information Bulletins ("FIB") and all information in such FIB's, and MAI Customer Database and all information in such Database.

      (b) In particular, the persons identified in subparagraph (a) herein are permanently enjoined from soliciting any MAI computer maintenance customer and from maintaining any contract with any former MAI computer maintenance customer where knowledge of any such customers was obtained by Francis during his employment with MAI.

      27

      We then stayed the permanent injunction in part by an order on February 4, 1993 which provides:

      28

      Appellants' emergency motion for stay of the district court's permanent injunction is granted in part. The injunction entered by the district court on February 2, 1993 is stayed to the following extent:

      Section (A)(1), enjoining defendants from "infringing MAI's copyrighted works," is stayed to the extent that it prohibits defendants from loading MAI software or operating MAI computers in order to maintain them.

      Section A(2), enjoining defendants from misappropriating MAI trade secrets, is stayed to the extent that it prohibits [516] defendants from loading MAI software or operating MAI computers in order to maintain them.

      The remainder of the district court's permanent injunction shall remain in effect....

      29

      Since the permanent injunction covers some of the same issues appealed in the preliminary injunction, the appeal of those issues in the context of the preliminary injunction has become moot. See Burbank-Glendale-Pasadena Airport Authority v. Los Angeles, 979 F.2d 1338, 1340 n. 1 (9th Cir.1992). Therefore, we grant MAI's motion to dismiss the appeal of the preliminary injunction relative to the issues of copyright infringement and trade secret misappropriation. Since other issues covered in the preliminary injunction are not covered in the permanent injunction,[2] the appeals have been consolidated and both the permanent injunction and parts of the preliminary injunction are reviewed here.

      30
      III. JURISDICTION AND STANDARD OF REVIEW
      31

      We have jurisdiction over interlocutory orders granting injunctions under 28 U.S.C. § 1292(a)(1).

      32

      In addition, an appeal under 28 U.S.C. § 1292(a)(1) brings before the court the entire order, and, in the interests of judicial economy the court may decide the merits of the case. The court, however, generally will chose to decide only those matters `inextricably bound up with' the injunctive relief.

      33

      Bernard v. Air Line Pilots Ass'n, Int'l, AFL-CIO, 873 F.2d 213, 215 (9th Cir.1989) (citations omitted).

      34

      In this case, the district court's grant of the permanent injunction is "inextricably bound up" with the underlying decisions of that court on the merits of the copyright and trade secrets claims. Therefore, our review of the propriety of the permanent injunction is inextricably tied to the underlying decision, and this court has jurisdiction to review the entire order. Id.

      35

      A grant of summary judgment is reviewed de novo.[3] We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Federal Deposit Ins. Corp. v. O'Melveny & Meyers, 969 F.2d 744, 747 (9th Cir.1992). The court must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial. Id.

      36

      A district court's grant of preliminary injunctive relief is subject to limited review. This court will reverse a preliminary injunction only where the district court "abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact." However, "questions of law underlying the issuance of a preliminary injunction" are reviewed de novo. Glick v. McKay, 937 F.2d 434, 436 (9th Cir.1991).

      37

      "To obtain a preliminary injunction, a party must show either (1) a likelihood of success on the merits and the possibility of irreparable injury, or (2) the existence of serious questions going to the merits and the balance of hardships tipping in [the movant's] favor. These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Diamontiney v. Borg, [517] 918 F.2d 793, 795 (9th Cir.1990) (internal quotations and citations omitted).

      38

      In other words, "[w]here a party can show a strong chance of success on the merits, he need only show a possibility of irreparable harm. Where, on the other hand, a party can show only that serious questions are raised, he must show that the balance of hardships tips sharply in his favor." Bernard v. Air Line Pilots Ass'n, Int'l, AFL-CIO, 873 F.2d 213, 215 (9th Cir.1989).

      39
      IV. COPYRIGHT INFRINGEMENT
      40

      The district court granted summary judgment in favor of MAI on its claims of copyright infringement and issued a permanent injunction against Peak on these claims. The alleged copyright violations include: (1) Peak's running of MAI software licenced to Peak customers; (2) Peak's use of unlicensed software at its headquarters; and, (3) Peak's loaning of MAI computers and software to its customers. Each of these alleged violations must be considered separately.

      41
      A. Peak's running of MAI software licenced to Peak customers
      42

      To prevail on a claim of copyright infringement, a plaintiff must prove ownership of a copyright and a "`copying' of protectable expression" beyond the scope of a license. S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 (9th Cir.1989).

      43

      MAI software licenses allow MAI customers to use the software for their own internal information processing.[4] This allowed use necessarily includes the loading of the software into the computer's random access memory ("RAM") by a MAI customer. However, MAI software licenses do not allow for the use or copying of MAI software by third parties such as Peak. Therefore, any "copying" done by Peak is "beyond the scope" of the license.

      44

      It is not disputed that MAI owns the copyright to the software at issue here, however, Peak vigorously disputes the district court's conclusion that a "copying" occurred under the Copyright Act.

      45

      The Copyright Act defines "copies" as: material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

      46

      17 U.S.C. § 101.

      47

      The Copyright Act then explains:

      48

      A work is "fixed" in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated [518] for a period of more than transitory duration.

      49

      17 U.S.C. § 101.

      50

      The district court's grant of summary judgment on MAI's claims of copyright infringement reflects its conclusion that a "copying" for purposes of copyright law occurs when a computer program is transferred from a permanent storage device to a computer's RAM. This conclusion is consistent with its finding, in granting the preliminary injunction, that: "the loading of copyrighted computer software from a storage medium (hard disk, floppy disk, or read only memory) into the memory of a central processing unit ("CPU") causes a copy to be made. In the absence of ownership of the copyright or express permission by license, such acts constitute copyright infringement." We find that this conclusion is supported by the record and by the law.

      51

      Peak concedes that in maintaining its customer's computers, it uses MAI operating software "to the extent that the repair and maintenance process necessarily involves turning on the computer to make sure it is functional and thereby running the operating system." It is also uncontroverted that when the computer is turned on the operating system is loaded into the computer's RAM. As part of diagnosing a computer problem at the customer site, the Peak technician runs the computer's operating system software, allowing the technician to view the systems error log, which is part of the operating system, thereby enabling the technician to diagnose the problem.[5]

      52

      Peak argues that this loading of copyrighted software does not constitute a copyright violation because the "copy" created in RAM is not "fixed." However, by showing that Peak loads the software into the RAM and is then able to view the system error log and diagnose the problem with the computer, MAI has adequately shown that the representation created in the RAM is "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."

      53

      After reviewing the record, we find no specific facts (and Peak points to none) which indicate that the copy created in the RAM is not fixed. While Peak argues this issue in its pleadings, mere argument does not establish a genuine issue of material fact to defeat summary judgment. A party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials in pleadings, but "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.Proc. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Harper v. Wallingford, 877 F.2d 728 (9th Cir.1989).

      54

      The law also supports the conclusion that Peak's loading of copyrighted software into RAM creates a "copy" of that software in violation of the Copyright Act. In Apple Computer, Inc. v. Formula Int'l, Inc., 594 F.Supp. 617, 621 (C.D.Cal.1984), the district court held that the copying of copyrighted software onto silicon chips and subsequent sale of those chips is not protected by § 117 of the Copyright Act. Section 117 allows "the `owner'[6] of a copy of a computer program to make or authorize the making of another copy" without infringing copyright law, if it "is an essential step in the utilization of the computer program" or if the new copy is "for archival purposes [519] only." 17 U.S.C. § 117 (Supp.1988).[7] One of the grounds for finding that § 117 did not apply was the court's conclusion that the permanent copying of the software onto the silicon chips was not an "essential step" in the utilization of the software because the software could be used through RAM without making a permanent copy. The court stated:

      55

      RAM can be simply defined as a computer component in which data and computer programs can be temporarily recorded. Thus, the purchaser of [software] desiring to utilize all of the programs on the diskette could arrange to copy [the software] into RAM. This would only be a temporary fixation. It is a property of RAM that when the computer is turned off, the copy of the program recorded in RAM is lost.

      56

      Apple Computer at 622.

      57

      While we recognize that this language is not dispositive, it supports the view that the copy made in RAM is "fixed" and qualifies as a copy under the Copyright Act.

      58

      We have found no case which specifically holds that the copying of software into RAM creates a "copy" under the Copyright Act. However, it is generally accepted that the loading of software into a computer constitutes the creation of a copy under the Copyright Act. See e.g. Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 260 (5th Cir.1988) ("the act of loading a program from a medium of storage into a computer's memory creates a copy of the program"); 2 Nimmer on Copyright, § 8.08 at 8-105 (1983) ("Inputting a computer program entails the preparation of a copy."); Final Report of the National Commission on the New Technological Uses of Copyrighted Works, at 13 (1978) ("the placement of a work into a computer is the preparation of a copy"). We recognize that these authorities are somewhat troubling since they do not specify that a copy is created regardless of whether the software is loaded into the RAM, the hard disk or the read only memory ("ROM"). However, since we find that the copy created in the RAM can be "perceived, reproduced, or otherwise communicated," we hold that the loading of software into the RAM creates a copy under the Copyright Act. 17 U.S.C. § 101. We affirm the district court's grant of summary judgment as well as the permanent injunction as it relates to this issue.

      59
      B. Use of unlicensed software at headquarters
      60

      It is not disputed that Peak has several MAI computers with MAI operating software "up and running" at its headquarters. It is also not disputed that Peak only has a license to use MAI software to operate one system. As discussed above, we find that the loading of MAI's operating software into RAM, which occurs when an MAI system is turned on, constitutes a copyright violation. We affirm the district court's grant of summary judgment in favor of MAI on its claim that Peak violated its copyright through the unlicensed use of MAI software at Peak headquarters, and also affirm the permanent injunction as it relates to this issue.

      61
      C. Loaning of MAI computers and software
      62

      MAI contends that Peak violated the Copyright Act by loaning MAI computers and software to its customers. Among the exclusive rights given to the owner of a copyrighted work is the right to distribute copies of the work by lending. 17 U.S.C. § 106(3). Therefore, Peak's loaning of MAI software, if established, would constitute a violation of the Copyright Act.

      63

      [520] MAI argues that it is clear that Peak loaned out MAI computers because Peak advertisements describe the availability of loaner computers for its customers and Chiechi admitted that the available loaners included MAI computers. However, there was no evidence that a MAI computer was ever actually loaned to a Peak customer. Paul Boulanger, a Senior Field Engineer at Peak, testified in his deposition that he was not aware of any MAI systems being loaned to Peak customers or of any customer asking for one. Charles Weiner, a Field Service Manager at Peak, testified in his deposition that he did not have any knowledge of MAI systems being loaned to customers. Weighing this evidence in the light most favorable to Peak, whether Peak actually loaned out any MAI system remains a genuine issue of material fact.

      64

      As a general rule, a permanent injunction will be granted when liability has been established and there is a threat of continuing violations. See, National Football League v. McBee & Bruno's, Inc., 792 F.2d 726, 732 (8th Cir.1986); 3 Nimmer on Copyright § 14.06[B] at 14-88. However § 502(a) of the Copyright Act authorizes the court to "grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a) (emphasis added). While there has been no showing that Peak has actually loaned out any MAI software, the threat of a violation is clear as Peak has MAI computers in its loaner inventory. The permanent injunction is upheld as it relates to this issue.

      65
      V. MISAPPROPRIATION OF TRADE SECRETS
      66

      The district court granted summary judgment in favor of MAI on its misappropriation of trade secrets claims and issued a permanent injunction against Peak on these claims. The permanent injunction prohibits Peak from "misappropriating, using in any manner in their business, including advertising connected therewith, and/or disclosing to others MAI's trade secrets," including: (1) MAI Customer Database; (2) MAI Field Information Bulletins ("FIB"); and, (3) MAI software.

      67

      Peak argues that since MAI's motion for summary judgment only included argument regarding the customer database as a trade secret that the grant of summary judgment on the FIBs and software was overbroad. However, in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the Supreme Court held that "so long as the losing party was on notice that she had to come forward with all of her evidence," summary judgment can properly be entered. Id. at 326, 106 S.Ct. at 2554. Although Celotex dealt with the court's authority to grant summary judgment sua sponte, its notice analysis is applicable to any summary judgment motion.

      68

      MAI argues that Peak had adequate notice because, while MAI only presented argument regarding the customer database, it moved for summary judgment on its claims of misappropriation of trade secrets generally, and, because MAI's Statement of Uncontroverted Facts included statements that the FIBs and software were trade secrets. We agree. However, we do not agree with MAI's contention that Peak has waived its right to appeal summary judgment on these issues by failing address the merits in the district court. Therefore, we reach the merits of the grant of summary judgment on each trade secret claim.

      69
      A. Customer Database
      70

      California has adopted the Uniform Trade Secrets Act ("UTSA") which codifies the basic principles of common law trade secret protection. Cal.Civ.Code §§ 3426-3426.10 (West Supp.1993). To establish a violation under the UTSA, it must be shown that a defendant has been unjustly enriched by the improper appropriation, use or disclosure of a "trade secret."

      71

      Peak argues both that the MAI Customer Database is not a "trade secret," and that even if it is a trade secret, that Peak did not "misappropriate" it.

      72

      The UTSA defines a "trade secret" as:

      73

      [521] information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

      (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and

      (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

      74

      Cal.Civ.Code § 3426.1(d) (West Supp.1993).

      75

      MAI contends its Customer Database is a valuable collection of data assembled over many years that allows MAI to tailor its service contracts and pricing to the unique needs of its customers and constitutes a trade secret.

      76

      We agree that the Customer Database qualifies as a trade secret. The Customer Database has potential economic value because it allows a competitor like Peak to direct its sales efforts to those potential customers that are already using the MAI computer system. Further, MAI took reasonable steps to insure the secrecy to this information as required by the UTSA. MAI required its employees to sign confidentiality agreements respecting its trade secrets, including the Customer Database. Thus, under the UTSA, the MAI Customer Database constitutes a trade secret.

      77

      We also agree with MAI that the record before the district court on summary judgment establishes that Peak misappropriated the Customer Database.

      78

      "Misappropriation" is defined under the UTSA as:

      79

      (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means;[8] or

      (2) Disclosure or use of a trade secret of another without express or implied consent by a person who:

      (A) Used improper means to acquire knowledge of the trade secret; or

      (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

      (C) Before a material change of his or her position knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or by mistake.

      80

      Cal.Civ.Code § 3426.1(b) (West Supp.1993).

      81

      Peak contends that Francis never physically took any portion of MAI's customer database and that neither Francis nor any-one under his direction put information he had obtained from working at MAI in the Peak database. However, to find misappropriation under the UTSA, this need not be established.

      82

      The UTSA definition of "misappropriation" has been clarified by case law which establishes that the right to announce a new affiliation, even to trade secret clients of a former employer, is basic to an individual's right to engage in fair competition, and that the common law right to compete fairly and the right to announce a new business affiliation have survived the enactment of the UTSA. American Credit Indem. Co. v. Sacks, 213 Cal. App.3d 622, 262 Cal.Rptr. 92, 99-100 (Cal. Ct.App.1989). However, misappropriation occurs if information from a customer database is used to solicit customers. Id.

      83

      Merely informing a former employer's customers of a change of employment, without more, is not solicitation. Id. 262 Cal.Rptr. at 99 (citing Aetna Bldg. Maintenance Co. v. West, 39 Cal.2d 198, 246 P.2d 11 (1952)). However, in this case, Francis did more than merely announce his new affiliation with Peak. When Francis began [522] working for Peak, he called MAI customers whose names he recognized. Additionally, Francis personally went to visit some of these MAI customers with proposals to try and get them to switch over to Peak. These actions constituted solicitation and misappropriation under the UTSA definition. We affirm the district court's grant of summary judgment in favor of MAI on its claim that Peak misappropriated its Customer Database and affirm the permanent injunction as it relates to this issue.

      84
      B. Field Information Bulletins
      85

      MAI argues summary judgment was properly granted on its claim of misappropriation of the FIBs because the FIBs are a valuable trade secret of MAI and the evidence showed that the FIBs were being used by Peak to operate a business competing unfairly with MAI.

      86

      We agree that the FIBs constitute trade secrets. It is uncontroverted that they contain technical data developed by MAI to aid in the repair and servicing of MAI computers, and that MAI has taken reasonable steps to insure that the FIBs are not generally known to the public.

      87

      However, whether Peak has misappropriated the FIBs remains a genuine issue of material fact. The only evidence introduced by MAI to establish Peak's use of the FIBs is Peak's advertisements claiming that "Peak's system specialists are specifically trained on the latest hardware releases on MAI Basic Four." MAI asserts that if Peak did not use FIBs that this claim would have to be false. However, Weiner and Boulanger testified in their depositions that they had never seen a FIB at Peak. Similarly, Boulanger, Robert Pratt and Michael McIntosh[9] each testified that they did not have any FIB information when they left MAI. Weighing this evidence in the light most favorable to Peak, whether Peak used any of the FIBs remains a genuine issue of material fact, and the district court's grant of summary judgment on this claim of trade secret misappropriation is reversed and the permanent injunction is vacated as it relates to this issue.

      88
      C. Software
      89

      MAI contends the district court properly granted summary judgment on its claim of misappropriation of software because its software constitutes valuable unpublished works that allow its machines to be maintained. MAI argues that Peak misappropriated the software by loading it into the RAM.

      90

      We recognize that computer software can qualify for trade secret protection under the UTSA. See e.g., S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1089-90 (9th Cir.1989). However, a plaintiff who seeks relief for misappropriation of trade secrets must identify the trade secrets and carry the burden of showing that they exist. Diodes, Inc. v. Franzen, 260 Cal.App.2d 244, 67 Cal.Rptr. 19, 22-24 (1968); see also Universal Analytics Inc. v. MacNeal-Schwendler Corp., 707 F.Supp. 1170, 1177 (C.D.Cal.1989) (plaintiff failed to inform defendant or the court "precisely which trade secret it alleges was misappropriated"), aff'd, 914 F.2d 1256 (9th Cir.1990).

      91

      Here, while MAI asserts that it has trade secrets in its diagnostic software and operating system, and that its licensing agreements constitute reasonable efforts to maintain their secrecy, MAI does not specifically identify these trade secrets. In his Declaration, Joseph Perez, a Customer Service Manager at MAI, stated that the diagnostic software "contain valuable trade secrets of MAI," however, the Declaration does not specify what these trade secrets are. Additionally, we find no declaration or deposition testimony which specifically identifies any trade secrets. Since the trade secrets are not specifically identified, we cannot determine whether Peak has misappropriated any trade secrets by running the MAI operating software and/or diagnostic software in maintaining MAI systems for its customers, and we reverse the district court's grant of summary judgment in favor of MAI on its claim that [523] Peak misappropriated trade secrets in its computer software and vacate the permanent injunction as it relates to this issue.

      92
      VI. BREACH OF CONTRACT
      93

      The district court granted summary judgment in favor of MAI on its breach of contract claim against Eric Francis. It is clear from the depositions of Francis and Chiechi that Francis solicited customers and employees of MAI in breach of his employment contract with MAI, and we affirm the district court's grant of summary judgment on this issue and affirm the permanent injunction as it relates to this claim.

      94
      VII. PRELIMINARY INJUNCTION
      95
      A. Trademark Infringement
      96

      In granting the preliminary injunction, the district court found that Peak advertisements that "MAI Basic Four" computers are part of "Peak's Product Line" imply that Peak is a MAI dealer for new computers and constitute trademark infringement. The district court also found that: "Such acts are likely to cause confusion, mistake or deception in that potential purchasers of MAI computers and/or maintenance services will be led to believe that Peak's activities are associated with or sanctioned or approved by MAI."

      97

      Peak claims that the district court erred in granting the preliminary injunction because it did not apply the legal tests established by the Ninth Circuit to evaluate whether a likelihood of confusion existed. See e.g., J.B. Williams Co. v. Le Conte Cosmetics, Inc., 523 F.2d 187, 191 (9th Cir.1975) (five factor test to determine likelihood of confusion) cert. denied, 424 U.S. 913, 96 S.Ct. 1110, 47 L.Ed.2d 317 (1976); AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir.1979) (eight factor test). However, the district court was not required to consider all these factors. As we recognized in Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521 (9th Cir. 1984):

      98

      [I]n granting a preliminary injunction, the parties will not have had a full opportunity to either develop or present their cases and the district court will have had only a brief opportunity to consider the different factors relative to the likelihood of confusion determination.... The appropriate time for giving full consideration to [these factors] is when the merits of the case are tried.

      99

      Id. at 526 (citations and quotations omitted).

      100

      Peak has not shown how the district court clearly erred in its preliminary trademark conclusions. Accordingly, the district court did not abuse its discretion and this portion of the preliminary injunction is upheld.

      101
      B. False Advertising
      102

      In granting the preliminary injunction, the district court found that "Peak's advertising ... falsely misleads the public as to Peak's capability of servicing and maintaining MAI computer systems." The injunction prohibits Peak from "advertising, directly or indirectly, that MAI Basic Four is part of Peak's Product line, that Peak has `satellite facilities,' and/or that Peak's technicians are `specifically trained on the latest hardware releases of MAI.'"

      103

      Peak argues that these representations in its ads are not false. However, the district court's findings are supported by the record. Depositions show that Peak is not an authorized MAI dealer, that its technicians receive no ongoing training and that its "satellite facilities" are actually storage sheds. Perhaps the storage sheds could be legitimately characterized as satellite facilities, but the district court's conclusion otherwise was not clearly erroneous. Accordingly, the district court did not abuse its discretion and this portion of the preliminary injunction is upheld.

      104
      VIII. CONCLUSION
      105

      The following sections of the preliminary injunction issued by the district court on April 15, 1992 have been mooted by that court's issuing of a permanent injunction:

      106

      Section (A)(1), enjoining defendants from infringing MAI's copyrights; Section (A)(2) enjoining defendants from misappropriating [524] MAI trade secrets; Section (A)(3) enjoining defendants from maintaining MAI computers; Section (A)(4) enjoining defendants from soliciting customers; and, Section (A)(5) enjoining defendants from maintaining certain customer contracts.

      107

      The remainder of the district court's preliminary injunction shall remain in effect pending the district court's final judgment. Earlier orders of this court temporarily staying portions of the injunction are vacated.

      108

      The permanent injunction issued by the district court on February 2, 1993, is vacated to the following extent:

      109

      Section (A)(2)(a), enjoining defendants from "misappropriating ... MAI's trade secrets" is vacated as it relates to MAI's software and MAI's Field Information Bulletins.

      110

      The remainder of the permanent injunction shall remain in effect. Earlier orders of this court temporarily staying portions of the injunction are vacated.

      111

      The district court's grant of summary judgment is AFFIRMED in part and REVERSED in part. This case is REMANDED for proceedings consistent with this opinion.

      112

      [1] The panel unanimously finds this case suitable for decision without oral argument. Fed. R.App.P. 34(a); Ninth Circuit Rule 34-4.

      113

      [2] These issues include trademark infringement and false advertising.

      114

      [3] The Central District of California's Local Rule 7.14 provides for the filing of a Statement of Uncontroverted Facts and Conclusions of Law with each motion for summary judgment and for the filing of a Statement of Genuine Issues of Material Fact with all opposition papers. In granting summary judgment, the district court had before it these papers as well as MAI's Motion for Summary Judgment, Peak's Opposition, and MAI's Response. MAI's Statement of Uncontroverted Facts and Conclusions of Law and Peak's Statement of Genuine Issues of Material Fact rely on the declarations and deposition testimony which were filed with the district court in connection with MAI's earlier motion for a preliminary injunction. These declarations and deposition testimony make up the record in this case.

      115

      [4] A representative MAI software license provides in part:

      116

      4. Software License.

      (a) License.... Customer may use the Software (one version with maximum of two copies permitted — a working and a backup copy) ... solely to fulfill Customer's own internal information processing needs on the particular items of Equipment ... for which the Software is configured and furnished by [MAI]. The provisions of this License ... shall apply to all versions and copies of the Software furnished to Customer pursuant to this Agreement. The term "Software" includes, without limitation, all basic operating system software....

      (b) Customer Prohibited Acts.... Any possession or use of the Software ... not expressly authorized under this License or any act which might jeopardize [MAI]'s rights or interests in the Software ... is prohibited, including without limitation, examination, disclosure, copying, modification, reconfiguration, augmentation, adaptation, emulation, visual display or reduction to visually perceptible form or tampering....

      (c) Customer Obligations. Customer acknowledges that the Software is [MAI]'s valuable and exclusive property, trade secret and copyrighted material. Accordingly, Customer shall ... (i) use the Software ... strictly as prescribed under this License, (ii) keep the Software ... confidential and not make [it] available to others....

      117

      A representative diagnostic license agreement provides in part:

      118

      6. Access/Non-Disclosure.

      Licensee shall not give access nor shall it disclose the Diagnostics (in any form) ... to any person ... without the written permission of [MAI]. Licensee may authorize not more than three (3) of its bona fide employees to utilize the Diagnostics ... if, and only if, they agree to be bound by the terms hereof.

      119

      [5] MAI also alleges that Peak runs its diagnostic software in servicing MAI computers. Since Peak's running of the operating software constitutes copyright violation, it is not necessary for us to directly reach the issue of whether Peak also runs MAI's diagnostic software. However, we must note that Peak's field service manager, Charles Weiner, admits that MAI diagnostic software is built into the MAI MPx system and, further, that if Peak loads the MAI diagnostic software from whatever source into the computer's RAM, that such loading will produce the same copyright violation as loading the operating software.

      120

      [6] Since MAI licensed its software, the Peak customers do not qualify as "owners" of the software and are not eligible for protection under § 117.

      121

      [7] The current § 117 was enacted by Congress in 1980, as part of the Computer Software Copyright Act. This Act adopted the recommendations contained in the Final Report of the National Commission on New Technological Uses of Copyrighted Works ("CONTU") (1978). H.R.Rep. No. 1307, 96th Cong., 2d Sess., pt. 1, at 23. The CONTU was established by Congress in 1974 to perform research and make recommendations concerning copyright protection for computer programs. The new § 117 reflects the CONTU's conclusion that: "Because the placement of a work into a computer is the preparation of a copy, the law should provide that persons in rightful possession of copies of programs be able to use them freely without fear of exposure to copyright liability." Final Report at 13.

      122

      [8] The UTSA defines "improper means," as "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means." Cal.Civ.Code § 3426.1(a) (West Supp.1993).

      123

      [9] Pratt and Boulanger are both computer technicians who left MAI to work at Peak.

    • 1.5 17 U.S.C. § 117.—Limitations on exclusive rights: Computer programs

      This is the edited section 117 after MAI v. Peak. Does it solve all the problems of that case? What if software is licensed rather than owned?
      1

      (a) Making of Additional Copy or Adaptation by Owner of Copy.—Not­with­stand­ing the provisions of section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

      2

      (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

      3

      (2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful.

      4

      (b) Lease, Sale, or Other Transfer of Additional Copy or Adaptation.—Any exact copies prepared in accordance with the provisions of this section may be leased, sold, or otherwise transferred, along with the copy from which such copies were prepared, only as part of the lease, sale, or other transfer of all rights in the program. Adaptations so prepared may be transferred only with the authorization of the copyright owner.

      5

      (c) Machine Maintenance or Repair.—Notwithstanding the provisions of section 106, it is not an infringement for the owner or lessee of a machine to make or authorize the making of a copy of a computer program if such copy is made solely by virtue of the activation of a machine that lawfully contains an authorized copy of the computer program, for purposes only of maintenance or repair of that machine, if—

      6

      (1) such new copy is used in no other manner and is destroyed immediately after the maintenance or repair is completed; and

      7

      (2) with respect to any computer program or part thereof that is not necessary for that machine to be activated, such program or part thereof is not accessed or used other than to make such new copy by virtue of the activation of the machine.

      8

      (d) Definitions.—For purposes of this section—

      9

      (1) the “maintenance” of a machine is the servicing of the machine in order to make it work in accordance with its original specifications and any changes to those specifications authorized for that machine; and

      10

      (2) the “repair” of a machine is the restoring of the machine to the state of working in accordance with its original specifications and any changes to those specifications authorized for that machine.

    • 1.6 Cartoon Network LP, LLLP v. CSC Holdings, Inc. - Fixation

      1

      536 F.3d 121

      2
      The CARTOON NETWORK LP, LLLP and Cable News Network L.P., L.L.L.P., Plaintiffs-Counter-Claimants-Defendants-Appellees,
      Twentieth Century Fox Film Corporation, Universal City Studios Productions LLLP, Paramount Pictures Corporation, Disney Enterprises Inc., CBS Broadcasting Inc., American Broadcasting Companies, Inc., NBC Studios, Inc., Plaintiffs-Counter-Defendants-Appellees,
      v.
      CSC HOLDINGS, INC. and Cablevision Systems Corporation, Defendants-Counterclaim-Plaintiffs-Third-Party Plaintiffs-Appellants,
      v.
      Turner Broadcasting System, Inc., Cable News Network LP, LLP, Turner Network Sales, Inc., Turner Classic Movies, L.P., LLLP, Turner Network Television LP, LLLP, Third-Party-Defendants-Appellees.
      3

      Docket No. 07-1480-cv(L).

      4

      Docket No. 07-1511-cv(CON).

      5

      United States Court of Appeals, Second Circuit.

      6

      Argued: October 24, 2007.

      7

      Decided: August 4, 2008.

      8

      [536 F.3d 122]  Jeffrey A. Lamken (Robert K. Kry and Joshua A. Klein, on the brief), Baker Botts L.L.P., Washington, D.C., and Timothy A. Macht (on the brief), New York, N.Y., for Defendants-Appellants.

      9

      Katherine B. Forrest (Antony L. Ryan, on the brief), Cravath, Swaine & Moore LLP, New York, N.Y., for Plaintiffs-Appellees The Cartoon Network LP, LLLP, et al.

      10

      Robert Alan Garrett (Hadrian R. Katz, Jon Michaels, Peter L. Zimroth, and Eleanor Lackman, on the brief), Arnold & Porter LLP, Washington, D.C., for Plaintiffs-Appellees Twentieth Century Fox Film Corporation, et al.

      11

      Marc E. Isserles, Cohen & Gresser LLP, New York, N.Y., for Amici Curiae Law Professors.

      12

      Henry A. Lanman, Trachtenberg Rodes & Friedberg LLP, New York, N.Y., for Amicus Curiae Professor Timothy Wu.

      13

      Solveig Singleton, The Progress & Freedom Foundation, Washington, D.C., for Amicus Curiae Progress & Freedom Foundation.

      14

      Carol A. Witschel, White & Case LLP, and Richard H. Reimer, New York, N.Y., for Amicus Curiae The American Society of Composers, Authors & Publishers.

      15

      Michael E. Salzman, Hughes Hubbard & Reed LLP, and Marvin Berenson, Broadcast Music Inc., New York, N.Y., for Amicus Curiae Broadcast Music, Inc.

      16

      David Sohn, Center for Democracy & Technology, Washington, D.C., Fred von Lohman, Electronic Freedom Foundation, San Francisco, Cal., Sherwin Siy, Public Knowledge, Washington D.C., William P. Heaston, Broadband Service Providers Association Regulatory Committee, Jonathan Band PLLC, Washington, D.C., Julie [536 F.3d 123] Kearney, Consumer Electronics Association, Arlington, Va., Michael F. Altschul et al., CTIA-The Wireless Association®, Washington, D.C., Jonathan Banks, USTelecom, Washington, D.C., Michael K. Kellogg et al., Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington D.C., for Amici Curiae Center for Democracy & Technology et al.

      17

      Donald B. Verrilli, Jr., et al., Jenner & Block LLP, Washington, D.C., Kenneth L. Doroshow & Scott A. Zebrak, Recording Industry Association of America, Washington, D.C., Jacqueline C. Charlesworth, National Music Publishers' Association, Washington, D.C., Victor S. Perlman, American Society of Media Photographers, Inc., Philadelphia, Pa., Allan Robert Adler, Association of American Publishers, Washington, D.C., Linda Steinman, Davis Wright Tremaine LLP, New York, N.Y., David Korduner, Directors Guild of America, Inc., Los Angeles, Cal., Frederic Hirsch & Chun T. Wright, Entertainment Software Association, Washington, D.C., Susan Cleary, Independent Film & Television Alliance, Los Angeles, Cal., Gary Gertzog, National Football League, New York, N.Y., Thomas Ostertag, Office of the Commissioner of Baseball, New York, N.Y., Duncan Crabtree-Ireland, Screen Actors Guild, Inc., Los Angeles, Cal., John C. Beiter, Loeb & Loeb, LLP, Nashville, Tenn., Anthony R. Segall, Writers Guild of America, West, Inc., Los Angeles, Cal., for Amici Curiae American Society of Media Photographers, Inc. et al.

      18

      Steven J. Metalitz & J. Matthew Williams, Washington, D.C., for Amicus Curiae Americans for Tax Reform.

      19

      Before: WALKER, SACK, and LIVINGSTON, Circuit Judges.

      20
      JOHN M. WALKER, JR., Circuit Judge:
      21

      Defendant-Appellant Cablevision Systems Corporation ("Cablevision") wants to market a new "Remote Storage" Digital Video Recorder system ("RS-DVR"), using a technology akin to both traditional, set-top digital video recorders, like TiVo ("DVRs"), and the video-on-demand ("VOD") services provided by many cable companies. Plaintiffs-Appellees produce copyrighted movies and television programs that they provide to Cablevision pursuant to numerous licensing agreements. They contend that Cablevision, through the operation of its RS-DVR system as proposed, would directly infringe their copyrights both by making unauthorized reproductions, and by engaging in public performances, of their copyrighted works. The material facts are not in dispute. Because we conclude that Cablevision would not directly infringe plaintiffs' rights under the Copyright Act by offering its RS-DVR system to consumers, we reverse the district court's award of summary judgment to plaintiffs, and we vacate its injunction against Cablevision.

      22
      BACKGROUND
      23

      Today's television viewers increasingly use digital video recorders ("DVRs") instead of video cassette recorders ("VCRs") to record television programs and play them back later at their convenience. DVRs generally store recorded programming on an internal hard drive rather than a cassette. But, as this case demonstrates, the generic term "DVR" actually refers to a growing number of different devices and systems. Companies like TiVo sell a stand-alone DVR device that is typically connected to a user's cable box and television much like a VCR. Many cable companies also lease to their subscribers "set-top storage DVRs," which combine many of the functions of a standard cable box and a stand-alone DVR in a single device.

      24

      [536 F.3d 124] In March 2006, Cablevision, an operator of cable television systems, announced the advent of its new "Remote Storage DVR System." As designed, the RS-DVR allows Cablevision customers who do not have a stand-alone DVR to record cable programming on central hard drives housed and maintained by Cablevision at a "remote" location. RS-DVR customers may then receive playback of those programs through their home television sets, using only a remote control and a standard cable box equipped with the RS-DVR software. Cablevision notified its content providers, including plaintiffs, of its plans to offer RS-DVR, but it did not seek any license from them to operate or sell the RS-DVR.

      25

      Plaintiffs, which hold the copyrights to numerous movies and television programs, sued Cablevision for declaratory and injunctive relief. They alleged that Cablevision's proposed operation of the RS-DVR would directly infringe their exclusive rights to both reproduce and publicly perform their copyrighted works. Critically for our analysis here, plaintiffs alleged theories only of direct infringement, not contributory infringement, and defendants waived any defense based on fair use.

      26

      Ultimately, the United States District Court for the Southern District of New York (Denny Chin, Judge), awarded summary judgment to the plaintiffs and enjoined Cablevision from operating the RS-DVR system without licenses from its content providers. See Twentieth Century Fox Film Corp. v. Cablevision Sys. Corp. (Cablevision I), 478 F.Supp.2d 607 (S.D.N.Y.2007). At the outset, we think it helpful to an understanding of our decision to describe, in greater detail, both the RS-DVR and the district court's opinion.

      27
      I. Operation of the RS-DVR System
      28

      Cable companies like Cablevision aggregate television programming from a wide variety of "content providers"—the various broadcast and cable channels that produce or provide individual programs—and transmit those programs into the homes of their subscribers via coaxial cable. At the outset of the transmission process, Cablevision gathers the content of the various television channels into a single stream of data. Generally, this stream is processed and transmitted to Cablevision's customers in real time. Thus, if a Cartoon Network program is scheduled to air Monday night at 8pm, Cartoon Network transmits that program's data to Cablevision and other cable companies nationwide at that time, and the cable companies immediately re-transmit the data to customers who subscribe to that channel.

      29

      Under the new RS-DVR, this single stream of data is split into two streams. The first is routed immediately to customers as before. The second stream flows into a device called the Broadband Media Router ("BMR"), id. at 613, which buffers the data stream, reformats it, and sends it to the "Arroyo Server," which consists, in relevant part, of two data buffers and a number of high-capacity hard disks. The entire stream of data moves to the first buffer (the "primary ingest buffer"), at which point the server automatically inquires as to whether any customers want to record any of that programming. If a customer has requested a particular program, the data for that program move from the primary buffer into a secondary buffer, and then onto a portion of one of the hard disks allocated to that customer. As new data flow into the primary buffer, they overwrite a corresponding quantity of data already on the buffer. The primary ingest buffer holds no more than 0.1 seconds of each channel's programming at any moment. Thus, every tenth of a second, the data residing on this buffer are automatically erased and replaced. The [536 F.3d 125] data buffer in the BMR holds no more than 1.2 seconds of programming at any time. While buffering occurs at other points in the operation of the RS-DVR, only the BMR buffer and the primary ingest buffer are utilized absent any request from an individual subscriber.

      30

      As the district court observed, "the RS-DVR is not a single piece of equipment," but rather "a complex system requiring numerous computers, processes, networks of cables, and facilities staffed by personnel twenty-four hours a day and seven days a week." Id. at 612. To the customer, however, the processes of recording and playback on the RS-DVR are similar to that of a standard set-top DVR. Using a remote control, the customer can record programming by selecting a program in advance from an on-screen guide, or by pressing the record button while viewing a given program. A customer cannot, however, record the earlier portion of a program once it has begun. To begin playback, the customer selects the show from an on-screen list of previously recorded programs. See id. at 614-16. The principal difference in operation is that, instead of sending signals from the remote to an on-set box, the viewer sends signals from the remote, through the cable, to the Arroyo Server at Cablevision's central facility. See id. In this respect, RS-DVR more closely resembles a VOD service, whereby a cable subscriber uses his remote and cable box to request transmission of content, such as a movie, stored on computers at the cable company's facility. Id. at 612. But unlike a VOD service, RS-DVR users can only play content that they previously requested to be recorded.

      31

      Cablevision has some control over the content available for recording: a customer can only record programs on the channels offered by Cablevision (assuming he subscribes to them). Cablevision can also modify the system to limit the number of channels available and considered doing so during development of the RS-DVR. Id. at 613.

      32
      II. The District Court's Decision
      33

      In the district court, plaintiffs successfully argued that Cablevision's proposed system would directly infringe their copyrights in three ways. First, by briefly storing data in the primary ingest buffer and other data buffers integral to the function of the RS-DVR, Cablevision would make copies of protected works and thereby directly infringe plaintiffs' exclusive right of reproduction under the Copyright Act. Second, by copying programs onto the Arroyo Server hard disks (the "playback copies"), Cablevision would again directly infringe the reproduction right. And third, by transmitting the data from the Arroyo Server hard disks to its RS-DVR customers in response to a "playback" request, Cablevision would directly infringe plaintiffs' exclusive right of public performance. See id. at 617. Agreeing with all three arguments, the district court awarded summary declaratory judgment to plaintiffs and enjoined Cablevision from operating the RS-DVR system without obtaining licenses from the plaintiff copyright holders.

      34

      As to the buffer data, the district court rejected defendants' arguments 1) that the data were not "fixed" and therefore were not "copies" as defined in the Copyright Act, and 2) that any buffer copying was de minimis because the buffers stored only small amounts of data for very short periods of time. In rejecting the latter argument, the district court noted that the "aggregate effect of the buffering" was to reproduce the entirety of Cablevision's programming, and such copying "can hardly be called de minimis." Id. at 621.

      35

      [536 F.3d 126] On the issue of whether creation of the playback copies made Cablevision liable for direct infringement, the parties and the district court agreed that the dispositive question was "who makes the copies"? Id. at 617. Emphasizing Cablevision's "unfettered discretion" over the content available for recording, its ownership and maintenance of the RS-DVR components, and its "continuing relationship" with its RS-DVR customers, the district court concluded that "the copying of programming to the RS-DVR's Arroyo servers ... would be done not by the customer but by Cablevision, albeit at the customer's request." Id. at 618, 620, 621.

      36

      Finally, as to the public performance right, Cablevision conceded that, during the playback, "the streaming of recorded programming in response to a customer's request is a performance." Id. at 622. Cablevision contended, however, that the work was performed not by Cablevision, but by the customer, an argument the district court rejected "for the same reasons that [it] reject[ed] the argument that the customer is `doing' the copying involved in the RS-DVR." Id. Cablevision also argued that such a playback transmission was not "to the public," and therefore not a public performance as defined in the Copyright Act, because it "emanates from a distinct copy of a program uniquely associated with one customer's set-top box and intended for that customer's exclusive viewing in his or her home." Id. The district court disagreed, noting that "Cablevision would transmit the same program to members of the public, who may receive the performance at different times, depending on whether they view the program in real time or at a later time as an RS-DVR playback." Id. at 623 (emphasis added). The district court also relied on a case from the Northern District of California, On Command Video Corp. v. Columbia Pictures Industries, 777 F.Supp. 787 (N.D.Cal.1991), which held that when the relationship between the transmitter and the audience of a performance is commercial, the transmission is "to the public," see Cablevision I, 478 F.Supp.2d at 623 (citing On Command, 777 F.Supp. at 790).

      37

      Finding that the operation of the RS-DVR would infringe plaintiffs' copyrights, the district court awarded summary judgment to plaintiffs and enjoined Cablevision from copying or publicly performing plaintiffs' copyrighted works "in connection with its proposed RS-DVR system," unless it obtained the necessary licenses. Cablevision I, 478 F.Supp.2d at 624. Cablevision appealed.

      38
      DISCUSSION
      39

      We review a district court's grant of summary judgment de novo. Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 607 (2d Cir.2006).

      40

      "Section 106 of the Copyright Act grants copyright holders a bundle of exclusive rights...." Id. at 607-08. This case implicates two of those rights: the right "to reproduce the copyrighted work in copies," and the right "to perform the copyrighted work publicly." 17 U.S.C. § 106(1), (4). As discussed above, the district court found that Cablevision infringed the first right by 1) buffering the data from its programming stream and 2) copying content onto the Arroyo Server hard disks to enable playback of a program requested by an RS-DVR customer. In addition, the district court found that Cablevision would infringe the public performance right by transmitting a program to an RS-DVR customer in response to that customer's playback request. We address each of these three allegedly infringing acts in turn.

      41
      [536 F.3d 127] I. The Buffer Data
      42

      It is undisputed that Cablevision, not any customer or other entity, takes the content from one stream of programming, after the split, and stores it, one small piece at a time, in the BMR buffer and the primary ingest buffer. As a result, the information is buffered before any customer requests a recording, and would be buffered even if no such request were made. The question is whether, by buffering the data that make up a given work, Cablevision "reproduce[s]" that work "in copies," 17 U.S.C. § 106(1), and thereby infringes the copyright holder's reproduction right.

      43

      "Copies," as defined in the Copyright Act, "are material objects ... in which a work is fixed by any method ... and from which the work can be ... reproduced." Id. § 101. The Act also provides that a work is "`fixed' in a tangible medium of expression when its embodiment ... is sufficiently permanent or stable to permit it to be ... reproduced ... for a period of more than transitory duration." Id. (emphasis added). We believe that this language plainly imposes two distinct but related requirements: the work must be embodied in a medium, i.e., placed in a medium such that it can be perceived, reproduced, etc., from that medium (the "embodiment requirement"), and it must remain thus embodied "for a period of more than transitory duration" (the "duration requirement"). See 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8.02[B][3], at 8-32 (2007). Unless both requirements are met, the work is not "fixed" in the buffer, and, as a result, the buffer data is not a "copy" of the original work whose data is buffered.

      44

      The district court mistakenly limited its analysis primarily to the embodiment requirement. As a result of this error, once it determined that the buffer data was "[c]learly ... capable of being reproduced," i.e., that the work was embodied in the buffer, the district court concluded that the work was therefore "fixed" in the buffer, and that a copy had thus been made. Cablevision I, 478 F.Supp.2d at 621-22. In doing so, it relied on a line of cases beginning with MAI Systems Corp. v. Peak Computer Inc., 991 F.2d 511 (9th Cir.1993). It also relied on the United States Copyright Office's 2001 report on the Digital Millennium Copyright Act, which states, in essence, that an embodiment is fixed "[u]nless a reproduction manifests itself so fleetingly that it cannot be copied." U.S. Copyright Office, DMCA Section 104 Report 111 (Aug.2001) ("DMCA Report") (emphasis added), available at http://www.copyright.gov/reports/studies/dmca/sec-104-report-vol-1.pdf.

      45

      The district court's reliance on cases like MAI Systems is misplaced. In general, those cases conclude that an alleged copy is fixed without addressing the duration requirement; it does not follow, however, that those cases assume, much less establish, that such a requirement does not exist. Indeed, the duration requirement, by itself, was not at issue in MAI Systems and its progeny. As a result, they do not speak to the issues squarely before us here: If a work is only "embodied" in a medium for a period of transitory duration, can it be "fixed" in that medium, and thus a copy? And what constitutes a period "of more than transitory duration"?

      46

      In MAI Systems, defendant Peak Computer, Inc., performed maintenance and repairs on computers made and sold by MAI Systems. In order to service a customer's computer, a Peak employee had to operate the computer and run the computer's copyrighted operating system software. See MAI Sys., 991 F.2d at 513. The issue in MAI Systems was whether, [536 F.3d 128] by loading the software into the computer's RAM,[1] the repairman created a "copy" as defined in § 101. See id. at 517. The resolution of this issue turned on whether the software's embodiment in the computer's RAM was "fixed," within the meaning of the same section. The Ninth Circuit concluded that

      47

      by showing that Peak loads the software into the RAM and is then able to view the system error log and diagnose the problem with the computer, MAI has adequately shown that the representation created in the RAM is "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."

      48

      Id. at 518 (quoting 17 U.S.C. § 101).

      49

      The MAI Systems court referenced the "transitory duration" language but did not discuss or analyze it. The opinion notes that the defendants "vigorously" argued that the program's embodiment in the RAM was not a copy, but it does not specify the arguments defendants made. Id. at 517. This omission suggests that the parties did not litigate the significance of the "transitory duration" language, and the court therefore had no occasion to address it. This is unsurprising, because it seems fair to assume that in these cases the program was embodied in the RAM for at least several minutes.

      50

      Accordingly, we construe MAI Systems and its progeny as holding that loading a program into a computer's RAM can result in copying that program. We do not read MAI Systems as holding that, as a matter of law, loading a program into a form of RAM always results in copying. Such a holding would read the "transitory duration" language out of the definition, and we do not believe our sister circuit would dismiss this statutory language without even discussing it. It appears the parties in MAI Systems simply did not dispute that the duration requirement was satisfied; this line of cases simply concludes that when a program is loaded into RAM, the embodiment requirement is satisfied—an important holding in itself, and one we see no reason to quibble with here.[2]

      51

      At least one court, relying on MAI Systems in a highly similar factual setting, has made this point explicitly. In Advanced Computer Services of Michigan, Inc. v. MAI Systems Corp., the district court expressly noted that the unlicensed user in that case ran copyrighted diagnostic software "for minutes or longer," but that the program's embodiment in the computer's RAM might be too ephemeral to be fixed if the computer had been shut down "within [536 F.3d 129] seconds or fractions of a second" after loading the copyrighted program. 845 F.Supp. 356, 363 (E.D.Va.1994). We have no quarrel with this reasoning; it merely makes explicit the reasoning that is implicit in the other MAI Systems cases. Accordingly, those cases provide no support for the conclusion that the definition of "fixed" does not include a duration requirement. See Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 L.Ed. 411 (1924) ("Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.").

      52

      Nor does the Copyright Office's 2001 DMCA Report, also relied on by the district court in this case, explicitly suggest that the definition of "fixed" does not contain a duration requirement. However, as noted above, it does suggest that an embodiment is fixed "[u]nless a reproduction manifests itself so fleetingly that it cannot be copied, perceived or communicated." DMCA Report, supra, at 111. As we have stated, to determine whether a work is "fixed" in a given medium, the statutory language directs us to ask not only 1) whether a work is "embodied" in that medium, but also 2) whether it is embodied in the medium "for a period of more than transitory duration." According to the Copyright Office, if the work is capable of being copied from that medium for any amount of time, the answer to both questions is "yes." The problem with this interpretation is that it reads the "transitory duration" language out of the statute.

      53

      We assume, as the parties do, that the Copyright Office's pronouncement deserves only Skidmore deference, deference based on its "power to persuade." Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). And because the Office's interpretation does not explain why Congress would include language in a definition if it intended courts to ignore that language, we are not persuaded.

      54

      In sum, no case law or other authority dissuades us from concluding that the definition of "fixed" imposes both an embodiment requirement and a duration requirement. Accord CoStar Group Inc. v. LoopNet, Inc., 373 F.3d 544, 551 (4th Cir. 2004) (while temporary reproductions "may be made in this transmission process, they would appear not to be `fixed' in the sense that they are `of more than transitory duration'"). We now turn to whether, in this case, those requirements are met by the buffer data.

      55

      Cablevision does not seriously dispute that copyrighted works are "embodied" in the buffer. Data in the BMR buffer can be reformatted and transmitted to the other components of the RS-DVR system. Data in the primary ingest buffer can be copied onto the Arroyo hard disks if a user has requested a recording of that data. Thus, a work's "embodiment" in either buffer "is sufficiently permanent or stable to permit it to be perceived, reproduced," (as in the case of the ingest buffer) "or otherwise communicated" (as in the BMR buffer). 17 U.S.C. § 101. The result might be different if only a single second of a much longer work was placed in the buffer in isolation. In such a situation, it might be reasonable to conclude that only a minuscule portion of a work, rather than "a work" was embodied in the buffer. Here, however, where every second of an entire work is placed, one second at a time, in the buffer, we conclude that the work is embodied in the buffer.

      56

      Does any such embodiment last "for a period of more than transitory duration"? Id. No bit of data remains in any buffer for more than a fleeting 1.2 seconds. And unlike the data in cases like MAI [536 F.3d 130] Systems, which remained embodied in the computer's RAM memory until the user turned the computer off, each bit of data here is rapidly and automatically overwritten as soon as it is processed. While our inquiry is necessarily fact-specific, and other factors not present here may alter the duration analysis significantly, these facts strongly suggest that the works in this case are embodied in the buffer for only a "transitory" period, thus failing the duration requirement.

      57

      Against this evidence, plaintiffs argue only that the duration is not transitory because the data persist "long enough for Cablevision to make reproductions from them." Br. of Pls.-Appellees the Cartoon Network et al. at 51. As we have explained above, however, this reasoning impermissibly reads the duration language out of the statute, and we reject it. Given that the data reside in no buffer for more than 1.2 seconds before being automatically overwritten, and in the absence of compelling arguments to the contrary, we believe that the copyrighted works here are not "embodied" in the buffers for a period of more than transitory duration, and are therefore not "fixed" in the buffers. Accordingly, the acts of buffering in the operation of the RS-DVR do not create copies, as the Copyright Act defines that term. Our resolution of this issue renders it unnecessary for us to determine whether any copies produced by buffering data would be de minimis, and we express no opinion on that question.

      58
      II. Direct Liability for Creating the Playback Copies
      59

      In most copyright disputes, the allegedly infringing act and the identity of the infringer are never in doubt. These cases turn on whether the conduct in question does, in fact, infringe the plaintiff's copyright. In this case, however, the core of the dispute is over the authorship of the infringing conduct. After an RS-DVR subscriber selects a program to record, and that program airs, a copy of the program—a copyrighted work—resides on the hard disks of Cablevision's Arroyo Server, its creation unauthorized by the copyright holder. The question is who made this copy. If it is Cablevision, plaintiffs' theory of direct infringement succeeds; if it is the customer, plaintiffs' theory fails because Cablevision would then face, at most, secondary liability, a theory of liability expressly disavowed by plaintiffs.

      60

      Few cases examine the line between direct and contributory liability. Both parties cite a line of cases beginning with Religious Technology Center v. Netcom On-Line Communication Services, 907 F.Supp. 1361 (N.D.Cal.1995). In Netcom, a third-party customer of the defendant Internet service provider ("ISP") posted a copyrighted work that was automatically reproduced by the defendant's computer. The district court refused to impose direct liability on the ISP, reasoning that "[a]lthough copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party." Id. at 1370. Recently, the Fourth Circuit endorsed the Netcom decision, noting that

      61

      to establish direct liability under ... the Act, something more must be shown than mere ownership of a machine used by others to make illegal copies. There must be actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner."

      62

      CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir.2004).

      63

      [536 F.3d 131] Here, the district court pigeon-holed the conclusions reached in Netcom and its progeny as "premised on the unique attributes of the Internet." Cablevision I, 478 F.Supp.2d at 620. While the Netcom court was plainly concerned with a theory of direct liability that would effectively "hold the entire Internet liable" for the conduct of a single user, 907 F.Supp. at 1372, its reasoning and conclusions, consistent with precedents of this court and the Supreme Court, and with the text of the Copyright Act, transcend the Internet. Like the Fourth Circuit, we reject the contention that "the Netcom decision was driven by expedience and that its holding is inconsistent with the established law of copyright," CoStar, 373 F.3d at 549, and we find it "a particularly rational interpretation of § 106," id. at 551, rather than a special-purpose rule applicable only to ISPs.

      64

      When there is a dispute as to the author of an allegedly infringing instance of reproduction, Netcom and its progeny direct our attention to the volitional conduct that causes the copy to be made. There are only two instances of volitional conduct in this case: Cablevision's conduct in designing, housing, and maintaining a system that exists only to produce a copy, and a customer's conduct in ordering that system to produce a copy of a specific program. In the case of a VCR, it seems clear — and we know of no case holding otherwise — that the operator of the VCR, the person who actually presses the button to make the recording, supplies the necessary element of volition, not the person who manufactures, maintains, or, if distinct from the operator, owns the machine. We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer's command.

      65

      The district court emphasized the fact that copying is "instrumental" rather than "incidental" to the function of the RS-DVR system. Cablevision I, 478 F.Supp.2d at 620. While that may distinguish the RS-DVR from the ISPs in Netcom and CoStar, it does not distinguish the RS-DVR from a VCR, a photocopier, or even a typical copy shop. And the parties do not seem to contest that a company that merely makes photocopiers available to the public on its premises, without more, is not subject to liability for direct infringement for reproductions made by customers using those copiers. They only dispute whether Cablevision is similarly situated to such a proprietor.

      66

      The district court found Cablevision analogous to a copy shop that makes course packs for college professors. In the leading case involving such a shop, for example, "[t]he professor [gave] the copyshop the materials of which the coursepack [was] to be made up, and the copyshop [did] the rest." Princeton Univ. Press v. Mich. Document Servs., 99 F.3d 1381, 1384 (6th Cir.1996) (en banc). There did not appear to be any serious dispute in that case that the shop itself was directly liable for reproducing copyrighted works. The district court here found that Cablevision, like this copy shop, would be "doing" the copying, albeit "at the customer's behest." Cablevision I, 478 F.Supp.2d at 620.

      67

      But because volitional conduct is an important element of direct liability, the district court's analogy is flawed. In determining who actually "makes" a copy, a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct. In cases like Princeton [536 F.3d 132] University Press, the defendants operated a copying device and sold the product they made using that device. See 99 F.3d at 1383 ("The corporate defendant ... is a commercial copyshop that reproduced substantial segments of copyrighted works of scholarship, bound the copies into `coursepacks,' and sold the coursepacks to students. ..."). Here, by selling access to a system that automatically produces copies on command, Cablevision more closely resembles a store proprietor who charges customers to use a photocopier on his premises, and it seems incorrect to say, without more, that such a proprietor "makes" any copies when his machines are actually operated by his customers. See Netcom, 907 F.Supp. at 1369. Some courts have held to the contrary, but they do not explicitly explain why, and we find them unpersuasive. See, e.g., Elektra Records Co. v. Gem Elec. Distribs., Inc., 360 F.Supp. 821, 823 (E.D.N.Y.1973) (concluding that, "regardless" of whether customers or defendants' employees operated the tape-copying machines at defendants' stores, defendant had actively infringed copyrights).

      68

      The district court also emphasized Cablevision's "unfettered discretion in selecting the programming that it would make available for recording." Cablevision I, 478 F.Supp.2d at 620. This conduct is indeed more proximate to the creation of illegal copying than, say, operating an ISP or opening a copy shop, where all copied content was supplied by the customers themselves or other third parties. Nonetheless, we do not think it sufficiently proximate to the copying to displace the customer as the person who "makes" the copies when determining liability under the Copyright Act. Cablevision, we note, also has subscribers who use home VCRs or DVRs (like TiVo), and has significant control over the content recorded by these customers. But this control is limited to the channels of programming available to a customer and not to the programs themselves. Cablevision has no control over what programs are made available on individual channels or when those programs will air, if at all. In this respect, Cablevision possesses far less control over recordable content than it does in the VOD context, where it actively selects and makes available beforehand the individual programs available for viewing. For these reasons, we are not inclined to say that Cablevision, rather than the user, "does" the copying produced by the RS-DVR system. As a result, we find that the district court erred in concluding that Cablevision, rather than its RS-DVR customers, makes the copies carried out by the RS-DVR system.

      69

      Our refusal to find Cablevision directly liable on these facts is buttressed by the existence and contours of the Supreme Court's doctrine of contributory liability in the copyright context. After all, the purpose of any causation-based liability doctrine is to identify the actor (or actors) whose "conduct has been so significant and important a cause that [he or she] should be legally responsible." W. Page Keeton et al., Prosser and Keeton on Torts § 42, at 273 (5th ed.1984). But here, to the extent that we may construe the boundaries of direct liability more narrowly, the doctrine of contributory liability stands ready to provide adequate protection to copyrighted works.

      70

      Most of the facts found dispositive by the district court—e.g., Cablevision's "continuing relationship" with its RS-DVR customers, its control over recordable content, and the "instrumental[ity]" of copying to the RS-DVR system, Cablevision I, 478 F.Supp.2d at 618-20—seem to us more relevant to the question of contributory liability. In Sony Corp. of America v. Universal City Studios, Inc., the lack of an [536 F.3d 133] "ongoing relationship" between Sony and its VCR customers supported the Court's conclusion that it should not impose contributory liability on Sony for any infringing copying done by Sony VCR owners. 464 U.S. 417, 437-38, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). The Sony Court did deem it "just" to impose liability on a party in a "position to control" the infringing uses of another, but as a contributory, not direct, infringer. Id. at 437, 104 S.Ct. 774. And asking whether copying copyrighted material is only "incidental" to a given technology is akin to asking whether that technology has "commercially significant noninfringing uses," another inquiry the Sony Court found relevant to whether imposing contributory liability was just. Id. at 442, 104 S.Ct. 774.

      71

      The Supreme Court's desire to maintain a meaningful distinction between direct and contributory copyright infringement is consistent with congressional intent. The Patent Act, unlike the Copyright Act, expressly provides that someone who "actively induces infringement of a patent" is "liable as an infringer," 35 U.S.C. § 271(b), just like someone who commits the underlying infringing act by "us[ing]" a patented invention without authorization, id. § 271(a). In contrast, someone who merely "sells ... a material or apparatus for use in practicing a patented process" faces only liability as a "contributory infringer." Id. § 271(c). If Congress had meant to assign direct liability to both the person who actually commits a copyright-infringing act and any person who actively induces that infringement, the Patent Act tells us that it knew how to draft a statute that would have this effect. Because Congress did not do so, the Sony Court concluded that "[t]he Copyright Act does not expressly render anyone liable for infringement committed by another." 464 U.S. at 434, 104 S.Ct. 774. Furthermore, in cases like Sony, the Supreme Court has strongly signaled its intent to use the doctrine of contributory infringement, not direct infringement, to "identify[] the circumstances in which it is just to hold one individual accountable for the actions of another." Id. at 435, 104 S.Ct. 774. Thus, although Sony warns us that "the lines between direct infringement, contributory infringement, and vicarious liability are not clearly drawn," id. at 435 n. 17, 104 S.Ct. 774 (internal quotation marks and citation omitted), that decision does not absolve us of our duty to discern where that line falls in cases, like this one, that require us to decide the question.

      72

      The district court apparently concluded that Cablevision's operation of the RS-DVR system would contribute in such a major way to the copying done by another that it made sense to say that Cablevision was a direct infringer, and thus, in effect, was "doing" the relevant copying. There are certainly other cases, not binding on us, that follow this approach. See, e.g., Playboy Enters. v. Russ Hardenburgh, Inc., 982 F.Supp. 503, 513 (N.D.Ohio 1997) (noting that defendant ISP's encouragement of its users to copy protected files was "crucial" to finding that it was a direct infringer). We need not decide today whether one's contribution to the creation of an infringing copy may be so great that it warrants holding that party directly liable for the infringement, even though another party has actually made the copy. We conclude only that on the facts of this case, copies produced by the RS-DVR system are "made" by the RS-DVR customer, and Cablevision's contribution to this reproduction by providing the system does not warrant the imposition of direct liability. Therefore, Cablevision is entitled to summary judgment on this point, and the district court erred in awarding summary judgment to plaintiffs.

      73
      [536 F.3d 134] III. Transmission of RS-DVR Playback
      74

      Plaintiffs' final theory is that Cablevision will violate the Copyright Act by engaging in unauthorized public performances of their works through the playback of the RS-DVR copies. The Act grants a copyright owner the exclusive right, "in the case of ... motion pictures and other audiovisual works, to perform the copyrighted work publicly." 17 U.S.C. § 106(4). Section 101, the definitional section of the Act, explains that

      75

      [t]o perform or display a work "publicly" means (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

      76

      Id. § 101.

      77

      The parties agree that this case does not implicate clause (1). Accordingly, we ask whether these facts satisfy the second, "transmit clause" of the public performance definition: Does Cablevision "transmit ... a performance ... of the work ... to the public"? Id. No one disputes that the RS-DVR playback results in the transmission of a performance of a work—the transmission from the Arroyo Server to the customer's television set. Cablevision contends that (1) the RS-DVR customer, rather than Cablevision, does the transmitting and thus the performing and (2) the transmission is not "to the public" under the transmit clause.

      78

      As to Cablevision's first argument, we note that our conclusion in Part II that the customer, not Cablevision, "does" the copying does not dictate a parallel conclusion that the customer, and not Cablevision, "performs" the copyrighted work. The definitions that delineate the contours of the reproduction and public performance rights vary in significant ways. For example, the statute defines the verb "perform" and the noun "copies," but not the verbs "reproduce" or "copy." Id. We need not address Cablevision's first argument further because, even if we assume that Cablevision makes the transmission when an RS-DVR playback occurs, we find that the RS-DVR playback, as described here, does not involve the transmission of a performance "to the public."

      79

      The statute itself does not expressly define the term "performance" or the phrase "to the public." It does explain that a transmission may be "to the public ... whether the members of the public capable of receiving the performance ... receive it in the same place or in separate places and at the same time or at different times." Id. This plain language instructs us that, in determining whether a transmission is "to the public," it is of no moment that the potential recipients of the transmission are in different places, or that they may receive the transmission at different times. The implication from this same language, however, is that it is relevant, in determining whether a transmission is made to the public, to discern who is "capable of receiving" the performance being transmitted. The fact that the statute says "capable of receiving the performance," instead of "capable of receiving the transmission," underscores the fact that a transmission of a performance is itself a performance. Cf. Buck v. Jewell-La Salle Realty Co., 283 U.S. 191, 197-98, 51 S.Ct. 410, 75 L.Ed. 971 (1931).

      80

      [536 F.3d 135] The legislative history of the transmit clause supports this interpretation. The House Report on the 1976 Copyright Act states that

      81

      [u]nder the bill, as under the present law, a performance made available by transmission to the public at large is "public" even though the recipients are not gathered in a single place, and even if there is no proof that any of the potential recipients was operating his receiving apparatus at the time of the transmission. The same principles apply whenever the potential recipients of the transmission represent a limited segment of the public, such as the occupants of hotel rooms or the subscribers of a cable television service.

      82

      H.R.Rep. No. 94-1476, at 64-65 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5678 (emphases added).

      83

      Plaintiffs also reference a 1967 House Report, issued nearly a decade before the Act we are interpreting, stating that the same principles apply where the transmission is "capable of reaching different recipients at different times, as in the case of sounds or images stored in an information system and capable of being performed or displayed at the initiative of individual members of the public." H.R.Rep. No. 90-83, at 29 (1967) (emphases added). We question how much deference this report deserves. But we need not belabor the point here, as the 1967 report is consistent with both legislative history contemporaneous with the Act's passage and our own interpretation of the statute's plain meaning.

      84

      From the foregoing, it is evident that the transmit clause directs us to examine who precisely is "capable of receiving" a particular transmission of a performance. Cablevision argues that, because each RS-DVR transmission is made using a single unique copy of a work, made by an individual subscriber, one that can be decoded exclusively by that subscriber's cable box, only one subscriber is capable of receiving any given RS-DVR transmission. This argument accords with the language of the transmit clause, which, as described above, directs us to consider the potential audience of a given transmission. We are unpersuaded by the district court's reasoning and the plaintiffs' arguments that we should consider a larger potential audience in determining whether a transmission is "to the public."

      85

      The district court, in deciding whether the RS-DVR playback of a program to a particular customer is "to the public," apparently considered all of Cablevision's customers who subscribe to the channel airing that program and all of Cablevision's RS-DVR subscribers who request a copy of that program. Thus, it concluded that the RS-DVR playbacks constituted public performances because "Cablevision would transmit the same program to members of the public, who may receive the performance at different times, depending on whether they view the program in real time or at a later time as an RS-DVR playback." Cablevision I, 478 F.Supp.2d at 623 (emphasis added). In essence, the district court suggested that, in considering whether a transmission is "to the public," we consider not the potential audience of a particular transmission, but the potential audience of the underlying work (i.e., "the program") whose content is being transmitted.

      86

      We cannot reconcile the district court's approach with the language of the transmit clause. That clause speaks of people capable of receiving a particular "transmission" or "performance," and not of the potential audience of a particular "work." Indeed, such an approach would render the "to the public" language surplusage. Doubtless the potential audience for every [536 F.3d 136] copyrighted audiovisual work is the general public. As a result, any transmission of the content of a copyrighted work would constitute a public performance under the district court's interpretation. But the transmit clause obviously contemplates the existence of non-public transmissions; if it did not, Congress would have stopped drafting that clause after "performance."

      87

      On appeal, plaintiffs offer a slight variation of this interpretation. They argue that both in its real-time cablecast and via the RS-DVR playback, Cablevision is in fact transmitting the "same performance" of a given work: the performance of the work that occurs when the programming service supplying Cablevision's content transmits that content to Cablevision and the service's other licensees. See Br. of Pls.-Appellees Twentieth Century Fox Film Corp. et al. at 27 ("Fox Br.") ("The critical factor ... is that the same performance is transmitted to different subscribers at different times .... more specifically, the performance of that program by HBO or another programming service." (third emphasis added)).

      88

      Thus, according to plaintiffs, when Congress says that to perform a work publicly means to transmit ... a performance ... to the public, they really meant "transmit ... the `original performance' ... to the public." The implication of this theory is that to determine whether a given transmission of a performance is "to the public," we would consider not only the potential audience of that transmission, but also the potential audience of any transmission of the same underlying "original" performance.

      89

      Like the district court's interpretation, this view obviates any possibility of a purely private transmission. Furthermore, it makes Cablevision's liability depend, in part, on the actions of legal strangers. Assume that HBO transmits a copyrighted work to both Cablevision and Comcast. Cablevision merely retransmits the work from one Cablevision facility to another, while Comcast retransmits the program to its subscribers. Under plaintiffs' interpretation, Cablevision would still be transmitting the performance to the public, solely because Comcast has transmitted the same underlying performance to the public. Similarly, a hapless customer who records a program in his den and later transmits the recording to a television in his bedroom would be liable for publicly performing the work simply because some other party had once transmitted the same underlying performance to the public.

      90

      We do not believe Congress intended such odd results. Although the transmit clause is not a model of clarity, we believe that when Congress speaks of transmitting a performance to the public, it refers to the performance created by the act of transmission. Thus, HBO transmits its own performance of a work when it transmits to Cablevision, and Cablevision transmits its own performance of the same work when it retransmits the feed from HBO.

      91

      Furthermore, we believe it would be inconsistent with our own transmit clause jurisprudence to consider the potential audience of an upstream transmission by a third party when determining whether a defendant's own subsequent transmission of a performance is "to the public." In National Football League v. PrimeTime 24 Joint Venture (NFL), 211 F.3d 10 (2000), we examined the transmit clause in the context of satellite television provider PrimeTime, which captured protected content in the United States from the NFL, transmitted it from the United States to a satellite ("the uplink"), and then transmitted it from the satellite to subscribers in both the United States and Canada ("the downlink"). PrimeTime had a license to [536 F.3d 137] transmit to its U.S. customers, but not its Canadian customers. It argued that although the downlink transmission to its Canadian subscribers was a public performance, it could not be held liable for that act because it occurred entirely outside of the United States and therefore was not subject to the strictures of the Copyright Act. It also argued that the uplink transmission was not a public performance because it was a transmission to a single satellite. See id. at 12.

      92

      The NFL court did not question the first assumption, but it flatly rejected the second on a specific and germane ground:

      93

      We believe the most logical interpretation of the Copyright Act is to hold that a public performance or display includes each step in the process by which a protected work wends its way to its audience. Under that analysis, it is clear that PrimeTime's uplink transmission of signals captured in the United States is a step in the process by which NFL's protected work wends its way to a public audience.

      94

      Id. at 13 (emphasis added) (internal quotation and citation omitted). Thus, while the uplink transmission that took place in the United States was not, in itself, "to the public," the NFL court deemed it so because it ultimately resulted in an undisputed public performance. Notably, the NFL court did not base its decision on the fact that an upstream transmission by another party (the NFL) might have been to the public. Nor did the court base its decision on the fact that Primetime simultaneously transmitted a performance of the work to the public in the United States. Because NFL directs us to look downstream, rather than upstream or laterally, to determine whether any link in a chain of transmissions made by a party constitutes a public performance, we reject plaintiffs' contention that we examine the potential recipients of the content provider's initial transmission to determine who is capable of receiving the RS-DVR playback transmission.

      95

      Plaintiffs also rely on NFL for the proposition that Cablevision publicly performs a work when it splits its programming stream and transmits the second stream to the RS-DVR system. Because NFL only supports that conclusion if we determine that the final transmission in the chain (i.e., the RS-DVR playback transmission) is "to the public," plaintiffs' reliance on NFL is misplaced. NFL dealt with a chain of transmissions whose final link was undisputedly a public performance. It therefore does not guide our current inquiry.

      96

      In sum, none of the arguments advanced by plaintiffs or the district court alters our conclusion that, under the transmit clause, we must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is "to the public." And because the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber, we believe that the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission.

      97

      Plaintiffs contend that it is "wholly irrelevant, in determining the existence of a public performance, whether `unique' copies of the same work are used to make the transmissions." Fox Br. at 27. But plaintiffs cite no authority for this contention. And our analysis of the transmit clause suggests that, in general, any factor that limits the potential audience of a transmission is relevant.

      98

      Furthermore, no transmission of an audiovisual work can be made, we assume, without using a copy of that work: to transmit a performance of a movie, for [536 F.3d 138] example, the transmitter generally must obtain a copy of that movie. As a result, in the context of movies, television programs, and other audiovisual works, the right of reproduction can reinforce and protect the right of public performance. If the owner of a copyright believes he is injured by a particular transmission of a performance of his work, he may be able to seek redress not only for the infringing transmission, but also for the underlying copying that facilitated the transmission. Given this interplay between the various rights in this context, it seems quite consistent with the Act to treat a transmission made using Copy A as distinct from one made using Copy B, just as we would treat a transmission made by Cablevision as distinct from an otherwise identical transmission made by Comcast. Both factors—the identity of the transmitter and the source material of the transmission—limit the potential audience of a transmission in this case and are therefore germane in determining whether that transmission is made "to the public."

      99

      Indeed, we believe that Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F.2d 154 (3d Cir.1984), relied on by both plaintiffs and the district court, supports our decision to accord significance to the existence and use of distinct copies in our transmit clause analysis. In that case, defendant operated a video rental store, Maxwell's, which also housed a number of small private booths containing seats and a television. Patrons would select a film, enter the booth, and close the door. An employee would then load a copy of the requested movie into a bank of VCRs at the front of the store and push play, thereby transmitting the content of the tape to the television in the viewing booth. See id. at 156-57.

      100

      The Third Circuit found that defendants' conduct constituted a public performance under both clauses of the statutory definition. In concluding that Maxwell's violated the transmit clause, that court explicitly relied on the fact that defendants showed the same copy of a work seriatim to its clientele, and it quoted a treatise emphasizing the same fact:

      101

      Professor Nimmer's examination of this definition is particularly pertinent: "if the same copy ... of a given work is repeatedly played (i.e., `performed') by different members of the public, albeit at different times, this constitutes a 'public' performance." 2 M. Nimmer, § 8.14[C][3], at 8-142 (emphasis in original). ... Although Maxwell's has only one copy of each film, it shows each copy repeatedly to different members of the public. This constitutes a public performance.

      102

      Id. at 159 (first omission in original).

      103

      Unfortunately, neither the Redd Horne court nor Prof. Nimmer explicitly explains why the use of a distinct copy affects the transmit clause inquiry. But our independent analysis confirms the soundness of their intuition: the use of a unique copy may limit the potential audience of a transmission and is therefore relevant to whether that transmission is made "to the public." Plaintiffs' unsupported arguments to the contrary are unavailing.

      104

      Given that each RS-DVR transmission is made to a given subscriber using a copy made by that subscriber, we conclude that such a transmission is not "to the public," without analyzing the contours of that phrase in great detail. No authority cited by the parties or the district court persuades us to the contrary.

      105

      In addition to Redd Horne, the district court also cited and analyzed On Command Video Corp. v. Columbia Pictures Industries, 777 F.Supp. 787 (N.D.Cal. 1991), in its transmit clause analysis. In that case, defendant On Command developed [536 F.3d 139] and sold "a system for the electronic delivery of movie video tapes," which it sold to hotels. Id. at 788. The hub of the system was a bank of video cassette players, each containing a copy of a particular movie. From his room, a hotel guest could select a movie via remote control from a list on his television. The corresponding cassette player would start, and its output would be transmitted to that guest's room. During this playback, the movie selected was unavailable to other guests. See id. The court concluded that the transmissions made by this system were made to the public "because the relationship between the transmitter of the performance, On Command, and the audience, hotel guests, is a commercial, `public' one regardless of where the viewing takes place." Id. at 790.

      106

      Thus, according to the On Command court, any commercial transmission is a transmission "to the public." We find this interpretation untenable, as it completely rewrites the language of the statutory definition. If Congress had wished to make all commercial transmissions public performances, the transmit clause would read: "to perform a work publicly means ... to transmit a performance for commercial purposes." In addition, this interpretation overlooks, as Congress did not, the possibility that even non-commercial transmissions to the public may diminish the value of a copyright. Finally, like Redd Horne, On Command is factually distinguishable, as successive transmissions to different viewers in that case could be made using a single copy of a given work. Thus, at the moment of transmission, any of the hotel's guests was capable of receiving a transmission made using a single copy of a given movie. As a result, the district court in this case erred in relying on On Command.

      107

      Plaintiffs also rely on Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277 (3d Cir.1991), in which the Third Circuit interpreted § 106(3) of the Copyright Act, which gives the copyright holder the exclusive right "to distribute copies ... of the copyrighted work to the public," 17 U.S.C. § 106(3) (emphasis added). The court concluded that "even one person can be the public for the purposes of section 106(3)." Ford, 930 F.2d at 299 (emphasis added). Commentators have criticized the Ford court for divesting the phrase "to the public" of "all meaning whatsoever," 2 Nimmer & Nimmer, supra, § 8.11[A], at 8-149, and the decision does appear to have that result. Whether this result was justified in the context of the distribution right is not for us to decide in this case. We merely note that we find no compelling reason, in the context of the transmit clause and the public performance right, to interpret the phrase "to the public" out of existence.

      108

      In sum, we find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons "capable of receiving" it, to determine whether that transmission is made "to the public." Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances "to the public," and therefore do not infringe any exclusive right of public performance. We base this decision on the application of undisputed facts; thus, Cablevision is entitled to summary judgment on this point.

      109

      This holding, we must emphasize, does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of content and associating one unique copy with each subscriber to the network, or by giving their subscribers the capacity to make their own individual copies. We do not address whether such a network operator would be [536 F.3d 140] able to escape any other form of copyright liability, such as liability for unauthorized reproductions or liability for contributory infringement.

      110

      In sum, because we find, on undisputed facts, that Cablevision's proposed RS-DVR system would not directly infringe plaintiffs' exclusive rights to reproduce and publicly perform their copyrighted works, we grant summary judgment in favor of Cablevision with respect to both rights.

      111
      CONCLUSION
      112

      For the foregoing reasons, the district court's award of summary judgment to the plaintiffs is REVERSED and the district court's injunction against Cablevision is VACATED. The case is REMANDED for further proceedings consistent with this opinion.

      113

      [1] To run a computer program, the data representing that program must be transferred from a data storage medium (such as a floppy disk or a hard drive) to a form of Random Access Memory ("RAM") where the data can be processed. The data buffers at issue here are also a form of RAM.

      114

      [2] The same reasoning also distinguishes this court's opinion in Matthew Bender & Co. v. West Publishing Co., 158 F.3d 693 (2d Cir. 1998). Language in that opinion, taken out of context, suggests that the definition of "fixed" imposes only an embodiment requirement: "Under § 101's definition of `copies,' a work satisfies the fixation requirement when it is fixed in a material object from which it can be perceived or communicated directly or with the aid of a machine." Id. at 702. Like the MAI Systems cases, Matthew Bender only addresses the embodiment requirement: specifically, whether West's copyrighted arrangement of judicial opinions was "embedded" in a CD-ROM compilation of opinions when the cases were normally arranged differently but could be manipulated by the user to replicate West's copyrighted arrangement. Id. at 703. The opinion merely quotes the duration language without discussing it, see id. at 702; that case therefore does not compel us to conclude that the definition of "fixed" does not impose a duration requirement.

    • 1.7 Playboy Enterprises, Inc. v. Frena

      This case examines what it means to display a work publicly
      1

      839 F.Supp. 1552 (1993)

      2
      PLAYBOY ENTERPRISES, INC., Plaintiff,
      v.
      George FRENA, d/b/a Techs Warehouse BBS Systems and Consulting, and Mark Dyess, Defendants.
      3

      No. 93-489-Civ-J-20.

      4

      United States District Court, M.D. Florida, Jacksonville Division.

      5

      December 9, 1993.

      6

      [1553] [1554] George E. Schulz, Jr., Chad S. Roberts, Jacksonville, FL, David P. Peterson, John D. Vadenberg, Garth A. Winn Portland, OR, for plaintiff.

      7

      David M. Wiesenfeld, Carl D. Dawson, Jacksonville, FL, for defendants.

      8
      ORDER
      9
      SCHLESINGER, District Judge.
      10

      This cause is before the Court on Plaintiff's First Motion for Partial Summary Judgment (Copyright Infringement) as to Defendant Frena (Doc. No. S-1, filed July 26, 1993), and Plaintiff's Second and Third Motions for Partial Summary Judgment (Trademark Infringement and Lanham Act Violations) as to Defendant Frena (Doc. No. S-3, filed July 29, 1993). In its First Motion for Partial Summary Judgment, Plaintiff requests that the Court grant partial summary judgment that Defendant Frena infringed Plaintiff's copyrights and specifically that the 170 image files in question in Exhibit C to the Tesnakis Affidavit infringed Plaintiff's copyrights in 50 of Plaintiff's copyrighted magazines. In the Second and Third Motions for Partial Summary Judgment, Plaintiff requests that the Court grant partial summary judgment that Defendant Frena infringed Plaintiff's federally registered trademarks PLAYBOY® and PLAYMATE® specifically that Defendant Frena infringed United States Trademark registration numbers 600,018 and 721,987 and that Defendant Frena competed unfairly with Plaintiff, violating 15 U.S.C. § 1125(a). Furthermore, Plaintiff asks for oral argument on its Motions. Defendant Frena has filed responses to these Motions. (Doc. Nos. S-5 and S-6, filed August 4, 1993).

      11

      Defendant George Frena operates a subscription computer bulletin board service, Techs Warehouse BBS ("BBS"), that distributed unauthorized copies of Plaintiff Playboy Enterprises, Inc.'s ("PEI") copyrighted photographs. BBS is accessible via telephone modem to customers. For a fee, or to those who purchase certain products from Defendant Frena, anyone with an appropriately equipped computer can log onto BBS. Once logged on subscribers may browse through different BBS directories to look at the pictures and customers may also download[1] the high quality computerized copies of the photographs and then store the copied image from Frena's computer onto their home computer. Many of the images found on BBS include adult subject matter. One hundred and seventy of the images that were available on BBS were copies of photographs taken from PEI's copyrighted materials.

      12

      Defendant Frena admits that these materials were displayed on his BBS, see Answer at ¶ 23; Defendant's Admissions, Response No. 8, that he never obtained authorization or consent from PEI, see Answer at ¶¶ 38, 39 and 40, and that each of the accused computer graphic files on BBS is substantially similar to copyrighted PEI photographs, see Defendant's Admissions, Response No. 5. Defendant Frena also admits that each of the files in question has been downloaded[2] by one of his customers. See Defendant's Admissions, Response No. 11.

      13

      Subscribers can upload[3] material onto the bulletin board so that any other subscriber, by accessing their computer, can see that material. Defendant Frena states in his Affidavit filed August 4, 1993, that he never uploaded any of PEI's photographs onto BBS and that subscribers to BBS uploaded the photographs. See Affidavit of George Frena at ¶ 6 (Doc. No. S-7). Defendant Frena states that as soon as he was served with a summons and made aware of this matter, he removed the photographs from BBS and has since that time monitored BBS to prevent additional photographs of PEI from being uploaded. See Affidavit of George Frena at ¶ 6.

      14

      Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories [1555] and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of showing the Court, by reference to materials on file that there are no genuine issues of material fact that should be decided at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Clark v. Coats & Clark, Inc., 929 F.2d 604 (11th Cir. 1991). A moving party discharges its burden on a motion for summary judgment by "showing" or "pointing out" to the Court that there is an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. at 2554. Rule 56 permits the moving party to discharge its burden with or without supporting affidavits and to move for summary judgment on the case as a whole or on any claim. Id. When a moving party has discharged its burden, the nonmoving party must then "go beyond the pleadings," and by its own affidavits, or by "depositions, answers to interrogatories, and admissions on file," designate specific facts showing that there is a genuine issue for trial. Id. at 324.

      15

      In determining whether the moving party has met its burden of establishing that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law, the Court must draw inferences from the evidence in the light most favorable to the nonmovant, Key West Harbor v. City of Key West, 987 F.2d 723, 726 (11th Cir.1993), and resolve all reasonable doubts in that party's favor. Spence v. Zimmerman, 873 F.2d 256, 257 (11th Cir.1989). The nonmovant need not be given the benefit of every inference, but only of every "reasonable" inference. Brown v. City of Clewiston, 848 F.2d 1534, 1540 n. 12 (11th Cir.1988). The Eleventh Circuit has explained the reasonableness standard:

      16

      In deciding whether an inference is reasonable, the Court must "cull the universe of possible inferences from the facts established by weighing each against the abstract standard of reasonableness." [citation omitted]. The opposing party's inferences need not be more probable than those inferences in favor of the movant to create a factual dispute, so long as they reasonably may be drawn from the facts. When more than one inference reasonably can be drawn, it is for the trier of fact to determine the proper one.

      17

      WSB-TV v. Lee, 842 F.2d 1266, 1270 (11th Cir.1988).

      18

      Thus, if a reasonable fact finder evaluating the evidence could draw more than one inference from the facts, and if that inference introduces a genuine issue of material fact, then the court should not grant the summary judgment motion. Augusta Iron and Steel Works v. Employers Insurance of Wausau, 835 F.2d 855, 856 (11th Cir.1988). It must be emphasized that the mere existence of some alleged factual dispute will not defeat an otherwise properly supported summary judgement motion. Rather, "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" if the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. at 2510. The inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. at 2511-12.

      19
      I. COPYRIGHT INFRINGEMENT
      20

      The Copyright Act of 1976 gives copyright owners control over most, if not all, activities of conceivable commercial value. The statute provides that

      21

      the owner of a copyright ... has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies ...; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies ... of the copyrighted work to the public ... and (5) in the case of ... pictorial ... works ... to display the copyrighted work publicly.

      22

      17 U.S.C. § 106. Engaging in or authorizing any of these categories without the copyright owner's permission violates the exclusive [1556] rights of the copyright owner and constitutes infringement of the copyright. See 17 U.S.C. § 501(a).

      23

      To establish copyright infringement, PEI must show ownership of the copyright and "copying" by Defendant Frena, see Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); Southern Bell Tel. & Tel. v. Assoc. Telephone Directory Publishers, 756 F.2d 801, 810 (11th Cir.1985).

      24

      There is no dispute that PEI owns the copyrights on the photographs in question. PEI owns copyright registrations for each of the 50 issues of Playboy publications that contain the photographs on BBS. See Tesnakis Affidavit at ¶ 9. The copyright registration certificate constitutes prima facie evidence in favor of Plaintiff. See Southern Bell Tel., 756 F.2d at 811. Once the plaintiff has established his prima facie ownership, the burden then shifts to the defendant to counter this evidence. See 3 MELVILLE B. NIMMER, Nimmer on Copyright § 13.01[A], at 13-7 (1993). Defendant Frena, however, failed to rebut the appropriate inference of validity.

      25

      Next, PEI must demonstrate copying by Defendant Frena. Since direct evidence of copying is rarely available in a copyright infringement action, copying may be inferentially proven by showing that Defendant Frena had access to the allegedly infringed work, that the allegedly infringing work is substantially similar to the copyrighted work, see Howard v. Sterchi, 974 F.2d 1272 (11th Cir.1992), and that one of the rights statutorily guaranteed to copyright owners is implicated by Frena's actions. See Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 291 (3d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 373, 116 L.Ed.2d 324.

      26

      Access to the copyrighted work is not at issue. Access is essentially undeniable because every month PEI sells over 3.4 million copies of Playboy magazine throughout the United States. See Kent Affidavit at ¶ 4.

      27

      Substantial similarity is also a non-issue in this case. Defendant Frena has admitted that every one of the accused images is substantially similar to the PEI copyrighted photograph from which the accused image was produced. See Defendant's Admissions at ¶ 5. Moreover, not only are the accused works substantially similar to the copyrighted work, but the infringing photographs are essentially exact copies. See Exhibits A and B in the Tesnakis Affidavit. In many cases, the only difference is that PEI's written text appearing on the same page of the photograph has been removed from the infringing copy.

      28

      The next step is to determine whether Defendant Frena violated one of the rights statutorily guaranteed to copyright owners under 17 U.S.C. § 106. See 17 U.S.C. § 501(a).

      29

      Public distribution of a copyrighted work is a right reserved to the copyright owner, and usurpation of that right constitutes infringement. See Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 843 (11th Cir.1990). PEI's right under 17 U.S.C. § 106(3) to distribute copies to the public has been implicated by Defendant Frena. Section 106(3) grants the copyright owner "the exclusive right to sell, give away, rent or lend any material embodiment of his work." 2 MELVILLE B. NIMMER, Nimmer on Copyright § 8.11[A], at 8-124.1 (1993). There is no dispute that Defendant Frena supplied a product containing unauthorized copies of a copyrighted work. It does not matter that Defendant Frena claims he did not make the copies itself. See JAY DRATLER, JR., Intellectual Property Law: Commercial, Creative and Industrial Property § 6.01[3], at 6-15 (1991).

      30

      Furthermore, the "display" rights of PEI have been infringed upon by Defendant Frena. See 17 U.S.C. § 106(5). The concept of display is broad. See 17 U.S.C. § 101. It covers "the projection of an image on a screen or other surface by any method, the transmission of an image by electronic or other means, and the showing of an image on a cathode ray tube, or similar viewing apparatus connected with any sort of information storage and retrieval system." H.R.Rep. No. 1476, 94th Cong., 2d Sess. 64 (Sept. 3, 1976), reprinted in 1976 U.S.Code Cong. & Admin.News [1557] 5659, 5677. The display right precludes unauthorized transmission of the display from one place to another, for example, by a computer system. See H.R.Rep. No. 1476, 94th Cong., 2d Sess. 80 (Sept. 3, 1976), reprinted in 1976 U.S.Code Cong. & Admin.News 5659, 5694; JAY DRATLER, JR., Intellectual Property Law: Commercial, Creative and Industrial Property § 6.01[4], at 624 (1991).

      31

      "Display" covers any showing of a "copy" of the work, "either directly or by means of a film, slide, television image or any other device or process." 17 U.S.C. § 101. However, in order for there to be copyright infringement, the display must be public. A "public display" is a display "at a place open to the public or ... where a substantial number of persons outside of a normal circle of family and its social acquaintenances is gathered." 2 MELVILLE B. NIMMER, Nimmer on Copyright § 8.14[C], at 8-169 (1993). A place is "open to the public" in this sense even if access is limited to paying customers. 2 MELVILLE B. NIMMER, Nimmer on Copyright § 8.14[C], at 8-169 n. 36 (1993); see Columbia Pictures Indus., Inc. v. Redd Horne Inc., 749 F.2d 154 (3d Cir.1984).

      32

      Defendant's display of PEI's copyrighted photographs to subscribers was a public display. Though limited to subscribers, the audience consisted of "a substantial number of persons outside of a normal circle of family and its social acquaintenances." 2 MELVILLE B. NIMMER, Nimmer on Copyright § 8.14[C], at 8-169 (1993). See also Thomas v. Pansy Ellen Products, 672 F.Supp. 237, 240 (W.D.North Carolina 1987) (display at a trade show was public even though limited to members); Ackee Music, Inc. v. Williams, 650 F.Supp. 653 (D.Kan.1986) (performance of copyrighted songs at defendant's private club constituted a public performance).

      33

      Defendant Frena argues that the affirmative defense of fair use precludes a finding of copyright infringement. "Fair use" describes "limited and useful forms of copying and distribution that are tolerated as exceptions to copyright protection." Cable/Home Communications Corp., 902 F.2d at 843 (citing Pacific & Southern Co. v. Duncan, 744 F.2d 1490, 1494 (11th Cir.1984), cert. denied, 471 U.S. 1004, 105 S.Ct. 1867, 85 L.Ed.2d 161 (1985)).

      34

      The question of fair use constitutes a mixed issue of law and fact. See Harper & Row, Publishers, Inc. v. Nation Enterprises., 471 U.S. 539, 560, 105 S.Ct. 2218, 2230, 85 L.Ed.2d 588 (1985). Fair use may be addressed on summary judgment. See Cable/Home Communications Corp., 902 F.2d at 843-45 (affirming summary judgment holding that fair use doctrine did not apply).

      35

      The Copyright Act mandates four nonexclusive factors which courts shall consider case by case in determining fair use. Cable/Home Communications Corp., 902 F.2d at 843; see 17 U.S.C. § 107. Section 107 does not attempt to define "fair use." It merely lists the factors to be considered in determining whether a use made of a work in a particular case is fair. Section 107 states:

      36

      [T]he fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

      (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

      (2) the nature of the copyrighted work;

      (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

      (4) the effect of the use upon the potential market for or value of the copyrighted work.

      37

      17 U.S.C. § 107.

      38

      With respect to the first factor, "every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright ...," Harper & Row, Publishers, Inc., 471 U.S. at 562, 105 S.Ct. at 2231 (quoting Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 451, 104 S.Ct. 774, 793, 78 L.Ed.2d 574 (1984)), so that "any [1558] commercial use tends to cut against a fair use defense." Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171, 1175 (5th Cir.1980).

      39

      Defendant Frena's use was clearly commercial. BBS was provided to those paying twenty-five dollars ($25) per month or to those who purchased products from Defendant Frena. One who distributes copyrighted material for profit is engaged in a commercial use even if the customers supplied with such material themselves use it for personal use. See Pacific & Southern Co. v. Duncan, 572 F.Supp. 1186 (N.D.Ga.1983), affirmed, 744 F.2d 1490 (11th Cir.1984), cert. denied, 471 U.S. 1004, 105 S.Ct. 1867, 85 L.Ed.2d 161 (1985).

      40

      Implicit in the presumption that every commercial use is presumptively unfair is "some meaningful likelihood that future market harm exists." Cable/Home Communications Corp., 902 F.2d at 844 (citing Sony, 464 U.S. at 451, 104 S.Ct. at 793). It is clear that future market harm exists to PEI due to Frena's activities, as will be discussed in more detail under factor four.

      41

      The second factor is the "nature of the copyrighted work." 17 U.S.C. § 107. "Copyright protection is narrower, and the corresponding application of fair use defense greater, in the case of factual works than in the case of works of fiction or fantasy." 3 MELVILLE B. NIMMER, Nimmer on Copyright § 13.05[A], at 13-102.57 (1993). If a work is more appropriately characterized as entertainment, it is less likely that a claim of fair use will be accepted. See In New Era Publications Intern., ApS v. Carol Publishing Group, 904 F.2d 152 (2d Cir.), cert. denied, 498 U.S. 921, 111 S.Ct. 297, 112 L.Ed.2d 251 (1990). The copyrighted works involved in this case are in the category of fantasy and entertainment. Therefore, the second factor works against Frena's fair use defense.

      42

      Regarding the third factor, the amount and substantiality of the portion of the copyrighted work used, the Supreme Court has directed a qualitative evaluation of the copying of the copyrighted work. Cable/Home Communications Corp., 902 F.2d at 844 (citing Harper & Row, 471 U.S. at 564-65, 105 S.Ct. at 2232-33). That is, "a small degree of taking is sufficient to transgress fair use if the copying is the essential part of the copyrighted work." Id. See, e.g., Meeropol v. Nizer, 560 F.2d 1061, 1071 (2d Cir.1977) (although copyrighted letters were less than 1% of the infringing work, they were displayed prominently), cert. denied, 434 U.S. 1013, 98 S.Ct. 727, 54 L.Ed.2d 756 (1978); Roy Export Co. Establishment of Vaduz, Liechtenstein, Black, Inc. v. Columbia Broadcasting Sys., Inc., 503 F.Supp. 1137, 1145 (S.D.N.Y. 1980) (fifty-five seconds taken from a onehour and twenty-nine-minute film deemed qualitatively substantial for copyright infringement), aff'd, 672 F.2d 1095 (2d Cir.), cert. denied, 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 (1982); Sheldon v. MetroGoldwyn Pictures Corp., 81 F.2d 49, 56 (2d Cir.) ("[N]o plagiarist can excuse the wrong by showing how much of his work he did not pirate."), cert. denied, 298 U.S. 669, 56 S.Ct. 835, 80 L.Ed. 1392 (1936).

      43

      There is no doubt that the photographs in Playboy magazine are an essential part of the copyrighted work. The Court is not implying that people do not read the articles in PEI's magazine. However, a major factor to PEI's success is the photographs in its magazine. By pirating the photographs for which PEI has become famous, Defendant Frena has taken a very important part of PEI's copyrighted publications.

      44

      The fourth factor, the "effect of the use upon the potential market for or value of the copyrighted work," 17 U.S.C. § 107(4), is "undoubtedly the single most important element of fair use, since a proper application of fair use does not impair materially the marketability of the copied work." Cable/Home Communications Corp., 902 F.2d at 845. This factor poses the issue of "whether unrestricted and widespread conduct of the sort engaged in by the defendant (whether in fact engaged in by the defendant or others) would result in a substantially adverse impact on the potential market for or value of the plaintiff's present work." 3 MELVILLE B. NIMMER, Nimmer on Copyright § 13.05[A], at 13.102.61-62 (1993). "[P]otential market means either an immediate or delayed market, and includes harm to derivative works." Cable/Home [1559] Communications Corp., 902 F.2d at 845.

      45

      Obviously, if this type of conduct became widespread, it would adversely affect the potential market for the copyrighted work. Such conduct would deny PEI considerable revenue to which it is entitled for the service it provides.

      46

      There is irrefutable evidence of direct copyright infringement in this case. It does not matter that Defendant Frena may have been unaware of the copyright infringement. Intent to infringe is not needed to find copyright infringement. Intent or knowledge is not an element of infringement, and thus even an innocent infringer is liable for infringement; rather, innocence is significant to a trial court when it fixes statutory damages, which is a remedy equitable in nature. See D.C. Comics Inc. v. Mini Gift Shop, 912 F.2d 29 (2d Cir.1990).

      47

      Frena argues that his commercial use was so insignificant as to justify holding for him under the principle of de minimis non curat lex. The Court disagrees. The detrimental market effects coupled with the commercial-use presumption negates the fair use defense. Defendant Frena infringed Plaintiff's copyrights; specifically, the 170 image files in question in Exhibit C to the Tesnakis Affidavit infringed Plaintiff's copyrights in 50 of Plaintiff's copyrighted magazines. The Court finds that the undisputed facts mandate partial summary judgment that Defendant Frena's unauthorized display and distribution of PEI's copyrighted material is copyright infringement under 17 U.S.C. § 501.

      48
      II. TRADEMARK INFRINGEMENT UNDER 15 U.S.C. § 1114
      49

      In addition to the use of PEI's copyrighted photographs on BBS, PEI's registered trademarks, PLAYBOY® and PLAYMATE®, were used to identify many of the files containing the photographs. Furthermore, PEI's text was removed from the photographs and Defendant Frena's name, Techs Warehouse BBS, and telephone number were placed on PEI's copyrighted photographs. This is uncontested. Therefore, Plaintiff has moved for partial summary judgment on the issues of trademark infringement under 15 U.S.C. § 1114 and unfair competition under 15 U.S.C. § 1125(a).

      50

      Defendant Frena admits that the registered trademarks PLAYBOY® and PLAYMATE® were used in file descriptors for 170 of the images found on BBS and that such file descriptors were displayed to his customers. See Answer at ¶¶ 51 and 52. Defendant Frena contends that when a subscriber uploads the material onto BBS, the same subscriber provides a description of the uploaded material for the BBS index. Defendant Frena contends that he himself has never placed the words "Playboy" or "Playmate" onto BBS. Defendant Frena further alleges that he, innocently and without malice, allowed subscribers to upload whatever they wanted onto BBS.

      51

      The first issue the Court must address is whether the marks PLAYBOY® and PLAYMATE® are distinctive enough to deserve protection under the Trademark Act of 1946 (commonly known as the Lanham Act), 15 U.S.C. § 1051 et seq., specifically § 32(1) of the Lanham Act, 15 U.S.C. § 1114(1). See Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176 n. 1 (11th Cir.), cert. denied, 474 U.S. 845, 106 S.Ct. 134, 88 L.Ed.2d 110 (1985); Ice Cold Auto Air v. Cold Air & Accessories, 828 F.Supp. 925, 930 (M.D.Fla. 1993).

      52

      There are four categories of distinctiveness in which a mark may be classified. "In ascending order they are: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful." Investacorp, Inc. v. Arabian Investment Banking Corp., 931 F.2d 1519, 1522-23 (11th Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 639, 116 L.Ed.2d 657 (1991). The categorization of a term as generic, descriptive, suggestive or arbitrary typically resolves the issue of whether a mark is protectable, with generic marks getting the least protection and arbitrary or fanciful marks receiving the highest degree of protection.

      53

      PLAYBOY® and PLAYMATE® are suggestive marks since they implicitly refer to their products qualities. See PEI v. P.K. [1560] Sorren Export Co. Inc. of Florida, 546 F.Supp. 987, 995 (S.D.Fl.1982). They are well known marks and widely associated with PEI's products. These marks have acquired great distinctiveness among consumers, and are therefore entitled to a high degree of protection. See Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 486 F.Supp. 414, 419 (S.D.N.Y.1980).

      54

      Once the threshold question of whether the mark is distinctive enough to deserve protection is answered affirmatively, the Court must turn to the central inquiry of whether there is a "likelihood of confusion." See Freedom Sav. and Loan Ass'n, 757 F.2d at 1179; Ice Cold Auto Air, 828 F.Supp. at 934.

      55

      The following factors are highly relevant in deciding whether there is a likelihood of confusion: "(1) the type of mark at issue; (2) similarity of marks; (3) similarity of product or services; (4) identity of purchasers and similarity of retail outlets; .... (6) the defendant's intent; and (7) actual confusion." Ice Cold Auto Air, 828 F.Supp. at 935 (citing Freedom Sav. and Loan Ass'n, 757 F.2d at 1182-83). The Court, however, is not required to specifically mention each of these factors in making its decision. See Univ. of Georgia Athletic Ass'n v. Laite, 756 F.2d 1535, 1542 (11th Cir.1985) (analyzing the factors in the context of a claim of unfair competition).

      56

      Rather than simply determining whether a majority of these factors indicate a likelihood of confusion, a court must "evaluate the weight to be accorded the individual factors and then make its ultimate decision." AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1538 (11th Cir.1986), cert. denied, 481 U.S. 1041, 107 S.Ct. 1983, 95 L.Ed.2d 822 (1987). An analysis of fewer than all seven factors may support a finding of likelihood of confusion. See Univ. of Georgia Athletic Ass'n, 756 F.2d at 1543. In the Eleventh Circuit, the type of mark and evidence of actual confusion are the most important factors. Dieter v. B & H Industries of Southwest Florida, Inc., 880 F.2d 322, 326 (11th Cir.1989), cert. denied, 498 U.S. 950, 111 S.Ct. 369, 112 L.Ed.2d 332 (1990).

      57

      In analyzing the type of mark, the Court must determine whether the mark is strong or weak in order to determine the level of protection to be extended to the mark. See Ice Cold Auto Air, 828 F.Supp. at 935.

      58

      The more distinctive a plaintiff's servicemark, the greater the likelihood that consumers will associate the registered trademark and all similar marks with the registered owner. The law therefore provides the greatest protection to strong and distinctive servicemarks; the strength of a mark depends on the extent of third party usage and the relationship between the name and the service or good it describes.

      59

      Freedom Sav. and Loan Assoc., 757 F.2d at 1182.

      60

      In analyzing the relationship between the name and the service or good it describes, the Court again considers the proper categorization of the mark. At this stage of the analysis, the goal is to determine the degree of distinctiveness of the mark. See Ambrit, Inc., 812 F.2d at 1539 n. 36. Suggestive and arbitrary marks are considered to be the most distinctive marks, and, as relatively strong marks, entitled to the strongest protection. See Ice Cold Auto Air, 828 F.Supp. at 935. The Court previously categorized the marks involved as suggestive marks which are, therefore, entitled to the strongest protection.

      61

      There is no issue as to the similarity of the marks in the instant case. Not only are the marks similar, they are exactly the same.

      62

      The greater the similarity between products and services, the greater the likelihood of confusion. See Exxon Corp. v. Texas Motor Exchange of Houston, Inc., 628 F.2d 500, 505 (5th Cir.1980). Defendant Frena's product consisted of computer images of nude women. Of course, this is the core of PEI's business. Even though Defendant Frena's photographs were available in a different medium than Plaintiff's, the services both parties provided were virtually identical.

      63

      A finding that Defendant adopted a mark with the intent of deriving benefit from the reputation of Plaintiff's service or product may alone be enough to justify an inference that there is confusing similarity. See Ambrit, Inc., 812 F.2d at 1542. Defendant [1561] contends that he did not intend to use Plaintiff's mark. However, a showing of intent or bad faith is unnecessary to establish a violation of § 1141(a). See Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472, 1476 (11th Cir.1991). Intent is just one of the factors to consider in evaluating whether the infringing use is likely to cause confusion. See Chanel, Inc., 931 F.2d at 1472, 1476 n. 4 (citing Original Appalachian Artworks, Inc. v. The Toy Loft, 684 F.2d 821, 831-32 (11th Cir.1982)).

      64

      Even though a guilty state of mind is relevant evidence of trademark infringement, an innocent state of mind is irrelevant on the issue of likelihood of confusion since the lack of intent to deceive does nothing to alleviate the confusion precipitated by similarity of trademarks. See 3A RUDOLF CALLMAN, The Law of Unfair Competition, Trademarks and Monopolies § 20.49, at 385 (4th ed. 1993).

      65

      "Although evidence of actual confusion is not necessary to a finding of likelihood of confusion, it is nevertheless the best evidence of likelihood of confusion." John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 978 (11th Cir.1983) (quoting Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 263 (5th Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 268, 66 L.Ed.2d 129 (1980)). Actual confusion by a few customers is evidence of likelihood of confusion by many customers. See Freedom Sav. and Loan Ass'n, 757 F.2d at 1185. Therefore, a plaintiff usually will not have to prove more than a few incidents of actual confusion. See id.

      66

      In its Motion for Summary Judgment, Plaintiff has not shown any evidence of actual confusion among consumers. However, it is not necessary to prove actual confusion on the part of customers. It is just that if evidence of actual confusion is available, it is so highly probative of likelihood of confusion that it can rarely be ignored.

      67

      An examination of the factors mentioned above indicates that Defendant Frena's use of PEI's marks is likely to confuse consumers. Defendant Frena is not merely using marks similar to those of Plaintiff, Defendant Frena is using the exact marks registered to Plaintiff.

      68

      This case involves a suggestive mark entitled to the strongest protection, Defendant Frena used the identical mark of Plaintiff and the services involved were virtually identical. Each of these elements tends to show a likelihood of confusion. It is likely that customers of Defendant Frena would believe that PEI was the source of Defendant Frena's images and that PEI either sponsored, endorsed or approved Defendant Frena's use of PEI's images.

      69

      It is well established that "falsely suggesting affiliation with the trademark owner in a manner likely to cause confusion as to source of sponsorship constitutes infringement." Burger King v. Mason, 710 F.2d 1480, 1492 (11th Cir.1983), cert. denied, 465 U.S. 1102, 104 S.Ct. 1599, 80 L.Ed.2d 130 (1984). Further, "the law is established that falsely suggesting the existence of affiliation with a well-known business by usurping the latter's good-will constitutes both trademark infringement and unfair competition." Showtime/The Movie Channel v. Covered Bridge Condominium Assoc., Inc., 693 F.Supp. 1080, 1089 (S.D.Fla.1988) (quoting Volkswagenwerk Aktiengesellschaft v. Tatum, 344 F.Supp. 235, 237 (S.D.Fla.1972)).

      70

      The Court finds that Defendant Frena infringed Plaintiff's federally registered trademarks PLAYBOY® and PLAYMATE®. More specifically, Defendant Frena infringed United States Trademark registration numbers 600,018 and 721,987.

      71
      III. UNFAIR COMPETITION UNDER 15 U.S.C. § 1125(a)
      72

      Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), provides:

      73

      (a)(1) Any person who, or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact which —

      (A) is likely to cause confusion or to cause mistake, or to deceive as to the [1562] affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services or commercial activities by another person, or

      (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

      shall be liable in a civil action by any person who believes that he or she is or is likely to be damages by such act.

      74

      15 U.S.C. § 1125(a). This statutory provision provides a federal cause of action for unfair competition. There are similarities between the analysis required for trademark infringement and for unfair competition. However, the unfair competition claim is broader. See Ice Cold Auto Air, 828 F.Supp. at 938 n. 14 (citing Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176, 1186 (11th Cir.1985)), cert. denied, 474 U.S. 845, 106 S.Ct. 134, 88 L.Ed.2d 110 (1985).

      75

      15 U.S.C. § 1125(a) is designed to protect against a broader range of deceptive or unfair trade practices than 15 U.S.C. § 1114. In addition, both sections require the same test to determine whether the particular actions complained of are violative of their terms. See Showtime/The Movie Channel v. Covered Bridge Condo, 693 F.Supp. 1080, 1090 (S.D.Fla.1988). Thus, as a general rule, the same set of facts which support an action for trademark infringement also support an action for unfair competition. See Babbit Electronics Inc. v. Dynascan Corp., 828 F.Supp. 944, 957 (S.D.Fla.1993); Marathon Mrg. Co. v. Enerlite Products Corp., 767 F.2d 214, 217 (5th Cir.1985). Therefore, it appears that Defendant Frena violated 15 U.S.C. § 1125(a).

      76

      Defendant Frena has violated 15 U.S.C. § 1125(a) by falsely inferring and describing the origin of PEI's photographs. Defendant Frena makes it appear that PEI authorized Defendant Frena's product. Furthermore, the removal of PEI's trademarks from the photographs constitutes "reverse passing off." See 3A RUDOLF CALLMAN, The Law of Unfair Competition, Trademarks and Monopolies § 21.18, at 170 (4th ed. 1993).

      77

      PEI's trademarks were obliterated from the photographs, and then Defendant Frena attempted to take credit for Plaintiff's work by placing its own advertisement with its phone number on some of the photographs. Thus, PEI has been denied the right to public credit for the success and quality of its goods. Reverse passing off is a violation of § 43(a) of the Lanham Act. See Roho, Inc. v. Marquis, 902 F.2d 356 (5th Cir.1990); Debs v. Meliopoulos, 1991 U.S.Dist. LEXIS 19864 (N.D.Ga.1991).

      78

      There is no liability for reverse passing off when a defendant modifies a product to such an extent that the defendant converts it into something different in kind from the original product. Defendant Frena, however, did not convert PEI's product to such an extent that it could be considered different in kind from PEI's product.

      79

      In Roho, the defendant purchased the plaintiff's wheelchair cushions on the open market, removed plaintiff's labels therefrom, and fastened them together to make bed mattresses. It was held that the two products were commercially distinct, and that therefore defendant was not simply reselling the product of plaintiff. In the instant case, however, Defendant Frena is simply reselling the product of PEI stripped of its original identity.

      80

      Defendant Frena's actions of deleting Plaintiff's text from the photographs, adding his own text to some of the photographs and appropriating PEI's photographs without attribution to the copyright owner violated Section 43(a) of the Lanham Act. Defendant Frena competed unfairly with Plaintiff, violating 15 U.S.C. § 1125(a).

      81

      Accordingly,

      82

      (1) Plaintiff's Request for Oral Argument on its Motion for Partial Summary Judgment (Doc. No. S-1) is DENIED,

      83

      (2) Plaintiff's Request for Oral Argument on its Second and Third Motions for Partial Summary Judgment (Doc. No. S-3) is DENIED,

      84

      [1563] (3) Plaintiff's First Motion for Partial Summary Judgment (Copyright Infringement) as to Defendant Frena (Doc. No. S-1) is GRANTED,

      85

      (4) Plaintiff's Second and Third Motions for Partial Summary Judgment (Trademark Infringement and Lanham Act Violations) as to Defendant Frena (Doc. No. S-3) are GRANTED and

      86

      (4) The remaining issues of the injunction and damages are still remaining for the Court to decide.

      87

      DONE AND ORDERED.

      88

      [1] The process of transferring the image from the bulletin board to one's personal computer is known as downloading.

      89

      [2] See note 1.

      90

      [3] The process of transferring the image from one's personal computer to the bulletin board is known as uploading.

    • 1.8 American Broadcasting Companies, Inc. v. Aereo, Inc.

      This case explores the breadth of the performance right. Is it too broad?
      1

      134 S.Ct. 2498 (2014)

      AMERICAN BROADCASTING COMPANIES, INC., ET AL., PETITIONERS,
      v.
      AEREO, INC., FKA BAMBOOM LABS, INC.

      No. 13-461.

      2

      Supreme Court of the United States.

      Argued April 22, 2014.
      Decided June 25, 2014.

      3

      BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined. SCALIA, J., filed a dissenting opinion, in which THOMAS and ALITO, JJ., joined.

      4
      JUSTICE BREYER, delivered the opinion of the Court.
      5

      The Copyright Act of 1976 gives a copyright owner the "exclusive righ[t]" to "perform the copyrighted work publicly." 17 U. S. C. §106(4). The Act's Transmit Clause defines that exclusive right as including the right to

      6

      "transmit or otherwise communicate a performance. . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times." §101.

      7

      We must decide whether respondent Aereo, Inc., infringes this exclusive right by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air. We conclude that it does.

      8
      I
      9
      A
      10

      For a monthly fee, Aereo offers subscribers broadcast television programming over the Internet, virtually as the programming is being broadcast. Much of this program-ming is made up of copyrighted works. Aereo neither owns the copyright in those works nor holds a license from the copyright owners to perform those works publicly.

      11

      Aereo's system is made up of servers, transcoders, and thousands of dime-sized antennas housed in a central warehouse. It works roughly as follows: First, when a subscriber wants to watch a show that is currently being broadcast, he visits Aereo's website and selects, from a list of the local programming, the show he wishes to see.

      12

      Second, one of Aereo's servers selects an antenna, which it dedicates to the use of that subscriber (and that subscriber alone) for the duration of the selected show. A server then tunes the antenna to the over-the-air broadcast carrying the show. The antenna begins to receive the broadcast, and an Aereo transcoder translates the signals received into data that can be transmitted over the Internet.

      13

      Third, rather than directly send the data to the subscriber, a server saves the data in a subscriber-specific folder on Aereo's hard drive. In other words, Aereo's system creates a subscriber-specific copy—that is, a "personal" copy—of the subscriber's program of choice.

      14

      Fourth, once several seconds of programming have been saved, Aereo's server begins to stream the saved copy of the show to the subscriber over the Internet. (The subscriber may instead direct Aereo to stream the program at a later time, but that aspect of Aereo's service is not before us.) The subscriber can watch the streamed program on the screen of his personal computer, tablet, smart phone, Internet-connected television, or other Internet-connected device. The streaming continues, a mere few seconds behind the over-the-air broadcast, until the subscriber has received the entire show. See A Dictionary of Computing 494 (6th ed. 2008) (defining "streaming" as "[t]he process of providing a steady flow of audio or video data so that an Internet user is able to access it as it is transmitted").

      15

      Aereo emphasizes that the data that its system streams to each subscriber are the data from his own personal copy, made from the broadcast signals received by the particular antenna allotted to him. Its system does not transmit data saved in one subscriber's folder to any other subscriber. When two subscribers wish to watch the same program, Aereo's system activates two separate antennas and saves two separate copies of the program in two separate folders. It then streams the show to the subscribers through two separate transmissions—each from the subscriber's personal copy.

      16
      B
      17

      Petitioners are television producers, marketers, distributors, and broadcasters who own the copyrights in many of the programs that Aereo's system streams to its subscribers. They brought suit against Aereo for copyright infringement in Federal District Court. They sought a preliminary injunction, arguing that Aereo was infringing their right to "perform" their works "publicly," as the Transmit Clause defines those terms.

      18

      The District Court denied the preliminary injunction. 874 F. Supp. 2d 373 (SDNY 2012). Relying on prior Circuit precedent, a divided panel of the Second Circuit affirmed. WNET, Thirteen v. Aereo, Inc., 712 F. 3d 676 (2013) (citing Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121 (2008)). In the Second Circuit's view, Aereo does not perform publicly within the meaning of the Transmit Clause because it does not transmit "to the public." Rather, each time Aereo streams a program to a subscriber, it sends a private transmission that is available only to that subscriber. The Second Circuit denied rehearing en banc, over the dissent of two judges. WNET, Thirteen v. Aereo, Inc., 722 F. 3d 500 (2013). We granted certiorari.

      19
      II
      20

      This case requires us to answer two questions: First, in operating in the manner described above, does Aereo "perform" at all? And second, if so, does Aereo do so "publicly"? We address these distinct questions in turn.

      21

      Does Aereo "perform"? See §106(4) ("[T]he owner of [a] copyright . . . has the exclusive righ[t] . . . to perform the copyrighted work publicly" (emphasis added)); §101 ("To perform . . . a work `publicly' means [among other things] to transmit . . . a performance . . . of the work . . . to the public . . ." (emphasis added)). Phrased another way, does Aereo "transmit . . . a performance" when a subscriber watches a show using Aereo's system, or is it only the subscriber who transmits? In Aereo's view, it does not perform. It does no more than supply equipment that "emulate[s] the operation of a home antenna and [digital video recorder (DVR)]." Brief for Respondent 41. Like a home antenna and DVR, Aereo's equipment simply responds to its subscribers' directives. So it is only the subscribers who "perform" when they use Aereo's equipment to stream television programs to themselves.

      22

      Considered alone, the language of the Act does not clearly indicate when an entity "perform[s]" (or "transmit[s]") and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo's performs.

      23
      A
      24

      History makes plain that one of Congress' primary purposes in amending the Copyright Act in 1976 was to overturn this Court's determination that community antenna television (CATV) systems (the precursors of modern cable systems) fell outside the Act's scope. In Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968), the Court considered a CATV system that carried local television broadcasting, much of which was copyrighted, to its subscribers in two cities. The CATV provider placed antennas on hills above the cities and used coaxial cables to carry the signals received by the antennas to the home television sets of its subscribers. The system amplified and modulated the signals in order to improve their strength and efficiently transmit them to subscribers. A subscriber "could choose any of the . . . programs he wished to view by simply turning the knob on his own television set." Id., at 392. The CATV provider "neither edited the programs received nor originated any programs of its own." Ibid.

      25

      Asked to decide whether the CATV provider infringed copyright holders' exclusive right to perform their works publicly, the Court held that the provider did not "perform" at all. See 17 U. S. C. §1(c) (1964 ed.) (granting copyright holder the exclusive right to "perform . . . in public for profit" a nondramatic literary work), §1(d) (granting copyright holder the exclusive right to "perform. . . publicly" a dramatic work). The Court drew a line: "Broadcasters perform. Viewers do not perform." 392 U. S., at 398 (footnote omitted). And a CATV provider "falls on the viewer's side of the line." Id., at 399.

      26

      The Court reasoned that CATV providers were unlike broadcasters:

      27

      "Broadcasters select the programs to be viewed; CATV systems simply carry, without editing, whatever programs they receive. Broadcasters procure programs and propagate them to the public; CATV systems receive programs that have been released to the public and carry them by private channels to additional viewers." Id., at 400.

      28

      Instead, CATV providers were more like viewers, for "the basic function [their] equipment serves is little different from that served by the equipment generally furnished by" viewers. Id., at 399. "Essentially," the Court said, "a CATV system no more than enhances the viewer's capacity to receive the broadcaster's signals [by] provid[ing] a well-located antenna with an efficient connection to the viewer's television set." Ibid. Viewers do not become performers by using "amplifying equipment," and a CATV provider should not be treated differently for providing viewers the same equipment. Id., at 398-400.

      29

      In Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974), the Court considered the copyright liability of a CATV provider that carried broadcast television programming into subscribers' homes from hundreds of miles away. Although the Court recognized that a viewer might not be able to afford amplifying equipment that would provide access to those distant signals, it nonetheless found that the CATV provider was more like a viewer than a broadcaster. Id., at 408-409. It explained: "The reception and rechanneling of [broadcast television signals] for simultaneous viewing is essentially a viewer function, irrespective of the distance between the broadcasting station and the ultimate viewer." Id., at 408.

      30

      The Court also recognized that the CATV system exercised some measure of choice over what to transmit. But that fact did not transform the CATV system into a broadcaster. A broadcaster exercises significant creativity in choosing what to air, the Court reasoned. Id., at 410. In contrast, the CATV provider makes an initial choice about which broadcast stations to retransmit, but then "`simply carr[ies], without editing, whatever programs [it] receive[s].'" Ibid. (quoting Fortnightly, supra, at 400 (alterations in original)).

      31
      B
      32

      In 1976 Congress amended the Copyright Act in large part to reject the Court's holdings in Fortnightly and Teleprompter. See H. R. Rep. No. 94-1476, pp. 86-87 (1976) (hereinafter H. R. Rep.) (The 1976 amendments "completely overturned" this Court's narrow construction of the Act in Fortnightly and Teleprompter). Congress enacted new language that erased the Court's line between broadcaster and viewer, in respect to "perform[ing]" a work. The amended statute clarifies that to "perform" an audiovisual work means "to show its images in any sequence or to make the sounds accompanying it audible." §101; see ibid. (defining "[a]udiovisual works" as "works that consist of a series of related images which are intrinsically intended to be shown by the use of machines . . ., together with accompanying sounds"). Under this new language, both the broadcaster and the viewer of a television program "perform," because they both show the program's images and make audible the program's sounds. See H. R. Rep., at 63 ("[A] broadcasting network is performing when it transmits [a singer's performance of a song] . . . and any individual is performing whenever he or she . . . communicates the performance by turning on a receiving set").

      33

      Congress also enacted the Transmit Clause, which specifies that an entity performs publicly when it "transmit[s]. . . a performance . . . to the public." §101; see ibid. (defining "[t]o `transmit' a performance" as "to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent"). Cable system activities, like those of the CATV systems in Fortnightly and Teleprompter, lie at the heart of the activities that Congress intended this language to cover. See H. R. Rep., at 63 ("[A] cable television system is performing when it retransmits [a network] broadcast to its subscribers"); see also ibid. ("[T]he concep[t] of public performance. . . cover[s] not only the initial rendition or showing, but also any further act by which that rendition or showing is transmitted or communicated to the public"). The Clause thus makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers' ability to receive broadcast television signals.

      34

      Congress further created a new section of the Act to regulate cable companies' public performances of copyrighted works. See §111. Section 111 creates a complex, highly detailed compulsory licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts. H. R. Rep., at 88 (Section 111 is primarily "directed at the operation of cable television systems and the terms and conditions of their liability for the retransmission of copyrighted works").

      35

      Congress made these three changes to achieve a similar end: to bring the activities of cable systems within the scope of the Copyright Act.

      36
      C
      37

      This history makes clear that Aereo is not simply an equipment provider. Rather, Aereo, and not just its subscribers, "perform[s]" (or "transmit[s]"). Aereo's activities are substantially similar to those of the CATV companies that Congress amended the Act to reach. See id., at 89 ("[C]able systems are commercial enterprises whose basic retransmission operations are based on the carriage of copyrighted program material"). Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users' homes. By means of its technology (antennas, transcoders, and servers), Aereo's system "receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers." Fortnightly, 392 U. S., at 400. It "carr[ies] . . . whatever programs [it] receive[s]," and it offers "all the programming" of each over-the-air station it carries. Id., at 392, 400.

      38

      Aereo's equipment may serve a "viewer function"; it may enhance the viewer's ability to receive a broadcaster's programs. It may even emulate equipment a viewer could use at home. But the same was true of the equipment that was before the Court, and ultimately before Congress, in Fortnightly and Teleprompter.

      39

      We recognize, and Aereo and the dissent emphasize, one particular difference between Aereo's system and the cable systems at issue in Fortnightly and Teleprompter. The systems in those cases transmitted constantly; they sent continuous programming to each subscriber's television set. In contrast, Aereo's system remains inert until a subscriber indicates that she wants to watch a program. Only at that moment, in automatic response to the subscriber's request, does Aereo's system activate an antenna and begin to transmit the requested program.

      40

      This is a critical difference, says the dissent. It means that Aereo's subscribers, not Aereo, "selec[t] the copyrighted content" that is "perform[ed]," post, at 4 (opinion of SCALIA, J.), and for that reason they, not Aereo, "transmit" the performance. Aereo is thus like "a copy shop that provides its patrons with a library card." Post, at 5. A copy shop is not directly liable whenever a patron uses the shop's machines to "reproduce" copyrighted materials found in that library. See §106(1) ("exclusive righ[t] . . . to reproduce the copyrighted work"). And by the same token, Aereo should not be directly liable whenever its patrons use its equipment to "transmit" copyrighted television programs to their screens.

      41

      In our view, however, the dissent's copy shop argument, in whatever form, makes too much out of too little. Given Aereo's overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here. The subscribers of the Fortnightly and Teleprompter cable systems also selected what programs to display on their receiving sets. Indeed, as we explained in Fortnightly, such a subscriber "could choose any of the . . . programs he wished to view by simply turning the knob on his own television set." 392 U. S., at 392. The same is true of an Aereo subscriber. Of course, in Fortnightly the television signals, in a sense, lurked behind the screen, ready to emerge when the subscriber turned the knob. Here the signals pursue their ordinary course of travel through the universe until today's "turn of the knob"—a click on a website—activates machinery that intercepts and reroutes them to Aereo's subscribers over the Internet. But this difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into "a copy shop that provides its patrons with a library card."

      42

      In other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act. But the many similarities between Aereo and cable companies, considered in light of Congress' basic purposes in amending the Copyright Act, convince us that this difference is not critical here. We conclude that Aereo is not just an equipment supplier and that Aereo "perform[s]."

      43
      III
      44

      Next, we must consider whether Aereo performs petitioners' works "publicly," within the meaning of the Transmit Clause. Under the Clause, an entity performs a work publicly when it "transmit[s] . . . a performance . . . of the work . . . to the public." §101. Aereo denies that it satisfies this definition. It reasons as follows: First, the "performance" it "transmit[s]" is the performance created by its act of transmitting. And second, because each of these performances is capable of being received by one and only one subscriber, Aereo transmits privately, not publicly. Even assuming Aereo's first argument is correct, its second does not follow.

      45

      We begin with Aereo's first argument. What performance does Aereo transmit? Under the Act, "[t]o `transmit' a performance . . . is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent." Ibid. And "[t]o `perform'" an audiovisual work means "to show its images in any sequence or to make the sounds accompanying it audible." Ibid.

      46

      Petitioners say Aereo transmits a prior performance of their works. Thus when Aereo retransmits a network's prior broadcast, the underlying broadcast (itself a performance) is the performance that Aereo transmits. Aereo, as discussed above, says the performance it transmits is the new performance created by its act of transmitting. That performance comes into existence when Aereo streams the sounds and images of a broadcast program to a subscriber's screen.

      47

      We assume arguendo that Aereo's first argument is correct. Thus, for present purposes, to transmit a performance of (at least) an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work. Cf. United States v. American Soc. of Composers, Authors and Publishers, 627 F. 3d 64, 73 (CA2 2010) (holding that a download of a work is not a performance because the data transmitted are not "contemporaneously perceptible"). When an Aereo subscriber selects a program to watch, Aereo streams the program over the Internet to that subscriber. Aereo thereby "communicate[s]" to the subscriber, by means of a "device or process," the work's images and sounds. §101. And those images and sounds are contemporaneously visible and audible on the subscriber's computer (or other Internet-connected device). So under our assumed definition, Aereo transmits a performance whenever its subscribers watch a program.

      48

      But what about the Clause's further requirement that Aereo transmit a performance "to the public"? As we have said, an Aereo subscriber receives broadcast television signals with an antenna dedicated to him alone. Aereo's system makes from those signals a personal copy of the selected program. It streams the content of the copy to the same subscriber and to no one else. One and only one subscriber has the ability to see and hear each Aereo transmission. The fact that each transmission is to only one subscriber, in Aereo's view, means that it does not transmit a performance "to the public."

      49

      In terms of the Act's purposes, these differences do not distinguish Aereo's system from cable systems, which do perform "publicly." Viewed in terms of Congress' regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers' screens. They do not render Aereo's commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo's subscribers. Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multisubscriber antenna or one small dedicated antenna, whether they arrive instantaneously or after a few seconds' delay, or whether they are transmitted directly or after a personal copy is made? And why, if Aereo is right, could not modern CATV systems simply continue the same commercial and consumer-oriented activities, free of copyright restrictions, provided they substitute such new technologies for old? Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies.

      50

      The text of the Clause effectuates Congress' intent. Aereo's argument to the contrary relies on the premise that "to transmit . . . a performance" means to make a single transmission. But the Clause suggests that an entity may transmit a performance through multiple, discrete transmissions. That is because one can "transmit" or "communicate" something through a set of actions. Thus one can transmit a message to one's friends, irrespective of whether one sends separate identical e-mails to each friend or a single e-mail to all at once. So can an elected official communicate an idea, slogan, or speech to her constituents, regardless of whether she communicates that idea, slogan, or speech during individual phone calls to each constituent or in a public square.

      51

      The fact that a singular noun ("a performance") follows the words "to transmit" does not suggest the contrary. One can sing a song to his family, whether he sings the same song one-on-one or in front of all together. Similarly, one's colleagues may watch a performance of a particular play—say, this season's modern-dress version of "Measure for Measure"—whether they do so at separate or at the same showings. By the same principle, an entity may transmit a performance through one or several transmissions, where the performance is of the same work.

      52

      The Transmit Clause must permit this interpretation, for it provides that one may transmit a performance to the public "whether the members of the public capable of receiving the performance . . . receive it . . . at the same time or at different times." §101. Were the words "to transmit . . . a performance" limited to a single act of communication, members of the public could not receive the performance communicated "at different times." Therefore, in light of the purpose and text of the Clause, we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.

      53

      We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions "by means of any device or process." Ibid. And retransmitting a television program using user-specific copies is a "process" of transmitting a performance. A "cop[y]" of a work is simply a "material objec[t] . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated." Ibid. So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds. Therefore, when Aereo streams the same television program to multiple subscribers, it "transmit[s] . . . a performance" to all of them.

      54

      Moreover, the subscribers to whom Aereo transmits television programs constitute "the public." Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other. This matters because, although the Act does not define "the public," it specifies that an entity performs publicly when it performs at "any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered." Ibid. The Act thereby suggests that "the public" consists of a large group of people outside of a family and friends.

      55

      Neither the record nor Aereo suggests that Aereo's subscribers receive performances in their capacities as owners or possessors of the underlying works. This is relevant because when an entity performs to a set of people, whether they constitute "the public" often depends upon their relationship to the underlying work. When, for example, a valet parking attendant returns cars to their drivers, we would not say that the parking service provides cars "to the public." We would say that it provides the cars to their owners. We would say that a car dealership, on the other hand, does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars. Similarly, an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to "the public," whereas an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform.

      56

      Finally, we note that Aereo's subscribers may receive the same programs at different times and locations. This fact does not help Aereo, however, for the Transmit Clause expressly provides that an entity may perform publicly "whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times." Ibid. In other words, "the public" need not be situated together, spatially or temporally. For these reasons, we conclude that Aereo transmits a performance of petitioners' copyrighted works to the public, within the meaning of the Transmit Clause.

      57
      IV
      58

      Aereo and many of its supporting amici argue that to apply the Transmit Clause to Aereo's conduct will impose copyright liability on other technologies, including new technologies, that Congress could not possibly have wanted to reach. We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect.

      59

      For one thing, the history of cable broadcast transmissions that led to the enactment of the Transmit Clause informs our conclusion that Aereo "perform[s]," but it does not determine whether different kinds of providers in different contexts also "perform." For another, an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work. See Brief for Respondent 31 ("[I]f a distributor . . . sells [multiple copies of a digital video disc] by mail to consumers, . . . [its] distribution of the DVDs merely makes it possible for the recipients to perform the work themselves—it is not a `device or process' by which the distributor publicly performs the work" (emphasis in original)).

      60

      Further, we have interpreted the term "the public" to apply to a group of individuals acting as ordinary members of the public who pay primarily to watch broadcast television programs, many of which are copyrighted. We have said that it does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content. See Brief for United States as Amicus Curiae 31 (distinguishing cloudbased storage services because they "offer consumers more numerous and convenient means of playing back copies that the consumers have already lawfully acquired" (emphasis in original)). In addition, an entity does not transmit to the public if it does not transmit to a substantial number of people outside of a family and its social circle.

      61

      We also note that courts often apply a statute's highly general language in light of the statute's basic purposes. Finally, the doctrine of "fair use" can help to prevent inappropriate or inequitable applications of the Clause. See Sony Corp. of America v. Universal City Studios, Inc., 464 U. S. 417 (1984).

      62

      We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that "[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which `Congress has not plainly marked [the] course,' should await a case in which they are squarely presented." Brief for United States as Amicus Curiae 34 (quoting Sony, supra, at 431 (alteration in original)). And we note that, to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress. Cf. Digital Millennium Copyright Act, 17 U. S. C. §512.

      63

      * * *

      64

      In sum, having considered the details of Aereo's practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo's activities outside the scope of the Act.

      65

      For these reasons, we conclude that Aereo "perform[s]" petitioners' copyrighted works "publicly," as those terms are defined by the Transmit Clause. We therefore reverse the contrary judgment of the Court of Appeals, and we remand the case for further proceedings consistent with this opinion.

      66

      It is so ordered.

      67
      JUSTICE SCALIA, with whom JUSTICE THOMAS and JUSTICE ALITO join, dissenting.
      68

      This case is the latest skirmish in the long-running copyright battle over the delivery of television program-ming. Petitioners, a collection of television networks and affiliates (Networks), broadcast copyrighted programs on the public airwaves for all to see. Aereo, respondent, operates an automated system that allows subscribers to receive, on Internet-connected devices, programs that they select, including the Networks' copyrighted programs. The Networks sued Aereo for several forms of copyright infringement, but we are here concerned with a single claim: that Aereo violates the Networks'"exclusive righ[t]" to "perform" their programs "publicly." 17 U. S. C. §106(4). That claim fails at the very outset because Aereo does not "perform" at all. The Court manages to reach the opposite conclusion only by disregarding widely accepted rules for service-provider liability and adopting in their place an improvised standard ("looks-like-cable-TV") that will sow confusion for years to come.

      69
      I. Legal Standard
      70

      There are two types of liability for copyright infringement: direct and secondary. As its name suggests, the former applies when an actor personally engages in infringing conduct. See Sony Corp. of America v. Universal City Studios, Inc., 464 U. S. 417, 433 (1984). Secondary liability, by contrast, is a means of holding defendants responsible for infringement by third parties, even when the defendants "have not themselves engaged in the infringing activity." Id., at 435. It applies when a defendant "intentionally induc[es] or encourag[es]" infringing acts by others or profits from such acts "while declining to exercise a right to stop or limit [them]." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U. S. 913, 930 (2005).

      71

      Most suits against equipment manufacturers and service providers involve secondary-liability claims. For example, when movie studios sued to block the sale of Sony's Betamax videocassette recorder (VCR), they argued that Sony was liable because its customers were making unauthorized copies. See Sony, supra, at 434-435. Record labels and movie studios relied on a similar theory when they sued Grokster and StreamCast, two providers of peer-to-peer file-sharing software. See Grokster, supra, at 920-921, 927.

      72

      This suit, or rather the portion of it before us here, is fundamentally different. The Networks claim that Aereo directly infringes their public-performance right. Accordingly, the Networks must prove that Aereo "perform[s]" copyrighted works, §106(4), when its subscribers log in, select a channel, and push the "watch" button. That process undoubtedly results in a performance; the question is who does the performing. See Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121, 130 (CA2 2008). If Aereo's subscribers perform but Aereo does not, the claim necessarily fails.

      73

      The Networks' claim is governed by a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act. See 3 W. Patry, Copyright §9:5.50 (2013). This requirement is firmly grounded in the Act's text, which defines "perform" in active, affirmative terms: One "perform[s]" a copyrighted "audiovisual work," such as a movie or news broadcast, by "show[ing] its images in any sequence" or "mak[ing] the sounds accompanying it audible." §101. And since the Act makes it unlawful to copy or perform copyrighted works, not to copy or perform in general, see §501(a), the volitional-act requirement demands conduct directed to the plaintiff's copyrighted material, see Sony, supra, at 434. Every Court of Appeals to have considered an automated-service provider's direct liability for copyright infringement has adopted that rule. See Fox Broadcasting Co. v. Dish Network LLC, 747 F. 3d 1060, 1066-1068 (CA9 2014); Cartoon Network, supra, at 130-131 (CA2 2008); CoStar Group, Inc. v. LoopNet, Inc., 373 F. 3d 544, 549-550 (CA4 2004).[1] Although we have not opined on the issue, our cases are fully consistent with a volitional-conduct requirement. For example, we gave several examples of direct infringement in Sony, each of which involved a volitional act directed to the plaintiff's copyrighted material. See 464 U. S., at 437, n. 18.

      74

      The volitional-conduct requirement is not at issue in most direct-infringement cases; the usual point of dispute is whether the defendant's conduct is infringing (e.g., Does the defendant's design copy the plaintiff's?), rather than whether the defendant has acted at all (e.g., Did this defendant create the infringing design?). But it comes right to the fore when a direct-infringement claim is lodged against a defendant who does nothing more than operate an automated, user-controlled system. See, e.g., Fox Broadcasting, supra, at 1067; Cartoon Network, supra, at 131. Internet-service providers are a prime example. When one user sends data to another, the provider's equipment facilitates the transfer automatically. Does that mean that the provider is directly liable when the transmission happens to result in the "reproduc[tion]," §106(1), of a copyrighted work? It does not. The provider's system is "totally indifferent to the material's content," whereas courts require "some aspect of volition" directed at the copyrighted material before direct liability may be imposed. CoStar, 373 F. 3d, at 550-551.[2] The defendant may be held directly liable only if the defendant itself "trespassed on the exclusive domain of the copyright owner." Id., at 550. Most of the time that issue will come down to who selects the copyrighted content: the defendant or its customers. See Cartoon Network, supra, at 131-132.

      75

      A comparison between copy shops and video-on-demand services illustrates the point. A copy shop rents out photocopiers on a per-use basis. One customer might copy his 10-year-old's drawings—a perfectly lawful thing to do— while another might duplicate a famous artist's copyrighted photographs—a use clearly prohibited by §106(1). Either way, the customer chooses the content and activates the copying function; the photocopier does nothing except in response to the customer's commands. Because the shop plays no role in selecting the content, it cannot be held directly liable when a customer makes an infringing copy. See CoStar, supra, at 550.

      76

      Video-on-demand services, like photocopiers, respond automatically to user input, but they differ in one crucial respect: They choose the content. When a user signs in to Netflix, for example, "thousands of . . . movies [and] TV episodes" carefully curated by Netflix are "available to watch instantly." See How [D]oes Netflix [W]ork?, online at http://help.netflix.com/en/node/412 (as visited June 20, 2014, and available in Clerk of Court's case file). That selection and arrangement by the service provider constitutes a volitional act directed to specific copyrighted works and thus serves as a basis for direct liability.

      77

      The distinction between direct and secondary liability would collapse if there were not a clear rule for determining whether the defendant committed the infringing act. See Cartoon Network, 536 F. 3d, at 132-133. The volitional-conduct requirement supplies that rule; its purpose is not to excuse defendants from accountability, but to channel the claims against them into the correct analytical track. See Brief for 36 Intellectual Property and Copyright Law Professors as Amici Curiae 7. Thus, in the example given above, the fact that the copy shop does not choose the content simply means that its culpability will be assessed using secondary-liability rules rather than direct-liability rules. See Sony, supra, at 434-442; Cartoon Network, supra, at 132-133.

      78
      II. Application to Aereo
      79

      So which is Aereo: the copy shop or the video-on-demand service? In truth, it is neither. Rather, it is akin to a copy shop that provides its patrons with a library card. Aereo offers access to an automated system consisting of routers, servers, transcoders, and dime-sized antennae. Like a photocopier or VCR, that system lies dormant until a subscriber activates it. When a subscriber selects a program, Aereo's system picks up the relevant broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that file's contents to the subscriber via the Internet—at which point the subscriber's laptop, tablet, or other device displays the broadcast just as an ordinary television would. The result of that process fits the statutory definition of a performance to a tee: The subscriber's device "show[s]" the broadcast's "images" and "make[s] the sounds accompanying" the broadcast "audible." §101. The only question is whether those performances are the product of Aereo's volitional conduct.

      80

      They are not. Unlike video-on-demand services, Aereo does not provide a prearranged assortment of movies and television shows. Rather, it assigns each subscriber an antenna that—like a library card—can be used to obtain whatever broadcasts are freely available. Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots: Aereo's automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo's operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability. See Grokster, 545 U. S., at 960 (BREYER, J., concurring) ("[T]he producer of a technology which permits unlawful copying does not himself engage in unlawful copying").

      81

      In sum, Aereo does not "perform" for the sole and simple reason that it does not make the choice of content. And because Aereo does not perform, it cannot be held directly liable for infringing the Networks' public-performance right.[3] That conclusion does not necessarily mean that Aereo's service complies with the Copyright Act. Quite the contrary. The Networks' complaint alleges that Aereo is directly and secondarily liable for infringing their publicperformance rights (§106(4)) and also their reproduction rights (§106(1)). Their request for a preliminary injunction—the only issue before this Court—is based exclusively on the direct-liability portion of the public-performance claim (and further limited to Aereo's "watch" function, as opposed to its "record" function). See App. to Pet. for Cert. 60a-61a. Affirming the judgment below would merely return this case to the lower courts for consideration of the Networks' remaining claims.

      82
      III. Guilt By Resemblance
      83

      The Court's conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts;[4] (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs. Ante, at 4-10. That reasoning suffers from a trio of defects.

      84

      First, it is built on the shakiest of foundations. Perceiving the text to be ambiguous, ante, at 4, the Court reaches out to decide the case based on a few isolated snippets of legislative history, ante, at 7-8 (citing H. R. Rep. No. 94-1476 (1976)). The Court treats those snippets as authoritative evidence of congressional intent even though they come from a single report issued by a committee whose members make up a small fraction of one of the two Houses of Congress. Little else need be said here about the severe shortcomings of that interpretative methodology. See Lawson v. FMR LLC, 571 U. S. ___, ___ (2014) (SCALIA, J., concurring in principal part and concurring in judgment) (slip op., at 1-2).

      85

      Second, the Court's reasoning fails on its own terms because there are material differences between the cable systems at issue in Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974), and Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968), on the one hand and Aereo on the other. The former (which were then known as community-antenna television systems) captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmits only specific programs selected by the user, at specific times selected by the user. The Court acknowledges this distinction but blithely concludes that it "does not make a critical difference." Ante, at 10. Even if that were true, the Court fails to account for other salient differences between the two technologies.[5] Though cable systems started out essentially as dumb pipes that routed signals from point A to point B, see ante, at 5, by the 1970's, that kind of service "`no longer exist[ed],'" Brief for Petitioners in Columbia Broadcasting System, Inc. v. Teleprompter Corp., O. T. 1973, No. 72-1633, p. 22. At the time of our Teleprompter decision, cable companies "perform[ed] the same functions as `broadcasters' by deliberately selecting and importing distant signals, originating programs, [and] selling commercials," id., at 20, thus making them curators of content—more akin to video-ondemand services than copy shops. So far as the record reveals, Aereo does none of those things.

      86

      Third, and most importantly, even accepting that the 1976 amendments had as their purpose the overruling of our cable-TV cases, what they were meant to do and how they did it are two different questions—and it is the latter that governs the case before us here. The injury claimed is not violation of a law that says operations similar to cable TV are subject to copyright liability, but violation of §106(4) of the Copyright Act. And whatever soothing reasoning the Court uses to reach its result ("this looks like cable TV"), the consequence of its holding is that someone who implements this technology "perform[s]" under that provision. That greatly disrupts settled jurisprudence which, before today, applied the straightforward, bright-line test of volitional conduct directed at the copyrighted work. If that test is not outcome determinative in this case, presumably it is not outcome determinative elsewhere as well. And it is not clear what the Court proposes to replace it. Perhaps the Court means to adopt (invent, really) a two-tier version of the Copyright Act, one part of which applies to "cable companies and their equivalents" while the other governs everyone else. Ante, at 9-10, 16.

      87

      The rationale for the Court's ad hoc rule for cablesystem lookalikes is so broad that it renders nearly a third of the Court's opinion superfluous. Part II of the opinion concludes that Aereo performs because it resembles a cable company, and Congress amended the Act in 1976 "to bring the activities of cable systems within [its] scope." Ante, at 8. Part III of the opinion purports to address separately the question whether Aereo performs "publicly." Ante, at 10-15. Trouble is, that question cannot remain open if Congress's supposed intent to regulate whatever looks like a cable company must be given legal effect (as the Court says in Part II). The Act reaches only public performances, see §106(4), so Congress could not have regulated "the activities of cable systems" without deeming their retransmissions public performances. The upshot is this: If Aereo's similarity to a cable company means that it performs, then by necessity that same characteristic means that it does so publicly, and Part III of the Court's opinion discusses an issue that is no longer relevant—though discussing it certainly gives the opinion the "feel" of real textual analysis.

      88

      Making matters worse, the Court provides no criteria for determining when its cable-TV-lookalike rule applies. Must a defendant offer access to live television to qualify? If similarity to cable-television service is the measure, then the answer must be yes. But consider the implications of that answer: Aereo would be free to do exactly what it is doing right now so long as it built mandatory time shifting into its "watch" function.[6] Aereo would not be providing live television if it made subscribers wait to tune in until after a show's live broadcast ended. A subscriber could watch the 7 p.m. airing of a 1-hour program any time after 8 p.m. Assuming the Court does not intend to adopt such a do-nothing rule (though it very well may), there must be some other means of identifying who is and is not subject to its guilt-by-resemblance regime.

      89

      Two other criteria come to mind. One would cover any automated service that captures and stores live television broadcasts at a user's direction. That can't be right, since it is exactly what remote storage digital video recorders (RS-DVRs) do, see Cartoon Network, 536 F. 3d, at 124-125, and the Court insists that its "limited holding" does not decide the fate of those devices, ante, at 16-17. The other potential benchmark is the one offered by the Government: The cable-TV-lookalike rule embraces any entity that "operates an integrated system, substantially dependent on physical equipment that is used in common by [its] subscribers." Brief for United States as Amicus Curiae 20. The Court sensibly avoids that approach because it would sweep in Internet service providers and a host of other entities that quite obviously do not perform.

      90

      That leaves as the criterion of cable-TV-resemblance nothing but th'ol' totality-of-the-circumstances test (which is not a test at all but merely assertion of an intent to perform test-free, ad hoc, case-by-case evaluation). It will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo treatment. (And automated systems now in contemplation will have to take their chances.) The Court vows that its ruling will not affect cloud-storage providers and cabletelevision systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its result-driven rule. Indeed, the difficulties inherent in the Court's makeshift approach will become apparent in this very case. Today's decision addresses the legality of Aereo's "watch" function, which provides nearly contemporaneous access to live broadcasts. On remand, one of the first questions the lower courts will face is whether Aereo's "record" function, which allows subscribers to save a program while it is airing and watch it later, infringes the Networks' public-performance right. The volitionalconduct rule provides a clear answer to that question: Because Aereo does not select the programs viewed by its users, it does not perform. But it is impossible to say how the issue will come out under the Court's analysis, since cable companies did not offer remote recording and playback services when Congress amended the Copyright Act in 1976.

      91

      * * *

      92

      I share the Court's evident feeling that what Aereo is doing (or enabling to be done) to the Networks' copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it. As discussed at the outset, Aereo's secondary liability for performance infringement is yet to be determined, as is its primary and secondary liability for reproduction infringement. If that does not suffice, then (assuming one shares the majority's estimation of right and wrong) what we have before us must be considered a "loophole" in the law. It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude "looks-like-cable-TV" solution the Court invents today.

      93

      We came within one vote of declaring the VCR contraband 30 years ago in Sony. See 464 U. S., at 441, n. 21. The dissent in that case was driven in part by the plaintiffs' prediction that VCR technology would wreak all manner of havoc in the television and movie industries. See id., at 483 (opinion of Blackmun, J.); see also Brief for CBS, Inc., as Amicus Curiae, O. T. 1982, No. 81-1687, p. 2 (arguing that VCRs "directly threatened" the bottom line of "[e]very broadcaster").

      94

      The Networks make similarly dire predictions about Aereo. We are told that nothing less than "the very existence of broadcast television as we know it" is at stake. Brief for Petitioners 39. Aereo and its amici dispute those forecasts and make a few of their own, suggesting that a decision in the Networks' favor will stifle technological innovation and imperil billions of dollars of investments in cloud-storage services. See Brief for Respondents 48-51; Brief for BSA, The Software Alliance as Amicus Curiae 5-13. We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development. See Sony, supra, at 430-431; see also Grokster, 545 U. S., at 958 (BREYER, J., concurring). Hence, the proper course is not to bend and twist the Act's terms in an effort to produce a just outcome, but to apply the law as it stands and leave to Congress the task of deciding whether the Copyright Act needs an upgrade. I conclude, as the Court concluded in Sony: "It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be [affirmed]." 464 U. S., at 456.

      95

      I respectfully dissent.

      96

      [1] An unpublished decision of the Third Circuit is to the same effect. Parker v. Google, Inc., 242 Fed. Appx. 833, 836-837 (2007) (per curiam).

      97

      The Networks muster only one case they say stands for a different approach, New York Times Co. v. Tasini, 533 U. S. 483 (2001). Reply Brief 18. But Tasini is clearly inapposite; it dealt with the question whether the defendants' copying was permissible, not whether the defendants were the ones who made the copies. See 533 U. S., at 487-488, 492, 504-506.

      98

      [2] Congress has enacted several safe-harbor provisions applicable to automated network processes, see, e.g., 17 U. S. C. §512(a)-(b), but those provisions do not foreclose "any other defense," §512(l), including a volitional-conduct defense.

      99

      [3] Because I conclude that Aereo does not perform at all, I do not reach the question whether the performances in this case are to the public. See ante, at 10-15.

      100

      [4] See Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974); Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968).

      101

      [5] The Court observes that "[t]he subscribers of the Fortnightly and Teleprompter cable systems . . . selected what programs to display on their receiving sets," but acknowledges that those choices were possible only because "the television signals, in a sense, lurked behind the screen, ready to emerge when the subscriber turned the knob." Ante, at 10. The latter point is dispositive: The signals were "ready to emerge" because the cable system—much like a video-on-demand provider— took affirmative, volitional steps to put them there. As discussed above, the same cannot be said of the programs available through Aereo's automated system.

      102

      [6] Broadcasts accessible through the "watch" function are technically not live because Aereo's servers take anywhere from a few seconds to a few minutes to begin transmitting data to a subscriber's device. But the resulting delay is so brief that it cannot reasonably be classified as time shifting.

    • 1.9 London-Sire Records, Inc. v. Doe 1 et al.

      This case examines what it means to distribute a copyrighted work in the age of electronic file distribution
      1

      542 F.Supp.2d 153

      2
      LONDON-SIRE RECORDS, INC., et al., Plaintiffs,
      v.
      DOE 1 et al., Defendants.
      3

      No. 04cv12434-NG.

      4

      United States District Court, D. Massachusetts.

      5

      March 31, 2008.

      6

      [156] John R. Bauer, Nancy M. Cremins, Robinson & Cole LLP, Boston, MA, Katheryn Jarvis, Moshe D. Rothman, Coggon Holme [157] Roberts & Owen LLP, Denver, CO, Emily A. Berger, San Francisco, CA, for Plaintiffs.

      7

      Raymond Sayeg, Jr. Law Office of Raymond Sayeg, Boston, MA, for Defendants.

      8
      ORDER ON MOTIONS TO QUASH
      9
      GERTNER, District Judge. 
      10

      This case consists of numerous actions consolidated under London-Sire Records, Inc. v. Does 1-4, Civil Action No. 04-cv-12434. The plaintiffs include several of the country's largest record companies. The defendants,[1] the plaintiffs claim, are individual computer users — mainly college students — who use "peer-to-peer" filesharing software to download and disseminate music without paying for it, infringing the plaintiffs' copyrights.

      11

      In these cases, the plaintiffs have been able to infer some infringing file-sharing activity from their investigations, but have not been able to discover the file-sharer's identity. They have an Internet Protocol [158] number ("IP number" or "IP address") identifying the file-sharer's computer, but no more. Consequently, the plaintiffs — with the Court's permission — have served subpoenas on a number of internet service providers ("ISPs"), largely colleges and universities, seeking a name to go with the number. To preserve the rights of those whose identities are sought, the Court has required the ISPs to delay responding to the subpoena until the individual defendants have had an opportunity to move to quash it before their identities are disclosed.[2] Several defendants have done so; those are the motions presently before the Court.

      12

      After briefing, argument, and amicus participation, the Court concludes that it has insufficient information to allow the plaintiffs to take expedited discovery under these circumstances. First, the movants are entitled to some First Amendment protection of their anonymity — albeit limited. Second, the defendants may have expectations of privacy with regard to their identity, but that depends on the terms of the internet service agreement they have with Boston University, which has not been provided to the Court. Third, the movants have raised an issue of fact with respect to the number of identities disclosed to the plaintiffs by the expedited discovery. As it currently exists, the plaintiffs' subpoena may invade the anonymity of many non-infringing internet users — anonymity that deserves protection by the Court. Under these circumstances, the best solution is in camera review of the terms of service agreement and the ISP's list of individuals who match the information supplied by the plaintiffs.

      13

      The Court will therefore GRANT two of the motions to quash (documents ##104 and 115), at least until the relevant information is obtained.[3] The plaintiffs may renew their motion for expedited discovery, addressing the Court's concerns by modifying the subpoena they seek to serve on Boston University, as discussed below.

      14
      I. BACKGROUND
      15
      A. Facts
      16

      In each of these cases, the facts are substantially identical. Since the defendants' motions are effectively motions to dismiss — there is almost no evidence in the case, and the movants argue, among other things, that the plaintiffs have failed to state a claim upon which relief can be granted — the Court will apply that standard of review to the pleadings. The plaintiffs' pleadings are taken as true, and the Court will draw all reasonable inferences in their favor. See, e.g., Rivera v. Rhode Island, 402 F.3d 27, 33 (1st Cir. 2005) (stating standard for motion to dismiss). To survive a motion to dismiss, the plaintiffs' pleaded facts must "possess enough heft to sho[w] that [they are] entitled to relief." Clark v. Boscher, 514 F.3d 107, 112 (1st Cir.2008) (internal quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1959, 167 L.Ed.2d 929 (2007)) (first alteration in Twombly). 

      17

      [159] The plaintiffs allege that the defendants used peer-to-peer software to "download and/or distribute to the public certain of the [plaintiffs'] Copyrighted Recordings.... Through his or her continuous and ongoing acts of downloading and/or distributing to the public the Copyrighted Recordings, each Defendant has violated Plaintiffs' exclusive rights of reproduction and distribution." E.g., Compl. at 5 (docket no. 07-cv-10834, document #1). To clarify the issues on which this case turns, the Court will briefly explain the nature of peer-to-peer software and its use.

      18

      Peer-to-peer software primarily exists to create decentralized networks of individual computer users. The software allows the users to communicate directly with one another, rather than routing their transmissions through a central server — thus the term "peer-to-peer" architecture, as opposed to "client-server." See, e.g., Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919-920 & n. 1, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005). Each type of architecture has distinct advantages and disadvantages, most of which are not relevant to this case.

      19

      What is relevant is that users in a peerto-peer network can remain relatively anonymous or pseudonymous. Because communications between two computers on a peer-to-peer network can take place directly, without passing through a central network server,[4] such transactions are not easily observable by a third party. By the nature of the network and software, then, peer-to-peer users can control what information they display to the world. See Linares Decl. at 4, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5). Moreover, generally speaking, anyone who has the requisite software and internet connection can participate in open peer-to-peer networks, such as the ones the defendants are alleged to have used in this case.

      20

      Peer-to-peer users can also transfer files over the network. Many such files are entirely legitimate. See Grokster, 545 U.S. at 920, 125 S.Ct. 2764. However, other files transferred are electronic versions of copyrighted music or video files. Notably, because the files on each user's computer are digital, another computer can make a precise copy of them with no attendant loss in quality. See Linares Decl. at 3-4, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5).

      21

      In this case, the plaintiffs allege that each of the defendants has taken part in just such a file transfer. To discover potentially infringing transfers, the plaintiffs (acting through their trade association, the Recording Industry Association of America, or "RIAA") have retained a third-party investigator, MediaSentry, Inc. [160] ("MediaSentry"). Id. at 4-5. MediaSentry essentially functions as an undercover user of the peer-to-peer networks. It connects to the network and searches for the plaintiff record companies' copyrighted files. Upon finding the files, it downloads them. See id. at 5-6. MediaSentry gathers what information it can about the computer from which the files were downloaded (the "sending computer.") Most crucially, that information includes the date and time at which the files were downloaded and the IP number of the sending computer. It can also include the user's name, but if given, the names are usually pseudonymous. See id. After the files are downloaded, the RIAA verifies that they can form the basis for a suit. It reviews a listing of the music files that the user has offered for download in order to determine whether they appear to be copyrighted sound recordings. The RIAA also listens to the downloaded music files from these users in order to confirm that they are, indeed, illegal copies of sound recordings whose copyrights are owned by RIAA members. Id. at 6.[5]

      22

      At this point, assuming the plaintiffs wish to sue, they cannot do so; they have only the IP number of the sending computer. An IP number is sometimes called an IP address because it is just that: an address. It serves as a locator declaring the place of a particular piece of electronic equipment so that electronic data may be sent to it, and is usually represented as a series of four numbers between 0 and 255. See, e.g., America Online v. Huang, 106 F.Supp.2d 848, 851 (E.D.Va.2000). (For example, 168.122.128.38 is one of the IP addresses allegedly used by a defendant in this case. See Doe List, Ex. A to Compl. (docket no. 07-cv-10834, document #1).)

      23

      But relatively few personal computer users have a specific, set IP address, called a "static" address. Instead, many use their computers to connect to a network provided by their ISP, which uses a certain range of IP addresses — say, all of the numbers between 168.122.1.x to 168.122.100.x. The ISP assigns an address within its range to the user's computer for the user's session, allocating the numbers within its range on an as-needed basis. This process is known as "dynamic" addressing. See, e.g., H. Brian Holland, Tempest in a Teapot or Tidal Wave? Cybersquatting Rights & Remedies Run Amok, 10 J. Tech. L. & Pol'y 301, 305 & nn. 13-18 (2005). This makes the plaintiffs' task of discovering the identity of a particular infringer more difficult. The IP address that they have noted as belonging to a particular user's computer may be assigned to a different user's computer in short order. See id.

      24

      However, the plaintiffs are not without leads. The range in which the IP address is assigned may reveal the user's ISP. See Linares Decl. at 7, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5); see also, e.g., Network-Tools.com, http://network-tools. com/default.asp (last visited Mar. 31, 2008) (providing such a service). And ISPs generally keep logs of which IP address is assigned to which user — although it may purge those logs after a certain period of time, which was one of the key facts relied [161] upon by the Court in granting expedited discovery. See Linares Decl. at 9, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5). Thus, the plaintiffs seek, though their subpoena, the opportunity to place their list of IP addresses side-by-side with the ISP's user logs to determine who was using the IP address at the moment of the alleged infringement. The ISPs, particularly colleges and universities, appropriately decline to reveal the identities of their users without a court order. Therefore, the plaintiffs bring "John Doe" lawsuits and seek discovery in order to determine the real identities of the defendants.

      25
      B. Procedural History
      26

      The plaintiff record companies have brought approximately forty "John Doe" cases in this Court, many-perhaps mostdesignating more than one defendant, grouped by ISP.[6] In each case, the Court has granted expedited discovery and leave to subpoena the ISP, recognizing that the plaintiffs' rights may be irreparably and unfairly prejudiced unless they are allowed to seek the defendants' identities. See, e.g., Order re: Expedited Discovery (Dec. 9, 2004) (document #7). Simultaneously, however, the Court has recognized that the defendants should have the opportunity to combat the subpoena if they desire to do so. Therefore, the Court has ordered that the ISP provide the individual users with notice of the lawsuit and a short statement of some of their rights before revealing their identities to the plaintiffs. Furthermore, the ISP may not respond to the subpoena for 14 days after each defendant has received notice. See id.; see also Appendix A (Court-Directed Notice).

      27

      Simultaneous with the grant of expedited discovery, the Court has consolidated each "John Doe" case with the first, London-Sire, No. 04-cv-12434. The cases involve similar, even virtually identical, issues of law and fact: the alleged use of peer-to-peer software to share copyrighted sound recordings and the discovery of defendants' identities through the use of a Rule 45 subpoena to their internet service provider. Consolidating the cases ensures administrative efficiency for the Court, the plaintiffs, and the ISP, and allows the defendants to see the defenses, if any, that other John Does have raised.[7]

      28

      In view of the $750 statutory minimum damages per song, 17 U.S.C. § 504(c)(2), most defendants choose to settle. The approximate settlement range appears to be $3,000 to $6,000 per defendant, a considerable amount of money, particularly to the college students who have been caught in the plaintiffs' nets.

      29

      Only three of the defendants have elected to fight the subpoena. Two are Doe defendants from the case originally titled Arista Records LLC v. Does 1-21, No. 07cv-10834 (consolidated on May 8, 2007). In that case, the plaintiffs sought discovery from Boston University as the defendants' ISP, and the two Does[8] separately moved [162] to quash the subpoena. Each primarily asserts that the plaintiffs have failed to state a sufficient claim for copyright infringement. See Mem. Supp. Mot. Quash (document #104); Mot. Quash (document #115). Because the two motions are substantively similar, the Court will address them together.

      30

      The third defendant to move to quash the subpoena is Doe no. 12 from Warner Brothers Records, Inc. v. Does 1-17, No. 07-cv-10924 (consolidated on May 18, 2007). The Internet Service Provider at issue is the University of Massachusetts. Doe no. 12 argues that she is not subject to personal jurisdiction in Massachusetts. See Mot. Quash (document #113).

      31

      The Court held a hearing on the Motions to Quash on January 28, 2008. Shortly thereafter, the Court granted the Electronic Frontier Foundation ("EFF") leave to file an amicus brief supporting the Motion to Quash. See Electronic Order (Feb. 6, 2008). Its brief principally treats the First Amendment implications of the subpoena[9] and the proper sweep of the copyright laws. The Court thanks the amicus for its participation.

      32

      The Court will examine first the motions of the two Does in the Boston University case, which argue that the subpoena ought to be denied on substantive grounds. It will then turn to the University of Massachusetts Doe's argument that the subpoena should be quashed for lack of personal jurisdiction.

      33
      II. LEGAL STANDARDS
      34

      This case is still at a preliminary stage: The plaintiffs seek to learn the identities of the defendants so that, the issue may be properly joined on the merits. Under Federal Rule 45, the Court "shall quash or modify the subpoena if it ... requires disclosure of privileged or other protected matter and no exception or' waiver applies." Fed.R.Civ.P. 45(c)(3)(A)(iii). The substantive inquiry is similar to the one necessary for issuing a protective order. See Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1322-23 (Fed.Cir.1990). The party requesting that the subpoena be quashed must show good cause for protection by specifically demonstrating that disclosure will cause a clearly defined and serious harm. See Anderson v. Cryovac, Inc., 805 F.2d 1, 7-8 (1st Cir. 1986); Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir.1995). The Court balances the harm of disclosure against the harm to the other party of restricting discovery.

      35

      The Court must therefore first consider whether the defendants' anonymity is entitled to privilege or other protection. If so, it will turn to the balancing test necessary under Rule 45(c)(3).

      36
      III. THE DEFENDANTS' ANONYMITY IS ENTITLED TO SOME FIRST AMENDMENT PROTECTION
      37

      The motion to quash raises two First Amendment issues-the right to anonymous speech and the right to whatever creative activity is involved in the defendants' acts. While the Court recognizes some limited First Amendment protection here, that protection only goes so far as to subject the plaintiffs' subpoenas to somewhat heightened scrutiny. Other courts have [163] reached the same conclusion. See, e.g., Sony Music Entm't v. Does 1-40, 326 F.Supp.2d 556, 564 (S.D.N.Y.2004).

      38

      As the Supreme Court has repeatedly held, the First Amendment protects anonymous speech. The right to anonymity is an important foundation of the right to speak freely. Indeed, "[a]nonymity is a shield from the tyranny of the majority. It ... exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular: to protect unpopular individuals from retaliation — and their ideas from suppression — at the hand of an intolerant society." Mclntyre v. Ohio Elections Comm'n, 514 U.S. 334, 357, 115 S.Ct. 1511, 131 L.Ed.2d 426 (1995). See also NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 460-62, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958) (discussing generally the importance of anonymity). Still, the anonymous activity that is being protected must be "speech."

      39

      Copyright infringement, per se, is clearly not speech entitled to First Amendment protection. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 555-57, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (discussing the First Amendment and copyright, and examining whether fair use doctrine applied to alleged act of copyright infringement). But there are some creative aspects of downloading music or making it available to others to copy: the value judgment of what is worthy of being copied; the association of one recording with another by placing them together in the same library; the self-expressive act of identification with a particular recording; the affirmation of joining others listening to the same recording or expressing the same idea. See Rebecca Tushnet, Copy This Essay: How Fair Use Doctrine Harms Free Speech and How Copying Serves It, 114 Yale L.J. 535, 545-47, 562-81 (2004); Jack M. Balkin, Digital Speech and Democratic Culture: A Theory of Freedom of Expression for the Information Society, 79 N.Y.U. L.Rev. 1, 45-46 (2004); cf. Harper & Row, 471 U.S. at 547, 105 S.Ct. 2218 (noting that compilation of pure fact "entails originality" in selection and ordering of the facts). Thus, while the aspect of a file-sharer's act that is infringing is not entitled to First Amendment protection, other aspects of it are. Cf, e.g., Schad v. Mount Ephraim, 452 U.S. 61, 66, 101 S.Ct. 2176, 68 L.Ed.2d 671 (1981) ("[N]ude dancing is not without its First Amendment protections from official regulation."); Eugene Volokh, Crime-Facilitating Speech, 57 Stan. L.Rev. 1095 (2005) (arguing that crime-facilitating speech has "some First Amendment value").

      40

      Nevertheless, the fact that there is First Amendment value associated with sharing music over a peer-to-peer network does not insulate the defendants from liability. Rather, the minimal First Amendment protection their activity garners[10] entitles them to some scrutiny of a discovery request that uses the power of the Court to threaten the privilege.[11]

      41
      [164] IV. APPLICATION OF THE BALANCING TEST
      42

      As to how to balance the harms, the Court finds persuasive the approach of the Southern District of New York in Sony Music, 326 F.Supp.2d 556. In that case, the court reviewed the leading cases on subpoenas seeking disclosure of defendants' identities from their ISP. It isolated five important factors:[12]

      43

      (1) a concrete showing of a prima facie claim of actionable harm, (2) specificity of the discovery request, (3) the absence of alternative means to obtain the subpoenaed information, (4) a central need for the subpoenaed information to advance the claim, and (5) the party's expectation of privacy.

      44

      Id. at 564-65 (citations omitted).[13] The first factor ensures that the defendants cannot pierce the defendants' anonymity based on an unsupported or legally insufficient pleading. The second, third, and fourth factors ensure that the subpoena is narrowly tailored to reveal no more information about the defendants than necessary, and to ensure that third parties who are not accused of infringement remain anonymous. The fifth factor considers the defendants' expectations of privacy, including whatever service arrangement they might have with their ISP.

      45

      The Court considers each factor in turn.

      46
      A. Factor One: Prima Facie Claim of Actionable Harm
      47

      This factor has three parts. First, the plaintiffs must assert an "actionable harm," a claim upon which relief can be granted. Second, the claim must be supported by prima facie evidence. That standard does not require the plaintiffs to prove their claim. They need only proffer sufficient evidence that, if credited, would support findings in their favor on all facts essential to their claim. See Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir.2007) (discussing prima facie standard for personal jurisdiction). Finally, both the claim and the prima facie evidence supporting it must be "concrete." That is, they must be [165] reasonably grounded in allegations of a specific act of infringement.

      48

      The movants and the EFF argue that the plaintiffs have failed to meet their burden under each part of the test. See Mot. Quash at 3-7 (document #104); Mot. Quash at 4-10 (document #115); EFF Br. at 9-24 (document #152). Their arguments involve important and difficult questions of copyright law. Ultimately, however, the Court finds that the plaintiffs have satisfied this factor. Considering as true the facts they have pleaded, and drawing all reasonable inferences in their favor, the plaintiffs have made a concrete showing of a prima facie case of an actionable harm.

      49
      1. Whether the Plaintiffs Have Asserted a Claim Upon Which Relief Can Be Granted
      50

      A claim for copyright infringement has two elements. First, the plaintiffs must demonstrate that they hold a valid copyright (an issue the defendants do not contest.) Second, the plaintiff must show that the defendant violated of one of the exclusive rights held by a copyright owner. See T-Peg, Inc. v. Vermont Timber Works, Inc., 459 F.3d 97, 108 (1st Cir.2006); see also Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 360-61, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); 17 U.S.C. § 501(a). The plaintiffs claim that "each [defendant, without the permission or consent of [p]laintiffs, has ... downloaded] or distribut[ed] to the public" music files to which the plaintiff holds the copyright. Compl. at 5 (docket no. 07-cv-10834, document #1). Two rights reserved to the copyright holder are at issue in this case: the right "to reproduce the copyrighted work in copies or phonorecords," 17 U.S.C. § 106(1), and the right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending," id. § 106(3).

      51

      The movants and the amicus present two broad arguments, each of which requires the Court to consider the scope of a copyright holder's exclusive rights under the statutes quoted above. First, they contend that the copyright laws require an actual dissemination of copyrighted material; merely making copyrighted material available for another person to copy, they argue, is only an attempt at infringement — which is not actionable. Mem. Supp. Mot. Quash at 4-6 (document #104); Mot. Quash at 7 (document #115); EFF Br. at 10-15 (document #152). Second, they contend that the scope of the rights given to copyright owners by § 106 is limited by the definition of "phonorecords" as "material objects" in 17 U.S.C. § 101.[14] In their view, the copyright owner's rights are limited to tangible, physical objects, and purely electronic transmissions over the internet fall outside those rights.[15] Suppl. Mem. L. Supp. Mot. Quash at 4-6 (document #149); Mot. Quash at 7 (document #115); EFF Br. at 15-24 (document #152). Both of these broad arguments question whether the plaintiffs have alleged a legally cognizable [166] harm under the copyright statutes. If they have not, then the subpoena must be quashed.

      52
      a. Whether the Copyright Holder's Right Extends Only to Actual Distributions
      53

      The first question the Court must address is whether the distribution right under 17 U.S.C. § 106(3) requires an actual dissemination to constitute an infringement.[16] It is an important issue, determining in part how to evaluate the proffered evidence in this case. MediaSentry, posing as just another peer-to-peer user, can easily verify that copyrighted material has been made available for download from a certain IP address. Arguably, though, MediaSentry's own downloads are not themselves copyright infringements because it is acting as an agent of the copyright holder, and copyright holders cannot infringe their own rights.[17] If that argument is accepted, MediaSentry's evidence cannot alone demonstrate an infringement.

      54

      The plaintiffs suggest two reasons why an actual distribution might not be required. First, the statute reserves to the copyright owner the right "to do and to authorize ... [the distribution of] copies or phonorecords of the copyrighted work to the public." § 106(3) (emphasis added). The language appears to grant two distinct rights: "doing" and "authorizing" a distribution. Making the copyrighted material available over the internet might constitute an actionable "authorization" of a distribution. Second, if mere authorization is not enough, the plaintiffs argue that in appropriate circumstances — including these — "making available" copyrighted material is sufficient to constitute an act of actual distribution. Neither argument has merit.

      55

      The First Circuit has squarely considered and rejected the proposition that copyright liability arises where the defendant authorized an infringement, but no actual infringement occurred. See Venegas-Hernandez v. Ass'n De Compositores & Editores de Musica Latinoamericana, 424 F.3d 50, 57-58 (1st Cir.2005). It noted that Congress' intent in adding "authorize" to the statute was to "avoid any questions as to the liability of contributory infringers." Id. at 58 (internal quotation marks omitted) (quoting H.R. Rep. 94-1476 ("House Report") at 52 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5674). Authorization is sufficient to give rise to liability, but only if an infringing act occurs after the authorization. See id. at 59; see also Latin Am. Music Co. v. The Archdiocese of San Juan of the Roman Catholic & Apostolic Church, 499 F.3d 32, 46 (1st Cir.2007) (citing and applying Venegas-Hernandez).

      56

      Thus, to constitute a violation of the distribution right under § 106(3), the defendants' actions must do more than "authorize" a distribution; they must actually "do" it. The Court therefore moves to [167] the plaintiffs' second argument: Merely making copyrighted works available to the public is enough where, as in this case, the alleged distributor does not need to take any more affirmative steps before an unauthorized copy of the work changes hands. Other courts have split over whether that is a valid reading of the statute. Compare Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997) (holding that making copyrighted material available is sufficient to constitute a distribution), and Arista Records LLC v. Greubel, 453 F.Supp.2d 961, 969-70 (N.D.Tex.2006) (citing and following Hotaling), and Warner Bros. Records, Inc. v. Payne, No. W-06-CA051, 2006 WL 2844415, at *3-*4 (W.D.Tex. July 17, 2006) (same), with In re Napster, Inc. Copyright Litig., 377 F.Supp.2d 796, 802-05 (N.D.Cal.2005) (criticizing Hotaling as being "contrary to the weight of [other] authorities" and "inconsistent with the text and legislative history of the Copyright Act of 1976"), and Natl Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 434 (8th Cir.1993) (stating that infringement of the distribution right requires the actual dissemination of copies or phonorecords).

      57

      To suggest that "making available" may be enough, the plaintiffs rely primarily on the Fourth Circuit's decision in Hotaling.[18] In that case, a library had an unauthorized copy of a book, which it "made available" to the public; the defendant argued that without a showing that any member of the public actually read the book, it could not be liable for "distribution." See id. at 201-02, 203. The district court agreed and granted summary judgment to the defendant. The Fourth Circuit reversed:

      58

      When a public library adds a work to its collection, lists the work in its index or catalog system, and makes the work available to the borrowing or browsing public, it has completed all the steps necessary for distribution to the public. At that point, members of the public can visit the library and use the work. Were this not to be considered distribution within the meaning of § 106(3), a copyright holder would be prejudiced by a library that does not keep records of public use, and the library would unjustly profit by its own omission.

      59

      Id.; see also id. at 204.

      60

      The plaintiffs contend that this case is analogous to Hotaling,[19] and suggest [168] that the Court should reach the same conclusion as the Fourth Circuit. But the EFF correctly points out a lacuna in the Fourth Circuit's reasoning. See EFF Br. at 15 (citing William F. Patry, 4 Patry on Copyright §§ 13:9, 13:11 (2007)). Merely because the defendant has "completed all the steps necessary for distribution" does not necessarily mean that a distribution has actually occurred.[20] It is a "distribution" that the statute plainly requires. See 17 U.S.C. § 106(3).

      61

      The plaintiffs encourage the Court to adopt a much more capacious definition of "distribution." They argue that the Supreme Court has held that the "terms `distribution' and `publication' ... [are] synonymous in the Copyright Act." Pls.' Resp. Opp. Amicus Curiae Br. at 2-3 (document #157) (citing Harper & Row, 471 U.S. at 552, 105 S.Ct. 2218).[21] They further note, correctly, that the statutory definition of publication can include offers to distribute. See 17 U.S.C. § 101. And sharing music files on a peer-to-peer network does, at least arguably, constitute an offer to distribute them.

      62

      While some lower courts have accepted the equation of publication and distribution, see Greubel, 453 F.Supp.2d at 969; In re Napster, 377 F.Supp.2d at 803, the plaintiffs' argument mischaracterizes the Supreme Court's decision in Harper & Row. The Supreme Court stated only that § 106(3) "recognized for the first time a distinct statutory right of first publication," and quoted the legislative history as establishing that § 106(3) gives a copyright holder "the right to control the first public distribution of an authorized copy ... of his work." Harper & Row, 471 U.S. at 552, 105 S.Ct. 2218 (internal quotation marks omitted) (quoting House Report at 62, reprinted in 1976 U.S.C.C.A.N. at 5675) (alteration in Harper & Row). That is a far cry from squarely holding that publication and distribution are congruent.

      63

      To the contrary, even a cursory examination of the statute suggests that the terms are not synonymous. "Distribution" is undefined in the copyright statutes. "Publication," however, is defined, and incorporates "distribution" as part of its definition:

      64

      'Publication' is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display [169] of a work does not of itself constitute publication.

      65

      17 U.S.C. § 101. By the plain meaning of the statute, all "distributions ... to the public" are publications. But not all publications are distributions to the public — the statute explicitly creates an additional category of publications that are not themselves distributions. For example, suppose an author has a copy of her (as yet unpublished) novel. If she sells that copy to a member of the public, it constitutes both distribution and publication. If she merely offers to sell it to the same member of the public, that is neither a distribution nor a publication. And if the author offers to sell the manuscript to a publishing house "for purposes of further distribution," but does not actually do so, that is a publication but not a distribution.

      66

      Plainly, "publication" and "distribution" are not identical. And Congress' decision to use the latter term when defining the copyright holder's rights in 17 U.S.C. § 106(3) must be given consequence. In this context, that means that the defendants cannot be liable for violating the plaintiffs' distribution right unless a "distribution" actually occurred.

      67

      But that does not mean that the plaintiffs' pleadings and evidence are insufficient. The Court can draw from the Complaint and the current record a reasonable inference in the plaintiffs' favor — that where the defendant has completed all the necessary steps for a public distribution, a reasonable fact-finder may infer that the distribution actually took place. As in Hotaling, the defendants have completed the necessary steps for distribution, albeit electronic: Per the plaintiffs' pleadings, each individual Doe defendant connected to the peer-to-peer network in such a way as to allow the public to make copies of the plaintiffs' copyrighted recordings. See Compl. at 5 (docket no. 07-cv-10834, document #1). Through their investigator, the plaintiffs have produced evidence that the files were, in fact, available for download. They have also alleged that sound recordings are illegally copied on a large scale, supporting the inference that the defendants participated in the peer-topeer network with the intent that other users could download from the defendants copies of the plaintiffs' copyrighted material. See Linares Decl. at 3-4, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5). At least at this stage of the proceedings, that is enough. The plaintiffs have pled an actual distribution and provided some concrete evidence to support their allegation.

      68
      b. Whether the Distribution Right Is Limited to Physical, Tangible Objects
      69

      Next, the movants and the EFF contend that the distribution right under 17 U.S.C. § 106(3) is limited to physical, tangible objects. By its terms, the distribution right only extends to distributions of "phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending." In turn, 17 U.S.C. § 101 defined "phonorecords" as "material objects in which sounds ... are fixed." The movants and the EFF focus on the phrase "material object," as well as the meaning of "sale or other transfer," and conclude that purely electronic file sharing does not fall within the scope of the right. If their argument is accepted, it would mean that the plaintiffs' Complaint is legally insufficient to allege a violation of the distribution right protected by§ 106(3).

      70

      The movants' argument is sweeping, carrying substantial implications for a great deal of internet commerce — any involving computer-to-computer electronic transfers of information. Indeed, this case is an exemplar. The plaintiffs have not [170] alleged a physical distribution. To the contrary, it is clear that their harm comes from the purely electronic copying of music files. See Linares Decl. at 3-4, Ex. A to PL Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5). After carefully considering the parties' and the EFF's arguments, the Court concludes that § 106(3) confers on copyright owners the right to control purely electronic distributions of their work.

      71

      As noted above, 17 U.S.C. § 106(3) applies to the distribution of "phonorecords." And "phonorecords" are defined in full as follows:

      72

      'Phonorecords' are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term`phonorecords' includes the material object in which the sounds are first fixed.

      73

      17 U.S.C. § 101. The movants and the EFF contend that the electronic distribution, if it occurred, did not involve the "distribution" of a material object "by sale or other transfer of ownership, or by rental, lease or lending," as §§ 106(3) and 101 require. The argument has two closely related prongs-first, that no material object actually changed hands, and second, that even if it did, it was not through one of the methods of transfer enumerated in the statute.

      74

      Each of those arguments relies on an overly literal definition of "material object," and one that ignores the phrase's purpose in the copyright statutes. Congress intended for the copyright owner to be able to control the public distribution of items that can reproduce the artist's sound recording. It makes no difference that the distribution occurs electronically, or that the items are electronic sequences of data rather than physical objects.

      75

      Before squarely addressing the parties' arguments, however, the Court briefly revisits an important foundational issue — whether the electronic files at issue here can constitute "material objects" within the meaning of the copyright statutes. Doing so will help the Court explain the scope of the distribution right and frame the application of the Copyright Act to an electronic world.

      76
      (1) Electronic Files Are Material Objects
      77

      Understanding Congress' use of "material object" requires returning to a fundamental principle of the Copyright Act of 1976, Pub.L. No. 94-553, 90 Stat. 2541 (codified as amended in 17 U.S.C). Congress drew "a fundamental distinction between the`original work' which is the product of`authorship' and the multitude of material objects in which it can be embodied. Thus, in the sense of the [Copyright Act], a`book' is not a work of authorship, but is a particular kind of`copy.'" House Report at 53, reprinted in 1976 U.S.C.C.A.N. at 5666.[22]

      78

      The Copyright Act thus does not use materiality in its most obvious sense — to mean a tangible object with a certain heft, like a book or compact disc. Rather, [171] it refers to materiality as a medium in which a copyrighted work can be "fixed." See 17 U.S.C. § 101 ("A work is`fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord, ... is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."). As the Second Circuit cogently explained, "[t]he sole purpose of § 101`s definitions of the words `copies' and`fixed' is to ... define the material objects in which copyrightable and infringing works may be embedded and to describe the requisite fixed nature of that work within the material object." Matthew Bender & Co., Inc. v. West Pub. Co., 158 F.3d 693, 702 (2d Cir.1998). The opposite is true as well. The sole purpose of the term "material object" is to provide a reference point for the terms "phonorecords" and "fixed."[23]

      79

      This analysis is borne out in other aspects of the Copyright Act — for example, the Act's abrogation of a common-law presumption regarding the sale of copyrights. At common-law, if an author sold her manuscript, the sale included the author's copyrights in the original work unless the sale agreement specifically excepted them. See, e.g., Yardley v. Houghton Mifflin Co., 108 F.2d 28, 30-31 (2d Cir.1939); Pushman v. New York Graphic Soc'y, Inc., 287 N.Y. 302, 306-07, 39 N.E.2d 249 (1942). Congress specifically abolished that presumption by distinguishing between the abstract, original work on the one hand, which is the source of the copyrights, and its material incarnation on the other, which is protected by the copyrights. See 17 U.S.C. § 202; House Report at 53, 123, reprinted in 1976 U.S.C.C.A.N. at 5666, 5739-40. Because the two are different, the author can freely sell a copy without disturbing the copyrights.

      80

      Thus, any object in which a sound recording can be fixed is a "material object." That includes the electronic files at issue here. When a user on a peer-to-peer network downloads a song from another user, he receives into his computer a digital sequence representing the sound recording. That sequence is magnetically encoded on a segment of his hard disk (or likewise written on other media.) With the right hardware and software, the downloader can use the magnetic sequence to reproduce the sound recording. The electronic file (or, perhaps more accurately, the appropriate segment of the hard disk) is therefore a "phonorecord" within the meaning of the statute. See § 101 (defining "fixed" and "phonorecords"); Matthew Bender & Co., 158 F.3d at 703-04. See also New York Times Co. v. Tasini 533 U.S. 483, 490-91, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001) (appearing to assume that electronic-only distributions constitute material objects); Stenograph LLC v. Bossard Assocs., Inc., 144 F.3d 96, 100 (D.C.Cir.1998) (holding that installation [172] of software onto a computer results in "copying"); Working Group on Intellectual Property Rights, Intellectual Property and the National Information Infrastructure 213 (1995), available at http://www. uspto.gov/go/com/doc/ipnii/ipnii.pdf (noting that electronic transmissions implicate copyright holders' rights and strongly implying that electronic files constitute "material objects").

      81

      With that background, the Court turns to the movants' and the EFF's arguments.

      82
      (2) The Transmission of an Electronic File Constitutes a "Distribution" Within the Meaning of § 106(3)
      83

      The movants and the EFF present two reasons why the Court should decline to find that purely electronic transmissions are a violation of the distribution right. First, they note that the distribution right is limited to "phonorecords of the copyrighted work," 17 U.S.C. § 106(3), and that part of the definition of "phonorecords" is that they are "material objects," id. § 101. They focus on the phrase "material objects" to suggest that a copyright owner's distribution right only extends to "tangible" objects. See EFF Br. at 15-16. Because there was no exchange of tangible objects in this case — no "hand-to-hand" exchange of physical things — they argue that the plaintiffs' distribution right was not infringed by the defendants' actions.

      84

      The movants' second argument focuses on a different phrase in § 106(3): "distribution" is limited to exchanges "by sale or other transfer of ownership, or by rental, lease, or lending." They note, correctly, that an electronic download does not divest the sending computer of its file, and therefore does not implicate any ownership rights over the sound file held by the transferor. Therefore, they conclude, an electronic file does not fit within the defined limits of the distribution right.

      85

      The movants' two arguments appear to be analytically distinct, but in fact each is the obverse of the other: Any time the transfer of copyrighted material takes place electronically, both contentions at least potentially come into play. Electronic transfers generally involve the reading of data at point A and the replication of that data at point B. Whenever that is true, one person might be stationed at point A and another at point B, obviating the need for a "hand-to-hand" transfer. Similarly, because the data at point A is not necessarily destroyed by the process of reading it, the person at point A might retain ownership over the original, forestalling the need for a "sale or other transfer of ownership," as stated in § 106(3).

      86

      Clearly, that description accurately characterizes electronic file transfers. The internet makes it possible for a sending computer in Boston and a downloader in California to communicate quickly and easily; the physical distance between the two, as well as the purely electronic nature of the transfer, makes the movants' argument attractive. But the "point A-to-point B" characterization is no less apt for an older technology, such as a fax transfer over a phone line. And it also applies to cases in which point A and point B are very close together — even in the same room.[24] The movants' argument thus pivots on the nature of the transfer, in which the copyrighted work is read by a machine, translated into data, transmitted (in data form), and re-translated elsewhere.

      87

      [173] After carefully considering the parties' and the EFF's arguments, the Court concludes that 17 U.S.C. § 106(3) does reach this kind of transaction. First, while the statute requires that distribution be of "material objects," there is no reason to limit "distribution" to processes in which a material object exists throughout the entire transaction — as opposed to a transaction in which a material object is created elsewhere at its finish. Second, while the statute addresses ownership, it is the newly minted ownership rights held by the transferee that concern it, not whether the transferor gives up his own.

      88

      The first point requires that the Court closely examine the scope of the distribution right under § 106(3). The statute provides copyright owners with the exclusive right "to distribute ... phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. § 106(3). In turn, phonorecords are defined in part as "material objects in which sounds ... are fixed by any method." Id. § 101. And as discussed above, in the sense of the Copyright Act, "material objects" should not be understood as separating tangible copies from non-tangible copies. Rather, it separates a copy from the abstract original work and from a performance of the work. See supra Section IV.A.l.b.(1).

      89

      Read contextually, it is clear that this right was intended to allow the author to control the rate and terms at which copies or phonorecords of the work become available to the public. In that sense, it is closely related to the reproduction right under § 106(1), but it is not the same. As Congress noted, "a printer [who] reproduces copies without selling them [and] a retailer [who] sells copies without having anything to do with their reproduction" invade different rights. House Report at 61, reprinted in 1976 U.S.C.C.A.N. at 5675. Under § 106(3),

      90

      [T]he copyright owner [has] the right to control the first public distribution of an authorized copy or phonorecord of his work, whether by sale, gift, loan, or some rental or lease arrangement. Likewise, any unauthorized public distribution of copies or phonorecords that were unlawfully made [is] an infringement. As section 109 makes clear, however, the copyright owner's rights under section 106(3) cease with respect to a particular copy or phonorecord once he has parted with ownership of it.

      91

      House Report at 62, reprinted in 1976 U.S.C.C.A.N. at 5675-76. Clearly, § 106(3) addresses concerns for the market for copies or phonorecords of the copyrighted work, and does so more explicitly and directly than the other provisions of § 106.[25]

      92

      An electronic file transfer is plainly within the sort of transaction that § 106(3) was intended to reach. Indeed, electronic transfers comprise a growing part of the legitimate market for copyrighted sound recordings. See, e.g., Verne Kopytoff & [174] Ellen Lee, Tech Chronicles, S.F. Chron., Feb. 27, 2008, at CI (reporting that through its iTunes Store, which operates exclusively via electronic file transfer, Apple has sold more than 4 billion songs to 50 million customers).[26] What matters in the marketplace is not whether a material object "changes hands," but whether, when the transaction is completed, the distributee has a material object. The Court therefore concludes that electronic file transfers fit within the definition of "distribution" of a phonorecord.[27]

      93

      For similar reasons, the Court concludes that an electronic file transfer can constitute a "transfer of ownership" as that term is used in § 106(3). As noted above, Congress wrote § 106(3) to reach the "unauthorized public distribution of copies or phonorecords that were unlawfully made." House Report at 62, reprinted in 1976 U.S.C.C.A.N. at 5676. That certainly includes situations where, as here, an "original copy" is read at point A and duplicated elsewhere at point B.[28] Since the focus of § 106(3) is the ability of the author to control the market, it is concerned with the ability of a transferor to create ownership in someone else — not the transferor's ability simultaneously to retain his own ownership.

      94

      This conclusion is supported by a comparison to the "first sale" doctrine, codified at 17 U.S.C. § 109. The "first sale" doctrine provides that once an author has released an authorized copy or phonorecord of her work, she has relinquished all control over that particular copy or phonorecord. See id. § 109(a); House Report at 79-80, reprinted in 1976 U.S.C.C.A.N. at 5693-94. The person who bought the copy — the "secondary" purchaser — may sell it to whomever she pleases, and at the terms she directs. The market implications are clear. The author controls the volume of copies entering the market, but once there, he has no right to control their secondary and successive redistribution. To be sure, the author retains a certain degree of control over the secondary sale, at least to the extent that he can control that redistributions through the terms in the original sales contract. But he must bring a contract suit, not an infringement action. See id. at 79, reprinted in 1976 U.S.C.C.A.N. at 5693. See also, e.g., Am. Int'l Pictures, Inc. v. Foreman, 576 F.2d 661, 664 (5th Cir.1978) (holding that where copyrighted material is resold subject to restrictions, and the secondary buyer violates those restrictions, no copyright infringement action lies). More often and more practically, however, the author will simply price the new copies or phonorecords to reflect the work's value in a secondary market. See, e.g., Vincent v. City Colleges of Chicago, 485 F.3d 919 (7th Cir.2007) (citing Stanley M. Besen & Sheila N. Kirby, Private Copying, Appropriability & Optimal, Copyright Royalties, 32 J.L. & Econ. 255 (1989)).

      95

      Conversely, where ownership is created through an illegal copy, the first [175] sale doctrine does not provide a defense to a distribution suit. See Quality King Distrib.. Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135, 148, 118 S.Ct. 1125, 140 L.Ed.2d 254 (1998). The distinction makes sense: where ownership is created through an illegal copy, the copyright holder has never had the chance to exercise his market rights over the copy. That is precisely the situation here.[29]

      96
      2. Whether the Plaintiffs Have Adduced Prima Facie Evidence of Infringement
      97

      The second sub-element of the Sony Music test's first factor asks whether the plaintiffs have presented prima facie evidence of infringement. See 326 F.Supp.2d at 564. Just as police cannot invade the privacy of a home without some concrete evidence of wrongdoing inside, plaintiffs should not be able to use the Court to invade others' anonymity on mere allegation. By requiring plaintiffs to make out a prima facie case of infringement, the standard requires plaintiffs to adduce evidence showing that their complaint and subpoena are more than a mere fishing expedition. The plaintiffs need not actually prove their case at this stage; they need only present evidence adequate to allow a reasonable fact-finder to find that each element of their claim is supported. See Adelson, 510 F.3d at 48.' They have done so.

      98

      The first element of a copyright infringement suit is a valid copyright. See T-Peg, 459 F.3d at 108. The plaintiffs have asserted, and the defendants have not challenged, that they hold the copyright to each of the sound recordings incorporated into the complaint. See Compl. at 4-5 (docket no. 07-cv-10834, document #1).

      99

      The second element is violation of one of the copyright holder's exclusive rights. See T-Peg, 459 F.3d at 108. The movants and the EFF argue that because the plaintiffs have not demonstrated an actual infringement, they have not asserted an actual violation.[30] They reason that the [176] investigator downloading the files from the defendants' computers was an agent of the plaintiffs, and plaintiffs cannot infringe their own copyrights. See Mem. Supp. Mot. Quash at 4-6 (document #149); EFF Br. at 12 n. 8 (document #152).

      100

      The Court need not now decide the precise nature of the evidence Media-Sentry gathered. While the parties dispute whether an investigator's download can be a perfected infringement, the downloads are also relevant, as described above, for another purpose: demonstrating that such infringement was technically feasible, thereby demonstrating that distributions could occur.

      101

      The plaintiffs have alleged that each defendant shared many, many music files — at least 100, and sometimes almost 700. See Ex. A to Compl. (docket no. 07-cv-10834, document #1) (providing information for each Doe, including number of copyrighted music files shared); Linares Decl. at 4, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5) (attesting to the veracity of the information contained in Exhibit A to the Complaint).[31] As noted above, that evidence supports an inference that the defendants participated in the peer-to-peer network precisely to share copyrighted files. The evidence and allegations, taken together, are sufficient to allow a statistically reasonable inference that at least one copyrighted work was downloaded at least once. That is sufficient to make out a prima facie case for present purposes.[32] Discovery may well reveal other factors relevant to the statistical inference, such as the length of time the defendant used peer-to-peer networks.

      102

      The plaintiffs have satisfied their burden for a prima facie case. As noted above, merely exposing music files to the internet is not copyright infringement. The defendants may still argue that they did not know that logging onto the peer-topeer network would allow others to access these particular files, or contest the nature of the files, or present affirmative evidence rebutting the statistical inference that downloads occurred. But these are substantive defenses for a later stage. Plaintiffs need not prove knowledge or intent in order to make out a prima facie case of infringement. See Feist, 499 U.S. at 361, [177] 111 S.Ct. 1282; Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1160 n. 19 (1st Cir.1994). As noted above, they are not required to win their case in order to serve the defendants with process.

      103
      3. Whether the Plaintiffs Have Tied Their Allegations and Evidence to Specific Acts of Infringement
      104

      The third sub-element of the first Sony Music factor is that the allegations be "concrete" — that they be tied to specific acts of infringement. See 326 F.Supp.2d at 564. The movants argue that the plaintiffs have failed to do so. Mot. Quash at 7-10 (document #115). In considering this question, the Court must keep in mind that transfers on a peer-to-peer network are not observable by outside users. To show infringement,[33] the plaintiffs are obliged to build a chain of inferences. The Court finds that, on this record, the chain is adequately anchored to specific allegations to satisfy this sub-element.

      105

      The plaintiffs have alleged that each of the defendants used the peer-to-peer network to distribute copies of specific sound recordings, detailed in Exhibit A to the Complaint. For instance, Doe no. 21, one of the movants here, is alleged to have distributed the song "Clocks," by the artist Coldplay. Capitol Records holds the copyright to that song. See Ex. A to Compl. (docket no. 07-cv-10834, document #1). The plaintiffs allege that the downloading creates a precise copy of the song. And Doe no. 21 is alleged to have "continuously used, and [to] continue[] to use," a peerto-peer network. Compl. at 5 (docket no. 07-cv10834, document #1). Finally, the fact of MediaSentry's download shows that it was, in fact, possible to download "Clocks" from Doe no. 21's computer as of 6:56 a.m. on January 25, 2007. Thus, the plaintiffs have alleged the specific content at issue; the essential nature of the infringement of that content; a rough time period in which the infringement took place; and that at a certain time, the defendant had taken every step necessary for an infringement of Capitol Records's rights in "Clocks" to occur.

      106

      While the plaintiffs must eventually prove that an actual infringement of those rights occurred, they may certainly do so through circumstantial proof and inference. And drawing a reasonable inference in the plaintiffs' favor, one did occur. The plaintiffs' current showing is adequate to satisfy both Federal Rule of Civil Procedure 8 and the more exacting standard of Sony Music — even if they could not directly observe, and thus allege, an infringing act. See, e.g., 5 Patry, Patry on Copyright, §§ 19:3 (listing necessary elements to plead a copyright claim), 19:10 (discussing pleading acts of infringement with specificity).

      107
      B. Factors Two, Three, and Four: Need and Narrow Tailoring
      108

      The second, third, and fourth factors in the Sony Music test are designed to ensure that the subpoena is appropriate to the plaintiffs' needs, their allegations, and' the preliminary evidence they have presented. The Court weighs "(2) specificity of the discovery request, (3) the absence of alternative means to obtain the subpoenaed information, [and] (4) a central need for the subpoenaed information to advance the claim." Sony Music, 326 F.Supp.2d at 565. Thus, the second factor prevents the subpoena from being so overbroad that it unreasonably invades the anonymity of users who are not alleged to have infringed copyright. The third cuts against the subpoena if there is another [178] reasonable and less-intrusive means to gather the same information. And the fourth tests whether the plaintiffs must have the information to proceed. On the circumstances of this case, the third and fourth factors support the disclosure of the defendants' identities. However, the Court is unable to determine on this record whether the plaintiffs' request is adequately specific to satisfy the second factor.

      109
      1. Specificity of the Discovery Request
      110

      The second Sony Music factor examines the breadth of the information sought by the plaintiffs. It has two aspects: first, the breadth of the information the plaintiffs seek, and second, whether the subpoena requires the ISP to reveal identifying information for numerous non-infringing parties, piercing the First Amendment anonymity to which they are entitled.

      111

      Under the Court's Order permitting expedited discovery, the plaintiffs are limited to identifying information: "name, address, telephone number, e-mail address, and Media Access Control addresses for each defendant." Amended Order re: Expedited Discovery at 1 (May 9, 2007) (docket no. 07-cv-10834, document #8).[34] The Court further ordered that "[n]o further information about the Doe defendants shall be revealed." Id. These limits are appropriate because they allow the plaintiffs to discover whom they are suing — the purpose of the expedited discovery — but no more. It does not, for example, permit disclosure of any information regarding the defendant's internet use.

      112

      Second, the Court must consider whether the information sought can be reasonably traced to a particular defendant. Generally speaking, according to the plaintiffs, the combination of IP address and date and time of access is sufficient to allow identification of the defendant. See Mem. Supp. Ex Parte Application for Leave To Take Immediate Discovery at 2 (docket no. 07-cv-10834, document #5).

      113

      That claim may not always be true. More than one computer may be placed under a single IP number. Thus, it is possible that the ISP may not be able to identify with any specificity which of numerous users is the one in question. See Stengel Decl. at 3 (document #118). If that is the case, giving the plaintiffs a long list of possible infringers would permit precisely the sort of fishing expedition the Sony Music test is designed to avoid. On the other hand, the ISP may frequently be able to narrow the list to a handful of possible users. In that situation, the plaintiffs should be entitled to use discovery to determine the identity of the alleged infringer. While it still might be possible that an unauthorized user was the actual infringer, see id., that is a matter better left for further discovery and presentation of the plaintiffs' claims on their merits.

      114

      The problem calls for a pragmatic solution that carefully respects the anonymity [179] of potentially innocent parties. Therefore, the Court will undertake to review particular cases as they come up, based on the number of users at issue and the degree of particularity with which the plaintiffs would be able to pick out the alleged infringer from a list. The subpoena to be served on Boston University shall be modified as discussed below in Section IV.D.

      115
      2. Absence of Alternative Means to Obtain Information
      116

      The third Sony Music factor requires that the plaintiffs have no other, less-intrusive way of obtaining the information they seek. This factor appears to be met in this case. Only the ISP has any record of which IP addresses were assigned to which users. To other entities online, those users would appear only as their IP addresses. The movants have not suggested any other method of obtaining the defendants' information; nor is the Court aware of any.

      117
      3. Central Need to Litigation
      118

      Finally, it is evident that the plaintiffs need the information in order to further the litigation. Without names and addresses, the plaintiffs cannot serve process, and the litigation can never progress. Therefore, the plaintiffs do have a central need for this information.

      119
      C. Factor Five: The Defendants' Expectations of Privacy
      120

      The final Sony Music factor regards the expectation of privacy held by the Doe defendants, as well as other innocent users who may be dragged into the case (for example, because they shared an IP address with an alleged infringer.) See 326 F.Supp.2d at 565.

      121

      As discussed above, see Section III, the alleged infringers have only a thin First Amendment protection. See Harper & Row, 471 U.S. at 559-60, 105 S.Ct. 2218.[35] Moreover, many internet service providers require their users to acknowledge as a condition of service that they are forbidden from infringing copyright owners' rights, and that the ISP may be required to disclose their identity in litigation. See, e.g., Sony Music, 326 F.Supp.2d at 559.

      122

      The record is unfortunately silent as to Boston University's terms of service agreement, if one exists. That agreement could conceivably make a substantial difference to the expectation of privacy a student has in his or her internet use. The process through which the plaintiffs determine whether a particular user actually used a peer-to-peer network to distribute music files may be much more intrusive than merely obtaining identities. In one case before the Court,[36] the plaintiffs have sought to obtain an image of a defendant's hard disk,[37] allowing a forensic computer [180] expert to inspect it to determine whether the defendant possessed an electronic copy of the plaintiffs' copyrighted material. See Pls.' Mot. Compel Discovery (docket no. 03-cv-11661, document #527).[38]

      123

      The Court finds that the terms of service arrangement, if one exists, would be extremely helpful in analyzing the privacy interests at issue. As this is an important factor for the Sony Music test, the Court will require that the subpoena served on Boston University be modified to require that it submit to the Court its terms of service arrangement.

      124
      D. Required Modifications to the Subpoenas
      125

      For the reasons explained above in Sections IV.B.1 and IV.C, the Court lacks the information to adjudicate whether the plaintiffs have carried their burden in demonstrating a need for expedited discovery under the Sony Music test. Therefore, the Motions to Quash that assert privacy interests (documents ##104 and 115) are GRANTED. The plaintiffs may renew their motion for expedited discovery, but must attach to such motion a copy of the Rule 45 subpoena to be served on Boston University. The subpoena must include the following language or language substantially similar:

      126

      The ISP shall submit to the Court, under seal, the information requested by the plaintiffs for its consideration in camera. For any IP address provided by the plaintiffs for which the ISP is unable to determine, to a reasonable degree of technical certainty, the identity of the user, it shall submit a list of all such users and a brief statement explaining the difficulty in selecting among them the alleged infringer.

      127

      The ISP shall simultaneously submit to the Court its terms of service agreement with its users, or, if it does not have a terms of service agreement, a statement to that effect.

      128

      The submissions by the ISP shall be made no later than 14 days after service of the subpoena.

      129

      The ISP shall not disclose to the plaintiffs any information regarding the identities of the defendants unless ordered to do so by this Court.

      130

      The Court, with the Sony Music framework thus in place, will consider the plaintiffs' request for expedited discovery as made in their renewed motion.

      131
      V. THE MOTION TO QUASH FOR LACK OF PERSONAL JURISDICTION
      132

      In addition to the Motions to Quash filed by the Boston University Does, one other Doe has filed a Motion to Quash. She claims that the Court lacks personal jurisdiction over her. She asserts, among other things, that she has never lived in Massachusetts and that "none of [her] visits to the State of Massachusetts had any relationship to the matter for which [she is] being sued, namely [her] alleged use of filesharing systems from [her] home in Maryland." Doe Aff. at 1, Ex. A to Mot. Quash Due to Lack of Personal Jurisdiction (document #113). The Court has the discretion to permit jurisdictional discovery. See, e.g., United States v. Swiss Am. Bank, Ltd., 274 F.3d [181] 610, 626 (1st Cir.2001). It is appropriate to do so in this case.

      133

      The only information the Court has before it is Jane Doe's affidavit — signed as Jane Doe — attesting that she is not a Massachusetts resident. On the facts of this case, that is an insufficient basis to disallow jurisdictional discovery. Even taking all of the facts in her affidavit as true, it is possible that the Court properly has personal jurisdiction. The Massachusetts long-arm statute permits jurisdiction to the extent allowed by constitutional limits. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir.2002) (quoting 'Automatic' Sprinkler Corp. of Am. v. Seneca Foods Corp., 361 Mass. 441, 280 N.E.2d 423 (1972)). It is a broad license. For example, Jane Doe might well be subject to jurisdiction if she infringed the plaintiffs' copyrights on a trip into Massachusetts. See Mass. Gen. Laws ch. 223A, § 3(c)-(d). It would be premature to adjudicate personal jurisdiction on this record.

      134

      The Motion to Quash Due to Lack of Personal Jurisdiction (document #113) is DENIED without prejudice.

      135
      VI. CONCLUSION
      136

      For the foregoing reasons, the Motions to Quash (document ##103 and 115) are GRANTED. The plaintiffs' Motion for Expedited Discovery may be renewed subject to the requirements on the subpoena set forth above in Section IV.D. Boston University is ORDERED not to destroy the information sought by plaintiffs unless the subpoena is not renewed by April 16, 2008. Furthermore, the Motion to Quash Due to Lack of Personal Jurisdiction (document #113) is DENIED without prejudice.

      137

      SO ORDERED.

      138
      APPENDIX A
      139
      COURT — DIRECTED NOTICE REGARDING ISSUANCE OF SUBPOENA
      140

      A subpoena has been issued directing Boston University, your Internet Service Provider ("ISP"), to disclose your name. The subpoena has been issued because you have been sued in the United States District Court for the District of Massachusetts in Boston, Massachusetts, as a "John Doe" by several major record companies. You have been sued for infringing copyrights on the Internet by uploading and/or downloading music. The record companies have identified you only as a "John Doe" and have served a subpoena on your ISP to learn your identity. This notice is intended to inform you of some of your rights and options.

      141
      YOUR NAME HAS NOT YET BEEN DISCLOSED. YOUR NAME WILL BE DISCLOSED IN 14 DAYS IF YOU DO NOT CHALLENGE THE SUBPOENA.
      142

      Your name has not yet been disclosed. The record companies have given the Court enough information about your alleged infringement to obtain a subpoena to identify you, but the Court has not yet decided whether you are liable for infringement. You can challenge the subpoena in Court. You have 14 days from the date that you receive this notice to file a motion to quash or vacate the subpoena. If you file a motion to quash the subpoena, your identity will not be disclosed until the motion is resolved (and the companies cannot proceed against you until you are identified). The second page of this notice can assist you in locating an attorney, and lists other resources to help you determine how to respond to the subpoena. If you do not file a motion to quash, at the end of the 14 day period, your ISP will send the record [182] company plaintiffs your identification information.

      143
      OTHER ISSUES REGARDING THE LAWSUIT AGAINST YOU
      144

      To maintain a lawsuit against you in the District Court of Massachusetts, the record companies must establish jurisdiction over you in Massachusetts. If you do not live or work in Massachusetts, or visit the state regularly, you may be able to challenge the Massachusetts court's jurisdiction over you. If your challenge is successful, the case in Massachusetts will be dismissed, but the record companies may be able to file against you in another state where there is jurisdiction.

      145

      The record companies may be willing to discuss the possible settlement of their claims against you. The parties may be able to reach a settlement agreement without your name appearing on the public record. You may be asked to disclose your identity to the record companies if you seek to pursue settlement. If a settlement is reached, the case against you will be dismissed. It is possible that defendants who seek to settle at the beginning of a case will be offered more favorable settlement terms by the record companies. You may contact the record companies' representatives by phone at (206) 973-4145, by fax at (206) 242-0905, or by email at infosettlementsupportcenter.com.

      146

      You may also wish to find your own lawyer (see resource list below) to help you evaluate whether it is in your interest to try to reach a settlement or to defend against the lawsuit.

      147
      RESOURCE LIST
      148

      The organizations listed below provide guidance on how to find an attorney. If you live in or near Massachusetts or Boston, the second and third listings below provide referrals for local attorneys.

      149

      American Bar Association

      150

      http://www.abanet/org/legalservices/ findlegalhelp/home.htm

      151

      Massachusetts Bar Association

      152

      http://www.massbar.org

      153

      Lawyer referral service — (617) 338-0610

      154

      Boston Bar Association

      155

      http://www.bostonbar.org

      156

      Lawyer referral service — (617) 742-0625

      157

      The organizations listed below have appeared before other courts around the country in similar lawsuits as "friends of the court" to attempt to protect what they believe to be the due process and First Amendment rights of Doe defendants.

      158

      Electronic Frontier Foundation

      159

      454 Shotwell Street

      160

      San Francisco, California 94110-1914

      161

      email: RIAAcases@eff.org

      162

      Public Citizen

      163

      1600 20th Street, NW

      164

      Washington, DC 20009

      165

      phone: (202)588-7721

      166

      email: litigation@citizen.org

      167

      [1] The defendants in this case have not yet been named; the Court simply refers to them as "the defendants." Those who contest the subpoena are "the movants."

      168

      [2] Specifically, the Court requires that the plaintiffs attach a "Court-Directed Notice Regarding Issuance of Subpoena," which the ISPs distribute to the individuals in question. The Notice informs the putative defendants that they have the opportunity to move to quash the subpoena, as these defendants have done. See Appendix A (Court-Directed Notice).

      169

      [3] Document #115 is styled "Reply Memorandum of Law of Defendant`Doe,' "but the Court has no other related documents. The Court takes the filing as a pro se Motion to Quash, and for clarity's sake, refers to it as such.

      170

      [4] This is a small oversimplification. Many popular peer-to-peer networks use a "supernode" architecture. A supernode is a semicentralized computer that operates only to relay search queries and responses within the peer-to-peer network. Once the desired file is located, however, it may be transferred directly from one computer to another. See, e.g., Peter S. Menell & David Nimmer, Legal Realism in Action: Indirect Copyright Liability's Continuing Tort Framework and Sony's De Facto Demise, 55 UCLA L.Rev. 143, 183-84 (2007).

      171

      The history of peer-to-peer networks has been one of increasing decentralization, and thus, increasing anonymity. See id. at 179-85 (tracing history of peer-to-peer network technologies through lawsuits asserting contributory copyright liability). Some newer peer-topeer technologies even dispense with supernodes. See, e.g., Grokster, 545 U.S. at 922, 125 S.Ct. 2764; Matthew Helton, Secondary Liability for Copyright Infringement: BitTorrent as a Vehicle for Establishing a New Copyright Definition for Staple Articles of Commerce, 40 Colum. J.L. & Soc. Probs. 1, 20-21 (2006) (discussing new version of software that permits direct peer-to-peer connection without the need for a proxy computer).

      172

      [5] At the hearing, the defendants protested that it is impossible to determine whether a sound recording is "illegal" merely by listening to it. See Bestavros Decl. at 2-3 (document #110). True enough. Indeed, one of the key features of digital copyright infringement is that an nth-generation copy is more or less identical to a non-infringing first-generation copy, so there is no drop in sound quality over time. But listening to the files is still important. The defendants must ascertain that what is labeled as a sound recording to which they hold the copyright actually is such a recording (and not, say, a misnamed file or fair use that would not infringe the copyright.)

      173

      [6] According to the amicus brief of the Electronic Frontier Foundation, more than 20,000 individuals have been sued nationwide. Amicus Curiae Br. of the Electronic Frontier Foundation ("EFF Br.") at 5-9 (document #152).

      174

      [7] For these reasons, insofar as one of the movant Does requests severance, see Mot. Quash at 1-3 (document #115), the motion is DENIED without prejudice. The case against each Doe will be individually considered for purposes of any rulings on the merits, and the movant may renew the severance request before trial if the case proceeds to that stage.

      175

      [8] It is not clear which Does are the two movants. The Doe filing one Motion to Quash (document #115) identifies him or herself as Doe no. 21; the Doe filing the other Motion to Quash (document #103) called himself Doe no. 1. Doe no. 1 has been dismissed, however. See Notice of Dismissal (document #122) (dismissing Doe no. 1 from the civil action originally docketed with number 07-cv-10834); Notice of Dismissal (document #136) (same).

      176

      [9] The EFF's First Amendment arguments are taken on their merits, contrary to the plaintiffs' contention that no party has raised them. See Pls.' Resp. Opp. Amicus Curiae Br. at 2-3 (document #157). At least one of the motions to quash raises the same issues, albeit in less detail. See Mem. L. Supp. Mot. Quash at 7-8 (document #104).

      177

      [10] See Sony Music, 326 F.Supp.2d at 564 (finding file-sharers' activity "qualifies as speech, but only to a degree," because the "real purpose is to obtain music for free"); In re Verizon Internet Svcs., Inc., 257 F.Supp.2d 244, 260 (D.D.C.2003), rev'd on other grounds, Recording Indus. Ass'n of Am., Inc. v. Verizon Internet Svcs., Inc., 351 F.3d 1229 (D.C.Cir. 2003) (holding that file-sharers were entitled to some anonymity on First Amendment grounds, "even though the degree of protection is minimal where alleged copyright infringement is the expression at issue").

      178

      [11] Other forms of speech also receive such intermediate valuation. See Florida Bar v. Went For It, Inc., 515 U.S. 618, 623, 115 S.Ct. 2371, 132 L.Ed.2d 541 (noting that commercial speech is entitled to "a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values" (internal quotation omitted)). The Court need not, and does not, express a view as to the proper place of file-sharing in the speech hierarchy; it is enough for present purposes to determine that it has some First Amendment value.

      179

      [12] In doing so, the court subsumed the analysis a number of other leading cases, including, for example, Dendrite International, Inc. v. Doe, 342 N.J.Super. 134, 775 A.2d 756, 760, 772 (2001), a case relied upon by the EFF. See Sony Music, 326 F.Supp.2d at 563-64. Dendrite, like many other cases involving internet speech, is not directly applicable to these facts. In that case, the plaintiff asserted that the anonymous defendant had defamed it on an internet bulletin board — an act much more clearly in the wheelhouse of the First Amendment's protections. See 342 N.J.Super. at 140-41, 775 A.2d at 760. The court in that case therefore sensibly elected to apply a more stringent standard than the one appropriate here. See id., 342 N.J.Super. at 149 — 59, 775 A.2d at 765-72.

      180

      [13] A number of other courts have also found the Sony Music approach persuasive, some on substantially different facts. See Best Western Int'l, No. CV-06-1537-DGC, 2006 WL 2091695, at *3-*5 (D.Ariz. July 25, 2006) (posting to internet bulletin boards); Gen. Bd. of Global Ministries of the United Methodist Church v. Cablevision Lightpath, Inc., No. C06-3669-ETB, 2006 WL 3479332, at *4-*5 (E.D.N.Y. Nov.30, 2006) (unauthorized access to email); Elektra Entm't Group v. Does 1-9, No. 04CV2289-RWS, 2004 WL 2095581, at *2-*5 (S.D.N.Y. Sept.8, 2004) (file-sharing and copyright infringement). But see Mobilisa, Inc. v. Doe, 217 Ariz. 103, 170 P.3d 712, 720 (Ariz.App.2007) (declining to apply Sony Music standard in case involving alleged unlawful access to plaintiffs' computer server by anonymous user, and applying a more stringent standard).

      181

      [14] The parties refer to "copies." The statute makes clear that where sound recordings are at issue, "phonorecords" is a more precise term. See 17 U.S.C. § 101. The two terms appear to be functionally interchangeable, however, differing only in the nature of the copyrighted work. See H.R. Rep. 94-1476 at 53 (1976), reprinted in 1976 U.S.C.C.A.N. at 5666 (noting that under the copyright statutes, "`copies' and `phonorecords' together will comprise all of the material objects in which copyrightable works are capable of being fixed").

      182

      [15] Strictly speaking, much of the parties' briefing on this issue is directed toward the scope of the distribution right under § 106(3), not the reproduction right under § 106(1). But both refer to "copies or phonorecords," so the arguments implicate both rights, though to different degrees.

      183

      [16] The plaintiffs have also alleged a violation of their reproduction rights under § 106(1). Under that statute, a copyright owner's rights are infringed whenever an unauthorized person "reproduce[s] the copyrighted work in copies or phonorecords." The plaintiffs have alleged that the defendants downloaded music, as well as distributed it, and that they did not have authorization to do so. See Compl. at 5 (docket no. 07-cv-10834, document #1). At least subject to arguments over the definition of "phonorecords," discussed below, the plaintiffs thus appear to have alleged a legally sufficient harm under § 106(1). It is still appropriate to address briefly the distribution right under § 106(3), however; it was the focus of the parties' briefing and arguably constitutes the crux of the alleged infringement in this case. The Court's analysis may also inform later arguments, such as summary judgment or request for further data from the ISP not authorized by the current scope of the subpoena.

      184

      [17] See Mem. Supp. Mot. Quash at 4-6 (document #149); EFF Br. at 12 n. 8 (document #152). The Court need not reach this issue now.

      185

      [18] The plaintiffs also cite A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir.2001). In A & M v. Napster, the Ninth Circuit considered a suit against a provider of peer-to-peer services. The court stated that "Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights." Id. at 1014. As the EFF argues, the Ninth Circuit's reasoning is not persuasive here. First, as the district court noted in that case, "it is pretty much acknowledged" that infringement had occurred. Id. (internal quotation marks omitted). Second, because the plaintiffs were suing the peer-topeer network provider rather than any particular user, they did not need to show that any particular copyright was infringed. It was enough to show that approximately 70% of the available material infringed the plaintiffs' copyrights. See id. at 1013. Finally, the court's very statement may betray a slight misunderstanding about the way the technology worked — it was not the "file names" that were copied, as the court's statement seems to imply, but the actual files themselves. Indeed, merely "upload[ing] file names" does not even constitute making the files themselves available. But see Motown Record Co., LP v. DePietro, No. 04-CV-2246, 2007 WL 576284, at *3 & n. 38 (E.D.Pa. Feb. 16, 2007) (finding A & M v. Napster persuasive on facts similar to those in the case at bar).

      186

      [19] Indeed, this case is closer to the facts of Hotaling than were the facts in the Napster litigation. In In re Napster, the court considered an "indexing" system in which central computer servers kept a record of which peerto-peer users had which files, somewhat analogous to the supernodes used by the peer-topeer system at issue here. See supra note 4. In rejecting the plaintiffs' theory, the court noted that the index was only an index-not the actual file containing the sound recording. See In re Napster, 377 F.Supp.2d at 803. In this case, the individual peer-to-peer users are alleged to have had the electronic files on their hard disks, not merely a reference. See also Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1162-63 (9th Cir.2007) (distinguishing Google's process of indexing images and providing thumbnails to users on similar grounds).

      187

      [20] The First Circuit's decisions in Venegas-Hernandez, 424 F.3d at 57-59, and Latin American Music Co., 499 F.3d at 46, appear to support this distinction.

      188

      [21] Before the Copyright Act was passed in 1976, "publication" determined the date on which statutory protection of the copyright began. See 17 U.S.C. § 24 (1970), repealed by Copyrights Act of 1976, ch. 3, § 302, 90 Stat. 2541. It occurred when "`the original or tangible copies of a work [were] ... made available to the general public'" Bartok v. Boosey & Hawkes, Inc., 523 F.2d 941, 945 (2d Cir.1975) (quoting Melville B. Nimmer, Nimmer on Copyright § 49 at 194-95 (1974)). It did not include the mere public performance of a work. See Ferris v. Frohman, 223 U.S. 424, 435-36, 32 S.Ct. 263, 56 L.Ed. 492 (1912).

      189

      [22] The term "material object" also distinguishes a tangible copy of a work from its performance. Compare 17 U.S.C. § 101 (defining "copies"), with id. (defining "perform"). Clearly, different copyrights are implicated by the ownership of a phonorecord and by a public performance of the sound recording physically embodied in that phonorecord. Compare 17 U.S.C. § 106(1), with id. § 106(3), and with id. §§ 106(4), 106(6). While this seems an elementary distinction, it is important to the scope of the distribution right, discussed more extensively below.

      190

      [23] This point of view is supported by Congress' abrogation of one judicial doctrine concerning the nature of a "copy." In White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 (1908), the Supreme Court rejected the argument that the copyright for a piece of music applied to the perforated sheets used to instruct a player piano, holding that it was limited to sheet music from which a person could read and reproduce the music. Because the perforated sheets were not intelligible to a person, the Court held, they were not "copies." Id. at 17, 28 S.Ct. 319. Congress rightly rejected this "artificial and largely unjustifiable distinction[]," House Report at 52, reprinted in 1976 U.S.C.C.A.N. at 5665, by expanding the definition of "fixed" to include methods that required machines. Concurrently, Congress sought to broaden the definition of the medium in which copyrighted material could be fixed. See id. at 52-53, reprinted in 1976 U.S.C.C.A.N. at 5665-66. A "material object" is thus largely, if not entirely, a vehicle for the fixation requirement.

      191

      [24] Suppose someone has a copy of a copyrighted poem on a single sheet of paper. He announces, "I'm going to be at the copy machine with the poem pressing the`Copy' button, but I'm not going to touch the new copies that come out in the tray." If another person takes one of the new copies, no hand-to-hand transfer of a tangible object has occurred, and the person who presses the copy button has not been divested of ownership in his original.

      192

      [25] The House Report does not specifically address the distribution right as a protection of the copyright owner's right to control the market, but it is an inescapable inference from the nature of the right. See, e.g., Harper & Row, 471 U.S. at 558, 105 S.Ct. 2218 ("By establishing a marketable right to the use of one's expression, copyright supplies the economic incentive to create and disseminate ideas."); cf. House Report at 62-63, reprinted in 1976 U.S.C.C.A.N. at 5676 (noting that too broad an exception to performance rights for non-profit users could allow free displays and performances to "supplant markets for printed copies"); id. at 80, reprinted in 1976 U.S.C.C.A.N. at 5694 (expressing concern that illegitimate fair use could affect the copyright owner's market for distribution of copies). The Court does not express a view as to the extent to which peer-to-peer file sharing actually does cause economic damage to copyright owners.

      193

      [26] It is perhaps in recognition of this fact of internet-era life — and in recognition of the fact that copyrighted material can be "distributed" electronically — that Congress has made available compulsory licenses "to distribute [phonorecords] to the public for private use, including by means of a digital phonorecord delivery." 17 U.S.C. § 115.

      194

      [27] The reading is not a stretch. The dictionary definition of "to distribute" includes, inter alia, "to disperse through a space ...; spread; scatter[;] to promote, sell, and ship or deliver ... to individual customers ... [;] to pass out or deliver ... to intended recipients." Random House Unabridged Dictionary 572 (2d ed.1993). An electronic file transfer fits comfortably within each.

      195

      [28] It is irrelevant that such an action may also infringe the reproduction right secured to the copyright holder under 17 U.S.C. § 106(1). A single action can infringe more than one right held under § 106.

      196

      [29] The EFF's reliance on Age v. Paramount Communications, 59 F.3d 317, 325 (2d Cir. 1995), is misplaced. The plaintiff in Agee claimed the violation of several different rights after Paramount used his music as a soundtrack to a video without authorization; most relevantly, the plaintiff claimed violation of the distribution right protected by § 106(3). The video traveled from Paramount to local affiliate television stations, and from there to the public. The court concluded that the broadcast, as it traveled from the affiliate stations to the public, was a public performance, not the distribution of a copy. The affiliates were only the intermediaries through which Paramount's right to perform was exercised. See Agee, 59 F.3d at 325; see also 17 U.S.C. § 112(e)(1) (permitting retention of "ephemeral recordings" for retransmission). A key fact was that the transmission was designed to be transitory. Electronic files, such as those transferred here, are not.

      197

      The Court recognizes that electronic copies can be of varying permanence, see MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 518-19 (9th Cir. 1993) (discussing whether loading copyrighted software into temporary random access memory constitutes a "copy" under the Copyright Act), and it is not clear that all of them should be treated equally under the copyright statutes. But this is a clear case, at one end of the spectrum. The files at issue here were downloaded precisely to be copies, indefinitely replayable and transferable. The Court has no need to consider modes of electronic transmission beyond transfers over peer-to-peer networks.

      198

      [30] Counsel for one movant also represents that none of the movant's music files were unlicensed. See Suppl. Mem. Supp. Mot. Quash at 9-10 (document #149). While that may be the case, it is not clear why it is relevant to allegations of unlicensed distribution under 17 U.S.C. § 106(3). And insofar as it is relevant to allegations of unlicensed copying under 17 U.S.C. § 106(1), it is a matter better left for after discovery, when counsel's representation can be supported by evidence.

      199

      The same movant further contends that the Linares affidavit, which forms the basis of some of the plaintiffs' prima facie case, should be stricken. The movant claims that MediaSentry, the private investigator who downloaded the files from the Does and recorded their IP addresses, see Linares Decl. at 4-6, Ex. A to PL Mot. Leave to Take Immediate Discovery (docket no. 07-cv 10834, document #5), does not have the license to undertake private investigations required by Massachusetts General Laws ch. 147, §§ 23-25. The Court has no evidence properly before it as to whether or not MediaSentry has a license, how MediaSentry gathers its information, or whether that information is publicly available. It therefore declines to reach the issue on this record; the movant may refile a motion to strike.

      200

      [31] From the Linares Declaration, it is easily inferred how this information is gained. MediaSentry, on finding an alleged infringer, requests through the peer-to-peer software a list of all the files available to be shared on the sending computer. It then culls through the resulting list of files to isolate (and count) the plaintiffs' copyrighted sound recordings. See Linares Decl. at 5-6, Ex. A to PI. Mot. Leave to Take Immediate Discovery (docket no. 07-cv-10834, document #5).

      201

      [32] This general inference of infringement is not inconsistent with the "concrete" criterion discussed below. It bears re-emphasis that this is a preliminary stage of the litigation; the plaintiffs need only show that some infringement was likely and that they have specifically identified at least some of the copyrighted material at issue. This protects the defendants from a fishing expedition in which plaintiffs only wish to investigate specific behavior — for example, the large use of bandwidth by a single user continuously over a long period of time or the mere use of a peerto-peer network.

      202

      [33] At least, absent MediaSentry's downloads — again, the Court does not decide whether those downloads can constitute direct evidence of actual infringements.

      203

      [34] The Media Access Control ("MAC") number is a unique identifier embedded in most network adaptors — the physical piece of hardware that permits a user to connect to a network, and thus to the internet. The MAC address is used by the ISP in routing information through the network and is specific to the user's computer; it is therefore uniquely relevant in allowing a fact-finder to determine whether the defendant was, in fact, infringing the plaintiff's copyright. Although sophisticated users can use software to make MAC addresses appear otherwise than they actually are — a process called "spoofing" — the addresses are still highly probative evidence in this litigation. See, e.g., Daniel Kamitaki, Note, Beyond E-Mail: Threats to Network Security and Privileged Information for the Modem Law Firm, 15 S. Cal. Interdisc. L.J. 307, 312 & nn. 30-34 (2006) (discussing MAC addresses generally); United States v. Carter, No. 07-CR-00184-RLH, 2008 WL 623600, at *12 (D.Nev. Mar.6, 2008) (noting possibility of spoofing).

      204

      [35] Insofar as the defendants wish to assert a more substantial First Amendment value — fair use, for example — that is a matter better left for later in the litigation.

      205

      [36] The Court may take judicial notice of related proceedings. See, e.g., Anderson v. Rochester-Genesee Reg'l Transp. Auth., 337 F.3d 201, 205 n. 4 (2d Cir.2003).

      206

      [37] That is, a precise copy of the hard drive, exactly as it is in the defendant's computer. This allows the plaintiffs not only to see what is obviously present on the user's computer, but also deleted or concealed files. "`Deleting a file does not actually erase that data from the computer's storage devices. Rather, it simply finds the data's entry in the disk directory and changes it to a`not used' status — thus permitting the computer to write over the`deleted' data. Until the computer writes over the`deleted' data, however, it may be recovered by searching the disk itself rather than the disk's directory. Accordingly, many files are recoverable long after they have been deleted' — even if neither the computer user nor the computer itself is aware of their existence." Shira A. Scheindlin & Jeffrey Rabkin, Electronic Discovery in Federal Civil Litigation: Is Rule 34 Up to the Task?, 41 B.C. L.Rev. 327, 337 (2000) (footnotes omitted).

      207

      [38] Of course, even an infringer's non-infringing information is entitled to some protection. But the situation is more serious where the defendant asked to permit an image of her computer may not be an infringer at all.

    • 1.10 Section 106 Hypotheticals Introduction to Intellectual Property

      Courtesy Professor Post (Temple Law)

      1

      Identify which of the exclusive rights granted by §106 the copyright holder could plausibly allege have been violated in the following hypotheticals:

      2

      1. Charlotte turns on the FM radio in her office; it is playing a recording of Bob Dylan’s “Tangled Up in Blue”(which you may assume is protected by copyright).

      3

      2. Daniel goes to an exhibition at the Philadelphia Museum of Art, where he sees a sculpture by Klaus Herring entitled “Abstract #33.” [Assume Herring’s sculpture is protected by copyright]. His sister is getting married this coming weekend, and as a surprise, Daniel carves an ice sculpture closely resembling the shape and proportions of “Abstract #33.”

      4

      3. Assume that Motion Pictures, Inc. (“MPI”) owns the copyright in the recently-released film “There Will Be Blood.” Ellen buys a copy of the DVD version at her local video store. Using her computer, she makes a copy of the DVD and sends it to her brother in Canada. She is a high school teacher, and she brings the DVD with her to school one day and shows it to her students.

      5

      4. Fergus buys fifty copies of Ian McEwan’s award winning novel Atonement. [Assume it is a copyright protected work] He gives all of the copies (except one) to his friends and relatives at Christmas. As part of his efforts to learn Italian, he translates the fifth and sixth chapters of the book into Italian. He also writes a song –“There will be no Atonement Anymore”–in which he imagines how the lead character from the novel (Briony Tallis) would have reacted had she visited Las Vegas. He performs the song at a local Philadelphia nightclub

      6

      5. Georgia owns an art gallery specializing in 20th century paintings and photographs. She obtains two large paintings by Jasper Johns and a series of photographs taken by Diane Arbus, hangs them in her gallery, and offers them for sale. [Assume the Johns paintings and Arbus photos are protected by copyright]. She takes photographs of the Johns painting and puts copies of the photograph (a) in her current catalogue (a listing of all art available for sale at the gallery) and (b) on her website.

      7

      6. Herman, CEO of Multiplex, Inc., buys a copy of “The Best American Poetry of 2008.” He is so moved by one of the poems in the collection that he reads it out loud at Multiplex, Inc.’s annual shareholder’s meeting.

  • 2 OIL Casebook: Derivative Works

    • 2.1 Galaxian

    • 2.2 Midway Mfg. Co. v. Artic Int'l, Inc.

      This case examines the fixation of video games when the user participates in the creation, and then considers whether speeded up circuit boards are a derivative work
      1

      704 F.2d 1009 (1983)

      2
      MIDWAY MFG. CO., an Illinois corporation, Plaintiff-Appellee,
      v.
      ARTIC INTERNATIONAL, INC., a New Jersey corporation, Defendant-Appellant.
      3

      No. 82-1607.

      4

      United States Court of Appeals, Seventh Circuit.

      5

      Argued November 29, 1982.
      Decided April 11, 1983.

      6

      [1010] Richard G. Kinney, Chicago, Ill., for defendant-appellant.

      7

      Eric C. Cohen, Fitch, Even, Tabin, Flannery & Welsh, Chicago, Ill., for plaintiff-appellee.

      8

      Before CUMMINGS, Chief Judge, POSNER, Circuit Judge, and SWYGERT, Senior Circuit Judge.

      9
      CUMMINGS, Chief Judge.
      10

      This appeal involves questions regarding the scope of protection video games enjoy under the 1976 Copyright Act, 90 Stat. 2541, 17 U.S.C. § 101 et seq.

      11

      Plaintiff manufactures video game machines. Inside these machines are printed circuit boards capable of causing images to appear on a television picture screen and sounds to emanate from a speaker when an electric current is passed through them. On the outside of each machine are a picture screen, sound speaker, and a lever or button that allows a person using the machine to alter the images appearing on the machine's picture screen and the sounds emanating from its speaker. Each machine can produce a large number of related images and sounds. These sounds and images are stored on the machine's circuit boards—how the circuits are arranged and connected determines the set of sounds and images the machine is capable of making. When a person touches the control lever or button on the outside of the machine he sends a signal to the circuit boards inside the machine which causes them to retrieve and display one of the sounds and images stored in them. Playing a video game involves manipulating the controls on the machine so that some of the images stored in the machine's circuitry appear on its picture screen and some of its sounds emanate from its speaker.

      12

      Defendant sells printed circuit boards for use inside video game machines. One of the circuit boards defendant sells speeds up the rate of play—how fast the sounds and images change—of "Galaxian," one of plaintiff's video games, when inserted in place of one of the "Galaxian" machine's circuit boards. Another of defendant's circuit boards stores a set of images and sounds almost identical to that stored in the [1011] circuit boards of plaintiff's "Pac-Man" video game machine[1] so that the video game people play on machines containing defendant's circuit board looks and sounds virtually the same as plaintiff's "Pac-Man" game.

      13

      Plaintiff sued defendant alleging that defendant's sale of these two circuit boards infringes its copyrights in its "Galaxian" and "Pac-Man" video games. In a memorandum opinion and order reported at 547 F.Supp. 999 (N.D.Ill.1982), the district court granted plaintiff's motion for a preliminary injunction and denied defendant's motion for summary judgment. The district court's order enjoins defendant from manufacturing or distributing circuit boards that can be used to play video games substantially similar to those protected by plaintiff's copyrights. Defendant appeals from that order on the ground that plaintiff has not shown a likelihood of succeeding on the merits of its claim of copyright infringement. We affirm for the reasons that follow.

      14

      Plaintiff claims that its "Pac-Man" and "Galaxian" video games are "audiovisual works" protected under the 1976 Copyright Act. Section 101 of that Act defines audiovisual works as

      15

      works that consist of a series of related images which are intrinsically intended to be shown by the use of machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied. 17 U.S.C. § 101.

      16

      It is not immediately obvious that video games fall within this definition. The phrase "series of related images" might be construed to refer only to a set of images displayed in a fixed sequence. Construed that way, video games do not qualify as audiovisual works. Each time a video game is played, a different sequence of images appears on the screen of the video game machine—assuming the game is not played exactly the same way each time. But the phrase might also be construed more broadly to refer to any set of images displayed as some kind of unit. That is how we construed it in WGN Continental Broadcasting Co. v. United Video, Inc., 693 F.2d 622 (7th Cir.1982), where we held that a news program and a thematically related textual display ("teletext") transmitted on the same television signal but broadcast on different television channels constituted a single audiovisual work. We see no reason to construe it more narrowly here. As we noted there, the legislative history of the Copyright Act of 1976 suggests that "Congress probably wanted the courts to interpret the definitional provisions of the new act flexibly, so that it would cover new technologies as they appeared, rather than to interpret those provisions narrowly and so force Congress periodically to update the act." 693 F.2d at 627.

      17

      There is a second difficulty that must be overcome if video games are to be classified as audiovisual works. Strictly speaking, the particular sequence of images that appears on the screen of a video game machine when the game is played is not the same work as the set of images stored in the machine's circuit boards. The person playing the game can vary the order in which the stored images appear on the screen by moving the machine's control lever. That makes playing a video game a little like arranging words in a dictionary into sentences or paints on a palette into a painting. The question is whether the creative effort in playing a video game is enough like writing or painting to make each performance of a video game the work of the player and not the game's inventor.

      18

      We think it is not. Television viewers may vary the order of images transmitted on the same signal but broadcast on different channels by pressing a button that changes the channel on their television. In the WGN case, we held that the creative effort required to do that did not make the sequence of images appearing on a viewer's [1012] television screen the work of the viewer and not of the television station that transmitted the images. Playing a video game is more like changing channels on a television than it is like writing a novel or painting a picture. The player of a video game does not have control over the sequence of images that appears on the video game screen. He cannot create any sequence he wants out of the images stored on the game's circuit boards. The most he can do is choose one of the limited number of sequences the game allows him to choose. He is unlike a writer or a painter because the video game in effect writes the sentences and paints the painting for him; he merely chooses one of the sentences stored in its memory, one of the paintings stored in its collection.

      19

      Defendant suggests another reason why plaintiff's video games are not copyrightable—because the printed circuit boards in which the games are fixed are patentable. We reject this argument for the same reason District Judge Decker rejected it. See 547 F.Supp. at 1008-1009. Plaintiff claims copyrights in audiovisual works—the distinctive set of images and sounds stored in its circuit boards. It does not claim copyrights in the design of those circuit boards, so it matters not that those designs may be patentable. Recording images and sounds in circuit boards does not destroy their copyrightability any more than does recording them on rolls of celluloid film. Defendant cites Apple Computer, Inc. v. Franklin Computer Corp., 545 F.Supp. 812 (E.D.Pa.1982), and The Magnavox Co. v. Mattell, Inc., 216 U.S.P.Q. 28 (N.D.Ill.1982) in support of its argument, but those cases are easily distinguished. Both dealt with copyrights in computer programs, not with copyrights in audiovisual works fixed in computer programs. We thus conclude that video games are copyrightable as audiovisual works under the 1976 Copyright Act and we note that every other federal court (including our own) that has confronted this issue has reached the same conclusion. Williams Electronics, Inc. v. Artic International, Inc., 685 F.2d 870 (3rd Cir.1982); Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d 607, 617 (7th Cir.1982); Stern Electronics, Inc. v. Kaufman, 669 F.2d 852 (2nd Cir.1982); Midway Manufacturing Co. v. Dirkschneider, 543 F.Supp. 466 (D.Neb. 1981). Cf. WGN Continental Broadcasting Co. v. United Video, Inc., 693 F.2d 622, 625-626 (7th Cir.1982).

      20

      Defendant next argues that plaintiff's copyrights are invalid because the 1976 Copyright Act does not apply to plaintiff's video games. Section 117 of the 1976 Copyright Act was amended in 1980 to define the exclusive rights of owners of copyrights in computer programs. As originally enacted, Section 117 provided that the 1909 Copyright Act and common law were to govern the rights of a copyright owner "with respect to the use of the [copyrighted] work in conjunction with" computers. Defendant argues that the 1980 amendment does not apply to copyrights, like those of plaintiff, in existence before the amendment took effect and that the original Section 117 requires that we look to the 1909 Act and common law to determine whether the circuit boards defendant manufactures are copies of plaintiff's audiovisual works.

      21

      We disagree. Even if the 1980 amendment applies only to copyrights issued after its effective date—an issue we do not decide—the district court properly applied the 1976 Act. The language and legislative history of the 1980 amendment are convincing that original Section 117 was intended only to leave unaltered the existing law governing the exclusive rights of owners of copyrights in computer programs. See H.Rep. No. 96-1307, 96th Cong., 2nd Sess. 27 (1980) (Part I) (Judiciary Committee), reprinted in 1980 U.S.Code Cong. & Ad.News 6460, 6486; id. at 19 (Part II) (Committee on Government Operations), reprinted in 1980 U.S.Code Cong. & Ad.News 6509; Tandy Corp. v. Personal Micro Computers, Inc., 524 F.Supp. 171, 174-175 (N.D. Cal.1981). It was not intended to permit pirating of audiovisual works stored in computers.

      22

      [1013] Defendant also argues that even if plaintiff's video games are copyrightable, plaintiff's asserted copyrights are invalid because the works they protect were originally published without the notice of copyright required by Section 401 of the 1976 Act. Plaintiff purchased the copyrights it asserts in this suit in 1979 and early 1980 from a Japanese company that invented the video game machines plaintiff now markets. Defendant claims that the Japanese company published in Japan without notice of copyright the audiovisual works stored in these machines before it assigned its copyrights to plaintiff. Even if that is so, however, the copyrights plaintiff purchased from the Japanese company are valid. Plaintiff registered its works in the United States in May and November 1980 (Supp. App. 102, 110)—within five years of the date they were originally published in Japan. Section 405(a)(2) affords a copyright owner five years within which to remedy the omission of a copyright notice from published copies of a work. Defendant does not allege that plaintiff has omitted to put a notice of copyright on any of the machines plaintiff has distributed in the United States or that its alleged infringement of plaintiff's copyrights was in reliance upon the omission of such notice from those copies originally published in Japan.

      23

      The final argument of defendant's that we address is that selling plaintiff's licensees circuit boards that speed up the rate of play of plaintiff's video games is not an infringement of plaintiff's copyrights. Speeding up the rate of play of a video game is a little like playing at 45 or 78 revolutions per minute ("RPM's") a phonograph record recorded at 33 RPM's. If a discotheque licensee did that, it would probably not be an infringement of the record company's copyright in the record. One might argue by analogy that it is not a copyright infringement for video game licensees to speed up the rate of play of video games, and that it is not a contributory infringement for the defendant to sell licensees circuit boards that enable them to do that.

      24

      There is this critical difference between playing records at a faster than recorded speed and playing video games at a faster than manufactured rate: there is an enormous demand for speeded-up video games but there is little if any demand for speeded-up records. Not many people want to hear 33 RPM records played at 45 and 78 RPM's so that record licensors would not care if their licensees play them at that speed. But there is a big demand for speeded-up video games. Speeding up a video game's action makes the game more challenging and exciting and increases the licensee's revenue per game. Speeded-up games end sooner than normal games and consequently if players are willing to pay an additional price-per-minute in exchange for the challenge and excitement of a faster game, licensees will take in greater total revenues. Video game copyright owners would undoubtedly like to lay their hands on some of that extra revenue and therefore it cannot be assumed that licensees are implicitly authorized to use speeded-up circuit boards in the machines plaintiff supplies.

      25

      Among a copyright owner's exclusive rights is the right "to prepare derivative works based upon the copyrighted work." 17 U.S.C. § 106(2). If, as we hold, the speeded-up "Galaxian" game that a licensee creates with a circuit board supplied by the defendant is a derivative work based upon "Galaxian," a licensee who lacks the plaintiff's authorization to create a derivative work is a direct infringer and the defendant is a contributory infringer through its sale of the speeded-up circuit board. See, e.g., Gershwin Publishing Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971); Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963, 975 (9th Cir.1981), certiorari granted, 457 U.S. 1116, 102 S.Ct. 2926, 73 L.Ed.2d 1326 (1982).

      26

      Section 101 of the 1976 Copyright Act defines a derivative work as "a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture [1014] version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted." It is not obvious from this language whether a speeded-up video game is a derivative work. A speeded-up phonograph record probably is not. Cf. Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 73 F.Supp. 165, 167 (S.D.N.Y. 1947) ("The change in time of the added chorus, and the slight variation in the base of the accompaniment, there being no change in the tune or lyrics, would not be `new work'"); 1 Nimmer on Copyright § 3.03 (1982). But that is because the additional value to the copyright owner of having the right to market separately the speeded-up version of the recorded performance is too trivial to warrant legal protection for that right. A speeded-up video game is a substantially different product from the original game. As noted, it is more exciting to play and it requires some creative effort to produce. For that reason, the owner of the copyright on the game should be entitled to monopolize it on the same theory that he is entitled to monopolize the derivative works specifically listed in Section 101. The current rage for video games was not anticipated in 1976, and like any new technology the video game does not fit with complete ease the definition of derivative work in Section 101 of the 1976 Act. But the amount by which the language of Section 101 must be stretched to accommodate speeded-up video games is, we believe, within the limits within which Congress wanted the new Act to operate. Cf. WGN Continental Broadcasting Co., supra, 693 F.2d at 627; Williams Electronics, Inc., supra, 685 F.2d at 873-874; Atari, supra, 672 F.2d at 614-620.

      27

      Defendant raises other arguments on appeal, all of which we reject for the reasons set forth in District Judge Decker's exhaustive opinion. See 547 F.Supp. at 1005-1012.

      28

      AFFIRMED.

      29

      [1] We described the "Pac-Man" video game in some detail in Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d 607, 610, 611 (7th Cir.1982).

    • 2.3 1-800 CONTACTS, Inc. v. WhenU.com

      1

      309 F.Supp.2d 467 (2003)

      2
      1-800 CONTACTS, INC., Plaintiff,
      v.
      WHENU.COM and Vision Direct, Inc., Defendants.
      3

      No. 02 Civ. 8043(DAB).

      4

      United States District Court, S.D. New York.

      5

      December 22, 2003.

      6

      [468] [469] [470] [471] Marshall R. King, Terence P. Ross, Gibson, Dunn & Crutcher, L.L.P., New York, NY, for the Plaintiff.

      7

      Arnold Paul Lutzker, Carl Herman Settlemyer, Maureen Cohen Harrington, Lutzker & Lutzker, L.L.P., Washington, DC, Celia Goldwag Barenholtz, John A. Morris, Kronish, Lieb, Weiner & Hellman L.L.P., New York, NY, for Defendant WhenU.com.

      8

      James D. Jacobs, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains, NY, for Defendant Vision Direct, Inc.

      9
      Opinion
      10
      BATTS, District Judge.
      11

      Before the Court is a Motion for a Preliminary Injunction by Plaintiff 1-800 Contacts ("1-800 Contacts" or "Plaintiff") to enjoin Defendants from delivering to computer users competitive "pop-up" Internet advertisements, in violation of federal and state copyright, trademark, and unfair competition laws. For the reasons set forth herein, Plaintiff's motion is GRANTED in part.

      12
      [472] I. BACKGROUND
      13
      A. Procedural Background
      14

      On October 9, 2002, Plaintiff filed this action with ten claims for relief.[1] With its Complaint, Plaintiff also filed a Motion for Preliminary Injunction,[2] to enjoin Defendants from: 1.) Placing, or causing any other entity to place, advertisements of any kind on any copy of Plaintiff's website, without the express consent of the Plaintiff; 2.) Altering or modifying, or causing any other entity to alter or modify, any copy of Plaintiff's website in any way, including its appearance or how it is displayed; 3.) Infringing, or causing any other entity to infringe, Plaintiff's copyright; 4.) Making any designations of origin, descriptions, representations or suggestions that Plaintiff is the source, sponsor or in any way affiliated with Defendant Vision Direct's website and services; 5.) Acting in any manner that causes Defendants' products, services, websites, or advertisements to be in any way associated with Plaintiff's products, services, or website, including, but not limited to, any means of marketing advertising, or agreements with third parties likely to induce the belief that Defendants or Defendants' websites, advertisements, products or services are in any way associated connected, or affiliated with, or licensed or authorized by Plaintiff; 6.) Infringing, or causing any other entity to infringe, Plaintiff's trademarks and/or service marks rights; 7.) Unfairly designating the origin of Defendant Vision Direct's website and services, or otherwise creating confusion regarding the origin of Defendant Vision Direct's website and services; 8.) Unfairly competing with Plaintiff in any manner; 9.) Acting, or causing another entity to act, in any manner likely to dilute, tarnish, or blur the distinctiveness of the 1-800 CONTACTS marks; 10.) Causing a likelihood of confusion or injuries to Plaintiff's business reputation; 11.) Interfering with Plaintiff's reasonable business expectations. (Plaintiff's Proposed Order, filed October 9, 2002.)

      15

      On October 22, 2002, the Court held a conference call with the parties, during which the parties agreed to cease the allegedly offending "pop-up" advertising conduct until a preliminary injunction hearing. The parties agreed to allow Defendants sufficient time to conduct a consumer survey to rebut Plaintiff's survey evidence and scheduled a Preliminary Injunction hearing for February 7, 2003.[3]

      16

      [473] On January 7, 2003, the Court ordered, by memo-endorsement of a letter request from Defendant WhenU.com ("WhenU" or "WhenU.com"), an adjournment of the Preliminary Injunction Hearing in this case to March 18, 2003. (Memo-Endorsement of Def. Jan. 6, 2003.) On January 31, 2003, Defendant WhenU.com filed its Memorandum of Law in Opposition to Plaintiff's Motion for a Preliminary Injunction ("WhenU.com Jan. 31, 2003"),[4] and Defendant Vision Direct filed its Memorandum in Opposition as well ("Vision Direct Jan. 31, 2003").[5]

      17

      On February 28, 2003, Plaintiff filed its Memorandum of Law in Reply to Defendant WhenU.com's Opposition and its Memorandum of Law in Reply to Defendant Vision Direct's Opposition ("Pl. Feb. 28, 2003").

      18

      Evidentiary hearings and argument were heard on March 18, March 19, April 8, and April 10, 2003. The Court incorporates herein the record of the evidentiary hearings and argument. Relevant hearing testimony and arguments are set forth in more detail below.[6]

      19
      B. Factual Background
      20

      The undisputed facts in this section, with the legal conclusions and facts found in the Discussion section, infra, constitute the Court's Findings of Fact and Conclusions of Law for purposes of Rule 52(a).

      21
      1. The Parties
      22

      Plaintiff 1-800 Contacts, Inc. ("1-800 Contacts") sells and markets replacement contact lenses and related products through its website, located at http://www.1800Contacts.com, and also through telephone and mail orders. (Declaration of Jason Mathison ("Mathison Dec.") ¶ 4; Plaintiff's October 9, 2002 Memorandum ("Pl. Oct. 9, 2002") at 3). Plaintiff has registered the "WE DELIVER, YOU SAVE" mark with the United States Patent and Trademark Office ("USPTO"), and has filed for registration of the mark "1-800 CONTACTS" and the 1-800 CONTACTS logo. (Complaint ("Compl.") Ex A-C; Pl. Oct. 9, 2002 at 4.) Plaintiff has expended considerable sums on marketing these marks; in 2001, 1-800 Contacts spent $27,118,000 on marketing. (Mathison Dec. ¶ 7; Pl. Oct. 9, 2002 at 4.) Since the founding of 1-800 Contacts in 1995, Plaintiff has continuously used its service marks to promote and identify its services in the United States and abroad. (Mathison Dec. ¶ 6) Plaintiff's sales have grown from $3,600,000 in 1995 to $169,000,000 in 2001. (Mathison Decl. ¶ 8; Pl. Oct. 9, 2002 at 3.)

      23

      Plaintiff is the sole owner of the 1-800Contacts.com website. (Mathison Dec. ¶ 5; Pl. Oct. 9, 2002 at 4.) Plaintiff registered its copyright to the 1-800Contacts.com website with the Copyright Office of the United States Library of Congress on October 2, 2000.[7] (Compl., Exh. D.) Over 221,800 people visited Plaintiff's [474] website in the month of September, 2002.[8] (Mathison Dec. ¶ 9; Pl. Oct. 9, 2002 at 4.)

      24

      Defendant Vision Direct, Inc. sells and markets replacement contact lenses and related products through its website, located at http://www.visiondirect.com. (Mummery Dec. ¶ 2; Vision Direct Jan. 31, 2002 at 2.) Vision Direct and 1-800 Contacts are competitors. Id. Defendant Vision Direct has registered and maintains a registration in the domain name[9] www.www1800Contacts.com. (Barrier Aff. Ex. A.)

      25

      Defendant WhenU.com is a software company that has developed and distributes, among other products, the "SaveNow" program, a proprietary software application. (Tr. at 34; Naider Aff. ¶ 22.)

      26
      2. The Internet and the Windows Operating Environment
      27

      Since Plaintiff's claims arise from alleged anti-competitive and infringing action by Defendants through the Defendants' use of proprietary software that is distributed to computer users, a brief explanation of the Internet, the computer operating environment and associated terms and definitions is helpful. These facts are not in dispute.

      28

      The Internet is a global network of millions of interconnected computers. (Compl.¶ 20.) With a computer that is connected to the Internet, a computer user can access computer code and information that is stored on the Internet in repositories called "servers." (Tr. at 137-38.) Much of the information stored in servers on the Internet can be viewed by a computer user in the form of "webpages," which are collections of pictures and information, retrieved from the Internet, and assembled on the user's computer screen. (Compl.¶ 20.) "Websites" are collection of webpages that are organized and linked together to allow a computer user to move from webpage to webpage easily. (Id.) A single website may contain information or pictures that are stored on many different servers. (Tr. at 139-140.)

      29

      To gain access to the Internet, a computer user generally connects to the Internet using an internet service provider ("ISP").[10] (Tr. at 136.) The ISP provides access to the Internet, which allows the user's computer to communicate with the Internet. (Tr. at 136.) Once a connection to the Internet has been established through an ISP, a user may "browse" or "surf" the Internet by using a software program called an Internet browser ("browser"). (Tr. at 136.) Microsoft Internet Explorer is one example of a browser program.[11] (Tr. at 135.) Through the browser, a user retrieves information located on Internet servers.[12] (Tr. at 138.)

      30

      To retrieve information from the Internet, a user may type the address[13] of a [475] website into the web browser — the user's computer will then request information from the server or servers on which the website resides,[14] and then will access the pertinent information on those servers. (Tr. at 137-38.)

      31

      Many computer users ("users") access the Internet with computers that use the Microsoft Windows operating system ("Windows"). Windows allows a user to work in numerous software applications simultaneously. (Naider Aff. at 4.) In Windows, the background screen is called the "desktop." When a software program is launched, a "window" appears on the desktop, within which the functions of that program are displayed and operate. (Naider Aff. at 4.) A user may open multiple windows simultaneously, allowing the user to launch and use more than one software application at the same time. Individual windows may be moved around the desktop, and because the computer screen is two-dimensional, one window may obscure another window, thus appearing to be "in front of" another window. (Naider Aff. at 4-5.)

      32

      A "search engine" is a website (or in some cases, a software program) that a computer user can use to find information on the Internet.[15] Typically, a computer user will type in a word or words describing what is sought, and the search engine will identify websites and webpages that contain those words.[16]

      33
      [476] 3. The SaveNow Program
      34

      The following description of the operation and function of the SaveNow software is not in dispute. The SaveNow program is computer software that only operates in the Microsoft Windows operating system. (Tr. at 27.) The SaveNow software, if installed, resides on individual computer users' computer desktops. (Tr. at 34; Naider Aff. ¶ 22.) When a computer user who has installed the SaveNow software (a "SaveNow user") browses the Internet, the SaveNow software scans activity conducted within the SaveNow user's Internet browser, (Naider Aff. ¶ 25), comparing URLs, website addresses, search terms and webpage content accessed by the SaveNow user with a proprietary directory,[17] using algorithms contained in the software. (Tr. at 34, 55; Naider Aff. ¶ 23.)

      35

      Entering an URL into the browser can "trigger" the SaveNow software to deliver a "pop-up" advertisement.[18] (Tr. at 172.) When a user types a search word or URL into the Internet browser, the SaveNow software looks to see what category of products or services the address belongs to. (Tr. at 144.) In general, if the SaveNow user's Internet usage "matches" information contained in the SaveNow directory, the SaveNow software will determine that an ad should be shown, will retrieve a pop-up advertisement from a server over the Internet, and will display that pop-up ad in a new window appearing on the user's computer screen. (Tr. at 34, 141, 145; Naider Aff. ¶ 26.) More pertinent to this case, when a user types in "1800contacts.com," the URL for Plaintiff's website, the SaveNow software recognizes that the user is interested in the eye-care category, and retrieves from an Internet server a pop-up advertisement from that category. (Tr. at 144-45.) Mr. Naider described the functioning of the proprietary directory contained in the SaveNow program:

      36

      [E]ssentially, the program contains a directory of the Internet, and ... has over 40,000 elements in this directory. Elements such as URL's, but many other elements, such as search terms, something we call key-word algorithms. So an example of a key-word algorithm would be, the software processes the content of the page and if I'm reading an article where the word "diabetes" appears four times and the word "type I" or "type II" in conjunction with that, that would be an example of a key-word algorithm. All of those elements, the URL's, the search terms, the key-word algorithms, are processed and compared against this directory of 40,000, and growing, elements. And then a decision is made that says, OK, this user is engaged in activity in a particular category — again, it may be hotel travel or air travel, in this case contact lenses or eye care — and the ad units themselves are basically associated with categories, such that if the software detects, by looking at these elements, activity in a category, it may display an ad that's relevant to that category.

      37

      (Tr. at 65.)

      38

      Usually there is a "few-second" delay between the moment a user accesses a [477] website, and the point at which a SaveNow pop-up advertisement appears on the user's screen. (Tr. at 146.)

      39

      If a SaveNow user who has accessed the 1-800 Contacts website and has received a WhenU.com pop-up advertisement does not want to view the advertisement or the advertiser's website, the user can click on the visible portion of the window containing the 1-800 Contacts website, and the 1-800 Contacts website will move to the front of the screen display, with the pop-up ad moving behind the website window. (Tr. at 63-64.) Or, if the user recognizes that a different website has appeared on the screen, the user can close the pop-up website by clicking on its "x," or close, button. If the user clicks on the pop-up ad, the main browser window (containing the 1-800 Contacts website) will be navigated to the website of the advertiser that was featured inside the pop-up advertisement. (Tr. at 63.)

      40

      The contents of the SaveNow proprietary directory are automatically updated. (Tr. at 142.) When a SaveNow user connects to the Internet, the SaveNow software receives information and updates itself without any prompting or conscious choice by the user. (Tr. at 142-43.) The SaveNow software does not store any information about the individual computer user, or track the user's usage of the computer. (Tr. at 28.) Once installed, the SaveNow software requires no action by the user to activate its operations; instead, the SaveNow software responds to a user's "in-the-moment" activities by generating pop-up advertisement windows that are related to the content of the websites a user has accessed. (Tr. at 27-28.)

      41

      Computer users typically install the SaveNow software as part of a "bundle"[19] of other software applications that consumers download at no cost. (Tr. at 67, Naider Aff. ¶ 33). A user who installs a typical software "bundle" clicks through four screens,[20] (Tr. at 68), and to proceed with installing the software "bundle," is required to approve a license agreement with WhenU, by clicking "I Agree" on the installation window.[21] (Tr. at 68; Memo in Opposition at 10). There have been approximately 100 million downloads of the [478] SaveNow program. (Tr. at 166.) The SaveNow software can be uninstalled from a user's computer, and Mr. Naider testified that approximately 75 million people have uninstalled the program. (Tr. at 70-71.)

      42

      The SaveNow software generates at least three kinds of ads — an ad may be a small "pop-up" advertisement appearing in the bottom right-hand corner of a user's screen; it may be a "pop-under" advertisement that appears behind the webpage the user initially visited; or it may be a "panoramic" advertisement that stretches across the bottom of the user's computer screen. (Naider Aff. ¶ 41.)

      43

      Pop-up advertisement windows generated by the SaveNow software are "branded" — a green "$" mark and the text "SaveNow!" are affixed to the top of the pop-up window. On the upper right-hand corner of the SaveNow ad windows, next to the "X" symbol that typically closes windows, is a "?" symbol that, when clicked, opens a new window containing a notice explaining the SaveNow software and a link to a page with more detailed information for removing or "uninstalling" the software.[22] (Tr. at 56-61; Naider Aff. ¶ 42.) As of the filing of this lawsuit, the pop-up advertisement windows contained text, at the bottom right of the pop-up window, stating: "A WhenU offer — click? for info."[23] Id.

      44

      One of the elements contained in the SaveNow proprietary software directory is the URL, "1800Contacts.com," which is the Internet website address for Plaintiff 1-800 Contacts. (Tr. at 134.) Since at least the Summer of 2002, when computer users who had the SaveNow software installed on their computers ("SaveNow users") accessed Plaintiff's website, pop-up or pop-under advertisements for Defendant Vision Direct would appear on the user's screen. (Pl. Oct. 9, 2002 at 8; Mathison Decl. at ¶ 14).

      45

      WhenU.com's clients "buy categories" of goods or services, paying for delivery of their advertisements or coupons to SaveNow users' screens when the SaveNow users are working in relevant categories. (Tr. at 65-66, 152.) Under some of WhenU.com's contracts, advertisers pay WhenU.com to deliver pop-up advertisements to SaveNow users' screens; under other contracts, advertisers pay WhenU.com based on the number of people who click on the pop-up advertisements; still other advertisers pay WhenU.com based on the number of actual purchases made by SaveNow users from pop-up ads that have been delivered to their computers. (Tr. at 152.) Thus, WhenU.com has a fee relationship with the advertisers who pay it to deliver pop-up advertisements, and a free relationship with consumers who [479] install the SaveNow software on their computers, but no relationship with the companies on whose websites the pop-up advertisements appear.

      46
      C. Plaintiff's Theory of the Case
      47

      Plaintiff argues that it has been harmed by the creation of an "impermissible affiliation between Plaintiff and Defendant," since because of Defendants' pop-up advertising, users "are likely to have the impression that the pop-up advertisements operate in cooperation with, rather than in competition against, the Plaintiff." (Pl. Oct. 9, 2002 at 10-11). Plaintiff argues the "pop-up advertisements also interfere with and disrupt the carefully designed display of content" on Plaintiff's copyrighted website. (Id.) Plaintiff argues further that the pop-up advertising enables Defendants to "profit illegally from unauthorized pop-up advertisements delivered to Plaintiff's website," (Id. at 11), and that through the pop-up advertisements, "Defendants are free-riding on the name, reputation, and goodwill that Plaintiff has worked so hard to attain." (Id.) Plaintiff argues that, by causing pop-up advertisements to appear on the copyrighted 1-800 Contacts website, Defendants have altered the copyrighted website, and in so doing, have infringed Plaintiff's exclusive rights to display its copyrighted works and to prepare derivative works. (Tr. at 359.) Plaintiff also argues that Defendants' pop-up advertising has created a likelihood of confusion between Defendant Vision Direct and Plaintiff, and that since Plaintiff has a valid trademark, Defendants have infringed Plaintiff's trademark. (Tr. at 369-70.)

      48

      Plaintiff's expert, William D. Neal, conducted a consumer survey to determine whether Defendants' pop-up advertising scheme was likely to cause confusion as to the source of the pop-up advertisements. (Tr. at 209, 243; Neal Dec. ¶ 3.) Specifically, Mr. Neal's overall research goal was to "[d]etermine whether online shoppers who wear or expect to wear contact lenses in the future, and who have the SaveNow software from WhenU.com installed on their computers, are confused and/or misled as to the source of SaveNow generated pop-up advertisements." (Neal Dec., Ex. B.)

      49

      Mr. Neal began with an Internet panel[24] to gather potential respondents to his survey. (Tr. at 210, 215.) Mr. Neal testified that from the initial 3.5 million people in the Internet panel, he selected a sample of 100,000 people,[25] and invited them to take a survey, and that approximately 46,000 people responded to that invitation. (Tr. [480] at 210.) Of this group, Mr. Neal determined that approximately 9.6% had the SaveNow software installed on their computers. (Tr. at 210.) Mr. Neal testified that his survey data was based on responses of 994 respondents, about half of whom were individuals who had the SaveNow software installed on their computers. (Tr. at 209.) The survey was administered online. (Neal Dec., Ex. B.)

      50

      From the survey, Mr. Neal concluded that 76% of survey respondents who had SaveNow software on their computer did not know that SaveNow software generates pop-up advertisements on their computer screens when they visited certain websites.[26] (Tr. at 211; Neal Dec. at ¶ 7c). Mr. Neal concluded that 60% of survey respondents who had experienced pop-up advertisements on their computer believe that "pop-up advertisements are placed on the website on which they appear by the owners of that site,"[27] and 52% believe that "pop-up advertisements have been pre-screened and approved by the website on which they appear."[28] (Tr. at 211; Neal Dec. at ¶ 7d). Mr. Neal also concluded that 51% of the survey respondents who had SaveNow software installed on their computer had never heard of that software program,[29] and that 68% did not know it was installed on their computer prior to his research study.[30] (Tr. at 210, Neal Dec. at ¶ 7b).

      51

      Mr. Neal testified that "a specific trademark was not researched" in his survey. (Tr. at 249.) Mr. Neal testified he did not view a SaveNow pop-up advertisement prior to administering the survey, (Tr. at 258), and did not show survey respondents an example of a SaveNow pop-up advertisement. (Tr. at 264.) Mr. Neal's survey did not ask whether the respondent had ever seen a SaveNow pop-up ad, (Tr. at 265.), did not attempt to distinguish between SaveNow pop-up ads and other pop-up ads, (Tr. at 266-67), and did not determine whether differences between SaveNow ads and other pop-up ads might have affected users' perceptions of the advertisements provided by SaveNow. (Tr. at 268-69.) Mr. Neal testified that although he had not provided survey respondents with an example of a SaveNow pop-up advertisement, it was "very reasonable" to assume that SaveNow users would have seen SaveNow pop-up ads. (Tr. at 272.) Mr. Neal testified that the reason he did [481] not research a specific trademark was that he understood

      52

      that there is a plethora of ads that can be demonstrated or generated through SaveNow, everything from contact lenses to indoor/outdoor carpet to almost anything else. To try to generate that plethora of ads in a research experiment would have been, one, very difficult. The other problem we have is how do you design a control for that? It's nearly impossible. My alternative position was to rely on people's recent recall of what they were seeing in terms of pop-up ads and ask them about their beliefs of those pop-up ads, who generated them, who authorized them, who was paying for them.

      53

      (Tr. at 272-73.)

      54
      D. Defendant WhenU's Theory of the Case
      55

      According to Avi Naider, CEO of WhenU.com, the SaveNow software was conceived to "revolutionize marketing from implied interest, interests that are deducted [sic] based on who a consumer is and what their personal information is, to actual interests, when you shop, when you travel, when you invest. And that's why we named the company WhenU.com." (Tr. at 24.) Mr. Naider testified that the way the SaveNow software works is that

      56

      the software runs in the background, and it doesn't require anything of the user. That's the point. Meaning if the user actually has to go and start saying to the software, OK, fine, offers on travel, they can do that through a search engine. This is a piece of software that is designed to remind the user, to push information to the user. So the user is on the Internet, they're looking at, let's say, travel or any other type of activity. The software, in a separate window, will deliver, or it may deliver, an ad to them that's relevant based on their in-the-moment activity.

      57

      (Tr. at 27, emphasis added.)

      58

      Mr. Naider testified that the SaveNow program performs "contextual marketing," which Mr. Naider defined as "delivering something to a consumer when they need it." (Tr. at 29.) As an example of contextual marketing, Mr. Naider discussed a receipt he had received after completing a grocery-store purchase of, among other things, a lactose-free, non-dairy milk product. Printed at the bottom of the store receipt was a coupon for a lactose-free, non-milk product, which Mr. Naider testified he received because a marketing company had identified his potential preferences from his purchasing behavior. (Tr. at 31.)

      59

      Mr. Naider analogized the operation of the pop-up windows generated by the SaveNow software to the functioning of several other common software programs. Specifically, using images from computer screen captures, Mr. Naider demonstrated that, in Windows, it is possible to have multiple windows, containing unrelated program applications, running at the same time. (Tr. at 36.) Mr. Naider continued, by demonstrating that windows generated by a Windows "instant messaging" application[31] would pop up without warning while he was working in an unrelated spreadsheet program, in order to deliver messages sent over the Internet by friends. (Tr. at 37-38.) Mr. Naider also testified that on his home computer he received messages and alerts from programs,[32] that [482] he had not triggered through any action of his own. (Tr. at 41.) Mr. Naider testified that, in general, computer users in the Windows operating environment expect to be working in multiple windows simultaneously, and that in "pushing" information to the user, the SaveNow software was acting much like other software applications that opened new "pop-up" windows. (Tr. at 41, 49-50.) Mr. Naider also testified that the pop-up windows had "no physical relationship with the main browser window," that the SaveNow software had "absolutely no knowledge" of where the main browser window was, and that the pop-up advertisements did not alter the main browser window in any way. (Tr. at 51.)

      60

      At the hearing, Professor John Deighton, an expert in interactive marketing, testified that as a result of the structure of the Internet, a new publishing and retailing model has developed. (Tr. at 85-94.) Professor Deighton said the economic investment required to publish on the Internet is much lower than in traditional publishing industries[33] and that, although 60 percent of the population of the United States is part of the Internet "audience," "no significant group of that audience is in any one place at any one time." (Tr. at 84-88.) As a result, Professor Deighton said that a new model has emerged, wherein publishing and retailing have "conjoined," and that individual websites are "a combination of publisher and marketplace," since it is expected that the websites will be read like a publication, but also an expectation that there will be competition, as in a marketplace. (Tr. at 88-90.) Professor Deighton said that the WhenU software is an example of a model for retailing and publishing that "will return to the Internet some of the cost that was made to build the Internet." (Tr. at 89.)

      61

      Professor Deighton also testified that a preliminary injunction in this case would have "some short-term immediate impacts and some chilling long-term impacts." (Tr. at 98.) Specifically, Professor Deighton testified that consumers who had elected to use the WhenU.com software would be frustrated in their attempts to continue to use it, and that competition in the advertising sector might be chilled. (Tr. at 98-99.) Dr. Deighton testified further:

      62

      The Internet is not a decade old and we have seen enormous fortunes made and lost. That process must be allowed to continue if the right model to support this wonderful institution is going to be discovered. I think that unnecessarily harsh restrictions on this initiative would discourage others from similar initiatives or improved initiatives.

      63

      (Tr. at 100.)

      64

      Defendants did not conduct their own survey to determine whether the SaveNow software caused consumer confusion. Instead, to challenge the validity of Mr. Neal's survey, Defendant WhenU.com produced Dr. Jacob Jacoby. Dr. Jacoby attacked Mr. Neal's research on a number of fronts.

      65

      Dr. Jacoby testified that because Mr. Neal failed to show any WhenU.com ads to survey respondents, survey respondents could not have had a "clear indication in their minds as to what [Mr. Neal] meant" when he defined pop-up ads. (Tr. at 290-91.)

      66

      Dr. Jacoby also testified that if Mr. Neal had intended to conduct a survey that revealed what respondents recalled about [483] pop-up advertising, Mr. Neal should have asked the survey respondents what they recalled about advertising, instead of providing his own definition of pop-up advertisements, followed by questions about pop-up advertisements. (Tr. at 294.) Dr. Jacoby testified that he had "never seen recall used in assessing likelihood of confusion," (Tr. at 295.), and that use of recall threatened the validity of Mr. Neal's survey, since there was nothing to guarantee that pop-up advertisements the survey respondents had seen were generated by the SaveNow program. (Tr. at 296.) Dr. Jacoby testified that this was significant because pop-up advertisements vary in size, placement, and content. (Tr. at 297.) Dr. Jacoby testified that the recall problem could have been avoided by use of an example, in order to distinguish SaveNow advertisements from other pop-up advertisements. (Tr. at 298.) In sum, Dr. Jacoby testified that Mr. Neal's suggestion of a definition of pop-up advertisements was "a leading, loaded kind of language." (Tr. at 304.)

      67

      Dr. Jacoby further testified that Mr. Neal inappropriately colored the language of questions, by suggesting that pop-up advertisements appeared "on a website" instead of on the computer screen, and by telling the respondents that pop-up advertisements were not authorized by the websites on which they appeared. (Tr. at 306-09.)

      68

      Avi Naider, the president of WhenU.com, testified that a preliminary injunction would result in damage to his company in excess of $10,000,000 over twelve months. (Tr. at 34.) His estimate of this amount was based on current or future advertisers who would cancel their advertising orders in order to avoid negative publicity or possible litigation. (Tr. at 33, 165.)

      69

      In a declaration attached to Defendant Vision Direct's Memorandum of Law, Ian Mummery stated:[34]

      70

      A preliminary injunction against Vision Direct would undoubtedly damage it, possibly irreparably. Vision Direct's reputation is unblemished and must remain so if Vision Direct is to continue its spectacular success. Customers will undoubtedly be hesitent [sic] to purchase contact lenses from a company that has been enjoined.

      71

      (Mummery Dec. ¶ 9).

      72

      In addition, Mr. Mummery's declaration stated that on September 17, 2002, three weeks before this action was filed, Defendant Vision Direct voluntarily instructed its co-defendant, WhenU.com, to cease placing "pop-up" ads on Plaintiff's website, and that Vision Direct has no intention of resuming use of the offending pop-up advertising. (Mummery Dec. ¶ 7, 8.) Mr. Mummery's declaration also stated that Defendant Vision Direct had sued its co-defendant WhenU.com and Coastal Contacts, an Internet replacement contact lens retailer who is not a party in this case, for conduct that is substantially the same as that for which Vision Direct is being sued in this case.[35] (Mummery Dec. ¶ 8.)

      73
      [484] II. DISCUSSION
      74
      A. Standard for Preliminary Injunction
      75

      It is well-settled in this Circuit that "a party seeking a preliminary injunction must demonstrate (1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly toward the party requesting the preliminary relief."[36] Fed. Express Corp. v. Fed. Espresso, Inc., 201 F.3d 168, 173 (2d Cir.2000); Procter & Gamble Co. v. Chesebrough-Pond's, Inc., 747 F.2d 114, 118 (2d Cir.1984); Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 314-15 (2d Cir.1982); United States v. Siemens Corp., 621 F.2d 499, 505 (2d Cir.1980).

      76
      B. Copyright Claims
      77

      To establish a prima facie case of copyright infringement, a Plaintiff must show "1) Ownership of valid copyright, and 2) Copying of constituent elements of the work that are original." Feist Publications Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); On Davis v. The Gap, Inc., 246 F.3d 152, 158-59 (2d Cir.2001) (finding on the basis of this standard that "the owner of a copyright is thus entitled to prevail in a claim for declaratory judgment of infringement without showing entitlement to monetary relief").

      78

      Plaintiff has filed as an exhibit to its Complaint a certificate of registration with the United States Copyright Office of the "1800 Contacts Web site," (Memorandum in Support at 4; Complaint Exh. D); this serves as prima facie evidence of valid ownership of a copyright. 17 U.S.C. § 410(c). This protection extends to both the computer code for the website and the screen displays of the website. OP Solutions, Inc. v. Intellectual Property Network Ltd., 1999 WL 47191 at *10 (S.D.N.Y.1999), 1999 U.S. Dist. LEXIS 16639, at *10 (noting that the protection accorded "non-literal" elements of a computer program extends to screen displays); Harbor Software, Inc. v. Applied Systems, Inc., 925 F.Supp. 1042, 1045 (S.D.N.Y.1996) (finding sufficient expressive choices in the selection and arrangement of information compiled in screen reports and displays to satisfy the minimal requirement of originality to warrant protection).

      79

      Plaintiff alleges that Defendants have "copied" constituent elements of Plaintiff's website in the "broad sense of invasion of one of the exclusive rights secured to copyright owners under the Copyright Act." (Pl. Oct. 9, 2002 at 28) (quoting Dynamic Solutions, Inc. v. Planning & Control, Inc., 646 F.Supp. 1329, 1337 n. 12 (S.D.N.Y.1986)). Plaintiff argues that the 1-800 Contacts website, as perceived by a SaveNow user,[37] appears differently than [485] the copyrighted website, and that the website's appearance has therefore been "modified and that Defendants' pop-up scheme caused this modification." (Pl. February 28, 2003 at 7). Specifically, Plaintiff alleges that Defendants have invaded Plaintiff's exclusive right to display the 1-800 Contacts website, in violation of 17 U.S.C. § 106(1), and its exclusive right to prepare derivative works based on the 1-800 Contacts website, secured to Plaintiff under 17 U.S.C. § 106(2).

      80
      1. Display Right, 17 U.S.C. § 106(1)
      81

      Plaintiff alleges that Defendants have invaded Plaintiff's exclusive right to display the 1-800 Contacts website. 17 U.S.C. § 106(1). Plaintiff argues it gives computer users a license to "use and display" its website, but does not give them a license to alter the website or change its appearance in any way. Plaintiff argues that, by delivering pop-up advertisements to a SaveNow user's computer while the user views Plaintiff's website, Defendants create a new screen display that incorporates Plaintiff's copyrighted work, thereby infringing Plaintiff's exclusive right to display its copyrighted work. (Memorandum in Support at 29).

      82

      For this Court to hold that computer users are limited in their use of Plaintiff's website to viewing the website without any obstructing windows or programs would be to subject countless computer users and software developers to liability for copyright infringement and contributory copyright infringement, since the modern computer environment in which Plaintiff's website exists allows users to obscure, cover, and change the appearance of browser windows containing Plaintiff's website.

      83

      Without authority or evidence for the claim that users exceed their license to view the copyrighted 1-800 Contacts website when they obscure the website with other browser windows (including pop-up ads generated by the SaveNow program), Plaintiff has little basis for its claim that Defendants have infringed its display right.

      84
      2. Derivative Works Right, 17 U.S.C. § 106(2)
      85

      Plaintiff also alleges that Defendants have invaded Plaintiff's exclusive right to prepare derivative works based on the 1-800 Contacts website, secured to Plaintiff under 17 U.S.C. § 106(2).

      86

      Section 106 of the Copyright Act provides that "the owner of copyright under this title has the exclusive right to ... prepare derivative works based upon the copyrighted work." 17 U.S.C. § 106. However, Plaintiff has failed to show that [486] Defendants have created a "derivative work" that infringes Plaintiff's exclusive rights under § 106(2).

      87

      Plaintiff argues that, by delivering pop-up advertisements to a SaveNow user's computer while the user views Plaintiff's website, Defendants are adding a Vision Direct advertisement to Plaintiff's copyrighted screen display, thus creating a derivative of the Plaintiff's copyrighted screen display, and in the process violating "two fundamental tenets of copyright law — exceeding the license granted and destroying the author's control over the manner in which its work is presented." (Pl. Oct. 9, 2002 at 30).

      88

      For the reason set forth above, to the extent Plaintiff's derivative work argument relies on a theory that Defendants cause or contribute to copyright infringement by a SaveNow user when viewing Plaintiff's copyrighted screen display, in excess of the license granted by Plaintiff,[38] this argument fails.

      89

      Plaintiff's second theory is that Defendants have created a derivative work by adding to or deleting from Plaintiff's copyrighted website, and therefore have transformed or recast the website, in derogation of Plaintiff's exclusive derivative work right. (Pl. Oct. 9, 2002 at 29.) Plaintiff argues that to infringe their derivative work right, Defendants need not have made a copy of the original work in order to create a derivative work,[39] and that to violate its protected right to prepare derivative works, Defendants "need only transform or recast the copyrighted work in some way," as by "adding to or deleting from" Plaintiff's copyrighted website. (Pl. Oct. 9, 2002 at 29.) Plaintiff analogizes the pop-up ads in this case to advertisements added to and interspersed throughout the text of a copyrighted book in National Bank of Commerce v. Shaklee Corp., 503 F.Supp. 533 (W.D.Tex.1980), which were found to be "unauthorized additions" to the book text, in violation of the book author's copyright. (Pl. Oct. 9, 2002 at 30). Plaintiff's argument fails because Defendants have not created a "derivative work."

      90

      In order for Plaintiff's derivative work right to have been infringed, the Court must find that the screen display of the 1-800 Contacts website, with Defendant's pop-up ads, is in fact a "derivative work," as defined at 17 U.S.C. § 101.

      91

      A "derivative work" is:

      92

      ... a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a `derivative work'.

      93

      17 U.S.C. § 101 (emphasis added).

      94

      In general, copyright protection is limited to protection of

      95

      ... original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either [487] directly or with the aid of a machine or device.

      96

      17 U.S.C. § 102.

      97

      A work is "fixed" in a tangible medium of expression:

      98

      ... when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is "fixed" for purposes of this title if a fixation of the work is being made simultaneously with its transmission.

      99

      17 U.S.C. § 101.

      100

      Applying the "fixation" requirement here, Plaintiff has failed to show that its website, and Defendants' pop-up advertisements are "sufficiently permanent or stable to permit it to be perceived, reproduced or otherwise communicated for a period of more than transitory duration." 17 U.S.C. § 101. Indeed, Defendants' pop-up ad windows may be moved, obscured, or "closed" entirely — thus completely disappearing from perception, with a single click of a mouse. (Tr. at 63-64.) Moreover, to the extent pop-up advertisements fit the description of "transmitted images," they are not "fixed" works, since there is no evidence that a fixation is made "simultaneously with" the pop-up advertisements' "transmission" to the viewer of the website.[40] 17 U.S.C. § 101.

      101

      Given that the screen display of the 1-800 Contacts website with Defendant's pop-up ads is not "fixed in any medium," it is not sufficiently "original" to qualify as a derivative work under the second sentence of 17 U.S.C. § 101.

      102

      The first sentence of 17 U.S.C. § 101 also allows "non-original" works to qualify for "derivative" work status. Since the screen display of the 1-800 Contacts website with Defendant's pop-up ads is not a "translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation," for Plaintiff's to prevail, it must show that Defendants have "recast, transformed, or adapted" the 1-800 Contacts website. None of these three actions seems to describe what is done to Plaintiff's website by Defendants' pop-up ads, since Plaintiff's website remains "intact" on the computer screen. Defendants' pop-up ads may "obscure" or "cover" a portion of Plaintiff's website — but they do not "change" the website, and accordingly do not "recast, transform or adapt" the website. Lee v. A.R.T. Company, 125 F.3d 580, 582 (7th Cir.1997) (mounting plaintiff's art works on ceramic tiles did not create "derivative work," and therefore did not infringe plaintiff's copyright). Moreover, if obscuring a browser window containing a copyrighted website with another computer window produces a "derivative work," then any action by a computer user that produced a computer window or visual graphic that altered the screen appearance of Plaintiff's website, however slight, would require Plaintiff's permission. A definition of "derivative work" that sweeps within the scope of the copyright law a multi-tasking Internet shopper whose word-processing program [488] obscures the screen display of Plaintiff's website is indeed "jarring," and not supported by the definition set forth at 17 U.S.C. § 101. See id.

      103

      Since Plaintiff has failed to demonstrate that Defendants have invaded the exclusive rights secured to Plaintiff under the Copyright Act, there is little likelihood that Plaintiff will succeed on the merits of its copyright claims. Dynamic Solutions, Inc. v. Planning Control, Inc., 646 F.Supp. 1329, 1337 n. 12 (S.D.N.Y.1986). In view of this finding, there is no need to address the question of irreparable injury on these grounds.

      104

      Accordingly, Plaintiff's motion for a preliminary injunction based on the Defendants' alleged infringement of Plaintiff's copyrights is DENIED.

      105
      C. Trademark Infringement
      106

      The Lanham Act prohibits the use in commerce, without consent, of any "registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods," in a way that is likely to cause confusion. 15 U.S.C. § 1114(1)(a). The act also prohibits the infringement of any unregistered, common law trademark. 15 U.S.C. § 1125(a)(1); Time, Inc. v. Petersen Publishing Co., 173 F.3d 113, 117 (2d Cir.1999); Genesee Brewing Co., Inc. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir.1997). Under 15 U.S.C. § 1125(a)(1), the plaintiff has the burden of proving:

      107

      a) ownership of a valid mark that is entitled to protection under the Lanham Act;

      b) Defendant's use of the mark is likely to cause confusion within the consuming public.[41]

      108

      In a trademark infringement case, "a showing of likelihood of confusion establishes both a likelihood of success on the merits and irreparable harm ... assuming that the plaintiff has a protectible mark." Hasbro, Inc. v. Lanard Toys, Ltd., 858 F.2d 70, 73 (2d Cir.1988) (citations omitted).

      109
      1. "Use" under the Lanham Act
      110

      Defendant WhenU.com argues it is not using Plaintiff's mark for purposes of the Lanham Act. Defendant notes that, as a result of features of the Windows operating environment that allow users to open multiple windows at one time, Defendant WhenU's SaveNow program generates new windows, displayed simultaneously with other pages. (Naider Aff. ¶ 40-42; WhenU.com Jan. 31, 2003 at 15-16). As a result, windows generated by SaveNow may be visible at the same time as a window containing Plaintiff's website, but WhenU.com argues this is not "use" within the Lanham Act. Defendant WhenU.com argues that "[n]othing is more fundamental than that a plaintiff cannot prevail on a claim for trademark infringement, pursuant to Section 1114 of the Lanham Act, or unfair competition, pursuant to Section 1125(a) of the Lanham Act, unless it can show that the defendant is using one of its marks in commerce in a way that is likely to cause confusion." (WhenU.com Jan. 31, 2003 at 17-18.)

      111

      A trademark is "used in commerce" for purposes of the Lanham Act "when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services." 15 U.S.C. § 1127.

      112

      [489] Defendants here use Plaintiff's mark in two ways. First, in causing pop-up advertisements for Defendant Vision Direct to appear when SaveNow users have specifically attempted to access Plaintiff's website — on which Plaintiff's trademark appears — Defendants are displaying Plaintiff's mark "in the ... advertising of" Defendant Vision Direct's services. Both Defendant Vision Direct and Plaintiff 1-800 Contacts are retail providers of replacement contact lenses, and therefore are unquestionably providing services "rendered in commerce." SaveNow users that type Plaintiff's website address into their browsers are clearly attempting to access Plaintiff's website because of prior knowledge of the website, knowledge that is dependent on Plaintiff's reputation and goodwill. SaveNow users that type Plaintiff's trademark "1-800 Contacts" into a search engine in an attempt to find the URL for Plaintiff's website are exhibiting a similar knowledge of Plaintiff's goods and services, and pop-up advertisements that capitalize on this are clearly using Plaintiff's mark. Thus, by causing pop-up advertisements to appear when SaveNow users have specifically attempted to find or access Plaintiff's website, Defendants are "using" Plaintiff's marks that appear on Plaintiff's website. 15 U.S.C. § 1127.

      113

      Second, Defendant WhenU.com includes Plaintiff's URL, , in the proprietary WhenU.com directory of terms that triggers pop-up advertisements on SaveNow users' computers. (Tr. at 134.) In so doing, Defendant WhenU.com "uses" Plaintiff's mark, by including a version of Plaintiff's 1-800 CONTACTS mark, to advertise and publicize companies that are in direct competition with Plaintiff.

      114

      Accordingly, the Court finds that Defendants have "used" Plaintiff's mark in commerce. OBH, Inc. v. Spotlight Magazine, Inc., 86 F.Supp.2d 176, 185-86 (W.D.N.Y.2000) (finding defendants to have "used in commerce" plaintiffs' mark where defendants: 1. used plaintiffs' trademark as the domain name for defendants' web site — which contained a link to defendants' other web site that was operated for commercial purposes; 2. used plaintiffs' trademark on the Internet, an international network; and 3. affected plaintiffs' ability to offer their services in commerce); Planned Parenthood Fed'n of Am., Inc. v. Bucci, 1997 WL 133313, at *3 (S.D.N.Y. Mar.24, 1997), aff'd, 152 F.3d 920 (2d Cir.1998), cert. denied, 525 U.S. 834, 119 S.Ct. 90, 142 L.Ed.2d 71 (1998).

      115

      Defendant errs in construing use "in connection with the services" to require "use as a trademark to identify or distinguish products or services." In support of its too narrow reading of the definition of "use," Defendant cites Lone Star Steakhouse v. Longhorn Steaks, 106 F.3d 355, 361 (11th Cir.1997). In Lone Star, the 11th Circuit upheld the district court's denial of the plaintiff restaurant owner's motion for a preliminary injunction, because plaintiffs had not "used" the service mark at issue prior to the defendant's registration of a similar mark. The court held that, as a matter of law, use of the mark "on a sign displayed on an interior wall of Plaintiff's ... [r]estaurant ... did not constitute a valid service mark use because it was not being used to identify or distinguish the services being offered." 106 F.3d at 361. The facts here are not controlled by the Lone Star court's reasoning. First, the question here is not whether Plaintiff adequately used its mark to establish a valid service mark; the question is whether Defendant is "using" Plaintiff's trademark. Second, even if this Court were to find that the standard for "use" required to establish a valid service mark is the same as the standard for "use" in the infringement context, in any case WhenU's use exceeds that of the plaintiff in Lone Star. Here, [490] WhenU.com is doing far more than merely "displaying" Plaintiff's mark. WhenU's advertisements are delivered to a SaveNow user when the user directly accesses Plaintiff's website — thus allowing Defendant Vision Direct to profit from the goodwill and reputation in Plaintiff's website that led the user to access Plaintiff's website in the first place.

      116

      Defendant WhenU.com also cites Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d 619, 623-25 (6th Cir.1996), wherein the Sixth Circuit reversed the district court, which had found that the defendant — who used a 1-800 telephone number that differed from plaintiff's 1-800 HOLIDAY telephone number in the use of a "zero" instead of the "o" — had "used" plaintiff's mark because there was a "clear violation of the spirit, if not the letter, of the Lanham Act." The Sixth Circuit, noting that § 32 of the Lanham Act forbids the "use in commerce [of] any reproduction, counterfeit, copy, or colorable imitation of a registered mark ... which ... is likely to cause confusion," reversed because the defendants did not actually "use" the plaintiff's mark, since plaintiff's number was 1-800 HOLIDAY,[42] and defendants were using 1-800 409-4329, and also because the defendants "did not create any confusion," since the district court found that the defendants had "never advertised or publicized anything to do with Holiday Inns or its telephone number." Holiday Inns, Inc., 86 F.3d at 623-25 (emphasis in original). Again, this case does not support Defendant WhenU.com's claim that it has not "used" Plaintiff's website within the meaning of the Lanham Act.[43]

      117
      b. Confusion Under the Lanham Act
      118

      Confusion for purposes of the Lanham Act is shown where there is a "likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question" or where "consumers are likely to believe that the challenged use of a trademark is somehow sponsored, endorsed, or authorized by its owner." New York Stock Exchange, Inc. v. New York, New York Hotel LLC, 293 F.3d 550 (2d Cir.2002) (internal citations and quotations omitted). Thus, "[c]onfusion" for purposes of the Lanham Act includes confusion "of any kind, including confusion as to source, sponsorship, affiliation, connection or identification." Guinness United Distillers & Vintners v. Anheuser-Bush, 2002 WL 1543817, *2 (S.D.N.Y.2002); Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F.Supp.2d 410, 413-14 (S.D.N.Y.2002).

      119

      Under the Lanham Act, actionable "confusion" may take a number of forms. In some cases, there may be actual confusion among members of the consuming public, and the plaintiff may be able to demonstrate — even at the preliminary injunction stage of the case — such actual confusion. E.g., Register.Com, Inc. v. Domain Registry of America, Inc., 2002 WL 31894625, *11 (S.D.N.Y.2002); Les Ballets Trockadero de Monte Carlo, Inc. v. Trevino, 945 F.Supp. 563 (S.D.N.Y.1996) (confusion [491] among consumers, plaintiff's employees, and defendant's friends sufficient to show actual confusion).

      120

      However, a plaintiff may be unable to prove actual confusion in the market — in some cases because the market for a particular mark or product has not yet developed, or because the plaintiff has acted early enough to prevent actual confusion from developing. Thus, although in order to support a claim of infringement a plaintiff must show a probability, not just a possibility, of confusion, Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 743 (2d Cir.1998), a likelihood of confusion is actionable even absent evidence of actual confusion. E.g., Hasbro, Inc. v. Lanard Toys, Ltd., 858 F.2d 70 (2d Cir.1988) (finding likelihood of confusion despite lack of evidence of actual confusion); Centaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1227 (2d Cir.1987) (finding lack of actual confusion did not undermine district court finding of likelihood of confusion), overruled on other grounds, 973 F.2d 1033, 1043-44 (2d Cir.1992); Lexington Management Corp. v. Lexington Capital Partners, 10 F.Supp.2d 271, 286 (S.D.N.Y.1998) (lack of evidence of actual confusion neither supported nor detracted from plaintiff's motion for preliminary injunction); Clinique Laboratories, Inc. v. Dep Corp., 945 F.Supp. 547, 555 (S.D.N.Y.1996).

      121

      Confusion need not be limited to the "point of sale" to be actionable under the Lanham Act. The Second Circuit has held that confusion among non-purchasers, arising from use of a mark outside of a retail environment after any sale or purchase of a product has concluded, is actionable under the Lanham Act.[44] Clinique Laboratories, Inc., 945 F.Supp. at 558 (S.D.N.Y.1996) (use of disclaimers insufficient to address post-sale confusion among consumers).

      122

      Confusion that occurs prior to a sale may also be actionable under the Lanham Act. One such type of actionable pre-sale confusion, "initial interest confusion," occurs when a consumer, seeking a particular trademark holder's product, is instead lured away to the product of a competitor because of the competitor's use of a similar mark, even though the consumer is not actually confused about the source of the products or services at the time of actual purchase. See Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir.1987).

      123

      Although the term "initial interest confusion" was coined in a Ninth Circuit case, Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir.1999), the principle that such confusion is actionable as grounds for a trademark [492] infringement action originated in this Circuit. Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir.1987); Grotrian, Helfferich, Schulz, Th. Steinweg Nachf v. Steinway and Sons, 523 F.2d 1331, 1342 (2d Cir.1975) (finding harm to the defendant in the likelihood that a consumer, upon hearing plaintiff's name and thinking it had some connection with defendant's name, would consider plaintiff's product on that basis, since plaintiff's name would attract potential customers based on the reputation built up by the defendant for many years); Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986) (acknowledging that the likelihood of confusion among potential customers is actionable harm under the Lanham Act); Jordache Enters., Inc. v. Levi Strauss & Co., 841 F.Supp. 506, 514-15 (S.D.N.Y.1993) ("Types of confusion that constitute trademark infringement include where ... potential consumers initially are attracted to the junior user's mark by virtue of its similarity to the senior user's mark, even though these consumers are not actually confused at the time of purchase".)

      124

      In Mobil Oil Corp. v. Pegasus Petroleum Corp., 229 U.S.P.Q. 890, 1986 WL 83765 (S.D.N.Y.1986), the district court found that plaintiff oil company would be harmed by "the likelihood that potential purchasers will think that there is some connection or nexus between the products and business of [defendant] and that of [plaintiff]." 229 U.S.P.Q. at 894, 1986 WL 83765. On appeal, the Second Circuit upheld the district court's finding, noting specifically that the district judge had

      125

      found a likelihood of confusion not in the fact that a third party would do business with Pegasus Petroleum believing it related to Mobil, but rather in the likelihood that Pegasus Petroleum would gain crucial credibility during the initial phases of a deal. For example, an oil trader might listen to a cold phone call from Pegasus Petroleum — an admittedly oft used procedure in the oil trading business — when otherwise he might not, because of the possibility that Pegasus Petroleum is related to Mobil.

      126

      Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 259 (2d Cir.1987).

      127

      Application of this principle to the Internet context was recognized in Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir.1999), in which the Ninth Circuit held that the Lanham Act bars a website owner from including in its HTML code any term that is confusingly similar to a competitor's mark. In Brookfield, the court found that the defendant's use of terms confusingly similar to plaintiff's trademarked term "MovieBuff" in metatags[45] placed in defendant's website would result in initial interest confusion "in the sense that, by using `moviebuff.com' or `MovieBuff' to divert people looking for `MovieBuff' to its website, [defendant] improperly benefits from the goodwill that [plaintiff] developed in its mark." Brookfield, 174 F.3d at 1062. The court held that the resulting likelihood of initial interest confusion was actionable under the Lanham Act.[46] Brookfield, 174 F.3d at 1063.

      128

      [493] District courts in this circuit have noted that, on the Internet, initial interest confusion occurs when "potential consumers of one website will be diverted and distracted to a competing website." Bihari v. Gross 119 F.Supp.2d 309, 319 (S.D.N.Y.2000) ("In the cyberspace context, the concern is that potential customers of one website will be diverted and distracted to a competing website. The harm is that the potential customer believes that the competing website is associated with the website the customer was originally searching for and will not resume searching for the original website."); BigStar Entertainment, Inc. v. Next Big Star, Inc., 105 F.Supp.2d 185, 207 (S.D.N.Y.2000) ("The concern is that many of those initially interested potential customers of plaintiff's would be diverted and distracted by defendants' site and would either believe that defendants' site is associated with plaintiff's or would not return to plaintiff's domain."); Planned Parenthood, 1997 WL 133313, at *12 (Defendant's use of a domain name and home page address similar to plaintiff's mark "on their face, causes confusion among Internet users and may cause Internet users who seek plaintiff's web site to expend time and energy accessing defendant's web site."); New York State Soc. of Certified Public Accountants v. Eric Louis Assoc., Inc., 79 F.Supp.2d 331, 342 (S.D.N.Y.1999) (Use by defendant of a domain name and metatag similar to plaintiff's common law service mark "caused a likelihood of confusion because it created initial interest confusion.").

      129

      As part of its argument that Defendants' pop-up advertising results in a likelihood of confusion, Plaintiff argues it has been injured by "initial interest confusion." (Pl. Oct. 19, 2002 at 20-21). Defendant WhenU.com devotes only a footnote to its argument that Plaintiff cannot show initial interest confusion "because consumers are not drawn to another online location without knowing where they are being taken." (Memorandum in Opposition at 24 n. 14 (citing BigStar Entm't, Inc. v. Next Big Star, Inc., 105 F.Supp.2d 185, 207-208 (S.D.N.Y.2000))). Defendant apparently misunderstands both the doctrine of initial interest confusion and the context of its quote from BigStar. The harm to Plaintiff from initial interest confusion lies not in the loss of Internet users who are unknowingly whisked away from Plaintiff's website; instead, harm to the Plaintiff from initial interest confusion lies in the possibility that, through the use of pop-up advertisements Defendant Vision Direct "would gain crucial credibility during the initial phases of a deal." Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d at 259. BigStar in no way requires that a consumer be unaware that he or she is being drawn to another online location:

      130

      Even if the customer quickly becomes aware of the competing source's actual identity and can rectify the mistake, the damage to the first user that the courts have identified manifest in three ways: the original diversion of the prospective customers' interest; the potential consequent effect of that diversion on the customer's ultimate decision whether or not to purchase caused by an erroneous impression that two sources of a product may be associated; and the initial credibility which may be accorded by the interested buyer to the junior user's products — customer consideration that otherwise may be unwarranted and that may be built on the strength of the senior user's mark, reputation and goodwill.

      131

      [494] BigStar Entertainment, Inc. v. Next Big Star, Inc., 105 F.Supp.2d 185, 207 (S.D.N.Y.2000)

      132

      The Court finds that the principle of initial interest confusion is applicable in the specific context of Internet sales, and applies the Polaroid factors[47] "with an eye to how they bear on the likelihood that"[48] Defendants' pop-up advertisements will confuse consumers into thinking that Defendants are somehow associated with Plaintiff or that Plaintiff has consented to their use of the pop-up advertisements. Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986).

      133
      3. Likelihood of Confusion
      134

      Traditionally, whether a mark is likely to cause confusion is determined by the familiar eight-factor test set forth by Judge Friendly in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961). Under the Polaroid test, courts assess[49] the likelihood of consumer confusion by examining:

      135

      1) the strength of Plaintiff's Mark;

      2) the similarity between the plaintiff's and defendant's marks;

      3) proximity of the parties' services;

      4) the likelihood that one party will "bridge the gap" into the other's product line;

      5) the existence of actual confusion between the marks;

      6) the good faith of the Defendant in using the mark;

      7) the quality of the Defendant's services;

      8) the sophistication of the consumers.

      136

      Polaroid, 287 F.2d at 495.

      137

      However, while a trial court considering the likelihood of confusion must evaluate the Polaroid factors,[50] the Second Circuit has cautioned that the Polaroid factors are not always dispositive. Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739 (2d Cir.1998); Estee Lauder Inc. v. The Gap. Inc., 108 F.3d 1503 (2d Cir.1997). Moreover, courts may consider other variables in evaluating the likelihood of confusion, and irrelevant factors may be abandoned. See Gruner + Jahr USA Publishing v. Meredith Corp., 991 F.2d 1072, 1077 (2d Cir.1993). The unique facts of each case must be considered in evaluating the likelihood of confusion. W.W.W. Pharm. Co., Inc. v. Gillette Co., 984 F.2d 567, 572 (2d Cir.1993); Thompson Medical Co. v. Pfizer Inc., 753 F.2d 208, 214 (2d Cir.1985) [495] ("[T]he complexities attendant to an accurate assessment of likelihood of confusion require that the entire panoply of elements constituting the relevant factual landscape be comprehensively examined. No single Polaroid factor is pre-eminent, nor can the presence or absence of one without analysis of the others, determine the outcome of an infringement suit.")

      138
      a. Strength of Plaintiff's Mark
      139

      In W.W.W. Pharmaceutical Co., Inc. v. Gillette Co., 984 F.2d 567, 572 (2d Cir.1993) limited on other grounds, Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 46 (2d Cir.1994), the Second Circuit set forth the test for the strength of a mark:

      140

      The focus under this factor is on the distinctiveness of the mark, or more precisely, its tendency to identify the goods sold under the mark as emanating from a particular, although possibly anonymous source. Turning on its "origin-indicating" quality in the eyes of the purchasing public, a mark's strength is assessed using two factors: (1) the degree to which it is inherently distinctive; and (2) the degree to which it is distinctive in the marketplace.

      To gauge the inherent distinctiveness of a mark, courts have used four categories: generic, descriptive, suggestive, and arbitrary or fanciful. A generic mark is generally a common description of goods and is ineligible for trademark protection. A descriptive mark describes a product's features, qualities or ingredients in ordinary language, and may be protected only if secondary meaning is established. A suggestive mark employs terms which do not describe but merely suggest the features of the product, requiring the purchaser to use imagination, thought and perception to reach a conclusion as to the nature of goods ... Fanciful or arbitrary marks are eligible for protection without proof of secondary meaning and with ease of establishing infringement.

      141

      984 F.2d at 572 (internal citations and quotations omitted).

      142

      Because Plaintiff's mark, 1-800 Contacts, "is not a common description of goods," the Court finds Plaintiff's mark is not generic. Cline v. 1-888-PLUMBING Group, Inc., 146 F.Supp.2d 351 (S.D.N.Y.2001) (finding the mark "1-888-PLUMBING" not generic, but instead descriptive).[51]

      143

      Plaintiff's 1-800 CONTACTS mark is not descriptive, since it does not convey an immediate idea of the ingredients, qualities, or characteristics of the contact lens products sold by Plaintiff, and neither informs a consumer about qualities, ingredients or characteristics nor points to contact lens' intended purpose, [496] function or intended use, size, or merit. Gruner + Jahr USA Publishing v. Meredith Corp., 991 F.2d 1072, 1076 (2d Cir.1993); Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir.1976).

      144

      Plaintiff's 1-800 CONTACTS mark is clearly suggestive since, although it may take some imagination to grasp that what Plaintiff markets is contact lenses (as opposed to electrical contacts or business contacts), the mark suggests Plaintiff's product. Thus, the Court finds that since Plaintiff's mark is suggestive, it is inherently distinctive and satisfies the first prong of the strength test set forth supra.

      145

      The 1-800 CONTACTS mark is also distinctive in the marketplace. Plaintiff has invested significant sums in marketing its marks — in 2001, Plaintiff spent $27,118,000 on marketing. (Mathison Dec. at ¶ 7.) Such efforts have generated significant sales — some $169,000,000 worth in 2001. (Id.) Over 221,800 people visited Plaintiff's website in the month of September, 2002. (Mathison Dec. at ¶ 9.) These figures are persuasive evidence that Plaintiff has established distinctiveness in the marketplace. Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F.Supp. 735, 741 (S.D.N.Y.1985) (evidence of widespread advertising and promotion of defendants' product that featured defendant's mark, continuous use of the mark for more than a century, and sales figures were all relevant to determination of the strength of the mark).

      146

      That Plaintiff's mark has gained such an identity is apparent from the fact that Defendant WhenU.com uses Plaintiff's trademarked name in its directory of terms that will "trigger" a pop-up advertisement for eye-care products.[52] Defendant WhenU.com's CEO stated in his affidavit that "[t]he web address is included in the eye-care category of WhenU's directory solely for the purpose of identifying consumers who visit the web address as consumers potentially interested in eye care products such as contact lenses." (Naider Aff. at 10). Accordingly, Plaintiff's mark passes the test for being a strong mark.

      147
      b. Similarity between Plaintiff's and Defendant's marks[53]
      148

      "In assessing the similarity of the marks, `courts look to the overall impression created by the logos and the context in which they are found and consider the totality of factors that could cause confusion among prospective purchasers.'" Lexington Management Corp. v. Lexington Capital Partners, 10 F.Supp.2d 271, 279 n. 4 (S.D.N.Y.1998), (quoting Gruner + Jahr USA Publishing, 991 F.2d at 1078 (2d Cir.1993)). A court should look not just at "the typewritten and aural similarity of the marks, but [also at] how they are presented in the marketplace" to determine: [497] 1.) whether the similarity between the two marks is likely to cause confusion and 2.) what effect the similarity has upon prospective purchasers." Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir.1996).

      149

      Defendant WhenU.com has included the URL address of Plaintiff's website, < www.1800Contacts.com>, in its proprietary directory of terms, (Tr. at 134), so that pop-up advertisements for the website of Defendant Vision Direct and other competitors will appear when computer users enter Plaintiff's URL into the address bar on their Internet browsers. (Tr. at 144-45.) Defendants also use the address www.1800Contacts.com in the advertising of Defendant Vision Direct's products by causing pop-up advertisements to appear when a SaveNow user types the address into an Internet browser.

      150

      The website address , used by Defendants in the SaveNow proprietary directory of terms incorporates completely the Plaintiff's trademark 1-800 CONTACTS. As used in the WhenU.com directory, Plaintiff's address, , differs from Plaintiff's trademark only in the omission of spaces and grammatical marks, and in the addition of the "www" and ".com." These distinctions are not significant. TCPIP Holding Co., Inc. v. Haar Communications, Inc., 244 F.3d 88, 101-02 (2d Cir.2001) (omission of spaces and addition of domain identifier ".com" or ".net" "are of little or no significance," since "it is necessary in the registration of an internet address to eliminate spaces and possessive punctuation"); OBH, Inc. v. Spotlight Magazine, Inc., 86 F.Supp.2d 176 (W.D.N.Y.2000) (finding "The Buffalo News" and "thebuffalonews.com," for all intents and purposes, identical); New York State Soc'y of Certified Pub. Accountants v. Eric Louis Assocs., Inc., 79 F.Supp.2d 331, 340 (S.D.N.Y.1999) (finding "nysscpa.com" nearly identical to "NYSSCPA"); Planned Parenthood Fed'n of Am., Inc. v. Bucci, 1997 WL 133313, at *8 (S.D.N.Y. Mar.24, 1997) (finding "plannedparenthood.com" nearly identical to "Planned Parenthood"), aff'd, 152 F.3d 920 (2d Cir.1998), cert. denied, 525 U.S. 834, 119 S.Ct. 90, 142 L.Ed.2d 71 (1998).

      151

      The similarity of the mark used by Defendants to Plaintiff's 1-800 Contacts mark is clearly relevant and increases the likelihood of confusion. If Defendants used a mark less similar to Plaintiff's mark — for example, "www.contacts.com" — then a SaveNow user who received Defendants' pop-up advertisements after typing into a browser "www.contacts.com" would be less likely to associate Plaintiff's mark with Defendants' pop-up advertisements. Accordingly, the Court finds Plaintiff's mark and the mark used by Defendants to be extremely similar, and that this similarity weighs in favor of a finding of likelihood of confusion.

      152
      c. Proximity of the parties' services
      153

      This factor is satisfied if Plaintiff shows that the parties' products are sufficiently related that customers are likely to confuse the source of origin. Lexington Management v. Lexington Capital Partners, 10 F.Supp.2d 271, 284-85 (S.D.N.Y.1998) (Noting that the Second Circuit has suggested that "the `proximity of products' factor should be considered together with the `sophistication of buyers'") (citing Cadbury Beverages v. Cott, 73 F.3d 474, 480 (2d Cir.1996)); see also Beneficial Corp. v. Beneficial Capital Corp., 529 F.Supp. 445, 449 (S.D.N.Y.1982) (noting that "the closeness of two products is, at least in part, a function of the extent to which purchasers can and do examine and distinguish them").

      154

      Here, the service offered by Plaintiff is identical to the service offered by Defendant [498] Vision Direct — both offer replacement contact lenses to consumers over the Internet. Defendant Vision Direct concedes that it is a competitor of Plaintiff. (Mummery Dec. ¶ 2.)

      155

      Defendant WhenU.com does not provide a service similar to Plaintiff's, since WhenU.com is a provider of Internet marketing services, and Plaintiff is an Internet retailer of contact lenses. However, it is apparent that WhenU's SaveNow software relies on the close similarity between Plaintiff's services and those of Defendant Vision Direct. At the hearing, WhenU's CEO, Avi Naider, described how the SaveNow software operates to trigger pop-up advertisements — by identifying the category of services provided by 1-800 Contacts, and then retrieving and displaying a pop-up advertisement of a competitor who fits into the same category of services. (Tr. at 65, 144-45.) Clearly, WhenU.com is intentionally benefitting from the fact that Defendant Vision Direct provides services that are substantially the same as Plaintiff's services.

      156

      Additionally, analysis of this factor "with an eye to" the likelihood of initial interest confusion adds support to the Court's finding that this factor weighs in favor Plaintiff. The close proximity of services provided by Defendant Vision Direct and Plaintiff increases the likelihood that consumers, having clicked on the pop-up advertisements provided by the SaveNow software, would shift their interest from Plaintiff's website and services to those of Vision Direct. Thus, the close similarity of Defendant Vision Direct's services to Plaintiff's increases the likelihood that, by "piggy-backing" on the good will and reputation of Plaintiff, Defendant's pop-up advertisements might divert potential customers from Plaintiff. Accordingly, this factor tips in favor of Plaintiff.

      157
      d. Likelihood that one party will "bridge the gap" into the other's product line
      158

      "Where the market for competing goods or services is the same, there is no need to consider whether plaintiff will bridge the gap between the markets." Planned Parenthood Federation of America, Inc. v. Bucci, 1997 WL 133313 at *8 (S.D.N.Y.1997) (declining to consider this factor where both plaintiff and defendant, whose websites were both on the Internet, were "vying for users in the same `market'") (citing Paddington Corp. v. Attiki Importers & Distributors, Inc., 996 F.2d 577, 586 (2d Cir.1993) (upholding the district court's finding that, where plaintiff's and defendant's ouzo products "would compete in the same market," the "likelihood-of-bridging-the-gap factor" was irrelevant)). Accordingly, while there is no need to address this factor, were the Court to do so, it is clear it would weigh in Plaintiff's favor.

      159
      e. Existence of actual confusion between the marks
      160

      "Actual confusion" is defined as the likelihood of consumer confusion that enables a seller to pass off his goods as the goods of another. W.W.W. Pharm. Co., Inc. v. Gillette Co., 984 F.2d 567, 574 (2d Cir.1993); Les Ballets Trockadero de Monte Carlo, Inc. v. Trevino, 945 F.Supp. 563, 571 (S.D.N.Y.1996).

      161

      However, "it is black letter law that actual confusion need not be shown to prevail under the Lanham Act, since actual confusion is very difficult to prove and the Act requires only a likelihood of confusion as to source." Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir.1986); see also Guinness United Distillers & Vintners v. Anheuser-Bush, 2002 WL 1543817, *4 (S.D.N.Y.2002) (finding plaintiff's survey, showing only 2% [499] actual confusion among consumers to weigh in favor of defendant, but nonetheless granting plaintiff's motion for preliminary injunction on the strength of other factors); Lexington Management Corp. v. Lexington Capital Partners, 10 F.Supp.2d 271, 286 (S.D.N.Y.1998) (where plaintiff provided no evidence of actual confusion in connection with its motion, this Polaroid factor neither supported nor detracted from plaintiff's motion for preliminary injunction).

      162

      As evidentiary support for its claim that consumers are likely to be confused by Defendants' pop-up advertisements as to their source, Plaintiff proffered its consumer survey, conducted by William D. Neal. (Pl. Oct. 9.2002 at 19.) The goal of Mr. Neal's survey was to "[d]etermine whether online shoppers who wear or expect to wear contact lenses in the near future, and who have the SaveNow software from WhenU.com installed on their computers, are confused and/or mislead as to the source of SaveNow generated pop-up advertisements." (Neal Aff., Ex. B at 16.) Plaintiff also notes that Defendants, who requested and were granted an opportunity to conduct its own survey, did not conduct one. (Tr. at 371.)

      163

      Proof of actual confusion, in the form of market research survey evidence, is highly probative of the likelihood of consumer confusion, "subject to the condition that `[t]he survey must ... have been fairly prepared and its results directed to the relevant issues.'" Schieffelin & Co. v. Jack Co. of Boca, Inc., 850 F.Supp. 232, 245 (S.D.N.Y.1994) (quoting Universal City Studios, Inc. v. Nintendo Co., 746 F.2d 112, 118 (2d Cir.1984)). However, survey evidence is not required to show actual confusion. The Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 964 (2d Cir.1996).

      164

      The evidentiary value of a consumer survey's results depends upon the underlying objectivity of the survey itself, which is determined by reference to, inter alia: whether the proper universe was examined and the representative sample was drawn from that universe; whether the survey's methodology and execution were in accordance with generally accepted standards of objective procedure and statistics in the field of such surveys; whether the questions were leading or suggestive; whether the data gathered was accurately reported; and whether persons conducting the survey were recognized experts. See Universal City Studios v. Nintendo Co., Ltd., 746 F.2d 112, 118 (2d Cir.1984); SmithKline Beecham Consumer Healthcare v. Johnson & Johnson-Merck, 2001 WL 588846 at *11 (S.D.N.Y.2001).

      165

      Plaintiff's survey statistics rely on numerous leading questions that suggested their own answers,[54] and that are therefore entitled to little weight in assessing consumer confusion. Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112 (2d Cir.1984) (Responses to survey question [500] that read, "To the best of your knowledge, was the Donkey Kong game made with the approval or under the authority of the people who produce the King Kong movies?" were not probative of confusion, because "[a] survey question which begs its answer cannot be a true indicator of the likelihood of consumer confusion.").

      166

      Even if these questions are disregarded, the survey is burdened by other flaws. To have substantial probative value, Plaintiff's survey must examine the impression of a junior mark on a potential consumer. See Conopco v. Cosmair, Inc., 49 F.Supp.2d 242, 253 (S.D.N.Y.1999) (citing Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1042 (2d Cir.1992)). "Typically, trademark infringement surveys use stimuli, such as pictures, advertisements or clothing, that directly expose potential consumers to the products or the marks in question." Trouble v. Wet Seal, Inc., 179 F.Supp.2d 291, 308 (S.D.N.Y.2001). Plaintiff's expert, Mr. Neal, testified that "a specific trademark was not researched" in his survey, (Tr. at 249), and that in the survey he did not show respondents an example of a SaveNow pop-up advertisement prior to drafting the survey. (Tr. at 264.) Mr. Neal's survey also did not ask whether survey respondents had ever seen a SaveNow pop-up ad, (Tr. at 265.), did not attempt to distinguish between SaveNow pop-up ads and other pop-up ads, (Tr. at 266-67), and did not determine whether differences between SaveNow ads and other pop-up ads might have affected users' perceptions of the advertisements provided by SaveNow. (Tr. at 268-69.)

      167

      Mr. Neal denied that he was conducting a trademark infringement survey; even so, the survey failed to use any stimulus that would inform consumers as to the competing products or marks in question. Mr. Neal also testified that although he had not provided survey respondents with an example of a SaveNow pop-up advertisement, it was "very reasonable" to assume that SaveNow users would have seen SaveNow pop-up ads. (Tr. at 272.) But this testimony is insufficient to support the leap Plaintiff requires of this Court. First, it does not necessarily follow that all survey respondents who had the SaveNow software on their computers saw SaveNow advertisements. (Tr. at 303.) Second, even if survey respondents who had SaveNow on their computers had seen SaveNow ads, it does not necessarily follow that those respondents were thinking of the SaveNow ads they had seen when they answered the survey questions from recall. (Tr. at 303.) Finally, since survey respondents answered questions about pop-up advertisements generally, it is just as "reasonable" to assume that they were thinking about pop-up advertisements from other sources when they answered the survey. Accordingly, Mr. Neal's survey, as designed and carried out, is not dispositive of whether pop-up advertisements generated by the SaveNow software has caused actual confusion among SaveNow users, and is not evidence of actual confusion.

      168

      However, Mr. Neal's survey is at least suggestive of the likelihood of initial interest confusion. The survey results indicate that 68% of 490 surveyed SaveNow users did not know that they had the SaveNow software on their computers, that 76% of those who knew the SaveNow software was on their computers were unaware of what the SaveNow software does, that 59% of SaveNow users believed that "pop-up advertisements are placed on the website on which they appear by the owners of that website," and that 52% of all users believed "pop-up advertisements have been pre-screened and approved by the website on which they appear." (Neal Aff. ¶ 7.) The fact that a significant number of SaveNow users may believe that pop-up advertisements are associated with the [501] owner of the website on which it appears is relevant to the likelihood of initial interest confusion, since this means a consumer is likely to associate a Vision Direct pop-up advertisement generated by the SaveNow program with the 1800-Contacts websites on which it appeared.

      169

      It seems likely that a SaveNow user, thinking the Vision Direct pop-up advertisement generated by SaveNow was part of the 1-800 Contacts website, might be lured into clicking on the Vision Direct SaveNow pop-up advertisement, which would result in the user's main browser window shifting to Vision Direct's website, making likely that the consumer's attention and interest would shift to Vision Direct's website, and that ultimately the consumer would purchase products from Vision Direct, instead of from 1-800 Contacts. Although the survey does not show that a SaveNow user who receives a Vision Direct pop-up advertisement is likely to click on it, nor that a consumer who is diverted from the 1-800 Contacts website to the Vision Direct website is likely to purchase products from the Vision Direct website, this only reduces the weight of the survey evidence in establishing a risk of initial interest confusion. Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867 (2d Cir.1986) ("While the complete absence of actual confusion evidence after a significant period of competition may weigh in a defendant's favor, such an inference is unjustified in the instant case in view of the survey evidence, even with its methodological defects. While these defects go to the weight of the survey, it is still somewhat probative of actual confusion in the post-sale context.") Nonetheless, the survey is supportive of the likelihood of initial interest confusion.

      170

      In view of the foregoing, the Court finds that the evidence does not support a finding of actual source confusion; however, in view of the survey's weak probative value in establishing the likelihood of initial interest confusion, this factor weighs in favor of neither Defendant nor Plaintiff.

      171

      Of course, since actual confusion is only one of the eight factors considered under Polaroid, that Plaintiff has not presented evidence of actual source confusion does not require a finding of no likelihood of confusion. The Mobil Oil court upheld the lower court where the district judge

      172

      found a likelihood of confusion not in the fact that a third party would do business with [defendant] believing it related to [plaintiff], but rather in the likelihood that [defendant] would gain crucial credibility during the initial phases of a deal. For example, an oil trader might listen to a cold phone call from [defendant] — an admittedly oft used procedure in the oil trading business — when otherwise he might not, because of the possibility that [defendant] is related to [plaintiff].

      173

      818 F.2d at 259.

      174

      Thus, while 1-800 Contacts' survey evidence is methodologically insufficient to show that a third party would do business with Vision Direct believing Vision Direct's advertisements (placed by WhenU's software) are related to 1-800 Contacts, this is not determinative of whether Plaintiff has established a likelihood of confusion generally.

      175
      f. Bad faith of the Defendant in using the mark
      176

      In analyzing the "bad faith" factor, the question is whether Defendants used Plaintiff's mark with the "intention of capitalizing on plaintiff's reputation and goodwill and any confusion between his and the senior user's product.'" Lang v. Retirement Living Publ'g Co., 949 F.2d 576, 583 (2d Cir.1991) (quoting Edison Brothers Stores, Inc. v. Cosmair, Inc., 651 [502] F.Supp. 1547, 1560 (S.D.N.Y.1987)). It is apparent that Defendants here did not "innocently select" Plaintiff's 1-800 CONTACTS mark for inclusion in its proprietary directory of terms. Instead, WhenU.com's president and CEO testified and affirmed in a sworn affidavit that the 1-800 CONTACTS trademark was included in the WhenU.com proprietary directory. (Tr. at 134.)

      177

      Actual or constructive knowledge of a trademark owner's exclusive right to use a registered mark may signal bad faith. Mobil Oil at 259. Here, Defendant WhenU.com has knowingly included Plaintiff's mark in the SaveNow proprietary software directory, to increase the competitive advantage of Defendant Vision Direct. Such knowing use of Plaintiff's mark supports a finding of bad faith. Accordingly, this factor tips in favor of Plaintiff.

      178
      g. Quality of the Defendant's services
      179

      The quality of Defendant's product may be relevant because:

      180

      (1) an inferior product may cause injury to the plaintiff trademark owner because people may think that the senior and junior products came from the same source; or (2) products of equal quality may tend to create confusion as to source because of this very similarity.

      181

      Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 505 (2d Cir.1996).

      182

      Plaintiff notes that "Defendants' services may or may not have the same quality as Plaintiff's services," but argues that the fact that Defendant's services are of comparable quality may confuse customers further, "precisely because the services are so similar." (Pl. Oct. 9, 2002 at 22.) However, here there is no evidence regarding the quality of Defendant's products. Without evidence, this factor could cut in favor of either Defendants or Plaintiff, Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F.Supp.2d 410, 420 (S.D.N.Y.2002), and accordingly the Court finds it to be of assistance to neither Plaintiff nor Defendants.

      183
      h. Sophistication of the Consumers
      184

      Plaintiff argues that the level of care and attention paid by consumers on the Internet is diminished, and that therefore this factor cuts in Plaintiff's favor, as the likelihood of confusion will be high. (Pl. Oct. 9, 2002 at 23.) (citing Something Old, Something New, Inc. v. QVC, Inc., 53 U.S.P.Q.2d 1715, 1724 (S.D.N.Y.1999)). In Something Old, Something New, the court considered the sophistication of consumers purchasing goods from a cable television and website home shopping network and found that "[a]rguably, home shoppers are more subject to impulse buying than store shoppers; the product can be easily glorified and the consequence of the purchase can be masked." Id. By contrast, here there are no passive couch-potato consumers. Internet shoppers have a specific product in mind when they go online and have the ability to navigate the Internet to get what they want. Moreover, in the mixed publishing/retailing context of the Internet, (Tr. at 88-90), only a few clicks of a mouse by the consumer separates a pop-up advertisement from an actual purchase by that consumer. Thus, consumers who have typed Plaintiff's < 1800Contacts.com> URL into the browser bar are clearly searching for contact lens products, and expect to be able to complete a transaction with Plaintiff in a short span of time, with little effort or transaction costs.

      185

      However, whether or not consumers of replacement contact lenses on the Internet are "sophisticated" will not change the harm that flows from initial interest confusion, since that harm arises when consumers' interest is diverted from Plaintiff's products by association of Plaintiff's trademark with Defendants' products. Since [503] the harm from initial interest confusion does not depend on actual confusion, the sophistication of consumers does not mitigate the likelihood of initial interest confusion. Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 260 (2d Cir.1987) (upholding a finding of trademark infringement where defendant's use of plaintiff's mark made probable "that potential purchasers would be misled into an initial interest" in defendant competitor's product, despite the sophistication of the consumers); Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir.1986) (sophistication of the buyers of expensive designer blue jeans contributed to, rather than prevented, initial interest confusion caused by infringer's use of trademark stitching patterns substantially similar to mark owner's, since sophisticated jeans consumers would be more likely to assume some sort of association between the mark-owner and the infringer); Grotrian, Helfferich, Schulz, Th. Steinweg Nachf v. Steinway and Sons, 523 F.2d 1331, 1342 (2d Cir.1975); New York State Soc. of Certified Public Accountants v. Eric Louis Associates, Inc., 79 F.Supp.2d 331, 341-42 (S.D.N.Y.1999) (sophistication of consumers does not mitigate initial interest confusion, since sophisticated consumers are as likely to be initially confused as unsophisticated consumers); Kompan A.S. v. Park Structures, Inc., 890 F.Supp. 1167 (N.D.N.Y.1995) (holding that the sophistication of purchasers of expensive playground equipment does not prevent initial confusion caused by defendants copying of plaintiff's trade dress).

      186

      The fact that Defendants' pop-up advertisement for competing Internet contact lenses retailers appears shortly after a consumer types into the browser bar Plaintiff's trademarked name and accesses Plaintiff's homepage increases the likelihood that a consumer might assume Defendants' pop-up advertisements are endorsed or licensed by Plaintiff, since the user will first see the 1-800 Contacts website, with logos and graphics, and then will see the pop-up advertisement. Planned Parenthood Fed'n. of Amer., Inc. v. Bucci, 1997 WL 133313, *8 (S.D.N.Y.1997) (plaintiff's mark appeared during a short delay while trademark infringer's homepage loaded, increasing the likelihood that Internet users would believe they had accessed plaintiff's website). Even if a consumer who clicked on Defendants' pop-up advertisements and accessed Defendant Vision Direct's website eventually realized — prior to purchasing anything — that Vision Direct's website was not related to Plaintiff, the consumer might then proceed to purchase replacement contacts on Vision Direct's website, instead of taking the steps necessary to return to Plaintiff's website. Bihari v. Gross 119 F.Supp.2d 309, 319 (S.D.N.Y.2000); BigStar Entm't, Inc. v. Next Big Star, 105 F.Supp.2d 185, 207 (S.D.N.Y.2000). Accordingly, this factor weighs in favor of the Plaintiff.

      187
      i. Other Factors: Branding by WhenU.com
      188

      Defendant WhenU.com argues that it has taken steps to ensure effectively there will be no confusion among consumers as to the source of the pop-up advertisements. Advertisement windows generated by Defendant WhenU's SaveNow software are "branded" — a green "$" mark and the text "SaveNow!" are affixed to the top of the window. (Naider Aff. ¶ 42; Memo in Opposition at 11.) On the upper right-hand corner of the SaveNow ad windows, next to the "X" symbol that typically closes windows, is a "?" symbol that, when clicked, opens a new window containing an explanation of the SaveNow software and a direct link to a page with more detailed information for removing or "uninstalling" the software. (Memo in Opposition at 11.) At the bottom right of the advertisement window is text stating: "A WhenU offer — click ? for info." (Memo in Opposition at [504] 11[55] (citing Upjohn Co. v. AHPC, 598 F.Supp. 550, 561-62 (S.D.N.Y.1984))).

      189

      WhenU.com argues that its disclaimers are "the preferred way of alleviating consumer confusion." (WhenU.com Memorandum at 23). WhenU.com argues further that, "unlike the use of trademarks in metatags to "trick" consumers into believing that a website is in fact the website that they intended to visit, where ... consumers see both the website they accessed as well as WhenU's clearly labelled ad, they are not likely to be confused." (Memorandum in Opposition at 24, n. 14 (citing Bihari v. Gross, 119 F.Supp.2d 309, 321-322 (S.D.N.Y.2000))).

      190

      While the Second Circuit has "found the use of disclaimers to be an adequate remedy when they are sufficient to avoid substantially the risk of consumer confusion," it is also important to note that "each case must be judged by considering the circumstances of the relevant business and its consumers." See Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311, 1315 (2d Cir.1987).

      191

      Here, consumer confusion caused by the pop-up advertisements can hardly be alleviated by WhenU's use of disclaimers with terms that are buried in other web pages, requiring viewers to scroll down or click on a link. Moreover, Defendant "has failed to come forth with any evidence whatsoever to support its contention that the disclaimer would reduce consumer confusion." Charles of the Ritz Group Ltd. v. Quality King Distribs., Inc., 832 F.2d 1317, 1324 (2d Cir.1987). The burden imposed upon Defendants to "come forward with evidence sufficient to demonstrate that [its disclaimers] would significantly reduce the likelihood of consumer confusion" is a heavy one. Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311 (2d Cir.1987).

      192

      Even if Defendants had offered evidence of the effect of its branding and disclaimers, such evidence would do little to counter Plaintiff's showing of the likelihood of initial interest confusion. OBH, Inc. v. Spotlight Magazine Inc., 86 F.Supp.2d 176, 190 (W.D.N.Y.2000) (rejecting disclaimer defense because defendant's disclaimer could not remedy initial interest confusion caused by defendant's use of plaintiff's mark on its website); NYS Soc'y of CPAs v. Eric Louis Associates, 79 F.Supp.2d 331 (S.D.N.Y.1999) (same); Planned Parenthood Fed'n of Am., Inc. v. Bucci, 1997 WL 133313 (S.D.N.Y.1997) (same); cf. Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867 (2d Cir.1986) (finding a likelihood of confusion in the post-sale context, and finding that "[a]ppellants' labeling in no way dispels the likelihood that consumers will conclude that appellants' jeans are somehow connected to appellee by virtue of the nearly identical stitching patterns").

      193

      Accordingly, Defendant WhenU's use of the "Save!" brand, the "A WhenU ad" brand, and the license agreement on installation do not alleviate Plaintiff's showing of a likelihood of confusion.

      194

      In sum, as discussed above, the Polaroid factors weigh heavily in favor of the Plaintiff's showing a likelihood of both source confusion and initial interest confusion. Having established a likelihood of confusion, Plaintiff has established both a likelihood [505] of success on the merits and irreparable harm on its trademark infringement claim. Hasbro, Inc. v. Lanard Toys. Ltd., 858 F.2d 70, 73 (2d Cir.1988).

      195
      C. Cybersquatting
      196

      The Second Circuit has described cybersquatting as follows:

      197

      Cybersquatting involves the registration as domain names of well-known trademarks by non-trademark holders who then try to sell the names back to the trademark owners. Since domain name registrars do not check to see whether a domain name request is related to existing trademarks, it has been simple and inexpensive for any person to register as domain names the marks of established companies. This prevents use of the domain name by the mark owners, who not infrequently have been willing to pay `ransom' in order to get `their names' back.

      198

      Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 493 (2d Cir.2000)

      199

      In passing the Anticybersquatting Consumer Protection Act ("ACPA"), Pub.L. No. 106-113 (1999), Congress provided a federal remedy for cybersquatting. 15 U.S.C. § 1125(d)(1)(A) provides

      200

      A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person —

      (i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

      (ii) registers, traffics in, or uses a domain name that

      (I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

      (II) in the case of a famous mark that is famous at the time of the registration of the domain name, is identical or confusingly similar to or dilutive of that mark; ...

      201

      15 U.S.C. § 1125(d)(1)(A).

      202

      "[A] court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark." 15 U.S.C. § 1125(d)(1)(C).

      203

      Plaintiff 1-800 Contacts has continuously used its marks in commerce since its inception in 1995. (Mathison Aff. ¶ 6.) Defendant Vision Direct registered[56] and maintains its registration in the domain name www.www1800Contacts.com. (Barrier Aff. Ex. A.) Plaintiff argues that this domain name is "almost identical" to Plaintiff's www.1-800Contacts.com website domain name, and that Defendant Vision Direct registered and maintains the www.www1800Contacts.com domain name with the bad faith intent to divert consumers from the 1-800 Contacts website to Defendant Vision Direct's website, and to profit from the use of Plaintiff's mark. (Pl. 10/9/02 at 32.) Vision Direct has not addressed these arguments.

      204

      The Court has already concluded that the 1-800 Contacts mark is suggestive, and also distinctive. See Discussion, supra.

      205

      The domain name registered by Defendant Vision Direct, www.www1800Contacts.com, differs from Plaintiff's 1-800 Contacts mark in the addition of the web prefix "www" and the omission of spaces. These distinctions are not significant.[57]

      206

      The statute provides that

      207

      [506] In determining whether a person has a bad faith intent described under subparagraph (a), a court may consider factors such as, but not limited to

      (I) the trademark or other intellectual property rights of the person, if any, in the domain name;

      (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;

      (III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;

      (IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;

      (V) the person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;

      * * * *

      (IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c)(1) of this section.

      208

      15 U.S.C. § 1125(d)(1)(B)(i).

      209

      Relying on these factors, it is apparent that Vision Direct has acted with bad faith. Vision Direct has no trademark rights in the domain name, is not identified by the domain name, has not demonstrated any prior bona fide use of the domain name or any site accessible using the domain name — accordingly, these factors weigh in favor of the Plaintiff. 15 U.S.C. § 1125(d)(1)(B)(i)(I-IV). Defendant Vision Direct and Plaintiff are competitors, offering virtually identical services over the Internet — this alone tends to show that Vision Direct has registered the www.www1800Contacts.com domain name with the "intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site." 15 U.S.C. § 1125(d)(1)(B)(i)(V).

      210

      Accordingly, the Court finds sufficient evidence to establish the bad faith of Defendant Vision Direct in registering and maintaining the www.www1800Contacts.com domain name. Based on the foregoing, Plaintiff has established a likelihood of success on its Cybersquatting claims.

      211

      Some district courts have found the trademark infringment principle applies in cybersquatting actions under the ACPA — that irreparable harm may be caused by the improper registration, trafficking or use of a confusingly similar domain name. E.g. Advance Magazine Publishers Inc. v. Vogue Int'l, 123 F.Supp.2d 790, 801 (D.N.J.2000) (citing Shields v. Zuccarini, 89 F.Supp.2d 634, 641 (E.D.Pa.2000)). However, other courts have not applied this principle, and have required a showing of irreparable harm to the plaintiff. E.g., BroadBridge Media, L.L.C. v. Hypercd.com, 106 F.Supp.2d 505, 509-10 (S.D.N.Y.2000). The Second Circuit has not weighed in on the distinction between irreparable harm for purposes of trademark infringement claims and cybersquatting claims. This Court joins the courts that find irreparable harm may be presumed on a motion for a preliminary injunction in a cybersquatting case where a [507] plaintiff has shown a likelihood of success on the merits.[58] Accordingly, issuance of a preliminary injunction against Defendant Vision Direct's use of the domain name www.www1800Contacts.com is appropriate.

      212
      D. Mootness
      213

      Defendant Vision Direct argues it should not be preliminarily enjoined in this case because any grounds for relief that Plaintiff may have had prior to the filing of the lawsuit have been mooted.[59] (Vision Direct Jan. 31, 2003 at 3.) Vision Direct notes that it voluntarily instructed its co-defendant, WhenU.com, to cease placing "pop-up" ads on Plaintiff's website three weeks before this action was filed,[60] and claims it has no intention of resuming use of the offending pop-up advertising. (Id. at 2-3; Mummery Dec. ¶ 7, 8.) Vision Direct also notes that it sued Coastal Contacts for substantially the same conduct in 02-Civ-9788. (Vision Direct Jan. 31, 2003 at 3.)

      214

      Although Vision Direct may have ceased its use of the complained-of pop-up advertisements, the Court nonetheless has authority to issue a preliminary injunction. See Blisscraft of Hollywood v. United Plastics Co., 294 F.2d 694, 701 (2d Cir.1961) (Injunction issued against future infringement although the defendant discontinued the use of offending labels, since the defendant continued to dispute the validity of the trademark); United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953) ("[t]he court's power to grant injunctive relief survives discontinuance of the illegal conduct" since the "purpose of an injunction is to prevent future conduct"). Moreover, since here there is little to support a conclusion that use by Defendant Vision Direct of pop-up advertisements will not reoccur, the Court rejects Defendant's claim that a preliminary injunction should not issue merely because Defendant has ceased the offending conduct. E.g., United Farm Workers v. Sloan's Supermarkets, Inc., 352 F.Supp. 1025, 1028-29 (S.D.N.Y.1972); Consumers Union of United States, Inc. v. Theodore Hamm Brewing Co., 314 F.Supp. 697, 701 (D.Conn.1970); Consumers Union of United States, Inc. v. Admiral Corp., 186 F.Supp. 800, 801 (S.D.N.Y.1960).

      215

      Vision Direct's claim that "no likelihood exists that Vision Direct will resume causing pop-up advertisements to appear on 1-800's web pages" is supported by nothing more than the affidavit of Ian Mummery stating that "Vision Direct has no intention of again participating in pop-up advertising." (Mummery Dec. at ¶ 8.) This avowed lack of "intention" to participate is a far cry from a guarantee by Vision Direct that it will not participate in pop-up advertising in the future. Here, Vision Direct has not convinced the Court that it has voluntarily done "everything within its power" to ensure that "there is not even a slight danger that it would now turn around and embark upon another course of deceptive conduct." Twentieth Century [508] Fox v. Suarez Corp., 1998 WL 126065, *3-5 (S.D.N.Y.1998)(denying preliminary injunction where defendant voluntarily changed website and attempted to cancel 42 advertisements, and "[p]laintiff ... specifically conceded that the defendant [did] everything within its power to cancel all advertisements").

      216

      Vision Direct argues that the balance of the hardships weighs in favor of denying the injunction, because of the harm to its reputation that will result from the imposition of a preliminary injunction against it. In support of its argument, Vision Direct cites United Farm Workers v. Sloan's Supermarkets, Inc., 352 F.Supp. at 1028-29. In Sloan's, the court acknowledged that "a preliminary injunction is not precluded merely because the action complained of has ceased, or because it was inadvertent, or because the defendant has sworn it will not happen again, or because the defendant might suffer some harm from the injunction," but held that the balance of harms tipped in favor of denying a preliminary injunction where "[t]he mere announcement to the public that [defendant] had been preliminarily enjoined ... would convey an incorrect impression of the defendant's position with regard to the plaintiff union; would misrepresent its good faith efforts; and would likely do considerable injury to its general business reputation which is not presently justified by the record".

      217

      However, here Vision Direct has offered only statements by Ian Mummery, that

      218

      [a] preliminary injunction against Vision Direct would undoubtedly damage it, possibly irreparably. Vision Direct's reputation is unblemished and must remain so if Vision Direct is to continue its spectacular success. Customers will undoubtedly be hesitent [sic] to purchase contact lenses from a company that has been enjoined.

      219

      (Mummery Dec. ¶ 9.)

      220

      Mr. Mummery provides no basis for his conclusions about what "undoubtedly" might happen. Notwithstanding his speculation, it is far from clear that enjoining Defendant Vision Direct from placing pop-up advertisements on Plaintiff's website will have any effect at all on sales by Vision Direct. Accordingly, these statements are insufficient to sustain Vision Direct's burden of showing that a preliminary injunction will harm its good will and reputation.

      221
      E. Other Claims
      222

      Plaintiff advances several other related theories under the Lanham Act and state law, in support of its Motion for Preliminary Injunction. As none of those theories, if established, would entitle plaintiff to greater relief" than that appropriate under its infringement and cybersquatting claims, "there is no need to consider them." E.G.L. Gem Lab Ltd. v. Gem Quality Institute, Inc., 90 F.Supp.2d 277, 298 (S.D.N.Y.2000).

      223
      F. Remedies
      224

      Defendant uses Plaintiff's mark within the meaning of the Lanham Act by causing pop-up advertisements to appear when SaveNow users have specifically attempted to find or access Plaintiff's website, by either typing Plaintiff's web address into the browser bar or by typing the Plaintiff's mark into a search engine. Defendant also uses Plaintiff's mark by including Plaintiff's mark and confusingly similar terms as elements in the proprietary SaveNow directory. These uses are likely to cause source confusion and initial interest confusion.

      225

      As Professor Deighton noted, the distinction between marketing and publishing [509] may be diminishing in the context of the unique environment of the Internet. (Tr. at 88-90.) On the other hand, technological advances should not trample on the traditionally-protected rights established by the trademark infringement laws. On the Internet, online shoppers have a myriad of competing retailers literally at their fingertips, are easily able to research preferences, and with very little time and effort are able to enact their preferences with purchases. In this context, the good will and reputation that Plaintiff and other online retailers have established is of extreme importance. Plaintiff has spent considerable sums to establish and maintain its marks' notoriety with online consumers, and is entitled to protect this investment from conduct that infringes those marks. An online shopper who has knowledge of Plaintiff's mark and an interest sufficient to choose to visit or find Plaintiff's website is a potential buyer that Plaintiff is entitled to protect from confusion.

      226

      Enjoining the Defendants from triggering pop-up advertisements when SaveNow users type in Plaintiff's website address and/or type Plaintiff's mark into a search engine will prevent Defendants from capitalizing on the goodwill and reputation that Plaintiff has earned through its own investment. Such an injunction will eliminate the likelihood that a SaveNow user will be confused as to the source of the pop-up advertisements that appear when the 1-800 Contacts website is accessed; it will also eliminate the likelihood that a SaveNow user would be lured from Plaintiff's website to Defendant Vision Direct's website in the initial phases of the user's attempts to shop for contact lens products on Plaintiff's website.

      227

      Of course, an injunction should not impede traffic in the more general free-for-all of the Internet superhighway, where general information is often sought. For example, a SaveNow user who enters a generic term such as "contact lenses" into a search engine is clearly looking for general information, and has not exhibited any preference for 1-800 Contacts. Plaintiff's website, as well as Defendant Vision Direct's website, may appear on the results page of the search engine along with other contact lens retailers and manufacturers. In this environment, all contact lens retailers including Plaintiff and Defendant Vision Direct, are "on the same page," and the unique interplay of publishing and marketing provided by the technology of the Internet should be given free reign.

      228

      Accordingly, it is appropriate that Defendants be preliminarily enjoined from using Plaintiff's mark or confusingly similar terms as an element in the SaveNow proprietary directory. It is also appropriate that Defendants be preliminarily enjoined from causing pop-up advertisements to appear when a computer user has made a specific choice to access or find Plaintiff's website by typing Plaintiff's mark into the URL bar of a web browser or into an Internet search engine.

      229

      Since it is likely that Plaintiff will succeed in its claims that Defendant Vision Direct registered and maintained a registration of the domain name www.www1800Contacts.com, that the domain name is confusingly similar to Plaintiff's 1800Contacts mark, and that the registration and maintenance of registration was in bad faith, it is also appropriate that Defendant Vision Direct be and hereby is ORDERED to cancel its registration of the domain name www.www1800Contacts.com.

      230
      III. CONCLUSION
      231

      For the foregoing reasons, 1-800 Contacts' Motion for a preliminary injunction is GRANTED in part and in DENIED in part.

      232

      [510] Defendants are preliminarily enjoined from: 1) including the 1-800 Contacts mark, and confusingly similar terms, as elements in the SaveNow software directory, and 2) displaying Plaintiff's mark "in the ... advertising of" Defendant Vision Direct's services, by causing Defendant Vision Direct's pop-up advertisements to appear when a computer user has made a specific choice to access or find Plaintiff's website by typing Plaintiff's mark into the URL bar of a web browser or into an Internet search engine. Within 30 days of the date of this Order, Defendants SHALL effect this injunction.

      233

      Plaintiff's Motion for preliminary injunctive relief on its cybersquatting claims is GRANTED. Defendant Vision Direct shall within 30 days of the date of this Order cancel its registration of the www.www1800Contacts.com domain name.

      234

      Plaintiff's Motion for preliminary injunctive relief on its copyright claims is DENIED.

      235

      The parties shall appear before the Court for a case conference on January 16, 2004 at 11:00 AM.

      236

      SO ORDERED.

      237

      [1] Plaintiff's claims included: 1.) Trademark infringement, in violation of the Section 32(1) of the Lanham Act, 15 U.S.C. § 1114; 2.) Unfair Competition, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); 3.) False designation of origin, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); 4.) Trademark dilution, in violation of Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); 5.) Cybersquatting, in violation of Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(d); 6.) Copyright infringement, in violation of the Federal Copyright Act, 17 U.S.C. §§ 101, et seq.; 7.) Contributory Copyright Infringement, in violation of the Federal Copyright Act, 17 U.S.C. §§ 101, et seq.; 8.) Dilution of trademark and/or injury to business reputation, in violation of N.Y.G.B.L. § 360-1; 9.) Common law unfair competition; and 10.) Tortious Interference with Prospective Economic Advantage.

      238

      [2] With its Preliminary Injunction Motion, Plaintiff filed a Memorandum of Law ("Pl. October 9, 2002"), supported by the Declaration of Jason Mathison ("Mathison Dec.") and the Affidavit of Amy Barrier ("Barrier Aff.").

      239

      [3] In a follow-up call on October 24, 2002, the parties notified the Court that they had formalized a stipulation, under which the parties ceased pop-up advertising activities on each others' websites, to "continue in effect through a hearing by this Court on Plaintiff's Motion for a Preliminary Injunction." (October 29, 2002 Stipulation and Order at 4). The Court signed the Stipulation on October 29, 2002 and reset the Preliminary Injunction hearing date to February 24, 2003.

      240

      [4] Defendant WhenU.com's Opposition was supported by the Affidavit of Avi Naider ("Naider Aff."), the Declaration of Dr. Jacob Jacoby ("Jacoby Dec."), and the Declaration of Dr. John A. Deighton ("Deighton Dec.")

      241

      [5] WhenU.com's Opposition was supported by the Declaration of Ian Mummery ("Mummery Dec.").

      242

      [6] References to the Preliminary Injunction hearing transcript are denoted by "Tr."

      243

      [7] Appended to Plaintiff's Complaint is Certificate of Registration No. VA-1-032-662, which provides, inter alia, that the "1800 Contacts Web site" was completed in the year 2000, that the work was first published on March 1, 2000, and that the effective date of the copyright registration was October, 2, 2000. (Compl., Ex. D.)

      244

      [8] Mr. Mathison's Declaration states that "Approximately 221,864 people visited the website in the past month" — his declaration was dated October 4, 2002.

      245

      [9] See fn. 13, infra.

      246

      [10] Examples of ISPs include Earthlink, Verizon, NetZero, America Online.

      247

      [11] Other examples of browser programs include Netscape Navigator, Opera, and Mozilla; in addition, many residential ISPs like Earthlink and America Online provide their own proprietary browsers.

      248

      [12] With appropriate software, any computer that is connected to the Internet can act as a server, by providing access, via the Internet, to other computer users who are connected to the Internet. Thus, there are many, many servers acting as "hosts" for information that is found on the Internet.

      249

      [13] The Second Circuit has explained that

      250

      Web pages are designated by an address called a domain name. A domain name consists of two parts: a top level domain and a secondary level domain. The top level domain is the domain name's suffix. Currently, the Internet is divided primarily into six top level domains: (1) .edu for educational institutions; (2) .org for non-governmental and non-commercial organizations; (3) .gov for governmental entities; (4) .net for networks; (5) .com for commercial users, and (6) a nation-specific domain, which is .us in the United States. The secondary level domain is the remainder of the address, and can consist of combinations of letters, numbers, and some typographical symbols. To take a simple example, in the domain name "cnn.com," cnn ("Cable News Network") represents the secondary level domain and .com represents the top level domain. Each domain name is unique.

      251

      Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 492-93 (2d Cir.2000).

      252

      In common usage, an "URL" (Uniform Resource Locator) is the location for a specific webpage, such that if the URL were entered into a browser, the webpage would appear. By contrast, a "domain name" is often used to refer to the URL for the "front" or "home" page of a website. Thus, the domain name for the 1-800 Contacts is www.1800Contacts.com, while the URL for a specific webpage within the 1-800 Contacts website might be www.1800Contacts.com/xxxxx.xxx, with the "x's" providing specific locations within the 1-800 Contacts domain. The URL of a webpage may be entered directly into a web browser to retrieve that webpage.

      253

      [14] Given that a single website contains text and information located on multiple servers, when a user's computer accesses a single website, the computer may be receiving information from several different servers. (Tr. at 140.) Avi Naider, CEO of WhenU analogized accessing a website to fishing:

      254

      The way a desktop computer actually operates is it communicates with multiple servers at the same time. So it's not a one-to-one thing. A desktop, even in the 1-800 Contacts web page, the text for the page might come from one server that might be owned by the 1-800 Contacts company, the images on the webpage might come from a commercial server somewhere that's set up to deliver images. Different elements on a desktop can come from lots of different places. Maybe the best way to describe a desktop is you've got lots of open fishing lines. Once you establish a connection into the Internet, you've sort of got your boat out into the ocean, and you can toss out lots of different lines to lots of different places and collect information from lots of different places.

      255

      (Tr. at 139.)

      256

      [15] Examples of search engines are www.Google.com, www.Yahoo.com and www.AskJeeves.com.

      257

      [16] The Second Circuit has defined the term "search engine" operationally:

      258

      A search engine will find all web pages on the Internet with a particular word or phrase. Given the current state of search engine technology, that search will often produce a list of hundreds of web sites through which the user must sort in order to find what he or she is looking for.

      259

      Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 493 (2d Cir.2000)

      260

      [17] The directory is stored on the SaveNow user's computer as a part of the SaveNow application. (Naider Aff. ¶ 23.)

      261

      [18] "Pop-up" windows are windows containing notifications or advertisements that appear on the screen, usually without any triggering action by the computer user.

      262

      [19] E.g. if a user wants a free cartoon character screensaver, in order to get it the user has to accept also the other programs it is bundled with. The screensaver is the lure that hooks the user into downloading the bundled software.

      263

      [20] As demonstrated at the hearing, the first screen encountered by a user installing a typical software bundle is a welcome screen, the second screen contains a license agreement for a screensaver software program (not related to WhenU.com's software), the third screen contains an opportunity to join an email list for the screensaver program, and the fourth screen describes where on the computer the software will be installed. (Tr. at 68.)

      264

      [21] A "typical" SaveNow License Agreement states, in pertinent part:

      265

      SaveNow shows users relevant contextual information and offers as they surf the Web. There are a vast number of offers and services available to Internet users that SaveNow may display. In addition, WhenU.com negotiates exclusive offers to maximize value for users. The software's goal is to show users information about these offers and services — right at the moment when they need it. Offers and information are provided to users by showing a limited number of relevant ads in the form of interstitials ("pop-up ads") and other ad formats. These offers and ads are shown when users visit various sites across the Internet, based on URLs visited by the user and/or search terms typed into search engines and/or the HTML content of the page viewed by the user. SaveNow ads/offers are delivered independently from the site the user happens to be visiting when they see a SaveNow ad/offer and are not endorsed or affiliated with anyone other than WhenU.com.

      266

      (Naider Aff. ¶ 23, Ex. G.)

      267

      [22] The notice says:

      268

      This offer is brought to you by WhenU.com, through the SaveNow service. SaveNow alerts you to offers and services at the moment when they are most relevant to you. SaveNow does not collect any personal information or browsing history from its users. Your privacy is 100 percent protected. The offers shown to you by SaveNow are not affiliated with the site you are visiting. For more about SaveNow, click here or e-mail information at WhenU.com. At WhenU, we are committed to putting you in control of your Internet experience.

      269

      (Tr. at 58-59).

      270

      [23] In December 2002, subsequent to the filing of this lawsuit, WhenU.com replaced this text with a new disclaimer, stating: "This is a WhenU offer and is not sponsored or displayed by the websites you are visiting. More ..." If a user clicks on the "More," a new window displays the same statement that was generated when the user clicked on the "?" character. (Tr. at 58.) However, since "there is no guarantee that Defendants will not simply return to the same conduct if the case is dismissed without issuance of an injunction," the Court considers the disclaimers as they appeared at the time the action was filed. OBH, Inc. v. Spotlight Magazine, Inc., 86 F.Supp.2d 176, 186 n. 8 (W.D.N.Y.2000).

      271

      [24] In his "Description of Data Analyst Online Panel," Mr. Neal affirms that:

      272

      A sample of respondents was drawn from American Consumer OpinionTM Online, Decision Analyst, Inc.'s Internet panel of over 3,500,000 consumers. These respondents were screened, and qualified participants were invited to Decision Analyst's encrypted OpinionSurveyTM Internet server to complete the survey.

      273

      (Neal Aff., Ex. D.)

      274

      Mr. Neal notes that "[t]he maximum number of surveys completed per panel household is two surveys per month, although this maximum is rarely achieved. The average panel household participates in three or four studies per year." Id.

      275

      Mr. Neal also states that "Panels are recruited by a combination of online and offline methods (telephone, mail, banner advertising, print advertising, publicity). The recruiting is designed to make each panel as representative of its target population as possible. American Consumer OpinionTM Online is linked to over 1,000 other Internet sites to provide a steady stream of new panelists."

      276

      [25] Mr. Neal drew a "nationally representative stratified quota sample" from the internet panel, "balanced by geography and demographics such as age and income." (Neal Dec., Ex. D.)

      277

      [26] In response to Question 9, "Were you aware that, when viewing websites on the Internet, SaveNow software causes `Pop-Up' advertisements to be displayed on your computer which are not authorized by the website on which they apppear?", 75.74% of those respondents who had SaveNow on their computers responded "No." (Neal Dec., Ex. E.)

      278

      [27] In response to Question 4-1, "I believe that `Pop-Up' advertisements are placed on the website on which they appear by the owners of the website", 59.98% of those respondents who had SaveNow on their computers responded "Agree," while 61.11% who did not have SaveNow on their computers responded "Agree." (Neal Dec., Ex. E.)

      279

      [28] In response to Question 4-6, "I believe that `Pop-Up' advertisements have been pre-screened and approved by the website on which they appear", 52.04% of those respondents who had SaveNow on their computers responded "Agree," while 52.21% who did not have SaveNow on their computers responded "Agree." (Neal Dec., Ex. E.)

      280

      [29] In response to Question 5, "Prior to your participation in this survey, had you ever heard of a free software program offered by WhenU.com called SaveNow?", 51.02% of those respondents who had SaveNow on their computers responded "No." (Neal Dec., Ex. E.)

      281

      [30] In response to Question 6, "Prior to your participation in this survey, did you know that the SaveNow software from WhenU.com was installed on your computer?", 68.16% of those respondents who had SaveNow on their computers responded "No." (Neal Dec., Ex. E.)

      282

      [31] The "instant messaging" windows demonstrated were generated by an America Online program; however Mr. Naider testified that other instant messaging applications behaved similarly. (Tr. at 42.)

      283

      [32] Mr. Naider referred specifically to a video software, called "Realplayer," which he testified "every once in a while, something pops in front of my screen from them." (Tr. at 41.)

      284

      [33] Professor Deighton testified that "[c]reating a website is within the reach of a child." (Tr. at 87.)

      285

      [34] Mr. Mummery's declaration was attached to Vision Direct's opposition to Plaintiff's motion. However, although Mr. Mummery makes his declarations upon personal knowledge, (Mummery Dec. ¶ 1), he does not identify what position he holds at Vision Direct. Mr. Mummery was not called to testify at the Preliminary Injunction hearing.

      286

      [35] On December 11, 2002, Defendant Vision Direct filed a separate action, Vision Direct v. WhenU.Com and Coastal Contacts, Inc., 02-Civ-9788 (DAB), against WhenU.com, its co-defendant in this case, and against Coastal Contacts, a Canadian corporation that is not a party in this case. With the complaint in 02-Civ-9788, Vision Direct also filed an application for an ex parte Temporary Restraining Order. The Court held a conference call with counsel for all parties to both cases on December 16, 2002. Based on that call, on December 18, 2002 the Court denied Vision Direct's application for a Temporary Restraining Order, and denied the parties' requests for full discovery in this case until the disposition of the Preliminary Injunction motion.

      287

      [36] Citing Abdul Wali v. Coughlin, 754 F.2d 1015, 1025 (2d Cir.1985), Plaintiff argues that, to show a likelihood of success on the merits, a party moving for a preliminary injunction "need not show that success is an absolute certainty," but that instead a movant need only show that the probability of success is "better than 50%" despite the fact that "considerable room for doubt" may remain about the ultimate case outcome. (Memorandum in Support at 12). Plaintiff misstates the relevant standard, since the Second Circuit specifically noted in Abdul Wali that where, as here, a grant of preliminary injunctive relief would do more than merely maintain the status quo, the movant "must show a substantial likelihood of success on the merits, i.e., that their cause is considerably more likely to succeed than fail." 754 F.2d 1015, 1026 overruled on other grounds, 482 U.S. 342, 107 S.Ct. 2400, 96 L.Ed.2d 282 (1987).

      288

      [37] Plaintiff argues that, under New York Times Co. v. Tasini, 533 U.S. 483, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001), "this Court must view Plaintiff's website as would a PC user surfing the web in order to determine whether Defendant modified Plaintiff's copyrighted works." Plaintiff appears to read Tasini too broadly. (Pl. Feb. 28, 2003 at 7). In Tasini, the Supreme Court held that the privilege accorded a newspaper, as a collective work copyright owner under § 201(c) of the Copyright Act, to reproduce and distribute parts of a collective work did not shield the newspaper from liability for permitting electronic publishers to include the work of individual authors in electronic online Databases. Tasini, 533 U.S. at 500, 121 S.Ct. 2381. The Court explained that "[i]n determining whether the Articles have been reproduced and distributed `as part of' a `revision' of the collective works in issue, we focus on the Articles as presented to, and perceptible by, the user of the Databases." Tasini, 533 U.S. at 499-500, 121 S.Ct. 2381. Although the Tasini Court turned to the perceptions of the computer user to determine whether articles had been reproduced and distributed "as part of" a "revision" of collective works for purposes of § 201(c), Tasini does not require this Court to "view Plaintiff's website as would a PC user surfing the web in order to determine whether Defendant modified Plaintiff's copyrighted works" in preparing a derivative work in violation of 17 U.S.C. § 106(2).

      289

      [38] Memorandum in Support, at 28 (citing Matthew Bender & Co., Inc. v. West Publ'g Co., 158 F.3d 693 (2d Cir.1998)).

      290

      [39] Plaintiff cites Aymes v. Bonelli, 47 F.3d 23, 25 (2d Cir.1995) as support for this proposition. However, in Aymes the defendant conceded that it had altered the computer program at issue and thereby created a "derivative work." Aymes, 47 F.3d at 25.

      291

      [40] The lack of any "fixation" here explains why Plaintiff errs in its assertion that this case is analogous to National Bank of Commerce v. Shaklee Corp., 503 F.Supp. 533 (W.D.Tex.1980). While in this case any "derivative" work created when a computer user views Plaintiff's copyrighted website as modified by Defendants' pop-up advertisements is not fixed in any tangible medium of expression, the books published with unauthorized interspersed advertisements in National Bank of Commerce v. Shaklee Corp., were clearly "fixed" in print.

      292

      [41] Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 390 (2d Cir.1995) (internal citations omitted); Estee Lauder, Inc. v. The Gap, Inc., 108 F.3d 1503, 1508 (2d Cir.1997).

      293

      [42] On a telephone keypad, 1-800 HOLIDAY translates numerically as 1-800 469-4329.

      294

      [43] While this case was sub judice, Defendants called to the Court's attention two decisions denying a preliminary injunction, by finding that "use" did not occur. In Wells Fargo & Co. v. WhenU.com, 293 F.Supp.2d 734, 763 (E.D.Mich.2003), the court determined that inclusion in SaveNow's proprietary directory of the Plaintiff's trademark was not "use," based on its reading of Sixth Circuit case law. In U-Haul Intern., Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723, 728 (E.D.Va.2003), the court made a similar ruling based on a factual finding that WhenU.com uses the marks for a "pure machine-linking function." This Court disagrees with, and is not bound by these findings.

      295

      [44] In Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F.Supp. 735 (S.D.N.Y.1985), the plaintiff sought a declaration that the pattern of stitching on the back pockets of its jeans, which was virtually identical to the trademarked stitch pattern on the back pocket of the declaratory defendant's jeans — "two curved arches intercepting at midpoint" — did not infringe defendant's trademark. Id. at 737-39.

      296

      The district court held that, even if there were little likelihood of point-of-sale confusion among consumers, there was a "substantial likelihood of confusion among prospective purchasers viewing the marks in a post-sale context," and accordingly granted summary judgment for defendants. Id. at 747-48.

      297

      On appeal, the Second Circuit reaffirmed that harm to a trademark owner — resulting from the likelihood that misuse of a mark might attract potential consumers to the junior user's product "based on the reputation built up by [the trademark owner]" — was actionable under the Lanham Act, and that "the Lanham Act was designed to prevent a competitor from such a bootstrapping of a trademark owner's goodwill ..." Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986).

      298

      [45] A metatag is "buried code" that is not visible to Internet users, which is referenced by domain name search engines or directories to determine whether a website corresponds to descriptive keywords entered into the search engine by a computer user. Those websites with metatags corresponding to the requested keywords appear on the computer screen as the search engine's response. Brookfield, 174 F.3d at 1061-62 n. 23.

      299

      [46] The facts of the case required the 9th Circuit to clarify whether use of a competitor's mark in a website's "metatags" infringed the competitor's rights under the Lanham Act. The Ninth Circuit defined "metatags" as "HTML code not visible to Web users but used by search engines in determining which sites correspond to the keywords entered by a Web user." Brookfield Communications, Inc., 174 F.3d at 1061 n. 23.

      300

      [47] See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961).

      301

      [48] In Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986), the Second Circuit stated

      302

      the Polaroid factors must be applied in the instant case with an eye to how they bear on the likelihood that the appellants' use of appellee's trademark stitching pattern will confuse consumers into thinking that appellee is somehow associated with appellants or has consented to their use of the stitching pattern regardless of labeling.

      303

      [49] "The ultimate conclusion as to whether a likelihood of confusion exists is not to be determined in accordance with some rigid formula. The Polaroid factors serve as a useful guide through a difficult quagmire. Each case, however, presents its own peculiar circumstances." Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986).

      304

      [50] "The steady application of Polaroid is critical to the proper development of trademark law, for it is only when the Polaroid factors are applied consistently and clearly over time that the relevant distinctions between different factual configurations can emerge." New Kayak Pool Corp. v. R & P Pools, Inc., 246 F.3d 183 (2d Cir.2001) (remanding for consideration of the Polaroid factors).

      305

      [51] Defendant argues that "1-800 CONTACTS" is "merely" a phone number that uses the generic term "contacts," and that the 1-800 CONTACTS mark and logo are therefore entitled to protection only against confusingly similar phone numbers. (Memorandum in Opposition at 21-22.) However, the case Defendant cites in support of this argument, Dial-A-Mattress Franchise Corp. v. Page, 880 F.2d 675, 678 (2d Cir.1989), does not limit the protection of telephone numbers against trademark infringement solely to "confusingly similar phone numbers." Instead, the court in Dial-A-Mattress stated

      306

      [t]he principles limiting protection for the use of generic terms serve to prevent a marketer from appropriating for its exclusive use words that must remain available to competitors to inform their customers as to the nature of the competitor's business or product. These principles do not require that a competitor remain free to confuse the public with a telephone number or the letters identifying that number that are deceptively similar to those of a first user.

      307

      Id. at 678.

      308

      [52] It is also of note here that Defendant Vision Direct registered and maintains a registration for the domain name www.www1800Contacts.com.

      309

      [53] Traditional cases addressing the question of similarity in the Polaroid factors have contemplated that the consumer actually sees or hears the parties' marks or logos, and might confuse the junior mark with the senior mark. In the Internet context, the issue is not whether the WhenU or Vision Direct marks themselves are similar to the Plaintiff's marks, but whether the marks used by the Defendants (whether actually seen by the consumer or not) are so similar to Plaintiff's mark that that similarity could ultimately cause consumer confusion. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1061 n. 23 (9th Cir.1999) (placement of a trademarked term in metatags, which the court defined as "HTML code not visible to Web users but used by search engines in determining which sites correspond to the keywords entered by a Web user," was actionable use under the Lanham Act).

      310

      [54] Question 4-2 reads, "I believe that anyone should have the right to place `Pop-Up' advertisements on any website at any time, even if the owner of the website does not authorize or approve it." (Neal Aff., Ex. C at 32.) By suggesting in the second clause that the pop-up ads might be unauthorized, Mr. Neal's survey suggests that they should not be permitted on the website. Question 4-5 reads: "I believe that `Pop-Up' advertisements are sometimes not sponsored by or authorized by the website on which they appear." However, Question 9 reads: "Were you aware that, when viewing websites on the Internet, SaveNow software causes `Pop-Up' advertisements to be displayed on your computer which are not authorized by the website on which they appear?" (Neal Aff., Ex. C at 35.) Since Question 9 flatly states that pop-up ads generated by SaveNow software are unauthorized, the survey itself suggest the answer to Question 4-5.

      311

      [55] As noted above, in December 2002, subsequent to the filing of this lawsuit, WhenU.com replaced this text with a new disclaimer, stating: "This is a WhenU offer and is not sponsored or displayed by the websites you are visiting. More ...," (Memo in Opposition at 10). However, since "there is no guarantee that Defendants will not simply return to the same conduct if the case is dismissed without issuance of an injunction," the Court considers the disclaimers as they appeared at the time the action was filed. OBH, Inc. v. Spotlight Magazine, Inc., 86 F.Supp.2d 176, 186 n. 8 (W.D.N.Y.2000).

      312

      [56] It appears from that the registration occurred sometime in 2002. (Barrier Aff. Ex. A.)

      313

      [57] See discussion, infra, p. 497.

      314

      [58] It is not insignificant that Congress chose to make the ACPA part of the Lanham Act, and for purposes of preliminary injunctions on trademark infringement claims under the Lanham Act, irreparable harm is presumed upon a finding of a likelihood of confusion.

      315

      [59] Arguing "[i]f a defendant voluntarily ceases the complained-of activities, a preliminary injunction request is moot when there is no reasonable expectation that the complained-of activities will resume in the future," Defendant Vision Direct cites American Express Travel Related Services, Inc. v. MasterCard International, Inc., 776 F.Supp. 787, 790-91 (S.D.N.Y.1991); Upjohn v. American Home Products Corp., 598 F.Supp. at 550, 554-55. (Vision Direct Jan. 31, 2003 at 3.)

      316

      [60] Defendant alleges that it voluntarily ceased its pop-up advertising activities on September 17, 2002. (Mummery Dec. ¶ 7, 8.)

    • 2.4 Lewis Galoob Toys Inc. v. Nintendo of America Inc

      This short excerpt considers whether modern “speedup” chips are a derivative work
      1

      964 F.2d 965 (1992)

      2
      LEWIS GALOOB TOYS, INC., Plaintiff-Appellee,
      v.
      NINTENDO OF AMERICA, INC., Defendant-Appellant.
      NINTENDO OF AMERICA, INC., Plaintiff-Appellant,
      v.
      LEWIS GALOOB TOYS, INC., Defendant-Appellee.
      3

      No. 91-16205.

      4

      United States Court of Appeals, Ninth Circuit.

      5

      Argued and Submitted March 12, 1992.
      Decided May 21, 1992.
      As Amended August 5, 1992.

      6

      [966] Thomas G. Gallatin, Jr., Mudge Rose Guthrie Alexander & Ferdon, New York City, for defendant-appellant.

      7

      Jerome B. Falk, Jr., Howard, Rice, Nemerovski, Canady, Robertson & Falk, San Francisco, Cal., for plaintiff-appellee.

      8

      Before FARRIS and RYMER, Circuit Judges, and KENYON,[1] District Judge.

      9
      [967] FARRIS, Circuit Judge:
      10

      Nintendo of America appeals the district court's judgment following a bench trial (1) declaring that Lewis Galoob Toys' Game Genie does not violate any Nintendo copyrights and dissolving a temporary injunction and (2) denying Nintendo's request for a permanent injunction enjoining Galoob from marketing the Game Genie. Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 780 F.Supp. 1283 (N.D.Cal.1991). We have appellate jurisdiction pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1291 and 1292(a)(1). We affirm.

      11
      FACTS
      12

      The Nintendo Entertainment System is a home video game system marketed by Nintendo. To use the system, the player inserts a cartridge containing a video game that Nintendo produces or licenses others to produce. By pressing buttons and manipulating a control pad, the player controls one of the game's characters and progresses through the game. The games are protected as audiovisual works under 17 U.S.C. § 102(a)(6).

      13

      The Game Genie is a device manufactured by Galoob that allows the player to alter up to three features of a Nintendo game. For example, the Game Genie can increase the number of lives of the player's character, increase the speed at which the character moves, and allow the character to float above obstacles. The player controls the changes made by the Game Genie by entering codes provided by the Game Genie Programming Manual and Code Book. The player also can experiment with variations of these codes.

      14

      The Game Genie functions by blocking the value for a single data byte sent by the game cartridge to the central processing unit in the Nintendo Entertainment System and replacing it with a new value. If that value controls the character's strength, for example, then the character can be made invincible by increasing the value sufficiently. The Game Genie is inserted between a game cartridge and the Nintendo Entertainment System. The Game Genie does not alter the data that is stored in the game cartridge. Its effects are temporary.

      15
      DISCUSSION
      16
      1. Derivative work
      17

      The Copyright Act of 1976 confers upon copyright holders the exclusive right to prepare and authorize others to prepare derivative works based on their copyrighted works. See 17 U.S.C. § 106(2). Nintendo argues that the district court erred in concluding that the audiovisual displays created by the Game Genie are not derivative works. The court's conclusions of law are reviewed de novo. See Rozay's Transfer v. Local Freight Drivers, Local 208, 850 F.2d 1321, 1326 (9th Cir.1988), cert. denied, 490 U.S. 1030, 109 S.Ct. 1768, 104 L.Ed.2d 203 (1989). Its findings of fact are reviewed for clear error. See id.

      18

      A derivative work must incorporate a protected work in some concrete or permanent "form." The Copyright Act defines a derivative work as follows:

      19

      A "derivative work" is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

      20

      17 U.S.C. § 101 (emphasis added). The examples of derivative works provided by the Act all physically incorporate the underlying work or works. The Act's legislative history similarly indicates that "the infringing work must incorporate a portion of the copyrighted work in some form." 1976 U.S.Code Cong. & Admin.News 5659, 5675. See also Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341, 1343-44 (9th Cir.1988) (discussing same), cert. denied, 489 U.S. 1018, 109 S.Ct. 1135, 103 L.Ed.2d 196 (1989).

      21

      Our analysis is not controlled by the Copyright Act's definition of "fixed." The [968] Act defines copies as "material objects, other than phonorecords, in which a work is fixed by any method." 17 U.S.C. § 101 (emphasis added). The Act's definition of "derivative work," in contrast, lacks any such reference to fixation. See id. Further, we have held in a copyright infringement action that "[i]t makes no difference that the derivation may not satisfy certain requirements for statutory copyright registration itself." Lone Ranger Television v. Program Radio Corp., 740 F.2d 718, 722 (9th Cir.1984). See also Paul Goldstein, Derivative Rights and Derivative Works in Copyright, 30 J. Copyright Soc'y U.S.A. 209, 231 n. 75 (1983) ("the Act does not require that the derivative work be protectable for its preparation to infringe"). Cf. Kalem Co. v. Harper Bros., 222 U.S. 55, 61, 32 S.Ct. 20, 21, 56 L.Ed. 92 (1911) (finding the movie "Ben Hur" infringed copyright in the book Ben Hur even though Copyright Act did not yet include movies as protectable works). A derivative work must be fixed to be protected under the Act, see 17 U.S.C. § 102(a), but not to infringe.

      22

      The argument that a derivative work must be fixed because "[a] `derivative work' is a work," 17 U.S.C. § 101, and "[a] work is `created' when it is fixed in a copy or phonorecord for the first time," id., relies on a misapplication of the Copyright Act's definition of "created":

      23

      A work is `created' when it is fixed in a copy or phonorecord for the first time; where a work is prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work.

      24

      Id. The definition clarifies the time at which a work is created. If the provision were a definition of "work," it would not use that term in such a casual manner. The Act does not contain a definition of "work." Rather, it contains specific definitions: "audiovisual works," "literary works," and "pictorial, graphic and sculptural works," for example. The definition of "derivative work" does not require fixation.

      25

      The district court's finding that no independent work is created, see Galoob, 780 F.Supp. at 1291, is supported by the record. The Game Genie merely enhances the audiovisual displays (or underlying data bytes) that originate in Nintendo game cartridges. The altered displays do not incorporate a portion of a copyrighted work in some concrete or permanent form. Nintendo argues that the Game Genie's displays are as fixed in the hardware and software used to create them as Nintendo's original displays. Nintendo's argument ignores the fact that the Game Genie cannot produce an audiovisual display; the underlying display must be produced by a Nintendo Entertainment System and game cartridge. Even if we were to rely on the Copyright Act's definition of "fixed," we would similarly conclude that the resulting display is not "embodied," see 17 U.S.C. § 101, in the Game Genie. It cannot be a derivative work.

      26

      Mirage Editions is illustrative. Albuquerque A.R.T. transferred artworks from a commemorative book to individual ceramic tiles. See Mirage Editions, 856 F.2d at 1342. We held that "[b]y borrowing and mounting the preexisting, copyrighted individual art images without the consent of the copyright proprietors ... [Albuquerque A.R.T.] has prepared a derivative work and infringed the subject copyrights." Id. at 1343. The ceramic tiles physically incorporated the copyrighted works in a form that could be sold. Perhaps more importantly, sales of the tiles supplanted purchasers' demand for the underlying works. Our holding in Mirage Editions would have been much different if Albuquerque A.R.T. had distributed lenses that merely enabled users to view several artworks simultaneously.

      27

      Nintendo asserted at oral argument that the existence of a $150 million market for the Game Genie indicates that its audiovisual display must be fixed. We understand Nintendo's argument; consumers clearly would not purchase the Game Genie if its display was not "sufficiently permanent or [969] stable to permit it to be perceived ... for a period of more than transitory duration." 17 U.S.C. § 101. But, Nintendo's reliance on the Act's definition of "fixed" is misplaced. Nintendo's argument also proves too much; the existence of a market does not, and cannot, determine conclusively whether a work is an infringing derivative work. For example, although there is a market for kaleidoscopes, it does not necessarily follow that kaleidoscopes create unlawful derivative works when pointed at protected artwork. The same can be said of countless other products that enhance, but do not replace, copyrighted works.

      28

      Nintendo also argues that our analysis should focus exclusively on the audiovisual displays created by the Game Genie, i.e., that we should compare the altered displays to Nintendo's original displays. Nintendo emphasizes that "`[a]udiovisual works' are works that consist of a series of related images ... regardless of the nature of the material objects ... in which the works are embodied." 17 U.S.C. § 101 (emphasis added). The Copyright Act's definition of "audiovisual works" is inapposite; the only question before us is whether the audiovisual displays created by the Game Genie are "derivative works." The Act does not similarly provide that a work can be a derivative work regardless of the nature of the material objects in which the work is embodied. A derivative work must incorporate a protected work in some concrete or permanent form. We cannot ignore the actual source of the Game Genie's display.

      29

      Nintendo relies heavily on Midway Mfg. Co. v. Artic Int'l, Inc., 704 F.2d 1009 (7th Cir.), cert. denied, 464 U.S. 823, 104 S.Ct. 90, 78 L.Ed.2d 98 (1983). Midway can be distinguished. The defendant in Midway, Artic International, marketed a computer chip that could be inserted in Galaxian video games to speed up the rate of play. The Seventh Circuit held that the speeded-up version of Galaxian was a derivative work. Id. at 1013-14. Artic's chip substantially copied and replaced the chip that was originally distributed by Midway. Purchasers of Artic's chip also benefited economically by offering the altered game for use by the general public. The Game Genie does not physically incorporate a portion of a copyrighted work, nor does it supplant demand for a component of that work. The court in Midway acknowledged that the Copyright Act's definition of "derivative work" "must be stretched to accommodate speeded-up video games." Id. at 1014. Stretching that definition further would chill innovation and fail to protect "society's competing interest in the free flow of ideas, information, and commerce." Sony Corp. of America v. Universal Studios, Inc., 464 U.S. 417, 429, 104 S.Ct. 774, 782, 78 L.Ed.2d 574 (1984).

      30

      In holding that the audiovisual displays created by the Game Genie are not derivative works, we recognize that technology often advances by improvement rather than replacement. See Christian H. Nadan, Note, A Proposal to Recognize Component Works: How a Teddy Bears on the Competing Ends of Copyright Law, 78 Cal.L.Rev. 1633, 1635 (1990). Some time ago, for example, computer companies began marketing spell-checkers that operate within existing word processors by signalling the writer when a word is misspelled. These applications, as well as countless others, could not be produced and marketed if courts were to conclude that the word processor and spell-checker combination is a derivative work based on the word processor alone. The Game Genie is useless by itself, it can only enhance, and cannot duplicate or recaste, a Nintendo game's output. It does not contain or produce a Nintendo game's output in some concrete or permanent form, nor does it supplant demand for Nintendo game cartridges. Such innovations rarely will constitute infringing derivative works under the Copyright Act. See generally Nadan, supra, at 1667-72.

      31
      2. Fair use
      32

      "The doctrine of fair use allows a holder of the privilege to use copyrighted material in a reasonable manner without the consent of the copyright owner." Narell v. Freeman, 872 F.2d 907, 913 (9th Cir.1989) (citations omitted). The district court concluded that, even if the audiovisual displays created by the Game Genie are derivative works, Galoob is not liable under 17 U.S.C. § 107 because the displays are a fair use of Nintendo's copyrighted displays. "Whether a use of copyrighted material is a `fair use' is a mixed question of law and fact. If the district court found sufficient facts to evaluate each of the statutory factors, the appellate court may decide whether defendants may claim the fair use defense as a matter of law." Abend v. MCA, Inc., 863 F.2d 1465, 1468 (9th Cir.1988), aff'd sub nom. Stewart v. Abend, 495 U.S. 207, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990).

      33

      [970] Section 107 codifies the fair use defense:

      34

      In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

      (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

      (2) the nature of the copyrighted work;

      (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole;

      (4) the effect of the use upon the potential market for or value of the copyrighted work.

      35

      The factors are nonexclusive, see Fisher v. Dees, 794 F.2d 432, 435 (9th Cir.1986), and section 107 does not indicate how much weight should be ascribed to each.

      36

      Much of the parties' dispute regarding the fair use defense concerns the proper focus of the court's inquiry: (1) Galoob or (2) consumers who purchase and use the Game Genie. Nintendo's complaint does not allege direct infringement, nor did it try the case on that theory. The complaint, for example, alleges only that "Galoob's marketing advertising [sic], promoting and selling of Game Genie has and will contribute to the creation of infringing derivatives of Nintendo's copyrighted ... games." (emphasis added). Contributory infringement is a form of third party liability. See Melville B. Nimmer & David Nimmer, 3 Nimmer on Copyright § 12.04[A][2], at 12-68 (1991). The district court properly focused on whether consumers who purchase and use the Game Genie would be infringing Nintendo's copyrights by creating (what are now assumed to be) derivative works.

      37

      Nintendo emphasizes that the district court ultimately addressed its direct infringement by authorization argument. The court concluded that, "[b]ecause the Game Genie does not create a derivative work when used in conjunction with a copyrighted video game, Galoob does not `authorize the use of a copyrighted work without the actual authority from the copyright owner.'" Galoob, 780 F.Supp. at 1298 (quoting Sony, 464 U.S. at 435 n. 17, 104 S.Ct. at 785 n. 17). Although infringement by authorization is a form of direct infringement, this does not change the proper focus of our inquiry; a party cannot authorize another party to infringe a copyright unless the authorized conduct would itself be unlawful.

      38

      Nintendo disputes this conclusion. According to Nintendo, a party can unlawfully authorize another party to use a copyrighted work even if that party's use of the work would not violate the Copyright Act. Nintendo's argument is unpersuasive. In Sony, 464 U.S. at 449, 104 S.Ct. at 792, for example, the Court considered whether consumers were using the Betamax for a commercial or noncommercial purpose even though Sony itself obviously was acting in its own commercial self-interest. Professor Nimmer similarly concludes that, "to the extent that an activity does not violate one of those five enumerated rights [see 17 U.S.C. § 106], authorizing such activity does not constitute copyright infringement." 3 Nimmer on Copyright § 12.04[A][3][a], at 12-80 n.82.

      39

      The district court concluded that "a family's use of a Game Genie for private home enjoyment must be characterized as a non-commercial, nonprofit activity." Galoob, 780 F.Supp. at 1293. Nintendo argues that Game Genie users are supplanting its commercially valuable right to make and sell derivative works. Nintendo's reliance on Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562, 105 S.Ct. 2218, 2231, 85 L.Ed.2d 588 (1985), is misplaced. The commercially valuable right at issue in Harper & Row was the right of first publication; Nation Enterprises intended to publish the copyrighted materials for profit. See id. at 562-63, 105 S.Ct. at 2231-32. See also Sony, 464 U.S. at 449, 104 S.Ct. at 792 ("If the Betamax were used to make copies for a commercial or profit-making purpose, such use would presumptively be unfair."). Game Genie users are engaged in a non-profit activity. Their use of the Game Genie to create derivative works therefore is presumptively fair. See Sony, 464 U.S. at 449, 104 S.Ct. at 792.

      40

      The district court also concluded that "[t]he [Nintendo] works' published nature supports the fairness of the use." Galoob, 780 F.Supp. at 1293. Nintendo argues that it has not published the derivative works created by the Game Genie. This argument ignores the plain language of section 107: "the factors to be considered shall include ... the nature of the copyrighted work." The argument also would make the fair use defense unavailable in all cases of derivative works, including "criticism, comment, news reporting, teaching ..., scholarship, or research." 17 U.S.C. § 107. A commentary that incorporated large portions of For Whom the Bell Tolls, for [971] example, would be undeserving of fair use protection because the incorporated portions would constitute an unpublished derivative work. This cannot be the law.

      41

      The district court further concluded that the amount of the portion used in relation to the copyrighted work as a whole "cannot assist Nintendo in overcoming the presumption of fair use." Galoob, 780 F.Supp. at 1293. The video tape recorders at issue in Sony allowed consumers to tape copyrighted works in their entirety. The Supreme Court nevertheless held that, "when one considers ... that [video tape recording] merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced does not have its ordinary effect of militating against a finding of fair use." 464 U.S. at 449-50, 104 S.Ct. at 792 (citations omitted). Consumers are not invited to witness Nintendo's audiovisual displays free of charge, but, once they have paid to do so, the fact that the derivative works created by the Game Genie are comprised almost entirely of Nintendo's copyrighted displays does not militate against a finding of fair use.

      42

      Nintendo would distinguish Sony because it involved copying copyrighted works rather than creating derivative works based on those works. In other words, the consumers in Sony could lawfully copy the copyrighted works because they were invited to view those works free of charge. Game Genie users, in contrast, are not invited to view derivative works based on Nintendo's copyrighted works without first paying for that privilege. Sony cannot be read so narrowly. It is difficult to imagine that the Court would have reached a different conclusion if Betamax purchasers were skipping portions of copyrighted works or viewing denouements before climaxes. Sony recognizes that a party who distributes a copyrighted work cannot dictate how that work is to be enjoyed. Consumers may use a Betamax to view copyrighted works at a more convenient time. They similarly may use a Game Genie to enhance a Nintendo Game cartridge's audiovisual display in such a way as to make the experience more enjoyable.

      43

      "The fourth factor is the `most important, and indeed, central fair use factor.'" Stewart, 495 U.S. at 238, 110 S.Ct. at 1769 (quoting 3 Nimmer on Copyright § 13.05[A], at 13-81). The district court concluded that "Nintendo has failed to show any harm to the present market for its copyrighted games and has failed to establish the reasonable likelihood of a potential market for slightly altered versions of the games at suit." Galoob, 780 F.Supp. at 1295. Nintendo's main argument on appeal is that the test for market harm encompasses the potential market for derivative works. Because the Game Genie is used for a noncommercial purpose, the likelihood of future harm may not be presumed. See Sony, 464 U.S. at 451, 104 S.Ct. at 793. Nintendo must show "by a preponderance of the evidence that some meaningful likelihood of future harm exists." Id. (emphasis supplied).

      44

      Nintendo's argument is supported by case law. Although the Copyright Act requires a court to consider "the effect of the use upon the potential market for or value of the copyrighted work," 17 U.S.C. § 107(4) (emphasis added), we held in Abend that "[a]lthough the motion picture will have no adverse effect on bookstore sales of the [underlying] novel — and may in fact have a beneficial effect — it is `clear that [the film's producer] may not invoke the defense of fair use.'" 863 F.2d at 1482 (quoting 3 Nimmer on Copyright § 13.05[B], at 13-84). We explained: "`If the defendant's work adversely affects the value of any of the rights in the copyrighted work ... the use is not fair even if the rights thus affected have not as yet been exercised by the plaintiff.'" Id. (quoting 3 Nimmer on Copyright § 13.05[B], at 13-84 to 13-85 (footnotes omitted)). The Supreme Court specifically affirmed our finding that the motion picture adaptation "impinged on the ability to market new versions of the story." Stewart, 495 U.S. at 238, 110 S.Ct. at 1769.

      45

      Still, Nintendo's argument is undermined by the facts. The district court considered the potential market for derivative works based on Nintendo game cartridges and found that: (1) "Nintendo has not, to date, issued or considered issuing altered versions of existing games," Galoob, 780 F.Supp. at 1295, and (2) Nintendo "has failed to show the reasonable likelihood of such a market." Id. The record supports the court's findings. According to Stephen Beck, Galoob's expert witness, junior or expert versions of existing Nintendo games would enjoy very little market interest because the original version of each game already has been designed to appeal to the largest number of consumers. Mr. Beck [972] also testified that a new game must include new material or "the game player is going to feel very cheated and robbed, and [the] product will have a bad reputation and word of mouth will probably kill its sales." Howard Lincoln, Senior Vice President of Nintendo of America, acknowledged that Nintendo has no present plans to market such games.

      46

      The district court also noted that Nintendo's assertion that it may wish to re-release altered versions of its game cartridges is contradicted by its position in various other lawsuits:

      47

      In those actions, Nintendo opposes antitrust claims by using the vagaries of the video game industry to rebut the impact and permanence of its market control, if any. Having indoctrinated this Court as to the fast pace and instability of the video game industry, Nintendo may not now, without any data, redefine that market in its request for the extraordinary remedy sought herein.... While board games may never die, good video games are mortal.

      48

      Galoob, 780 F.Supp. at 1295. The existence of this potential market cannot be presumed. See Sony, 464 U.S. at 451, 104 S.Ct. at 793. See also Wright v. Warner Books, Inc., 953 F.2d 731, 739 (2d Cir.1991) (affirming district court's finding of no reasonable likelihood of injury to alleged market because "[p]laintiff has offered no evidence that the project will go forward"). The fourth and most important fair use factor also favors Galoob.

      49

      Nintendo's most persuasive argument is that the creative nature of its audiovisual displays weighs against a finding of fair use. The Supreme Court has acknowledged that "fair use is more likely to be found in factual works than fictional works." Stewart, 495 U.S. at 237, 110 S.Ct. at 1769. This consideration weighs against a finding of fair use, but it is not dispositive. See Sony, 464 U.S. at 448, 104 S.Ct. at 792 (fair use defense is an "equitable rule of reason"). The district court could properly conclude that Game Genie users are making a fair use of Nintendo's displays.

      50
      3. Temporary and permanent injunction
      51

      Galoob has not violated the Copyright Act. Nintendo therefore is not entitled to a temporary or permanent injunction.

      52

      AFFIRMED.

      53
      RYMER, Circuit Judge, concurring in the judgment:
      54

      I concur in the judgment for reasons stated by the district court, Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 780 F.Supp. 1283 (N.D.Cal.1991).

      55

      [1] Honorable David V. Kenyon, United States District Judge for the Central District of California, sitting by designation.

    • 2.5 Micro Star v. FormGen Inc.

      1

      154 F.3d 1107

      2

      1998 Copr.L.Dec. P 27,820, 48 U.S.P.Q.2d 1026,
      98 Cal. Daily Op. Serv. 7130,
      98 Daily Journal D.A.R. 9859

      3
      MICRO STAR, Plaintiff-Appellant,
      v.
      FORMGEN INC., a corporation; GT Interactive Software Corp.;
      3D Realms Entertainment, aka 3D Realms
      Entertainment; DOES, 1 through 100,
      inclusive., Defendants-Appellees.
      MICRO STAR, Plaintiff-Appellant/Cross-Appellee,
      v.
      FORMGEN INC., a corporation; GT Interactive Software Corp.;
      3D Realms Entertainment, aka 3D Realms
      Entertainment; Does, 1 through 100,
      inclusive., Defendants-Appellees/Cross-Appellants.
      4

      Nos. 96-56426, 96-56433.

      5

      United States Court of Appeals,
      Ninth Circuit.

      6

      Argued and Submitted Nov. 4, 1997.
      Decided Sept. 11, 1998.

      7

      [1109] Philip H. Stillman, Flynn, Sheridan, Tabb & Stillman, San Diego, CA, for plaintiff-appellant/cross-appellee.

      8

      Michael S. Oberman, Kramer, Levin, Naftalis & Frankel, New York City, for defendants-appellees/cross-appellants.

      9

      Mark E. Nebergall, Mark Traphagen, Software Publishers Association, Washington, DC, for defendants-appellees/cross-appellants.

      10

      Gail E. Markels, Interactive Digital Software Association, New York City, for defendants-appellees/cross-appellants.

      11

      Appeal from the United States District Court for the Southern District of California Marilyn L. Huff, District Judge, Presiding. D.C. No. CV-96-03435-MLH.

      12

      Before: KOZINSKI, THOMPSON[*] and TROTT, Circuit Judges.

      13

      KOZINSKI, Circuit Judge.

      14

      Duke Nukem routinely vanquishes Octabrain and the Protozoid Slimer. But what about the dreaded Micro Star?

      15
      I
      16

      FormGen Inc., GT Interactive Software Corp. and Apogee Software, Ltd. (collectively FormGen) made, distributed and own the rights to Duke Nukem 3D (D/N-3D), an immensely popular (and very cool) computer game. D/N-3D is played from the first-person perspective; the player assumes the personality and point of view of the title character, who is seen on the screen only as a pair of hands and an occasional boot, much as one might see oneself in real life without the aid of a mirror.[1] Players explore a futuristic city infested with evil aliens and other hazards. The goal is to zap them before they zap you, while searching for the hidden passage to the next level. The basic game comes with twenty-nine levels, each with a different combination of scenery, aliens, and other challenges. The game also includes a "Build Editor," a utility that enables players to create their own levels. With FormGen's encouragement, players frequently post levels they have created on the Internet where others can download them. Micro Star, a computer software distributor, did just that: It downloaded 300 user-created levels and stamped them onto a CD, which it then sold commercially as Nuke It (N/I). N/I is packaged in a box decorated with numerous "screen shots," pictures of what the new levels look like when played.

      17

      Micro Star filed suit in district court, seeking a declaratory judgment that N/I did not infringe on any of FormGen's copyrights. FormGen counterclaimed, seeking a preliminary injunction barring further production and distribution of N/I. Relying on Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc., 964 F.2d 965 (9th Cir.1992), the district court held that N/I was not a derivative work and therefore did not infringe FormGen's copyright. The district court did, however, grant a preliminary injunction as to the screen shots, finding that N/I's packaging violated FormGen's copyright by reproducing pictures of D/N-3D characters without a license. The court rejected Micro Star's fair use claims. Both sides appeal their losses.

      18
      II
      19

      A party seeking a preliminary injunction must show "either a likelihood of success on the merits and the possibility of irreparable injury, or that serious questions going to the merits were raised and the balance of hardships tips sharply in its favor." Johnson Controls, Inc. v. Phoenix Control Systems, Inc., 886 F.2d 1173, 1174 (9th Cir.1989). Because "in a copyright infringement claim, a showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm," id., FormGen need only show a likelihood of success on the merits to get the preliminary injunction it seeks (barring the manufacture and distribution of N/I) and to preserve the preliminary injunction it already won (barring the screen shots on N/I's packaging).

      20
      III
      21

      To succeed on the merits of its claim that N/I infringes FormGen's copyright, FormGen must show (1) ownership of the copyright to D/N-3D, and (2) copying of protected expression by Micro Star. See Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330, 1335 (9th Cir.1995). FormGen's [1110] copyright registration creates a presumption of ownership, see id., and we are satisfied that FormGen has established its ownership of the copyright. We therefore focus on the latter issue.

      22

      FormGen alleges that its copyright is infringed by Micro Star's unauthorized commercial exploitation of user-created game levels. In order to understand FormGen's claims, one must first understand the way D/N-3D works. The game consists of three separate components: the game engine, the source art library and the MAP files.[2] The game engine is the heart of the computer program; in some sense, it is the program. It tells the computer when to read data, save and load games, play sounds and project images onto the screen. In order to create the audiovisual display for a particular level, the game engine invokes the MAP file that corresponds to that level. Each MAP file contains a series of instructions that tell the game engine (and, through it, the computer) what to put where. For instance, the MAP file might say scuba gear goes at the bottom of the screen. The game engine then goes to the source art library, finds the image of the scuba gear, and puts it in just the right place on the screen.[3] The MAP file describes the level in painstaking detail, but it does not actually contain any of the copyrighted art itself; everything that appears on the screen actually comes from the art library. Think of the game's audiovisual display as a paint-by-numbers kit. The MAP file might tell you to put blue paint in section number 565, but it doesn't contain any blue paint itself; the blue paint comes from your palette, which is the low-tech analog of the art library, while you play the role of the game engine. When the player selects one of the N/I levels, the game engine references the N/I MAP files, but still uses the D/N-3D art library to generate the images that make up that level.

      23

      FormGen points out that a copyright holder enjoys the exclusive right to prepare derivative works based on D/N-3D. See 17 U.S.C. § 106(2) (1994). According to FormGen, the audiovisual displays generated when D/N-3D is run in conjunction with the N/I CD MAP files are derivative works that infringe this exclusivity. Is FormGen right? The answer is not obvious.

      24

      The Copyright Act defines a derivative work as

      25

      a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

      26

      Id. § 101. The statutory language is hopelessly overbroad, however, for "[e]very book in literature, science and art, borrows and must necessarily borrow, and use much which was well known and used before." Emerson v. Davies, 8 F. Cas. 615, 619 (C.C.D.Mass.1845) (No. 4436), quoted in 1 Nimmer on Copyright, § 3.01, at 3-2 (1997). To narrow the statute to a manageable level, we have developed certain criteria a work must satisfy in order to qualify as a derivative work. One of these is that a derivative work must exist in a "concrete or permanent form," Galoob, 964 F.2d at 967 (internal quotation marks omitted), and must substantially incorporate protected material from the preexisting work, see Litchfield v. Spielberg, 736 F.2d 1352, 1357 (9th Cir.1984). Micro Star argues that N/I is not a derivative work because the audiovisual displays generated when D/N-3D is run with N/I's MAP files are [1111] not incorporated in any concrete or permanent form, and the MAP files do not copy any of D/N-3D's protected expression. It is mistaken on both counts.

      27

      The requirement that a derivative work must assume a concrete or permanent form was recognized without much discussion in Galoob. There, we noted that all the Copyright Act's examples of derivative works took some definite, physical form and concluded that this was a requirement of the Act. See Galoob, 964 F.2d at 967-68; see also Edward G. Black & Michael H. Page, Add-On Infringements, 15 Hastings Comm/Ent. L.J. 615, 625 (1993) (noting that in Galoob the Ninth Circuit "re-examined the statutory definition of derivative works offered in section 101 and found an independent fixation requirement of sorts built into the statutory definition of derivative works"). Obviously, N/I's MAP files themselves exist in a concrete or permanent form; they are burned onto a CD-ROM. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir.1996) (computer files on a CD are fixed in a tangible medium of expression). But what about the audiovisual displays generated when D/N-3D runs the N/I MAP files--i.e., the actual game level as displayed on the screen? Micro Star argues that, because the audiovisual displays in Galoob didn't meet the "concrete or permanent form" requirement, neither do N/I's.

      28

      In Galoob, we considered audiovisual displays created using a device called the Game Genie, which was sold for use with the Nintendo Entertainment System. The Game Genie allowed players to alter individual features of a game, such as a character's strength or speed, by selectively "blocking the value for a single data byte sent by the game cartridge to the [Nintendo console] and replacing it with a new value." Galoob, 964 F.2d at 967. Players chose which data value to replace by entering a code; over a billion different codes were possible. The Game Genie was dumb; it functioned only as a window into the computer program, allowing players to temporarily modify individual aspects of the game. See Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc., 780 F.Supp. 1283, 1289 (N.D.Cal.1991).

      29

      Nintendo sued, claiming that when the Game Genie modified the game system's audiovisual display, it created an infringing derivative work. We rejected this claim because "[a] derivative work must incorporate a protected work in some concrete or permanent form." Galoob, 964 F.2d at 967 (internal quotation marks omitted). The audiovisual displays generated by combining the Nintendo System with the Game Genie were not incorporated in any permanent form; when the game was over, they were gone. Of course, they could be reconstructed, but only if the next player chose to reenter the same codes.[4]

      30

      Micro Star argues that the MAP files on N/I are a more advanced version of the Game Genie, replacing old values (the MAP files in the original game) with new values (N/I's MAP files). But, whereas the audiovisual displays created by Game Genie were never recorded in any permanent form, the audiovisual displays generated by D/N-3D from the N/I MAP files are in the MAP files themselves. In Galoob, the audiovisual display was defined by the original game cartridge, not by the Game Genie; no one could possibly say that the data values inserted by the Game Genie described the audiovisual display. In the present case the audiovisual display that appears on the computer monitor when a N/I level is played is described--in exact detail--by a N/I MAP file.

      31

      This raises the interesting question whether an exact, down to the last detail, description of an audiovisual display (and--by definition--we know that MAP files do describe audiovisual displays down to the last detail) [1112] counts as a permanent or concrete form for purposes of Galoob. We see no reason it shouldn't. What, after all, does sheet music do but describe in precise detail the way a copyrighted melody sounds? See 1 William F. Patry, Copyright Law and Practice 168 (1994) ("[A] musical composition may be embodied in sheet music...."). To be copyrighted, pantomimes and dances may be "described in sufficient detail to enable the work to be performed from that description." Id. at 243 (citing Compendium II of Copyright Office Practices § 463); see also Horgan v. Macmillan, Inc., 789 F.2d 157, 160 (2d Cir.1986). Similarly, the N/I MAP files describe the audiovisual display that is to be generated when the player chooses to play D/N-3D using the N/I levels. Because the audiovisual displays assume a concrete or permanent form in the MAP files, Galoob stands as no bar to finding that they are derivative works.

      32

      In addition, "[a] work will be considered a derivative work only if it would be considered an infringing work if the material which it has derived from a preexisting work had been taken without the consent of a copyright proprietor of such preexisting work." Mirage Editions v. Albuquerque A.R.T. Co., 856 F.2d 1341, 1343 (quoting 1 Nimmer on Copyright § 3.01 (1986)) (internal quotation marks omitted). "To prove infringement, [FormGen] must show that [D/N-3D's and N/I's audiovisual displays] are substantially similar in both ideas and expression." Litchfield v. Spielberg, 736 F.2d 1352, 1356 (9th Cir.1984) (emphasis omitted). Similarity of ideas may be shown by comparing the objective details of the works: plot, theme, dialogue, mood, setting, characters, etc. See id. Similarity of expression focuses on the response of the ordinary reasonable person, and considers the total concept and feel of the works. See id. at 1356-57. FormGen will doubtless succeed in making these showings since the audiovisual displays generated when the player chooses the N/I levels come entirely out of D/N-3D's source art library. Cf. Atari, Inc. v. North Am. Philips Consumer Elec. Corp., 672 F.2d 607, 620 (7th Cir.1982) (finding two video games substantially similar because they shared the same "total concept and feel").

      33

      Micro Star further argues that the MAP files are not derivative works because they do not, in fact, incorporate any of D/N-3D's protected expression. In particular, Micro Star makes much of the fact that the N/I MAP files reference the source art library, but do not actually contain any art files themselves. Therefore, it claims, nothing of D/N-3D's is reproduced in the MAP files. In making this argument, Micro Star misconstrues the protected work. The work that Micro Star infringes is the D/N-3D story itself--a beefy commando type named Duke who wanders around post-Apocalypse Los Angeles, shooting Pig Cops with a gun, lobbing hand grenades, searching for medkits and steroids, using a jetpack to leap over obstacles, blowing up gas tanks, avoiding radioactive slime. A copyright owner holds the right to create sequels, see Trust Co. Bank v. MGM/UA Entertainment Co., 772 F.2d 740 (11th Cir.1985), and the stories told in the N/I MAP files are surely sequels, telling new (though somewhat repetitive) tales of Duke's fabulous adventures. A book about Duke Nukem would infringe for the same reason, even if it contained no pictures.[5]

      34

      Micro Star nonetheless claims that its use of D/N-3D's protected expression falls within the doctrine of fair use, which permits unauthorized use of copyrighted works "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." 17 U.S.C. § 107; see Narell v. Freeman, 872 F.2d 907, 913 (9th Cir.1989). Section 107 instructs courts "determining whether the use made of a work in any particular case is a fair use" to consider four factors: (1) the purpose and character of the use, including whether it is commercial in nature; (2) the nature of the copyrighted work; (3) the amount and substantiality of the copied material in relation to the copyrighted work as a whole; and (4) the effect of the use on the potential market for the copyrighted work. 17 U.S.C. § 107.

      35

      [1113] As a preliminary matter, Micro Star asks us to focus on the player's use of the N/I CD in evaluating the fair use claim, because-according to Micro Star-the player actually creates the derivative work. In Galoob, after we assumed for purposes of argument that the Game Genie did create derivative works, we went on to consider the fair use defense from the player's point of view. See Galoob, 964 F.2d at 970. But the fair use analysis in Galoob was not necessary and therefore is clearly dicta. More significantly, Nintendo alleged only contributory infringement--that Galoob was helping consumers create derivative works; FormGen here alleges direct infringement by Micro Star, because the MAP files encompass new Duke stories, which are themselves derivative works.

      36

      Our examination of the section 107 factors yields straightforward results. Micro Star's use of FormGen's protected expression was made purely for financial gain. While that does not end our inquiry, see Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 584, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994), "every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 451, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984).[6] The Supreme Court has explained that the second factor, the nature of the copyrighted work, is particularly significant because "some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 586, 114 S.Ct. 1164. The fair use defense will be much less likely to succeed when it is applied to fiction or fantasy creations, as opposed to factual works such as telephone listings. See United Tel. Co. v. Johnson Publ'g Co., 855 F.2d 604, 609 (8th Cir.1988); see also Stewart v. Abend, 495 U.S. 207, 237, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990). Duke Nukem's world is made up of aliens, radioactive slime and freezer weapons-clearly fantasies, even by Los Angeles standards. N/I MAP files "expressly use[ ] the [D/N-3D] story's unique setting, characters, [and] plot," Stewart, 495 U.S. at 238, 110 S.Ct. 1750; both the quantity and importance of the material Micro Star used are substantial. Finally, by selling N/I, Micro Star "impinged on [FormGen's] ability to market new versions of the [D/N-3D] story." Stewart, 495 U.S. at 238, 110 S.Ct. 1750; see also Twin Peaks Productions, Inc. v. Publications Int'l, Ltd., 996 F.2d 1366, 1377 (2d Cir.1993). Only FormGen has the right to enter that market; whether it chooses to do so is entirely its business. "[N/I] neither falls into any of the categories enumerated in section 107 nor meets the four criteria set forth in section 107." Stewart, 495 U.S. at 237, 110 S.Ct. 1750. It is not protected by fair use.

      37

      Micro Star also argues that it is the beneficiary of the implicit license FormGen gave to its customers by authorizing them to create new levels. Section 204 of the Copyright Act requires the transfer of the exclusive rights granted to copyright owners (including the right to prepare derivative works) to be in writing. See 17 U.S.C. § 204(a); Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 556 (9th Cir.1990). A nonexclusive license may, however, be granted orally or implied by conduct. See Effects, 908 F.2d at 558. Nothing indicates that FormGen granted Micro Star any written license at all; nor is there evidence of a nonexclusive oral license. The only written license FormGen conceivably granted was to players who designed their own new levels, but that license contains a significant limitation: Any new levels the players create "must be offered [to others] solely for free." The parties dispute whether the license is binding, but it doesn't matter. If the license is valid, it clearly prohibits commercial distribution of levels; if it doesn't, FormGen hasn't granted any written licenses at all.[7]

      38

      [1114] In case FormGen didn't license away its rights, Micro Star argues that, by providing the Build Editor and encouraging players to create their own levels, FormGen abandoned all rights to its protected expression. It is well settled that rights gained under the Copyright Act may be abandoned. But abandonment of a right must be manifested by some overt act indicating an intention to abandon that right. See Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104 (9th Cir.1960). Given that it overtly encouraged players to make and freely distribute new levels, FormGen may indeed have abandoned its exclusive right to do the same. But abandoning some rights is not the same as abandoning all rights, and FormGen never overtly abandoned its rights to profit commercially from new levels. Indeed, FormGen warned players not to distribute the levels commercially and has actively enforced that limitation by bringing suits such as this one.

      39
      IV
      40

      Because FormGen will likely succeed at trial in proving that Micro Star has infringed its copyright, we reverse the district court's order denying a preliminary injunction and remand for entry of such an injunction. Of course, we affirm the grant of the preliminary injunction barring Micro Star from selling N/I in boxes covered with screen shots of the game. [8]

      41

      AFFIRMED in part, REVERSED in part, and REMANDED. Micro Star to bear costs of both appeals.

      42

      ---------------

      43

      [*] Judge Thompson was drawn to replace Judge Floyd Gibson who became unavailable after the case was submitted.

      44

      [1] This form of play was pioneered by a company called id Software with its classic Wolfenstein 3D character.

      45

      [2] So-called because the files all end with the extension ".MAP". Also, no doubt, because they contain the layout for the various levels.

      46

      [3] Actually, this is all a bit metaphorical. Computer programs don't actually go anywhere or fetch anything. Rather, the game engine receives the player's instruction as to which game level to select and instructs the processor to access the MAP file corresponding to that level. The MAP file, in turn, consists of a series of instructions indicating which art images go where. When the MAP file calls for a particular art image, the game engine tells the processor to access the art library for instructions on how each pixel on the screen must be colored in order to paint that image.

      47

      [4] A low-tech example might aid understanding. Imagine a product called the Pink Screener, which consists of a big piece of pink cellophane stretched over a frame. When put in front of a television, it makes everything on the screen look pinker. Someone who manages to record the programs with this pink cast (maybe by filming the screen) would have created an infringing derivative work. But the audiovisual display observed by a person watching television through the Pink Screener is not a derivative work because it does not incorporate the modified image in any permanent or concrete form. The Game Genie might be described as a fancy Pink Screener for video games, changing a value of the game as perceived by the current player, but never incorporating the new audiovisual display into a permanent or concrete form.

      48

      [5] We note that the N/I MAP files can only be used with D/N-3D. If another game could use the MAP files to tell the story of a mousy fellow who travels through a beige maze, killing vicious saltshakers with paper-clips, then the MAP files would not incorporate the protected expression of D/N-3D because they would not be telling a D/N-3D story.

      49

      [6] Of course, transformative works have greater recourse to the fair use defense as they "lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright ... and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use." Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (citations omitted). N/I can hardly be described as transformative; anything but.

      50

      [7] We would have no reason to sever the limitation from the license; the limitation is plainly stated in the User License, unambiguous, and not the least bit unreasonable. Indeed, it is precisely the sort of term we would expect to see in such a license.

      51

      [8] Micro Star raises various other claims alleging copyright misuse and abuse of the discovery process. However, nothing indicates that FormGen abused its copyright. See Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330, 1337 (9th Cir.1995). And we are at a loss to understand why Micro Star complains about the discovery process; certainly the district court did not abuse its discretion. See Sopcak v. Northern Mountain Helicopter Serv., 52 F.3d 817, 819 (9th Cir.1995).

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