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CoStar Reopens Settled Fixation Issue in Online Digital Environment

BY Mitchell Zimmerman
August 31, 2005

In a little-noticed and as yet un-cited alternative holding last year, the U.S. Court of Appeals for the Fourth Circuit undermined a previously unbroken line of cases holding that electronic copies of digital works are “fixed” within the meaning of the Copyright Act if they exist in the random access memory (“RAM”) of a computer. CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004).

LoopNet was an Internet service provider whose Web site allowed its subscribers, generally real estate brokers, to post listings of commercial real estate listings ' including photographs of the properties ' on the Internet. CoStar claimed that LoopNet was directly liable for copyright infringement because LoopNet subscribers uploaded CoStar's copyrighted photos of properties with LoopNet's approval.

In the leading case on direct liability of Internet service providers, Religious Technology Center v. Netcom On-Line Communication Services, 907 F.Supp. 1361 (N.D. Cal. 1995), the court had held ISPs were not liable as direct (as opposed to contributory) infringers when their “role in the infringement is nothing more than setting up and operating [an automated] system that is necessary for the functioning of the Internet.” Notwithstanding that copyright is a strict liability statute, Netcom held that “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.”

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