'Distribution' in Peer-to-Peer File-Sharing Lawsuits

What Is 'Distribution'?

Under the Copyright Act, a copyright owner has various exclusive rights, including the right 'to distribute copies ' of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending.' The Act does not define the word 'distribute.' 'Copies' of works are defined as 'material objects ' in which a work is fixed and from which the work can be perceived,' thus distribution is clearly limited to some sort of activity involving tangible copies, but the Act is largely silent as to what that activity would be. All the statute says is that it must constitute sale or other transfer of ownership of the tangible copies, or 'rental, lease or lending' of them. Contrary to arguments often made in defense of P2P file sharing, the statute does not require that distribution must involve or result in a physical copy literally moving from one place to another.

The law certainly never required physical movement of copies in the pre-Internet world, as is evident in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4^th Cir. 1997). In Hotaling, the Fourth Circuit reversed a lower court to hold that a copyright owner's distribution right was violated by the placing of a single, unauthorized copy of a book on the shelf of a library. Whether or not any patron ever checked out the book, the library had made it available to the public, which was enough to violate the distribution right. The Fourth Circuit noted: '[T]he record does not contain any evidence showing specific instances ' in which the libraries loaned the infringing copies to members of the public. But ' proving the libraries held unauthorized copies in their collections, where they were available to the public, is sufficient to establish distribution within the meaning of the statute.' Over a brief and respectful dissent, the court reasoned that '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.' Id. (Emphasis added).

In the Internet context, the physical objects at issue are usually audio or audio-visual files stored on the hard drive of a user's computer. A peer-to-peer transaction between two users does not relocate a physical copy of a recording from one user's possession to another's, but, like the library in Hotaling, the first user makes the file available to the public at large. As in Hotaling, this should be seen as a violation of the distribution right, whether or not a second user actually accesses or copies the available file. The Ninth Circuit so stated in A&M Records Inc. v. Napster, 239 F.3d 1004 (9^th Cir. 2001). ('Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights.') On remand, the district court in Napster distinguished Hotaling on the grounds that the library in Hotaling actually had a tangible copy of the work in its collection, but Napster did not. See, 377 F.Supp.2d 796 (N.D.Cal. 2005). That distinction, whatever its merits, clearly does not extend to claims against individual file-sharers who do hold copies of films or recordings on their hard drives.

The File-Sharer Cases

Since Napster, the majority of P2P cases have involved claims of direct infringement against individual users, not secondary-liability claims against intermediaries like Napster. These individual P2P cases have generally been resolved by settlement rather than judicial decision, so it was not until 2006 that any court had occasion to address 'making available' in connection with P2P technology. (One very early case supporting the making-available argument is Playboy Enters. Inc. v. Frena, 839 F.Supp. 1552 (M.D. Fla. 1993), a case involving the relatively primitive bulletin board technology of the early 1990s.) The District of Maine appears to have been the first, in Universal City Studios Prodns. v. Bigwood, 441 F.Supp.2d 185 (D. Me. 2006), involving an individual who shared various films using the Kazaa online network. Judge Gene Carter noted that 'in the digital environment, a person who stores copyrighted files in a shared directory makes those files immediately and readily available for download by other P2P users.' Id. at 188. Citing Hotaling and the Ninth Circuit's Napster decision, the court concluded that the defendant had violated the distribution right by 'using Kazaa to make copies of the Motion Pictures available to thousands of people over the Internet.' Id. at 190-191. Summary judgment was awarded to the plaintiff.

In Elektra Entertainment Group Inc., v. Perez, No. 05-931, 2006 U.S. Dist. Lexis 78229 (D. Ore. Oct. 25, 2006), Judge Anne Aiken of the District of Oregon used similar reasoning to deny a motion to dismiss a P2P complaint. The defendant in Perez likewise used the Kazaa software program 'to make a number of music files available over the Internet,' and the plaintiffs identified multiple titles among the defendant's offerings. The defendant moved to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, claiming that the plaintiff did not 'specify the allegedly infringing activity' in the complaint. The court disagreed. It noted that the complaint 'alleges that defendant used an online media distribution system, among other things, to make the copyrighted recordings available for distribution to others.' Id. at 5 (emphasis added). That allegation, supported by an exhibit listing the files in the defendant's share folder at the time of the plaintiff's investigation, was sufficient to warrant denial of the motion to dismiss.

In October 2007, in Virgin Records America v. Thomas, No. 06-1497 (D. Minn. Oct. 5, 2007), a jury in Minnesota found defendant Jammie Thomas liable for infringement and awarded statutory damages of $222,000. Thomas was found to have violated copyrights in 24 tracks by sharing them online, resulting in a damage award of $9,250 per track, the first jury award ever made in an individual file sharing case. Jury charge No. 15, strenuously contested by the defendants, read as follows: 'The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown.'

Clearly, a plaintiff's burden of showing infringement is much easier to carry under such an instruction, since it need only establish that copyrighted material was present in a defendant's share folder, not that any third party actually obtained a copy. Again, this is not a new rule for the Internet; it is fully consistent
with the long-held views of the Copyright Office regarding when a work is deemed 'published.' (See, 'Compendium II of Copyright Office Practices' (1984) at '905.02 (publication results from 'leaving copies in a public place for anyone to take')). Thomas has appealed.

Skepticism

The courts' acceptance of making-available liability for individual file sharers has recently encountered some skepticism, however, at least in a procedural context. In February, the District of Connecticut in Atlantic Recording Corp. v. Brennan, No. 3:07cv232 (JBA), 2007 [sic] U.S. Dist. LEXIS 6276 (D. Ct. Feb. 13, 2007[sic]) (Note: Both the Lexis citation and the date on the case read '2007' but this appears to be erroneous; the decision was issued in February 2008), refused to enter a default judgment against a non-appearing defendant, again in a case involving the sharing of music files. The complaint alleged that defendant had 'used, and continues to use, an online media distribution system to download the Copyrighted Recordings, to distribute the Copy- righted Recordings to the public, and/ or to make the Copyrighted Recordings available for distribution to others.' When the defendant defaulted, the court refused to award judgment for the plaintiff in part because it perceived possible meritorious defenses to the allegations.

Specifically with regard to the allegation of making available, the court found the claim 'problematic,' stating that ”without actual distribution of copies ' there is no violation of the distribution right.” Id. at 9 (citations omitted). This seems tautological, using the word 'distribution' as one of the criteria by which to determine whether there has been a 'distribution,' but the court did not address the issue, or the case law, in any detail and it does not appear that a more careful consideration of the point would likely have altered the ultimate result.

The court in Brennan cited the recent Ninth Circuit decision in Perfect 10 Inc. v. Amazon.com Inc., 508 F.3d 1146, at 1162 (9^th Cir. 2007), which states that 'distribution requires an 'actual dissemination' of a copy,' but the citation is inapposite in the file-sharing context. In Perfect 10, the Ninth Circuit refused to apply the Hotaling rule to Google and other online intermediaries because they did not have tangible copies of the infringing images on their servers. They were thus 'unlike the participants in the Napster system or the library in Hotaling.' There is no question that distribution can be found to occur if a defendant does have such tangible copies; the Perfect 10 court itself noted that '[t]he Supreme Court has indicated that in the electronic context, copies may be distributed electronically,' citing N.Y. Times v. Tasini, 533 U.S. 483, 448 (2001).

Compromise

Most recently, the Southern District of New York in Elektra Entertainment Group, Inc. v. Barker, No. 05-CV-7340 (KMK) (S.D.N.Y. Mar. 31, 2008) (slip op.), struck a compromise between full recognition of the making-available right and outright hostility to it. Like Brennan, above, the Barker case arose in the context of a motion to dismiss a complaint against a user of Kazaa P2P software, who was found to have 611 music files in a share folder. In perhaps the most extensive discussion of the issue yet offered by any court, Judge Kenneth M. Karas considered the sufficiency of plaintiff's allegation that defendant had used 'an online media distribution system ' to make the [recordings at issue] available for distribution to others.' He found the allegation insufficient to state a cause of action, but suggested amended language that could make it viable.

The court began by noting that the Copyright Act does not define the term 'distribute.' Congress did define the term 'publication,' however, and in doing so it used language almost identical to that used in establishing the distribution right in '106(3). Moreover, the court noted that the legislative history of the Act spoke frequently of creating a right of 'publication' under '106, although the statutory language that was eventually chosen spoke of a right 'to distribute.' Judge Karas thus concluded that: 'the House and Senate of the Ninety-Fourth Congress considered the terms 'distribute' and 'publication' to be synonymous.'

Therefore, the court followed a number of earlier decisions in adopting the statutory definition of 'publication' to define the scope of the '106(3) distribution right. Under that definition, distribution can be shown by an 'offer[] to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance or public display.' This definition, however, was not to be confused with the 'countourless 'make available' right proposed by plaintiff.' Id. at 15. Specifically, the court declined to follow Hotaling, stating 'respectfully' that the Fourth Circuit's rule in that case, 'even if sound public policy, is not grounded in the statute.' Merely alleging that the defendants had made the plaintiff's works available, as plaintiffs did, would therefore not be sufficient to state a cause of action.

Instead, the Barker court applied the full publication-based definition to hold that a making-available allegation must include claims that defendant 'made an offer to distribute, and that the offer was for the purpose of further distribution, public performance or public display.' The plaintiff's initial allegation, that the defendants made the works available 'for distribution to others' apparently satisfied the 'offer to distribute' element, but the court observed in a footnote that '[w]hether use of a peer-to-peer file sharing program such as Kazaa necessarily entails 'further distribution' however, is still an open question.' Id. at 18 n.8. Plaintiffs were given 30 days to amend their complaint, if they so chose, to add an allegation of 'making available' which would conform to the court's newly-articulated standard.

Conclusion

The making-available claim is well supported by the case law and the statute. It is no argument to say, as Brennan does, that distribution requires 'actual distribution.' The debate is over the meaning of the word. Clearly it requires a tangible copy, which Napster did not have, but where the defendant does in fact have a tangible copy, and allows others to access and use that tangible copy, the result in Hotaling should control. It is no stretch to say that one has loaned one's car if one gives the keys to a friend and says 'bon voyage.' Whether or not the borrower ever drives it away is immaterial. In the world of file sharing it may take two to tango, but it only takes one to distribute.

What Is 'Distribution'?

Under the Copyright Act, a copyright owner has various exclusive rights, including the right 'to distribute copies ' of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending.' The Act does not define the word 'distribute.' 'Copies' of works are defined as 'material objects ' in which a work is fixed and from which the work can be perceived,' thus distribution is clearly limited to some sort of activity involving tangible copies, but the Act is largely silent as to what that activity would be. All the statute says is that it must constitute sale or other transfer of ownership of the tangible copies, or 'rental, lease or lending' of them. Contrary to arguments often made in defense of P2P file sharing, the statute does not require that distribution must involve or result in a physical copy literally moving from one place to another.

The law certainly never required physical movement of copies in the pre-Internet world, as is evident in Hotaling v. Church of Jesus Christ of Latter-Day Saints , 118 F.3d 199 (4 th Cir. 1997). In Hotaling, the Fourth Circuit reversed a lower court to hold that a copyright owner's distribution right was violated by the placing of a single, unauthorized copy of a book on the shelf of a library. Whether or not any patron ever checked out the book, the library had made it available to the public, which was enough to violate the distribution right. The Fourth Circuit noted: '[T]he record does not contain any evidence showing specific instances ' in which the libraries loaned the infringing copies to members of the public. But ' proving the libraries held unauthorized copies in their collections, where they were available to the public, is sufficient to establish distribution within the meaning of the statute.' Over a brief and respectful dissent, the court reasoned that '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.' Id. (Emphasis added).

In the Internet context, the physical objects at issue are usually audio or audio-visual files stored on the hard drive of a user's computer. A peer-to-peer transaction between two users does not relocate a physical copy of a recording from one user's possession to another's, but, like the library in Hotaling, the first user makes the file available to the public at large. As in Hotaling, this should be seen as a violation of the distribution right, whether or not a second user actually accesses or copies the available file. The Ninth Circuit so stated in A&M Records Inc. v. Napster , 239 F.3d 1004 (9 th Cir. 2001). ('Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights.') On remand, the district court in Napster distinguished Hotaling on the grounds that the library in Hotaling actually had a tangible copy of the work in its collection, but Napster did not. See, 377 F.Supp.2d 796 (N.D.Cal. 2005). That distinction, whatever its merits, clearly does not extend to claims against individual file-sharers who do hold copies of films or recordings on their hard drives.

The File-Sharer Cases

Since Napster, the majority of P2P cases have involved claims of direct infringement against individual users, not secondary-liability claims against intermediaries like Napster. These individual P2P cases have generally been resolved by settlement rather than judicial decision, so it was not until 2006 that any court had occasion to address 'making available' in connection with P2P technology. (One very early case supporting the making-available argument is Playboy Enters. Inc. v. Frena , 839 F.Supp. 1552 (M.D. Fla. 1993), a case involving the relatively primitive bulletin board technology of the early 1990s.) The District of Maine appears to have been the first, in Universal City Studios Prodns. v. Bigwood , 441 F.Supp.2d 185 (D. Me. 2006), involving an individual who shared various films using the Kazaa online network. Judge Gene Carter noted that 'in the digital environment, a person who stores copyrighted files in a shared directory makes those files immediately and readily available for download by other P2P users.' Id. at 188. Citing Hotaling and the Ninth Circuit's Napster decision, the court concluded that the defendant had violated the distribution right by 'using Kazaa to make copies of the Motion Pictures available to thousands of people over the Internet.' Id. at 190-191. Summary judgment was awarded to the plaintiff.

In Elektra Entertainment Group Inc., v. Perez, No. 05-931, 2006 U.S. Dist. Lexis 78229 (D. Ore. Oct. 25, 2006), Judge Anne Aiken of the District of Oregon used similar reasoning to deny a motion to dismiss a P2P complaint. The defendant in Perez likewise used the Kazaa software program 'to make a number of music files available over the Internet,' and the plaintiffs identified multiple titles among the defendant's offerings. The defendant moved to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, claiming that the plaintiff did not 'specify the allegedly infringing activity' in the complaint. The court disagreed. It noted that the complaint 'alleges that defendant used an online media distribution system, among other things, to make the copyrighted recordings available for distribution to others.' Id. at 5 (emphasis added). That allegation, supported by an exhibit listing the files in the defendant's share folder at the time of the plaintiff's investigation, was sufficient to warrant denial of the motion to dismiss.

In October 2007, in Virgin Records America v. Thomas, No. 06-1497 (D. Minn. Oct. 5, 2007), a jury in Minnesota found defendant Jammie Thomas liable for infringement and awarded statutory damages of $222,000. Thomas was found to have violated copyrights in 24 tracks by sharing them online, resulting in a damage award of $9,250 per track, the first jury award ever made in an individual file sharing case. Jury charge No. 15, strenuously contested by the defendants, read as follows: 'The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown.'

Clearly, a plaintiff's burden of showing infringement is much easier to carry under such an instruction, since it need only establish that copyrighted material was present in a defendant's share folder, not that any third party actually obtained a copy. Again, this is not a new rule for the Internet; it is fully consistent
with the long-held views of the Copyright Office regarding when a work is deemed 'published.' (See, 'Compendium II of Copyright Office Practices' (1984) at '905.02 (publication results from 'leaving copies in a public place for anyone to take')). Thomas has appealed.

Skepticism

The courts' acceptance of making-available liability for individual file sharers has recently encountered some skepticism, however, at least in a procedural context. In February, the District of Connecticut in Atlantic Recording Corp. v. Brennan, No. 3:07cv232 (JBA), 2007 [sic] U.S. Dist. LEXIS 6276 (D. Ct. Feb. 13, 2007[sic]) (Note: Both the Lexis citation and the date on the case read '2007' but this appears to be erroneous; the decision was issued in February 2008), refused to enter a default judgment against a non-appearing defendant, again in a case involving the sharing of music files. The complaint alleged that defendant had 'used, and continues to use, an online media distribution system to download the Copyrighted Recordings, to distribute the Copy- righted Recordings to the public, and/ or to make the Copyrighted Recordings available for distribution to others.' When the defendant defaulted, the court refused to award judgment for the plaintiff in part because it perceived possible meritorious defenses to the allegations.

Specifically with regard to the allegation of making available, the court found the claim 'problematic,' stating that ”without actual distribution of copies ' there is no violation of the distribution right.” Id. at 9 (citations omitted). This seems tautological, using the word 'distribution' as one of the criteria by which to determine whether there has been a 'distribution,' but the court did not address the issue, or the case law, in any detail and it does not appear that a more careful consideration of the point would likely have altered the ultimate result.

The court in Brennan cited the recent Ninth Circuit decision in Perfect 10 Inc. v. Amazon.com Inc. , 508 F.3d 1146, at 1162 (9 th Cir. 2007), which states that 'distribution requires an 'actual dissemination' of a copy,' but the citation is inapposite in the file-sharing context. In Perfect 10, the Ninth Circuit refused to apply the Hotaling rule to Google and other online intermediaries because they did not have tangible copies of the infringing images on their servers. They were thus 'unlike the participants in the Napster system or the library in Hotaling.' There is no question that distribution can be found to occur if a defendant does have such tangible copies; the Perfect 10 court itself noted that '[t]he Supreme Court has indicated that in the electronic context, copies may be distributed electronically,' citing N.Y. Times v. Tasini , 533 U.S. 483, 448 (2001).

Compromise

Most recently, the Southern District of New York in Elektra Entertainment Group, Inc. v. Barker, No. 05-CV-7340 (KMK) (S.D.N.Y. Mar. 31, 2008) (slip op.), struck a compromise between full recognition of the making-available right and outright hostility to it. Like Brennan, above, the Barker case arose in the context of a motion to dismiss a complaint against a user of Kazaa P2P software, who was found to have 611 music files in a share folder. In perhaps the most extensive discussion of the issue yet offered by any court, Judge Kenneth M. Karas considered the sufficiency of plaintiff's allegation that defendant had used 'an online media distribution system ' to make the [recordings at issue] available for distribution to others.' He found the allegation insufficient to state a cause of action, but suggested amended language that could make it viable.

The court began by noting that the Copyright Act does not define the term 'distribute.' Congress did define the term 'publication,' however, and in doing so it used language almost identical to that used in establishing the distribution right in '106(3). Moreover, the court noted that the legislative history of the Act spoke frequently of creating a right of 'publication' under '106, although the statutory language that was eventually chosen spoke of a right 'to distribute.' Judge Karas thus concluded that: 'the House and Senate of the Ninety-Fourth Congress considered the terms 'distribute' and 'publication' to be synonymous.'

Therefore, the court followed a number of earlier decisions in adopting the statutory definition of 'publication' to define the scope of the '106(3) distribution right. Under that definition, distribution can be shown by an 'offer[] to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance or public display.' This definition, however, was not to be confused with the 'countourless 'make available' right proposed by plaintiff.' Id. at 15. Specifically, the court declined to follow Hotaling, stating 'respectfully' that the Fourth Circuit's rule in that case, 'even if sound public policy, is not grounded in the statute.' Merely alleging that the defendants had made the plaintiff's works available, as plaintiffs did, would therefore not be sufficient to state a cause of action.

Instead, the Barker court applied the full publication-based definition to hold that a making-available allegation must include claims that defendant 'made an offer to distribute, and that the offer was for the purpose of further distribution, public performance or public display.' The plaintiff's initial allegation, that the defendants made the works available 'for distribution to others' apparently satisfied the 'offer to distribute' element, but the court observed in a footnote that '[w]hether use of a peer-to-peer file sharing program such as Kazaa necessarily entails 'further distribution' however, is still an open question.' Id. at 18 n.8. Plaintiffs were given 30 days to amend their complaint, if they so chose, to add an allegation of 'making available' which would conform to the court's newly-articulated standard.

Conclusion

The making-available claim is well supported by the case law and the statute. It is no argument to say, as Brennan does, that distribution requires 'actual distribution.' The debate is over the meaning of the word. Clearly it requires a tangible copy, which Napster did not have, but where the defendant does in fact have a tangible copy, and allows others to access and use that tangible copy, the result in Hotaling should control. It is no stretch to say that one has loaned one's car if one gives the keys to a friend and says 'bon voyage.' Whether or not the borrower ever drives it away is immaterial. In the world of file sharing it may take two to tango, but it only takes one to distribute.