CoStar Group, Inc. v. LoopNet, Inc.

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373 F.3d 544 (4th Cir. 2004)

LoopNet's service allows subscribers, generally real estate brokers, to post listings of commercial real estate on the Internet. Id. at 546. CoStar, a copyright owner of numerous photographs of commercial real estate, sued LoopNet for direct copyright infringement because CoStar’s copyrighted photographs were posted by LoopNet’s subscribers on LoopNet’s website. Id.

Rejecting the strict liability approach in Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993), the Fourth Circuit held that since LoopNet was simply the owner and manager of a system used by others who were violating CoStar’s copyrights, and was not an actual duplicator itself, the Court found it was not directly liable for copyright infringement. Id.

The Fourth Circuit adopted the standard outlined in Religious Tech. Center v. Netcom, which held that a person must engage in a volitional act of copying in order to be directly liable for infringement, concluding that "Netcom made a particularly rational interpretation of § 106 when it concluded that a person had to engage in volitional conduct — specifically, the act constituting infringement — to become a direct infringer." Id. at 551. The Court also held that the reasoning of the Netcom decision survived the enactment of the DMCA safe harbors. Id. at 555.

Distinguishing secondary liability, the Court held that direct infringement of the Copyright Act "requires conduct by a person who causes in some meaningful way an infringement," noting that the Act describes "only the party who actually engages in infringing conduct — the one who directly violates the prohibitions." Id. at 549-550.

Because Loopnet was “passively storing material at the direction of users in order to make that material available to other users upon their request,” the court determined it was not engaging in “copying.” Id. at 555. LoopNet engaged in a brief review and chose to block certain photographs, but "this conduct, which takes only seconds, does not amount to 'copying,' nor does it add volition to LoopNet’s involvement in storing the copy." Id. at 556.

In addition, the court held that an ISP did not make copies that are "'fixed' in the sense that they are 'of more than transitory duration,' and the ISP therefore would not be a 'copier' to make it directly liable under the Copyright Act." Id. at 551. This holding appears to be an exception to the holding in MAI v. Peak, 991 F.2d 511 (9th Cir. 1993), which held that a temporary copy made in the course of routine computer operations can be an an infringing copy under the Copyright Act.

Chapter 3 - Copyright
General · Rights Acquisition · Infringement Issues · Digital Millennium Copyright Act (DMCA) · Non-Preemptable Common Law Claims