Are You Being “Server-ed”?

Stephen Carlisle March 15, 2018

If you are are involved in the real estate business, (or even if you’re not, because it’s such a well-known cliché) the three most important things that govern the value of a particular piece of property are “location, location and location.”

In dealing with copyright in the modern internet era, this has also become true. Websites (who more often than not are doing something they shouldn’t) claim to be exempt from liability for copyright infringement because of the “location” of the infringing files. They promote a theory that since the infringing files are located “there” and not “here,” that they have no liability for copyright infringement. Indeed, this is the entire argument of notorious sites like The Pirate Bay, backed by the usual suspects of infringement apologists like Public Knowledge and the Electronic Frontier Foundation, ¹ who maintain the idea comes from “years of settled precedent.” ²

Guess what? It’s not settled precedent at all.

This is what is known as the “Server Test,” and originates with the 9^th Circuit Court of Appeals. In the case of Perfect 10 v. Google, ³ they ruled that liability for direct copyright infringement depended upon whether the infringing images were stored on the defendant’s server (in this case, Google) or was simply imbedded or linked from a 3^rd party server. If it was the latter, there was no direct infringement by Google.

However, this ruling has failed to be followed by other District Courts around the country. In a thoroughly researched opinion, the District Court for the Southern District of New York in the closely watched case of Goldman v. Breitbart News Network, ⁴ recently found that “[f]our courts in this district have discussed the Server Test and Perfect 10’s holding; none have adopted the Server Test for the display right.” ⁵

After an intensive survey of those cases that have squarely addressed the display right issue, the Court concludes: “this Court is aware of only three decisions outside of the Ninth Circuit considering the display right in light of Perfect 10; one from the Seventh Circuit which adopted the Server Test for contributory liability, one from the Southern District which stated as a factual matter only that Perfect 10 existed, and one from the Northern District of Texas rejecting Perfect 10.” ⁶

“Years of settled precedent?” Hardly.

In the span of about six weeks, we have received four opinions, three in the United States and one in Germany, where three out of the four cases hold “it’s not where the copy is stored, it is where the damage occurs that matters.”

First up is the case from Germany of S. Fischer Verlag Gmbh v. Project Gutenburg Literary Archive. ⁷ (N.B. endnote contains a link to an English Translation).

The facts are simple and undisputed. Project Gutenberg is a not-for-profit internet archive that makes digital copies of public domain works available for download. Its website states:

“This eBook is for the use of anyone anywhere at no cost with almost no restrictions whatsoever. You may copy it, give it away or re-use it under the terms of the Project Gutenberg License included with this eBook or online at www.gutenberg.org.” ⁸

Problem is, PG only checks to see if the book is in the public domain in the United States. It conveniently leaves it up to the downloader to determine if the work is protected by copyright in the country of the downloader. ⁹

It turns out that PG was delivering into Germany, books in German, by German authors where the books were in the public domain in the United States, but not in Germany. A German publisher of some of these works made contact with PG to get these items removed. The response by PG can be best characterized as lackadaisical and indifferent, ultimately resulting in a refusal to remove the works at all. ¹⁰

The German publishers sued PG in Germany, alleging infringements of 18 works to which they held the copyright. PG defended the suit claiming:

• We don’t know who is downloading our works or how often, since we don’t keep track.
• Providing this information is just too darn difficult so we shouldn’t have to do it.
• We are wholly located within the U.S. so German law does not apply to us.
• We tell users not to download works which are under copyright protection in their country.
• That people download copyright protected works anyway is not our problem.
• Even though part of the website is in German, we are only targeting German speakers in the U.S.
• The requested “geo-blocking” is too easily circumvented, so we shouldn’t have to do it at all. ¹¹
• Our lawyers told us it was OK. ¹² (seriously)

To which the Court replies:

• Under German law, an offense is committed not only in the place where committed but also in the place where the offense had its effect. ¹³
• Material which a website makes publically accessible in Germany, and which material is protected under German law, is an unlawful act committed in Germany. ¹⁴
• PG targets German users by having parts of the website in German, offering works by German authors, and explicitly states that the eBook may be used by “anyone, anywhere.” ¹⁵
• Alleged lack of proof of actual downloads is not dispositive. Since PG openly targets German users to download infringing works, “infringements are to be expected.” ¹⁶

In other words, if you take a rock from your front yard and throw it though your neighbor’s window, you can’t escape liability by saying, “It’s my rock and I can throw it wherever I want. The fact that the rock came from my yard means you have no say over what I do with it. The fact that your window is now shattered is just too bad for you.”

As to the “advice of counsel” defense, the Court dismisses this rather pointedly:

“Insofar as the first defendant pleads that it rejected the plaintiff’s claim on the advice of its legal counsel, this is irrelevant.  If  anything,  such  –  potentially  false  –  advice  by  a  legal counsel would only apply to the first defendant’s culpability, which is without relevance for the claim  for  injunctive  relief.  Moreover, the defendants have not specified  what  their  legal counsel’s advice was in the first place. It is therefore still unclear whether this legal advice even included the investigation of German laws and whether the advice to reject the claims was based on legal or factual considerations.” ¹⁷

The Court ordered the removal from public availability in Germany all of the 18 specific works complained of, subject to a fine of 250,000 Euros or imprisonment for 6 months, for non-compliance. ¹⁸

PG responds by throwing the baby out with the bathwater: it now blocks in Germany all access to the entire PG website, including sub-pages. ¹⁹ Actually, this is more akin to the behavior of a petulant six-year old, who finding his team is losing the ball game, takes his bat and ball and goes home.

The very next day, a District Court in California dismissed Playboy Entertainment’s suit against Happy Mutants, the operators of a website known as “Boing Boing.” ²⁰ What happened was that someone uploaded every single Playboy centerfold since 1960 to Imgur, a total of 477 images in all. ²¹ Boing Boing provided a link and encouraged viewers to go there, despite the obvious infringing nature of the images. But alas, Playboy sued Happy Mutants in a California District Court, which is bound by the 9^th Circuit’s “Server Test” as explained in Perfect 10. So, since the infringing images were on Imgur’s servers not Happy Mutants, the dismissal was inevitable. Playboy has since declined to either appeal the dismissal or file an amended complaint.

Sorry, Playboy, but you’ve just been “server-ed.”

The very next day after dismissal of Playboy’s action in a California District Court, a District Court in the Southern District of New York denied the Defendants’ (including Breitbart, Time, Gannet, Boston Globe and a host of others) motion for summary judgement on almost exactly the same facts, and rejects the “Server Test.”

Here in Goldman v. Breitbart News Network, the Plaintiff took a candid picture of Tom Brady, and uploaded it to Snapchat. Upon doing so, the photo “went ‘viral’—rapidly moving from Snapchat to Reddit to Twitter—and finally, made its way onto the websites of the defendants, who embedded the Tweet alongside articles they wrote about Tom Brady actively helping the Boston Celtics recruit basketball player Kevin Durant.” ²² None of them got a license.

“Here, it is undisputed that none of the defendant websites actually downloaded the Photo from Twitter, copied it, and stored it on their own servers. Rather, each defendant website merely embedded the Photo, by including the necessary embed code in their HTML instructions. As a result, all of defendants’ websites included articles about the meeting between Tom Brady and the Celtics, with the full-size Photo visible without the user having to click on a hyperlink, or a thumbnail, in order to view the Photo.” ²³

All of the defendants (of course) invoked the “Server Test” to exempt themselves from liability, claiming as noted above that this was “settled law,” despite the fact that, again as noted above, this area of the law is not “settled.”

In rejecting the “Server Test,” the Court took a deep dive into the legislative history surrounding the display right provided by 17 USC 106 (5). The Court holds:

“A review of the legislative history reveals that the drafters of the 1976 Amendments intended copyright protection to broadly encompass new, and not yet understood, technologies…

Specifically, in considering the display right, Congress cast a very wide net, intending to include ‘[e]ach and every method by which the images … comprising a … display are picked up and conveyed,’ assuming that they reach the public. (citation omitted) It further noted that ‘‘display’ would include 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.’ (citation omitted) Indeed, an infringement of the display right could occur ‘if the image were transmitted by any method (by closed or open circuit television, for example, or by a computer system) from one place to members of the public elsewhere.’ (citation omitted)” ²⁴

Put more simply, it doesn’t matter where the image is located, what matters is whether the image is being displayed without the consent of the copyright owner.

The Court looks to the decision of the Supreme Court in American Broadcasting Cos. v. Aereo Inc. ²⁵ and finds the reasoning of the court applicable to the facts here:

“At heart, the Court’s holding eschewed the notion that Aereo should be absolved of liability based upon purely technical distinctions…’ 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 patrons with a library card.’ (citation omitted)… Furthermore, the principles that undergird the Aereo decision—chief among them that mere technical distinctions invisible to the user should not be the lynchpin on which copyright liability lies—apply with equal vigor here.” ²⁶

Since here, the embedding caused the photo to pop up as if it was in fact stored on the Defendant’s server, when it was stored elsewhere, makes the entire “Server Test” a distinction without a difference as to the display right. Plus, the Defendants all took active steps to embed the image in their web pages, the sort of “volitional act” many courts require in order to impose liability.

“In Perfect 10, Google’s search engine provided a service whereby the user navigated from webpage to webpage, with Google’s assistance. This is manifestly not the same as opening up a favorite blog or website to find a full color image awaiting the user, whether he or she asked for it, looked for it, clicked on it, or not. Both the nature of Google Search Engine, as compared to the defendant websites, and the volitional act taken by users of the services, provide a sharp contrast to the facts at hand.” ²⁷

The Court goes on to hold that the “Server Test” has no real support in the Copyright Act, and that Perfect 10 is, in fact, wrongly decided.

“[T]his Court is skeptical that Perfect 10 correctly interprets the display right of the Copyright Act. As stated above, this Court finds no indication in the text or legislative history of the Act that possessing a copy of an infringing image is a prerequisite to displaying it. The Ninth Circuit’s analysis hinged, however, on making a “copy” of the image to be displayed—which copy would be stored on the server. It stated that its holding did not ‘erroneously collapse the display right in section 106(5) into the reproduction right in 106(1).’ (citation omitted). But indeed, that appears to be exactly what was done.” ²⁸

“In sum, the Court here does not apply the Server Test. It is neither appropriate to the specific facts of this case, nor, this Court believes, adequately grounded in the text of the Copyright Act. It therefore does not and should not control the outcome here.” ²⁹

A little more than two weeks later, the Court of Appeals for the District of Columbia handed down its decision in Spanski Enterprises Inc v. Telewizja Polska S.A., ³⁰ giving more weight to the theory that it’s really where the harm occurs that is the most important factor in deciding in copyright disputes.

Spanski is the reverse of Project Gutenberg, but the result is ultimately the same.

In Spanski, the defendant streamed into the U.S. 51 episodes of Polish language television programs for which Plaintiff held the exclusive North and South American performance rights. The District Court ruled that this was infringement and assessed damages of $60,000 per episode or $3,060,000 in total. ³¹

On appeal, TV Polska made two arguments that sound vaguely familiar:

• “[M]aintaining a fully automated video-on-demand service cannot constitute a copyright violation because the end user, who ultimately selects which content to view, is alone liable for any infringement.” ³²
• “[B]ecause its conduct occurred exclusively in Poland, imposing Copyright Act  liability  on  the  basis  of  that  conduct  would  amount  to an  impermissible  extraterritorial  application  of  the Act.” ³³

In other words,

• It’s not my fault that by making it easy for infringements to occur, that actual infringements do occur; and
• It’s not my fault that your window is damaged, because I threw the rock from my own yard.

The Court of Appeals dispenses with the first point swiftly and decisively:

“Nowhere  does  the [Copyright]  Act  state  that  a  work  so  shown  is performed  only  if  a third-party  end  user  plays  no  role  in  the  showing.” ³⁴

A closer question is presented as to whether a broadcast that originates abroad can be actionable in the United States, which the Court determines to be a “question of first impression in the federal appellate courts.” ³⁵

The Court finds that “multiple district court decisions” ³⁶ have held that a performance that originates abroad but “terminates in the United States constitutes a domestic Copyright Act violation.” It rules that to hold otherwise “would leave the door open to widespread infringement, rendering copyright in works capable of online transmission largely nugatory.” ³⁷

Good Lord. A blinding light of unapologetic common sense.

The Court cites favorably the amicus curiae brief filed by the United States Department of Justice. There, the DoJ writes that if extra-territorially were a ready defense “large scale criminal enterprises could avoid United States copyright liability by simply locating their servers outside the United States.” ³⁸

Gee…isn’t this what the EFF tells us every day is, in fact, the law?

The court wholeheartedly disagrees.

“We agree with the United States that ‘Congress could not have intended the public performance right to be susceptible to such ready evasion.’” ³⁹

“To sum up, we hold that where a foreign broadcaster uploads copyrighted content to its website and directs that content onto a computer screen in the United States at a user’s request, the broadcaster commits an actionable domestic violation of the Copyright Act.” ⁴⁰

To round up these complex issues, Section 512(c) contemplates exemption from liability only if the service provider has “actual knowledge” that the material is infringing or is “not aware of facts and circumstances from which infringing activity is apparent.”

Having made this determination, it seems logical that it should apply to linking as well. Clearly Boing Boing knew that the Playboy Centerfolds were infringing copies and it actively induced its visitors to go there. As David Newhoff writes in his blog “The Illusion of More:”

“A simple way to understand this case is to substitute Playboy’s images for child pornography. I know it’s an overused example, but that’s because there is no confusion that child porn is unlawful in every sense of the word. If Boing Boing were to write a post that said something like, ‘Child pornography is a heinous crime that we would never condone, but reviewing these images provides insight into the minds of pedophiles,’ and then they linked to said images, guess what would happen. That’s right. They could be held liable for facilitating and promoting access to unlawful material; and I doubt that any court, or many citizens, would be the least bit confused about this because linking to the material is not integral to reporting about it. This is a judgment call that professional journalists make all the time.” ⁴¹

Yet, to follow the logic of the “Server Test,” it suggests that there should be no liability for doing so.

As to the foreign effect of U.S. Copyright law, the blog IPKat makes this point:

“[T]he fact that the works have entered the public domain under US law cannot serve as a justification to make them available to the public in other countries, where copyright protection is still in place. If one were to follow the defendants’ logic, the legality of making works available to the public worldwide would depend solely on the law of the country in which the person who provided the works had his residency. This would conflict with local laws and the principle of territoriality, and in essence submit all works’ copyright duration to the ‘lowest common denominator’ of the country with the shortest copyright term. It is easy to conceive a scenario where another ‘Project Gutenberg’ would establish its business in countries like Eritrea (where works enter the public domain 50 years after publication) or the (English speaking) Republic of Marshall Islands (where copyright is apparently only available to citizens of the Marshall Islands or works produced there), thus placing almost all contemporary literature in the ‘public domain’ under local laws.” ⁴²

We need to dispense with the idea that the internet is somehow so different that normal concepts of law, including respect for the laws of other countries, do not or should not apply. A stream of commerce that exists globally should expect that it might incur liability globally. And PG’s geo-blocking temper tantrum demonstrates a point made time and again by this blog, namely that there exists the technology to keep these internet entities within the law, they just don’t want to do it.

As to the frequent complaints that such ruling will “break the internet,” we’ve heard this every single time one of these decision goes against the tech interests and their lap dogs, and somehow the internet keeps rolling along.

Or maybe causing “a tremendous chilling effect on the core functionally of the web” ⁴³ is a good idea.

Again, as David Newhoff writes:

“… I actually agree with Boing Boing’s defenders that this case gets to the heart of the internet—namely the heart of what sucks about the internet, which is populated by too many opportunistic platforms that do very little other than manipulate users and exploit work somebody else has produced. If WANKs like Boing Boing cannot operate without blanket immunity from responsibility—a dysfunctional policy that real journalists have never enjoyed—then the enterprise should fail.” ⁴⁴