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A Guide to Safe Sysop-ing: The Church of Scientology, Sysops & On-Line Service Providers


Amy E. Weaver
Luce Scholar, Special Assistant to Margaret Ng,
Hong Kong Legislative Council

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Abstract

     In the past two years, computer bulletin board (BBS) system operators ("sysops") have been repeatedly held liable for the civil and criminal violations of their BBS users. The emerging cases have created three different standards of liability depending on the underlying complaint -- copyright or defamation -- and the court's jurisdiction. One of the more interesting cases involved the Church of Scientology suing an alleged copyright infringer, the sysop of the BBS where the message was posted, and the Internet provider. The article argues that this case blurs the distinction between copyright and defamation and does not fit easily within any of the current modes of analysis.

Introduction

In the past few years, federal courts, in several well-publicized lawsuits involving on-line communications, have held systems operators ("sysops") responsible for copyright infringements by their bulletin board ("BBS") users [ 1 ]. After one or two of these cases trickled through the justice system, the floodgates opened and in the last year cases against sysops or on- line service providers seem to be filed at the rate of one indictment or complaint every two or three months [ 2 ].

One of the latest sysops to join this not-so-exclusive group of defendants is Tom Klemesrud in a case [ 3 ] brought by the powerful and controversial Church of Scientology [ 4 ]. This article examines the Scientology case, the court's most recent opinion, and the possible standards of liability for sysops and Internet access providers.

Religious Technology Center v. Netcom [ 5 ]

In 1968, Dennis Erlich became a member of the Church of Scientology - a forty-year old religion founded by science fiction writer L. Ron Hubbard [ 6 ]. Scientologists, who claim Tom Cruise, John Travolta and Anne Archer among their members, follow a course of religious study called "auditing." The course begins with analysis by an "electro-psychometer," which purports to measure mental state. The goal of the program is to eliminate negative images ("engrams") and attain a state of "clear."[ 7 ] As members proceed through different levels, they gain exposure to highly-guarded proprietary materials.

Erlich progressed through the church's levels and was trained as a minister. After leaving the Scientologists in 1982, Erlich became extremely critical of the church and its teachings. In August 1994, he took his anti- Scientology gospel to the Internet. Erlich described his posted messages as his "preach[ing]."[ 8 ] Part of Erlich's "sermons" included copyrighted materials by Hubbard, the church's spiritual leader. Erlich contended that he used these materials "to show the evils of the church" and for satire and commentary [ 9 ]. Most of Erlich's postings were in the USENET newsgroups "alt.religion.scientology" and "alt.technology.clearing." The posted works were part of the Advanced Technology of Scientology, which is shown only to the most high-ranking, long-term members of the religion.[ 10 ]

Erlich posted his messages through support.com, a BBS operated by sysop Tom Klemesrud from his North Hollywood home. The BBS's messages are forwarded automatically to the Internet through Netcom, an Internet access provider [ 11 ]. After discovering the postings, Thomas Small, counsel for RTC and BPI, sent letters to numerous Internet remailer operators, including Netcom and Erlich, requesting that they "lock out" the two newsgroups or block Erlich's access to their system systems. The letter constituted a thinly-veiled threat to bring legal action:

We do not wish to involve others in litigation. Unfortunately, however, such actions will be unavoidable where there is contributory infringement by those who knowingly induce or contribute to the infringing conduct of these users by providing facilities or systems that enable the direct infringers to infringe, because we legally must take all actions to protect our clients' property rights [ 12 ].

Klemesrud replied that he would block Erlich's access to his BBS if the Church could prove that it owned the copyrights to the allegedly infringing documents. The Church found this request to be unreasonable. Netcom also refused to block the newsgroups or the BBS [ 13 ].

After these refusals, the Church convinced San Jose federal district court Judge Ronald M. Whyte, in an ex parte hearing, to issue a search warrant for Erlich's home and computer [ 14 ]. Under the sometimes arcane copyright laws, private citizens can obtain permission to have a search conducted in civil cases [ 15 ]. The February 13, 1995, raid lasted more than six hours and ended with church members seizing more than 360 computer floppy disks, 29 books and many boxes of personal effects [ 16 ].

The raid was the first step in a lawsuit filed by the Scientologists against Erlich alleging copyright infringement and trade secret misappropriation seeking a permanent injunction and statutory damages of $120,000 per infringement [ 17 ]. In addition to suing Erlich as the primary infringer, the Church of Scientology also sued Klemesrud and Netcom [ 18 ]. The Scientologists' argument for holding Klemesrud and Netcom responsible is straightforward: the Church warned them of the infringement and, by failing to take measures to prevent Erlich from using their forums, the defendants effectively infringed the works. Judge Whyte issued a temporary restraining order against all three defendants, specifically ordering Klemesrud and Netcom to ensure that no data circulated by their computer systems infringed any of the Scientologist's copyrights [ 19 ].

On February 21, 1995, Judge Whyte dissolved the TRO against Klemesrud and Netcom and refused to grant a preliminary injunction against either party [ 20 ]. In his refusal, Judge Whyte emphasized Netcom's and Klemesrud's inability to monitor Erlich's activities. During the hearing Judge Whyte commented that it would be a "practical impossibility" for either service provider to "do any kind of censoring or checking of what's put through their services." [ 21 ]

On March 6, 1995, the plaintiffs renewed their request for a preliminary injunction against Klemesrud and Netcom based on allegations of Erlich's continuing infringement [ 22 ]. The request was delayed until a megahearing on June 23rd, where Judge Whyte considered eight motions [ 23 ]. In September, the court disposed of the five motions that applied only to Erlich, deciding two key issues in the Church's favor [ 24 ]. In November, the court addressed the motions by Klemesrud and Netcom. Although the court granted summary judgment for the defendants on the Church's claims of direct and vicarious copyright infringement, Judge Whyte denied summary judgment on the crucial issues of contributory infringement and fair use [ 25 ]. Both sides called the ruling a "victory." [ 26 ]

CyberLaw: The Current State of Sysop Liability

Before turning to Judge Whyte's decision in RTC v. Netcom, this article considers the few previous cases establishing sysop liability. Cases involving BBSs and sysop liability are just beginning to emerge from the legal pipeline. Rather than supplying guidelines to which sysops could adjust their behavior, the opinions have split oddly between a type of strict liability and an encouragement-based test. So far, all the relevant cases took place in federal district courts. No cases have reached the federal courts of appeals or the Supreme Court.

Civil Cases

Two federal district court copyright cases have held sysops civilly liable for materials posted by users on their bulletin boards. In Playboy Enterprises, Inc. v. Frena [ 27 ], the court held sysop George Frena liable for directly infringing 170 Playboy magazine centerfolds that users had uploaded onto his adults-only BBS. Although he did not upload the images himself or encourage users to upload them, and there was no explicit finding that he was even aware of the files, Frena was held strictly liable for their existence on his BBS. The court noted cursorily that "[t]here is no dispute that Defendant Frena supplied a product containing copies of a copyrighted work. It does not matter that Defendant Frena claims that he did not make the copies himself.[ 28 ]"

The decision is faulty in several ways [ 29 ]. Most seriously, it is grossly over-inclusive with no limiting principle. It is hard to understand how a sysop could take any remedial steps to prevent Frena-like liability. Frena, upon notification of the infringement, deleted all infringing files and began monitoring the BBS to prevent any new uploading of Playboy centerfolds [ 30 ]. These actions proved futile, as the court held him strictly liable. Under this analysis, every BBS operator would be liable for copyright infringing materials posted to his or her system no matter how strongly discouraged or how quickly erased. Second, the decision displays faulty reasoning that is inapplicable to the facts of the case. For example, the court discusses how George Frena could easily access Playboy photographs because the company "sells over 3.4 million copies of Playboy magazine [per month] throughout the United States." [ 31 ] The analysis is superfluous: the court found that the users, not Frena, uploaded the materials and never makes a finding that he was aware of the images.[ 32 ]

Several months after Frena, a second district court held a sysop liable for infringing materials under a different theory. In Sega Enterprises Ltd. v. MAPHIA [ 33 ], the court issued a preliminary injunction against the MAPHIA sysop after making a tentative finding that he was guilty of contributory infringement [ 34 ]. The facts revealed that the sysop knew about the uploaded programs and rewarded users who purchased MAPHIA products with extra downloading time [ 35 ]. Although no specific test was set forth, the judge appeared to base his decision on MAPHIA's "role in the copying, including provision of facilities, direction, knowledge and encouragement."[ 36 ]

Criminal Cases

Two well-publicized criminal cases against BBS sysops have been brought, but both ended before going to trial [ 37 ]. In United States v. Kenadek [ 38 ], the sysop of "Davey Jones' Locker" pleaded guilty to charges of conspiracy and criminal copyright infringement based on actions by his users. Richard Kenadek was aware of the illegal copying and encouraged it: there was a forum on the BBS exclusively for copyrighted materials and he rewarded uploaders with free downloading time. His guilty plea marked the first successful prosecution of a sysop for criminal copyright infringement.[ 39 ]

The second criminal case drew headlines around the world. In United States v. LaMacchia [ 40 ], an MIT undergraduate was prosecuted under the wire fraud statute for setting up a BBS and encouraging uploading and downloading of what was alleged to be valued at more than one million dollars of software. U.S. District Court Judge Richard Stearns dismissed the wire fraud conspiracy charge against LaMacchia and held that copyright-related charges are so unique that they must be brought under the Copyright Act, and not under a criminal statute such as wire fraud. The dismissal turned on an interpretation of an earlier Supreme Court copyright case [ 41 ], but the facts demonstrate that prosecutors are willing to indict in cases that fit the Sega mold.

Conclusions

With the exception of Frena, which may simply be an anomaly, the sysop- copyright liability cases have all turned on the issue of encouragement. Those sysops who actively encouraged and/or rewarded users for uploading copyrighted materials were found liable in civil cases or attracted the attention of prosecutors in criminal cases. These cases, however, differ substantially from the situation facing the court in RTC v. Netcom.

Analysis: RTC v. Netcom and Klemesrud

When the district court ruled on Klemesrud's and Netcom's motions in November 1995, it did not explicitly follow any of the previous sysop cases. Judge Whyte denied summary judgment to the defendants on the issue of contributory infringement [ 42 ], but refused to grant the Church a preliminary injunction because the plaintiffs had not met their burden of showing a likelihood of success on the merits [ 43 ]. He also granted summary judgment for the defendants on the plaintiffs' direct and vicarious liability claims. The trial is scheduled for 1997.

Direct Infringement

The court granted Klemesrud and Netcom summary judgment on the Church's claim that they had directly infringed the copyrighted materials. [ 44 ] As the court explained, direct infringement takes place when the infringer intentionally or unintentionally exercises any of the exclusive rights held by the copyright owner, such as the right to public display or distribution[ 45 ]. Judge Whyte rejected the suggestion that either Frena or Sega required a finding of direct infringement. He attempted to distinguish Frena by reading it as applying direct liability only when the defendant has infringed the plaintiff's exclusive public distribution rights, not when the defendant's computer automatically makes the copies. Ultimately, he noted that the opinion had been much maligned and declined to follow it [ 46 ]. Judge Whyte similarly rejected the Church's argument that Netcom and Klemesrud could be directly liable under Sega, noting that "although there is some language in Sega regarding direct infringement it is entirely conclusory."[ 47 ]

In granting the motion in favor of Klemesrud and Netcom, the court seemed persuaded by the fact that the alleged infringer, Erlich, is not anonymous. This situation differentiates the case from all previous sysop cases, such as Sega, Frena, Klemesrud and LaMacchia, where the primary infringers were all unknown. Judge Whyte noted that a direct infringement claim against alleged secondary infringers is not necessary "[w]here the infringing subscriber is clearly directly liable for the same act, it does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet. Such a result is unnecessary where there is already a party directly liable for causing copies to be made."[ 48 ]

Vicarious Liability

Next, the court granted summary judgment to the defendants on the issue of vicarious liability [ 49 ]. To be liable, the defendant must (1) have the right and ability to control the infringer's acts and (2) receive a direct financial benefit from the act [ 50 ]. The court held that the Church had raised a valid question of fact as to whether Netcom or Klemesrud could practically monitor or shut out Erlich. The Church, however, failed to meet the next requirement: raising a question as to financial benefit. Both Netcom and Klemesrud charged fixed fees for their services [ 51 ]. The court analogized the defendants to landlords who received a set rent from their commercial tenants regardless of the tenant's profitability [ 52 ]. Generally, although not always, fixed-rent landlords are exempt from vicarious liability. Although the Church alleged that Netcom benefited from the publicity surrounding Erlich's postings, there was no evidence that either defendant gained more business or profited in any substantial manner.[ 53 ]

Contributory Infringement

The most influential part of the opinion is likely to be the district court's holding that both Netcom and Klemesrud must stand trial on the issue of contributory infringement. The law for contributory infringement is case- based, not statutory [ 54 ]. The plaintiff must establish that the defendant "with [1] knowledge of the infringing activity, [2] induces, causes or materially contributes to the infringing conduct of another [ 55 ]." The court held that there was no question that the defendants were not liable for knowledge of Erlich's allegedly infringing postings before receiving the letter from the Church's attorney. The court, however, found that there was a question of fact as to "whether Netcom [and Klemesrud] knew or should have known that Erlich had infringed plaintiffs' copyrights following receipt of plaintiffs' letter."[ 56 ]

Netcom and Klemesrud argued that even after they received the letters, they still did not have the requisite knowledge because the notice was too "equivocal." They contended that there were two main problems. First, the letter did not provide proof of copyright registration and ownership. The court disposed of this argument by noting that in this case the allegedly infringing works actually contained copyright notices within them. Moreover, the court noted that to "require proof of valid registrations would be impractical and would perhaps take too long to verify, making it impossible for a copyright holder to protect his or her works. . . ."[ 57 ]

Second, the defendants argued that the possibility of a fair use defense by Erlich made it difficult, if not impossible, for them to have "knowledge" of infringement. Although Judge Whyte was more impressed by this argument, he noted that Netcom "admits that it did not even look at the postings once given notice and that had it looked at the copyright notice and statements regarding authorship, it would have triggered an investigation into whether there was infringement." [ 58 ]. Based on the facts of this case, the court held that the Church had raised a question as to Klemesrud's and Netcom's knowledge of infringement.

The court also held that the Church had established the second requirement of the test: that the defendants had materially contributed to the alleged infringement by providing the Internet/BBS services. The court analogized the services to radio stations that allowed rebroadcasting of infringing music [ 59 ]. "If plaintiffs can prove the knowledge element, [they] will be liable for contributory infringement since [their] failure to simply cancel Erlich's infringing message and thereby stop an infringing copy from being distributed world-wide constitutes substantial participation in Erlich's public distribution of the message." [ 60 ]

fair Use

Finally, the court denied Netcom summary judgment on its affirmative defense of fair use [ 61 ]. "Fair use" is one of the more confusing doctrines in copyright law. It is an affirmative defense that allows the user under certain circumstances to make copies for limited purposes such as criticism, comment, news reporting or classroom instruction [ 62 ]. To determine whether the copying constitutes "fair use," the court must balance four factors: "(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."[ 63 ]

In analyzing this case, the court looked not at whether Erlich's use was fair, but instead at how Netcom used Erlich's postings by reposting them on the Internet [ 64 ]. The court held that although the first three requisites neither weighed for or against Netcom, the defense failed based on the fourth requirement. There, the Church pointed out that in the past groups had stolen confidential scriptures and charged potential members for Scientology-like training. This factor precluded summary judgment.

Recommendations and Concerns for Current Sysops and Internet Service Providers

Religious Technology Center v. Netcom is the first opinion to discuss the developing cyberspace law thoroughly and to consider many emerging issues. The opinion is likely to become the leading case in the field. Although Netcom provides a strong analytical framework based on the facts of that case, many questions remain unanswered about the optimal level of responsibility for sysops and on-line service providers.

Unanswered Questions

Among the many unanswered questions is whether a sysop or Internet access provider can be held liable for direct infringement in the absence of a known primary infringer, such as Erlich. In granting the defendants summary judgment on the direct infringement claim, the district court relied heavily on the fact that the primary infringer was a known person who had been named in the suit. It is unclear whether the decision would have been different had the postings been created by an anonymous infringer. The decision might also have been different if the infringer were known, but either not amenable to suit or not named in the lawsuit because he did not have the deep pockets that make on-line service providers attractive defendants.

Second, it is unclear whether there is a difference in potential liability between an access provider, such as Netcom, and a sysop. Ultimately, the opinion treats the two types of defendants the same way, but the court implies at several points that the parties could be subject to varying levels of liability. For example, when dismissing the direct infringement charges against both parties, the court noted that "[t]here is no logical reason to draw a line around Netcom and Klemesrud and say that they are uniquely responsible for distributing Erlich's messages. Netcom is not even the first link in the chain of distribution -- Erlich had no direct relationship with Netcom but dealt solely with Klemesrud's BBS, which used Netcom to gain its Internet access."[ 65 ]. This distinction may be more critical in cases where the sysop actively monitors or participates in his BBS.

Third, what degree of "knowledge" is required to hold the defendants liable? Both parties were notified by letter from the Church that Erlich was allegedly infringing their copyrighted materials. But was this sufficient to require the parties to act considering a possible fair use defense? As Klemesrud pointed out in his affidavit, requiring him to screen for supposed infringement would be extremely difficult: "I would have to read 2,926 pages of material [daily] just from my Fidonet feed alone, to check for any L. Ron Hubbard copyrighted material assuming that I knew how to spot what is copyrighted by L. Ron Hubbard."[ 66 ] Fair use adds an additional wrinkle: Klemesrud, once he spotted any copied materials or was alerted to them, would be forced to analyze the materials under the four-part fair use test to determine whether it was likely that the copying constituted infringement. In the opinion, the court denied summary judgment based on Netcom's affirmative defense of fair use, but the court focused on its use of the posting, not whether Erlich's use was legal. When the primary defendant is able to present a valid fair use claim, the secondary defendants, such as syops, are not liable. Here, unfortunately for Klemesrud and Netcom, Erlich's fair use defense failed. But this raises the question of whether a strong, yet invalid, fair use defense by the primary infringer can serve as a complete defense to the secondary defendants.

Fourth, assuming that the defendants were given sufficient notice, what steps were they required to take? And what constraints on technology are valid excuses? The court noted that "Netcom admits that, although not currently configured to do this, it may be possible to reprogram its system to screen postings containing particular words or coming from particular individuals."[ 67 ]. Despite holding that the Church had raised a question of fact about the ability to control the information posted, the court noted that there was "no evidence indicating Netcom, or anyone, could design software that could determine whether a posting is infringing."[ 68 ]. The "White Paper" by the President's Intellectual Property and National Information Infrastructure Committee recommends some level of liability for on-line service providers so that these companies will have an incentive to create software that is self-monitoring [ 69 ]. If this software is developed will plaintiffs need to show that defendants "knew" of the alleged infringement or will the fact that the software exists be sufficient?

Finally, if sysops and internet providers become overly concerned about taking immediate action to counter possible copyright violations, what will the effect be on free speech? Will these same providers wind up as defendants in First Amendment-related lawsuits? Does any level of liabilty put the providers in "damned if I do, damned if I don't" predicament?

Solutions

At first blush, it appears that Congress could solve (or at least clarify) many of these problems by amending the Copyright Act to address the unique situation facing cyberspace providers. For example, Congress could specify the technological steps that a service provider is required to take after receiving notice of an infringement. These "solutions," however, may ultimately prove ineffective. As every popular magazine frequently announces [ 70 ], the Internet is growing at an extraordinary rate. With this growth comes new problems and, most importantly, new technology. Legislation is likely to be outdated within months. Out of a concern about developing law and technology, the drafters of the White Paper stopped short of recommending a specific level of liability for on-line service providers.[ 71 ]. For the foreseeable future, crafting reasonable and technologically current solutions will remain the job of the courts. Despite the backlog in the federal system, the courts remain the more flexible and quicker way to determine on-line liability.

Other potential solutions focus on the rights of potential plaintiffs. An organization or person who is the victim of libel or copyright infringement can be damaged every day that the posting sits in the forum. Immediate action is necessary to prevent harm to the plaintiff. Even the possibility of going to federal court for a TRO may take too long. One possible solution may be to set up a federal "cybercourt" on-line where plaintiffs can bring their claims almost instantaneously. The court could hold an immediate show cause hearing and choose to take no action or to issue a TRO or other temporary remedy until a federal district court can assess the issue more fully. This would also have the advantage of having the situation judged by an technology expert (or at least by someone who has more than a passing knowledge of e-mail).

This concept is currently been attempted by the Cyberspace Law Institute in its Virtual Magistrate Project [ 72 ]. The institute selected eight "magistrates" who serve as voluntary on-line arbitrators [ 73 ]. The magistrates conduct the arbitration via email and post their decisions on their web page [ 74 ]. The project began in March 1996 and so far the magistrates have issued just one opinion. The magistrates provide only injunctive-type relief. The virtual litigants cannot receive money damages. If successful, this project could provide the model for a congressionally-approved set of federal magistrates. This idea is not as far-fetched as it may sound at first glance. Congress has created non-Article III federal judgeship positions several times in the past. In 1978, Congress saw a similar need for specialization and created the bankruptcy courts [ 75 ]. Like bankruptcy judges or federal magistrates, these "virtual magistrates" would be subject to review by the district courts. They would have the advantage of being specialists and more quickly available.

Conclusion

RTC v. Netcom has already presented many fascinating issues. Despite the need to clarify the law, however, this case does not yet provide all the answers for sysops and on-line access providers. The cyberworld will have to wait for the next watershed cases. Until then, it will be crucial for Internet participants to closely follow the developing case law in order to avoid liability.

Footnotes

  1. Playboy Enters. Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993); Sega Enters. Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994).
  2. See, e.g., Frena, 839 F. Supp. 1552; Sega, 857 F. Supp. 679; United States v. Kenadek (unpublished) (D. Mass. 1994); United States v. LaMacchia, 871 F. Supp. 573 (D. Mass. 1994); Microsoft v. Unnamed Teenager (unpublished) (D. N.J. 1995).
  3. Religious Technology Ctr. v. Netcom On-Line Communications Servs., Inc., C-95-20091-RMW (N.D.Cal. 1995).
  4. The Church is suing through Religious Technology Center (RTC), owner of the Advanced Technology copyrights, and Bridge Publications, Inc. (BPI), holder of the exclusive reproduction rights to founder L. Ron Hubbard's works.
  5. Much of the information in this paper is drawn from Internet web sites that offer copies of court documents and commentary. See,e.g., Electronic Frontier Foundation.
  6. After decades of legal wrangling, the IRS granted the church recognition as a tax-exempt religious organization in 1993. Michael Sznajderman, Scientologists Survive Storms, Mark 40 Years -- Despite Decades of Struggle and No Shortage of Critics, the Church Lives to Celebrate Milestone Birthday, THE TAMPA TRIBUNE, Dec. 5, 1994.
  7. See RTC v. Wollersheim, 796 F.2d 1076, 1077 (9th Cir. 1986), cert. denied, 479 U.S. 1103 (1987).
  8. Jamie Beckett, Scientology Suit Takes on Cyberspace, SAN FRANCISCO CHRONICLE, Mar. 2, 1995, at A3.
  9. Id.
  10. Alan Abrahamson, Scientology Critic Loses Court Bid, LOS ANGELES TIMES, Feb. 22, 1995 at B5. As Scientologists progress through the Church's levels, they gain exposure to new Hubbard texts. The members are not allowed to see any of the texts out of order and the secret materials are carefully guarded. See RTC v. Wollersheim, 796 F.2d 1076, 1077-78 (9th Cir. 1986) ("The Church asserts that the unsupervised, premature exposure of an adherent to these materials will produce a spiritually harmful effect. The Church keeps the higher level materials in secure places, and makes the materials available only to adherents who agree in writing to maintain their confidentiality."). In Church of Scientology v. Fishman, No. CV 91- 6526, aff'd, 35 F.3d 570 (9th Cir. 1994), some of the secret materials became part of the district court's public record. To prevent the materials from being seen by non-Scientologists (and Scientologists who had not progressed to the appropriate level), Church members went to the district court and checked out the materials each day for several years. See RTC v. Lerma, 908 F. Supp. 1362, 1365 (E.D. Va. 1995).
  11. "Erlich connects to Klemesrud's BBS using a telephone and a modem. Erlich then transmits his messages to Klemesrud's computer, where they are automatically briefly stored. According to a prearranged pattern established by Netcom's software, Erlich's initial act of posting a message to the Usenet results in the automatic copying of Erlich's message from Klemesrud's computer onto Netcom's computer and onto other computers on the Usenet. In order to ease transmission and for the convenience of Usenet users, Usenet servers maintain postings from newsgroups for a short period of time -- eleven days for Netcom's system and three days for Klemesrud's system. Once on Netcom's computers, messages are available to Netcom's customers and Usenet neighbors, who may then download the messages to their own computers. Netcom's local server makes available its postings to a group of Usenet servers, which do the same for other servers until all Usenet sites worldwide have obtained access to the postings, which takes a matter of hours." RTC v. Netcom, 907 F. Supp. 1361, 1367-68 (N.D. Cal. 1995).
  12. Letter to Internet Remailer Operators from Thomas M. Small, Jan. 3, 1995.
  13. 907 F. Supp. at 1366.
  14. Order to Clerk to Issue Writ for Seizure of Articles Infringing Statutory Copyrights, C-95-20091-RMW, Feb. 9, 1995.
  15. 17 U.S.C. § 503(a) (1988).
  16. Abrahamson & Riccardi, supra at B3. Although the Church members were accompanied by two off-duty police officers, Erlich alleges that the search was directed entirely by the Scientologists. See RTC v. Erlich, 1995 WL 820126 (N.D. Cal. 1995) (order granting in part and denying in part plaintiff's application for a preliminary injunction).
  17. Erlich is not the only former Scientologist to be in the middle of a legal battle with the Church. On August 12, 1995, the Church of Scientology sued Aranaldo Lerma for copyright violations based on his postings to "alt.religion.scientology." See Wendy Grossman, Internet: Scientologists Fight On, THE GUARDIAN, Aug. 17, 1995, at 2. The Church obtained a writ of seizure from federal Judge Leonie M. Brinkema of the Eastern District of Virginia for Lerma's computer equipment and more than 100 disks. Id. The same month, the Church also sued former Scientologists Lawrence Wollersheim and Bob Penny, who run F.A.C.T.Net, an anti-Scientology BBS. The federal district court in Denver has denied the Church's motion for a preliminary injunction. See RTC v. F.A.C.T.Net, Inc., 901 F. Supp. 1515 (1995).
  18. Verified Complaint for Injunctive Relief and Damages, C-95- 20091-RMW, Feb. 8, 1995.
  19. Order for Temporary Restraining Orders, Order to Show Cause Re: Preliminary Injunction, and for Order of Impoundment, C-95-20091- RMW, Feb. 10, 1995; see also Abrahamson, supra at B1.
  20. Amended Temporary Restraining Order, C-95-20091-RMW, Feb. 23, 1995.
  21. Transcript of Court Hearing, Feb. 21, 1995. Judge Whyte did grant a preliminary injunction against Erlich ordering him not to (1) reproduce specific Hubbard works (except as allowed by the fair use doctrine); (2) disclose any unpublished, confidential Hubbard works; and (3) destroy any materials not previously seized by the plaintiffs. Amended Temporary Restraining Order, C-95-20091-RMW, Feb. 23, 1995.
  22. Renewed Motion for Preliminary Injunction against Defendants Netcom On-Line Communications Services, Inc. and Tom Klemesrud, C-95- 20091-RMW, Mar. 6, 1995.
  23. See, e.g., Mark Walsh, Scientologists, Secrets, and Cyberspace: Church Sues Over Posting Training Papers on Internet, LEGAL TIMES, July 3, 1995, at 2.
  24. See RTC v. Erlich, 1995 WL 820126 (N.D. Cal. Sept. 22, 1995). The court granted the Church a broad preliminary injunction against Erlich that prevents him from using their copyrighted material. Judge Whyte found that Erlich was unlikely to prevail on his fair use defense because of his "near-verbatim copying of substantial portions of plaintiffs' works." The court denied the Church's motions to preliminarily enjoin Erlich based on trade mark misappropriation, to hold him in contempt and to sanction against his counsel. It granted Erlich's motion to vacate the writ of seizure. Id.
  25. Netcom, 907 F. Supp. at 1361.
  26. Compare Judge Finds Access Providers Can Be Held Responsible and Liable for Infringing Internet Postings (Netcom and BBS operator sent to trial), Church of Scientology press release, Nov. 30, 1995 (the "32-page ruling is a major blow to Netcom and Klemesrud"; "It is a decisive victory for the Church of Scientology") with Netcom Responds to Ruling on Copyright Case, PRNewswire, Nov. 28, 1995 (the "ruling was a major victory for NETCOM").
  27. 839 F. Supp. 1552 (M.D. Fla. 1993).
  28. Id. at 1556 (emphasis added).
  29. For additional criticism of the Frena decision, see Niva Elkin- Koren, Copyright Law and Social Dialogue on the Information Superhighway: The Case Against Copyright Liability of Bulletin Board Operators, 13 CARDOZO ARTS & ENT. L. J. 3465 (1995).
  30. 839 F. Supp. 1552, 1554 (M.D. Fla. 1993).
  31. Id. at 1556.
  32. It is possible that the court simply found Frena's claim of ignorance unbelievable. It is somewhat hard to believe that he could be completely unaware of the presence of 170 Playboy centerfolds floating around on his closely-monitored system.
  33. 857 F. Supp. 679 (N.D. Cal. 1994).
  34. Strangely, Sega cites Frena for a point about a knowledge requirement for contributory infringement. Id. at 686. George Frena was held liable for direct infringement even though he had no knowledge of the copying.
  35. Id. at 683.
  36. Id. at 687.
  37. In February 1995, Novell and Microsoft also settled a civil suit against the 17-year old sysop of the "Deadbeat Bulletin Board," which contained hundreds of copyrighted software programs. Under the judicially-approved settlement, the teenager's BBS was shut down, all his computer equipment was forfeited, and a $25,000 fine was assessed. Joint Novell-Microsoft Investigation Leads to Court- Ordered Shutdown of "Pirate" Bulletin Board, Seizure of Teen Operator's Computer System, and $25,000 Payment by Operator, PR NEWSWIRE, Feb. 3, 1995. Because the court documents were sealed and the teenager's name was not released, it is hard to draw any lessons from this case, other than to note that computer companies are determined to enforce their copyrights.
  38. See Daniel Klaidman, United States v. Kenadek, THE LEGAL TIMES, Sept. 19, 1994, at 4; Computer Bulletin Board Operator Pleads Guilty, PR NEWSWIRE, Dec. 15, 1994.
  39. Kenadek was sentenced to six months home arrest, 24 months probation and forfeiture of all his computer equipment. SPA Says First Bulletin Board Sysop Indicted, NEWSBYTES NEWS NETWORK, Sept. 1, 1994.
  40. 871 F. Supp. 535 (D. Mass. 1994).
  41. See Dowling v. United States, 473 U.S. 207 (1985). In Dowling, the Court held that the defendant could not be prosecuted for stealing, converting or fraudulently taking software across state lines under the crime of Interstate Transportation of Stolen Property (ITSP). The court reasoned that Congress had already defined misuse of copyrighted materials as "infringement" in the Copyright Act. Moreover, there was no need to use a gap-filling statute such as ITSP to prosecute copyright-related crimes because Congress already had legislative authority over all copyright issues. In LaMacchia, the district court held that Dowling prevented the government from prosecuting the defendant under the catch-all wire fraud statute. 871 F. Supp. at 545. 'The Dowling decision establishes that Congress has finely calibrated the reach of criminal liability [in the Copyright Act], and therefore absent clear indications of Congressional intent, the criminal laws of the United States do not reach copyright-related conduct. Thus copyright prosecutions should be limited to Section 506 of the Act, and other incidental statutes that explicitly refer to copyright and copyrighted works.' Id. at 545 (quoting 3 NIMMER ON COPYRIGHT, § 15.05 at 15-20 (1993)).
  42. At the time of his ruling, Klemesrud still had not made himself available for a deposition. Consequently, the court considered his motion to be for judgment on the pleadings. 907 F. Supp. at 1366 n.6. The standard for judging a motion on the pleadings is nearly the same as that for summary judgment. The court treated them similarly in its opinion, as will this paper.
  43. 907 F. Supp. at 1383.
  44. Relying on MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993), the court held that Erlich's postings created "copies" of allegedly infringing materials on Klemesrud's and Netcom's computer systems and that these copies were sufficiently "fixed" for copyright purposes.
  45. See 17 U.S.C. §§ 106, 501.
  46. 907 F. Supp. at 1371-72 & n.16.
  47. Id. at 1371.
  48. Id. at 1372.
  49. The Church did not specifically make a vicarious liability claim against Klemesrud. The court gave the plaintiffs 30 days to amend their complaint, if they could make a good faith showing that he benefited financially from Erlich's infringing activities. There is no indication that they amended it.
  50. Id. at 1375.
  51. See, e.g., Roy Export Co. v. Trustees of Columbia Univ., 344 F. Supp. 1350, 1353 (S.D.N.Y. 1972); but see Polygram Int'l Publishing, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1330-33 (D. Mass. 1994).
  52. Id. at 1376.
  53. The district court's finding conflicts somewhat with the findings of the "White Paper." See Report of the Information Infrastructure Task Force of the Intellectual Property and the National Information Infrastructure Committee, available at http://www.uspto.gov/niiip.html (noting that on-line service providers benefit financially from infringing activities by users).
  54. See Sony Corp. v. Universal City Studio, Inc., 464 U.S. 417, 435 (1984) (recognizing liability for contributory copyright infringement despite absence of express statutory language).
  55. 907 F. Supp. at 1373 (quoting Gershwin Publishing Corp. v. Columbia Artists Mgt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)).
  56. Id. at 1374.
  57. Id.
  58. Id. at 1374-75. Although the court summarily denied Klemesrud's contributory liability motion for "the reasons discussed in connection with Netcom's motion," id. at 1382, it is not clear whether Klemesrud reviewed the postings. At a minimum, he did respond to the Church's notice letter with a demand that they prove that they owned the copyrights. Id. at 1366.
  59. Id. at 1375.
  60. Id. at 1374.
  61. Oddly, the court addresses only Netcom's fair use contention. Presumably this was an oversight since Klemesrud clearly pleaded fair use as an affirmative defense in his answer. See Answer of Tom Klemesrud, C-95-20091-RMW, Apr. 14, 1995.
  62. See 17 U.S.C. § 107 (1988).
  63. Id.
  64. The court had previously held that Erlich could not present a fair use defense. See Order of Sept. 22, 1995, 1995 WL 820126. Based on that ruling, the court refused to consider Erlich's fair use as a defense for Klemesrud and Netcom. The court wrote: "To the extent that Netcom and Klemesrud argue that plaintiffs' copyrights are invalid and that Netcom and Klemesrud are not liable because Erlich had a valid fair use defense, the court previously rejected these arguments and will not reconsider them here." 907 F. Supp. at 1366 n.3.
  65. Id. at 1372 (emphasis added).
  66. Affidavit of Tom Theo Klemesrud, Feb. 20, 1995.
  67. Id. at 1368.
  68. Id. at 1376 n.23.
  69. See note 53, infra.
  70. Both Time and Newsweek have dedicated entire issues to the rapid-fire development of cyberspace. Technomania: The Hype and the Hope, NEWSWEEK, Feb. 25, 1995; Welcome to Cyberspace, TIME, Spring Special Issue, 1995.
  71. See note 53, infra; see also Richard Raysman and Peter Brown, Internet Copyright Developments, N. Y. L. J., Jan. 9 1996 (discussing White Paper).
  72. See Virtual Magistrates Seek to Resolve Online Disputes Online, INFORMATION LAW ALERT: A VOORHEES REPORT, Mar. 15, 1996.
  73. This project has been described as "George Jetson meets Judge Wapner." Amy Cortese, Here Come the Cyber Judge, BUSINESS WEEK, Mar. 25, 1996.
  74. See Virtual Magistrate Project Web Site, http://vmag.law.will.edu:8080.
  75. The original act creating the bankruptcy courts did not survive Supreme Court review. See Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982). In 1984, Congress amended the Act to meet constitutional requirements. See 28 U.S.C. §§ 151, 152. Congress has also acted to combat the increasing workload of the federal courts by creating the position of federal magistrate. See Federal Magistrates Act of 1968, 82 Stat. 1108, as amended, 28 U.S.C. §§ 631 et seq. The magistrate system proved so effective that Congress later expanded the magistrates' powers. See 93 Stat. 643, amending 28 U.S.C. §§ 604, 633-36, 1915(b), 18 U.S.C. § 3401.

About the Author

     Amy E. Weaver is Luce Scholar, Hong Kong Legislative Council. She is a 1989 graduate of Wellesley College and a 1995 graduate of the Harvard Law School. In 1995-96 she was a law clerk for the Honorable Eugene A. Wright of the Ninth Circuit Court of Appeals in Seattle. Before attending law school, she worked as a research associate at the Harvard Business School. She is the co-author of several articles, published in the Annals of the History of Computing, about the emergence of the first business computers.