Elements of claim
If someone has the "right and ability" to supervise the infringing action of another, and that right and ability "coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials — even in the absence of actual knowledge" that the infringement is taking place — the "supervisor" may be held vicariously liable for the infringement. Vicarious liability is based on a connection to the direct infringer (not necessarily to the infringing activity).
The best known copyright cases involving vicarious liability are the "dance hall" cases, where vicarious liability was found when dance hall owners allowed the unauthorized public performance of musical works by the bands they hired, even when the owners had no knowledge of the infringements and had even expressly warned the bands not to perform copyrighted works without a license from the copyright owners.
|“||[A]lthough vicarious liability was initially predicated upon the agency doctrine of respondeat superior . . . , one may be vicariously liable if he has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.||”|
Courts distinguish financial interests that vary with the amount of infringement from those that do not. A landlord who gets a flat monthly rent regardless of the infringing activities of a tenant will usually be found not to have the requisite financial interest, whereas a landlord who is paid a percentage of the tenant’s revenue usually will.
The degree of “control” that a party must exercise to satisfy the “right and ability to supervise” test is a question of practicality. Almost any party who enters a contractual relationship with a potential infringer can put a clause in the contract requiring that the latter not infringe. If such a clause alone satisfied the “control” test, it would encourage perverse results: parties like landlords and restaurant owners would take care not to prohibit infringements in their contracts in order to appear unable to control it. Courts instead look for realistic control: actual approval of infringing activities before they take place, for example.
- Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)(full-text) (holding that company that leased floor space to phonograph record department was liable for record department's sales of "bootleg" records despite absence of actual knowledge of infringement, because of company's beneficial relationship to the sales).
- See, e.g., Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 354 (7th Cir. 1929)(full-text); Famous Music Corp. v. Bay State Harness Horse Racing & Breeding Ass'n, 554 F.2d 1213 (1st Cir. 1977)(full-text); KECA Music, Inc. v. Dingus McGee's Co., 432 F. Supp. 72, 199 U.S.P.Q. (BNA) 764 (W.D. Mo. 1977)(full-text). Indeed, the "cases are legion which hold the dance hall proprietor liable for the infringement of copyright resulting from the performance of a musical composition by a band or orchestra whose activities provide the proprietor with a source of customers and enhanced income. He is liable whether the bandleader is considered, as a technical matter, an employee or an independent contractor, and whether or not the proprietor has knowledge of the compositions to be played or any control over their selection." Shapiro, Bernstein, 316 F.2d at 307 (citing some 10 cases).
- Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)(full-text).
- See, e.g., Davis v. Dupont de Nemours & Co., 240 F. Supp. 612, 631-32 (S.D.N.Y. 1965)(full-text) (imposing vicarious liability on the sponsor of an infringing television broadcast on grounds that the sponsor “had to approve of several steps in the production of the television program. For example, [it] had to consent to televising the story . . . before work on the production was commenced. Copies of the first draft of the television script (which substantially represented the actual telecast) were sent to [the sponsor], and their representatives sat in on story conferences.”) (footnotes omitted).