Literary works

In 1976, Universal City Studios, Inc., and Walt Disney Productions, owners of copyrights in motion pictures and other audiovisual works, commenced a copyright infringement action in the United States District Court for the Central District of California against Sony Corporation of America and related entities that manufacture and sell Betamax video tape recorders. The Betamax consists of a tuner that receives signals from the public airwaves, a recorder that places those signals on magnetic tape, and an adapter that converts the signals for playback on a television set. It includes a timer for unattended recording, a pause button to omit commercials, and a fast-forward control. Surveys of several hundred Betamax owners conducted by both parties in 1978 showed that the primary use for most owners was time-shifting, recording a program for single later viewing and then erasing it. Sony's survey indicated that over 80 percent of interviewees watched at least as much regular television as before owning a Betamax. Seven point three percent of use was to record sports events whose professional leagues had no objection to home recording, and representatives of religious and educational broadcasters also testified they had no objection. After a lengthy trial, the District Court in 1979 denied all relief to the respondents, finding that time-shifting was fair use, that Sony had no direct involvement with any infringing activity, and that the Betamax was a staple article of commerce capable of substantial noninfringing uses. The court noted Sony's instruction booklet warned that unauthorized recording of copyrighted material may violate copyright laws. The Ninth Circuit in 1981 reversed the District Court's judgment on the copyright claim, holding petitioners liable for contributory infringement without setting aside any findings of fact, and remanded for consideration of damages or a continuing royalty. The Supreme Court granted certiorari in 1982, ordered reargument in 1983, and issued its decision in January 1984.

Bela Lugosi and Universal Pictures Company, Inc. concluded an agreement in September 1930 for the production of the film Dracula in which Lugosi contracted to and did play the title role. Paragraph 4 of the agreement granted Universal the right to photograph and exploit in connection with the photoplay any and all of the artist's acts, poses, plays and appearances and the right to use and give publicity to the artist's name and likeness in connection with the advertising and exploitation of the photoplay. Lugosi died in 1956. Commencing in 1960 Universal entered into many licensing agreements which authorized licensees to use the Count Dracula character in connection with the sale of commercial merchandising products such as plastic model kits, masks, posters, candy dispensers, T-shirts, and beverage stirring rods. The licensing agreements specifically authorized the use of Lugosi's likeness from his portrayal of Count Dracula in Dracula and Dracula's Daughter. On February 3, 1966, Lugosi's widow Hope Linninger Lugosi and surviving son Bela George Lugosi filed a complaint against Universal alleging that they were the heirs of Bela Lugosi and that Universal had appropriated property which they had inherited from Lugosi and which was not embraced in paragraph 4 of the 1930 agreement. The complaint sought damages, an accounting of profits, and an injunction against further licensing without their consent. The trial court found that the essence of the thing licensed by Universal was the uniquely individual likeness and appearance of Bela Lugosi in the role of Count Dracula. It concluded that Lugosi had a protectable property right in his facial characteristics and individual manner of likeness and appearance as Count Dracula that descended to his heirs under his will. The court awarded plaintiffs $53,023.23 in damages for licensing agreements executed after February 3, 1964, and issued a permanent injunction against further unauthorized licensing of Lugosi's likeness as Count Dracula on commercial products. Universal appealed. The Supreme Court of California granted a hearing, conducted an independent study of the issues, and adopted the opinion of the Court of Appeal, Second Appellate District, as its own after appropriate deletions and additions.

Rural Telephone Service Company, Inc., is a certified public utility that provides telephone service to several communities in northwest Kansas. As a condition of its monopoly franchise, state regulation requires Rural to issue an updated telephone directory annually. Rural's directory consists of white pages listing subscribers' names, towns, and telephone numbers in alphabetical order, along with yellow pages featuring classified advertisements. Feist Publications, Inc., specializes in area-wide telephone directories covering larger geographical ranges than typical local directories. Feist's 1983 directory encompasses eleven telephone service areas in fifteen counties and contains 46,878 white pages listings. To compile its directory, Feist approached each of the eleven telephone companies operating in northwest Kansas and offered to pay for the right to use their white pages listings. Of the eleven companies, only Rural refused to license its listings. Feist then copied 1,309 listings from Rural's 1982-1983 white pages after first removing several thousand outside its geographic range and verifying the remaining data through additional investigation that added street addresses to many entries. Four of the copied listings were fictitious entries that Rural had inserted to detect copying. Rural sued Feist for copyright infringement in the United States District Court for the District of Kansas. The district court granted summary judgment to Rural. The Court of Appeals for the Tenth Circuit affirmed in an unpublished opinion. The Supreme Court granted certiorari to review whether the copyright in Rural's directory protects the names, towns, and telephone numbers copied by Feist.

Respondents Grokster, Ltd. and StreamCast Networks, Inc. distribute free software products that enable computer users to share electronic files through peer-to-peer networks. Grokster's software employs FastTrack technology while StreamCast distributes Morpheus software that relies on Gnutella technology. Users of either product can send requests for files directly to the computers of others on the network, with results communicated back and files downloaded directly from peers' computers without any central server intercepting the content. A group of copyright holders including motion picture studios, recording companies, songwriters, and music publishers, referred to collectively as MGM, sued Grokster and StreamCast in the United States District Court for the Central District of California. MGM alleged that the companies knowingly and intentionally distributed their software to enable users to reproduce and distribute copyrighted works in violation of the Copyright Act. MGM commissioned a statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for download on the FastTrack system were copyrighted works. Well over 100 million copies of the software in question are known to have been downloaded, and billions of files are shared across the FastTrack and Gnutella networks each month. Grokster and StreamCast concede the infringement in most downloads, and it is uncontested that they are aware that users employ their software primarily to download copyrighted files. From time to time, moreover, the companies have learned about their users' infringement directly, as from users who have sent e-mail to each company with questions about playing copyrighted movies they had downloaded, to whom the companies have responded with guidance. MGM notified the companies of 8 million copyrighted files that could be obtained using their software. After the notorious file-sharing service, Napster, was sued by copyright holders for facilitation of copyright infringement, StreamCast gave away a software program of a kind known as OpenNap, designed as compatible with the Napster program and open to Napster users for downloading files from other Napster and OpenNap users' computers. The evidence that Grokster sought to capture the market of former Napster users is sparser but revealing. Grokster launched its own OpenNap system called Swaptor and inserted digital codes into its Web site so that computer users using Web search engines to look for "Napster" or "[f]ree filesharing" would be directed to the Grokster Web site. StreamCast monitored both the number of users downloading its OpenNap program and the number of music files they downloaded. It also used the resulting OpenNap network to distribute copies of the Morpheus software and to encourage users to adopt it. Internal company documents indicate that StreamCast hoped to attract large numbers of former Napster users if that company was shut down by court order or otherwise, and that StreamCast planned to be the next Napster. Finally, there is no evidence that either company made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files. Grokster and StreamCast receive no revenue from users, who obtain the software itself for nothing. Instead, both companies generate income by selling advertising space, and they stream the advertising to Grokster and Morpheus users while they are employing the programs. After discovery, the parties on each side of the case cross-moved for summary judgment. The court nonetheless granted summary judgment in favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of their software. The Court of Appeals affirmed. The Supreme Court granted certiorari.