“Web, Schmeb,” says syndicated computer columnist John Dvorak in March’s issue of PC Computing, summing up his user viewpoint that the World Wide Web is over-hyped, offers scant information of any value, and is too slow. In other words, it’s a big waste of time.

Such utterances from disgruntled users aside, many businesses view the Web as a dynamic new advertising medium and have leapt into the fray, often with insufficient understanding of the many potential legal pitfalls distributing information on the Web entails.

Last month, this column addressed the issue of domain names and potential trademark infringement concerns businesses need to consider when choosing and registering a domain name. This month’s column expands on a prior discussion of potential copyright infringement liability for the copying and transmission of someone else’s copyrighted materials over the Web.

An issue that virtually every business operating a Web site needs to consider is who owns the copyright in the content that the site will display and transmit. Copyright protection extends to various forms of information, including text, graphics, data, audio, video and photographs. The copyright owner, usually the creator or author of the work or materials in question, or one to whom the author has assigned his or her rights, e.g., an employer, has the exclusive right to copy, modify, distribute, and publicly perform and display the copyrighted work. A company that has created materials for display or distribution on its Web site will typically own the copyright to those materials. In this situation, no infringement concerns arise. But what about the situation where a company wants to make available via its Web site someone else’s copyrighted materials?

Let’s take a hypothetical involving a Web site operator who scans the text of a printed journal onto its computer in order to make it available for downloading from its Web site. The company operating the Web site knows the journal is copyrighted and doesn’t obtain authorization from the journal’s publisher to copy, display or distribute the journal. If the journal’s publisher sues for copyright infringement, a court would likely find the Web site operator liable and might award the publisher both monetary damages and injunctive relief. The publisher would argue that the Web site operator created illegal copies of the journal in two ways: by scanning it into electronic form onto its server hard drive, and by its computer creating a copy in random access memory (RAM) each time someone requested the journal from the Web site operator’s server.

The journal publisher might also be able to successfully argue that the Web site operator was liable for illegal distribution of the infringing copies, given current caselaw – even though the Copyright Act does not specifically prohibit the unauthorized electronic transmission of infringing copies, but the distribution of infringing copies “by sale or other transfer of ownership, or by rental, lease or lending” (17 U.S.C. §106(3)).

Let’s take another wrinkle. What if your company decides it would benefit from creating a hypertext link from its Web site to the first site containing the infringing copy of the journal? Would your company be liable to the publisher for copyright infringement along with the operator of the first site?

The exclusive rights of a copyright owner described above arise automatically upon creation of a copyrightable “work of authorship.” Registration of the work with the Copyright Office is not necessary to obtain copyright protection. It is, however, a prerequisite to being awarded statutory damages against an infringer. Statutory damages can be steep: up to $100,000 per infringed work if the infringement was done in knowing violation of the law.

The Copyright Act not only provides for direct liability for infringement, as would likely result from the first Web site operator copying the journal articles as described above, but for contributory and vicarious liability as well.

A contributory infringer has been defined in numerous court decisions to be one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, often by providing services or equipment that facilitate the direct infringement of the protected work. To be found liable for contributory infringement, the alleged infringer must know or have reason to know that its conduct may lead to an infringement.

Similarly, vicarious liability results when the alleged infringer has the right and ability to control or supervise the infringing activity of another and derives a financial benefit from the exploitation of the copyrighted materials. Actual knowledge of the infringement is not a prerequisite for vicarious liability. The law, in essence, punishes the vicarious infringer for sitting idly by and benefiting from the infringement if it could have prevented it.

In our example, someone whose Web site links to the first Web site containing the infringing journal materials arguably facilitates the infringement of the publisher’s copyrights. The linking site provides a means to connect users directly to the infringing copies of the journal on the first site. But unless the publisher can prove that the operator of a linking site knew or had reason to know that the journal materials on the first site were infringing copies, there may be no contributory infringement liability. The operator of the linking site may also escape vicarious liability for infringement unless the journal copyright owner can successfully argue that the operator of the linking site financially benefited from the link to the infringing journal materials on the first site, and had the ability to control or supervise the infringing conduct of the first site’s operator. Proving the latter point may be especially difficult.

There is not yet any caselaw directly addressing the issue of a Web site operator’s liability for contributory or vicarious copyright infringement for providing a link to infringing material on another site. Businesses seeking to take advantage of the World Wide Web should obtain the advice of competent legal counsel in deciding what materials they may display or link to on their sites – lest they relish the prospect of becoming cyberlaw trailblazers.

This article is provided for general informational purposes only and does not constitute legal advice. Each factual situation is different and requires specific analysis.

Attorney Eric Freibrun specializes in Computer law and Intellectual Property protection, providing legal services to information technology vendors and users. Tel.: 847-562-0099; Fax: 847-562-0033; E-mail: eric@freibrunlaw.com.