Did Netcom directly break the law? No. The court decided that Netcom didn't directly infringe the copyright because its computers were acting like an automatic copy machine. Netcom didn't choose to make the copies; the user, Erlich, did. Blaming Netcom would be like blaming the phone company because someone used a phone to plan a crime. 

Is Netcom responsible like a boss is for an employee? No. This is called vicarious liability, and it requires two things: control over the person and making money directly from their bad act. While Netcom could have kicked Erlich off its service, it didn't make any extra money from his illegal posts. Netcom just collected its normal flat monthly fee, so it didn't get a 'direct financial benefit' from the infringement.

Did Netcom illegally help Erlich? Maybe. This is called contributory liability, and it's like being the getaway driver in a robbery. You're guilty if you know a crime is happening and you help it succeed. The Church told Netcom about the illegal posts. The judge said that once Netcom knew what was going on, its choice to do nothing and let the posts stay online could be seen as 'materially contributing' to the copyright infringement. Because this is a 'maybe,' the case against Netcom can continue.

No, Netcom is not automatically responsible for copyright infringement here because it didn't do anything on purpose to cause copies to be made, other than having a system that automatically shares messages posted by users and temporarily stores copies. This isn't enough to make Netcom responsible right away. It's kind of like how the owner of a copy machine isn't responsible if someone uses it to make illegal copies - they might be in trouble if they knew about it and helped the person a lot, but they aren't responsible just for owning the machine. Netcom might still be in trouble if it knew about Erlich's infringement after RTC and BPI told them, and if it helped him a lot by not taking down the posts. But the court says there are facts that still need to be figured out about this. The court also says Netcom's other arguments for why it shouldn't be responsible, like fair use and free speech, aren't good enough.

Although copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party.

"Contributory liability requires that the secondary infringer `know or have reason to know'of direct infringement. "

In that case, the court held that although "copies" were made, the operator of the bulletin board service and the Internet access provider were not liable for direct infringement.

The court in Religious Technology Center v. Netcom On-line Communication Services, Inc.(Netcom) ruled that a bulletin board operator and its Internet access provider should not be held liable for infringing acts committed by the bulletin board' s subscribers

Netcom's act of designing or implementing a system that automatically and uniformly creates temporary copies of all data sent through it is not unlike that of the owner of a copying machine who lets the public make copies with it. Although some of the people using the machine may directly infringe copyrights, courts analyze the machine owner's liability under the rubric …

Services, Inc., which suggests that in an online context, evidence of actual knowledge of specific acts of infringement is required to hold a computer system operator liable for contributory copyright infringement.

Accordingly, the court rejected the plaintiffs' argument that the ISP stored and thereby copied the copyrighted works: "Where the infringing subscriber is clearly directly liable for the same act, it [would] not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement [was] nothing more than setting up and operating a system …

—stating plaintiff's theory "would result in liability for every single Usenet server in the worldwide link of computers transmitting [the message] to every other computer. These parties, who are liable under plaintiffs' theory, do no more than operate or implement a system that is essential if Usenet messages are to be widely distributed." (emphasis added

As the Fourth Circuit held, agreeing with the reasoning of Netcom, "automatic copying, storage, and transmission of copyrighted materials, when instigated by others, does not render an [Internet service provider] strictly liable for copyright infringement [.]"

Requiring a showing of volitional conduct comports with the general principle that, even with a strict liability statute such as the Copyright Act, the challenged conduct must cause the harm.

Regarding direct infringement: No. An ISP that provides automated access to the Internet does not commit direct copyright infringement by passively storing and forwarding user-posted content. Although temporary copies are made on Netcom's system, Netcom did not take any volitional act to cause the copying; the system's function is automatic and initiated by a third party (Erlich). Holding Netcom directly liable would unreasonably implicate every server in the global Usenet chain and is inconsistent with copyright law, which requires some element of causation by the defendant. Unlike the owner of a copy machine, whose liability is analyzed under contributory infringement, imposing strict direct liability here would be an unworkable standard for the functioning of the Internet. 

Regarding vicarious liability: No. An ISP is not vicariously liable because the plaintiffs failed to show that the provider received a direct financial benefit from the infringing activity. While Netcom arguably had the right and ability to control Erlich's access, it received only a fixed monthly fee for its service. This fee was not dependent on Erlich's infringing posts, nor was there evidence that Netcom attracted more subscribers because it permitted infringement. Therefore, the second prong of the vicarious liability test, a direct financial benefit, is not met.

Regarding contributory liability: Yes, a genuine issue of material fact exists. An ISP may be held contributorily liable for a user's infringement if it knew or should have known about the infringing activity and materially contributed to it. The plaintiffs' notification letter to Netcom created a triable issue as to whether Netcom had the requisite knowledge. Netcom's failure to take any action to remove the infringing posts after receiving notice could constitute a 'material contribution' to the continued public distribution of the copyrighted works. Because questions of fact remain regarding Netcom's knowledge and its participation, summary judgment is inappropriate on this claim.

No, Netcom is not directly liable for copyright infringement because it did not take any affirmative action that directly resulted in copying the plaintiffs' works, other than installing and maintaining a system whereby software automatically forwards messages received from subscribers onto the Usenet, and temporarily stores copies on its system. Netcom's actions do not amount to volitional conduct, which is necessary for direct infringement liability. The court analogizes Netcom's role to that of the owner of a copying machine who lets the public make copies with it - the owner is not liable for direct infringement, but may be contributorily liable. The court distinguishes this case from MAI v. Peak, where the defendant directly caused the copying. Here, Netcom's system is merely used to create a copy by a third party. However, Netcom may still be contributorily liable if it knew or should have known of the infringing activity and substantially participated in it. There is a genuine issue of fact as to whether Netcom knew of the infringement after receiving notice from the plaintiffs and whether it substantially participated by failing to remove the infringing material. The court rejects Netcom's other defenses, including substantial non-infringing uses, fair use, and First Amendment protection.

Religious Tech. Ctr. v. Netcom On-Line Commc'n Serv.

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