UMG Recordings, Inc. v. Sinnott
300 F. Supp. 2d 993, 2004 U.S. Dist. LEXIS 4469, 69 U.S.P.Q. 2d (BNA) 1924 (2004)
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Rule of Law:
An owner of a marketplace, such as a flea market, is contributorily liable for copyright infringement by vendors if the owner knows or has reason to know of the infringing activity and materially contributes to it. The owner is also vicariously liable if they have the right and ability to supervise the infringing activity and derive a direct financial benefit from it.
Facts:
- Richard Sinnott has been the sole owner and operator of the Marysville Flea Market (MFM) since 1992, where he rents booth space to vendors.
- Sinnott establishes all rules for the MFM, employs security to enforce them, and reserves the right to inspect all merchandise and cancel any vendor's space rental.
- On September 3, 2000, investigators from the Recording Industry Association of America (RIAA) informed Sinnott that several MFM vendors were selling counterfeit CDs and cassettes.
- Sinnott ejected the RIAA investigators from his office, refusing their offer to help train his staff to identify counterfeit goods, stating "it’s not my problem."
- Between 2000 and 2002, the RIAA sent Sinnott four letters detailing the ongoing infringement and his potential liability.
- Sinnott acknowledged receiving these letters but claimed he did not read them.
- During this period, Sinnott continued to operate the flea market, providing space, utilities, security, and customers to the vendors, including those selling infringing materials.
- In addition to vendor fees, Sinnott profited from concession stands, for which he was the sole authorized seller, and a go-kart track on the property.
Procedural Posture:
- Twenty-three recording companies (Plaintiffs) filed a lawsuit against Richard Sinnott (Defendant) in the U.S. District Court for the Eastern District of California.
- The plaintiffs alleged that Sinnott was secondarily liable for copyright infringement committed by vendors at his flea market.
- Plaintiffs filed a motion for summary judgment, asking the court to find Sinnott liable as a matter of law, leaving only the determination of damages for trial.
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Issue:
Does a flea market owner who provides the site and facilities for vendors selling counterfeit recordings become contributorily and vicariously liable for their copyright infringement after being given knowledge of the infringing activity?
Opinions:
Majority - Morrison C. England, Jr.
Yes, a flea market owner who provides the site and facilities for vendors with knowledge of their infringing activity is contributorily and vicariously liable for copyright infringement. For contributory liability, Sinnott had both actual and constructive knowledge of the infringement. Actual knowledge was established when RIAA investigators personally informed him and through subsequent letters, which he cannot disavow by willfully choosing not to read them. His material contribution was established by providing the entire infrastructure for the infringing sales—the physical space, utilities, parking, and customer base—which is sufficient under Ninth Circuit precedent set in Fonovisa, Inc. v. Cherry Auction, Inc. For vicarious liability, Sinnott had the right and ability to control the vendors through his own rules and regulations, and he refused offers of free training that would have enabled him to police the infringement. He derived a direct financial benefit because the availability of cheap, counterfeit music served as a 'draw' for customers, which in turn increased revenue for his concession stands and go-kart track. This indirect financial link is sufficient to establish vicarious liability.
Analysis:
This case solidifies the application of secondary copyright liability to operators of physical marketplaces like flea markets, building directly on the Ninth Circuit's ruling in Fonovisa. It establishes that providing the essential site and facilities for commerce is a sufficient 'material contribution' for contributory liability once the operator has knowledge of infringement. The court's treatment of Sinnott's refusal to read the RIAA's letters as 'willful blindness' reinforces that operators cannot feign ignorance to escape liability. This decision serves as a strong precedent holding property owners and event organizers accountable for policing infringement that occurs under their supervision and from which they benefit, even indirectly.
