CS 306 - Synthesis of Ethics & Law for the Computing Professional George Mason University 9781506655017

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Cases and Materials CS 306 -- Synthesis of Ethics & Law for the Computing Professional George Mason University

Fall 2019 Tamara A. Maddox

Michael W. Tompkins Michael P. Maddox

Copyright 2005, 2008 -- Maddox, Tompkins, Maddox. All rights reserved.

Table of Contents

II

Introduction — The American Legal System ..........cccccccccssssscsscsseessesscesseseesacesesssesscessceasens 1 A Note on Research Papers...........ccsccsccsscssseeseeseeeceesseeceeeeaeseaeeseeseeeseesesseeeseesseeseceeeneceneesees 4

Ul.

Free Speech... ccececscecssesscsecsseseesceseseeececcesesceseeseesesaessecsesaeeaeaeeeseeseeseeseeseeseesecseesseseeaees 6 Brandenburg V. ONI0 o..ceeccescceccescsssessessccseceseesececeeaecuncsesseseceesesaeceseeseeeseeaecseseseseeeneeeaeetees 6

18 U.S.C. § 1460.

IV.

eee cece cceeceeeceeeeeeseeseesecseesesseeaeeseeeesecseenecseeseeseesessesaeesenseeseeeteeesssaeees 10

Ashcroft v. The Free Speech Coalition .......cccccecccceecessesesseeseessesseseessesessessessesseeesecssensenes United States v. Willi .......cccccccccesscsscessessesssesscsseeseesecsecesecacenecseseneeseeeaeeaeteaseaeeeeneeeats New York Times Co. v. United States ......cccccccceccessseseesesesteseeseesseeseeseesseeseessceaecnssessesseees PYUVACY oo... ceeeeececeseeeseesceeeseenseceseceseececeseceaeessacesuecscecaeesecaeceeecesseeseeeseeceseceueessecesseeseceaeecsass The Health Insurance Portability and Accountability Act .........ccccccccecscsesteceeseeeeees

11 17 27 4l 4]

The Gramm-Leach-Bliley Act .........cccccccecsececessessesseseesseseeseaeseesecseesecseceesacsessecseeseesseas 51 The European Union Data Protection Directive ..............ccccecceceseeeeeeeeeceeeesteeneeeeeeseeseesees 65

Tn re Bodil Lindqvist .....0.....cccccccccccecececevseeseeseeseesenecaeeeeaceseeseeseeseeseeseeseeeseseueseeeneeeeseesees 65

VI.

Intellectual Property .............:cceccesseseeseeeseesecseeeeeesecceeseeseceeeeaeeseeeaeeaeceeeeseceseeseceeesseeeseeseseaees 78 The Statute of Anne (1710) oo... ec cccceseceecesceeeceseeeseeesecesecsseccseeeseeeseesseeeseensseeeeesaees 78 Sony Corporation of America v. Universal City Studios, INC. .........00cccccccccceeveeteeereees 80 Campbell v. Acuff-Rose Music, INC........ccccceccccceecceceeseesenseesesesececseeasesesaecaeeueceeneeeeaeens 90 A & M Records v. NAPSter .......ccccsccseceesccssseesseesseeeseeeseceseceneceaeesaecesceceeseaeeeseeeaeenaeeseeseas 98 MGM v, Grokster o..ccccsecseccesessessessesessesseeseceuceseescensesceaeesecsesssesesecesaseceeseesenseeaseaseeseasens 111 Code Of Virginia ..........ccccccccccesesseeesceececeescesecsecesecseeaeeeaeeaeesaeeaeeaeenseceeeaeseseeaeeeeeeseeseeas 122 Computer Crimes ..........:cccesecsceessseseeeeececessseeesecneeeseceseesseceseeeseceseceeecueceaeceaeeeeseeeseesstenses 129 The Virginia Computer Crimes Act... cece eccscseessesecseeseeseeeeaseeeaeeneeeeeseeseeeeeaeea® 129 Jeremy Jaynes v. Commonwealth of Virginia ....c..ccccccccscseescseessssecssesseneseesteeneeeeenetaees 134

The Computer Fraud and Abuse Act o.......eccceecesescecceccesceceeeesecseesecaecaecatenetseeeeeeeaeenes 153 EF Cultural Travel BV v. Exploricd, INC. ......cc.ccccccccccccccetc eee c ence tte t tes eteecenettusetesenseees 156

I.

Introduction — The American Legal System

In any given place in America, there are two sovereign governments: the federal government and the state government. For example, a person standing in the George Mason University Fairfax campus is within the sovereign jurisdiction of the United States of America and the Commonwealth of Virginia. There may be other relevant governments (e.g., the County of Fairfax, the City of Fairfax, and to some extent George Mason University itself), but they are all branches of one of the two sovereign governments named above. So, what is a sovereign? Simply put, it is a government that answers to no one but its own citizens (and to anyone else to whom it agrees to answer). In the U.S., the ultimate sovereign authority is the state government. In 1789, however, the then-existing states adopted a constitution under which they voluntarily gave up some of their sovereignty to a new, higher government named the United States of America. But the federal government is a limited one; it only has authority in specific areas (e.g., national defense, interstate commerce, etc.). If the U.S. Constitution fails to provide authority over a given area to the national government, then the federal government cannot regulate that area. A.

Federal Courts versus State Courts

Every sovereign has its own court system. That is why court cases can be brought in federal court or in state court. Neither is superior to the other per se; rather, each is superior in its own area. For example, if Jeff (a Maryland citizen) and Mary (a Virginia citizen) are involved in an automobile accident in Georgia, Jeff may sue Mary in Georgia (because that is where the accident happened) or in Virginia (because that is where the Mary lives). Georgia and Virginia both have state “courts of general jurisdiction” (courts that can hear any case) that are competent to decide this case. In addition, because the parties are citizens of different states (and if the amount in controversy exceeds a certain amount), Jeff may sue Mary in a federal court if he prefers. This means that Jeff has a number of choices: he may sue Mary in a Georgia state court, a Georgia federal court, a Virginia state court, or a Virginia federal court. But, no matter which court he chooses, Georgia substantive law will apply, because that’s the law that determined who had the right-of-way at the time. (Whichever court hears the case will follow its own procedural rules, such as what dates are available for hearings, when various motions have

to be filed, and so forth, but the substantive law, such as “Is making a left turn at a red light legal from a one-way street to a one-way street?”, will be determined by the location of the alleged injury).

So, assuming that Jeff sues Mary in federal court in Virginia, the federal judge will be bound by Georgia law when deciding who had the right-of-way — even if the judge doesn’t like what Georgia law says, and even if Georgia law is the exact opposite of Virginia law. And there are plenty of court opinions in which a federal court (even the United States Supreme Court) has

said something to the effect of “We are bound in this case by the law of Georgia as set forth in decisions of the Georgia Supreme Court.” On the other hand, the federal courts are supreme on questions of federal law (including federal constitutional law). The U.S. Constitution specifically provides that:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof, and all Treaties made, or which shall be made, under the Authority of the United States,

shall be the supreme Law of the Land, and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any state to the Contrary notwithstanding. U.S. Const., art. VI, cl. 2. B.

Civil Cases versus Criminal Cases

In addition to the location of the court, any case in America is likely either a civil case or

a criminal case. A criminal case is one in which the government (the sovereign) is alleging that the defendant(s) committed a crime and must be punished, either by being placed in jail or by

being fined.

Only the government can choose whether to bring a criminal case — the victim has

no say in the matter (though some states by law, and most prosecutors by personal preference, permit the victim to be heard before the prosecutor makes the decision). Criminal cases are subject to a difficult standard of proof: the government must prove its case beyond a reasonable doubt. In other words, if the trier of fact (usually a jury) has any doubt about the defendant’s guilt, and if that doubt is reasonable, the government loses. Civil cases, on the other hand, are private lawsuits in which one person (the plaintiff) is asking the court to order the other person (the defendant) either (A) to pay money to the plaintiff; and/or (B) to do (or not do) something. Sometimes a plaintiff wants both (A) and (B). For example, a homeowner whose neighbor keeps driving on his lawn might sue the neighbor asking for money (to repair the lawn) and an injunction (a court order to stay off the homeowner’s property). Each state’s court system is structured by that state. This includes how and where each type of suit is brought, as well as methods of appeal when applicable.

A simplified’ chart of the different court systems in place in Virginia

Virginia Supreme Court

(Federal Questions Only)

4

U.S. Supreme Court 4

Virginia Court of Appeals

USS. Circuit Court of Appeals

Virginia Circuit Court

U.S. District Court

Virginia General District Court

Virginia Juvenile & Domestic Relations District Court

U.S. Bankruptcy Court

*

This chart is very simplified: for example, on the Virginia side, this chart omits small claims court; most criminal cases are appealed from the Circuit Court to the Court of Appeals, except that death penalty cases go directly to the Supreme Court; while most civil cases are appealed directly from the Circuit Court to the Supreme Court, except that divorce cases go to the Court of Appeals even though they’re civil cases. In addition, many but not all cases begin in the Circuit Court, not in either of the District Courts, and some cases (such as appeals of some administrative agencies’ decisions) start in the Court of Appeals. Some (rare) cases can even begin in the Supreme

Court.

The purpose of this chart is merely to give you a general idea of

how the system works, not to cover all the finer legal points of appellate procedure.

II.

A Note on Research Papers

As you know, this is a 300-level college course, one that has been designated as a “writing-intensive” course by the University. We thought it appropriate, therefore, to include a note about research papers. The key word in “research paper” is “research.” paper; you must perform the necessary research first. Format. 1.

It is not enough to write a research

A research paper will include the following parts: Title page:

This will be an otherwise blank page that contains the title of the

paper and the author’s name, prominently placed.

In a less prominent place you

should include the professor’s name, course, semester, and date of submission. The body of the paper: This will consist of three main parts: The introduction: This will introduce the paper’s topic, any necessary A. background (such as the facts relevant to the issue you’re researching), and the issues you intend to address. The body: This is the largest portion of the paper by far. It contains the substance of the information you intend to convey. Depending on the intent of the assignment, it may simply be informative, or it may attempt to persuade the reader to adopt a particular point of view. This section must be adequately supported by the various sources you found during your research. The usual method for doing this is to use footnotes that cite to a source. Another method is to use parenthetical references, while a third (the method used in legal writing) is to use citation sentences. These are demonstrated below. The conclusion: This part of the paper presents your personal conclusions regarding the assignment. Depending on the type of assignment, this may be a series of responses to questions you were asked; or it may be a final explanation of why the reader should agree with you. The bibliography (or “sources cited”): This will be a list of al] sources you cited in your paper, in alphabetical order by author, with each entry conveying enough information for the average reader to find your source with ease. If in doubt, follow Turabian’s format. If any of your sources are electronic, you must also include the date on which you last accessed the source (because electronic sources are ephemeral and might not be there when your reader tries to check them). Research. It’s a research paper. This means that you must perform research in order to earn a decent grade. This is not the time to prove that you read the course textbook, or that you know how to answer questions based on your own logical analysis. You need to demonstrate an

actual grasp of the available source material. On that note, you should remember that the available source material does not mean that you cite someone else’s summary of a third person’s conclusions regarding what a fourth person

meant. In such a situation, go to that fourth person’s material and find out what s/he has to say -directly. Do not rely on others’ interpretations of the material. Conclude. Conversely, it isn’t enough merely to research — or even to tell us the results of your research. You must also analyze what you find and tell us your conclusions. If you don’t explain what you’ve learned and why, there’s something wrong with your paper: it doesn’t say anything. Hints. 1. If your bibliography for a 300-level course research paper has only five sources in

NM

ad

2.

it, you probably didn’t do a good job researching. There is no such thing as good writing. There is only good rewriting. So start early to give yourself enough time to edit your paper before turning it in. Yes, we deduct for poor spelling and grammar. Learn to live with it. Cite, cite, cite. “It is well-known that courts enforce the First Amendment right of free speech.” Really? Give a citation to a source that says so. Don’t cite the course textbook. Really. Don’t cite the course textbook. Don’t cite the professor, either. A newspaper (even, or maybe especially, an on-line version) is not a reliable source. Neither is a newsmagazine, a blog, a television news program, or a radio program. Why? Because they’re all rushed into print (or its equivalent) under deadline, with pressure to “scoop” the competition — and many of them don’t even do their own research, preferring to rely on others for their facts (“sources said that....”). Furthermore, the author is seldom an expert on the subject him- or herself, and may not even know enough to distinguish appropriate source material without doing significant research. You need to use better sources than that. Just because it’s on the web doesn’t mean it’s reliable. (In fact, web sources are easier to prepare, post, change, and delete than printed sources, and therefore are often less reliable. Being on the web does not even guarantee that it’s current! The ease of grabbing chunks of previously posted information and inserting it into a “new” website can make online sources particularly suspect.) Check out your source before you go quoting it; is it reliable? What makes you think so? Just because your source comes from a publication or database that tends to be reliable, such as a university library database, doesn’t automatically make it a suitable reference for your research. A database focused on educational materials may be an excellent resource, but it does not guarantee that every source is reliable for every purpose. You still must investigate each source for yourself.

III.

Free Speech

Free speech is the concept that individuals have the right to express themselves without fear of government censorship, interference, or punishment. In the United States, freedom of

speech is protected by the First Amendment to the United States Constitution: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances. U.S. Const., amend. I (emphasis added). One issue that frequently arises in the free speech arena is the concept of “hate speech” or “inciteful” (not to be confused with “insightful”) speech: speech that attacks a person or group based on prejudice or hatred. Such speech is often said to be dangerous, on the ground that it risks inciting attacks on members of the group under discussion.

Brandenburg v. Ohio

No. 492 SUPREME COURT OF THE UNITED STATES 395 U.S. 444, 89 S. Ct. 1827, 23 L. Ed. 2d 430 June 9, 1969 PER CURIAM: The appellant, a leader of a Ku Klux Klan group, was convicted under the Ohio Criminal Syndicalism statute for “advocat[ing] .. . the duty, necessity, or propriety of crime, sabotage, violence, or unlawful methods of terrorism as a means of accomplishing industrial or political reform” and for “voluntarily assembl[ing] with any society, group, or assemblage of persons formed to teach or advocate the doctrines of criminal syndicalism.” Ohio Rev. Code Ann. § 2923.13. He was fined $ 1,000 and sentenced to one to 10 years’ imprisonment. The appellant challenged the constitutionality of the criminal syndicalism statute under the First and Fourteenth Amendments to the United States Constitution, but the intermediate appellate court of Ohio affirmed his conviction without opinion. The Supreme Court of Ohio

dismissed his appeal, sua sponte, “for the reason that no substantial constitutional question exists herein.”

It did not file an opinion or explain its conclusions. Appeal was taken to this Court, and we noted probable

reverse.

jurisdiction.

393

U.S.

948

(1968).

We

The record shows that a man, identified at trial as the appellant, telephoned an announcerreporter on the staff of a Cincinnati television station and invited him to come to a Ku Klux Klan “rally” to be held at a farm in Hamilton County. With the cooperation of the organizers, the reporter and a cameraman attended the meeting and filmed the events. Portions of the films were later broadcast on the local station and on a national network. The prosecution’s case rested on the films and on testimony identifying the appellant as the person who communicated with the reporter and who spoke at the rally. The State also introduced into evidence several articles appearing in the film, including a

Bible, films.

pistol, a rifle, a shotgun,

and a red hood worn

ammunition,

a

by the speaker in the

One film showed 12 hooded figures, some of whom carried firearms. They were gathered around a large wooden cross, which they burned. No one was present other than the participants and the

newsmen

who

made the film. Most of the words

uttered during the scene were incomprehensible when the film was projected, but scattered phrases could be understood that were derogatory of Negroes and, in one instance, of Jews.' Another scene on the same

'

The significant portions that could

be understood were:

film showed the appellant, in Klan regalia, making a speech. The speech, in full, was as follows: “This is an organizers’ meeting. We have had quite a few members here today which are -- we have hundreds,

hundreds of members throughout the State of Ohio.

I can

quote

from

a newspaper

clipping from the Columbus, Ohio Dispatch, five weeks ago Sunday morning. The Klan has more members in the State of Ohio than does any other organization. We’re not a revengent organization, but if our President, our Congress, our Supreme Court, continues to suppress the white, Caucasian race, it’s

possible that there might have to be some revengeance taken. “We are marching on Congress July the Fourth, four hundred thousand strong. From there we are dividing into two

groups,

one

group

to

march

on

St.

Augustine, Florida, the other group to march into Mississippi. Thank you.”

the text of which is quite similar to that of the laws of Ohio. *** The Court upheld the statute on the ground that, without more, “advocating” violent means to effect political and economic change involves such danger to the security of the State that the State may outlaw it. * * * But Whitney has been thoroughly discredited by later decisions. * * * These later decisions have fashioned the principle

that the constitutional guarantees of free speech and free press do not permit a State to forbid or proscribe advocacy of the use of force or of law violation except where such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action. As we said in Noto v.

United States, 367 U.S. 290, 297-298 (1961), “the mere abstract teaching . . . of the moral propriety or even moral necessity for a resort to force and violence, is not the same as preparing a group for violent action and steeling it to such action.” * * * A statute which fails to draw this distinction impermissibly intrudes upon the freedoms guaranteed by the First and Fourteenth Amendments. It sweeps within its condemnation speech which our Constitution has immunized from governmental

control.* * * The second film showed six hooded figures one of whom, later identified as the appellant, repeated a speech very similar to that recorded on the was

Measured by this test, Ohio’s Criminal Syndicalism Act cannot be sustained. The Act punishes persons who “advocate or teach the duty, necessity, or propriety” of violence “as a means of

added: “Personally, I believe the nigger should be

accomplishing industrial or political reform”; or who

returned to Africa, the Jew Though some of the figures weapons, the speaker did not.

publish or circulate or display any book or paper containing such advocacy; or who “justify” the

first

film.

The

“revengeance”

reference was

to

omitted,

the

possibility

and one sentence

of

returned to Israel.” in the films carried

commission of violent acts “with intent to exemplify,

The Ohio Criminal Syndicalism Statute was enacted in 1919. From 1917 to 1920, identical or quite similar laws were adopted by 20 States and two territories.

* * *

constitutionality Syndicalism

Act,

In

1927,

this

of

California’s

Cal.

Penal

Court

Code

§§

sustained

the

Criminal 11400-11402,

“How far is the nigger going to -- yeah.” “This is what we are going to do to the niggers.” “A dirty nigger.” “Send the Jews back to Israel.” “Let’s give them back to the dark garden.” “Save America.”

spread or advocate the propriety of the doctrines of criminal syndicalism”; or who “voluntarily assemble” with a group formed “to teach or advocate the doctrines of criminal syndicalism.” Neither the indictment nor the trial judge’s instructions to the jury in any way refined the statute’s bald definition of the crime in terms of mere advocacy not distinguished from incitement to imminent lawless action. Accordingly, we are here confronted with a

statute which,

by its own

words

and as applied,

purports to punish mere advocacy and to forbid, on pain of criminal punishment, assembly with others merely to advocate the described type of action.*

“Let’s go back to constitutional betterment.” “Bury the niggers.”

“We intend to do our part.” “Give us our state rights.” “Freedom for the whites.” “Nigger will have to fight for every inch he gets from now on.”

‘

Statutes

affecting

the

right

of

assembly, like those touching on freedom of speech, must observe the established distinctions between mere advocacy and incitement to imminent lawless action, for as Chief Justice Hughes wrote in De Jonge v. Oregon, supra, at 364:

Such a statute falls within the condemnation of the

his “opposition was so expressed that its natural and

First and Fourteenth Amendments. The contrary teaching of Whitney v. California, supra, cannot be supported, and that decision is therefore overruled.

intended effect would be to obstruct recruiting.” * * * “If that was

intended and if, in all

the circumstances, that would be its probable effect, it would not be protected by reason of its being part of a general program

Reversed.

and expressions of a conscientious belief.” bid.

general

and

MR. JUSTICE DOUGLAS, concurring.

In the While

I join the opinion of the Court, |

desire to enter a caveat.

The

“clear and present danger”

test was

adumbrated by Mr. Justice Holmes in a case arising during World War I -- a war “declared” by the Congress, not by the Chief Executive. The case was Schenck v. United States, 249 U.S. 47, 52, where the

defendant

was

charged

with

attempts

to

cause

“It is only the present danger of immediate evil or an intent to bring it about that warrants Congress in setting a limit to the expression of opinion where private rights are not concerned. Congress certainly cannot forbid all effort to change the mind of the country.” * * *

insubordination in the military and obstruction of enlistment. The pamphlets that were distributed urged resistance to the draft, denounced conscription, and impugned the motives of those backing the war effort. The First Amendment was tendered as a defense. Mr. Justice Holmes in rejecting that defense said:

Another “The

question

in

every

case

is

whether the words used are used in such circumstances and are of such a nature as to

create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent. question of proximity and degree.” Frohwerk

also

authored

prosecution

vy.

by

and

United States,

Mr.

Justice

punishment

249

Holmes,

for

Those, U.S.

204,

involved

publication

of

because “the circulation of the paper was in quarters

third

breath would

be enough to kindle a

Debs v. United States, 249 U.S. 211, was the of the trilogy of the 1918 Term. Debs was

convicted of speaking in opposition to the war where

“The right of peaceable assembly is a right cognate to those of free speech and free press and is * * *

was Schaefer v. United

then,

were

the

World

War

I cases

that put the gloss of “clear and present danger” on the First Amendment. Whether the war power -- the

greatest leveler of them all -- is adequate to sustain that doctrine is debatable. The dissents in Abrams, Schaefer, and Pierce show how easily “clear and present danger’ is manipulated to crush what Brandeis called “the fundamental right of free men to strive for better conditions through new legislation and new institutions” by argument and discourse (Pierce v. United States, supra, at 273) even in time of war. Though I doubt if the “clear and present danger” test is congenial to the First Amendment in time of a declared war, I am certain it is not reconcilable with the First Amendment in days of

peace. *

equally fundamental.”

instance

States, 251 U.S. 466, in which Mr. Justice Brandeis, joined by Mr. Justice Holmes, dissented. A third was Pierce v. United States, 252 U.S. 239, in which again Mr. Justice Brandeis, joined by Mr. Justice Holmes, dissented.

It is a

articles very critical of the war effort in World War I. Schenck was referred to as a conviction for obstructing security “by words of persuasion.” * * * And the conviction in Frohwerk was sustained where a little flame.” * * *

1919 Term, the Court applied the

Schenck doctrine to affirm the convictions of other dissidents in World War I. Abrams v. United States, 250 U.S. 616, was one instance. Mr. Justice Holmes, with whom Mr. Justice Brandeis concurred, dissented. While adhering to Schenck, he did not think that on the facts a case for overriding the First Amendment had been made out:

*

OK

Mr. Justice Holmes, though never formally abandoning the “clear and present danger” test, moved closer to the First Amendment ideal when he

said in dissent in Gitlow v. New York, 268 U.S. 652, 673: “Every idea is an incitement. It offers itself for belief and if believed it is acted on unless some other belief outweighs it or some failure of energy stifles the movement at its birth. The only difference

forcible

overthrow

of government

as an

abstract

principle is immune from prosecution. * * * But an “active” member, who has a guilty knowledge and intent of the aim to overthrow the Government by

violence, * * * may be prosecuted. *** power to investigate, backed by the

And the powerful

sanction of contempt, includes the power determine which of the two categories fits

between the expression of an opinion and an

particular witness.

incitement in the narrower sense is the speaker’s enthusiasm for the — result. Eloquence may set fire to reason. But whatever may be thought of the redundant discourse before us it had no chance of starting a present conflagration. If in the long run the beliefs expressed in proletarian dictatorship are destined to be accepted by

roams at will through all of the beliefs of the witness, ransacking his conscience and his innermost thoughts.

the dominant

Hand preferred over the “clear and present danger” test. Indeed, in his book, The Bill of Rights 59 (1958), in referring to Holmes’ creation of the “clear and present danger” test, he said, “I cannot help thinking that for once Homer nodded.”

forces of the community,

the

only meaning of free speech is that they should be given their chance and have their

way.” We have never philosophy of that dissent.

been

faithful

to

** *

And

to the

so the investigator

Judge Learned Hand, who wrote for the Court of Appeals in affirming the judgment in Dennis, coined the “not improbable” test, 183 F.2d 201, 214, which this Court adopted and which Judge

the

My own view is quite different. I see no place in the regime of the First Amendment for any

242,

The Court in Herndon v. Lowry, 301 U.S. overturned a conviction for exercising First

Amendment rights to incite insurrection because of lack of evidence of incitement. * * * In Bridges v. California, 314 U.S. 252, 261-263, we approved the “clear and present danger” test in an elaborate dictum that tightened it and confined it to a narrow category. But in Dennis v. United States, 341 U.S. 494, we

opened

wide

the door,

distorting

the “clear

present danger” test beyond recognition.

and

* * *

In that case the prosecution dubbed an agreement to teach the Marxist creed a “conspiracy.” The case was submitted to a jury on a charge that the jury could not convict unless it found that the defendants “intended to overthrow the Government ‘as speedily as circumstances would permit.’” /d., at 509-511. The Court sustained convictions under that charge, construing it to mean a determination of “‘whether the gravity of the “evil,” discounted by its

improbability, justifies such invasion of free speech as is necessary to avoid the danger.””” * * *

came

Out of the “clear and present danger” test other offspring. Advocacy and teaching of

“clear and present danger” test, whether strict and tight as some would make it, or free-wheeling as the Court in Dennis rephrased it. When one reads the opinions closely and sees when and how the “clear and present danger”

test has been applied, great misgivings are aroused. First, the threats were often loud but always puny and made serious only by judges so wedded to the status quo that critical analysis made them nervous. Second, the test was so twisted and perverted in Dennis as to make the trial of those teachers of Marxism an all-out political trial which was part and parcel of the cold war that has eroded substantial parts of the First Amendment.

Action is often a method of expression and within the protection of the First Amendment. Suppose one tears up his own copy of the Constitution in eloquent protest to a decision of this Court. May he be indicted?

celebrate

Suppose one rips his own Bible to shreds to his departure from one “faith” and his

embrace of atheism. May he be indicted? 2

See Feiner v. New

York, 340 U.S.

315, where a speaker was arrested for arousing an audience when the only “clear and present danger” was that the hecklers in the audience would break up the meeting.

Last Term the Court held in United States v. O’Brien, 391 U.S. 367, 382, that a registrant under Selective Service who burned his draft card in protest of the war in Vietnam could be prosecuted. The First

Amendment was tendered as a defense and rejected,

Court between the criminal act of being an “active”

the Court saying:

Communist and the innocent act of being a nominal or inactive Communist mark the difference only between deep and abiding belief and casual or uncertain belief. But I think that all matters of belief are beyond the reach of subpoenas or the probings of investigators. That is why the invasions of privacy

“The indicating the

issuance of certificates registration and eligibility

classification of individuals is a legitimate and substantial administrative aid in the functioning of this system. And legislation to insure the continuing issued certificates serves a substantial purpose in administration.” 391 U.S., at

availability of legitimate and the system’s 377-378.

But O’Brien was not prosecuted for not having his draft card available when asked for by a federal agent. He was indicted, tried, and convicted

made by investigating committees were notoriously unconstitutional. That is the deep-seated fault in the infamous loyalty-security hearings which, since 1947 when President Truman launched them, have processed 20,000,000 men and women. Those hearings were primarily concerned with one’s thoughts, ideas, beliefs, and convictions. They were the most blatant violations of the First Amendment we have ever known.

for burning the card. And this Court’s affirmance of that conviction was not, with all respect, consistent with the First Amendment.

posture

The act of praying often involves body and movement as well as utterances. It is

nonetheless protected by the Free Exercise Clause. Picketing, as we have said on numerous occasions, is “free speech plus.” * * * That means that it can be regulated when it comes to the “plus” or “action” side

of the protest. It can be regulated as to the number of pickets and the place and hours * * *, because traffic

and

other

community

problems

would

otherwise

The line between what is permissible and not subject to control and what may be made impermissible and subject to regulation is the line between ideas and overt acts.

The example usually given by those who would punish speech is the case of one who falsely shouts fire in a crowded theatre. This is, however, a classic case where speech is brigaded with action. * * * They are indeed

inseparable and a prosecution can be launched for the overt acts actually caused. Apart from rare instances of that kind, speech is, I think, immune from

suffer. are

prosecution. Certainly there is no constitutional line

implicated in the symbolic protest of the Vietnam

between advocacy of abstract ideas as in Yates and advocacy of political action as in Scales. The quality of advocacy turns on the depth of the conviction; and government has no power to invade that sanctuary of

But

none

of

these

considerations

war in the burning of a draft card. One’s beliefs have long sanctuaries which government Barenblatt is one example of the sanctuary can be violated. The

been thought to be could not invade. ease with which that lines drawn by the

belief and conscience.

Free speech also involves the issue of speech that some find offensive or disgusting, such as pornography. It is in this area that the Internet is finding itself the subject of many attempts to regulate speech, especially in the area of child pornography. 18 U.S.C. § 1460. Possession with intent to sell, and sale, of obscene matter on Federal property. (a) Whoever, either— (1) in the special maritime and territorial jurisdiction of the United States, or on any land or building owned by, leased to, or otherwise used by or under the control of the Government of the United States; or

(2) in the Indian country as defined in section 1151 of this title,

knowingly sells or possesses with intent to sell an obscene visual depiction shall be punished by a fine in accordance with the provisions of this title or imprisoned for not more than 2 years, or both.

(b) For the purposes of this section, the term “visual depiction” includes undeveloped film and videotape but does not include mere words.

through

Ashcroft v. The Free Speech Coalition

a separate

statute.

* **

Like

the

law

in

No. 00-795

Ferber, the CPPA seeks to reach beyond obscenity, and it makes no attempt to conform to the Miller

SUPREME COURT OF THE UNITED STATES

standard. For instance, the statute would reach visual depictions, such as movies, even if they have

redeeming social value. 535 U.S. 234, 122 S. Ct. 1389, 152 L. Ed. 2d 403 The principal question to be resolved, then, is whether the CPPA is constitutional where it proscribes a significant universe of speech that is neither obscene under Miller nor child pornography under Ferber.

April 16, 2002 whether

KENNEDY, J.: We consider in this case the Child Pornography Prevention Act of

1996 (CPPA), 18 U.S.C. § 2251 et seq., abridges the freedom of speech. The CPPA extends the federal prohibition against child pornography to sexually

I

explicit images that appear to depict minors but were

Before 1996, Congress defined child pornography as the type of depictions at issue in Ferber, images made using actual minors. * * * The CPPA retains that prohibition at 18 U.S.C. § 2256(8)(A) and adds three other prohibited categories of speech, of which the first, § 2256(8)(B), and the third, § 2256(8)(D), are at issue in this case. Section 2256(8)(B) prohibits “any visual depiction, including any photograph, film, video, picture, or computer or computer-generated image or picture” that “is, or appears to be, of a minor engaging in sexually explicit conduct.” The prohibition on “any visual depiction” does not depend at all on how the

produced without using any real children. The statute prohibits, in specific circumstances, possessing or distributing these images, which may be created by using adults who look like minors or by using computer imaging. The new technology, according to

Congress, makes it possible to create realistic images of children who do not exist. * * * By prohibiting child pornography that does not depict an actual child, the statute goes beyond New York v. Ferber, 458 U.S. 747, 73 L. Ed. 2d

1113, 102 S. Ct. 3348 (1982), which distinguished child pornography from other sexually explicit

image is produced. The section captures a range of depictions, sometimes called “virtual child

speech because of the State’s interest in protecting the children exploited by the production process. *** As a general rule, pornography can be banned only if obscene, but under Ferber, pornography showing minors can be proscribed whether or not the

pornography,” which images, as well as

include computer-generated images produced by more

traditional means. For instance, the literal terms of

images are obscene under the definition set forth in

the statute embrace a Renaissance painting depicting a scene from classical mythology, a “picture” that

Miller v. California, 413 U.S.

“appears

to

93 S. Ct. 2607 (1973). Ferber recognized that “the Miller standard, like all general definitions of what

explicit

conduct.”

may

if a jury believes an actor “appears to be” a minor engaging in “actual or simulated . sexual intercourse.” § 2256(2).

be

banned

as

obscene,

15, 37 L. Ed. 2d 419,

does

not

reflect

Hollywood

the

State’s particular and more compelling interest in prosecuting those who promote the — sexual exploitation of children.” * * *

be,

of

movies,

a

minor

The

engaging

statute

also

in

sexually

prohibits

filmed without any child actors,

These images do not involve, let alone harm,

While we have not had occasion to consider the question, we may assume that the apparent age of

decided the materials threaten children in other, less

persons

to

direct, ways. Pedophiles might use the materials to

standards.

encourage children to participate in sexual activity. “{A] child who is reluctant to engage in sexual

engaged

in sexual

conduct

is relevant

whether a depiction offends community

any children in the production process; but Congress

Pictures of young children engaged in certain acts might be obscene where similar depictions of adults,

activity with an adult, or to pose for sexually explicit

or perhaps even older adolescents, would not. The CPPA,

obscene;

however,

Congress

is not directed

has proscribed

at speech

that

those

materials

photographs, can sometimes be convinced by viewing depictions of other children ‘having fun’ participating in such activity.” * * * Furthermore,

is

11

pedophiles might “whet their own sexual appetites”

granted summary judgment to the Government. The

with the pornographic

court dismissed the overbreadth claim because it was “highly unlikely” that any “adaptations of sexual

images, “thereby increasing

the creation and distribution of child pornography and the sexual abuse and exploitation of actual children.” * * * Under these rationales, harm flows from the content of the images, not from the means of

their production. another problem images: prosecute *** As found, it particular

To

works

In addition, Congress identified created by computer-generated

that

defendants

possessing

‘Romeo

and

Juliet,’

will

be

treated

as

The Court of Appeals for the Ninth Circuit reversed. *** The court reasoned that the Government could not prohibit speech because of its tendency to persuade viewers to commit illegal acts. The court held the CPPA to be substantially overbroad because it bans materials that are neither obscene nor produced by the exploitation of real

Their existence can make it harder to pornographers who do use real minors. imaging technology improves, Congress becomes more difficult to prove that a picture was produced using actual children.

ensure

like

‘criminal contraband.’” * * *

children as in New York v. Ferber. * * *

child

pomography using real minors cannot evade prosecution, Congress extended the ban to virtual child pornography.

While the Ninth Circuit found the CPPA invalid on its face, four other Courts of Appeals have sustained it. * * * We granted certiorari. * * *

* OK OK

iu Respondents do challenge § 2256(8)(D). Like the text of the “appears to be” provision, the

sweep

of this

provision

is quite

broad.

The

Section

First

Amendment

commands,

“Congress shall make no law . . . abridging the freedom of speech.” The government may violate this mandate in many ways, * * * but a law imposing

2256(8)(D) defines child pornography to include any sexually explicit image that was “advertised, promoted, presented, described, or distributed in such a manner that conveys the impression” it depicts “a minor engaging in sexually explicit conduct.” One

criminal

penalties on protected

speech

is a stark

example of speech suppression. The CPPA’s penalties are indeed severe. A first offender may be imprisoned for 15 years. § 2252A(b)(1). A repeat

Committee Report identified the provision as directed

offender faces a prison sentence of not less than 5

at sexually explicit images pandered as child pornography. * * * The statute is not so limited in its reach, however, as it punishes even those possessors who took no part in pandering. Once a work has been

years and not more than 30 years in prison. Ibid. While even minor punishments can chill protected speech, * * * this case provides a textbook example of why we permit facial challenges to statutes that burden expression. With these severe penalties in force, few legitimate movie producers or book

described as child pornography, the taint remains on the speech in the hands of subsequent possessors, making possession unlawful even though the content otherwise would not be objectionable.

publishers, or few other speakers in any capacity, would risk distributing images in or near the uncertain reach of this law. The Constitution gives

Fearing that the CPPA threatened the activities of its members, respondent Free Speech Coalition and others challenged the statute in the United States District Court for the Northern District of California. The Coalition, a California trade association for the adult-entertainment industry, alleged that its members did not use minors in their sexually explicit works, but they believed some of these materials might fall within the CPPA’s expanded definition of child pornography. The other

significant protection from overbroad laws that chill speech within the First Amendment’s vast and privileged sphere. Under this principle, the CPPA is unconstitutional on its face if it prohibits a substantial amount of protected expression. * * * The sexual abuse of a child is a most serious crime and an act repugnant to the moral instincts of a

decent people. In its legislative findings, Congress

respondents are Bold Type, Inc., the publisher of a book advocating the nudist lifestyle; Jim Gingerich, a

recognized that there are subcultures of persons who harbor illicit desires for children and commit criminal

painter of nudes; and Ron Raffaelli, a photographer specializing in erotic images. Respondents alleged that the “appears to be” and “conveys the impression” provisions are overbroad and vague, chilling them from producing works protected by the

acts to gratify the impulses. * * * Congress also found that surrounding the serious offenders are those who flirt with these impulses and trade pictures and written accounts of sexual activity with young children.

First Amendment.

The District Court disagreed and

12

Congress may pass valid laws to protect children from abuse, and it has. * * * The prospect of crime, however, by itself does not justify laws suppressing protected speech. See Kingsley Int'l Pictures Corp. v. Regents of Univ. of N. Y., 360 US.

art and literature throughout the ages. Under the CPPA, images are prohibited so long as the persons appear to be under 18 years of age. * * * This is higher than the legal age for marriage in many States, as well as the age at which persons may consent to sexual relations. * * * It is, of course, undeniable that some youths engage in sexual activity before the legal age, either on their own inclination or because they are victims of sexual abuse.

684, 689, 3 L. Ed. 2d 1512, 79 S. Ct. 1362 (1959) (“Among

applied

free men,

to

the deterrents ordinarily to be

prevent

crime

are

education

and

punishment for violations of the law, not abridgment

of the rights of free speech” * * *). It is also well established

that

speech

because it concerns sensibilities. * * *

may

not

subjects

be

prohibited

offending

Both themes -- teenage sexual activity and

our

the

sexual

abuse

of

children

--

have

inspired

countless literary works. William Shakespeare created the most famous pair of teenage lovers, one of whom is just 13 years of age. See Romeo and Juliet, act I, sc. 2, 1. 9 (“She hath not seen the change of fourteen years”). In the drama, Shakespeare portrays the relationship as something splendid and innocent, but not juvenile. The work has inspired no less than 40 motion pictures, some of which suggest

As a general principle, the First Amendment bars the government from dictating what we see or read or speak or hear. The freedom of speech has its limits; it does not embrace certain categories of speech, including defamation, incitement, obscenity, and pornography produced with real children. * * *

While these categories may be prohibited without violating the First Amendment, none of them includes the speech prohibited by the CPPA. In his dissent from the opinion of the Court of Appeals,

that the teenagers consummated

Judge Ferguson recognized this to be the law and proposed that virtual child pornography should be

approach, that fact alone would not conclusion that the work was obscene.

** * Shakespeare explicit

scenes

for

may the

not

their relationship.

have

written

Elizabethean

sexually

audience,

but

were modern directors to adopt a less conventional compel

the

regarded as an additional category of unprotected speech. * * * It would be necessary for us to take this step to uphold the statute.

Contemporary movies pursue — similar themes. Last year’s Academy Awards featured the movie, Traffic, which was nominated for Best Picture. * * * The film portrays a teenager, identified as a 16-year-old, who becomes addicted to drugs. The viewer sees the degradation of her addiction, which in the end leads her to a filthy room to trade sex for drugs. The year before, American Beauty won the Academy Award for Best Picture. * * * In the

As we have noted, the CPPA is much more than a supplement to the existing federal prohibition on obscenity. Under Miller v. California, 413 U.S.

15, 37 L. Ed. 2d 419, 93 S. Ct. 2607 (1973), the Government

must prove that the work,

taken as a

whole, appeals to the prurient interest, is patently offensive in light of community standards, and lacks

course of the movie, a teenage girl engages in sexual relations with her teenage boyfriend, and another yields herself to the gratification of a middle-aged man. The film also contains a scene where, although the movie audience understands the act is not taking place, one character believes he is watching a teenage boy performing a sexual act on an older man.

serious literary, artistic, political, or scientific value. *** The CPPA, however, extends to images that appear to depict a minor engaging in sexually explicit

activity without regard to the Miller requirements. The materials need not appeal to the prurient interest. Any depiction of sexually explicit activity, no matter how it is presented, is proscribed. The CPPA applies to a picture in a psychology manual, as well as a movie depicting the horrors of sexual abuse. It is not necessary, moreover, that the image be patently offensive. Pictures of what appear to be 17-year-olds engaging in sexually explicit activity do not in every

Our society, like other cultures, has empathy and enduring fascination with the lives and destinies of the young. Art and literature express the vital interest we all have in the formative years we ourselves once knew, when wounds can be so

case contravene community standards.

grievous, disappointment so profound, and mistaken choices so tragic, but when moral acts and self-

The CPPA prohibits speech despite its serious literary, artistic, political, or scientific value. The statute proscribes the visual depiction of an idea -- that of teenagers engaging in sexual activity -- that is a fact of modern society and has been a theme in

fulfillment are still in reach. Whether we mention violate the CPPA, they within the wide sweep of the statute’s these films, or hundreds of others of explore those subjects, contain a

13

or not the films explore themes prohibitions. If lesser note that single graphic

depiction

of sexual

activity within the statutory

definition, the possessor of the film would be subject to severe punishment without inquiry into the work’s redeeming value. This is inconsistent with an essential First Amendment rule: The artistic merit of a work does not depend on the presence of a single explicit scene. *** Under Miller, the First Amendment requires that redeeming value be judged by considering the work as a whole. Where the scene is part of the narrative, the work itself does not for this reason become obscene, even though the scene in

Later,

have noted,

read

obscenity,

to

prohibit

the CPPA

because

it

cannot

be

lacks

the

Government

seeks

to

address

this

produced

by

using

** * It did not suggest that, other

governmental

interests

actual instances of child abuse, * * * the causal link is contingent and indirect. The harm does not necessarily follow from the speech, but depends upon some unquantified potential for subsequent criminal

acts. The Government says these indirect are sufficient because, as Ferber acknowledged, pornography rarely can be valuable speech. This argument, however, suffers from two

sexual exploitation.” * * *

on

103,

the Government asserts that the images can lead to

scope of legislation aimed at protecting children from prohibition

U.S.

In contrast to the speech in Ferber, speech that itself is the record of sexual abuse, the CPPA prohibits speech that records no crime and creates no victims by its production. Virtual child pornography is not “intrinsically related” to the sexual abuse of children, as were the materials in Ferber. * * * While

interest in stamping it out without regard to any judgment about its content. * * * The production of the work, not its content, was the target of the statute. The fact that a work contained serious literary, artistic, or other value did not excuse the harm it caused to its child participants. It was simply “unrealistic to equate a community’s toleration for sexually oriented materials with the permissible

a_

pornography

absent this concern, would suffice. * * *

whether it depicts works of value. * * * Where the images are themselves the product of child sexual abuse, Ferber recognized that the State had an

upheld

of

child pornography.”

deficiency by arguing that speech prohibited by the CPPA is virtually indistinguishable from child pornography, which may be banned without regard to

Ferber

495

children. “Given the importance of the State’s interest in protecting the victims of child pornography,” the State was justified in “attempting to stamp out this vice at all levels in the distribution chain.” * * * Osborne also noted the State’s interest in preventing child pornography from being used as an aid in the solicitation of minors. * * * The Court, however, anchored its holding in the concern for the participants, those whom it called the “victims of

required link between its prohibitions and the affront to community standards prohibited by the definition of obscenity. The

v. Ohio,

ruled that these same interests justified a ban on the

possession

isolation might be offensive. * * * For this reason, and the others we

in Osborne

109 L. Ed. 2d 98, 110 S. Ct. 1691 (1990), the Court

harms child * * * flaws.

First, Ferber’s judgment about child pornography was based upon how it was made, not on what it

the

distribution and sale of child pornography, as well as

communicated.

its production, because these acts were “intrinsically

speech is neither obscene nor the product of sexual

The case reaffirmed that where

the

related” to the sexual abuse of children in two ways. * * * First, as a permanent record of a child’s abuse, the continued circulation itself would harm the child who had participated. Like a defamatory statement, each new publication of the speech would cause new injury to the child’s reputation and emotional wellbeing. ** * Second, because the traffic in child pornography was an economic motive for its

abuse, it does not fall outside the protection of the First Amendment. * * * The second flaw in the Government’s position is that Ferber did not hold that child pomography is by definition without value. On the contrary, the Court recognized some works in this category might have significant value, * * * but

production, the State had an interest in closing the distribution network. “The most expeditious if not the only practical method of law enforcement may be to dry up the market for this material by imposing

relied on virtual images -- the very images prohibited by the CPPA -- as an alternative and permissible means of expression: “If it were necessary for literary

severe criminal penalties on persons selling, advertising, or otherwise promoting the product.”

perhaps looked younger could be utilized. Simulation outside of the prohibition of the statute could provide

* * * Under either rationale, the speech had what the Court in effect held was a proximate link to the crime from which it came.

another

or artistic value, a person over the statutory age who

alternative.”

***

Ferber,

then,

not

only

referred to the distinction between actual and virtual child pornography, it relied on it as a reason

14

supporting its holding. Ferber provides no support for a statute that eliminates the distinction and makes the alternative mode criminal as well.

seeks to control thought or to justify its laws for that impermissible end. The right to think is the beginning

Ul The CPPA, for reasons we have explored, is inconsistent with Miller and finds no support in Ferber. The Government seeks to justify its

of freedom,

and speech

government thought.

because

must

speech

be protected

is

the

from

the

beginning

of

prohibitions in other ways. It argues that the CPPA is

To preserve these freedoms, and to protect speech for its own sake, the Court’s First Amendment cases draw vital distinctions between words and deeds, between ideas and conduct. *** The

necessary because pedophiles may use virtual child pornography to seduce children. There are many

government may not increases the chance

things

committed “at some indefinite future time.” * * * The government may suppress speech for advocating the use of force or a violation of law only if “such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action.” * * * There is here no attempt, incitement, solicitation, or conspiracy. The Government has shown no more than a remote connection between speech that might encourage

innocent

in

themselves,

however,

such

cartoons, video games, and candy, that might be for immoral purposes, yet we would not expect to be prohibited because they can be misused. Government, of course, may punish adults

as

used those The who

provide unsuitable materials to children, * * * and it may enforce criminal penalties for unlawful solicitation. The precedents establish, however, that

speech within the rights of adults to hear may not be silenced completely in an attempt to shield children

thoughts or impulses and any resulting child abuse. Without a significantly stronger, more direct connection, the Government may not prohibit speech on the ground that it may encourage pedophiles to engage in illegal conduct.

from it. * * * In Butler v. Michigan, 352 U.S. 380,

381, 1 L. Ed. 2d 412, 77 S. Ct. 524 (1957), the Court invalidated a statute prohibiting distribution of an indecent publication because of its tendency to “incite minors to violent or depraved or immoral

acts.” A unanimous Court agreed upon the important First Amendment principle that the State could not

The

to protect them from those who would commit other crimes. The principle, however, remains the same: The Government cannot ban speech fit for adults simply because it may fall into the hands of children. The evil in question depends upon the actor’s unlawful conduct, conduct defined as criminal quite apart from any link to the speech in question. This establishes that the speech ban is not narrowly drawn. The objective is to prohibit illegal conduct, but this restriction goes well beyond that interest by restricting the speech available to law-abiding adults.

somewhat

the

of

controlling

that

its

implausible.

If

virtual

images

were

In the case of the material covered by Ferber, the creation of the speech is itself the crime of child abuse; the prohibition deters the crime by removing the profit motive. * * * Even where there is

submits further that virtual the appetites of pedophiles engage in illegal conduct. sustain the provision in

desirability

argues

identical to illegal child pornography, the illegal images would be driven from the market by the indistinguishable substitutes. Few pornographers would risk prosecution by abusing real children if fictional, computerized images would suffice.

an underlying crime, however, the Court has not allowed the suppression of speech in all cases. * * * We need not consider where to strike the balance in

question. The mere tendency of speech to encourage unlawful acts is not a sufficient reason for banning it. The government “cannot constitutionally premise

on

next

produced using real children necessitates a prohibition on virtual images as well. Virtual images, the Government contends, are indistinguishable from real ones; they are part of the same market and are often exchanged. In this way, it is said, virtual images promote the trafficking in works produced through the exploitation of real children. The hypothesis is

Here, the Government wants to keep speech from children not to protect them from its content but

legislation

Government

objective of eliminating the market for pornography

“reduce the adult population . . . to reading only what is fit for children.” * * *

The Government child pornography whets and encourages them to This rationale cannot

prohibit speech because it an unlawful act will be

this case, because here, there is no underlying crime at all. Even if the Government’s market deterrence theory were persuasive in some contexts, it would not justify this statute.

a

person’s private thoughts.” * * * First Amendment freedoms are most in danger when the government

15

Finally, the Government says that the possibility of producing images by using computer

We disagree with this view. The CPPA prohibits sexually explicit materials that “convey the impression” they depict minors. While that phrase may sound like the “appears to be” prohibition in § 2256(8)(B), it requires little judgment about the content of the image. Under § 2256(8)(D), the work must be sexually explicit, but otherwise the content is irrelevant. Even if a film contains no sexually explicit scenes involving minors, it could be treated as child pornography if the title and trailers convey the

imaging makes it very difficult for it to prosecute those who produce pornography by using real children. Experts, we are told, may have difficulty in saying whether the pictures were made by using real children or by using computer imaging. The necessary solution, the argument runs, is to prohibit both kinds of images. The argument, in essence, is that protected speech may be banned as a means to

ban unprotected speech. This analysis turns the First

impression that the scenes would be found in the

Amendment upside down.

speech

The Government may not suppress lawful as the means to suppress unlawful speech.

Protected merely

movie. The determination turns on how the speech is presented, not on what is depicted. While the legislative findings address at length the problems

speech because

does it

not

become

resembles

the

unprotected latter.

posed by materials that look like child pornography, they are silent on the evils posed by images simply

The

Constitution requires the reverse. “The possible harm

pandered that way.

to society in permitting some unprotected speech to

go unpunished is outweighed by the possibility that

The

Government

does

not offer a serious

protected speech of others may be muted... .” * * *

defense of this provision, and the other arguments it

The overbreadth doctrine prohibits the Government from banning unprotected speech if a substantial

makes in support of the CPPA do not bear on § 2256(8)(D). The materials, for instance, are not likely

amount of protected speech is prohibited or chilled in the process.

to be confused for child pornography in a criminal trial. The Court has recognized that pandering may be relevant, as an evidentiary matter, to the question whether particular materials are obscene. * * * Where

* KOR

a defendant engages in the “commercial exploitation In sum, § 2256(8)(B) covers materials beyond the categories recognized in Ferber and Miller, and the reasons the Government offers in support of limiting the freedom of speech have no

of erotica solely for the sake of their prurient appeal,” id. at 466, the context he or she creates may itself be relevant to the evaluation of the materials.

justification in our precedents or in the law of the

Section 2256(8)(D), however, prohibits a substantial amount of speech that falls outside Ginzburg’s rationale. Materials falling within the proscription are tainted and unlawful in the hands of all who receive it, though they bear no responsibility

First Amendment. The provision abridges the freedom to engage in a substantial amount of lawful speech. For this reason, it is overbroad and unconstitutional.

for

IV

how

it was

marketed,

sold,

or

described.

The

statute, furthermore, does not require that the context be part of an effort at “commercial exploitation.”

Respondents challenge § 2256(8)(D) as well. This provision bans depictions of sexually explicit conduct that are “advertised, promoted,

***

As

a consequence,

the CPPA

does

more

than

that conveys the impression that the material is or contains a visual depiction of a minor engaging in sexually explicit conduct.” The parties treat the

prohibit pandering. It prohibits possession of materia! described, or pandered, as child pornography by someone earlier in the distribution chain. The provision prohibits a sexually explicit film containing no youthful actors, just because it is placed in a box suggesting a prohibited movie. Possession is a crime

section as nearly identical to the provision prohibiting materials that appear to be child pornography. In the

even when the possessor knows the movie was mislabeled. The First Amendment requires a more

Government’s view, the difference between the two is that “the ‘conveys the impression’ provision requires the jury to assess the material at issue in

precise restriction. For this reason, § 2256(8)(D) is substantially overbroad and in violation of the First Amendment.

presented, described, or distributed in such a manner

light of the manner in which it is promoted.” * * * The Government’s assumption, however,

is that the

determination would still depend principally upon the content of the prohibited work.

16

Vv

contention that the provisions are unconstitutional because of vague statutory language.

For the reasons we have set forth, prohibitions of §§ 2256(8)(B) and 2256(8)(D)

the are

overbroad and unconstitutional. Having reached this

The judgment

of the Court

of Appeals

is

affirmed.

conclusion, we need not address respondents’ further It is so ordered.

A recent update to the line of cases dealing with regulation of speech on the internet is United States v Williams Section 2252A(a)(3)(B) of Title 18, United States

UNITED STATES v. WILLIAMS

Code, criminalizes, in certain specified certiorari to the united states court of appeals for the eleventh circuit Argued October 30, 2007--Decided May 19, 2008 After this Court found facially overbroad a federal statutory provision criminalizing the possession and distribution of material pandered as child

circumstances, the pandering or solicitation of child pornography. This case presents the question whether that statute is overbroad under the First Amendment or impermissibly vague under the Due Process Clause of the Fifth Amendment. 1

pornography, regardless of whether it actually was

A

that, Ashcroft v. Free Speech Coalition, 535 U.S.

234, Congress passed the pandering and solicitation provision at issue, 18 U.S. C. §2252A(a)(3)(B). Respondent Williams pleaded guilty to this offense

and others, but reserved the right to challenge his pandering conviction's constitutionality. The District

Court rejected his challenge, but the Eleventh Circuit reversed, finding the statute both overbroad under the First Amendment and impermissibly vague under the Due Process Clause. 28K

444 F. 3d 1286, reversed. Scalia, J., delivered the opinion of the Court, in which Roberts, C. J., and Stevens, Kennedy,

Thomas,

Breyer, and Alito, JJ., joined. Stevens, J., filed a concurring opinion, in which Breyer, J., joined. Souter, J., filed a dissenting opinion, in which Ginsburg, J., joined.

UNITED STATES, PETITIONER v. MICHAEL WILLIAMS on writ of certiorari to the united states court of

appeals for the eleventh circuit

[May 19, 2008] Justice Scalia delivered the opinion of the Court.

We have long held that obscene speech--sexually explicit material that violates fundamental notions of

decency--is not protected by the First Amendment. See Roth v. United States, 354 U.S. 476, 484-485 (1957). But to protect explicit material that has social value, we have limited the scope of the obscenity exception, and have overturned convictions for the distribution of sexually graphic but nonobscene material. See Miller v. California, 413 U.S. 15, 2324 (1973); see also, e.g., Jenkins v. Georgia, 418 U.S. 153, 161 (1974). Over the last 25 years, we have confronted a related and overlapping category of proscribable speech: child pornography. See Ashcroft v. Free Speech Coalition, 535 U.S. 234 (2002); Osborne v. Ohio, 495 U.S. 103 (1990); New York v. Ferber, 458 U.S. 747 (1982). This consists of sexually explicit visual portrayals that feature children. We have held that a statute which proscribes the distribution of all child pornography, even material that does not qualify as obscenity, does not on its face violate the First Amendment. See id., at 751-753, 756-764. Moreover, we have held that the government may criminalize the possession of child pornography, even though it may not criminalize the mere possession of

obscene material involving adults. Compare Osborne, supra, at 111, with Stanley v. Georgia, 394 U.S. 557

568 (1969).

The broad authority to proscribe child

a visual depiction of an actual minor engaging in

pornography is not, however, unlimited. Four Terms ago, we held facially overbroad two provisions of the federal Child Pornography Protection Act of 1996 (CPPA). Free Speech Coalition, 535 U.S., at 258. The first of these banned the possession and distribution of " ‘any visual depiction' " that " ‘is, or appears to be, of a minor engaging in sexually explicit conduct,' " even if it contained only youthfullooking adult actors or virtual images of children

sexually explicit "(ii) conduct,

"shall be punished as provided in subsection (b)." §2252A(a)(3)(B) (2000 ed., Supp. V). Section 2256(2)(A) defines "sexually explicit conduct" as

generated by a computer. Jd., at 239-241 (quoting 18

"actual or simulated--

U. S. C. §2256(8)(B)). This was invalid, we

explained, because the child-protection rationale for

sexual intercourse, including genital-genital, oralgenital, "(i) anal-genital, or oral-anal, whether

speech restriction does not apply to materials produced without children. See 535 U. S., at 249-251,

between persons of the same or opposite sex;

254. The second provision at issue in Free Speech Coalition criminalized the possession and distribution

bestiality; "(ii)

of material that had been pandered as child pornography, regardless of whether it actually was

masturbation;

"(iii)

that. See id., at 257 (citing 18 U.S. C. §2256(8)(D)). sadistic or masochistic abuse; or "(iv)

A person could thus face prosecution for possessing unobjectionable material that someone else had

pandered. 535 U. S., at 258. We held that this

lascivious exhibition of the genitals or pubic area of

prohibition, which did "more than prohibit pandering," was also facially overbroad. Ibid.

any "(v) person." Violation of §2252A(a)(3)(B) incurs a minimum sentence of 5 years imprisonment and a maximum of

After our decision in Free Speech Coalition, Congress went back to the drawing board and

20 years. 18 U.S. C. §2252A(b)(1).

produced legislation with the unlikely title of the Prosecutorial Remedies and Other Tools to end the

The Act's express findings indicate that Congress was concermed that limiting the child-pornography prohibition to material that could be proved to feature actual children, as our decision in Free Speech Coalition required, would enable many child pornographers to evade conviction. See §501(9), (10), 117 Stat. 677. The emergence of new technology and the repeated retransmission of picture files over the Internet could make it nearly impossible to prove that a particular image was produced using real children--even though "[t]here is no substantial evidence that any of the child pornography images being trafficked today were made other than by the abuse of real children," virtual imaging being prohibitively expensive.

Exploitation of Children Today Act of 2003, 117 Stat. 650. We shall refer to it as the Act. Section 503 of the Act amended 18 U. S. C. §2252A to add a new

pandering and solicitation provision, relevant portions of which now read as follows: Any person who--

knowingly--

"(a)

"(3)

advertises, promotes, presents, distributes, or solicits

B

through the "(B) mails, or in interstate or foreign commerce by any means, including by computer, any

The following facts appear in the opinion of the Eleventh Circuit, 444 F. 3d 1286, 1288 (2006). On April 26, 2004, respondent Michael Williams, using a sexually explicit screen name, signed in to a public Internet chat room. A Secret Service agent had also

material or purported material in a manner that reflects the belief, or that is intended to cause another to believe, that the material or purported material is, or contains--

signed in to the chat room under the moniker "Lisa n Miami." The agent noticed that Williams had posted

an obscene visual depiction of a minor engaging in sexually explicit "(i) conduct; or

a message that read: "Dad of toddler has 'good' pics of her an [sic] me for swap of your toddler pics, or live cam." The agent struck up a conversation with

18

Williams, leading to an electronic exchange of

relative to the statute's plainly legitimate sweep. See Board of Trustees of State Univ. of N. Y. v. Fox, 492

nonpornographic pictures of children. (The agent's picture was in fact a doctored photograph of an adult.) Soon thereafter, Williams messaged that he had photographs of men molesting his 4-year-old daughter. Suspicious that "Lisa n Miami" was a lawenforcement agent, before proceeding further Williams demanded that the agent produce additional

U.S. 469, 485 (1989); Broadrick v. Oklahoma, 413 U. S. 601, 615 (1973). Invalidation for overbreadth is "' "strong medicine" '" that is not to be "casually employed." Los Angeles Police Dept. v. United Reporting Publishing Corp., 528 U.S. 32, 39 (1999) (quoting Ferber, 458 U. S., at 769).

pictures. When he did not, Williams posted the following public message in the chat room: "HERE ROOM; I CAN PUT UPLINK CUZ IM FOR REAL-

The first step in overbreadth analysis is to construe the challenged statute; it is impossible to determine whether a statute reaches too far without first knowing what the statute covers. Generally speaking, §2252A(a)(3)(B) prohibits offers to provide and requests to obtain child pornography. The statute does not require the actual existence of child pornography. In this respect, it differs from the statutes in Ferber, Osborne, and Free Speech Coalition, which prohibited the possession or

-SHE CANT." Appended to this declaration was a

hyperlink that, when clicked, led to seven pictures of actual children, aged approximately 5 to 15, engaging in sexually explicit conduct and displaying their genitals. The Secret Service then obtained a search warrant for Williams's home, where agents seized two hard drives containing at least 22 images of real children engaged in sexually explicit conduct, some of it sadomasochistic.

distribution of child pornography. Rather than targeting the underlying material, this statute bans the

collateral speech that introduces such material into

Williams was charged with one count of pandering child pornography under §2252A(a)(3)(B) and one count of possessing child pornography under §2252A(a)(5)(B). He pleaded guilty to both counts

the child-pornography distribution network. Thus, an Internet user who solicits child pornography from an undercover agent violates the statute, even if the officer possesses no child pornography. Likewise, a person who advertises virtual child pornography as

but reserved the right to challenge the constitutionality of the pandering conviction. The District Court rejected his challenge, and sentenced him to concurrent 60-month sentences on the two

depicting actual children also falls within the reach of the statute.

counts. No. 04-20299-CR-MIDDLEBROOKS (SD The statute's definition of the material or

Fla., Aug. 20, 2004), App. B to Pet. for Cert. 46a69a. The United States Court of Appeals for the Eleventh Circuit reversed the pandering conviction, holding that the statute was both overbroad and impermissibly vague. 444 F. 3d, at 1308-1309.

purported material that may not be pandered or solicited precisely tracks the material held constitutionally proscribable in Ferber and Miller: obscene material depicting (actual or virtual) children engaged in sexually explicit conduct, and any other material depicting actual children engaged in sexually explicit conduct. See Free Speech Coalition, 535 U. S., at 245-246 (stating that the First Amendment does not protect obscenity or pornography produced with actual children); id., at 256 (holding invalid the challenged provision of the CPPA because it "cover[ed] materials beyond the categories recognized in Ferber and Miller").

Il A According to our First Amendment overbreadth doctrine, a statute is facially invalid if it prohibits a substantial amount of protected speech. The doctrine seeks to strike a balance between competing social costs. Virginia v. Hicks, 539 U.S. 113, 119-120 (2003). On the one hand, the threat of enforcement of an overbroad law deters people from engaging in constitutionally protected speech, inhibiting the free exchange of ideas. On the other hand, invalidating a law that in some of its applications is perfectly constitutional--particularly a law directed at conduct

First, the statute includes a scienter requirement. The first word of §2252A(a)(3)--"knowingly"-applies to both of the immediately following

so antisocial that it has been made criminal--has

subdivisions, both the previously existing

A number of features of the statute are important to our analysis:

obvious harmful effects. In order to maintain an

§2252A(a)(3)(A)* and the new §2252A(a)

appropriate balance, we have vigorously enforced the

(3)(B) at issue here. We think that the best reading of the term in context is that it applies to every element of the two provisions. This is not a case where

requirement that a statute's overbreadth be substantial, not only in an absolute sense, but also

19

grammar or structure enables the challenged

Pornography on the [Internet 9. To run afoul of the

provision or some of its parts to be read apart from the "knowingly" requirement. Here "knowingly" introduces the challenged provision itself, making clear that it applies to that provision in its entirety;

statute, the speech need only accompany or seek to induce the transfer of child pornography from one person to another. Third, the phrase "in a manner that reflects the

and there is no grammatical barrier to reading it that way.

belief" includes both subjective and objective components. "[A] manner that reflects the belief" is quite different from "a manner that would give one cause to believe." The first formulation suggests that

Second, the statute's string of operative verbs-"advertises, promotes, presents, distributes, or solicits"--is reasonably read to have a transactional connotation. That is to say, the statute penalizes

the defendant must actually have held the subjective "belief" that the material or purported material was

speech that accompanies or seeks to induce a transfer

child pornography. Thus, a misdescription that leads the listener to believe the defendant is offering child pornography, when the defendant in fact does not believe the material is child pornography, does not violate this prong of the statute. (It may, however, violate the "manner ... that is intended to cause another to believe” prong if the misdescription is

of child pornography--via reproduction or physical

delivery--from one person to another. For three of the verbs, this is obvious: advertising, distributing, and

soliciting are steps taken in the course of an actual or proposed transfer of a product, typically but not exclusively in a commercial market. When taken in isolation, the two remaining verbs--"promotes" and

intentional.) There is also an objective component to

"presents"--are susceptible of multiple and wideranging meanings. In context, however, those meanings are narrowed by the commonsense canon

Searle & Co., 367 U.S. 303, 307 (1961); 2A N.

the phrase "manner that reflects the belief." The statement or action must objectively manifest a belief that the material is child pornography; a mere belief, without an accompanying statement or action that would lead a reasonable person to understand that the defendant holds that belief, is insufficient.

Singer & J. Singer, Sutherland Statutes and Statutory Construction §47.16 (7th ed. 2007). "Promotes," in a list that includes "solicits," "distributes," and "advertises," is most sensibly read to mean the act of

Fourth, the other key phrase, "in a manner . . . that is intended to cause another to believe," contains only a subjective element: The defendant must "intend"

of noscitur a sociis--which counsels that a word is given more precise content by the neighboring words with which it is associated. See Jarecki v. G. D.

that the listener believe the material to be child

recommending purported child pornography to another person for his acquisition. See American

pornography, and must select a manner of “advertising, promoting, presenting, distributing, or soliciting" the material that he thinks will engender that belief--whether or not a reasonable person would think the same. (Of course in the ordinary case the proof of the defendant's intent will be the fact that, as an objective matter, the manner of "advertising, promoting, presenting, distributing, or soliciting" plainly sought to convey that the material was child pornography.)

Heritage Dictionary 1403 (4th ed. 2000) (def. 4: "To attempt to sell or popularize by advertising or publicity"). Similarly, "presents," in the context of the other verbs with which it is associated, means

showing or offering the child pornography to another person with a view to his acquisition. See id., at 1388 (def. 3a: "To make a gift or award of"). (The envisioned acquisition, of course, could be an electronic one, for example reproduction of the image on the recipient's computer screen.)

Fifth, the definition of "sexually explicit conduct" (the visual depiction of which, engaged in by an actual minor, is covered by the Act's pandering and soliciting prohibition even when it is not obscene) is

To be clear, our conclusion that all the words in this list relate to transactions is not to say that they relate to commercial transactions. One could

very similar to the definition of "sexual conduct" in the New York statute we upheld against an overbreadth challenge in Ferber. That defined

certainly "distribute" child pornography without expecting payment in return. Indeed, in much Internet

file sharing of child pornography each participant

"sexual conduct" as " ‘actual or simulated sexual intercourse, deviate sexual intercourse, sexual bestiality, masturbation, sado-masochistic abuse, or lewd exhibition of the genitals.'" 458 U.S., at 751.

makes his files available for free to other

participants--as Williams did in this case. "Distribution may involve sophisticated pedophile rings or organized crime groups that operate for profit, but in many cases, is carried out by individual amateurs who seek no financial reward." Child

2 2k

20

To be sure, there remains an important distinction between a proposal to engage in illegal activity and the abstract advocacy of illegality. See Brandenburg v. Ohio, 395 U.S. 444, 447-448 (1969) (per curiam); see also NAACP v. Claiborne Hardware Co., 458

Amici contend that some advertisements for mainstream Hollywood movies that depict underage characters having sex violate the statute. Brief for Free Speech Coalition et al. as Amici Curiae 9-18.

We think it implausible that a reputable distributor of

U.S. 886, 928-929 (1982). The Act before us does not prohibit advocacy of child pornography, but only offers to provide or requests to obtain it. There is no doubt that this prohibition falls well within constitutional bounds. The constitutional defect we

Hollywood movies, such as Amazon.com, believes

that one of these films contains actual children engaging in actual or simulated sex on camera; and even more implausible that Amazon.com would intend to make its customers believe such a thing. The average person understands that sex scenes in mainstream movies use nonchild actors, depict sexual activity in a way that would not rise to the explicit level necessary under the statute, or, in most cases,

found in the pandering provision at issue in Free

Speech Coalition was that it went beyond pandering to prohibit possession of material that could not otherwise be proscribed. 535 U. S., at 258.

both. In sum, we hold that offers to provide or requests ek

to obtain child pornography are categorically

excluded from the First Amendment. Since the Eleventh Circuit erroneously concluded otherwise, it

Finally, the dissent accuses us of silently overruling our prior decisions in Ferber and Free Speech Coalition. See post, at 12. According to the dissent, Congress has made an end-run around the First Amendment's protection of virtual child pornography by prohibiting proposals to transact in such images rather than prohibiting the images themselves. But an offer to provide or request to

applied strict scrutiny to §2252A(a)(3)(B), lodging three fatal objections. We address these objections because they could be recast as arguments that Congress has gone beyond the categorical exception. The Eleventh Circuit believed it a constitutional difficulty that no child pornography need exist to trigger the statute. In its view, the fact that the statute

receive virtual child pornography is not prohibited by the statute. A crime is committed only when the

could punish a "braggart, exaggerator, or outright liar" rendered it unconstitutional. 444 F. 3d, at 1298. That seems to us a strange constitutional calculus. Although we have held that the government can ban both fraudulent offers, see, e.g., [/inois ex rel. Madigan v. Telemarketing Associates, Inc., 538 U.S. 600, 611-612 (2003), and offers to provide illegal products, the Eleventh Circuit would forbid the government from punishing fraudulent offers to provide illegal products. We see no logic in that position; if anything, such statements are doubly excluded from the First Amendment.

speaker believes or intends the listener to believe that the subject of the proposed transaction depicts real children. It is simply not true that this means "a protected category of expression [will] inevitably be suppressed," post, at 13. Simulated child pornography will be as available as ever, so long as it is offered and sought as such, and not as real child pornography. The dissent would require an exception from the statute's prohibition when, unbeknownst to one or both of the parties to the proposal, the completed transaction would not have been unlawful because it is (we have said) protected by the First Amendment. We fail to see what First Amendment interest would be served by drawing a distinction between two defendants who attempt to acquire contraband, one of whom happens to be mistaken about the contraband nature of what he would acquire. Is Congress forbidden from punishing those who attempt to acquire what they believe to be national-security documents, but which are actually fakes? To ask is to answer. There is no First

The Eleventh Circuit held that under Brandenburg, the "non-commercial, non-inciteful

promotion of illegal child pornography" is protected, and §2252A(a)(3)(B) therefore overreaches by criminalizing the promotion of child pornography. 444 F. 3d, at 1298. As we have discussed earlier, however, the term "promotes" does not refer to abstract advocacy, such as the statement "I believe

that child pornography should be legal" or even "I encourage you to obtain child pornography." It refers

Amendment exception from the general principle of

to the recommendation of a particular piece of

criminal law that a person attempting to commit a

purported child pornography with the intent of initiating a transfer.

crime need not be exonerated because he has a mistaken view of the facts.

28 KK

2K

21

Child pornography harms and debases the most defenseless of our citizens. Both the State and

manifestly believes or would induce belief in a

Federal Governments have sought to suppress it for many years, only to find it proliferating through the new medium of the Internet. This Court held unconstitutional Congress's previous attempt to meet

exhibition is or will be an actual child, not an impersonated, simulated or "Virtual" one, or the

prospective party that the subject of an exchange or

subject of a composite created from lawful photos

spliced together. The Act specifically prohibits three types of those proposals. It outlaws solicitation of

this new threat, and Congress responded with a carefully crafted attempt to eliminate the First Amendment problems we identified. As far as the

child pornography, as well as two distinct kinds of offers: those "advertis[ing]" or "promot[ing]" prosecutable child pornography, which recommend

provision at issue in this case is concerned, that effort was successful.

the material with the implication that the speaker can make it available, and those "present[ing]" or "distribut[ing]" such child pornography, which make the material available to anyone who chooses to take

The judgment of the Eleventh Circuit is reversed. It is so ordered.

it. 18 U.S. C. §2252A(a)(3)(B) (2000 ed., Supp. V).

UNITED STATES, PETITIONER y. MICHAEL WILLIAMS

The Court holds it is constitutional to prohibit these proposals, and up to a point I do not disagree.

In particular, I accept the Court's explanation that Congress may criminalize proposals unrelated to any

on writ of certiorari to the united states court of

appeals for the eleventh circuit

extant image. I part ways from the Court, however, on the regulation of proposals made with regard to specific, existing representations. Under the new law,

[May 19, 2008]

mnrwmuthe, clements.of the pandering. offense are. the same, whether or not the images are of real children. As to those that do not show real children, of course, a transaction in the material could not be prosecuted consistently with the First Amendment, and I believe that maintaining the First Amendment protection of

Justice Souter, with whom Justice Ginsburg joins, dissenting.

Dealing in obscenity is penalized without violating the First Amendment, but as a general matter pornography lacks the harm to justify prohibiting it. If, however, a photograph (to take the kind of image in this case) shows an actual minor child as a pornographic subject, its transfer and even

expression we have previously held to cover fake child pornography requires a limit to the law's criminalization of pandering proposals. In failing to confront the tension between ostensibly protecting

the material pandered while approving prosecution of

its possession may be made criminal. New York v.

the pandering of that same material, and in allowing the new pandering prohibition to suppress otherwise protected speech, the Court undermines Ferber and Free Speech Coalition in both reasoning and result. This is the significant element of today's holding, and

Ferber, 458 U.S. 747, 765-766 (1982); Osborne v.

Ohio, 495 U. S. 103, 110-111 (1990). The exception to the general rule rests not on the content of the picture but on the need to foil the exploitation of child subjects, Ferber, 458 U.S., at 759-760, and the justification limits the exception: only pornographic photographs of actual children may be prohibited, see id., at 763, 764; Ashcroft v. Free Speech Coalition, 535 U.S. 234, 249-251 (2002). Thus, just six years ago the Court struck down a statute outlawing particular material merely represented to be child pornography, but not necessarily depicting actual

I respectfully dissent from it.

I The easy case for applying the Act would be a proposal to obtain or supply child pornography supposedly showing a real child, when the solicitation or offer is unrelated to any image (that is,

children. /d., at 257-258.

when the existence of pornographic "material" was merely "purported"). ***

The Prosecutorial Remedies and Other Tools to

end the Exploitation of Children Today Act of 2003 (Act), 117 Stat. 650, was enacted in the wake of Free Speech Coalition. The Act responds by avoiding any

Congress did not pass the Act to catch unsuccessful solicitors or fraudulent offerors with no photos to sell; rather, it feared that "[t]he mere prospect that the technology exists to create composite or computer-generated depictions that are

direct prohibition of transactions in child pornography" when no actual minors may be

pictured; instead, it prohibits proposals for transactions in pornography when a defendant

indistinguishable from depictions of real children will

22

allow defendants who possess images of real children to escape prosecution ... . This threatens to render child pornography laws that protect real children unenforceable." /d., §501(13).

at 255 ("The Government raises serious constitutional difficulties by seeking to impose on the defendant the

A person who "knowingly" proposes a transaction in an extant image incorporates into the proposal an understanding that the subject of the proposal is or includes that image. Cf. ante, at 14 ("['Promotes']

established by the prosecution, as well as images that show no real children at all; and this, despite the fact that, under Free Speech Coalition, the first proposed

refers to the recommendation of a particular piece of purported child pornography ..."). Congress

understood that underlying most proposals there will be an image that shows a child, and the proposal referring to an actual child's picture will thus amount to a proposal to commit an independent crime such as a transfer of child pornography, see 18 U. S. C. §§2252A(a)(1), (2). But even when actual pictures thus occasion proposals, the Act requires no finding that an actual child be shown in the pornographic

burden of proving his speech is not unlawful"). The Act, however, punishes proposals regarding images when the inclusion of actual children is not

transfer could not be punished without the very proof the Act is meant to dispense with, and the second could not be made criminal at all. Il

What justification can there be for making independent crimes of proposals to engage in transactions that may include protected materials? The Court gives three answers, none of which comes

to grips with the difficulty raised by the question. The

will be fake, with the picture showing only a

first, ante, at 17-18, says it is simply wrong to say that the Act makes it criminal to propose a lawful transaction, since an element of the forbidden proposal must express a belief or inducement to

simulation of a child, for example, or a very younglooking adult convincingly passed off as a child; in those cases the proposal is for a transaction that could not itself be made criminal, because the absence of a

shows actual children. But this does not go to the point. The objection is not that the Act criminalizes a proposal for a transaction described as being in

setting in order to prove a violation. And the fair assumption (apparently made by Congress) is that in some instances, the child pornography in question

child model means that the image is constitutionally protected. See Free Speech Coalition, 535 U. S., at 246. But under the Act, that is irrelevant. What

matters is not the inclusion of an actual child in the image, or the validity of forbidding the transaction proposed; what counts is simply the manifest belief or intent to cause a belief that a true minor is shown in the pornographic depiction referred to. The tension with existing constitutional law is obvious. Free Speech Coalition reaffirmed that nonobscene virtual pornographic images are protected, because they fail to trigger the concern for child safety that disentitles child pornography to First Amendment protection. See id., at 249-251. The case thus held that pictures without real minors (but only simulations, or young-looking adults) may not be the subject of a non-obscenity pornography crime, id., at 246, 251, and it has reasonably been taken to mean

that transactions in pornographic pictures featuring children may not be punished without proof of real children, see, ¢.g., United States v. Salcido, 506 F. 3d

729, 733 (CA9 2007) (per curiam) ("In [Free Speech Coalition], the Supreme Court held that possession of ‘virtual’ child pornography cannot constitute a criminal offense. ... As a result, the government has the burden of proving beyond a reasonable doubt that the images were of actual children, not computergenerated images"); cf. Free Speech Coalition, supra,

believe that the subject of the proposed transaction

virtual (that is, protected) child pornography. The point is that some proposals made criminal, because they express a belief that they refer to real child pornography, will relate to extant material that does not, or cannot be, demonstrated to show real children

and so may not be prohibited. When a proposal covers existing photographs, the Act does not require that the requisite belief (manifested or encouraged) in the reality of the subjects be a correct belief. Prohibited proposals may relate to transactions in

lawful, as well as unlawful, pornography. Much the same may be said about the Court's second answer, that a proposal to commit a crime enjoys no speech protection. Ante, at 11. For the

reason just given, that answer does not face up to the source of the difficulty: the action actually contemplated in the proposal, the transfer of the particular image, is not criminal if it turns out that an actual child is not shown in the photograph. If Ferber and Free Speech Coalition are good law, the facts

sufficient for conviction under the Act do not suffice to show that the image (perhaps merely simulated), and thus a transfer of that image, are outside the bounds of constitutional protection. For this reason, it is not enough just to say that the First Amendment does not protect proposals to commit crimes. For that rule rests on the assumption that the proposal is

actually to commit a crime, not to do an act that may

turn out to be no crime at all. Why should the general

completion of the crime. This is not so, however, in

rule of unprotected criminal proposals cover a case like the proposal to transfer what may turn out to be fake child pornography?

the proposed transaction in an identified pornographic image without the showing of a real child; no matter what the parties believe, and no

matter how exactly a defendant's actions conform to his intended course of conduct in completing the

The Court's third answer analogizes the proposal to an attempt to commit a crime, and relies on the rule of criminal law that an attempt is criminal even when some impediment makes it impossible to

transaction he has in mind, if there turns out to be reasonable doubt that a real child was used to make the photos, or none was, there could be, respectively, no conviction and no crime. Thus, in the classic

complete the criminal act (the possible impediment here being the advanced age, say, or simulated

impossibility example, there is attempt liability when

character of the child-figure). See ante, at 14-15.

the course of conduct intended cannot be completed owing to some fact which the defendant was

Although the actual transfer the speaker has in mind may not turn out to be criminal, the argument goes, the transfer intended by the speaker is criminal, because the speaker believes” that the contemplated

mistaken about, and which precludes completing the intended physical acts. But on the Court's reasoning there would be attempt liability even when the

transfer will be of real child pornography, and transfer of real child pornography is criminal. The fact that the circumstances are not as he believes

contemplated acts had been completed exactly as intended, but no crime had been committed. Why should attempt liability be recognized here (thus making way for "proposal" liability, under the Court's analogy)?

them to be, because the material does not depict actual minors, is no defense to his attempt to engage in an unlawful transaction.

The Court's first response is to demur, with its

But invoking attempt doctrine to dispense with Free Speech Coalition's real-child requirement in the

example of the drug dealer who sells something else. Ante, at 14. (A package of baking powder, powder cocaine, would be an example.) No doubts the dealer may validly be convicted attempted drug sale even if he didn't know

circumstances of this case is incoherent with the Act, and it fails to fit the paradigm of factual impossibility or qualify for an extended version of that rule. The incoherence of the Court's answer with the scheme of the Act appears from §2252A(b)(1) (2000 ed., Supp. V), which criminalizes attempting or conspiring to

not one of an it was

baking powder he was selling. Yet selling baking powder is no more criminal than selling virtual child pornography.

violate the Act's substantive prohibitions, including the pandering provision of §2252A(a)(3)(B). Treating pandering itself as a species of attempt would thus

This response does not suffice, however, because it overlooks a difference between the lawfulness of selling baking powder and the lawful character of virtual child pornography. Powder sales are lawful but not constitutionally privileged. Any justification within the bounds of rationality would suffice for limiting baking powder transactions, just as it would for regulating the discharge of blanks from a pistol. Virtual pornography, however, has been held to fall within the First Amendment speech privilege, and thus is affirmatively protected, not merely allowed as

mean that there is a statutory, inchoate offense of attempting to attempt to commit a substantive child pornography crime. A metaphysician could imagine a system like this, but the universe of inchoate crimes is not expandable indefinitely under the actual principles of criminal law, let alone when First Amendment protection is threatened. See 2 W. LaFave, Substantive Criminal Law §11.2(a), p. 208 (2d ed. 2003) ("[W]here a certain crime is actually

defined in terms of either doing or attempting a

a matter of course. The question stands: why should a proposal that may turn out to cover privileged

certain crime, then the argument that there is no crime of attempting this attempt is persuasive").

expression be subject to standard attempt liability?

The more serious failure of the attempt analogy, however, is its unjustifiable extension of the classic

The Court's next response deals with the privileged character of the underlying material. It

factual frustration rule, under which the action

gives another example of attempt that presumably could be made criminal, in the case of the mistaken

specifically intended would be a criminal act if completed. The intending killer who mistakenly grabs the pistol loaded with blanks would have committed homicide if bullets had been in the gun; it

spy, who passes national security documents thinking they are classified and secret, when in fact they have

was only the impossibility of completing the very

been declassified and made subject to public inspection. Ante, at 18. Publishing unclassified

intended act of shooting bullets that prevented the

documents is subject to the First Amendment

24

privilege and can claim a value that fake child

2k OK

pornography cannot. The Court assumes that the document publication may be punished as an attempt to violate state-secret restrictions (and I assume so too); then why not attempt-proposals based on a

Finally, if the Act stands when applied to identifiable, extant pornographic photographs, then in

practical terms Ferber and Free Speech Coalition

mistaken belief that the underlying material is real

fall. They are left as empty as if the Court overruled

child pornography? As the Court looks at it, the deterrent value that justifies prosecuting the mistaken

them formally, and when a case as well considered and as recently decided as Free Speech Coalition is put aside (after a mere six years) there ought to be a very good reason. Another pair of First Amendment cases come to mind, compare Minersville School

spy (like the mistaken drug dealer and the intending killer) would presumably validate prosecuting those who make proposals about fake child pornography. But it would not, for there are significant differences between the cases of security documents and pornography without real children.

Dist. v. Gobitis, 310 U.S. 586 (1940), with West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624 (1943). In Barnette, the Court set out the reason for its abrupt turn in overruling Gobitis after three years, 319 U.S.

at 635-642, but here nothing is explained. Attempts Where Government documents, blank cartridges, and baking powder are involved, deterrence can be promoted without compromising any other important policy, which is not true of criminalizing mistaken child pornography proposals. There are three dispositive differences. As for the first, if the law can criminalize proposals for transactions in fake as well as true child pornography as if they were like

with baking powder and unclassified documents can be punished without damage to confidence in precedent; suppressing protected pornography cannot be. ***We should hold that a transaction in what turns out to be fake pornography is better understood, not as an incomplete attempt to commit a crime, but as a completed series of intended acts that simply do not add up to a crime, owing to the privileged character of the material the parties were in fact about to deal

attempts to sell cocaine that turned out to be baking powder, constitutional law will lose something

sufficiently important to have made it into multiple

in.

holdings of this Court, and that is the line between child pornography that may be suppressed and fake child pornography that falls within First Amendment protection. No one can seriously assume that after today's decision the Government will go on prosecuting defendants for selling child pornography (requiring a showing that a real child is pictured, under Free Speech Coalition, 535 U. S., at 249-251); it will prosecute for merely proposing a pornography transaction manifesting or inducing the belief that a photo is real child pornography, free of any need to demonstrate that any extant underlying photo does show a

Til Untethering the power to suppress proposals about extant pornography from any assessment of the likely effects the proposals might have has an unsettling

significance well beyond the subject of child pornography. For the Court is going against the grain of pervasive First Amendment doctrine that tolerates speech restriction not on mere general tendencies of expression, or the private understandings of speakers or listeners, but only after a critical assessment of practical consequences. Thus, one of the milestones

real child. If the Act can be enforced, it will

function just as it was meant to do, by merging the whole subject of child pornography into the offense of proposing a transaction, dispensing with the realchild element in the underlying subject. And eliminating the need to prove a real child will be a loss of some consequence. This is so not because there will possibly be less pornography available owing to the greater ease of prosecuting, but simply

of American political liberty is Brandenburg v. Ohio, 395 U.S. 444 (1969) (per curiam), which is seen as the culmination of a half century's development that began with Justice Holmes's dissent in Abrams v. United States, 250 U.S. 616 (1919). In place of the rule that dominated the First World War sedition and espionage cases, allowing suppression of speech for its tendency and the intent behind it, see Schenck v. United States, 249 U.S. 47, 52 (1919), Brandenburg

because there must be a line between what the Government may suppress and what it may not, and a segment of that line will be gone. This Court went to great pains to draw it in Ferber and Free Speech

insisted that “the constitutional guarantees of free speech and free

Coalition; it was worth drawing and it is worth

press do not permit a State to forbid or proscribe

respecting now in facing the attempt to end-run that

advocacy of the use of force or of law violation except where such advocacy is directed to inciting or

line through the provisions of the Act.

25

producing imminent lawless action and is likely to

The claim needs to be taken with a grain of salt.

incite or produce such action." 395 U. S., at 447.

There has never been a time when some such concern could not be raised. Long before the Act was passed, for example, pornographic photos could be taken of

See also G. Stone, Perilous Times: Free Speech in

Wartime 522 (2004) ("[E]xactly fifty years after Schenck, the Supreme Court finally and unambiguously embraced the Holmes-Brandeis

models one day into adulthood, and yet there is no indication that prosecution has ever been crippled by the need to prove young-looking models were underage.

version of clear and present danger"). Brandenburg unmistakably insists that any limit

Still, if ] were convinced there was a real reason

on speech be grounded in a realistic, factual

for the Government's fear stemming from computer

assessment of harm. This is a far cry from the Act before us now, which rests criminal prosecution for proposing transactions in expressive material on nothing more than a speaker's statement about the

simulation, I would be willing to reexamine Ferber.

Conditions can change, and if today's technology left no other effective way to stop professional and amateur pornographers from exploiting children there would be a fair claim that some degree of expressive protection had to yield to protect the children.

material itself, a statement that may disclose no more

than his own belief about the subjects represented or his desire to foster belief in another. This should

weigh heavily in the overbreadth balance, because

But the Government does not get a free pass

"First Amendment freedoms are most in danger when the government seeks to control thought or to justify

whenever it claims a worthy objective for curtailing

its laws for that impermissible end. The right to think

claimed here. Although Congress found that child pornography defendants "almost universally rais[e]"

speech, and I have further doubts about the need

is the beginning of freedom, and speech must be

the defense that the alleged child pornography could be simulated or virtual, §501(10), 117 Stat. 677, neither Congress nor this Court has been given the citation to a single case in which a defendant's

protected from the government because speech is the beginning of thought." Free Speech Coalition, 535 U. S., at 253. See also Hurley v. Irish-American Gay,

Lesbian and Bisexual Group of Boston, Inc., 515 U.

acquittal is reasonably attributable to that defense.

S. 557, 579 (1995) ("The very idea that a noncommercial speech restriction be used to produce thoughts and statements acceptable to some groups or, indeed, all people, grates on the First Amendment, for it amounts to nothing less than a proposal to limit

Without some convincing evidence to the

contrary, experience tells us to have faith in the capacity of the jury system, which I would have expected to operate in much the following way, if the Act were not on the books. If the Government sought to prosecute proposals about extant images as

speech in the service of orthodox expression. The Speech Clause has no more certain antithesis").

attempts, it would seek to carry its burden of showing

IV

that real children were depicted in the image subject to the proposal simply by introducing the image into evidence; if the figures in the picture looked like real children, the Government would have made its prima facie demonstration on that element.* The defense might well offer expert testimony to the effect that

I said that I would not pay the price enacted by the Act without a substantial justification, which I am at a loss to find here. | have to assume that the Court sees some grounding for the Act that I do not, however, and I suppose the holding can only be explained as an uncritical acceptance of a claim made both to Congress and to this Court. In each forum the Government argued that a jury's appreciation of the mere possibility of simulated or virtual child pornography will prevent convictions for the real

if this was the extent of the testimony that came in, the cross-examination would ask whether the witness could say that this particular, seemingly authentic representation was merely simulated. If the witness

thing, by inevitably raising reasonable doubt about

could say that (or said so on direct), and survived

whether actual children are shown. The Government

further questioning about the basis for the opinion and its truth, acquittal would have been proper; the defendant would have raised reasonable doubt about whether a child had been victimized (the same standard that would govern if the defendant were on

technology can produce convincing simulations, but

voices the fear that skeptical jurors will place traffic in child pornography beyond effective prosecution unless it can find some way to avoid the Ferber limitation, skirt Free Speech Coalition, and allow

prosecution whether pornography shows actual

trial for abusing a child personally). But if the defense had no specific evidence that the particular image failed to show actual children, I am skeptical

children or not.

26

that a jury would have been likely to entertain reasonable doubt that the image showed a real child.

exploitation of children unpunishable, there is no

excuse for cutting back on the First Amendment and

no alternative to finding overbreadth in this Act. | Perhaps I am wrong, but without some

would hold it unconstitutional on the authority of

demonstration that juries have been rendering

Ferber and Free Speech Coalition.

One issue that comes up from time to time in the free speech context is “prior restraint” — the government’s ability, not to punish speech once it is made (e.g., imprisoning those who have made illegal threats), but to prevent speech before it is made. Prior restraint, a common tactic of totalitarian governments, is constitutionally suspect in the United States because of the First Amendment. York. The stays entered June 25, 1971, by the Court

New York Times Co. v. United States

are vacated. The judgments shall issue forthwith. (The “Pentagon Papers” Case) So ordered.

No. 1873 MR. SUPREME COURT OF THE UNITED STATES

the view 403 U.S. 713, 91 S. Ct. 2140, 29 L. Ed. 2d 822

JUSTICE

BLACK,

with whom

MR.

JUSTICE DOUGLAS joins, concurring: I adhere to

that the Government’s

case against the

Washington Post should have been dismissed and that the injunction against the New York Times should have been vacated without oral argument when the cases were first presented to this Court. I believe that every moment’s continuance of the injunctions against these newspapers amounts to a

June 30, 1971* * Together with No. 1885, United States v.

Washington Post Co.

flagrant, indefensible, and continuing violation of the PER CURIAM: We granted certiorari in these cases in which the United States seeks to enjoin the New York Times and the Washington Post from publishing the contents of a classified study entitled “History of U.S. Decision-Making Process on Viet Nam Policy.” * * * “Any system of prior restraints of expression

comes to this Court bearing a heavy presumption against its constitutional validity.” *** The Government “thus carries a heavy burden of showing justification for the imposition of such a restraint.” ** * The District Court for the Southern District of New York in the New York Times case and the District Court for the District of Columbia and the Court of Appeals for the District of Columbia Circuit

in

the

Washington

Post

case

held

that

the

Government had not met that burden. We agree.

The judgment of the Court of Appeals for

First Amendment.

Furthermore, after oral argument, |

agree completely that we must affirm the judgment of the Court of Appeals for the District of Columbia Circuit and reverse the judgment of the Court of

Appeals for the Second Circuit for the reasons stated by my Brothers DOUGLAS and BRENNAN. In my view it is unfortunate that some of my Brethren are apparently willing to hold that the publication of news may sometimes be enjoined. Such a holding would make a shambles of the First Amendment. Our Government was launched in 1789 with the adoption of the Constitution. The Bill of Rights, including the First Amendment, followed in 1791. Now, for the first time in the 182 years since the founding of the Republic, the federal courts are asked to hold that the First Amendment does not mean what

it says, but rather means that the Government can halt the publication of current news of vital importance to the people of this country.

the District of Columbia Circuit is therefore affirmed.

The order of the Court of Appeals for the Second Circuit is reversed and the case is remanded with directions to enter a judgment affirming the judgment of the District Court for the Southern District of New

In

seeking

injunctions

against

these

newspapers and in its presentation to the Court, the Executive essential

Branch purpose

seems and

to have forgotten the history of the First

Amendment.

When the Constitution was adopted,

and

shell.

In

my

view,

far

from

deserving

many people strongly opposed it because the document contained no Bill of Rights to safeguard certain basic freedom * * * They especially feared

condemnation for their courageous reporting, the New York Times, the Washington Post, and other newspapers should be commended for serving the

that the new powers granted to a central government might be interpreted to permit the government to curtail freedom of religion, press, assembly, and speech. In response to an overwhelming public

purpose that the Founding Fathers saw so clearly. In

clamor,

James

Madison

offered

a _ series

revealing the workings of government that led to the

Vietnam war, the newspapers nobly did precisely that which the Founders hoped and trusted they would do.

of

amendments to satisfy citizens that these great liberties would remain safe and beyond the power of

The Government’s case here is based on premises entirely different from those that guided the

government to abridge. Madison proposed what later became the First Amendment in three parts, two of which are set out below, and one of which

Framers of the First Amendment. The Solicitor General has carefully and emphatically stated:

proclaimed: “The people shall not be deprived or abridged of their right to speak, to write, or to publish

“Now, Mr. Justice construction of . . . [the First well known, and I certainly say that no law means no should be obvious. I can

their sentiments; and the freedom of the press, as one

of the great bulwarks of liberty, shall be inviolable.” ***

(Emphasis

added.)

The

amendments

were

Justice, that to me it is equally obvious that

offered to curtail and restrict the general powers granted to the Executive, Legislative, and Judicial Branches two years before in the original

‘no

Constitution

into

a new

of government

charter

under

which

law’

does

not

mean

‘no

law’,

and

I

would seek to persuade the Court that that is true. . . . There are other parts of the

Constitution. The Bill of Rights changed the original branch

[BLACK], your Amendment] is respect it. You law, and that only say, Mr.

Constitution that grant powers and responsibilities to the Executive, and . . . the First Amendment was not intended to make it impossible for the Executive to function or to protect the security of the United States.”

no

could abridge the people’s

freedoms of press, speech, religion, and assembly. Yet the Solicitor General argues and some members

of the Court appear to agree that the general powers of the Government adopted in the original

*

KOK

Constitution should be interpreted to limit and restrict

the specific and emphatic guarantees of the Bill of Rights adopted later. I can imagine no greater perversion of history. Madison and the other Framers of the

First Amendment,

able

men

that they

And the Government argues in its brief that

in spite of the First Amendment, “the authority of the Executive Department

to protect the nation against

publication of information whose disclosure would endanger the national security stems from two

were,

wrote in language they earnestly believed could never be misunderstood: “Congress shall make no law... . abridging the freedom . . . of the press .. . .” Both the history and language of the First Amendment support

interrelated sources: the constitutional power of the President over the conduct of foreign affairs and his authority as Commander-in-Chief * * *

the view that the press must be left free to publish news,

whatever

the

source,

without

censorship,

In other

words,

we

are

asked

to hold

that

despite the First Amendment’s emphatic command, the Executive Branch, the Congress, and the Judiciary can make laws enjoining publication of current news and abridging freedom of the press in the name of “national security.” The Government does not even attempt to rely on any act of Congress. Instead it makes the bold and dangerously far-

injunctions, or prior restraints. In the First Amendment the Founding Fathers gave the free press the protection it must have to fulfill its essential role in our democracy. The press was to serve the governed, not the governors. The Government’s power to censor the press was

abolished so that the press would remain forever free

reaching contention that the courts should take it upon themselves to “make” a law abridging freedom

to censure the Government. The press was protected so that it could bare the secrets of government and inform the people. Only a free and unrestrained press

of the press in the name of equity, presidential power and national security, even when the representatives

can effectively expose deception in government. And is the duty to prevent any part of the government from deceiving the people and sending them off to

of the people in Congress have adhered to command of the First Amendment and refused make such a law. * * * To find that the President “inherent power” to halt the publication of news

distant lands to die of foreign fevers and foreign shot

resort

paramount among the responsibilities of a free press

28

to

the

courts

would

wipe

out

the

the to has by

First

Amendment and destroy the fundamental liberty and security of the very people the Government hopes to

make “secure.” No one can read the history of the adoption of the First Amendment without being convinced beyond any doubt that it was injunctions like those sought here that Madison and _ his collaborators intended to outlaw in this Nation for all time. The word “security” is a broad, vague generality whose contours should not be invoked to abrogate the fundamental law embodied in the First Amendment. The guarding of military and diplomatic secrets at the expense of informed representative government provides no real security for our Republic. The Framers of the First Amendment, fully aware of both the need to defend a new nation and

the abuses of the English and Colonial governments, sought to give this new society strength and security by providing that freedom of speech, press, religion, and assembly should not be abridged. This thought was eloquently expressed in 1937 by Mr. Chief

Justice Hughes -- great man and great Chief Justice that he was -- when the Court held a man could not be punished for attending a meeting run by

national defense which information the possessor has reason to believe could be used to the injury of the United States or to the advantage of any foreign nation, willfully communicates . . . the same to any

person not entitled to receive it . . . shall be fined not more than $ 10,000 or imprisoned not more than ten years, or both.”

The Government suggests “communicates” is broad enough publication.

that the word to encompass

There are eight sections in the chapter on espionage and censorship, §§ 792-799. In three of those eight “publish” is specifically mentioned: § 794 (b) applies to “Whoever, in time of war, with intent that the same shall be communicated to the enemy, collects, records, publishes, or communicates . . . [the disposition of armed forces].” Section 797 applies to whoever “reproduces, publishes, sells, or gives away” photographs of defense installations. Section 798 relating to cryptography applies to whoever: “communicates, furnishes, transmits, or otherwise makes available . . . or publishes” the described material. * * * (Emphasis added.)

Communists. “The greater the importance of safeguarding

the community from incitements to the overthrow of our institutions by force and violence, the more imperative is the need to preserve inviolate the constitutional rights of free speech, free press and free assembly in order to maintain the opportunity for

Thus it is apparent that Congress was capable of and did distinguish between publishing and communication in the various sections of the Espionage Act.

free political discussion, to the end that government may be responsive to the will of the people and that

changes,

if desired, may

* KOK

be obtained by peaceful

means. Therein lies the security of the Republic, the very foundation of constitutional government.” * * * MR. MR.

JUSTICE

JUSTICE BLACK

DOUGLAS, joins,

with

concurring:

Judge Gurfein’s holding in the Times case that this Act does not apply to this case was therefore preeminently sound. Moreover, the Act of September

whom While

23, 1950, in amending I

join the opinion of the Court I believe it necessary to express my views more fully. It should be noted at the outset that the First Amendment provides that “Congress shall make no law .. . abridging the freedom of speech, or of the press.” That leaves, in my view, no room for

governmental restraint on the press. * * *

18 U. S. C. § 793 states in § 1

(b) that: “Nothing in this Act shall be construed to authorize, require, or establish military or civilian censorship or in any way to limit or infringe upon freedom of the press or of speech as guaranteed by the

Constitution of the United States and no regulation shall be promulgated hereunder having that effect.” 64 Stat. 987.

There

is, moreover,

no

statute

barring

the

publication by the press of the material which the Times and the Post seek to use. Title 18 U. S.C. § 793 (e) provides that “whoever having unauthorized possession of, access to, or control over any

document, writing . . . or information relating to the

Thus

Congress

has

been

faithful

to the

command of the First Amendment in this area. So any power that the Government possesses must come from its “inherent power.”

judgments in the present cases may not be taken to * Ok O*

indicate the propriety, in the future, of issuing temporary stays and restraining orders to block the publication of material sought to be suppressed by the Government. So far as I can determine, never before has the United States sought to enjoin a newspaper from publishing information in_ its possession. The relative novelty of the questions

These disclosures * * * may have a serious

impact. But that is no basis for sanctioning a previous restraint on the press. * * * As we stated only the other day in Organization for a Better Austin v. Keefe, 402 US. 415, 419, “any prior restraint on expression comes to

this Court with a ‘heavy presumption’

presented, the necessary haste with which decisions were reached, the magnitude of the interests asserted, and the fact that all the parties have concentrated their arguments upon the question whether permanent restraints were proper may have justified at least some of the restraints heretofore imposed in these cases. Certainly it is difficult to fault the several courts below for seeking to assure that the issues here involved were preserved for ultimate review by this

against its

constitutional validity.” The

Government

says

that it has

inherent

powers to go into court and obtain an injunction to protect the national interest, which alleged to be national security.

in this case

is

Court. But even if it be assumed that some of the interim restraints were proper in the two cases before

Near v. Minnesota, 283 U.S. 697, repudiated

that expansive doctrine in no uncertain terms.

us, that assumption has no bearing upon the propriety

of similar judicial action in the future. To begin with, there has now

The dominant purpose of the First Amendment was to prohibit the widespread practice of governmental suppression of embarrassing information. It is common knowledge that the First Amendment was adopted against the widespread use

judgment;

been

ample

whatever

values

time

there

for reflection and

may

be

in the

preservation of novel questions for appellate review may not support any restraints in the future. More important, the First Amendment stands as an absolute bar to the imposition of judicial restraints in circumstances of the kind presented by these cases.

of the common law of seditious libel to punish the dissemination of material that is embarrassing to the

powers-that-be. * * * The present cases will, I think, go down in history as the most dramatic illustration of that principle. A debate of large proportions goes on in the Nation over our posture in Vietnam. That

U The error that has pervaded these cases from the outset was the granting of any injunctive relief whatsoever, interim or otherwise. The entire thrust of the Government’s claim throughout these cases has

debate antedated the disclosure of the contents of the present documents. The latter are highly relevant to the debate in progress.

been that publication of the material sought to be Secrecy anti-democratic,

in government is fundamentally perpetuating bureaucratic errors.

enjoined “could,” or “might,” or “may” prejudice the national interest in various ways. But the First Amendment tolerates absolutely no prior judicial restraints of the press predicated upon surmise or conjecture that untoward consequences may result.”

Open debate and discussion of public issues are vital to our

national

should

be

health.

On

“uninhibited,

public robust,

questions and

there

wide-open”

debate. * * * *

* Ok

Freedman v. Maryland, 380 U.S. 51 (1965), and similar cases regarding temporary restraints of allegedly obscene materials are not in point. For those cases rest upon the proposition that “obscenity is not protected by the freedoms of speech

*

The stays in these cases that have been in effect for more than a week constitute a flouting of

the principles of the First Amendment as interpreted

and press.” * * * Here there is no question but that

in Near v. Minnesota.

the material

sought to be suppressed

is within the

protection of the First Amendment; the only question is whether, notwithstanding that fact, its publication may be enjoined for a time because of the presence of an overwhelming national interest. Similarly, copyright cases have no pertinence here: the Government is not asserting an interest in the particular form of words chosen in the documents,

MR. JUSTICE BRENNAN, concurring:

I I write separately in these cases only to emphasize what should be apparent: that our

30

Our cases, it is true, have indicated that there is a single, extremely narrow class of cases in which the First Amendment’s ban on prior judicial restraint may be overridden. Our cases have thus far indicated that such cases may arise only when the Nation “is at war,” *** during which times “no one would question but that a government might prevent actual

prime minister of a country form of government.

and

chief

guaranty

purpose [is]

to

of

[the

prevent

First

successful and _ the

both confidentiality and secrecy.

Other nations can

hardly deal with this Nation in an atmosphere of mutual

trust unless they can be assured

confidences

will

be

kept.

And

within

that their

our

own

executive departments, the development of considered and intelligent international policies would be impossible if those charged with their formulation could not communicate with each other freely, frankly, and in confidence. In the area of basic national defense the frequent need for absolute secrecy is, of course, self-evident. * OK OK

as necessary to afford the courts an opportunity to its case,

and

enlightened

maintenance of an effective national defense require

previous

This is not to say that Congress and the courts have no role to play. Undoubtedly Congress has the power to enact specific and appropriate

examine the claim more thoroughly. Unless and until out

defense

an

Yet it is elementary that the of international diplomacy

conduct

publication, it must inevitably submit the basis upon which that aid is sought to scrutiny by the judiciary. And therefore, every restraint issued in this case, whatever its form, has violated the First Amendment -- and not less so because that restraint was justified

made

in

enlightened people.

event may mere conclusions be sufficient: for if the Executive Branch seeks judicial aid in preventing

clearly

lie

press that is alert, aware, and free most vitally serves the basic purpose of the First Amendment. For without an informed and free press there cannot be an

safety of a transport already at sea can support even the issuance of an interim restraining order. In no

has

of national

may

government. For this reason, it is perhaps here that a

restraints upon publication.” *** Thus, only governmental allegation and proof that publication must inevitably, directly, and immediately cause the occurrence of an event kindred to imperiling the

the Government

affairs

citizenry -- in an informed and critical public opinion

information that would set in motion a_ nuclear holocaust, in neither of these actions has the Government presented or even alleged that publication of items from or based upon the material at issue would cause the happening of an event of

“The

in the areas

which alone can here protect the values of democratic

would justify even in peacetime the suppression of

nature.

power

international

situation were assumed to be tantamount to a time of war, or if the power of presently available armaments

Amendment’s}]

a parliamentary

In the absence of the governmental checks and balances present in other areas of our national life, the only effective restraint upon executive policy

obstruction to its recruiting service or the publication of the sailing dates of transports or the number and location of troops.” * * * Even if the present world

that

with

the

First Amendment commands that no injunction may issue.

criminal laws to protect government property and preserve

government

secrets.

Congress

has

passed

such laws, and several of them are of very colorable MR.

JUSTICE

STEWART,

with

whom

relevance

MR. JUSTICE WHITE joins, concurring: In the governmental structure created by our Constitution, the Executive is endowed with enormous power in the two related areas of national defense and international relations. This power, largely unchecked by the Legislative * * * and Judicial * * * branches, has been pressed to the very hilt since the advent of the nuclear missile age. For better or for worse, the

cases.

to

And

the

apparent

if a criminal

circumstances

prosecution

of these

is instituted,

it

will be the responsibility of the courts to decide the applicability of the criminal law under which the charge is brought. Moreover, if Congress should pass a specific law authorizing civil proceedings in this field, the courts would likewise have the duty to decide the constitutionality of such a law as well as

its applicability to the facts proved.

simple fact is that a President of the United States possesses vastly greater constitutional independence

But in the cases before us we are asked neither to construe specific regulations nor to apply

in these two vital areas of power than does, say, a

specific function not the prevent material

but is seeking to suppress the ideas expressed therein. And the copyright laws, of course, protect only the

form of expression and not the ideas expressed.

31

laws. We are asked, instead, to perform a that the Constitution gave to the Executive, Judiciary. We are asked, quite simply, to the publication by two newspapers of that the Executive Branch insists should not,

in the national interest, be published. I am convinced

material at issue here would not be available from the

that the Executive is correct with respect to some of the documents involved. But I cannot say that disclosure of any of them will surely result in direct, immediate, and irreparable damage to our Nation or

Court’s opinion or from public records, nor would it be published by the press. Indeed, even today where we hold that the United States has not met its burden,

the material remains sealed in court records and it is

its people. That being so, there can under the First Amendment

be but one judicial

resolution

properly not discussed in today’s opinions. Moreover, because the material poses substantial dangers to national interests and because of the hazards of criminal sanctions, a responsible press may choose never to publish the more sensitive materials. To sustain the Government in these cases would start the courts down a long and hazardous road that | am not willing to travel, at least without congressional guidance and direction.

of the

issues before us. I join the judgments of the Court. MR.

JUSTICE

WHITE,

with whom

MR.

JUSTICE STEWART joins, concurring: [ concur in today’s judgments, but only because of the concededly extraordinary protection against prior

restraints

enjoyed

constitutional

by

system.

the I

do

press not

say

under that

our in

no

circumstances would the First Amendment permit an

It is not easy to reject the proposition urged by the United States and to deny relief on its goodfaith claims in these cases that publication will work

injunction against publishing information about government plans or operations. * * * Nor, after examining the materials the | Government characterizes as the most sensitive and destructive, can I deny that revelation of these documents will do substantial damage to public interests. Indeed, I am confident that their disclosure will have that result. But I nevertheless agree that the United States has not satisfied the very heavy burden that it must meet to

serious damage to the country. But that discomfiture is considerably dispelled by the infrequency of prior-

restraint cases. Normally, publication will occur and the damage be done before the either opportunity or grounds for here, publication has already begun part of the threatened damage has

The

warrant an injunction against publication in these cases, at least in the absence of express and

fact of a massive

Government has suppression. So and a substantial already occurred.

breakdown

in security

is

known, access to the documents by many unauthorized people is undeniable, and the efficacy of equitable relief against these or other newspapers

appropriately limited congressional authorization for prior restraints in circumstances such as these.

to avert anticipated damage is doubtful at best. The Government’s position is simply stated: The responsibility of the Executive for the conduct of

What

more,

terminating

the

ban

on

the Government now seeks to suppress does not mean that the law either requires or invites newspapers or others to publish them or that they will be immune from criminal action if they do. Prior restraints require an unusually heavy justification under the First Amendment; but failure by the Govemment to justify prior restraints does not measure its constitutional entitlement to a conviction for criminal publication. That the Government mistakenly chose to proceed by injunction does not mean that it could not successfully proceed in another

injunction against publication of a newspaper story whenever he can convince a court that information to be revealed threatens “grave

is

publication of the relatively few sensitive documents

the foreign affairs and for the security of the Nation is so basic that the President is entitled to an the and

irreparable” injury to the public interest; * * * and the injunction should issue whether or not the material to be published is classified, whether or not publication would be lawful under relevant criminal statutes enacted by Congress, and regardless of the circumstances by which the newspaper came into possession of the information.

way. At Congress,

least based

in the on

its

absence own

of legislation investigations

by * ROK

and

findings, I am quite unable to agree that the inherent powers of the Executive and the courts reach so far as to authorize remedies having such sweeping potential

The Criminal Code contains numerous provisions potentially relevant to these cases. Section

for inhibiting publications by the press. Much of the difficulty inheres in the “grave and_ irreparable

797 *** makes it a crime to publish certain photographs or drawings of military installations. Section 798, *** also in precise language,

danger” standard suggested by the United States. If the United States were to have judgment under such a standard in these cases, our decision would be of little guidance to other courts in other cases, for the

proscribes knowing and willful publication of any classified information concerning the cryptographic systems or communication intelligence activities of

32

the United States as well as any information obtained from communication intelligence operations. * * * If any of the material here at issue is of this nature, the newspapers are presumably now on full notice of the

would pose a ‘grave and immediate danger to the security of the United States.’” * * * With all due respect, I believe the ultimate issue in these cases is even more basic than the one posed by the Solicitor

position of the United States and must face the consequences if they publish. I would have no

Congress has the power to make law.

difficulty in sustaining convictions under these sections on facts that would not justify the intervention of equity and the imposition of a prior

In concerning

General.

restraint.

The

issue

is whether this Court

these cases there is the President’s power

no to

or the

problem classify

information as “secret” or “top secret.” Congress has specifically recognized Presidential authority, which has been formally exercised in Exec. Order 10501 (1953), to classify documents and information. * * * Nor is there any issue here regarding the President’s power as Chief Executive and Commander in Chief to protect national security by disciplining employees who disclose information and by taking precautions to prevent leaks.

The same would be true under those sections

of the Criminal Code casting a wider net to protect the national defense. Section 793(e) * * * makes it a

criminal

act for any unauthorized

possessor

of a

document “relating to the national defense” either (1) willfully to communicate or cause to be

communicated

that document

to any

person

not

entitled to receive it or (2) willfully to retain the document and fail to deliver it to an officer of the United States entitled to receive it. *** “The

The

problem

here

is

whether

in

these

dangers surrounding the unauthorized possession of

particular cases the Executive Branch has authority to invoke the equity jurisdiction of the courts to protect

such

deemed

what it believes to be the national interest. * * * The

a case,

their

Government argues that in addition to the inherent power of any government to protect itself, the

to the

President’s power to conduct foreign affairs and his

authorities who would otherwise make the demand.” *** Of course, in the cases before us, the unpublished documents have been demanded by the United States and their import has been made known at least to counsel for the newspapers involved. * * *

position as Commander in Chief give him authority to impose censorship on the press to protect his ability to deal effectively with foreign nations and to conduct the military affairs of the country. Of course,

items

advisable

are

self-evident,

to require

regardless

unauthorized

of

and

it

their surrender

demand,

possession

especially

may

is

in such

since

be unknown

it is beyond cavil that the President has broad powers by virtue of his primary responsibility for the conduct of our foreign affairs and his position as Commander

It is thus clear that Congress has addressed

itself to the problems of protecting the security of the

in Chief. * * * And in some situations it may be that

country and the national defense from unauthorized

under whatever inherent powers the Government may have, as well as the implicit authority derived from the President’s mandate to conduct foreign affairs and to act as Commander in Chief, there is a basis for

disclosure of potentially damaging information. * * * It has not, however, authorized the injunctive remedy against threatened publication. It has apparently been satisfied to rely on criminal sanctions and _ their deterrent effect on the responsible as well as the irresponsible press. | am not, of course, saying that either of these newspapers has yet committed a crime or that either would commit a crime if it published all the material now in its possession. That matter must await resolution in the context of a criminal

the invocation of the equity jurisdiction of this Court as an aid to prevent the publication of material damaging to “national security,” however that term may be defined.

that event, the issue of guilt or innocence would be

It would, however, be utterly inconsistent with the concept of separation of powers for this Court to use its power of contempt to prevent behavior that Congress has specifically declined to

determined

prohibit. * * *

proceeding if one is instituted by the United States. In by

procedures

and

standards

quite

different from those that have purported to govern

these injunctive proceedings.

In these cases we are not faced with a situation where Congress has failed to provide the

MR. JUSTICE The Government contends cases is whether in a suit First Amendment bars a

Executive with broad power to protect the Nation from disclosure of damaging state secrets. Congress

MARSHALL, concurring: that the only issue in these by the United States, “the court from prohibiting a

has

on

several

occasions

given

extensive

consideration to the problem of protecting the military and strategic secrets of the United States.

newspaper from publishing material whose disclosure

33

This consideration has resulted in the enactment of

threat

statutes

proclamation the publication of information relating to national defense that might be useful to the enemy.

making

it

a

crime

to

receive,

disclose,

communicate, withhold, and publish certain documents, photographs, instruments, appliances, and information. The bulk of these statutes is found in chapter 37 of U. S. C., Title 18, entitled Espionage and Censorship. * * * In that chapter, Congress has

*

of war

authority

to directly

prohibit

by

KOK

Congress rejected this proposal after war against Germany had been declared even though many believed that there was a grave national emergency and that the threat of security leaks and espionage was serious. The Executive Branch has not gone to Congress and requested that the decision to provide such power be reconsidered. Instead, the Executive Branch comes to this Court and asks that it be granted the power Congress refused to give.

provided penalties ranging from a $ 10,000 fine to death for violating the various statutes. Thus it would seem that in order for this Court to issue an injunction it would require a showing that such an injunction would enhance the already existing power of the Government to act.

* * * It is a traditional axiom of equity that a court of In 1957 the United States Commission on Government Security found that “airplane journals, scientific periodicals, and even the daily newspaper

equity will not do a useless thing just as it is a traditional axiom that equity will not enjoin the commission of a crime. * * * Here there has been no attempt to make such a showing. The Solicitor General does not even mention in his brief whether the Government considers that there is probable cause to believe a crime has been committed or whether there is a conspiracy to commit future crimes.

have featured articles containing information and other data which should have been deleted in whole or in part for security reasons.” In response to this problem the Commission proposed that “Congress enact legislation making it a crime for any person

willfully to disclose without proper authorization, for any purpose whatever, information classified ‘secret’

If the Government had attempted to show that there was no effective remedy under traditional criminal law, it would have had to show that there is no arguably applicable statute. Of course, at this stage this Court could not and cannot determine whether there has been a violation of a particular statute or decide the constitutionality of any statute. Whether a good-faith prosecution could have been instituted under any statute could, however, be determined.

or ‘top secret,’ knowing, or having reasonable grounds to believe, such information to have been so

classified.” * * * After substantial floor discussion on the proposal, it was rejected. * * * If the proposal that

Sen.

Cotton

championed

on the

floor had

been

enacted, the publication of the documents involved here would certainly have been a crime. Congress refused, however, to make it a crime. The Government is here asking this Court to remake that decision. This Court has no such power.

MR.

* OK OK

CHIEF

JUSTICE

BURGER,

dissenting: So clear are the constitutional limitations on prior restraint against expression, that from the

Even if it is determined that the Government could not in good faith bring criminal prosecutions against the New York Times and the Washington Post, it is clear that Congress has specifically rejected passing legislation that would have clearly given the President the power he seeks here and made the

time

of Near

v.

Minnesota,

283

U.S.

697

(1931),

until recently in Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971), we have had little occasion to be concerned with cases involving prior restraints against news reporting on matters of public interest. There is, therefore, little variation among the members of the Court in terms of resistance to prior restraints against publication. Adherence to this basic constitutional principle, however, does not make

current activity of the newspapers unlawful. When Congress specifically declines to make conduct unlawful it is not for this Court to redecide those issues -- to overrule Congress. * * *

these cases simple. In these cases, the imperative of a free and unfettered press comes into collision with

On at least two occasions Congress has refused to enact legislation that would have made the conduct engaged in here unlawful and given the

another

imperative,

complex

modern

the

effective

government

and

functioning

of a

specifically the

President the power that he seeks in this case. In 1917

effective exercise of certain constitutional powers of

during the debate over the original Espionage Act, still the basic provisions of § 793, Congress rejected a proposal to give the President in time of war or

the Executive. Only those who view the First Amendment as an absolute in all circumstances -- a

34

view I respect, but reject -- can find such cases as these to be simple or easy.

period the Times, publication. * * *

These cases are not simple for another and more immediate reason. We do not know the facts of the cases. No District Judge knew all the facts. No

It is not disputed that the Times has had unauthorized possession of the documents for three to four months, during which it has had its expert analysts studying them, presumably digesting them and preparing the material for publication. During all of this time, the Times, presumably in its capacity as

Court

of Appeals judge

knew

all the

facts. No

member of this Court knows all the facts.

Why are we in this posture, in which only those judges to whom the First Amendment is absolute and permits of no restraint in any circumstances or for any reason, are really in a position to act?

demonstrating

the

hectic

pressures

The

prompt

reflects our universal

setting of these

abhorrence

own

choice,

deferred

publication for purposes it considered proper and thus

public knowledge was delayed. No doubt this was for a good reason; the analysis of 7,000 pages of complex material drawn from a vastly greater volume of material would inevitably take time and the writing of good news stories takes time. But why should the United States Government, from whom this information was illegally acquired by someone, along with all the counsel, trial judges, and appellate judges be placed under needless pressure? After these months of deferral, the alleged “right to know” has somehow and suddenly become a right that must be

under

which these cases have been processed and I need not

restate them.

its

trustee of the public’s “right to know,” has held up

I suggest we are in this posture because these cases have been conducted in unseemly haste. MR. JUSTICE HARLAN covers the chronology of

events

by

cases

of prior restraint.

But prompt judicial action does not mean unjudicial haste.

vindicated instanter. Would it have been unreasonable, since the newspaper could anticipate the Government’s objections to release of secret material, to give the Government an opportunity to review the entire collection and determine whether agreement could be

Here, moreover, the frenetic haste is due in large part to the manner in which the Times proceeded from the date it obtained the purloined documents. It seems reasonably clear now that the haste precluded reasonable and deliberate judicial treatment of these cases and was not warranted. The precipitate action of this Court aborting trials not yet completed is not the kind of judicial conduct that

reached on publication? Stolen or not, if security was

not in fact jeopardized, much of the material could no doubt have been declassified, since it spans a period ending in 1968. With such an approach -- one that great newspapers have in the past practiced and stated editorially to be the duty of an honorable press

ought to attend the disposition of a great issue.

-- the newspapers and Government might well narrowed the area of disagreement as to what and was not publishable, leaving the remainder resolved in orderly litigation, if necessary. To

The newspapers make a derivative claim under the First Amendment; they denominate this right as the public “right to know”; by implication, the Times asserts a sole trusteeship of that right by virtue of its journalistic “scoop.” The right is asserted as an absolute. Of course, the First Amendment right itself is not an absolute, as Justice Holmes so long ago pointed out in his aphorism concerning the right

is hardly

believable that a newspaper

have was to be me it

long regarded

as a great institution in American life would fail to perform one of the basic and simple duties of every citizen with respect to the discovery or possession of stolen property or secret government documents. That duty, I had thought -- perhaps naively -- was to report forthwith, to responsible public officers. This

to shout “fire” in a crowded theater if there was no fire. There are other exceptions, some of which Chief Justice Hughes mentioned by way of example in Near v. Minnesota. There are no doubt other exceptions no one has had occasion to describe or

duty rests on taxi drivers, Justices, and the New York

discuss. Conceivably such exceptions may be lurking in these cases and would have been flushed had they

Times. The course followed by the Times, whether so calculated or not, removed any possibility of orderly litigation of the issues. If the action of the judges up

been properly considered in the trial courts, free from unwarranted deadlines and frenetic pressures. An

to now has been happenstance. * * *

correct,

that

result

is

sheer

issue of this importance should be tried and heard in a judicial atmosphere conducive to thoughtful, reflective deliberation, especially when haste, in terms of hours, is unwarranted in light of the long

Our grant of the writ of certiorari before final judgment in the Times case aborted the trial in the District Court before it had made a complete

35

record pursuant to the mandate of the Court of Appeals for the Second Circuit.

With

The consequence of all this melancholy series of events is that we literally do not know what

we are acting on. As I see it, we have been forced to deal

with

litigation

concerning

rights

of

magnitude without an adequate record, and surely

were

frequently

unable

to respond

I consider

that the

Court

Both the Court of Appeals for the Second Circuit and the Court of Appeals for the District of

great

Columbia Circuit rendered judgment on June 23. The New York Times’ petition for certiorari, its motion for accelerated consideration thereof, and_ its application for interim relief were filed in this Court

without time for adequate treatment either in the prior proceedings or in this Court. It is interesting to note that counsel on both sides, in oral argument before

this Court,

all respect,

has been almost irresponsibly feverish in dealing with these cases.

on June 24 at about 11 a.m. The application of the United States for interim relief in the Post case was

to

questions on factual points. Not surprisingly they pointed out that they had been working literally “around the clock” and simply were unable to review the documents that give rise to these cases and were not familiar with them. This Court is in no better

also filed here on June 24 at about 7:15 p.m. This Court’s order setting a hearing before us on June 26 at 11 a.m., a course which I joined only to avoid the possibility of even more peremptory action by the Court, was issued less than 24 hours before. The

posture. I agree generally with MR. JUSTICE HARLAN and MR. JUSTICE BLACKMUN but I

record in the Post case was

filed with the Clerk

am not prepared to reach the merits. * * *

shortly before 1 p.m. on June 25; the record in the Times case did not arrive until 7 or 8 o’clock that

I would affirm the Court of Appeals for the Second Circuit and allow the District Court to complete the trial aborted by our grant of certiorari,

same night. The briefs of the parties were received less than two hours before argument on June 26.

meanwhile preserving the status quo in the Post case.

This frenzied train of events took place in the name of the presumption against prior restraints created by the First Amendment. Due regard for the extraordinarily important and difficult questions involved in these litigations should have led the Court to shun such a precipitate timetable. In order to decide the merits of these cases properly, some or all of the following questions should have been faced:

I would direct that the District Court on remand give priority to the Times case to the exclusion of all other

business of that court but I would not set arbitrary deadlines. I should add that I am in general agreement with

much

of what

MR.

JUSTICE

WHITE

has

expressed with respect to penal sanctions concerning communication or retention of documents information relating to the national defense.

or

1. Whether the Attorney General is authorized to bring these suits in the name of the United States. * * * This question involves as well the construction and validity of a singularly opaque

We all crave speedier judicial processes but

statute -- the Espionage Act, 18 U.S. C. § 793 (e).

when judges are pressured as in these cases the result

is a parody of the judicial function. 2. Whether the First Amendment permits the federal courts to enjoin publication of stories which would present a serious threat to national security.

MR. JUSTICE HARLAN, with whom THE CHIEF JUSTICE and MR. JUSTICE BLACKMUN join, dissenting: These cases forcefully call to mind the wise admonition of Mr. Justice Holmes, dissenting in Northern Securities Co. v. United States, 193 U.S. 197, 400-401 (1904):

* OK *

3. Whether the threat to publish highly secret documents is of itself a sufficient implication of national security to justify an injunction on the

“Great cases like hard cases make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but

theory that regardless of the contents of documents harm enough results simply from demonstration of such a breach of secrecy.

because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before

4. Whether the unauthorized disclosure of any of these particular documents would seriously impair the national security.

which even well settled principles of law will bend.”

36

the the

5. What

weight

should

be given

to the

have felt constrained

to deal with the cases

in the

fuller sweep indicated above.

opinion of high officers in the Executive Branch of

the Government with respect to questions 3 and 4. It is a sufficient basis for affirming the Court

of Appeals

6. Whether the newspapers are entitled to retain and use the documents notwithstanding the seemingly uncontested facts that the documents, or

the originals

of which

they

are duplicates,

for the Second

Circuit

in the

Times

litigation to observe that its order must rest on the conclusion that because of the time elements the Government had not been given an adequate opportunity to present its case to the District Court. At the least this conclusion was not an abuse of discretion.

were

purloined from the Government’s possession and that

the newspapers received them with knowledge that they had been feloniously acquired. * * * 7. Whether the threatened harm to the national security or the Government’s possessory interest in the documents justifies the issuance of an

In the Post litigation the Government had more time to prepare; this was apparently the basis for the refusal of the Court of Appeals for the District of Columbia Circuit on rehearing to conform its

injunction against publication in light of — a. The strong First Amendment policy against prior restraints on publication;

judgment to that of the Second Circuit. But I think

b. The doctrine against enjoining

this judgment cannot stand -- a reason which also

conduct in violation of criminal statutes; and c. The extent to which the materials at issue have apparently already been

judgment of the District Court in the Times litigation, set aside by the Court of Appeals. It is plain to me

there is another and more

fundamental

reason why

furnishes an additional ground for not reinstating the

otherwise disseminated.

that the scope of the judicial function in passing upon

the

activities

of

the

Executive

Branch

of

the

Government in the field of foreign affairs is very narrowly restricted. This view is, I think, dictated by the concept of separation of powers upon which our constitutional system rests.

These are difficult questions of fact, of law, and of judgment; the potential consequences of erroneous decision are enormous. The time which has been available to us, to the lower courts,” and to the

parties has been wholly inadequate for giving these

cases the kind of consideration they deserve. It is a

In a speech on the floor of the House of

reflection on the stability of the judicial process that these great issues -- as important as any that have arisen during my time on the Court -- should have been decided under the pressures engendered by the

Representatives, Chief Justice John Marshall, then a member of that body, stated:

“The

President

is the sole organ

of the

torrent of publicity that has attended these litigations from their inception.

nation in its external relations, and representative with foreign nations.” * * *

Forced as I am to reach the merits of these cases, I dissent from the opinion and judgments of the Court. Within the severe limitations imposed by the time constraints under which I have been required to operate, I can only state my reasons in telescoped form, even though in different circumstances I would

From that time, shortly after the founding of the Nation, to this, there has been no substantial challenge to this description of the scope of executive power. * * *

its

sole

From this constitutional primacy in the field of foreign affairs, it seems to me that certain conclusions necessarily follow. Some of these were stated concisely by President Washington, declining the request of the House of Representatives for the

*

The hearing in the Post case before Judge Gesell began at 8 a.m. on June 21, and his decision was rendered, under the hammer of a

papers leading up to the negotiation of the Jay Treaty:

deadline imposed by the Court of Appeals, shortly before 5 p.m. on the same day. The hearing in the Times case before Judge Gurfein was held on June 18

“The nature of foreign negotiations requires caution, and their success must often depend on secrecy; and even when brought to a conclusion a full disclosure of all the measures, demands, or eventual concessions which may have been proposed or contemplated would be extremely impolitic; for this might have a pernicious influence on future

and his decision was rendered on June 19. The Government’s appeals in the two cases were heard by the Courts of Appeals for the District of Columbia and Second Circuits, each court sitting en banc, on June 22. Each court rendered its decision on the following afternoon.

37

Accordingly, I would vacate the judgment of

negotiations, or produce immediate inconveniences, perhaps danger powers.” * * *

The

and

mischief,

power

to

in relation

evaluate

the

to other

the Court of Appeals for the District of Columbia Circuit on this ground and remand the case for further proceedings in the District Court. Before the

commencement

“pernicious

influence” of premature disclosure is not, however, lodged in the Executive alone. | agree that, in performance of its duty to protect the values of the First Amendment against political pressures, the

judiciary

must

review

the

initial

Executive

determination to the point of satisfying itself that the

stated above

subject matter of the dispute does lie within the proper compass of the President’s foreign relations power. Constitutional considerations forbid “a complete

abandonment

of judicial

control.”

of such

further

proceedings,

due

opportunity should be afforded the Government for procuring from the Secretary of State or the Secretary of Defense or both an expression of their views on the issue of national security. The ensuing review by the District Court should be in accordance with the views expressed in this opinion. And for the reasons

I would

affirm the judgment

of the

Court of Appeals for the Second Circuit.

* * *

Pending

Moreover, the judiciary may properly insist that the determination that disclosure of the subject matter would irreparably impair the national security be made by the head of the Executive Department

further

hearings

in

each

case

conducted under the appropriate ground rules, I would continue the restraints on publication. I cannot believe that the doctrine prohibiting prior restraints reaches to the point of preventing courts from maintaining the status quo long enough to act responsibly in matters of such national importance as those involved here.

concerned -- here the Secretary of State or the Secretary of Defense -- after actual personal consideration by that officer. This safeguard is

required in the analogous area of executive claims of privilege for secrets of state. * * *

MR. JUSTICE BLACKMUN,

join MR. JUSTICE HARLAN But in my judgment the judiciary may not properly go beyond these two inquiries and redetermine for itself the probable impact of

dissenting:

I

in his dissent. I also

am in substantial accord with much that MR. JUSTICE WHITE says, by way of admonition, in the

latter part of his opinion.

disclosure on the national security.

At

this

point

the

focus

is on

only

the

“The very nature of executive decisions as foreign policy is political, not judicial. Such

comparatively few documents specified by the Government as critical. So far as the other material --

decisions are wholly confided by our Constitution to

vast in amount -- is concerned, let it be published and published forthwith if the newspapers, once the strain

to the

political

Executive

and

departments

Legislative.

of

the

They

government,

are

delicate,

is gone and the sensationalism is eased, still feel the urge so to do.

complex, and involve large elements of prophecy. They are and should be undertaken only by those

directly responsible to the people whose welfare they

But we are concerned here with the few documents specified from the 47 volumes. Almost 70 years ago Mr. Justice Holmes, dissenting in a celebrated case, observed:

advance or imperil. They are decisions of a kind for which the Judiciary has neither aptitude, facilities nor responsibility and which has long been held to belong in the domain of political power not subject to judicial intrusion or inquiry.” * * *

“Great cases like hard cases make

bad law. For great cases are called great, not Even if there is some room for the judiciary to override the executive determination, it is plain that the scope of review must be exceedingly narrow.

by reason of their real importance in shaping the law of the future,

accident

I can see no indication in the opinions of either the District Court or the Court of Appeals in the Post litigation that the conclusions of the Executive were

but because

immediate

of some

overwhelming

interest which appeals to the feelings and distorts

interests

given even the deference owing to an administrative agency, much less that owing to a co-equal branch of

the Government operating constitutional prerogative.

of the

judgment.

exercise

a

These

kind

of

immediate

hydraulic

pressure .. . .” Northern Securities Co. v.

United (1904).

within the field of its

States,

193

U.S.

197,

400-401

The present cases, if not great, are at least

unusual in their posture and implications, and the

38

Holmes observation application.

certainly

has

pertinent

months to formulate

its plan of procedure and, thus,

deprived its public for that period.

The New York Times clandestinely devoted

The First Amendment, after all, is only one

a period of three months to examining the 47 volumes that came into its unauthorized possession. Once it had begun publication of material from those volumes, the New York case now before us emerged.

part of an entire Constitution. Article II of the great

It

immediately

assumed,

and

ever

since

document

has

maintained, a frenetic pace and character. Seemingly, made public fast enough. Seemingly, from then on, every deferral or delay, by restraint or otherwise, was

But even the newspapers concede that there are situations where restraint is in order and is constitutional. Mr. Justice Holmes gave us a suggestion when he said in Schenck,

same. Two federal district courts, two United States courts of appeals, and this Court -- within a

“It is a question of proximity and degree. When a nation is at war many things that might be said in time of peace are such a hindrance to its effort that their utterance will not be endured so long as men fight and that no Court could regard them as protected by any constitutional right.” 249 U.S., at 52.

period of less than three weeks from inception until today -- have been pressed into hurried decision of profound constitutional issues on inadequately that,

one

facts without the

would

hope,

should

characterize the American judicial process. There has been much writing about the law and little knowledge and less digestion of the facts. In the New York case the judges, both trial and appellate, had not yet examined the basic material when the case was brought here. In the District of Columbia case, little

I therefore would remand these cases to be developed expeditiously, of course, but on a schedule permitting the orderly presentation of evidence from both sides, with the use of discovery, if necessary, as authorized by the rules, and with the preparation of briefs, oral argument, and court opinions of a quality better than has been seen to this point. In making this last statement, I criticize no lawyer or judge. I know

more was done, and what was accomplished in this respect was only on required remand, with the Washington Post, on the excuse that it was trying to protect its source of information, initially refusing to reveal what material it actually possessed, and with the District Court forced to make assumptions as to that possession.

from past personal experience the agony pressure cases

a

lawsuit

importance.

of

this

magnitude

It is not the way

and

in the preparation

and

the

issues

including this one, produced thus far.

With such respect as may be due to the contrary view, this, in my opinion, is not the way to

try

primary

standards are not yet developed. The parties here are in disagreement as to what those standards should be.

The District of Columbia case is much the

and largely assumed

Branch

broad right of the press to print and of the very narrow right of the Government to prevent. Such

telegram following the initial Sunday publication.

deliberation

Executive

majority of this Court. * * * What is needed here is a weighing, upon properly developed standards, of the

abhorrent and was to be deemed violative of the First Amendment and of the public’s “right immediately to know.” Yet that newspaper stood before us at oral argument and professed criticism of the Government for not lodging its protest earlier than by a Monday

careful

in the

important, and I cannot subscribe to a doctrine of unlimited absolutism for the First Amendment at the cost of downgrading other provisions. First Amendment absolutism has never commanded a

once publication started, the material could not be

developed

vests

power over the conduct of foreign affairs and places in that branch the responsibility for the Nation’s safety. Each provision of the Constitution is

asserted

involved

deserve

of time

of litigation. But these better

and

than

the

courts,

has

been

* KOK

for federal courts to

adjudicate, and to be required to adjudicate, issues

The Court, however, decides the cases today the other way. I therefore add one final comment.

that allegedly concern the Nation’s vital welfare. The country would be none the worse off were the cases tried quickly, to be sure, but in the customary and

properly deliberative manner. The most recent of the

these two ultimate America. Columbia

material, it is said, dates no later than 1968, already about three years ago, and the Times itself took three

39

I strongly urge, and sincerely hope, that newspapers will be fully aware of their responsibilities to the United States of Judge Wilkey, dissenting in the District of case, after a review of only the affidavits

before his court (the basic papers had not then been

foundation. | therefore share his concern. | hope that

made available by either party), concluded that there were a number of examples of documents that, if in the possession of the Post, and if published, “could

damage

clearly result in great harm to the nation,” and he defined “harm” to mean “the death of soldiers, the destruction

difficulty

of

of

alliances,

negotiation

the

with

greatly

our

increased

enemies,

the

inability of our diplomats to negotiate... .” I, for one, have now been able to give at least some cursory

study not only to the affidavits, but to the material itself. I regret to say that from this examination I fear that Judge Wilkey’s statements have possible

has

not

already

been

done.

If, however,

damage has been done, and if, with the Court’s action

today,

these

newspapers

proceed

to

publish

the

critical documents and there results therefrom “the death of soldiers, the destruction of alliances, the greatly increased difficulty of negotiation with our enemies, the inability of our diplomats to negotiate,”

to which list I might add the factors of prolongation of the war and of further delay in the freeing of United States prisoners, then the Nation’s people will know where the responsibility for these sad consequences rests.

IV.

Privacy

The word “privacy” means a lot of things — and many of those meanings are mutually exclusive. To some people, privacy is a mere concept; to others, a value; and to still others, an

inviolable right. It is important to distinguish between the concept of privacy and the right to privacy. Most criminals try to commit their crimes in private — but that doesn’t mean that they necessarily have a legal right to the level of privacy they want. In fact, you will see that privacy and security are often at odds with each other ... while at the same time they are essentially two sides of the

same coin. In the United States, most of our essential rights are protected by the United States Constitution. Interestingly, the word “privacy” never appears in the U.S. Constitution. Despite this, the Supreme Court has looked at various situations and declared that several of the constitutional amendments, taken together, create a “penumbral” right to privacy upheld by the United States Constitution. While there is much debate concerning the basis and extent of this penumbral right, the United States Supreme Court seems unlikely to back away from the basic premise that some level of individual privacy is guaranteed by our constitution and its amendments. While a full discussion of the evolution of the right to privacy is beyond the scope of this course, the most appropriate starting place in understanding why the Constitution has been determined to support a right to privacy is to consider the text of the Fourth Amendment to the U.S. Constitution: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, Shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. U.S. Const., amend. IV.

The idea of being “secure ... against unreasonable searches and seizures” definitely has a flavor of upholding individual privacy. At the same time, connection made between “security” and “privacy” demonstrates the close tie between these two concepts. In addition to Constitutional support for privacy, Congress has enacted various pieces of legislation designed to protect individual privacy under certain circumstances. Some significant examples of such legislation are as follows:

A. — The Health Insurance Portability and Accountability Act The

Health

Insurance

Portability and Accountability Act of 1996

(HIPAA)

is an

extremely complex statute that governs many subjects. As relevant to this course, HIPAA mandates certain things for “covered entities” to protect consumers’ privacy. Here are some excerpts from the relevant federal statutes and regulations.

41

1,

The Enabling Statutes:

42 U.S.C. § 1320d-2. Standards for information transactions and data elements (a) Standards to enable electronic exchange (1) In general The Secretary shall adopt standards for transactions, and data elements for such transactions, to enable health information to be exchanged electronically, that are appropriate for— (A) the financial and administrative transactions described in paragraph (2); and (B) other financial and administrative transactions determined appropriate by the Secretary, consistent with the goals of improving the operation of the health care system and reducing

administrative costs. (2) Transactions The transactions referred to in paragraph (1)(A) are transactions with respect to the following:

(A) Health claims or equivalent encounter information. (B) Health claims attachments. (C) Enrollment and disenrollment in a health plan. (D) Eligibility for a health plan. (E) Health care payment and remittance advice. (F) Health plan premium payments. (G) First report of injury. (H) Health claim status. (1) Referral certification and authorization.

(3) Accommodation of specific providers The standards adopted by the Secretary under paragraph (1) shall accommodate the needs of different types of health care providers. (b) Unique health identifiers (1) In general

The Secretary shall adopt standards providing for a standard unique health identifier for each individual, employer, health plan, and health care provider for use in the health care system. In carrying out the preceding sentence for each health plan and health care provider, the Secretary shall take into account

multiple uses for identifiers and multiple locations and specialty classifications for health care providers. (2) Use of identifiers The standards adopted under paragraph (1) shall specify the purposes for which a unique health identifier may be used. (c) Code sets (1) In general The Secretary shall adopt standards that—

(A) select code sets for appropriate data elements for the transactions referred to in subsection (a)(1) of this section from among the code sets that have been developed by private and public entities; or (B) establish code sets for such data elements if no code sets for the data elements have been developed. (2) Distribution The Secretary shall establish efficient and low-cost procedures for distribution (including electronic distribution) of code sets and modifications made to such code sets under section 1320d-—3 (b) of this title. (d) Security standards for health information (1) Security standards The Secretary shall adopt security standards that— (A) take into account— (i) the technical capabilities of record systems used to maintain health information; (ii) the costs of security measures;

(iii) the need for training persons who have access to health information; (iv) the value of audit trails in computerized record systems; and (v) the needs and capabilities of small health care providers and rural health care providers (as such providers are defined by the Secretary); and

42

(B) ensure that a health care clearinghouse, if it is part of a larger organization, has policies and security procedures which isolate the activities of the health care clearinghouse with respect to

processing information in a manner that prevents unauthorized access to such information by such larger organization.

(2) Safeguards Each person described in section 1320d—1 (a) of this title who maintains or transmits health information shall maintain reasonable and appropriate administrative, technical, and physical safeguards— (A) to ensure the integrity and confidentiality of the information; (B) to protect against any reasonably anticipated— (i) threats or hazards to the security or integrity of the information; and (ii) unauthorized uses or disclosures of the information; and (C) otherwise to ensure compliance with this part by the officers and employees of such person. (e) Electronic signature (1) Standards

The Secretary, in coordination with the Secretary of Commerce, shall adopt standards specifying procedures for the electronic transmission and authentication of signatures with respect to the transactions referred to in subsection (a)(1) of this section. (2) Effect of compliance Compliance with the standards adopted under paragraph (1) shall be deemed to satisfy Federal and State statutory requirements for written signatures with respect to the transactions referred to in subsection (a)(1) of this section. (f) Transfer of information among health plans The Secretary shall adopt standards for transferring among health plans appropriate standard data elements needed for the coordination of benefits, the sequential processing of claims, and other data elements for individuals who have more than one health plan. 42 U.S.C. § 1320d—5. General penalty for failure to comply with requirements and standards (a) General penalty (1) In general Except as provided in subsection (b) of this section, the Secretary shall impose on any person who

violates a provision of this part a penalty of not more than $100 for each such violation, except that the total amount imposed on the person for all violations of an identical requirement or prohibition during a calendar year may not exceed $25,000. (2) Procedures The provisions of section 1320a—7a of this title (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to the imposition of a civil money penalty under this subsection in the same manner as such provisions apply to the imposition of a penalty under such section 1320a—7a of

this title. (b) Limitations (1) Offenses otherwise punishable

A penalty may not be imposed under subsection (a) of this section with respect to an act if the act constitutes an offense punishable under section 1320d—6 of this title. (2) Noncompliance not discovered A penalty may not be imposed under subsection (a) of this section with respect to a provision of this part if it is established to the satisfaction of the Secretary that the person liable for the penalty did not know, and by exercising reasonable diligence would not have known, that such person violated the provision. (3) Failures due to reasonable cause

(A) In general Except as provided in subparagraph (B), a penalty may not be imposed under subsection (a) of this section if— (i) the failure to comply was due to reasonable cause and not to willful neglect; and (ii) the failure to comply is corrected during the 30-day period beginning on the first date the person liable for the penalty knew, or by exercising reasonable diligence would have known,

that the failure to comply occurred.

43

(B) Extension of period (i) No penalty The period referred to in subparagraph (A)(ii) may be extended as determined appropriate by the Secretary based on the nature and extent of the failure to comply. (ii) Assistance If the Secretary determines that a person failed to comply because the person was unable to comply, the Secretary may provide technical assistance to the person during the period described in subparagraph (A)(ii). Such assistance shall be provided in any manner determined appropriate by the Secretary. (4) Reduction In the case of a failure to comply which is due to reasonable cause and not to willful neglect, any penalty under subsection (a) of this section that is not entirely waived under paragraph (3) may be waived to the extent that the payment of such penalty would be excessive relative to the compliance failure involved. 42 U.S.C. § 1320d-6. Wrongful disclosure of individually identifiable health information. (a) Offense

A person who knowingly and in violation of this part-— (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person,

shall be punished as provided in subsection (b) of this section. (b) Penalties A person described in subsection (a) of this section shall— (1) be fined not more than $50,000, imprisoned not more than 1 year, or both; (2) if the offense is committed under false pretenses, be fined not more than $100,000, imprisoned not more than 5 years, or both; and (3) if the offense is committed with intent to sell, transfer, or use individually identifiable health

information for commercial advantage, personal gain, or malicious harm, $250,000, imprisoned not more than 10 years, or both.

2.

be fined not more than

The Implementing Regulations: Note: when the federal regulations refer to a “section” or a “part,” they are referring to a

specific portion of the regulations.

For example,

the first regulation reprinted below

is

section 103, in subpart A, in part 160, in subtitle A, of title 45 of the Code of Federal Regulations. For convenience, it is commonly referred to as 45 C.F.R. § 160.103 (a lawyer citing it in court would say “forty-five C F R section 160 point 103”). The reason for organizing the regulations this way is to allow convenient definitions that apply to some related regulations but not to others (for example, an anti-counterfeiting regulation could say “for purposes of this subpart, ‘cash’ means United States currency but does not include checks,” while an anti-fraud regulation might say “for purposes of this part, ‘cash’ includes United States or foreign currency or coin, negotiable instruments, and government bonds”). 45 C.F.R. § 160.103 Definitions. Except as otherwise provided, the following definitions apply to this subchapter:

Individually identifiable health information is information that is a subset of health information, demographic information collected from an individual, and:

including

(1) Is created or received by a health care provider, health plan, employer, or health care clearinghouse; and

(2) Relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual; and (i) That identifies the individual; or

(ii) With respect to which there is a reasonable basis to believe the information can be used to identify the individual.

44

Protected health information means individually identifiable health information: (1) Except as provided in paragraph (2) of this definition, that is: (i) Transmitted by electronic media;

(ii) Maintained in electronic media; or (iii) Transmitted or maintained in any other form or medium. (2) Protected health information excludes individually identifiable health information in: (i) Education records covered by the Family Educational Rights and Privacy Act, as amended, 20 U.S.C. § 1232g; (ii) Records described at 20 U.S.C. § 1232g(a)(4)(B)(iv); and (iii) Employment records held by a covered entity in its role as employer.

45 C.F.R. § 164.104 Applicability. (a) Except as otherwise provided, the standards, requirements, and implementation specifications adopted under this

part apply to the following entities: (1) A health plan. (2) A health care clearinghouse. (3) A health care provider who transmits any health information

in electronic form in connection with a

transaction covered by this subchapter. (b) When a health care clearinghouse creates or receives protected health information as a business associate of another covered entity, or other than as a business associate of a covered entity, the clearinghouse must comply with

Sec. 164.105 relating to organizational requirements for covered entities, including the designation of health care components of a covered entity. 45 C.F.R. § 164.306 Security Standards: General rules. (a) General requirements. Covered entities must do the following:

(1) Ensure the confidentiality, integrity, and availability of all electronic protected health information the covered entity creates, receives, maintains, or transmits.

(2) Protect against any reasonably anticipated threats or hazards to the security or integrity of such information. (3) Protect against any reasonably anticipated uses or disclosures of such information that are not permitted or required under subpart E of this part. (4) Ensure compliance with this subpart by its workforce. (b) Flexibility of approach. (1) Covered entities may use any security measures that allow the covered entity to

reasonably and appropriately implement the standards and implementation specifications as specified in this subpart. (2) In deciding which security measures to use, a covered entity must take into account the following factors: (i) The size, complexity, and capabilities of the covered entity. (ii) The covered entity’s technical infrastructure, hardware, and software security capabilities. (iii) The costs of security measures. (iv) The probability and criticality of potential risks to electronic protected health information. (c) Standards. A covered entity must comply with the standards as provided in this section and in Sec. 164.308, Sec. 164.310,

Sec.

164.312,

Sec.

164.314,

and

Sec.

164.316

with

respect

to

all

electronic

protected

health

information. (d) Implementation specifications. In this subpart: (1) Implementation specifications are required or addressable. If an implementation specification is required, the word “Required” appears in parentheses after the title of the implementation specification. [f an implementation specification is addressable, the word “Addressable” appears in parentheses after the title of the implementation specification. (2) When a standard adopted in Sec. 164.308, Sec. 164.310, Sec. 164.312, Sec. 164.314, or Sec. 164.316 includes required implementation specifications, a covered entity must implement the implementation

specifications. (3) When a standard adopted in Sec. 164.308, Sec. 164.310, Sec. 164.312, Sec. includes addressable implementation specifications, a covered entity must--

164.314, or Sec.

164.316

(i) Assess whether each implementation specification is a reasonable and appropriate safeguard in its environment, when analyzed with reference to the likely contribution to protecting the entity’s electronic protected health information; and

45

(ii) As applicable to the entity-(A) Implement the implementation specification if reasonable and appropriate; or (B) If implementing the implementation specification is not reasonable and appropriate-(1) Document why it would not be reasonable and appropriate to implement implementation specification; and

(e) Maintenance.

the

(2) Implement an equivalent alternative measure if reasonable and appropriate. Security measures implemented to comply with standards and implementation specifications

adopted under Sec. 164.105 and this subpart must be reviewed and modified as needed to continue provision of reasonable and appropriate protection of electronic protected health information as described at Sec. 164.316. 45 C.F.R. § 164.308 Administrative Safeguards. (a) A covered entity must, in accordance with Sec. 164.306: (1)(i) Standard: Security management process. Implement policies and procedures to prevent, detect, contain, and correct security violations.

(ii) Implementation specifications: (A) Risk analysis (Required). Conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information held by the covered entity.

(B) Risk management

(Required). Implement security measures sufficient to reduce risks and

vulnerabilities to a reasonable and appropriate level to comply with Sec. 164.306(a). (C) Sanction policy (Required). Apply appropriate sanctions against workforce members who fail to comply with the security policies and procedures of the covered entity. (D) Information system activity review (Required). Implement procedures to regularly review records of information system activity, such as audit logs, access reports, and security incident tracking reports. (2) Standard: Assigned security responsibility. Identify the security official who is responsible for the development and implementation of the policies and procedures required by this subpart for the entity. (3)(i) Standard: Workforce security. Implement policies and procedures to ensure that all members of its

workforce

have

appropriate

access

to

electronic

protected

health

information,

as

provided

under

paragraph (a)(4) of this section, and to prevent those workforce members who do not have access under paragraph (a)(4) of this section from obtaining access to electronic protected health information.

(ii) Implementation specifications: (A) Authorization and/or supervision (Addressable).

Implement

procedures for the authorization

and/or supervision of workforce members who work with electronic protected health information or in locations where it might be accessed. (B) Workforce clearance procedure (Addressable). Implement procedures to determine access of a workforce member to electronic protected health information is appropriate.

that the

(C) Termination procedures (Addressable). Implement procedures for terminating access to electronic protected health information when the employment of a workforce member ends or as required by determinations made as specified in paragraph (a)(3)(ii)(B) of this section.

(4)(i) Standard: Information access management. Implement policies and procedures for authorizing access to electronic protected health information that are consistent with the applicable requirements of subpart E of this

part. (ii) Implementation specifications: (A) Isolating health care clearinghouse functions (Required). If a health care clearinghouse is part of a larger organization, the clearinghouse must implement policies and procedures that protect the

electronic protected health information of the clearinghouse from unauthorized access by the larger organization. (B) Access authorization (Addressable). Implement policies and procedures for granting access to electronic protected health information, for example, through access to a workstation, transaction, program, process, or other mechanism. (C) Access establishment and modification (Addressable). Implement policies and procedures that, based upon the entity’s access authorization policies, establish, document, review, and modify a

user’s right of access to a workstation, transaction, program, or process. (5)(i) Standard: Security awareness and training. Implement a security awareness and training program for all members of its workforce (including management).

46

(ii) Implementation specifications. Implement: (A) Security reminders (Addressable). Periodic security updates. (B) Protection from malicious software (Addressable). Procedures for guarding against, detecting, and reporting malicious software.

(C) Log-in monitoring (Addressable). Procedures for monitoring log-in attempts and reporting discrepancies. (D) Password management (Addressable). Procedures for creating, changing, and safeguarding passwords. (6)(i) Standard: Security incident procedures. Implement policies and procedures to address security incidents.

(ii) Implementation specification: Response and Reporting (Required). Identify and respond to suspected or known security incidents; mitigate, to the extent practicable, harmful effects of security incidents that

are known to the covered entity; and document security incidents and their outcomes. (7)(i) Standard: Contingency plan. Establish (and implement as needed) policies and procedures for responding to an emergency or other occurrence (for example, fire, vandalism, system failure, and natural disaster) that

damages systems that contain electronic protected health information. (ii) Implementation specifications: (A) Data backup plan (Required). Establish and implement procedures to create and maintain retrievable exact copies of electronic protected health information. (B) Disaster recovery plan (Required). Establish (and implement as needed) procedures to restore any loss of data. (C) Emergency mode operation plan (Required). Establish (and implement as needed) procedures to enable continuation of critical business processes for protection of the security of electronic protected health information while operating in emergency mode. (D) Testing and revision procedures (Addressable). Implement procedures for periodic testing and revision of contingency plans.

(E) Applications and data criticality analysis (Addressable). Assess the relative criticality of specific applications and data in support of other contingency plan components. (8) Standard: Evaluation. Perform a periodic technical and nontechnical evaluation, based initially upon the standards implemented under this rule and subsequently, in response to environmental or operational changes

affecting the security of electronic protected health information, that establishes the extent to which an entity’s security policies and procedures meet the requirements of this subpart. (b)(1) Standard: Business associate contracts and other arrangements. A covered entity, in accordance with Sec. 164.306, may permit a business associate to create, receive, maintain, or transmit electronic protected health information on the covered entity’s behalf only if the covered entity obtains satisfactory assurances, in accordance with Sec. 164.314(a) that the business associate will appropriately safeguard the information. (2) This standard does not apply with respect to-(i) The transmission by a covered entity of electronic protected health information to a health care provider concerning the treatment of an individual. (ii) The transmission of electronic protected health information by a group health plan or an HMO or health insurance issuer on behalf of a group health plan to a plan sponsor, to the extent that the requirements of Sec. 164.314(b) and Sec. 164.504(f) apply and are met; or

(iii) The transmission of electronic protected health information from or to other agencies providing the services at Sec. 164.502(e)(1)(ii)(C), when the covered entity is a health plan that is a government program providing public benefits, if the requirements of Sec. 164.502(e)(1)(ii)(C) are met. (3) A covered entity that violates the satisfactory assurances it provided as a business associate of another covered entity will be in noncompliance with the standards, implementation specifications, and requirements of this paragraph and Sec. 164.314(a). (4) Implementation specifications: Written contract or other arrangement (Required). Document the satisfactory assurances required by paragraph (b)(1) of this section through a written contract or other arrangement with the business associate that meets the applicable requirements of Sec. 164.314(a). 45 C.F.R. § 164.310 Physical Safeguards. A covered entity must, in accordance with Sec. 164.306: (a)(1) Standard: Facility access controls. Implement policies and procedures to limit physical access to its electronic information systems and the facility or facilities in which they are housed, while ensuring that

properly authorized access is allowed.

47

(2) Implementation specifications: (1) Contingency operations (Addressable). Establish (and implement as needed) procedures that allow facility access in support of restoration of lost data under the disaster recovery plan and emergency mode operations plan in the event of an emergency. (ii) Facility security plan (Addressable). Implement policies and procedures to safeguard the facility

and the equipment therein from unauthorized physical access, tampering, and theft. (iii) Access control and validation procedures (Addressable). Implement procedures to control and validate a person’s access to facilities based on their role or function, including visitor control, and control of access to software programs for testing and revision. (iv) Maintenance records (Addressable). Implement policies and procedures to document repairs

and modifications to the physical components

of a facility which are related to security (for

example, hardware, walls, doors, and locks).

(b) Standard: Workstation use. Implement policies and procedures that specify the proper functions to be performed, the manner in which those functions are to be performed, and the physical attributes of the surroundings of a specific workstation or class of workstation that can access electronic protected health information. (c) Standard: Workstation security. Implement physical safeguards for all workstations that access electronic protected health information, to restrict access to authorized users. (d)(1) Standard: Device and media controls. Implement policies and procedures that govern the receipt and

removal of hardware and electronic media that contain electronic protected health information into and out of a facility, and the movement of these items within the facility. (2) Implementation specifications:

(i) Disposal (Required). Implement policies and procedures to address the final disposition of electronic protected health information, and/or the hardware or electronic media on which it is stored. (ii) Media re-use (Required). Implement procedures for removal of electronic protected health information from electronic media before the media are made available for re-use. (iii) Accountability (Addressable). Maintain a record of the movements of hardware and electronic media and any person responsible therefor. (iv) Data backup and storage (Addressable). Create a retrievable, exact copy of electronic protected health information, when needed, before movement of equipment. 45 C.F.R. § 164.312 Technical Safeguards. A covered entity must, in accordance with Sec. 164.306: (a)(1) Standard: Access control. Implement technical policies and procedures for electronic information systems that maintain electronic protected health information to allow access only to those persons or software programs that have been granted access rights as specified in Sec. 164.308(a)(4). (2) Implementation specifications: (i) Unique user identification (Required). Assign a unique name and/or number for identifying and tracking user identity. (ii) Emergency access procedure (Required). Establish (and implement as needed) procedures for obtaining necessary electronic protected health information during an emergency. (iii) Automatic logoff (Addressable). Implement electronic procedures that terminate an electronic session after a predetermined time of inactivity. (iv) Encryption and decryption (Addressable). Implement a mechanism to encrypt and decrypt electronic protected health information. (b) Standard: Audit controls. Implement hardware, software, and/or procedural mechanisms that record and

examine activity in information systems that contain or use electronic protected health information. (c)(1) Standard: Integrity. Implement policies and procedures to protect electronic protected health information from improper alteration or destruction.

(2) Implementation specification: Mechanism

to authenticate electronic protected health information

(Addressable). Implement electronic mechanisms to corroborate that electronic protected health information has not been altered or destroyed in an unauthorized manner. (d) Standard: Person or entity authentication. Implement procedures to verify that a person or entity seeking

access to electronic protected health information is the one claimed.

48

(e)(1) Standard: Transmission security. Implement technical security measures to guard against unauthorized access to electronic protected health information that is being transmitted over an electronic communications network. (2) Implementation specifications:

(i) Integrity controls (Addressable). Implement security measures to ensure that electronically transmitted electronic protected health information isnot improperly modified without detection until disposed of. (ii) Encryption

(Addressable).

Implement

a

mechanism

to encrypt

electronic

protected

health information whenever deemed appropriate. 45 C.F-.R. § 164.502

Uses and Disclosures of Protected Health Information:

General Rules.

(a) Standard. A covered entity may not use or disclose protected health information, except as permitted or required by this subpart or by subpart C of part 160 of this subchapter.

(1) Permitted uses and disclosures. A covered entity is permitted to use or disclose protected health information as follows: (i) To the individual; (ii) For treatment, payment,

or health care operations, as permitted by and in compliance

with Sec.

164.506; (iii) Incident to a use or disclosure otherwise permitted or required by this subpart, provided that the

covered entity has complied with the applicable requirements of Sec. 164.502(b), Sec. 164.514(d), and Sec. 164.530(c) with respect to such otherwise permitted or required use or disclosure; (iv) Pursuant to and in compliance with a valid authorization under Sec. 164.508;

(v) Pursuant to an agreement under, or as otherwise permitted by, Sec. 164.510; and (vi) As permitted by and in compliance with this section, Sec. 164.512, or Sec. 164.514(e), (f), or (g). (2) Required disclosures. A covered entity is required to disclose protected health information: (i) To an individual, when requested under, and required by Sec. 164.524 or Sec. 164.528; and (ii) When required by the Secretary under subpart C of part 160 of this subchapter to investigate or determine the covered entity’s compliance with this subpart. (b) Standard: Minimum necessary. (1) Minimum necessary applies. When using or disclosing protected health

information or when requesting protected health information from another covered entity, a covered entity must make reasonable efforts to limit protected health information to the minimum necessary to accomplish the intended purpose of the use, disclosure, or request. (2) Minimum necessary does not apply. This requirement does not apply to: (i) Disclosures to or requests by a health care provider for treatment; (ii) Uses or disclosures made to the individual, as permitted under paragraph (a)(1)(i) of this section or as required by paragraph (a)(2)(i) of this section; (iti) Uses or disclosures made pursuant to an authorization under Sec. 164.508; (iv) Disclosures made to the Secretary in accordance with subpart C of part 160 of this subchapter; (v) Uses or disclosures that are required by law, as described by Sec. 164.512(a); and

(vi) Uses or disclosures that are required for (c) Standard: Uses and disclosures of protected health entity that has agreed to a restriction pursuant to Sec. information covered by the restriction in violation

164.522(a).

compliance with applicable requirements of this subchapter. information subject to an agreed upon restriction. A covered 164.522(a)(1) may not use or disclose the protected health of such restriction, except as otherwise provided in Sec.

(d) Standard: Uses and disclosures of de-identified protected health information.(1) Uses and disclosures to create de-identified information. A covered entity may use protected health information to create information that is not

individually identifiable health information or disclose protected health information only to a business associate for such purpose, whether or not the de-identified information is to be used by the covered entity. (2) Uses and disclosures of de-identified information. Health information that meets the standard and implementation

specifications

for de-identification under

Sec.

164.514(a) and (b) is considered

not to be

individually identifiable health information, i.e., de-identified. The requirements of this subpart do not apply to information

that has been de-identified

in accordance

with the applicable requirements

of Sec.

164.514,

provided that: (i) Disclosure of a code or other means of record identification designed to enable coded or otherwise de-

identified information to be re-identified constitutes disclosure of protected health information; and

49

(it) If de-identified information is re-identified, a covered entity may use or disclose such re-identified information only as permitted or required by this subpart. (e)(1) Standard: Disclosures to business associates. (i) A covered entity may disclose protected health information to a business associate and may allow a business associate to create or receive protected health information on its

behalf, if the covered entity obtains satisfactory assurance that the business associate will appropriately safeguard the information. (ii) This standard does not apply: (A) With respect to disclosures by a covered entity to a health care provider concerning the treatment of the individual; (B) With respect to disclosures by a group health plan or a health insurance issuer or HMO with respect to a group health plan to the plan sponsor, to the extent that the requirements of Sec. 164.504(f) apply and are met; or (C) With respect to uses or disclosures by a health plan that is a government program providing public benefits, if eligibility for, or enrollment in, the health plan is determined by an agency other than the agency administering the health plan, or if the protected health information used to determine enrollment or eligibility in the health plan is collected by an agency other than the agency administering the health plan, and such activity is authorized by law, with respect to the collection and sharing of individually identifiable health information for the performance of such functions by

the health plan and the agency other than the agency administering the health plan. (iii) A covered entity that violates the satisfactory assurances it provided as a business associate of another covered entity will be in noncompliance with the standards, implementation specifications, and requirements of this paragraph and Sec. 164.504(e). (2) Implementation specification: documentation. A covered entity must document the satisfactory assurances required by paragraph (e)(1) of this section through a written contract or other written agreement or arrangement with the business associate that meets the applicable requirements of Sec. 164.504(e). 45 C.F.R. § 164.506 Uses and Disclosures to Carry out Treatment, Payment, or Health Care Operations. (a) Standard: Permitted uses and disclosures. Except with respect to uses or disclosures that require an authorization under Sec. 164.508(a)(2) and (3), a covered entity may use or disclose protected health information for treatment, payment, or health care operations as set forth in paragraph (c) of this section, provided that such use or disclosure is

consistent with other applicable requirements of this subpart. (b) Standard: Consent for uses and disclosures permitted. (1) A covered entity may obtain consent of the individual to use or disclose protected health information to carry out treatment, payment, or health care operations. (2) Consent, under paragraph (b) of this section, shall not be effective to permit a use or disclosure of protected health information when an authorization, under Sec. 164.508, is required or when another condition must be

met for such use or disclosure to be permissible under this subpart. (c) Implementation specifications: Treatment, payment, or health care operations. (1) A covered entity may use or disclose protected health information for its own treatment, payment, or health

care operations. (2) A covered entity may disclose protected health information for treatment activities of a health care provider. (3) A covered entity may disclose protected health information to another covered entity or a health care provider for the payment activities of the entity that receives the information. (4) A covered entity may disclose protected health information to another covered entity for health care operations activities of the entity that receives the information, if each entity either has or had a relationship with the individual who is the subject of the protected health information being requested, the protected health information pertains to such relationship, and the disclosure is:

(i) For a purpose listed in paragraph (1) or (2) of the definition of health care operations; or (ii) For the purpose of health care fraud and abuse detection or compliance. (5) A covered entity that participates in an organized health care arrangement may disclose protected health

information about an individual to another covered entity that participates in the organized health care arrangement for any health care operations activities of the organized health care arrangement.

50

B.

The Gramm-Leach-Bliley Act

United States Code, Title 15, Chapter 94, Subchapter I: 15 U.S.C. § 6801. Protection of nonpublic personal information (a) Privacy obligation policy It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’

nonpublic personal information. (b) Financial institutions safeguards

In furtherance of the policy in subsection

(a) of this section,

each

agency

or authority described

in

section 6805(a) of this title shall establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguards— (1) to insure the security and confidentiality of customer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and

(3) to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer. 15 U.S.C. § 6802. Obligations with respect to disclosures of personal information (a) Notice requirements Except as otherwise provided in this subchapter, a financial institution may not, directly or through any affiliate, disclose to a nonaffiliated third party any nonpublic personal information, unless such financial

institution provides or has provided to the consumer a notice that complies with section 6803 of this title. (b) Opt out (1) In general

A financial institution may not disclose nonpublic personal information to a nonaffiliated third party unless— (A) such financial institution clearly and conspicuously discloses to the consumer, in writing or in electronic form or other form permitted by the regulations prescribed under section 6804 of this

title, that such information may be disclosed to such third party; (B) the consumer

is given

the opportunity,

before

the time

that such

information

is initially

disclosed, to direct that such information not be disclosed to such third party; and (C) the consumer option. (2) Exception

is given an explanation of how the consumer can exercise that nondisclosure

This subsection shall not prevent a financial institution from providing nonpublic personal information to a nonaffiliated third party to perform services for or functions on behalf of the financial institution, including marketing of the financial institution’s own products or services, or financial products or services offered pursuant to joint agreements between two or more financial institutions that comply with the requirements imposed by the regulations prescribed under section 6804 of this title, if the financial

institution fully discloses the providing of such information and enters into a contractual agreement with the third party that requires the third party to maintain the confidentiality of such information. (c) Limits on reuse of information Except as otherwise provided in this subchapter, a nonaffiliated third party that receives from a financial institution nonpublic personal information under this section shall not, directly or through an affiliate of such

receiving third party, disclose such information to any other person that is a nonaffiliated third party of both the financial institution and such receiving third party, unless such disclosure would be lawful if made directly to

such other person by the financial institution. (d) Limitations on the sharing of account number information for marketing purposes A financial institution shall not disclose, other than to a consumer reporting agency, an account number or similar form of access number or access code for a credit card account, deposit account, or transaction account of a consumer to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer. (e) General exceptions \ Subsections (a) and (b) of this section shall not prohibit the disclosure of nonpublic personal information—

51

(1) as necessary to effect, administer, or enforce a transaction requested or authorized by the consumer, or in connection with— (A) servicing or processing a financial product or service requested or authorized by the consumer; (B) maintaining or servicing the consumer’s account with the financial institution, or with another

entity as part of a private label credit card program or other extension of credit on behalf of such entity; or (C) a proposed or actual securitization, secondary market sale (including sales of servicing rights), or similar transaction related to a transaction of the consumer;

(2) with the consent or at the direction of the consumer;

(3) (A) to protect the confidentiality or security of the financial institution’s records pertaining to the consumer, the service or product, or the transaction therein;

(B) to protect against or prevent actual or potential fraud, unauthorized transactions, claims, or other liability;

(C) for required institutional risk control, or for resolving customer disputes or inquiries; (D) to persons holding a legal or beneficial interest relating to the consumer; or (E) to persons acting in a fiduciary or representative capacity on behalf of the consumer;

(4) to provide information to insurance rate advisory organizations, guaranty funds or agencies, applicable rating agencies of the financial institution, persons assessing the institution’s compliance with industry standards, and the institution’s attorneys, accountants, and auditors; (5) to the extent specifically permitted or required under other provisions of law and in accordance with the Right to Financial Privacy Act of 1978 [12 U.S.C. 3401 et seq.], to law enforcement agencies (including a Federal functional regulator, the Secretary of the Treasury with respect to subchapter II of chapter 53 of title 31, and chapter 2 of title | of Public Law 91-508 (12 U.S.C. 1951-1959), a State insurance authority, or the Federal Trade Commission), self-regulatory organizations, or for an investigation on a matter related to public safety;

(6) (A) to a consumer reporting agency in accordance with the Fair Credit Reporting Act [15 U.S.C.

1681 et seq.], or (B) from a consumer report reported by a consumer reporting agency; (7) in connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal information concerns solely consumers of such business or unit; or (8) to comply with Federal, State, or local laws, rules, and other applicable legal requirements; to comply

with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons

by

Federal, State, or local authorities; or to respond to judicial process or government regulatory authorities having jurisdiction over the financial institution for examination, compliance, or other purposes as authorized by law. 15 U.S.C. § 6803. Disclosure of institution privacy policy (a) Disclosure required At the time of establishing a customer relationship with a consumer and not less than annually during the continuation of such relationship, a financial institution shall provide a clear and conspicuous disclosure to

such consumer, in writing or in electronic form or other form permitted by the regulations prescribed under section 6804 of this title, of such financial institution’s policies and practices with respect to— (1) disclosing nonpublic personal information to affiliates and nonaffiliated third parties, consistent with section 6802 of this title, including the categories of information that may be disclosed;

(2) disclosing nonpublic personal information of persons who have ceased to be customers of the financial institution; and (3) protecting the nonpublic personal information of consumers. Such disclosures shall be made in accordance with the regulations prescribed under section 6804 of this title. (b) Information to be included The disclosure required by subsection (a) of this section shall include—

(1) the policies and practices of the institution with respect to disclosing nonpublic personal information to nonaffiliated third parties, other than agents of the institution, consistent with section 6802 of this title, and including—

52

(A) the categories of persons to whom the information is or may be disclosed, other than the persons to whom the information may be provided pursuant to section 6802 (e) of this title; and

(B) the policies and practices of the institution with respect to disclosing of nonpublic personal information of persons who have ceased to be customers of the financial institution;

(2) the categories of nonpublic personal information that are collected by the financial institution; (3) the policies that the institution maintains to protect the confidentiality and security of nonpublic personal information in accordance with section 6801 of this title; and (4) the disclosures required, if any, under section 168 1a (d)(2)(A)(iii) of this title. 15 U.S.C. § 6809. Definitions

As used in this subchapter: (1) Federal banking agency The term “Federal banking agency” has the same meaning as given in section 1813 of title 12. (2) Federal functional regulator The term “Federal functional regulator’ means— (A) the Board of Governors of the Federal Reserve System; (B) the Office of the Comptroller of the Currency; (C) the Board of Directors of the Federal Deposit Insurance Corporation; (D) the Director of the Office of Thrift Supervision; (E) the National Credit Union Administration Board; and

(F) the Securities and Exchange Commission. (3) Financial institution (A) In general

The term “financial institution” means any institution the business of which is engaging in financial activities as described in section 1843 (k) of title 12.

(B) Persons subject to CFTC regulation Notwithstanding subparagraph (A), the term “financial institution” does not include any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act [7 U.S.C. 1 et seq.]. (C) Farm credit institutions Notwithstanding subparagraph (A), the term “financial institution” does not include the Federal Agricultural Mortgage Corporation or any entity chartered and operating under the Farm Credit Act

of 1971 [12 U.S.C. 2001 et seq.]. (D) Other secondary market institutions Notwithstanding subparagraph (A), the term “financial institution” does not include institutions chartered by Congress specifically to engage in transactions described in section 6802 (e)(1)(C) of this title, as long as such institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party. (4) Nonpublic personal information (A) The term “nonpublic personal information” means personally identifiable financial information— (i) provided by a consumer to a financial institution; (ii) resulting from any transaction with the consumer or any service performed for the consumer; or (iii) otherwise obtained by the financial institution. (B) Such term does not include publicly available information, as such term is defined by the regulations prescribed under section 6804 of this title. (C) Notwithstanding subparagraph (B), such term— (i) shall include any list, description, or other grouping of consumers (and publicly available

information pertaining to them) that is derived using any nonpublic personal information other than publicly available information; but (ii) shall not include any list, description, or other grouping of consumers (and publicly available

information pertaining to them) that is derived without using any nonpublic personal information. (5) Nonaffiliated third party The term “nonaffiliated third party” means any entity that is not an affiliate of, or related by common

ownership or affiliated by corporate control with, the financial institution, but does not include a joint employee of such institution.

53

(6) Affiliate The term “affiliate” means any company that controls, is controlled by, or is under common control with another company. (7) Necessary to effect, administer, or enforce

The term “as necessary to effect, administer, or enforce the transaction” means— (A) the disclosure is required, or is a usual, appropriate, or acceptable method, to carry out the transaction or the product or service business of which the transaction is a part, and record or service or maintain the consumer’s account in the ordinary course of providing the financial service or

financial product, or to administer or service benefits or claims relating to the transaction or the product or service business of which it is a part, and includes— (i) providing the consumer or the consumer’s agent or broker with a confirmation, statement, or other record of the transaction, or information on the status or value of the financial service or financial product; and (ii) the accrual or recognition of incentives or bonuses associated with the transaction that are provided by the financial institution or any other party; (B) the disclosure is required, or is one of the lawful or appropriate methods, to enforce the rights of the financial institution or of other persons engaged in carrying out the financial transaction, or

providing the product or service; (C) the disclosure is required, or is a usual, appropriate, or acceptable method, for insurance underwriting at the consumer’s request or for reinsurance purposes, or for any of the following purposes as they relate to a consumer’s insurance: Account administration, reporting, investigating, or preventing fraud or material misrepresentation, processing premium payments, processing

insurance

claims,

administering

insurance

benefits

(including

utilization

review

activities),

participating in research projects, or as otherwise required or specifically permitted by Federal or State law; or (D) the disclosure is required, or is a usual, appropriate or acceptable method, in connection with—

(i) the authorization, settlement, billing, processing, clearing, transferring, reconciling, or collection of amounts charged, debited, or otherwise paid using a debit, credit or other payment card, check, or account number, or by other payment means; (ii) the transfer of receivables, accounts or interests therein; or (iti) the audit of debit, credit or other payment information. (8) State insurance authority The term “State insurance authority” means, in the case of any person engaged in providing insurance,

the State insurance authority of the State in which the person is domiciled. (9) Consumer The term “consumer” means an individual who obtains, from a financial institution, financial products or services which are to be used primarily for personal, family, or household purposes, and also means the

legal representative of such an individual. (10) Joint agreement The term “joint agreement” means a formal written contract pursuant to which two or more financial institutions jointly offer, endorse, or sponsor a financial product or service, and as may be further defined in the regulations prescribed under section 6804 of this title. (11) Customer relationship The term “time of establishing a customer relationship” shall be defined by the regulations prescribed under section 6804 of this title, and shall, in the case of a financial institution engaged in extending credit directly to consumers to finance purchases of goods or services, mean the time of establishing the credit relationship with the consumer.

United States Code, Title 15, Chapter 94, Subchapter II: 15 U.S.C. § 6821. Privacy protection for customer information of financial institutions

(a) Prohibition on obtaining customer information by false pretenses It shall be a violation of this subchapter for any person to obtain or attempt to obtain, or cause to be disclosed

or attempt to cause to be disclosed to any person, customer information of a financial institution relating to another person—

54

(1) by making a false, fictitious, or fraudulent statement or representation to an officer, employee, or agent of a financial institution; (2) by making a

false, fictitious, or fraudulent statement or representation to a customer of a financial

institution; or

(3) by providing any document to an officer, employee, or agent of a financial institution, knowing that the document is forged, counterfeit, lost, or stolen, was fraudulently obtained, or contains a false, fictitious, or fraudulent statement or representation. (b) Prohibition on solicitation of a person to obtain customer information from financial institution under false

pretenses It shall be a violation of this subchapter to request a person to obtain customer information of a financial institution, knowing that the person will obtain, or attempt to obtain, the information from the institution in any manner described in subsection (a) of this section. *

KOK

15 U.S.C. § 6823. Criminal penalty (a) In general Whoever knowingly and intentionally violates, or knowingly and intentionally attempts to violate, section 6821 of this title shall be fined in accordance with title 18 or imprisoned for not more than 5 years, or both. (b) Enhanced penalty for aggravated cases Whoever violates, or attempts to violate, section 6821 of this title while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of section 3571 of title 18, imprisoned for not more than 10 years, or both. 15 U.S.C. § 6824. Relation to State laws (a) In general This subchapter shall not be construed as superseding, altering, or affecting the statutes, regulations, orders, or interpretations in effect in any State, except to the extent that such statutes, regulations, orders, or interpretations are inconsistent with the provisions of this subchapter, and then only to the extent of the inconsistency. (b) Greater protection under State law For purposes of this section, a State statute, regulation, order, or interpretation is not inconsistent with the

provisions of this subchapter if the protection such statute, regulation, order, or interpretation affords any person is greater than the protection provided under this subchapter as determined by the Federal Trade Commission, after consultation with the agency or authority with jurisdiction under section 6822 of this title of either the person that initiated the complaint or that is the subject of the complaint, on its own motion or upon the petition of any interested party. 15 U.S.C. § 6827. Definitions For purposes of this subchapter, the following definitions shall apply: (1) Customer The term “customer” means, with respect to a financial institution, any person (or authorized representative of a person) to whom the financial institution provides a product or service, including that of acting as a fiduciary. (2) Customer information of a financial institution The term “customer information of a financial institution” means any information maintained by or for a financial institution which is derived from the relationship between the financial institution and a

customer of the financial institution and is identified with the customer. (3) Document The term “document” means any information in any form.

(4) Financial institution (A) In general

The term “financial institution” means any institution engaged in the business of providing financial services to customers who maintain a credit, deposit, trust, or other financial account or relationship with the institution.

55

(B) Certain financial institutions specifically included The term “financial institution” includes any depository institution (as defined in section 461 (b)(1)(A) of title 12), any broker or dealer, any investment adviser or investment company, any insurance company, any loan or finance company, any credit card issuer or operator of a credit card

system, and any consumer reporting agency that compiles and maintains files on consumers on a nationwide basis (as defined in section 1681a(p) of this title). (C) Securities institutions For purposes of subparagraph (B)}— (i) the terms “broker” and “dealer” have the same meanings as given in section 78c of this title; (ii) the term “investment adviser” has the same meaning as given in section 80b—2(a)(11) of this title; and (iii) the term “investment company” has the same meaning as given in section 80a-—3 of this title.

(D) Certain persons and entities specifically excluded The term “financial institution” does not include any person or entity with respect to any financial

activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act [7 U.S.C. 1 et seq.] and does not include the Federal Agricultural Mortgage Corporation or any entity chartered and operating under the Farm Credit Act of 1971 [12 U.S.C. 2001 et seq.]. (E) Further definition by regulation

The Federal Trade Commission, after consultation with Federal banking agencies and the Securities and

Exchange

Commission,

may

prescribe

regulations

clarifying

or

describing

the

types

of

institutions which shall be treated as financial institutions for purposes of this subchapter.

Implementing Regulations (from Subchapter C, Parts 313-14):

the Code

of Federal

Regulations,

Title 16, Chapter I,

16 C.F.R. § 313.1 Purpose and scope. (a) Purpose. This part governs the treatment of nonpublic personal information about consumers by the financial institutions listed in paragraph (b) of this section. This part: (1) Requires a financial institution in specified circumstances to provide notice to customers about its privacy policies and practices;

(2) Describes the conditions under which a financial institution may disclose nonpublic personal information about consumers to nonaffiliated third parties; and (3) Provides a method for consumers to prevent a financial institution from disclosing that information to most nonaffiliated third parties by “opting out” of that disclosure, subject to the exceptions in §§ 313.13, 313.14, and 313.15. (b) Scope. This part applies only to nonpublic personal information about individuals who obtain financial products or services primarily for personal, family or household purposes from the institutions listed below. This part does

not apply to information about companies or about individuals who obtain financial products or services for business, commercial, or agricultural purposes. This part applies to those “financial institutions” and “other persons” over which the Federal Trade Commission (“Commission”) has enforcement authority pursuant to Section 505(a)(7) of the Gramm-Leach-Bliley Act. An entity is a “financial institution” if its business is engaging in a financial activity as described in Section 4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. 1843(k), which incorporates by reference activities enumerated by the Federal Reserve Board in 12 CFR 211.5(d) and 12

CFR 225.28. The “financial institutions” subject to the Commission’s enforcement authority are those that are not otherwise subject to the enforcement authority of another regulator under Section 505 of the Gramm-Leach-Bliley Act. More specifically, those entities include, but are not limited to, mortgage lenders, “pay day” lenders, finance

companies,

mortgage

connection

with

brokers, account servicers, check cashers, wire transferors, travel agencies operated

financial

services,

collection

agencies,

credit

counselors

and

other

financial

advisors,

in tax

preparation firms, non-federally insured credit unions, and investment advisors that are not required to register with the Securities and Exchange Commission. They are referred to in this part as “You.” The “other persons” to whom this part applies are third parties that are not financial institutions, but that receive nonpublic personal information from financial institutions with whom they are not affiliated. Nothing in this part modifies, limits, or supersedes the

56

standards governing individually identifiable health information promulgated by the Secretary of Health and Human Services under the authority of sections 262 and 264 of the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. 1320d-1320d-8. Any institution of higher education that complies with the Federal Educational Rights and Privacy Act (“FERPA”), 20 U.S.C. 1232g, and its implementing regulations, 34 CFR part 99, and that is

also a financial institution subject to the requirements of this part, shall be deemed to be in compliance with this part if it is in compliance with FERPA. 16 C.F.R. § 313.3 Definitions.

As used in this part, unless the context requires otherwise: (a) Affiliate means any company that controls, is controlled by, or is under common

control with another

company. (b)(1) Clear and conspicuous means that a notice is reasonably understandable and designed to call attention to

the nature and significance of the information in the notice. (2) Examples -- (i) Reasonably understandable. You make your notice reasonably understandable if you:

(A) Present the information in the notice in clear, concise sentences, paragraphs, and sections; (B) Use short explanatory sentences or bullet lists whenever possible; (C) Use definite, concrete, everyday words and active voice whenever possible; (D) Avoid multiple negatives; (E) Avoid legal and highly technical business termmology whenever possible; and (F) Avoid explanations that are imprecise and readily subject to different interpretations. (ii) Designed to call attention. You design your notice to call attention to the nature and significance of the information in it if you: (A) Use a plain-language heading to call attention to the notice; (B) Use a typeface and type size that are easy to read; (C) Provide wide margins and ample line spacing; (D) Use boldface or italics for key words; and (E) In a form that combines your notice with other information, use distinctive type size, style, and graphic devices, such as shading or sidebars, when you combine your notice with other information. (iii) Notices on web sites. If you provide a notice on a web page, you design your notice to call attention to the nature and significance of the information in it if you use text or visual cues to encourage scrolling down the page if necessary to view the entire notice and ensure that other elements on the web site (such as text, graphics, hyperlinks, or sound) do not distract attention from the notice, and you either: (A) Place the notice on a screen that consumers frequently access, such as a page on which transactions are conducted; or (B) Place a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature and relevance of the notice. (c) Collect means to obtain information that you organize or can retrieve by the name of an individual or by identifying number, symbol, or other identifying particular assigned to the individual, irrespective of the source of the underlying information. (d) Company means any corporation, limited liability company, business trust, general or limited partnership, association, or similar organization. (e)(1) Consumer means an individual who obtains or has obtained a financial product or service from you that is to be used primarily for personal, family, or household purposes, or that individual’s legal representative. (2) Examples -- (i) An individual who applies to you for credit for personal, family, or household

purposes is a consumer of a financial service, regardless of whether the credit is extended. (ii) An individual who provides nonpublic personal information to you in order to obtain a determination about whether he or she may qualify for a loan to be used primarily for personal,

family, or household purposes is a consumer of a financial service, regardless of whether the loan is extended. (iii) An individual who provides nonpublic personal information to you in connection with obtaining or seeking to obtain financial, investment, or economic advisory services is a consumer, regardless of whether you establish a continuing advisory relationship.

57

(iv) If you hold ownership or servicing rights to an individual’s loan that is used primarily for personal, family, or household purposes, the individual is your consumer, even if you hold those rights in conjunction with one or more other institutions. (The individual is also a consumer with respect to the other financial institutions involved.) An individual who has a loan in which you have ownership or servicing rights is your consumer, even if you, or another institution with those rights,

hire an agent to collect on the loan. (v) An individual who is a consumer of another financial institution is not your consumer solely because you act as agent for, or provide processing or other services to, that financial institution. (vi) An individual is not your consumer solely because he or she has designated you as trustee for a trust.

(vii) An individual is not your consumer solely because he or she is a beneficiary of a trust for which you are a trustee. (viii) An individual is not your consumer solely because he or she is a participant or a beneficiary of an employee benefit plan that you sponsor or for which you act as a trustee or fiduciary.

(f) Consumer reporting agency has the same meaning as in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 168 1a(f)). (g) Control of a company means: (1) Ownership, control, or power to vote 25 percent or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one or more other persons;

(2) Control in any manner over the election of a majority of the directors, trustees, or general partners (or individuals exercising similar functions) of the company; or (3) The power to exercise, directly or indirectly, a controlling influence over the management or policies

of the company. (h) Customer means a consumer who has a customer relationship with you. (i)(1) Customer relationship means a continuing relationship between a consumer and you under which you

provide one or more financial products or services to the consumer that are to be used primarily for personal, family, or household purposes. (2) Examples -- (i) Continuing relationship. A consumer has a continuing relationship with you if the consumer: (A) Has a credit or investment account with you; (B) Obtains a loan from you; (C) Purchases an insurance product from you; (D) Holds an investment product through you, such as when you act as a custodian for securities or for assets in an Individual Retirement Arrangement; (E) Enters into an agreement or understanding with you whereby you undertake to arrange or broker a home mortgage loan, or credit to purchase a vehicle, for the consumer; (F) Enters into a lease of personal property on a non-operating basis with you;

(G) Obtains financial, investment, or economic advisory services from you for a fee; (H) Becomes your client for the purpose of obtaining tax preparation or credit counseling services from you; (1) Obtains career counseling while seeking employment with a financial institution or the finance, accounting, or audit department of any company (or while employed by such a financial institution or department of any company); (J) Is obligated on an account that you purchase from another financial institution, regardless of whether the account is in default when purchased, unless you do not locate the consumer or attempt to collect any amount from the consumer on the account; (K) Obtains real estate settlement services from you; or

(L) Has a loan for which you own the servicing rights. (ii) No continuing relationship. A consumer does not, however, have a continuing relationship with you if: (A) The consumer obtains a financial product or service from you only in isolated transactions, such as using your ATM to withdraw cash from an account at another financial institution;

purchasing a money order from you; cashing a check with you; or making a wire transfer through you; (B) You sell the consumer’s loan and do not retain the rights to service that loan;

58

(C) You sell the consumer airline tickets, travel insurance, or traveler’s checks in isolated transactions;

(D) The consumer obtains one-time personal or real property appraisal services from you; or (E) The consumer purchases checks for a personal checking account from you.

(j) Federal functional regulator means: (1) The Board of Governors of the Federal Reserve System; (2) The Office of the Comptroller of the Currency;

(3) The Board of Directors of the Federal Deposit Insurance Corporation; (4) The Director of the Office of Thrift Supervision; (5) The National Credit Union Administration Board; and (6) The Securities and Exchange Commission. (k)(1) Financial institution means any institution the business of which is engaging in financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). An institution that is significantly engaged in financial activities is a financial institution.

(2) Examples of financial institution. (i) A retailer that extends credit by issuing its own credit card directly to consumers is a financial institution because extending credit is a financial activity listed in 12 CFR 225.28(b)(1) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act and issuing that extension of credit through a proprietary credit card demonstrates that a retailer is significantly engaged in extending credit. (ii) A personal property or real estate appraiser is a financial institution because real and personal property appraisal is a financial activity listed in 12 CFR 225.28(b)(2)(i) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act. (iii) An automobile dealership that, as a usual part of its business, leases automobiles on a

nonoperating basis for longer than 90 days is a financial institution with respect to its leasing business because leasing personal property on a nonoperating basis where the initial term of the lease is at least 90 days is a financial activity listed in 12 CFR 225.28(b)(3) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act. (iv) A career counselor that specializes in providing career counseling services to individuals currently employed by or recently displaced from a financial organization, individuals who are

seeking employment with a financial organization, or individuals who are currently employed by or seeking placement with the finance, accounting or audit departments of any company is a financial institution because such career counseling activities are financial activities listed in 12 CFR 225.28(b)(9)(iii) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act. (v) A business that prints and sells checks for consumers, either as its sole business or as one of its product lines, is a financial institution because printing and selling checks is a financial activity that is listed in 12 CFR 225.28(b)(10)(ii) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act. (vi) A business that regularly wires money to and from consumers is a financial institution because transferring money is a financial activity referenced in section 4(k)(4)(A) of the Bank Holding Company Act and regularly providing that service demonstrates that the business is significantly engaged in that activity. (vii) A check cashing business is a financial institution because cashing a check is exchanging money, which is a financial activity listed in section 4(k)(4)(A) of the Bank Holding Company Act. (viii) An accountant or other tax preparation service that is in the business of completing income tax returns is a financial institution because tax preparation services is a financial activity listed in 12 CFR 225.28(b)(6)(vi) and referenced in section 4(k)(4)(G) of the Bank Holding Company Act. (ix) A business that operates a travel agency in connection with financial services is a financial institution because operating a travel agency in connection with financial services is a financial activity listed in 12 CFR 211.5(d)(15) and referenced in section 4(k)(4)(G) of the Bank Holding Company Act.

(x) An entity that provides real estate settlement services is a financial institution because providing real estate settlement services is a financial activity listed in 12 CFR 225.28(b)(2)(viii) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act. (xi) A mortgage broker is a financial institution because brokering loans is a financial activity listed in 12 CFR 225.28(b)(1) and referenced in section 4(k)(4)(F) of the Bank Holding Company Act.

59

(xii) An investment advisory company and a credit counseling service are each financial institutions because providing financial and investment advisory services are financial activities referenced in section 4(k)(4)(C) of the Bank Holding Company Act. (3) Financial institution does not include:

(i) Any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); (ii) The Federal Agricultural Mortgage Corporation or any entity chartered and operating under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); or (iii) Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights) or similar transactions related to a transaction of a

consumer, as long as such institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party other than as permitted by §§ 313.14 and 313.15 of this part. (iv) Entities that engage in financial activities but that are not significantly engaged in those financial activities. (4) Examples of entities that are not significantly engaged in financial activities. (i) A retailer is not a financial institution if its only means of extending credit are occasional “lay away” and deferred payment plans or accepting payment by means of credit cards issued by others.

(ii) A retailer is not a financial institution merely because it accepts payment in the form of cash, checks, or credit cards that it did not issue. (iii) A merchant is not a financial institution merely because it allows an individual to “run a tab.” (iv) A grocery store is not a financial institution merely because it allows individuals to whom it sells groceries to cash a check, or write a check for a higher amount than the grocery purchase and obtain cash in return. (1)(1) Financial product or service means any product or service that a financial holding company could offer by engaging in a financial activity under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C.

1843(k)). (2) Financial service includes your evaluation or brokerage of information that you collect in connection with a request or an application from a consumer for a financial product or service. (m)(1) Nonaffiliated third party means any person except: (i) Your affiliate; or (ii) A person employed jointly by you and any company that is not your affiliate (but nonaffiliated

third party includes the other company that jointly employs the person). (2) Nonaffiliated third party includes any company that is an affiliate by virtue of your or your affiliate’s direct or indirect ownership or control of the company in conducting merchant banking or investment banking activities of the type described in section 4(k)(4)(H) or insurance company investment activities of the type described in section 4(k)(4)(1) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) and (I)). (n)(1) Nonpublic personal information means: (i) Personally identifiable financial information; and (ii) Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available.

(2) Nonpublic personal information does not include: (i) Publicly available information, except as included on a list described in paragraph (n)(1)(ii) of this section; or (ii) Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information that is not publicly available.

(3) Examples of lists -- (1) Nonpublic personal information includes any list of individuals’ names and street addresses that is derived in whole or in part using personally identifiable financial information (that is not publicly available), such as account numbers.

(ii) Nonpublic personal information does not include any list of individuals’ names and addresses that contains

only

publicly

available

information,

is not derived,

in whole

or in part,

using

personally identifiable financial information that is not publicly available, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution. (0)(1) Personally identifiable financial information means any information:

60

(i) A consumer provides to you to obtain a financial product or service from you; (ii) About a consumer resulting from any transaction involving a financial product or service between you and a consumer; or (iii) You otherwise obtain about a consumer in connection with providing a financial product or

service to that consumer. (2) Examples -- (i) Information included. Personally identifiable financial information includes: (A) Information a consumer provides to you on an application to obtain a loan, credit card, or

other financial product or service; (B) Account balance information, payment history, overdraft history, and credit or debit card purchase information; (C) The fact that an individual is or has been one of your customers or has obtained a financial product or service from you;

(D) Any information about your consumer if it is disclosed in a manner that indicates that the individual is or has been your consumer; (E) Any information that a consumer provides to you or that you or your agent otherwise obtain in connection with collecting on, or servicing, a credit account; (F) Any information you collect through an Internet “cookie” (an information collecting device from a web server); and (G) Information from a consumer report. (ii) Information not included. Personally identifiable financial information does not include: (A) A list of names and addresses of customers of an entity that is not a financial institution; and (B) Information that does not identify a consumer, such as aggregate information or blind data that does not contain persona! identifiers such as account numbers, names, or addresses. (p)(1) Publicly available information means any information that you have a reasonable basis to believe is lawfully made available to the general public from: (i) Federal, State, or local government records; (ii) Widely distributed media; or (iii) Disclosures to the general public that are required to be made by Federal, State, or local law. (2) Reasonable basis. You have a reasonable basis to believe that information is lawfully made available to the general public if you have taken steps to determine: (i) That the information is of the type that is available to the general public; and

(ii) Whether an individual can direct that the information not be made available to the general public and, if so, that your consumer has not done so. (3) Examples -- (i) Government records. Publicly available information in government records includes information in government real estate records and security interest filings. (ii) Widely distributed media. Publicly available information from widely distributed media includes information from a telephone book, a television or radio program, a newspaper, or a web site that is available to the general public on an unrestricted basis. A web site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public. (iii) Reasonable basis -- (A) You have a reasonable basis to believe that mortgage information is lawfully made available to the general public if you have determined that the information is of the type included on the public record in the jurisdiction where the mortgage would be recorded. (B) You have a reasonable basis to believe that an individual’s telephone number is lawfully made available to the general public if you have located the telephone number in the telephone book or the consumer has informed you that the telephone number is not unlisted.

(q) You includes each “financial institution” (but excludes any “other person”) over which the Commission has enforcement jurisdiction pursuant to section 505(a)(7) of the Gramm-Leach-Bliley Act. 16 C.F.R. § 313.9 Delivering privacy and opt out notices. (a) How to provide notices. You must provide any privacy notices and opt out notices, including short-form initial

notices, that this part requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically. (b)(1) Examples of reasonable expectation of actual notice. You may reasonably expect that a consumer will receive

actual notice if you:

61

(i) Hand-deliver a printed copy of the notice to the consumer; (ii) Mail a printed copy of the notice to the last known address of the consumer; (iii) For the consumer who conducts transactions electronically, clearly and conspicuously post the notice on the electronic site and require the consumer to acknowledge receipt of the notice as a necessary step to

obtaining a particular financial product or service; (iv) For an isolated transaction with the consumer, such as an ATM transaction, post the notice on the ATM screen and require the consumer to acknowledge receipt of the notice as a necessary step to

obtaining the particular financial product or service. (2) Examples of unreasonable expectation of actual notice. You may not, however, reasonably expect that a consumer will receive actual notice of your privacy policies and practices if you:

(i) Only post a sign in your branch or office or generally publish advertisements of your privacy policies and practices;

(ii) Send the notice via electronic mail to a consumer who does not obtain a financial product or service from you electronically. (c) Annual notices only. You may reasonably expect that a customer will receive actual notice of your annual privacy notice if: (1) The customer uses your web site to access financial products and services electronically and agrees to receive notices at the web site and you post your current privacy notice continuously in a clear and conspicuous manner on the web site; or

(2) The customer has requested that you refrain from sending any information regarding the customer relationship, and your current privacy notice remains available to the customer upon request. (d) Oral description of notice insufficient. You may not provide any notice required by this part solely by orally explaining the notice, either in person or over the telephone.

(e) Retention or accessibility of notices for customers -- (1) For customers only, you must provide the initial notice required by § 313.4(a)(1), the annual notice required by § 313.5(a), and the revised notice required by § 313.8 so

that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically. (2) Examples of retention or accessibility. You provide a privacy notice to the customer so that the customer can retain it or obtain it later if you:

(i) Hand-deliver a printed copy of the notice to the customer; (ii) Mail a printed copy of the notice to the last known address of the customer; or (iii) Make your current privacy notice available on a web site (or a link to another web site) for the customer who obtains a financial product or service electronically and agrees to receive the notice at the web site. (f) Joint notice with other financial institutions. You may provide a joint notice from you and one or more of your affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to you and the other institutions. (g) Joint relationships. If two or more consumers jointly obtain a financial product or service from you, you may satisfy the initial, annual, and revised notice requirements of §§ 313.4(a), 313.5(a), and 313.8(a) by providing one notice to those consumers jointly, unless one or more of those consumers requests separate notices. 16 C.F.R. § 313.10 Limits on disclosure of non-public personal information to nonaffiliated third parties. (a)(1) Conditions for disclosure. Except as otherwise authorized in this part, you may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party unless: (i) You have provided to the consumer an initial notice as required under § 313.4; (ii) You have provided to the consumer an opt out notice as required in § 313.7; (ili) You have given the consumer a reasonable opportunity, before you disclose the information to the nonaffiliated third party, to opt out of the disclosure; and (iv) The consumer does not opt out.

(2) Opt out definition. Opt out means a direction by the consumer that you not disclose nonpublic personal information about that consumer to a nonaffiliated third party, other than as permitted by §§ 313.13, 313.14,

and 313.15. (3) Examples of reasonable opportunity to opt out. You provide a consumer with a reasonable opportunity to

opt out if: (i) By mail. You mail the notices required in paragraph (a)(1) of this section to the consumer and allow

the consumer to opt out by mailing a form, calling a toll-free telephone number, or any other reasonable means within 30 days from the date you mailed the notices.

62

(ii) By electronic means. A customer opens an on-line account with you and agrees to receive the notices required in paragraph (a)(1) of this section electronically, and you allow the customer to opt out by any reasonable means within 30 days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account.

(iii) Isolated transaction with consumer. For an isolated transaction, such as the purchase of a money order by a consumer, you provide the consumer with a reasonable opportunity to opt out if you provide the notices required in paragraph (a)(1) of this section at the time of the transaction and request that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction. (b) Application of opt out to all consumers and all nonpublic personal information -- (1) You must comply with this

section, regardless of whether you and the consumer have established a customer relationship. (2) Unless you comply with this section, you may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer that you have collected, regardless of whether you collected it before or after receiving the direction to opt out from the consumer. (c) Partial opt out. You may allow a consumer to select certain nonpublic personal information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out. 16 C.F.R. § 313.11 Limits on redisclosure and reuse of information.

(a)(1) Information

you receive

under an exception.

If you

receive

nonpublic

personal

information

from

a

nonaffiliated financial institution under an exception in § 313.14 or 313.15 of this part, your disclosure and use of

that information is limited as follows: (i) You may disclose the information to the affiliates of the financial institution from which you received the information; (ii) You may disclose the information to your affiliates, but your affiliates may, in turn, disclose and use the information only to the extent that you may disclose and use the information; and (iii) You may disclose and use the information pursuant to an exception in § 313.14 or 313.15 in the ordinary course of business to carry out the activity covered by the exception under which you received the information.

(2) Example. If you receive a customer list from a nonaffiliated financial institution in order to provide account processing services under the exception in § 313.14(a), you may disclose that information under any exception

in § 313.14 or 313.15 in the ordinary course of business in order to provide those services. You could also disclose that information in response to a properly authorized subpoena. You could not disclose that information to a third party for marketing purposes or use that information for your own marketing purposes. (b)(1) Information you receive outside of an exception. If you receive nonpublic personal information from a

nonaffiliated financial institution other than under an exception in § 313.14 or 313.15 of this part, you may disclose the information only: (i) To the affiliates of the financial institution from which you received the information; (ii) To your affiliates, but your affiliates may, in turn, disclose the information only to the extent that you can disclose the information; and (iii) To any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which you received the information. (2) Example. If you obtain a customer list from a nonaffiliated financial institution outside of the exceptions in

§ 313.14 and 313.15: (i) You may use that list for your own purposes; and (ii) You may disclose that list to another nonaffiliated third party only if the financial institution from which you purchased the list could have lawfully disclosed the list to that third party. That is, you may disclose the list in accordance with the privacy policy of the financial institution from which you received

the list, as limited by the opt out direction of each consumer whose nonpublic personal information you intend to disclose, and you may disclose the list in accordance with an exception in § 313.14 or 313.15,

such as to your attorneys or accountants. (c) Information you disclose under an exception. If you disclose nonpublic personal information to a nonaffiliated third party under an exception in § 313.14 or 313.15 of this part, the third party may disclose and use that information only as follows:

(1) The third party may disclose the information to your affiliates; (2) The third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and

63

(3) The third party may disclose and use the information pursuant to an exception in § 313.14 or 313.15 in the (d)

ordinary course of business to carry out the activity covered by the exception under which it received the information. Information you disclose outside of an exception. If you disclose nonpublic personal information to a

nonaffiliated third party other than under an exception in § 313.14 or 313.15 of this part, the third party may disclose the information only: (1) To your affiliates; (2) To its affiliates, but its affiliates, in turn, may disclose the information only to the extent the third party can disclose the information; and (3) To any other person, if the disclosure would be lawful if you made it directly to that person. 16 C.F.R. § 313.16 Protection of Fair Credit Reporting Act.

Nothing in this part shall be construed to modify, limit, or supersede the operation of the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), and no inference shall be drawn on the basis of the provisions of this part regarding whether information is transaction or experience information under section 603 of that Act. 16 C.F.R. § 314.1 Purpose and scope.

(a) Purpose. This part, which implements sections 501 and 505(b)(2) of the Gramm-Leach-Bliley Act, sets forth standards for developing, implementing, and maintaining reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information. (b) Scope. This part applies to the handling of customer information by all financial institutions over which the Federal Trade Commission (“FTC” or “Commission”) has jurisdiction. This part refers to such entities as “you.”

This part applies to all customer information in your possession, regardless of whether such information pertains to individuals with whom you have a customer relationship, or pertains to the customers of other financial institutions that have provided such information to you. 16 C.F.R. § 314.2 Definitions.

(a) In general. Except as modified by this part or unless the context otherwise requires, the terms used in this part have the same meaning as set forth in the Commission’s rule governing the Privacy of Consumer Financial Information, 16 CFR part 313. (b) Customer information means any record containing nonpublic personal information as defined in 16 CFR 313.3(n), about a customer of a financial institution, whether in paper, electronic, or other form, that is handled or

maintained by or on behalf of you or your affiliates. (c) Information security program means the administrative, technical, or physical safeguards collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customer (d) Service provider means any person or entity that receives, maintains, processes, or otherwise to customer information through its provision of services directly to a financial institution that is 16 C.F.R. § 314.3 Standards for safeguarding (a) Information security program. You shall security program that is written in one or more physical safeguards that are appropriate to your

you use to access, information. is permitted access subject to this part.

customer information. develop, implement, and maintain a comprehensive information readily accessible parts and contains administrative, technical, and size and complexity, the nature and scope of your activities, and the

sensitivity of any customer information at issue. Such safeguards shall include the elements set forth in § 314.4 and shall be reasonably designed to achieve the objectives of this part, as set forth in paragraph (b) of this section. (b) Objectives. The objectives of section 501(b) of the Act, and of this part, are to: (1) Insure the security and confidentiality of customer information; (2) Protect against any anticipated threats or hazards to the security or integrity of such information; and

(3) Protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. 16 C.F.R. § 314.4 Elements. In order to develop, implement, and maintain your information security program, you shall:

(a) Designate an employee or employees to coordinate your information security program. (b) Identify reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of

customer information that could result in the unauthorized disclosure, misuse, alteration, destruction or other compromise of such information, and assess the sufficiency of any safeguards in place to control these risks. At

64

a minimum, such a risk assessment should include consideration of risks in each relevant area of your operations, including: (1) Employee training and management; (2) Information systems, including network and software design, as well as information processing, storage, transmission and disposal; and

(3) Detecting, preventing and responding to attacks, intrusions, or other systems failures. (c) Design and implement information safeguards to control the risks you identify through risk assessment, and regularly test or otherwise monitor the effectiveness of the safeguards’ key controls, systems, and procedures. (d) Oversee service providers, by:

(1) Taking reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the customer information at issue; and (2) Requiring your service providers by contract to implement and maintain such safeguards. (e) Evaluate and adjust your information security program in light of the results of the testing and monitoring required by paragraph (c) of this section; any material changes to your operations or business arrangements; or

any other circumstances that you know

or have reason to know

may have a material impact on your

information security program. 16 C.F.R. § 314.5 Effective date. (a) Each financial institution subject to the Commission’s jurisdiction must implement an information security program pursuant to this part no later than May 23, 2003. (b) Two-year grandfathering of service contracts. Until May 24, 2004, a contract you have entered into with a nonaffiliated third party to perform services for you or functions on your behalf satisfies the provisions of § 314.4(d), even if the contract does not include a requirement that the service provider maintain appropriate safeguards, as long as you entered into the contract not later than June 24, 2002.

C.

The European Union Data Protection Directive

The U.S. is not the only jurisdiction with concern about privacy protection. European Union also protects its citizens’ privacy, as do its member nations.

The

Occasionally, a private citizen can find herself the subject of a wide-ranging debate about issues of public

concern, even without ever meaning to do so. Consider here the “Swedish Church Lady Case”:

In re Bodil Lindqvist

personal data and on the free movement of such data (OJ 1995 L 281, p. 31).

Case C-101/01

2. Those questions were raised in criminal proceedings before that court against Mrs Lindqvist, who was charged with breach of the Swedish legislation on the protection of personal data for publishing on her internet site personal data on a number of people working with her on a voluntary basis in a parish of the Swedish Protestant Church.

EUROPEAN COURT OF JUSTICE 6 November 2003 Judgment 1, By order of 23 February 2001, received at the Court on | March 2001, the Géta hovratt (Géta

Court

of

preliminary

Appeal) ruling

referred under

to

the

Article

Court 234

EC

for

Legal background

a

Community legislation

seven

questions concerning inter alia the interpretation of Directive 95/46/EC of the European Parliament and

3. Directive 95/46 is intended, according to the terms of Article 1(1), to protect the fundamental

of the Council of 24 October 1995 on the protection

rights

of individuals

particular their right to privacy, with respect to the

with

regard

to the

processing

of

and

freedoms

of

processing of personal data.

65

natural

persons,

and

in

subject or of another person where Article 3 of Directive 95/46 provides, 4. regarding the scope of the directive: I. This Directive shall apply to the

the data subject is physically or legally incapable of giving his

processing of personal data wholly or partly

part of a

(d) processing is carried out in the course of its legitimate activities with appropriate guarantees by a foundation, association or any other non-profit-seeking body with a

This Directive shall not apply to the

political, philosophical, religious or trade-union aim and on condition

processing of personal data: - in the course of an activity which

that the processing relates solely to the members of the body or to

consent; or

by automatic means, and to the processing otherwise than by automatic means of

personal data which form part of a filing system or are intended to form filing system.

2.

persons who have regular contact

falls outside the scope of Community law, such as_ those provided for by Titles V and VI of

with it in connection with its purposes and that the data are not disclosed to a third party without the consent of the data subjects; or (e) the processing relates to data which are manifestly made public by the data subject or is necessary for the establishment, exercise or

the Treaty on European Union and in any case to _ processing operations concerning _ public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law,

3.

defence of legal claims. Paragraph 1 shall not apply where

processing of the data purposes of preventive diagnosis, the provision or the management of and where those data

- by a natural person in the course of a purely personal or household activity.

health professional

5.

Article 8 of Directive 95/46, entitled The processing of special categories of data, provides: 1, Member States shall prohibit the processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, _ trade-union membership, and the processing of data concerning health or sex life. 2. Paragraph 1 shall not apply where: (a) the data subject has given his explicit consent to the processing

is required for the medicine, medical of care or treatment health-care services, are processed by a

subject under

national

law or rules established by national competent bodies to the obligation of professional secrecy or by another person also subject to an equivalent obligation of

secrecy.

(b) processing is necessary for the purposes of carrying out the obligations and specific rights of

4. Subject to the provision of suitable safeguards, Member States may, for reasons of substantial public interest, lay down exemptions in addition to those laid down in paragraph 2 either by national law or by decision of the supervisory authority. 5. Processing of data relating to offences, criminal convictions or security measures may be carried out only under the control of official authority, or if suitable specific safeguards are provided under national law, subject to derogations which may be granted by the Member State under national provisions providing suitable

the controller in the field of employment law in so far as it is authorised by national law

specific safeguards. However, a complete register of criminal convictions may be kept only under the control of official authority.

providing for adequate safeguards;

Member States may provide that data relating to administrative sanctions or

of those

data, except

where

the

laws of the Member State provide that the prohibition referred to in paragraph 1 may not be lifted by the data subject's giving his consent; or

or (c)

processing

is

necessary

judgements

to

protect the vital interests of the data

66

in

civil

cases

shall

also

be

processed under the control of official authority. 6. Derogations from paragraph 1 provided for in paragraphs 4 and 5 shall be

of the proposed processing operation or operations, the country of origin and country of final destination, the rules of law, both general and sectoral, in force in the third

notified to the Commission.

country

7.

rules

Member

States shall determine the

conditions under which a national identification number or any other identifier of general application may be processed.

if they are necessary to reconcile the right to

Directive

95/46,

entitled

Exemptions and restrictions, provides that Member States may adopt measures restricting the scope of

some of the obligations imposed by the directive on the controller of the data, inter alia as regards information given to the persons concerned, where such a restriction is necessary to safeguard, for example, national security, defence, public security, an important economic or financial interest of a Member State or of the European Union, or the investigation and prosecution of criminal offences or

accordance with the procedure referred to in

Article 25 of Directive 95/46, which is part

of Chapter IV entitled Transfer of personal data to third countries, reads as follows: 1. The Member States shall provide that the transfer to a third country of personal data which are undergoing processing or are intended for processing after transfer may take place only if, without prejudice to compliance with the national provisions adopted pursuant to the other provisions of this Directive, the third country in question ensures an adequate level of protection.

2.

The

adequacy

of

the

level

necessary to comply

with the Commission's

decision. 9. At the time of the adoption of Directive 95/46, the Kingdom of Sweden made the following statement on the subject of Article 9, which was entered in the Council minutes (document No 4649/95 of the Council, of 2 February 1995):

The

Kingdom

of Sweden

considers

that

artistic and literary expression refers to the means of expression rather than to the contents of the communication or its quality.

of

protection afforded by a third country shall be assessed in the light of all the circumstances surrounding a data transfer operation

are

Article 31(2), that a third country ensures an adequate level of protection within the meaning of paragraph 2 of this Article, by reason of its domestic Jaw or of the international commitments it has entered into, particularly upon conclusion of the negotiations referred to in paragraph 5, for the protection of the private lives and basic freedoms and rights of individuals. Member States shall take the measures

of breaches of ethics for regulated professions. 8.

which

2.

privacy with the rules governing freedom of expression. of

the professional

4, Where the Commission _ finds, under the procedure provided for in Article 31(2), that a third country does not ensure an adequate level of protection within the meaning of paragraph 2 of this Article, Member States shall take the measures necessary to prevent any transfer of data of the same type to the third country in question. 5. At the appropriate time, the Commission shall enter into negotiations with a view to remedying the situation resulting from the finding made pursuant to paragraph 4. 6. The Commission may find, in

processing of personal data carried out solely for journalistic purposes or the purpose of artistic or literary expression only

13

and

measures

where they consider that a third country does not ensure an adequate level of protection within the meaning of paragraph

or derogations from the provisions of this Chapter, Chapter IV and Chapter V1 for the

Article

security

complied with in that country. 3. The Member States and the Commission shall inform each other of cases

6. Article 9 of Directive 95/46, entitled Processing of personal data and freedom of expression, provides: Member States shall provide for exemptions

7.

in question and

10. The European Convention for the Protection of Human Rights and Fundamental Freedoms signed at Rome on 4 November 1950 (the ECHR), provides, in Article 8, for a right to respect for private and

or set of data transfer operations;

particular consideration shall be given to the nature of the data, the purpose and duration

67

family life and, in Article

- transferred processed personal data to a

10, contains provisions

third country without (Paragraph 33 of the PUL).

concerning freedom of expression.

authorisation

The national legislation 11.

Directive

Swedish

law

95/46

by

was

the

implemented

Personuppgiftslag

16. Mrs Lindqvist accepted the facts but disputed that she was guilty of an offence. Mrs Lindqvist was fined by the Eksj6 tingsratt (District Court) (Sweden) and appealed against that sentence to the referring court.

in

(SFS

1998:204) (Swedish law on personal data, the PUL). The main proceedings and the questions referred

17. The amount of the fine was SEK 4 000, which was arrived at by multiplying the sum of SEK 100, representing Mrs Lindqvist's financial position, by a factor of 40, reflecting the severity of the offence. Mrs Lindqvist was also sentenced to pay SEK 300 to a Swedish fund to assist victims of crimes.

12. In addition to her job as a maintenance worker, Mrs Lindqvist worked as a catechist in the parish of Alseda (Sweden). She followed a data

processing course on which she had inter alia to set up a home page on the internet. At the end of 1998, Mrs Lindqvist set up internet pages at home on her personal computer in order to allow parishioners preparing for their confirmation to obtain information

18.

the Swedish Church's website set up a link between those pages and that site. 13. The pages in question contained information about Mrs Lindqvist and 18 colleagues in the parish, sometimes including their full names and in other

cases

only their first names.

Mrs

Lindqvist

As it had doubts as to the interpretation of

the Community law applicable in this area, inter alia Directive 95/46, the Géta hovratt decided to stay proceedings and refer the following questions to the Court for a preliminary ruling: (1) Is the mention of a person - by name or with name and telephone number - on an internet home page an action which falls within the scope of [Directive 95/46]? Does it constitute the processing of personal data

they might need. At her request, the administrator of

also

described, in a mildly humorous manner, the jobs held by her colleagues and their hobbies. In many cases family circumstances and telephone numbers and other matters were mentioned. She also stated

wholly or partly by automatic means to list on a self-made internet home page a number of persons with comments and statements

that one colleague had injured her foot and was on

about their jobs and hobbies etc.? (2) If the answer to the first question is no,

half-time on medical grounds.

can the act of setting up on an internet home 14,

Mrs

Lindqvist

had

not

informed

page separate pages for about 15 people with links between the pages which make it possible to search by first name be considered to constitute the processing otherwise than by automatic means of personal data which form part of a filing system or are intended to form part of a filing system within the meaning of Article

her

colleagues of the existence of those pages or obtained their consent, nor did she notify the Datainspektionen (supervisory authority for the protection of electronically transmitted data) of her activity. She removed the pages in question as soon as she became aware that they were not appreciated by some of her colleagues.

3(1)? If the answer to either of those questions is yes, the hovratt also asks the following questions: (3) Can the act of loading information of the

15. The public prosecutor brought a prosecution against Mrs Lindqvist charging her with breach of the PUL on the grounds that she had:

- processed personal data by automatic means without giving prior written notification

to

the

type described about work colleagues onto a private home page which is none the less accessible to anyone who knows its address

Datainspektionen

(Paragraph 36 of the PUL); - processed sensitive personal data (injured foot

and

half-time

on

medical

be regarded as outside the scope of [Directive 95/46] on the ground that it is

grounds)

covered by one of the exceptions in Article

without authorisation (Paragraph 13 of the PUL);

3(2)? (4) Is information on a home

page stating

that a named colleague has injured her foot

68

and is on half-time on medical grounds personal data concerning health which, according to Article 8(1), may not be processed? (5) [Directive 95/46] prohibits the transfer of personal data to third countries in certain cases. If a person in Sweden uses a

21. The Swedish Government submits that the term the processing of personal data wholly or partly by automatic means in Article 3(1) of Directive 95/46, covers all processing in computer format, in

computer to load personal data onto a home

other words, in binary format. Consequently, as soon

page stored on a server in Sweden - with the

as personal data are processed by computer, whether using a word processing programme or in order to put them on an internet page, they have been the subject of processing within the meaning of Directive 95/46.

an index and find that page using a search engine, might constitute such processing.

result that personal data become accessible to people constitute

in third countries - does that a transfer of data to a third

country within the meaning of the directive? Would the answer be the same even if, as far

22. The Netherlands Government submits that personal data are loaded onto an internet page using a computer and a server, which are essential elements of automation, so that it must be considered that such data are subject to automatic processing.

as known, no one from the third country had

in fact accessed the data or if the server in question was actually physically in a third country? : (6) Can the provisions of [Directive 95/46], in a case such as the above, be regarded as bringing about a restriction which conflicts

23. 95/46

The Commission submits that Directive applies to all processing of personal data

with the general principles of freedom of expression or other freedoms and rights,

referred to in Article 3 thereof, regardless of the technical means used. Accordingly, making personal

which are applicable within the EU and are enshrined in inter alia Article 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms?

data available on the internet constitutes processing wholly or partly by automatic means, provided that

Finally,

the

hovratt

asks

the

there are no technical limitations which restrict the processing to a purely manual operation. Thus, by its

following

very nature, an internet page falls within the scope of Directive 95/46.

question: (7) Can a Member State, as regards the issues raised in the above questions, provide

Reply of the Court

more extensive protection for personal data or give it a wider scope than the directive,

24.

The term personal data used in Article 3(1)

of Directive 95/46 covers, according to the definition

even if none of the circumstances described in Article 13 exists?

in Article 2(a) thereof, any information relating to an

identified or identifiable natural person. The term undoubtedly covers the name of a person in

The first question

conjunction with his telephone coordinates or information about his working conditions or hobbies.

19. By its first question, the referring court asks whether the act of referring, on an internet page, to

various persons and identifying them by name or by

25. According to the definition in Article 2(b) of Directive 95/46, the term processing of such data used in Article 3(1) covers any operation or set of operations which is performed upon personal data, whether or not by automatic means. That provision gives several examples of such operations, including disclosure by transmission, dissemination or otherwise making data available. It follows that the

other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly or partly by automatic means within the meaning of Article 3(1) of Directive 95/46. Observations submitted to the Court

operation of loading personal data on an internet page must be considered to be such processing.

20. Mrs Lindqvist submits that it is unreasonable to take the view that the mere mention by name of a person or of personal data in a

26.

document contained on an internet page constitutes

It remains to be determined whether such

processing is wholly or partly by automatic means. In that connection, placing information on an internet page entails, under current technical and computer procedures, the operation of loading that page onto a

automatic processing of data. On the other hand, reference to such data in a keyword in the meta tags of an internet page, which makes it possible to create

69

server and the operations necessary to make that page

household activity within the meaning of the second

accessible to people who are connected to the internet. Such operations are performed, at least in part, automatically.

indent of Article 3(2) of Directive 95/46. However, that Government does not rule out that the exception provided for in the first indent of that paragraph might cover cases in which a natural person publishes personal data on an internet page solely in the exercise of his freedom of expression and without any connection with a professional or commercial activity.

27. therefore page, to name or

The answer to the first question must be that the act of referring, on an internet various persons and identifying them by by other means, for instance by giving their

telephone

number

working

or information

conditions

and

hobbies,

regarding constitutes

their 32.

the

the main proceedings does not fall within any of the exceptions in Article 3(2) of Directive 95/46. As regards the exception in the second indent of that paragraph in particular, it observes that the creator of an internet page brings the data placed on it to the knowledge of a generally indeterminate group of people.

of Directive 95/46. The second question 28.

As the first question has been answered in

the affirmative, there is no need to reply to the second question, which arises only in the event that the first question is answered in the negative.

33. The Commission submits that an internet page such as that at issue in the main proceedings cannot be considered to fall outside the scope of Directive 95/46 by virtue of Article 3(2) thereof, but constitutes, given the purpose of the internet page at

The third question

29. By its third question, the national court essentially seeks to know whether processing of

issue in the main proceedings, an artistic and literary creation within Directive.

personal data such as that described in the first question is covered by one of the exceptions in Article 3(2) of Directive 95/46.

out an economic activity and are thus not subject to Community law. If the Court were to hold otherwise, the question of the validity of Directive 95/46 would arise, as, in adopting it, the Community legislature would have exceeded the powers conferred on it by Article 100a of the EC Treaty (now, after amendment, Article 95 EC). The approximation of laws, which concerns the establishment and

35. The Commission argues that Community law is not limited to economic activities connected with the four fundamental freedoms. Referring to the legal basis of Directive 95/46, to its objective, to Article 6 EU, to the Charter of fundamental rights of the European Union proclaimed in Nice on 18 December 2000 (OJ 2000 C 364, p. 1), and to the

market, cannot serve as a

Council of Europe Convention of 28 January 1981 for the protection of individuals with regard to

on the internet. Swedish

Government

submits

Directive 95/46 was implemented

automatic processing that that directive is movement of personal an economic activity,

that,

in national

law, the Swedish legislature took the view that processing of personal data by a natural person which consisted in publishing those data to an indeterminate number of people, for example through the internet, could

not

be

9 of that

covered by Community law.

legal basis for Community measures regulating the tight of private individuals to freedom of expression

The

of Article

examples, in other words, to activities which essentially fall within what are generally called the second and third pillars. The other interpretation consists in excluding from the scope of Directive 95/46 the exercise of any activity which is not

expression to create internet pages in the course of a non-profit-making or leisure activity are not carrying

31.

meaning

the scope of that provision to the areas cited as

30. Mrs Lindqvist submits that private individuals who make use of their freedom of

when

the

34. It takes the view that the first indent of Article 3(2) of Directive 95/46 lends itself to two different interpretations. The first consists in limiting

Observations submitted to the Court

functioning of the common

According to the Netherlands Government,

automatic processing of data such as that at issue in

processing of personal data wholly or partly by automatic means within the meaning of Article 3(1)

described

as

a purely

personal

course

of the

integration

common market.

or

70

of personal data, it concludes intended to regulate the free data in the exercise not only of but also of social activity in the

and

functioning

of the

36. It adds that to exclude generally from the scope of Directive 95/46 internet pages which contain no element of commerce or of provision of services might entail serious problems of demarcation. A large number of internet pages containing personal data intended to disparage certain persons with a particular end in view might then be excluded from

42. Against that background, it would not be appropriate to interpret the expression activity which falls outside the scope of Community law as having a scope which would require it to be determined in

each individual case whether the specific activity at issue directly affected freedom of movement between Member States.

the scope of that directive. 43. The activities mentioned by way of example in the first indent of Article 3(2) of Directive 95/46 (in other words, the activities provided for by Titles V and VI of the Treaty on European Union and processing operations concerning public security, defence, State security and activities in areas of criminal law) are, in any event, activities of the State or of State authorities and unrelated to the fields of activity of individuals.

Reply of the Court 37. Article 3(2) of Directive 95/46 provides for two exceptions to its scope.

38.

The first exception concerns the processing

of personal data in the course of an activity which falls outside the scope of Community law, such as those provided for by Titles V and VI of the Treaty

on

European

Union,

and

in any case

44.

processing

It must

therefore

be considered

that the

activities mentioned by way of example in the first indent of Article 3(2) of Directive 95/46 are intended to define the scope of the exception provided for there, with the result that that exception applies only to the activities which are expressly listed there or which can be classified in the same category (ejusdem generis).

operations concerning public security, defence, State security (including the economic well-being of the State when the processing operation relates to State security matters) and the activities of the State in areas of criminal law. 39. As the activities of Mrs Lindqvist which are at issue in the main proceedings are essentially not economic but charitable and religious, it is necessary to consider whether they constitute the processing of personal data in the course of an activity which falls outside the scope of Community law within the meaning of the first indent of Article 3(2) of Directive 95/46.

45.

those

Charitable

carried

out

or

religious

by

Mrs

activities

Lindqvist

such

as

cannot

be

considered equivalent to the activities listed in the first indent of Article 3(2) of Directive 95/46 and are thus not covered by that exception. 46. As regards the exception provided for in the second indent of Article 3(2) of Directive 95/46, the 12th recital in the preamble to that directive, which

40. The Court has held, on the subject of Directive 95/46, which is based on Article 100a of the Treaty, that recourse to that legal basis does not

concerns

presuppose the existence of an actual link with free movement between Member States in every situation referred to by the measure founded on that basis (see Joined Cases C-465/00, C-138/01 and C-139/01 Osterreichischer Rundfunk and Others [2003] ECR I0000, paragraph 41, and the case-law cited therein).

processing of data carried out by a natural person in the exercise of activities which are exclusively personal or domestic, correspondence and the holding of records of addresses.

41. limits

unsure

and

uncertain,

which

would

exception,

cites,

as

examples

of the

47. That exception must therefore be interpreted as relating only to activities which are carried out in the course of private or family life of individuals, which is clearly not the case with the processing of personal data consisting in publication on the internet so that those data are made accessible to an indefinite

A contrary interpretation could make the of the field of application of the directive

particularly

that

be

contrary to its essential objective of approximating.

the laws, regulations and administrative provisions of the Member States in order to eliminate obstacles to

number of people.

the functioning of the internal market precisely from _ disparities between

48.

deriving national

The

answer

to

the

third

question

must

therefore be that processing of personal data such as

legislations (Osterreichischer Rundfunk and Others, cited above, paragraph 42).

that described in the reply to the first question is not covered by any of the exceptions in Article 3(2) of

Directive 95/46.

71

The fourth question

understood

to refer to the

transferring

personal

data

act of intentionally

from

the

territory

of a

49. By its fourth question, the referring court seeks to know whether reference to the fact that an individual has injured her foot and is on half-time on

distinction can be made between the different ways in which data are made accessible to third parties. It

medical grounds constitutes personal data concerning

concludes that loading personal data onto an internet

health within the meaning of Article 8(1) of Directive

page using a computer cannot be considered to be a

95/46.

transfer of personal data to a third country within the meaning of Article 25 of Directive 95/46.

50.

Member

State to a third country and, second, that no

In the light of the purpose of the directive,

the expression data concerning health used in Article

55. The United Kingdom Government submits that Article 25 of Directive 95/46 concerns the transfer of data to third countries and not their accessibility from third countries. The term transfer

8(1) thereof must be given a wide interpretation so as to include information concerning all aspects, both physical and mental, of the health of an individual.

connotes the transmission of personal data from one place and person to another place and person. It only in the event of such a transfer that Article 25 Directive 95/46 requires Member States to ensure adequate level of protection of personal data in third country.

51. The answer to the fourth question must therefore be that reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive

is of an a

95/46. Reply of the Court The fifth question 52.

56. Directive 95/46 does not define the expression transfer to a third country in Article 25 or any other provision, including Article 2.

By its fifth question the referring court seeks

essentially to know whether there is any transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 where an individual in a Member State loads personal data onto an internet

57. In order to determine whether loading personal data onto an internet page constitutes a transfer of those data to a third country within the

page which is stored on an internet site on which the page

can

be

consulted

and

which

is hosted

meaning of Article 25 of Directive 95/46 merely because it makes them accessible to people in a third country, it is necessary to take account both of the technical nature of the operations thus carried out and

by a

natural or legal person (the hosting provider) who is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. The referring court also asks whether the

of the purpose and structure of Chapter IV of that directive where Article 25 appears.

reply to that question would be the same if no one 58. Information on the internet can be by an indefinite number of people living places at almost any time. The ubiquitous that information is a result inter alia of the the technical means used in connection internet are relatively simple and becoming less expensive.

from the third country had in fact accessed the data or if the server where the page was stored was physically in a third country. Observations submitted to the Court

53. The Commission and the Swedish Government consider that the loading, using a computer, of personal data onto an internet page, so that they become accessible to nationals of third countries, constitutes a transfer of data to third countries within the meaning of Directive 95/46. The

59. Under the procedures for use of the internet available to individuals like Mrs Lindqvist during the

1990s, the author of a page intended for publication on the internet transmits the data making up that page

answer would be the same if no one from the third country had in fact accessed the data or if the server where it was stored was physically in a third country.

to his hosting provider.

the

view,

first,

that

that

term

must

That provider manages

the

computer infrastructure needed to store those data and connect the server hosting the site to the internet. That allows the subsequent transmission of those data to anyone who connects to the internet and seeks

54. The Netherlands Government points out that the term transfer is not defined by Directive 95/46. It takes

consulted in many nature of fact that with the less and

access to it. The computers

which

constitute that

infrastructure may be located, and indeed often are

be

72

located, in one or more countries other than that where the hosting provider is established, without its clients being aware or being in a position to be aware

protection the transfer of personal data to that country must be prohibited.

of it.

65. For its part, Article 25 of Directive 95/46 imposes a series of obligations on Member States and

60. obtain pages

It appears from the court file that, in order to the on

information appearing on the internet which Mrs Lindqvist had _ included

information

about her colleagues, an internet user

on the Commission for the purposes of monitoring transfers of personal data to third countries in the light of the level of protection afforded to such data in each of those countries.

would not only have to connect to the internet but also personally carry out the necessary actions to consult those pages. In other words, Mrs Lindqvist's internet pages did not contain the technical means to

66. In particular, Article 25(4) of Directive 95/46 provides that, where the Commission finds that a third country does not ensure an adequate level of protection, Member States are to take the measures necessary to prevent any transfer of personal data to

send that information automatically to people who did not intentionally seek access to those pages.

the third country in question. 6l. It follows that, in circumstances such as those in the case in the main proceedings, personal

67. Chapter IV of Directive 95/46 contains no provision concerning use of the internet. In particular, it does not lay down criteria for deciding whether operations carried out by hosting providers should be deemed to occur in the place of establishment of the service or at its business address or in the place where the computer or computers constituting the

data which appear on the computer of a person in a third country, coming from a person who has loaded them onto an internet site, were not directly

transferred between those two people but through the computer infrastructure of the hosting provider where the page is stored.

service's infrastructure are located. 62. It is in that light that it must be examined whether the Community legislature intended, for the purposes

Directive transfer

of

the

95/46, [of data]

application

of

Chapter

IV

68. Given, first, the state of development of the internet at the time Directive 95/46 was drawn up and, second, the absence, in Chapter IV, of criteria applicable to use of the internet, one cannot presume that the Community legislature intended the

of

to include within the expression to

a third

country

within

the

meaning of Article 25 of that directive activities such as those carried out by Mrs Lindqvist. It must be

expression transfer [of data] to a third country to

stressed that the fifth question asked by the referring court concerns only those activities and not those carried out by the hosting providers.

63.

Chapter

IV of Directive 95/46,

cover the loading, by an individual in Mrs Lindqvist's position, of data onto an internet page, even if those data are thereby made accessible to persons in third countries with the technical means to access them.

in which

Article 25 appears, sets up a special regime, with specific rules, intended to allow the Member States to monitor transfers of personal data to third countries. That Chapter sets up a complementary regime to the

69. If Article 25 of Directive 95/46 were interpreted to mean that there is transfer [of data] to a third country every time that personal data are loaded onto an internet page, that transfer would necessarily be a transfer to all the third countries where there are the technical means needed to access the internet. The special regime provided for by Chapter IV of the directive would thus necessarily become a regime of general application, as regards operations on the

general regime set up by Chapter II of that directive concerning the lawfulness of processing of personal data. 64. The objective of Chapter IV is defined in the 56th to 60th recitals in the preamble to Directive 95/46, which state inter alia that, although the

protection

of

individuals

guaranteed

in

internet. Thus, if the Commission

found, pursuant to

Article 25(4) of Directive 95/46, that even one third country did not ensure adequate protection, the Member States would be obliged to prevent any

the

Community by that Directive does not stand in the way of transfers of personal data to third countries which ensure an adequate level of protection, the

personal data being placed on the internet.

adequacy of such protection must be assessed in the

70.

light of all the circumstances surrounding the transfer operation or set of transfer operations. Where a third country does not ensure an adequate level of

Article 25 of Directive 95/46 is to be interpreted as meaning that operations such as those carried out by

Accordingly,

it must

be

concluded

that

Mrs Lindqvist do not as such constitute a transfer [of

73

data] to a third country. It is thus unnecessary to

75.

The

Swedish

Government

considers

that

investigate whether an individual from a_ third country has accessed the internet page concerned or whether the server of that hosting service is

Directive 95/46 allows the interests at stake to be weighed against each other and freedom of expression and protection of private life to be thereby

physically in a third country.

safeguarded. It adds that only the national court can

71.

The

reply

to

the

fifth

question

assess, in the light of the facts of each individual case, whether the restriction on the exercise of the right to freedom of expression entailed by the

must

therefore be that there is no transfer [of data] to a

third country within the meaning of Article 25 of

application of the rules on the protection of the rights

Directive 95/46 where an individual in a Member State loads personal data onto an internet page which is stored with his hosting provider which is

of others is proportionate. 76. The Netherlands Government points out that both freedom of expression and the right to respect

established in that State or in another Member State, thereby making those data accessible to anyone who

for private life are among the general principles of

connects to the internet, including people in a third

law for which the Court ensures respect and that the ECHR does not establish any hierarchy between the

country.

various fundamental rights. It therefore considers that the national court must endeavour to balance the various fundamental rights at issue by taking account

The sixth question

72.

By

its sixth

question

the referring court

of the circumstances of the individual case.

seeks to know whether the provisions of Directive 95/46, in a case such as that in the main proceedings, bring about a restriction which conflicts with the

77. The United Kingdom Government points out that its proposed reply to the fifth question, set

out in paragraph 55 of this judgment, is wholly in accordance with fundamental rights and avoids any

general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined in inter alia

disproportionate restriction on freedom of expression.

It adds that it is difficult to justify an interpretation which would mean that the publication of personal

Article 10 of the ECHR.

data in a particular form, that is to say, on an internet

Observations submitted to the Court

page, is subject to far greater restrictions than those 73.

Citing inter alia Case C-274/99 P Connolly v

applicable to publication in other forms, such as on

paper.

Commission [2001] ECR I-1611, Mrs Lindqvist submits that Directive 95/46 and the PUL, in so far as they lay down requirements of prior consent and prior notification of a supervisory authority and a principle of prohibiting processing of personal data of a sensitive nature, are contrary to the general

78. The Commission also submits that Directive 95/46 does not entail any restriction contrary to the general principle of freedom of expression or other tights and freedoms applicable in the European Union corresponding inter alia to the right provided

principle of freedom of expression enshrined in Community law. More particularly, she argues that

for in Article 10 of the ECHR.

the definition of processing of personal data wholly or partly by automatic means does not fulfil the criteria of predictability and accuracy.

Reply of the Court 79. According to the seventh recital in the preamble to Directive 95/46, the establishment and functioning of the common market are liable to be seriously affected by differences in national rules applicable to the processing of personal data.

74. She argues further that merely mentioning a natural person by name, revealing their telephone details and working conditions and_ giving information about their state of health and hobbies,

information

which

is in the public domain,

well-

breach of the right to respect for private life. Mrs

According to the third recital of that directive the harmonisation of those national rules must seek to ensure not only the free flow of such data between

Lindqvist considers that, in any event, the constraints

Member

imposed by Directive 95/46 are disproportionate to the objective of protecting the reputation and private life of others.

fundamental rights of individuals. Those objectives may of course be inconsistent with one another.

known

or trivial, does

not constitute

a significant

80.

States

also

the

safeguarding

On the one hand, the economic

integration

74

but

resulting

from

the

of the

and social

establishment

and

functioning of the internal market will necessarily

life of the individuals about whom Mrs Lindqvist has placed data on her internet site.

lead to a substantial increase in cross-border flows of personal data between all those involved in a private or public capacity in economic and social activity in

the Member

States, whether

businesses

87.

or public

Consequently,

it is for the authorities and

courts of the Member States not only to interpret their national law in a manner consistent with Directive

authorities of the Member States. Those so involved will, to a certain extent, need to have access to personal data to perform their transactions or carry out their tasks within the area without internal

95/46 but also to make sure they do not rely on an interpretation of it which would be in conflict with the fundamental rights protected by the Community

legal order or with the other general principles of Community law, such as inter alia the principle of

frontiers which the internal market constitutes. 81. On the other hand, those affected by the processing of personal data understandably require those data to be effectively protected.

proportionality. 88.

Whilst it is true that the protection of private

life requires the application of effective sanctions 82. The mechanisms allowing those different rights and interests to be balanced are contained, first, in Directive 95/46 itself, in that it provides for rules which determine in what circumstances and to what

against people processing personal data in ways inconsistent with Directive 95/46, such sanctions must always respect the principle of proportionality. That is so a fortiori since the scope of Directive

extent the processing of personal data is lawful and

95/46 is very wide and the obligations of those who

what safeguards must be provided for. Second, they result from the adoption, by the Member States, of national provisions implementing that directive and their application by the national authorities.

process personal data are many and significant.

89.

all the circumstances of the case before it, in particular the duration of the breach of the rules

83. As regards Directive 95/46 itself, its provisions are necessarily relatively general since it has to be applied to a large number of very different situations. Contrary to Mrs Lindqvist's contentions,

the directive quite properly

implementing Directive 95/46 and the importance, for the persons concerned, of the protection of the

data disclosed.

includes rules with a 90.

degree of flexibility and, in many instances, leaves to the Member States the task of deciding the details or choosing between options.

not,

Directive 95/46. However, there is nothing to suggest

the

sixth

question

must

in themselves,

bring

about

a restriction

which

applying the national legislation implementing Directive 95/46 to ensure a fair balance between the rights and interests in question, including the fundamental rights protected by the Community legal order. The seventh question 91,

interests involved.

By its seventh question, the referring court

essentially seeks to know whether it is permissible for the Member States to provide for greater protection for personal data or a wider scope than are required under Directive 95/46.

86. In that context, fundamental rights have a particular importance, as demonstrated by the case in

in essence,

to

for the national authorities and courts responsible for

85. Thus, it is, rather, at the stage of the application at national level of the legislation implementing Directive 95/46 in individual cases that a balance must be found between the rights and

in which,

answer

conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined inter alia in Article 10 of the ECHR. It is

that the regime it provides for lacks predictability or that its provisions are, as such, contrary to the general principles of Community law and, in particular, to the fundamental rights protected by the Community legal order.

proceedings,

The

therefore be that the provisions of Directive 95/46 do

84. It is true that, in many respects, the Member States have a margin for manoeuvre in implementing

the main

It is for the referring court to take account,

in accordance with the principle of proportionality, of

Mrs

Lindqvist's freedom of expression in her work preparing people for Communion and her freedom to carry out activities contributing to religious life have

Observations submitted to the Court 92. The Swedish Government states that Directive 95/46 is not confined to fixing minimum

to be weighed against the protection of the private

75

conditions

for the

protection

of personal

data.

97.

Member States are obliged, in the course of implementing that directive, to attain the level of protection dictated by it and are not empowered to provide for greater or less protection. However, account must be taken of the discretion which the Member States have in implementing the directive to lay down in their domestic law the general conditions for the lawfulness of the processing of personal data. 93. The Netherlands Directive 95/46 does not from providing for greater It is clear, for example,

11(1), subparagraph

provided for by Directive 95/46 and in accordance with its objective of maintaining a balance between

the free movement of protection of private life.

Government submits that preclude Member States protection in certain areas. from Article 10, Article

(a) of the first paragraph

It is true that Directive 95/46 allows the

Member States a margin for manoeuvre in certain areas and authorises them to maintain or introduce particular rules for specific situations as a large number of its provisions demonstrate. However, such possibilities must be made use of in the manner

personal

data

and

the

98. On the other hand, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included within the

of

scope thereof, provided that no other provision of

Article 14, Article 17(3), Article 18(5) and Article 19(1) of that directive that the Member States may

Community law precludes it.

make provision for wider protection. Moreover, the Member States are free to apply the principles of Directive 95/46 also to activities which do not fall within its scope.

99. In the light of those considerations, the answer to the seventh question must be that measures taken by the Member States to ensure the protection of personal data must be consistent both with the

94. The Commission submits that Directive 95/46 is based on Article 100a of the Treaty and that,

provisions of Directive 95/46 and with its objective of maintaining a balance between freedom of movement of personal data and the protection of

if a Member State wishes to maintain or introduce legislation which derogates from such a harmonising directive, it is obliged to notify the Commission pursuant to Article 95(4) or 95(5) EC. The

private

life. However,

nothing

prevents

a Member

State from extending the scope of the national legislation implementing the provisions of Directive

Commission therefore submits that a Member State

95/46 to areas not included in the scope thereof provided that no other provision of Community law precludes it.

cannot make provision for more extensive protection for personal data or a wider scope than are required

under the directive. Costs

Reply of the Court 95.

100. The costs incurred by the Swedish, Netherlands and United Kingdom Governments and

Directive 95/46 is intended, as appears from

the eighth recital in the preamble thereto, to ensure

by

that the level of protection of the rights and freedoms of individuals with regard to the processing of personal data is equivalent in all Member States. The

Authority, which have submitted observations to the

tenth

the action pending

recital

adds

that the

approximation

Commission

and

the

EFTA

Surveillance

Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in

of the

national laws applicable in this area must not result in any lessening of the protection they afford but must, on the contrary, seek to ensure a high level of protection in the Community.

before the national

court, the

decision on costs is a matter for that court. On those grounds,

THE COURT,

96. The harmonisation of those national laws is therefore not limited to minimal harmonisation but amounts to harmonisation which is generally complete. It is upon that view that Directive 95/46 is intended to ensure free movement

the

in answer to the questions referred to it by the Géta hovratt by order of 23 February 2001, hereby rules:

of personal data

1. The act of referring, on an internet page, to various persons and identifying them by name or by other means, for instance by giving their telephone number or information regarding their working conditions and hobbies, constitutes the processing of personal data wholly

while guaranteeing a high level of protection for the rights and interests of the individuals to whom such data relate.

76

or partly by automatic means within the meaning of Article 3(1) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data. 2. Such processing of personal data is not covered by any of the exceptions in Article 3(2) of Directive 95/46. 3. Reference to the fact that an individual has injured her foot and is on half-time on medical grounds constitutes personal data concerning health within the meaning of Article 8(1) of Directive 95/46. 4, There is no transfer [of data] to a third country within the meaning of Article 25 of Directive 95/46 where an individual in a Member State loads personal data onto an internet page which is stored on an internet site on which the page can be consulted and which is hosted by a natural or legal person who is established in that State or in another Member State, thereby making those data accessible to anyone who connects to the internet, including people in a third country. 5. The provisions of Directive 95/46 do not, in themselves, bring about a restriction which conflicts with the general principles of freedom of expression or other freedoms and rights, which are applicable within the European Union and are enshrined inter alia in Article 10 of

the European Convention for the Protection of Human Rights and Fundamental Freedoms signed at Rome on 4 November 1950. It is for the national authorities and courts responsible for applying the national legislation implementing Directive 95/46

to ensure a fair balance between the rights and interests in question, including the fundamental rights protected by the Community legal order. 6. Measures taken by the Member States to ensure the protection of personal data must be consistent both with the provisions of Directive 95/46 and with its objective of maintaining a balance between freedom of movement of personal data and the protection of private life. However, nothing prevents a Member State from extending the scope of the national legislation implementing the provisions of Directive 95/46 to areas not included in the scope thereof provided that no other provision of Community law precludes it. Jann Timmermans Gulmann

Cunha Rodrigues Rosas Edward Puissochet Macken von Bahr

Delivered in open court in Luxembourg on 6 November 2003. R. Grass Registrar

V. Skouris President

V.

Intellectual Property

Intellectual property is the name we give to the various intangible rights we have to control the reproduction of our creative works. Copyright is perhaps the oldest of those rights. April, One thousand seven hundred

The Statute of Anne (1710)

the

times

Granted

and

Limited

and ten, within by

this

Act,

as

Anno Octavo Anne Regine.

aforesaid, shall Print, Reprint, or Import, or cause to be Printed, Reprinted, or Imported any such Book or Books, without the Consent of the Proprietor or

An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned.

Proprietors thereof first had and obtained in Writing, Signed in the Presence of Two or more Credible Witnesses; or knowing the same to be so Printed or Reprinted, without the Consent of the Proprietors, shall Sell, Publish, or Expose to Sale, or cause to be Sold, Published, or Exposed to Sale, any such Book or Books, without such Consent first had and obtained, as aforesaid, Then such Offender or Offenders shall Forfeit such Book or Books, and all and every Sheet or Sheets, being part of such Book or Books, to the Proprietor or Proprietors of the Copy thereof, who shall forthwith Damask and make Waste-Paper of them: And further, That every such Offender or Offenders, shall Forfeit One Peny [sic]

Whereas Printers, Booksellers, and other Persons, have of late frequently taken the Liberty of Printing, Reprinting, and Publishing, or causing to be Printed, Reprinted, and Published Books, and other Writings, without the Consent of the Authors or Proprietors of

such

Books

and

Writings,

to

their

very

great

Detriment, and too often to the Ruin of them and their Families: For Preventing therefore such

Practices for the future, and for the Encouragement of Learned Men to Compose and Write useful Books; May it please Your Majesty, that it may be Enacted, and be it Enacted by the Queens most Excellent Majesty, by and with the Advice and Consent of the

for every sheet which shall be found in his, her, or their Custody, either Printed or Printing, Published or

Exposed

Lords Spiritual and Temporal, and Commons in this present of the April, Author

Parliament Assembled, and by same, That from and after the One thousand seven hundred of any Book or Books already

to Sale, contrary to the true intent and

meaning of this Act, the one Moiety thereof to the Queens [sic] most Excellent Majesty, Her Heirs and Successors, and the other Moiety thereof to any Person or Persons that shall Sue for the same, to be Recovered in any of Her Majesties [sic] Courts of Record at Westminster, by Action of Debt, Bill, Plaint, or Information, in which no Wager of Law, Essoign, Privilege, or Protection, or more than one

the Authority Tenth Day of and ten, the Printed, who

hath not Transferred to any other the Copy or Copies of such Book or Books, Share or Shares thereof, or the Bookseller or Book-sellers, Printer or Printers, or

Imparlance, shall be allowed.

other Person or Persons, who hath or have Purchased

or Acquired the Copy or Copies of any Book or Books, in order to Print or Reprint the same, shall have the sole Right and Liberty of Printing such Book and Books for the Term of One and twenty Years, to Commence from the said Tenth Day of

And whereas many Persons may through Ignorance

April, and no longer; and that the Author of any Book

likewise the Consent of such Proprietor or Proprietors

or Books

already

Composed

and

not

Printed

Offend against this Act, unless some Provision be made whereby the Property in every such Book, as is

intended by this Act to be Secured to the proprietor or

Proprietors

thereof,

may

be

ascertained,

as

and

for the Printing or Reprinting of such Book or Books

Published, or that shall hereafter be Composed, and his Assignee, or Assigns, shall have the sole Liberty

may from time to time be known; Be it therefore further Enacted by the Authority aforesaid, That

of Printing and Reprinting such Book and Books for the Term of fourteen Years, to Commence from the

nothing extend Person therein

Day of the First Publishing the same, and no longer; And that if any other Bookseller, Printer, or other Person whatsoever, from and after the Tenth Day of

in this Act contained shall be construed to to subject any Bookseller, Printer, or other whatsoever, to the Forfeitures or Penalties mentioned, for or by reason of the Printing or

Reprinting

78

of any

Book

or Books

without

such

Consent, as aforesaid, unless the Title to the Copy of such Book or Books hereafter Published shall, before such Publication be Entred [sic], in the RegisterBook of the Company of Stationers, in such manner

said said Company of at the Hall of the Publication made, for the Libraries of the

as hath been usual, which Register-Book shall at all

Cambridge, the Libraries of the Four Universities in Scotland, the Library of Sion College in London, and the Library commonly called the Library belonging

times be kept at the Hall of the said Company, and unless such Consent of the Proprietor or Proprietors be in like manner Entred [sic], as aforesaid,

for

every

of which

several

Entries,

to the Faculty of Advocates at Edinburgh respectively; which said Warehouse-Keeper, is hereby required, within Ten Days after Demand by

Six

Pence shall be Paid, and no more; which said Register-Book may, at all Seasonable [sic; should be: Reasonable] and Convenient times, be Resorted to, and Inspected by any Book-seller, Printer, or other Person, for the Purposes before mentioned, without any Fee or Reward; and the Clerk of the said Company of Stationers, shall, when and as often as

the Keepers of the respective Libraries, or any Person or Persons by them or any of them Authorised to Demand the said Copy, to Deliver the same, for the Use of the aforesaid Libraries; and if any Proprietor, Bookseller or Printer, or the said Warehouse-Keeper of the said Company of Stationers, shall not observe the Direction of this Act therein, That then he and they, so making Default in not Delivering the said Printed Copies, as aforesaid, shall Forfeit, besides the value of the said Printed Copies, the sum of Five Pounds for every Copy not so Delivered, as also the value of the said Printed Copy not so Delivered, the same to be Recovered by the Queens [sic] Majesty, Her Heirs and Successors, and by the Chancellor, Masters, and Scholars of any of the said Universities, and by the President and Fellows of

thereunto required, give a Certificate under his Hand of

such

Entry

or

Entries,

and

for

every

such

Certificate, may take a Fee not exceeding Six Pence. Provided nevertheless, That if the Clerk of the said Company of Stationers, for the time being shall Refuse or Neglect to Register, or make such Entry or Entries, or to give such Certificate, being thereunto Required by the Author or Proprietor of such Copy or Copies, in the Presence of Two or more Credible Witnesses, That then such Person and Persons so refusing, Notice being first duly given of such Refusal, by an Advertisement in the Gazette, shall have

the

like

Benefit,

as

if such

Entry

or

Sion College, and the said Faculty of Advocates at Edinburgh, with their full Costs respectively. * OK OK

Entries,

Certificate or Certificates had been duly made and gven; and that the Clerks so refusing, shall, for any such Offence, Forfeit to the Proprietor of such Copy or Copies the Sum of Twenty Pounds, to be Recovered in any of Her Majesties [sic] Courts of

Record

at Westminster,

by Action of Debt,

Stationers for the time being, said Company, before such the Use of the Royal Library, Universities of Oxford and

Provided, That nothing in this Act contained shall extend, or be construed to extend, either to Prejudice or Confirm any Right that the said Universities, or any of them, or any Person or Persons have, or claim to have, to the Printing or Reprinting any Book or Copy already Printed, or hereafter to be Printed.

Bill,

Plaint, or Information, in which no Wager of Law, Essoign, Privilege or Protection, or more than one

Imparlance shall be allowed.

OK ok

Provided always, That after the Expiration of the said

* KOK

Term of Fourteen Years, the sole Right of Printing or Disposing of Copies shall return to the Authors thereof, if they are then Living, for another Term of Fourteen Years.

Provided always, and it is hereby Enacted, That Nine

Copies of each Book or Books, upon the best Paper, that from and after the said Tenth Day of April, One thousand seven hundred and ten, shall be Printed and Published, as aforesaid, or Reprinted and Published

with Additions,

FINIS.

shall, by the Printer and Printers

thereof, be Delivered to the Warehouse-Keeper of the

Of course, not all copyright infringements are the same. Sometimes people can be guilty of infringement even when they weren’t the ones who actually did the copying.

79

An

Sony Corporation of America v. Universal City

No. 81-1687

at a later time.

17, 1984, Decided

copyrights on some of the television programs that are broadcast on the public airwaves. Some members of the general public use video tape recorders sold by petitioners to record some of these broadcasts, as well as a large number of other broadcasts. The question presented is whether the sale of petitioners’ copying equipment to the general public violates any of the rights conferred upon respondents by the Copyright Act.

for the

Central

District

individuals

had

Respondents

thereby

infringed further

This

practice,

petitioners

liable

for

distributing

VTR’s,

to

collect

royalties

equipment, or to obtain would enlarge the scope monopolies to encompass

of

commerce

that

is not

VTR’s

to

the

on

the

sale

of

such

other relief, if affirmed, of respondents’ statutory control over an article of

the

subject

of copyright

I

that

petitioners were liable for the copyright infringement

The

two

respondents

in

this

action,

Universal City Studios, Inc., and Walt Disney Productions, produce and hold the copyrights on a substantial number of motion pictures and other

audiovisual works. In the current marketplace, they can exploit their rights in these works in a number of ways: by authorizing theatrical exhibitions, by licensing limited showings on cable and network television, by selling syndication rights for repeated airings on local television stations, and by marketing programs on prerecorded videotapes or videodiscs. Some works are suitable for exploitation through all

After a lengthy trial, the District Court denied respondents all the relief they sought and entered judgment for petitioners. 480 F.Supp. 429 (1979). The United States Court of Appeals for the

of these avenues, while the market for other works is

Ninth Circuit reversed the District Court’s judgment on respondents’ copyright claim, holding petitioners

more limited.

liable for contributory infringement and ordering the District Court to fashion appropriate relief. 659 F.2d 963 (1981). We granted certiorari, 457 U.S. 1116

Petitioner Betamax

video

Sony

tape

manufactures

recorders

and

millions markets

of

these

devices through numerous retail establishments, some of which are also petitioners in this action.

(1982); since we had not completed our study of the 463

“time-

protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress.

allegedly committed by Betamax consumers because of petitioners’ marketing of the Betamax VTR’s. *** Respondents sought no relief against any Betamax consumer. Instead, they sought money damages and an equitable accounting of profits from petitioners, as well as an injunction against the manufacture and marketing of Betamax VTR’s.

case last Term, we ordered reargument, 1226 (1983). We now reverse.

as

general public. The Court of Appeals’ holding that respondents are entitled to enjoin the distribution of

respondents’

maintained

known

that the practice has impaired the commercial value of their copyrights or has created any likelihood of future harm. Given these findings, there is no basis in the Copyright Act upon which respondents can hold

California in 1976. Respondents alleged that some individuals had used Betamax video tape recorders (VTR’s) to record some of respondents’ copyrighted works which had been exhibited on commercially sponsored television and contended that these copyrights.

of

time-shifting in this litigation, were unable to prove

Respondents commenced this copyright infringement action against petitioners in the United

Court

rejection

shifting,” enlarges the television viewing audience. For that reason, a significant amount of television programming may be used in this manner without objection from the owners of the copyrights on the programs. For the same reason, even the two respondents in this case, who do assert objections to

STEVENS, J.: Petitioners manufacture and sell home video tape recorders. Respondents own the

District

our

uses a VTR principally to record a program he cannot view as it is being televised and then to watch it once

464 US. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574

States

of

findings reveal that the average member of the public

SUPREME COURT OF THE UNITED STATES

January

explanation

respondents’ unprecedented attempt to impose copyright liability upon the distributors of copying equipment requires a quite detailed recitation of the findings of the District Court. In summary, those

Studios, Inc.

U.S.

***

Sony’s

Betamax

VTR

is

a_

consisting of three basic components: which

80

receives

electromagnetic

signals

mechanism

(1) a tuner, transmitted

over the television band of the public airwaves and separates them into audio and visual signals; (2) a recorder, which records such signals on a magnetic tape; and (3) an adapter, which converts the audio and visual signals on the tape into a composite signal that can be received by a television set.

Several noteworthy.

capabilities

The

separate

of the tuner

in

machine the

indicated that over 80% of the interviewees watched at least as much regular television as they had before owning a Betamax.* Respondents offered no

When

intended not only to time-shift (record, playback and then erase) but also to build a library of cassettes. Maintaining a library, however, proved too expensive, and he is now erasing some earlier tapes and reusing them.

are

Betamax

enables it to record a broadcast off one station while the television set is tuned to another channel, permitting the viewer, for example, to watch two simultaneous news broadcasts by watching one “live” and recording the other for later viewing. Tapes may

“Griffiths copied about 20 minutes

be reused, and programs that have been recorded may be erased either before or after viewing. A timer in the Betamax can be used to activate and deactivate

of a Universal motion picture called ‘Never Give An Inch,’ and two episodes from Universal television series entitled ‘Baa Baa Black Sheep’ and ‘Holmes and Yo Yo.’ He would have erased each of these but for the request of plaintiffs’ counsel that it be kept. Griffiths also testified that he had copied but already erased Universal films called ‘Alpha Caper’ (erased before anyone saw it) and ‘Amelia Earhart.’ At the time of his deposition Griffiths did not intend to keep any Universal film in his library.

the equipment at predetermined times, enabling an intended viewer to record programs that are

transmitted when he or she is not at home. Thus a person may watch a program at home in the evening even though it was broadcast while the viewer was at

work

during the afternoon.

The

Betamax

is also

equipped with a pause button and a fast-forward control. The pause button, when depressed, deactivates the recorder until it is released, thus enabling a viewer to omit a commercial

advertisement

from

the

recording,

provided,

of

“Griffiths has also recorded documentaries, news broadcasts, sporting events and political programs such as a rerun of the Nixon/Kennedy debate.” * * *

course, that the viewer is present when the program is recorded. The fast-forward control enables the viewer of a previously recorded program to run the tape

rapidly when a segment he or she does not desire to see is being played back on the television screen.

Four

1978. Although there were some differences in the

3

of

tapes.’

Sony’s

“According to plaintiffs’ survey, 75.4% of the VTR owners use their machines to record for time-shifting purposes half or most of the time. Defendants’ survey showed that 96% of the Betamax owners had used the machine to record programs they otherwise would have missed. “When plaintiffs asked interviewees how many cassettes were in their library, 55.8% said there were 10 or

survey

fewer. In defendants’

As evidence of how a VTR may be

used, respondents offered the testimony of William Griffiths. Griffiths, although

named

testified to

‘ The District Court summarized some of the findings in these surveys as follows:

surveys, they both showed that the primary use of the machine for most owners was “time-shifting” -- the practice of recording a program to view it once at a later time, and thereafter erasing it. Time-shifting enables viewers to see programs they otherwise would miss because they are not at home, are occupied with other tasks, or are viewing a program on another station at the time of a broadcast that they desire to watch. Both surveys also showed, however, that a substantial number of interviewees had

libraries

other witnesses

having engaged in similar activity.

The respondents and Sony both conducted surveys of the way the Betamax machine was used by several hundred owners during a sample period in

accumulated

“He owns approximately 100 tapes. Griffiths bought his Betamax, he

survey, of the total

programs viewed by interviewees in the past month, 70.4% had been viewed only that

as an individual

defendant, was a client of plaintiffs’ law firm. The District Court summarized his testimony as follows:

one time and for 57.9%, there were no plans

for further viewing.” * * *

81

copying

evidence of decreased television viewing by Betamax

as

fair

use

“because

there

is

no

accompanying reduction in the market for ‘plaintiff's original work.’” * * *

owners.°

Sony introduced considerable evidence describing television programs that could be copied without objection from any copyright holder, with

As an independent ground of decision, the District Court also concluded that Sony could not be

special emphasis on sports, religious, and educational programming.

For example,

that 7.3% of all Betamax

their survey

held liable as a contributory infringer even if the home use of a VTR was considered an infringing use. The District Court noted that Sony had no direct

indicated

use is to record sports

events, and representatives of professional baseball, football, basketball, and hockey testified that they

involvement with any Betamax purchasers who recorded copyrighted works off the air. Sony’s advertising was silent on the subject of possible copyright infringement, but its instruction booklet contained the following statement:

had no objection to the recording of their televised events for home use. * * * Respondents offered opinion evidence concerning the future impact of the unrestricted sale of VTR’s on the commercial value of their copyrights. The District Court found, however, that they had failed to prove any likelihood of future harm from the use of VTR’s for time-shifting. * * *

“Television programs, films, videotapes and other

materials

Unauthorized

The

District Court assumed

constructive knowledge The lengthy trial of the case in the District Court concerned the private, home use of VTR’s for recording programs broadcast on the public airwaves without charge to the viewer. *** No_ issue

The

District

home

Court

use

of

material of the

that Sony

had

of the probability that the

them allegedly infringing.” * * * It reasoned: “Selling

a

staple

article

of

commerce -- e. g., a typewriter, a recorder, a

on pay or

concluded

recording

copyrighted.

Betamax machine would be used to record copyrighted programs, but found that Sony merely sold a “product capable of a variety of uses, some of

concerning the transfer of tapes to other persons, the use of home-recorded tapes for public performances,

noncommercial

be _

of such

may be contrary to the provisions United States copyright laws.” * * *

The District Court’s Decision

or the copying of programs transmitted cable television systems was raised. * * *

may

recording

camera, a photocopying machine -technically contributes to any infringing use subsequently made thereof, but this kind of ‘contribution,’ if deemed sufficient as a basis for liability, would expand the theory beyond precedent and arguably beyond judicial management.

that

material

broadcast over the public airwaves was a fair use of copyrighted works and did not constitute copyright infringement. It emphasized the fact that the material

was broadcast free to the public at large, the noncommercial character of the use, and the private character of the activity conducted entirely within the home. Moreover, the court found that the purpose of this use served the public interest in increasing access to television programming, an interest that “is providing the fullest possible access to information through the public airwaves. Columbia Broadcasting System, Inc. v. Democratic National Committee, 412

“", . Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they ‘constructively’ knew that some purchasers on some occasions would use their product for a purpose which a court later deemed, as a matter of first impression,

U.S. 94, 102.” * * * Even when an entire copyrighted

to be an infringement.” * * *

consistent

with

the

First

Amendment

policy

of

work was recorded, the District Court regarded the Finally,

°

“81.9%

of

the

the

District

Court

discussed

the

respondents’ prayer for injunctive relief, noting that they had asked for an injunction either preventing the

defendants’

interviewees watched the same amount or more of regular television as they did before owning a Betamax. 83.2% reported their frequency of movie

future sale of Betamax machines, or requiring that the

machines

be

rendered

incapable

of

recording

copyrighted works off the air. The court stated that it had “found no case in which the manufacturers,

going was unaffected by Betamax.” * * *

82

distributors, retailers and advertisers of the instrument enabling the infringement were sued by the copyright holders,” and that the request for relief in this case “is unique.” * * *

On the matter of relief, the Court of Appeals concluded that “statutory damages may be appropriate” and that the District Court should

reconsider its determination that an injunction would It concluded that an injunction was wholly inappropriate because any possible harm to respondents was outweighed by the fact that “the

Betamax

could

still

legally

be

used

to

not be an appropriate remedy; and, referring to “the analogous photocopying area,” suggested that a continuing royalty pursuant to a judicially created compulsory license may very well be an acceptable

record

resolution of the relief issue. * * *

noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the-air recording.” * * *

II Article I, § 8, of the Constitution provides:

The Court of Appeals’ Decision

The Court of Appeals reversed the District

“The Congress shall have Power ... To Promote the Progress of Science and

Court’s judgment on respondents’ copyright claim. It did not set aside any of the District Court’s findings

Authors and Inventors the exclusive Right to

of fact. Rather, it concluded the home use of a VTR was was not a “productive use.” that it was unnecessary for

useful Arts, by securing for limited Times to

as a matter of law that not a fair use because it * * * It therefore held plaintiffs to prove any

their respective Writings and Discoveries.” The monopoly privileges that Congress may authorize

are

neither

unlimited

nor

primarily

harm to the potential market for the copyrighted works, but then observed that it seemed clear that the

designed to provide a special private benefit. Rather, the limited grant is a means by which an important

cumulative

public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors

possible

effect by

VTR’s

of

mass

would

reproduction tend

to

diminish

made the

potential market for respondents’ works. * * *

by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.

On the issue of contributory infringement, the Court of Appeals first rejected the analogy to staple articles of commerce such as tape recorders or photocopying machines. It noted that such machines “may have substantial benefit for some purposes” and do not “even remotely raise copyright problems.” * * * VTR’s, however, are sold “for the primary purpose of reproducing television programming” and “{virtually] all such programming is copyrighted

material.

* * * The

Court

of Appeals

“The copyright law, like the patent statutes, makes reward to the owner a secondary consideration. In Fox Film Corp. v. Doyal,

286

U.S.

123,

127, Chief Justice

Hughes spoke as follows respecting the copyright monopoly granted by Congress, ‘The sole interest of the United States and

concluded,

the

therefore, that VTR’s were not suitable for any substantial noninfringing use even if some copyright owners elect not to enforce their rights.

primary

object

in

conferring

the

monopoly lie in the general benefits derived by the public from the labors of authors.’ It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius.” United

The Court of Appeals also rejected the District Court’s reliance on Sony’s lack of knowledge that home use constituted infringement. Assuming that the statutory provisions defining the remedies for

States v. Paramount Pictures, Inc., 334 U.S.

131, 158 (1948).

infringement applied also to the nonstatutory tort of contributory infringement, the court stated that a defendant’s good faith would merely reduce his

defining

damages liability but would not excuse the infringing conduct. It held that Sony was chargeable with

should be granted to authors or to inventors in order to give the public appropriate access to their work

knowledge

product. Because this task involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society’s competing

of the homeowner’s

As the text of the Constitution makes plain,

it is Congress that has been assigned the task of

infringing activity

because the reproduction of copyrighted materials was either “the most conspicuous use” or “the major

use” of the Betamax product. * * *

83

the

scope

of the

limited

monopoly

that

interest in the free flow of ideas, information, and

the five ways set forth in the statute, “is an infringer

commerce

of the copyright.” is authorized by copyrighted work who makes a fair

on

copyright

the

statutes

other

have

hand,

been

our

patent

amended

and

repeatedly.

* KOK

§ 501(a). Conversely, anyone who the copyright owner to use the in a way specified in the statute or use of the work is not an infringer

From its beginning, the law of copyright has developed in response to significant changes in

of the copyright with respect to such use.

technology. * * * Indeed, it was the invention of a new form of copying equipment -- the printing press - that gave rise to the original need for copyright protection. * * * Repeatedly, as new developments have occurred in this country, it has been the Congress that has fashioned the new rules that new technology made necessary. * * * The remedies for infringement “are only those prescribed by Congress.” Thompson v. Hubbard, 131 U.S. 123, 151

The Copyright Act provides the owner of a copyright with a potent arsenal of remedies against

an infringer of his work, including an injunction to restrain the infringer from violating his rights, the impoundment and destruction of all reproductions of his work made in violation of his rights, a recovery of his actual damages and any additional profits realized

by the infringer or a recovery of statutory damages,

and attorney’s fees. §§ 502-505.'°

(1889).

legislative guidance is a recurring theme. * * * Sound policy, as well as history, supports our consistent deference to Congress when major technological

The two respondents in this case do not seek relief against the Betamax users who have allegedly infringed their copyrights. Moreover, this is not a class action‘on behalf of all copyright owners who license their works for television broadcast, and respondents have no right to invoke whatever rights

innovations

other

The judiciary’s reluctance to expand the protections afforded by the copyright without explicit

alter

the

market

for

copyrighted

copyright

holders

may

have

to

bring

materials. Congress has the constitutional authority and the institutional ability to accommodate fully the

infringement actions based on Betamax copying of their works. * * * As was made clear by their own

varied permutations of competing interests that are inevitably implicated by such new technology.

evidence, the copying of the respondents’ programs represents a small portion of the total use of VTR’s. It is, however, the taping of respondents’ own copyrighted programs standing to charge

In a case like this, in which Congress has not

plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such

protection

“subsists

...

infringement. To prevail, they have the burden of

Ill

medium of expression.” 17 U. S. C. § 102(a) (1982 ed.). This protection has never accorded the copyright owner complete control over all possible uses of his work. * * * Rather, the Copyright Act grants the copyright holder “exclusive” rights to use and to

The Copyright Act does not expressly render anyone liable for infringement committed by another. In contrast, the Patent Act expressly brands anyone who “actively induces infringement of a patent” as an infringer, 35 U. S. C. § 271(b), and further imposes liability on certain individuals labeled “contributory” infringers, § 271(c). The absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringements

in five qualified ways,

including reproduction of the copyrighted work in copies. § 106. * * * All reproductions of the work, however,

are not within the exclusive domain

infringed be held

in

original works of authorship fixed in any tangible

authorize the use of his work

them with contributory

proving that users of the Betamax have their copyrights and that Sony should responsible for that infringement.

a calculus of interests. * * * Copyright

that provides Sony with

of the

copyright owner; some are in the public domain. Any individual may reproduce a copyrighted work for a

on certain parties who have not themselves engaged

“fair use”; the copyright owner does not possess the exclusive right to such a use. Compare

§ 106 with

‘5

§ 107,

Moreover,

anyone who willfully

infringes the copyright to reproduce a motion picture for purposes of commercial advantage or private financial gain is subject to substantial criminal penalties, 17 U.S.C. § 506(a) (1982 ed.), and the fruits and instrumentalities of the crime are forfeited

“Anyone who violates any of the exclusive rights of the copyright owner,” that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work in one of

upon conviction, § 506(b).

84

in the infringing activity. * * * For vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement is merely a species of the broader problem of identifying the

respondents’ works; respondents do. Sony supplies a piece of equipment that is generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the

circumstances in which it is just to hold one individual accountable for the actions of another.

copyright holder would prefer not to have copied. The Betamax can be used to make authorized or unauthorized uses of copyrighted works, but the

Such circumstances were plainly present in Kalem Co. v. Harper Brothers, 222 U.S. 55 (1911),

the

copyright

decision

of this

Court

on

which

range of its potential use is much broader than the particular infringing use of the film Ben Hur involved

respondents place their principal reliance. In Kalem,

the Court held that the producer of an unauthorized

in Kalem. Kalem does not support respondents’ novel theory of liability.

film dramatization of the copyrighted book Ben Hur

was

liable for his sale of the motion

picture

to Justice Holmes stated that the producer had

jobbers, who in turn arranged for the commercial exhibition of the film. Justice Holmes, writing for the

“contributed” to the infringement

Court, explained:

and the label “contributory infringement” has been

of the copyright,

applied in a number of lower court copyright cases

“The defendant not only expected

involving an ongoing relationship between the direct

but invoked by advertisement the use of its

infringer and the contributory infringer at the time the

films for dramatic reproduction of the story.

infringing conduct occurred.

That was the most conspicuous purpose for

other situations in which the imposition of vicarious

which they could be used, and the one for

liability is manifestly just, the “contributory” infringer was in a position to control the use of

which

especially

they

were

made.

If the

In such cases, as in

defendant did not contribute to the infringement it is impossible to do so except

copyrighted works by others and had authorized the

by taking part in the final act. It is liable on

* * * This case, however, plainly does not fall in that category. The only contact between Sony and the users of the Betamax that is disclosed by this record

use without permission from the copyright owner.

principles recognized in every part of the law.” Id., at 62-63.

occurred at the moment of sale. The District Court The use for which the item sold in Kalem

expressly found that “no employee of Sony, Sonam or DDBI had either direct involvement with the allegedly infringing activity or direct contact with purchasers of Betamax who recorded copyrighted works off-the-air.” * * * And it further found that “there was no evidence that any of the copies made by Griffiths or the other individual witnesses in this suit were influenced or encouraged by [Sony’s] advertisements.” * * *

had been “especially” made was, of course, to display

the performance that had already been recorded upon it. The producer had personally appropriated the copyright owner’s protected work and, as the owner

of the tangible medium of expression upon which the protected work was recorded, authorized that use by his sale of the film to jobbers. But that use of the film was not his to authorize: the copyright owner possessed the exclusive right to authorize public performances of his work. Further, the producer personally advertised the unauthorized public performances, dispelling any possible doubt as to the use of the film which he had authorized.

If vicarious liability is to be imposed on Sony in this case, it must rest on the fact that it has sold equipment with constructive knowledge of the fact that its customers may use that equipment to make unauthorized copies of copyrighted material. There is no precedent in the law of copyright for the imposition of vicarious liability on such a theory. The

Respondents argue that Kalem stands for the proposition that supplying the “means” to accomplish an infringing activity and encouraging that activity

closest analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship between patent law and copyright law. * * *

through advertisement are sufficient to establish liability for copyright infringement. This argument rests on a gross generalization that cannot withstand scrutiny.

The

producer

in Kalem

did

not

[I]n contributory infringement cases arising

merely

under

provide the “means” to accomplish an infringing activity; the producer supplied the work itself, albeit does

not

supply

Betamax

consumers

patent

laws

the

Court

has

always

recognized the critical importance of not allowing the patentee to extend his monopoly beyond the limits of his specific grant. These cases deny the patentee any

in a new medium of expression. Sony in the instant

case

the

with

85

right to control the distribution of unpatented articles

A. Authorized Time-Shifting

unless they are “unsuited for any commercial noninfringing use.” * * * Unless a commodity “has no use except through practice of the patented

Each of the respondents owns a_ large inventory of valuable copyrights, but in the total spectrum of television programming their combined market share is small. The exact percentage is not

method,” * * *, the patentee has no right to claim that its distribution constitutes contributory infringement. “To form the basis for contributory infringement the item must almost be uniquely suited as a component of the

patented

invention.”

* **

“[A]

sale

specified, but it is well below 10%. * * * If they were to prevail, the outcome of this litigation would have a significant impact on both the producers and the

of an

article which though adapted to an infringing use is

viewers of the remaining 90% of the programming in

also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a

the Nation.

No

doubt,

many

other producers

rule would block the wheels of commerce.” * * *

the findings of the District Court make We

recognize

there

are

time-shifting to continue, at least for an experimental

time period. * * * The District Court found:

publication to the products or activities that make such duplication possible. The staple article of commerce doctrine must strike a balance between a copyright holder’s legitimate demand for effective -not merely symbolic -- protection of the statutory monopoly, and the rights of others freely to engage in

“Even if it were deemed that home-

use

used Indeed,

for

legitimate,

it need

merely

if the product

unobjectionable be

capable

Owners

consented

to

the

copying.

An this

purposes. “Defendants introduced considerable testimony at trial about the potential for such copying of sports,

of substantial

religious,

educational

and

other

programming. This included testimony from representatives of the Offices of the

significant noninfringing

Commissioners of the National Football, Basketball, Baseball and Hockey Leagues

uses. In order to resolve that question, we need not explore ail the different potential uses of the machine and determine whether or not they would constitute infringement. Rather, we need only consider whether on the basis of the facts as found by the District Court a significant number of them would be noninfringing. in order to resolve this case we

material

ability to use the Betamax for noninfringing off-the-air recording.

is widely

The question is thus whether the Betamax is

Moreover,

copyrighted

injunction would deprive the public of the

IV

of commercially

of

noncopyrighted material or material whose

noninfringing uses.

capable

recording

constituted infringement, the Betamax could still legally be used to _ record

substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute infringement

it clear that

time-shifting may enlarge the total viewing audience and that many producers are willing to allow private

substantial

differences between the patent and copyright laws. But in both areas the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or

contributory

share

respondents’ concern about the possible consequences of unrestricted copying. Nevertheless

and Associations,

the Executive

Director of

National Religious Broadcasters and various educational communications agencies. Plaintiffs attack the weight of the testimony offered and also contend that an injunction is warranted because infringing uses outweigh noninfringing uses.

need not

give precise content to the question of how much use is commercially significant. For one potential use of it is understood: private, noncommercial timeshifting in the home. It does so both (A) because

legal

“Whatever the future percentage of versus illegal home-use recording

might

be,

respondents have no right to prevent other copyright

deprive the public of the very tool or article

the Betamax plainly satisfies this standard, however

an

injunction

which

seeks

to

holders from authorizing it for their programs, and

of commerce capable of some noninfringing

(B) because the District Court’s factual findings reveal that even the unauthorized home time-shifting of respondents’ programs is legitimate fair use.

use would be an extremely harsh remedy, as well as one unprecedented in copyright law.” * * *

86

Although the District Court made these statements in the context of considering the propriety of injunctive relief, the statements constitute a finding that the evidence concerning “sports,

If there are millions of owners of VTR’s who make copies of televised sports events, religious broadcasts, and educational programs such as Mister

religious, educational and other programming” was sufficient to establish a significant quantity of broadcasting whose copying is now authorized, and a significant potential for future authorized copying. That finding is amply supported by the record. In addition to the religious and sports officials identified explicitly by the District Court, * * * two items in the record deserve specific mention.

Rogers’ Neighborhood, and if the proprietors of those programs welcome the practice, the business of supplying the equipment that makes such copying feasible should not be stifled simply because the equipment is used by some individuals to make unauthorized reproductions of respondents’ works.

The respondents do not represent a class composed of all copyright holders. Yet a finding of contributory infringement would inevitably frustrate the interests of broadcasters in reaching the portion of their audience that is available only through time-shifting.

First is the testimony of John Kenaston, the station manager of Channel 58, an educational station

in Los Angeles affiliated Broadcasting Service. He

with the Public explained and holders

authenticated the station’s published guide to its programs. * * * For each program, the guide tells whether unlimited home taping is authorized, home

taping is authorized

does not mean that respondents should be deemed to have granted a license to copy their programs. Thirdparty conduct would be wholly irrelevant in an action for direct infringement of respondents’ copyrights. But in an action for contributory infringement against

subject to certain restrictions

(such as erasure within seven days), or home taping is not authorized at all. The Spring 1978 edition of

the guide described 107 programs. Sixty-two of those programs or 58% authorize some home taping. Twenty-one of them or almost unrestricted home taping. * * *

Second

20%

the seller of copying equipment, the copyright holder may not prevail unless the relief that he seeks affects only his programs, or unless he speaks for virtually all copyright holders with an interest in the outcome. In this case, the record makes it perfectly clear that there are many important producers of national and local television programs who find nothing

authorize

is the testimony of Fred Rogers,

president of the corporation that produces and owns

objectionable about the enlargement in the size of the television audience that results from the practice of time-shifting for private home use. * * * The seller of

the copyright on Mister Rogers’ Neighborhood. The program is carried by more public television stations than any other program. Its audience numbers over 3,000,000 families a day. He testified that he had absolutely no objection to home taping for

the equipment that expands those producers’ audiences cannot be a contributory infringer if, as is true in this case, it has had no direct involvement with any infringing activity.

noncommercial use and expressed the opinion that it is a real service to families to be able to record children’s programs and to show them at appropriate times.”’

B. Unauthorized Time-Shifting Even unauthorized uses of a copyrighted work are not necessarily infringing. An unlicensed use of the copyright is not an infringement unless it

27 “Some public stations, as well as commercial stations, program the ‘Neighborhood’ at hours when some children cannot use it. | think that it’s a real service to families to be able to record such programs and show them at appropriate times. I have always felt that with the advent of all of this new technology that allows people to tape the

conflicts with one of the specific exclusive rights conferred by the copyright statute. * * * Moreover, the definition of exclusive rights in § 106 of the present Act is prefaced by the words “subject to

sections 107 through 118.” Those sections describe a variety of uses of copyrighted material that “are not

‘Neighborhood’ off-the-air, and I’m speaking for the ‘Neighborhood’

they

then

because that’s what I produce, that

become

much

programming of their frankly, I am opposed by others. My whole always been ‘You are

way Maybe

you

are.

You

more

active

in

infringements of copyright” “notwithstanding the provisions of section 106.” The most pertinent in this

the

family’s television life. Very to people being programmed approach in broadcasting has an important person just the

can

make

Of course, the fact that other copyright may welcome the practice of time-shifting

anything that allows a person to be more active in the

healthy decisions.’

control

of his or her

important.” * * *

I’m going on too long, but I just feel that

87

life, in a healthy way,

is

case is § 107, the legislative endorsement of the

have. But a use that has no demonstrable effect upon

doctrine of “fair use.” * * *

the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author’s incentive to create. The

That section identifies various factors*® that

prohibition of such noncommercial uses would merely inhibit access to ideas without any

enable a court to apply an “equitable rule of reason” analysis to particular claims of infringement. * * * Although not conclusive, the first factor requires that

countervailing benefit. * * *

“the commercial or nonprofit character of an activity” be weighed in any fair use decision. * * * If the Betamax were used to make copies for a commercial or profit-making purpose, such use would

Thus, although every commercial use of copyrighted material is presumptively an unfair

exploitation of the monopoly privilege that belongs to the owner of the copyright, noncommercial uses are a

presumptively be unfair. The contrary presumption is appropriate here, however, because the District Court’s findings plainly establish that time-shifting

different matter. A challenge to a noncommercial use

of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential

for private home use must be characterized as a noncommercial, nonprofit activity. Moreover, when one considers the nature of a televised copyrighted

This is not, however, the end of the inquiry

market for the copyrighted work. Actual present harm need not be shown; such a requirement would leave the copyright holder with no defense against predictable damage. Nor is it necessary to show with certainty that future harm will result. What is necessary is a showing by a preponderance of the evidence that some meaningful likelihood of future harm exists. If the intended use is for commercial gain, that likelihood may be presumed. But if it is for

Congress

a noncommercial

audiovisual work * * *, and that time-shifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced, see § 107(3), does not have its ordinary effect of

militating against a finding of fair use. * * *

because

has also directed

us to consider

“the effect of the use upon the potential market for or value of the copyrighted work.” § 107(4). The purpose of copyright is to create incentives for creative effort. Even copying for noncommercial

In this case, respondents failed to carry their

burden with regard to District Court described follows:

purposes may impair the copyright holder’s ability to obtain

the rewards

that Congress

intended

him

purpose, the likelihood must be

demonstrated.

to

home time-shifting. The respondents’ evidence as

“Plaintiffs’

Section 107 provides:

several

points

in the

experts

admitted

trial that

the

at

time-

shifting without librarying would result in ‘not a great deal of harm.’ Plaintiffs’

“Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including

greatest concern about time-shifting is with ‘a point of important philosophy that transcends even commercial judgment.’ They fear that with any Betamax usage,

such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — “(1) the purpose and character of the use,

‘invisible

boundaries’

copyright owner program.’” * * * Later

in

its

has

opinion,

are

passed:

lost control

the

‘the

over

District

his

Court

observed:

including whether such use is of a commercial nature or is for nonprofit educational purposes; “(2) the nature of the copyrighted work; “(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and “(4) the effect of the use upon the potential

“Most of plaintiffs’ predictions of harm hinge on speculation about audience viewing patterns and ratings, a measurement

system which Sidney Sheinberg, MCA’s president, calls a ‘black art’ because of the significant level of imprecision involved in the calculations.” * * *

market for or value of the copyrighted work.” * * *

88

There was no need for the District Court to say much about past harm. “Plaintiffs have admitted that no actual harm to their copyrights has occurred

he may condemn a private act of time-shifting as a violation of federal law.

to date.” * * *

When these factors are all weighed in the “equitable rule of reason” balance, we must conclude

On the question of potential future harm from time-shifting, the District Court offered a more

that this record amply supports the District Court’s

detailed

analysis

of

the

evidence.

It

conclusion that home time-shifting is fair use. In light of the findings of the District Court regarding the

rejected

original telecast of a program will not be measured in

state of the empirical data, it is clear that the Court of Appeals erred in holding that the statute as presently

the live audience and the ratings and revenues will

written bars such conduct. * * *

respondents’

“fear

that

persons

‘watching’

the

decrease,” by observing that current measurement In summary, the record and findings of the District Court lead us to two conclusions. First, Sony demonstrated a significant likelihood that substantial numbers of copyright holders who license their works

technology allows the Betamax audience to be reflected. * * * It rejected respondents’ prediction “that live television or movie audiences will decrease

as

more

people

watch

Betamax

tapes

as

an

for broadcast on free television would not object to having their broadcasts time-shifted by private

alternative,” with the observation that “[there] is no

factual basis for [the underlying] assumption.” * * * It rejected respondents’ “fear that time-shifting will reduce audiences for telecast reruns,” and concluded

instead should And it “theater suffer

that “given current market practices, aid plaintiffs rather than harm them.” declared that respondents’ suggestion or film rental exhibition of a program because of time-shift recording of

viewers. And second, respondents failed to demonstrate that time-shifting would cause any likelihood of nonminimal harm to the potential market for, or the value of, their copyrighted works. The Betamax is, therefore, capable of substantial noninfringing uses. Sony’s sale of such equipment to the general public does not constitute contributory infringement of respondents’ copyrights.

this * * * that will that

program” “lacks merit.” * * *

Vv

After completing that review, the District Court restated its overall conclusion several times, in several different ways. “Harm from time-shifting is speculative and, at best, minimal.” *** “The audience benefits from the time-shifting capability

“The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.” Deepsouth Packing Co. v. Laitram Corp.,

have already been discussed. It is not implausible that benefits could also accrue to plaintiffs, broadcasters, and advertisers, as the Betamax makes it possible for more persons to view their broadcasts.” * * * “Testimony at trial suggested that Betamax may require adjustments in marketing strategy, but it did

not

establish

even

a likelihood

of harm.”

406 U.S. 518, 530 (1972). One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later

* * *

“Television production by plaintiffs today is more profitable than it has ever been, and, in five weeks of trial, there was no concrete evidence to suggest that the Betamax will change the studios’ financial picture.” * * *

against the sale of machines that make such copying possible.

The District Court’s conclusions are buttressed by the fact that to the extent time-shifting

It may well be that Congress will take a fresh look at this new technology, just as it so often

expands public access to freely broadcast television programs, it yields societal benefits. In Community

has examined other innovations in the past. But it is

viewing at home, or have enacted a flat prohibition

not our written. reads, to case, the reversed.

Television of Southern California v. Gottfried, 459 U.S. 498, 508, n. 12 (1983), we acknowledged the

public interest in making television broadcasting more available. Concededly, that interest is not unlimited. But it supports an interpretation of the concept of “fair use” that requires the copyright

job to apply laws that have not yet been Applying the copyright statute, as it now the facts as they have been developed in this judgment of the Court of Appeals must be

It is so ordered.

holder to demonstrate some likelihood of harm before

89

Even when one infringes on another’s copyright, there are sometimes valid reasons for doing so. The law provides legal recognition for some of these reasons, calling them “fair use.” Fair Use is a doctrine that permits copying of another person’s copyrighted work without

permission under certain circumstances that have been determined to be “fair.” that 2 Live Crew had written a parody of “Oh, Pretty Woman,” that they would afford all credit for

Campbell v. Acuff-Rose Music, Inc.

ownership

No. 92-1292

Acuff-Rose, SUPREME

and authorship

of the original song to

Dees, and Orbison, and that they were

willing to pay a fee for the use they wished to make

COURT OF THE United States

of it. Enclosed

510 U.S. 569; 114 S. Ct. 1164; 127 L. Ed. 2d 500; 1994 U.S. LEXIS 2052; 62 U.S.L.W. 4169; 29 U.S.P.Q.2D (BNA) 1961; Copy. L. Rep. (CCH) P27,222; 22 Media L. Rep. 1353; 94 Cal. Daily Op. Service 1662; 94 Daily Journal DAR 2958; 7 Fla. L. Weekly Fed. S 800

with the letter were

a copy

of the

lyrics and a recording of 2 Live Crew’s song. * * * Acuff-Rose’s agent refused permission, stating that “I am aware of the success enjoyed by ‘The 2 Live Crews’, but I must inform you that we cannot permit the use of a parody of ‘Oh, Pretty Woman.“ * * * Nonetheless, in June or July 1989, * * * 2 Live Crew released records, cassette tapes, and compact discs of “Pretty Woman” in a collection of songs entitled “As Clean As They Wanna Be.” The albums and compact discs identify the authors of “Pretty Woman” as Orbison and Dees and its publisher as Acuff-Rose.

March 7, 1994, Decided

SOUTER, J.: We are called upon to decide whether 2 Live Crew’s commercial parody of Roy Orbison’s song, “Oh, Pretty Woman,” may be a fair use within the meaning of the Copyright Act of 1976, 17 U.S.C. § 107 (1988 ed. and Supp. IV). Although the District Court granted summary judgment for 2 Live Crew, the Court of Appeals reversed, holding the defense of

Almost a year later, after nearly a quarter of

a million copies of the recording

had been

sold,

fair use barred by the song’s commercial character

Acuff-Rose sued 2Live Crew and its record company, Luke Skyywalker Records, for copyright infringement. The District Court granted summary

and excessive borrowing. Because we hold that a parody’s commercial character is only one element to

judgment for 2 Live Crew, * * * reasoning that the commercial purpose of 2 Live Crew’s song was no

be weighed in a fair use enquiry, and that insufficient

bar to fair use; that 2 Live Crew’s version was a parody, which “quickly degenerates into a play on words, substituting predictable lyrics with shocking

consideration was given to the nature of parody in weighing the degree of copying, we reverse and remand.

ones” to show “how bland and banal the Orbison song” is; that 2 Live Crew had taken no more than was necessary to “conjure up” the original in order to

I

parody it; and that it was “extremely unlikely that 2 Live Crew’s song could adversely affect the market for the original.” * * * The District Court weighed these factors and held that 2 Live Crew’s song made fair use of Orbison’s original. * * *

In 1964, Roy Orbison and William Dees wrote a rock ballad called “Oh, Pretty Woman” and assigned their rights in it to respondent Acuff-Rose Music, Inc. * * * Acuff-Rose registered the song for copyright protection.

The Court of Appeals for the Sixth Circuit reversed and remanded. * * * Although it assumed for the purpose of its opinion that 2 Live Crew’s song was a parody of the Orbison original, the Court of Appeals thought the District Court had put too little emphasis on the fact that “every commercial use... is presumptively ... unfair,” Sony Corp. of America

Petitioners Luther R. Campbell, Christopher Wongwon, Mark Ross, and David Hobbs are collectively known as 2 Live Crew, a popular rap music group. * * * In 1989, Campbell wrote a song

entitled “Pretty Woman,” which he later described in an affidavit as intended, “through comical lyrics, to satirize the original work... .” * * * On July 5,

v. Universal City Studios, Inc., 464 U.S. 417, 451, 78

1989, 2 Live Crew’s

L. Ed. 2d 574, 104 S. Ct. 774 (1984), and it held that

manager

informed Acuff-Rose

90

“the admittedly commercial nature” of “requires the conclusion” that the first of relevant under the statute weighs against fair use. * * * Next, the Court of Appeals

the parody four factors a finding of determined

came to be known, * * * the doctrine was recognized by the American courts nonetheless. In Folsom v. Marsh, 9 F. Cas. 342 (No. 4,901) (CCD Mass. 1841), Justice Story distilled the essence of law and methodology from the earlier cases: “look to the nature and objects of the

that, by “taking the heart of the original and making it the heart of a new work,” qualitatively, taken too much.

2 Live Crew * * * Finally,

had, after

noting that the effect on the potential market for the

selections

original (and the market for derivative works) is “undoubtedly the single most important element of fair use,” Harper & Row, Publishers, Inc. v. Nation

materials used, and the degree in which the use may

Enterprises,

471

U.S.

539,

566,

85

L. Ed.

2d

588,

348.

analysis has been established by the presumption attaching to commercial uses.” * ** In sum, the purpose... use.” * * *

that

its

“blatantly

prevents this parody

It is uncontested here that 2 Live Crew’s song would be an infringement of Acuff-Rose’s rights in “Oh, Pretty Woman,” under the Copyright Act of 1976, 17 U.S.C. § 106 (1988 ed. and Supp. TV), but for a finding of fair use through parody.

it when

under the Statute of Anne courts held that in some

fair use remained

exclusively

nature

or

is

for

nonprofit

educational purposes; “(2) the nature of the copyrighted work; “(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and “(4) the effect of the use upon the potential market for or value of the copyrighted work. “The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.” * * *

he wrote,

to secure every

of 1710, instances

expressed,

commercial

man in the enjoyment of his copy-right, one must not put manacles upon science.” * * * In copyright cases brought English

Thus

“(1) the purpose and character of the use, including whether such use is of a

* * * From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, “to promote the Progress of Science and useful Arts... .” U.S. Const., Art. I, § 8, cl. 8. * * * For as Justice Story explained, “in truth, in literature, in science and in art, there are, and can be, few, if any, things, which in an abstract sense, are strictly new and original throughout. Every book in literature, science and art, borrows, and must necessarily borrow, and use much which was well known and used before.” *** Similarly, Lord Ellenborough expressed the inherent tension in the need simultaneously to protect copyrighted material I shall think myself bound

of the

“Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

II

and to allow others to build upon

value

fair

We granted certiorari, 507 U.S. 1003 (1993), to determine whether 2 Live Crew’s commercial parody could be a fair use.

“while

and

Ҥ 107. Limitations on exclusive rights: Fair use

commercial

from being a

quantity

judge-made doctrine until the passage of the 1976 Copyright Act, in which Justice Story’s summary is discernible: * * *

presumption” that “harm for purposes of the fair use concluded

the

prejudice the sale, or diminish the profits, or supersede the objects, of the original work.” /d., at

105 S. Ct. 2218 (1985), the Court of Appeals faulted the District Court for “refusing to indulge the

court

made,

Congress meant § 107 “to restate the present judicial doctrine of fair use, not to change, narrow, or

* ** “fair

enlarge it in any way” and intended that courts continue the common-law tradition of fair use adjudication. *** The fair use doctrine thus

abridgements” would not infringe an author’s rights, and although the First Congress enacted our initial copyright statute, Act of May 31, 1790, 1 Stat. 124,

“permits [and application of

without any explicit reference to “fair use,” as it later

91

requires] courts to avoid rigid the copyright statute when, on

occasion, it would stifle the very creativity which that

division. * * * Suffice it to say now that parody has

law is designed to foster.” * * *

an obvious claim to transformative value, as AcuffRose itself does not deny. Like less ostensibly humorous forms of criticism, it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one. We thus line up with the courts that have held that parody, like other comment or criticism, may claim fair use under §

The task is not to be simplified with brightline rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis. * * * The text employs the terms “including” and “such as” in the preamble paragraph to indicate the “illustrative and not limitative” function of the examples given, § 101, *** which thus provide only general

107. See, e. g., Fisher v. Dees, 794 F.2d 432 (CA9 1986) (“When “When Sunny

guidance about the sorts of copying that courts and Congress * * * Nor isolation, and the purposes

most commonly had found to may the four statutory factors one from another. All are to results weighed together, in of copyright. * * *

be fair uses. be treated in be explored, light of the

Music,

Inc.

Sonny Sniffs Glue,” a parody of Gets Blue,” is fair use); Elsmere

vy. National

Broadcasting

Co.,

482

F.

Supp. 741 (SDNY), aff'd, 623 F.2d 252 (CA2 1980) (“I Love Sodom,” a “Saturday Night Live” television

parody of “I Love New York,” is fair use); see also

A

House Report, p. 65; Senate Report, p. 61 (“Use in a parody of some of the content of the work parodied” may be fair use).

The first factor in a fair use enquiry is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit

The germ of parody lies in the definition of the Greek parodeia, quoted in Judge Nelson’s Court of Appeals dissent, as “a song sung alongside

educational purposes.” § 107(1). This factor draws on Justice Story’s formulation, “the nature and objects

another.” *** Modern dictionaries accordingly describe a parody as a “literary or artistic work that

of the selections made.” * * * The enquiry here may

imitates the characteristic style of an author or a work for comic effect or ridicule,’ *** or as a

be guided by the examples given in the preamble to

“composition

§ 107, looking to whether the use is for criticism, or comment, or news reporting, and the like, see § 107.

The central purpose of this investigation is to see, in Justice Story’s words, whether the new work

merely

less

will

be

Court

has

only

once

before

the

something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish), and other factors, like the extent of

its commerciality, loom larger.'* Parody needs to

the

‘4 A parody that more loosely targets an original than the parody presented here may still be sufficiently aimed at an original work to come within our analysis of parody. If a parody whose wide dissemination in the market runs the risk of

significance of other factors, like commercialism, that may weigh against a finding of fair use. This

which

attention or to avoid the drudgery in working up

use is not absolutely necessary for a finding of fair use,'! * * * the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright, * * * and the more the

in

in part, comments on that author’s works. * * * If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get

“transformative.” * * * Although such transformative

work,

verse

material, is the use of some elements of a prior author’s composition to create a new one that, at least

or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is

new

or

heart of any parodist’s claim to quote from existing

instead adds something new, with a further purpose

the

prose

of copyright law, the nub of the definitions, and the

“supersede[s] the objects” of the original creation, Folsom v. Marsh, supra, at 348; accord, Harper & Row, supra, at 562 (“supplanting” the original), or

transformative

in

characteristic turns of thought and phrase in an author or class of authors are imitated in such a way as to make them appear ridiculous.” * * * For the purposes

even

considered whether parody may be fair use, and that

serving as a substitute for the original or licensed

time issued no opinion because of the Court’s equal

derivatives (see infra, at 590-594, discussing factor four), it is more incumbent on one claiming fair use to establish the extent of transformation and the

" The obvious statutory exception to this focus on transformative uses is the straight reproduction of multiple copies for classroom

parody’s

critical

relationship

to the

original.

By

contrast, when there is little or no risk of market substitution, whether because of the large extent of

distribution.

92

mimic an original to make

Crew’s song, it assumed for purposes of its opinion that there was some. /d., at 1435-1436, and n.8.

its point, and so has some

claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very

We

have

fess

difficulty

in

finding

that

act of borrowing. * * *

critical element in 2 Live Crew’s song than the Court of Appeals did, although having found it we will not

The fact that parody can claim legitimacy for some appropriation does not, of course, tell either

take the further step of evaluating its quality. The threshold question when fair use is raised in defense

parodist or judge much about where to draw the line.

of parody

Like a book review quoting the copyrighted material

reasonably be perceived.'® Whether, going beyond that, parody is in good taste or bad does not and should not matter to fair use. As Justice Holmes explained, “it would be a dangerous undertaking for

criticized, parody may or may not be fair use, and petitioners’

suggestion

that

any

parodic

use

is

presumptively fair has no more justification in law or fact than the equally hopeful claim that any use for news reporting should be presumed

Act has no hint of an evidentiary preference parodists

over

their

victims,

and

persons

fair * * *. The no

for

workable

Woman”

contains

that 2 Live

parody,

Crew’s

commenting

the

law

to

constitute

While we might not assign a high rank to the

and

commenting on the original or criticizing it, to some degree. 2 Live Crew juxtaposes the romantic musings of a man whose fantasy comes true, with degrading

say about society at large. As the District Court remarked, the words of 2 Live Crew’s song copy the original’s first line, but then “quickly degenerate into a play on words, substituting predictable lyrics with

taunts, a bawdy demand

for sex, and a sigh of relief

from paternal responsibility. The later words can be taken as a comment on the naivete of the original of

shocking ones... [that] derisively demonstrate how

an earlier day, as a rejection of its sentiment that ignores the ugliness of street life and the debasement

bland and banal the Orbison song seems to them.” ** * Judge Nelson, dissenting below, came to the same conclusion, that the 2 Live Crew song “was clearly intended to ridicule the white-bread original” and “reminds us that sexual congress with nameless streetwalkers is not necessarily the stuff of romance and is not necessarily without its consequences. The singers (there are several) have the same thing on their minds as did the lonely man with the nasal but here there is no hint of wine

to

may

parodic element here, we think it fair to say that 2 Live Crew’s song reasonably could be perceived as

criticizing the original work, whatever it may have to

voice,

only

character

Inc., 809 F. Supp. 267, 280 (SDNY 1992) (Leval, J.)

“Pretty on

trained

a parodic

(“First Amendment protections do not apply only to those who speak clearly, whose jokes are funny, and whose parodies succeed”) (trademark case).

Here, the District Court held, and the Court

assumed,

whether

themselves final judges of the worth of [a work], outside of the narrowest and most obvious limits. At the one extreme some works of genius would be sure to miss appreciation. Their very novelty would make them repulsive until the. public had learned the new language in which their author spoke.” * * * cf. Yankee Publishing Inc. v. News America Publishing,

presumption for parody could take account of the fact that parody often shades into satire when society is lampooned through its creative artifacts, or that a work may contain both parodic and nonparodic elements. Accordingly, parody, like any other use, has to work its way through the relevant factors, and be judged case by case, in light of the ends of the copyright law.

of Appeals

is

that it signifies. It is this joinder of reference and ridicule that marks off the author’s choice of parody from the other types of comment and criticism that traditionally have had a claim to fair use protection as transformative works. * * * The Court of Appeals, however, immediately cut short the enquiry into 2 Live Crew’s fair use claim by confining its treatment of the first factor essentially to one relevant fact, the commercial

and roses.”

*** Although the majority below had difficulty discerning any criticism of the original in 2 Live transformation of the earlier work, the new work’s minimal distribution in the market, the small extent to which it borrows from an original, or other factors, taking parodic aim at an original is a less critical factor in the analysis, and looser forms of parody may be found to be fair use, as may satire with lesser justification for the borrowing than would otherwise be required.

'6

that a court assessment of or great, and relation to the

The only further judgment, indeed,

may pass on a work goes to an whether the parodic element is slight the copying small or extensive in parodic element, for a work with slight

parodic element and extensive copying will be more likely to merely “supersede the objects” of the original. * * *

93

inflated the

even the force of that tendency will vary with the

significance of this fact by applying a presumption ostensibly culled from Sony, that “every commercial use of copyrighted material is presumptively... unfair... .” Sony, 464 U.S. at 451. In giving virtually

context is a further reason against elevating commerciality to hard presumptive significance. The use, for example, of a copyrighted work to advertise a product, even in a parody, will be entitled to less

dispositive weight to the commercial nature of the parody, the Court of Appeals erred.

indulgence

nature

of the use. The

court then

under

the first factor of the fair use

enquiry than the sale of a parody for its own sake, let

alone one performed a single time by students in school. * * *

The language of the statute makes clear that the commercial or nonprofit educational purpose of a work is only one element of the first factor enquiry

B

into its purpose and character. Section 107(1) uses the term “including” to begin the dependent clause referring to commercial

use,

and

the main

The second statutory factor, “the nature of the copyrighted work,” § 107(2), draws on Justice

clause

speaks of a broader investigation into “purpose and character.”

As

we

explained

in Harper

&

Story’s expression, the “value of the materials used.” *** This factor calls for recognition that some

Row,

Congress resisted attempts to narrow the ambit of this

works are closer to the core of intended copyright

traditional enquiry by adopting categories of presumptively fair use, and it urged courts to preserve the breadth of their traditionally ample view of the universe of relevant evidence. * * * Accordingly, the mere fact that a use is educational and not for profit does not insulate it from a finding of infringement,

protection than others, with the consequence that fair use is more difficult to establish when the former works are copied. *** We agree with both the District Court and the Court of Appeals that the Orbison original’s creative expression for public

dissemination falls within the core of the copyright’s

any more than the commercial character of a use bars

protective purposes. * * * This fact, however, is not

a

much help in this case, or ever likely to help much in separating the fair use sheep from the infringing

finding

of

fairness.

If,

indeed,

commerciality

carried presumptive force against a finding of fairness, the presumption would swallow nearly all of

goats in a parody case, since parodies almost invariably copy publicly known, expressive works.

the illustrative uses listed in the preamble paragraph

of

§

107,

including

news

reporting,

comment,

criticism, teaching, scholarship, and research, since these activities “are generally conducted for profit in

Cc

this country.” * * * Congress could not have intended

The third factor asks whether “the amount and substantiality of the portion used in relation to

such a rule, which certainly is not inferable from the common-law cases, arising as they did from the world of letters in which Samuel Johnson could pronounce that “no man but a blockhead ever wrote, except for money.” * * *

the copyrighted work as a whole,” § 107(3) (or, in Justice Story’s words, “the quantity and value of the materials used,” * * * are reasonable in relation to the purpose of the copying. Here, attention turns to the

persuasiveness Sony itself called for no hard evidentiary presumption. There, we emphasized the need for a “sensitive balancing of interests,” 464 U.S. at 455, n.40, noted that Congress had “eschewed a rigid, bright-line approach to fair use,” id. at [*585] 449, n.31, and stated that the commercial or nonprofit

back

with other[s] in fair use decisions,” id, at 449, n.32.

The

Court

of

Appeals’

elevation

to the

first of the statutory

factors,

for,

as

in

prior cases, we recognize that the extent of permissible copying varies with the purpose and character of the use. * * * The facts bearing on this factor will also tend to address the fourth, by revealing the degree to which the parody may serve as a market substitute for the original or potentially licensed derivatives. * * *

educational character of a work is “not conclusive,” id., at 448-449, but rather a fact to be “weighed along

***

of a parodist’s justification for the

particular copying done, and the enquiry will harken

of one

sentence from Sony to a per se rule thus runs as much

The

counter to Sony itself as to the long common-law

District

Court

considered

the

song’s

parodic purpose in finding that 2 Live Crew had not helped themselves overmuch. *** The Court of Appeals disagreed, stating that “while it may not be

tradition of fair use adjudication. Rather, as we explained in Harper & Row, Sony stands for the proposition that the “fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use.” 471 U.S. at 562. But that is all, and the fact that

inappropriate to find that no more was taken than necessary, the copying was qualitatively substantial. ... We conclude that taking the heart of the original and making it the heart of a new work

94

was to purloin a substantial portion of the essence of the original.” 972 F.2d at 1438.

which parody takes aim. Copying does not become excessive in relation to parodic purpose merely because the portion taken was the original’s heart. If 2 Live Crew had copied a significantly less

The Court of Appeals is of course correct that this factor calls for thought not only about the

memorable part of the original, it is difficult to see how its parodic character would have come through.

quantity of the materials used, but about their quality and importance, too. In Harper & Row, for example,

* Ok OK

the Nation had taken only some 300 words out of President Ford’s memoirs, but we signaled the significance of the quotations in finding them to amount to “the heart of the book,” the part most likely to be news-worthy and important in licensing

This is not, of course, to say that anyone

who calls himself a parodist can skim the cream and get away scot free. In parody, as in news reporting, *** context is everything, and the question of

serialization. * * * We also agree with the Court of Appeals that whether “a substantial portion of the infringing work was copied verbatim” from the

fairness asks what else the parodist did besides go to the heart of the original. It is significant that 2 Live Crew not only copied the first line of the original, but thereafter departed markedly from the Orbison lyrics for its own ends. 2 Live Crew not only copied the

copyrighted work is a relevant question, * * * for it may reveal a dearth of transformative character or

purpose under the first factor, or a greater likelihood

bass riff and repeated it, * * * but also produced otherwise distinctive sounds, interposing “scraper”

of market harm under the fourth; a work composed primarily of an original, particularly its heart, with little added or changed, is more likely to be a merely superseding use, fulfilling demand for the original.

noise, overlaying the music with solos in different keys, and altering the drum beat. * * * This is not a case,

then,

where

“a

substantial

portion”

of

the

parody itself is composed of a “verbatim” copying of Where

we

part

company

with

the

court

the original. It is not, that is, a case where the parody

below is in applying these guides to parody, and in

is so insubstantial, as compared to the copying, that

particular to parody in the song before us. Parody presents a difficult case. Parody’s humor, or in any

the third factor must be resolved as a matter of law against the parodists.

event its comment, necessarily springs from recognizable allusion to its object through distorted imitation. Its art lies in the tension between a known original and its parodic twin. When parody takes aim at a particular original work, the parody must be able to “conjure up” at least enough of that original to make the object of its critical wit recognizable. * * * What makes for this recognition is quotation of the

Suffice it to say here that, as to the lyrics, we

think the Court of Appeals correctly suggested that “no more was taken than necessary,”

music, we express no opinion whether repetition of the bass riff is excessive copying, and we remand to permit evaluation of the amount taken, in light of the song’s parodic purpose and _ character, its transformative elements, and considerations of the potential for market substitution sketched more fully below.

original’s most distinctive or memorable features, which the parodist can be sure the audience will know. Once enough has been taken to assure identification, how much more is reasonable will depend,

say,

on

the

extent

to

which

the

* * * but just

for that reason, we fail to see how the copying can be excessive in relation to its parodic purpose, even if the portion taken is the original’s “heart.” As to the

song’s

overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original. But using some characteristic features cannot be avoided.

D

insufficiently appreciative of parody’s need for the recognizable sight or sound when it ruled 2 Live

The fourth fair use factor is “the effect of the use upon the potential market for or value of the copyrighted work.” § 107(4). It requires courts to consider not only the extent of market harm caused

Crew’s use unreasonable as a matter of law. It is true, of course, that 2 Live Crew copied the characteristic opening bass riff (or musical phrase) of the original,

also “whether unrestricted and widespread conduct of the sort engaged in by the defendant . . . would result

and true that the words of the first line copy the Orbison lyrics. But if quotation of the opening riff

in a substantially adverse impact on the potential market” for the original. * * * The enquiry “must

and the first line may be said to go to the “heart” of the original, the heart is also what most readily conjures up the song for parody, and it is the heart at

take account not only of harm to the original but also of harm to the market for derivative works.” Harper

We

think

the

Court

of

Appeals

was

by the particular actions of the alleged infringer, but

& Row, supra, at 568.

95

for

the

original,

it does

not

produce

a

harm

cognizable under the Copyright Act. Because “parody may quite legitimately aim at garroting the original, destroying it commercially as well as artistically,” *** the role of the courts is to distinguish between “biting criticism [that merely]

Since fair use is an affirmative defense, * * * its proponent would have difficulty carrying the burden of demonstrating fair use without favorable

evidence about relevant markets. * * * In moving for summary judgment, 2 Live Crew left themselves at just such a disadvantage when they failed to address

the effect on the market for rap derivatives, and

suppresses demand [and] which] usurps it.” * * *

copyright

confined themselves to uncontroverted submissions that there was no likely effect on the market for the original. They did not, however, thereby subject

This remediable

themselves to the evidentiary presumption applied by

disparagement is reflected in the rule that there is no

the Court of Appeals. In assessing the likelihood of

protectible

significant market harm, the Court of Appeals quoted

market for potential derivative uses includes only

from language in Sony that ““‘if the intended use is for commercial gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the

those that creators of original works would in general develop or license others to develop. Yet the unlikelihood that creators of imaginative works will

distinction displacement derivative

market

infringement[,

between potentially and — unremediable for

criticism.

The

likelihood must be demonstrated.’ * * * The court

license critical reviews or lampoons of their own

reasoned that because “the use of the copyrighted work is wholly commercial, . . . we presume that a likelihood of future harm to Acuff-Rose exists.” * * * In so doing, the court resolved the fourth factor

productions removes such uses from the of a potential licensing market. “People criticism, but they only want praise.” * the extent that the opinion below may be

against 2 Live Crew, just as it had the first, by applying a presumption about the effect of

considered harm to the market for parodies of “Oh, Pretty Woman,” * * * the court erred. * * *

commercial use, a presumption which as applied here we hold to be error.

In explaining why the law recognizes no derivative market for critical works, including parody, we have, of course, been speaking of the later work as if it had nothing but a critical aspect (i.e., “parody pure and simple,” supra, at 591). But the later work may have a more complex character, with effects not only in the arena of criticism but also in protectible markets for derivative works, too. In that sort of case, the law looks beyond the criticism to the other elements of the work, as it does here. 2 Live Crew’s song comprises not only parody but also rap

No “presumption” or inference of market harm that might find support in Sony is applicable to a case involving something beyond mere duplication

for commercial

purposes.

Sony’s

discussion

of a

presumption contrasts a context of verbatim copying of the original in its entirety for commercial purposes, with the noncommercial context of Sony

itself (home copying of television programming). In the former circumstances, what Sony said simply makes common sense: when a commercial use amounts to mere duplication of the entirety of an original, it clearly “supersede[s] the objects,” * * * of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur. * * * But when, on the contrary, the second use is transformative, market substitution is at least less certain, and market harm may not be so readily inferred. Indeed, as to parody pure and simple, it is more likely that the new work will not affect the market for the original in a way cognizable

music, and the derivative market for rap music is a proper focus of enquiry * * *. Evidence of substantial

harm to it would weigh against a finding of fair use, *** because the licensing of derivatives is an important economic incentive to the creation of originals. See 17 U.S.C. § 106(2) (copyright owner has rights to derivative works). Of course, the only harm to derivatives that need concern us, as discussed above, is the harm of market substitution. The fact that a parody may impair the market for derivative uses by the very effectiveness of its critical

under this factor, that is, by acting as a substitute for it (“superseding

[its]

objects”).

***

This

commentary is no more relevant under copyright than the like threat to the original market. * * *

is so

because the parody and the original usually serve different market functions. Bisceglia, ASCAP,

Although 2Live Crew submitted uncontroverted affidavits on the question of market harm to the original, neither they, nor Acuff-Rose, introduced evidence or affidavits addressing the likely effect of 2 Live Crew’s parodic rap song on the

Copyright Law Symposium, No. 34, at 23.

We do not, of course, suggest that a parody may not harm the market at all, but when

very notion ask . . . for * * Thus, to read to have

a lethal

parody, like a scathing theater review, kills demand

market for a nonparody, rap version of “Oh, Pretty

96

Woman.” And while Acuff-Rose would have us find evidence of a rap market in the very facts that 2 Live Crew recorded a rap parody of “Oh, Pretty Woman” and another rap group sought a license to record a rap

Pretty Woman, that you look lovely as can be Are you lonely just like me?

derivative, there was no evidence that a potential rap

Pretty Woman, stop a while, Pretty Woman, talk a while,

market

was

harmed

in any way

by 2 Live Crew’s

parody, rap version. The fact that 2 Live Crew’s parody sold as part of a collection of rap songs says very little about the parody’s effect on a market for a rap version of the original, either of the music alone or of the music with its lyrics. The District Court

Pretty Woman give your smile to me Pretty Pretty Pretty “Cause

Woman, yeah, yeah, yeah Woman, look my way, Woman, say you’ll stay with me I need you, Ill treat you right

essentially passed on this issue, observing that AcuffRose is free to record “whatever version of the

Come to me baby, Be mine tonight

original it desires,” * * *; the Court of Appeals went the other way by erroneous presumption. Contrary to each treatment, it is impossible to deal with the fourth

Pretty Woman, don’t walk on by, Pretty Woman, don’t make me cry, Pretty Woman, don’t walk away,

factor except by recognizing that a silent record on an

Hey, O. K.

important factor bearing on fair use disentitled the proponent of the defense, 2 Live Crew, to summary judgment. The evidentiary hole will doubtless be

If that’s the way it must be, O. K. I guess I'll go on home, it’s late There’Il be tomorrow night, but wait!

plugged on remand. Il

conclude

It was error for the Court of Appeals to that the commercial nature of 2 Live

Crew’s parody of “Oh, Pretty Woman” rendered it presumptively unfair. No such _ evidentiary presumption is available to address either the first factor, the character and

fourth,

market

harm,

purpose

in

What do I see Is she walking back to me? Yeah, she’s walking back to me! Oh, Pretty Woman.

APPENDIX B TO OPINION OF THE COURT “Pretty Woman” as Recorded by 2 Live Crew

of the use, or the

determining

whether

a

transformative use, such as parody, is a fair one. The

court also erred in holding that 2 Live Crew had necessarily copied excessively from the Orbison

original, considering the parodic purpose of the use. We therefore reverse the judgment of the Court of Appeals and remand the case for further proceedings

consistent with this opinion.

Pretty woman walkin’ down Pretty woman girl you look Pretty woman you bring me Pretty woman you make me Oh, pretty woman

the street so sweet down to that knee wanna beg please

Big hairy woman you need to shave that stuff Big hairy woman you know I bet it’s tough

Big hairy woman all that hair it ain’t legit It is so ordered.

“Cause you look like ‘Cousin It’

Big hairy woman APPENDIX A TO OPINION OF THE COURT “Oh, Pretty Woman” Dees

by Roy Orbison and William

Bald headed woman girl your hair won’t grow Bald headed woman you got a teeny weeny afro Bald headed woman you know your hair could Jook

nice Pretty Woman, walking down the street, Pretty Woman, the kind I like to meet, Pretty Woman, I don’t believe you, you’re not the truth,

No one could look as good as you

Bald headed woman first you got to roll it with rice Bald headed woman here, let me get this hunk of biz

for ya Ya know what I’m saying you look better than rice a roni Oh bald headed woman

Mercy Pretty Woman, won’t you pardon me, Pretty Woman, I couldn’t help but see,

Big hairy woman come on in And don’t forget your bald headed friend Hey pretty woman let the boys

Two timin’ woman that takes a load off my mind

Jump in

Two timin’ woman now I know the baby ain’t mine Two timin’ woman girl you know you ain’t right Two timin’ woman you’s out with my boy last night

Oh, two timin’ woman

Oh pretty woman

More recently, the Internet has become the new copyright battleground, as copyrighted music and videos are posted online, frequently without the permission of the copyright holder.

With the development of formats such as MP3, individuals obtained the ability to download and swap music files with ease. Not surprisingly, this type of music "sharing" became quite popular, eventually spawning the development of large databases packed with easily accessible music files. The music industry responded with a number of lawsuits, two of which follow here.

These

cases revisit significant copyright issues such as fair use in the context of new technology, particularly with regard to the Internet. enables users to download MP3 music files without payment. On January 7, 2000, plaintiffs Jerry Leiber,

A & M RECORDS v. NAPSTER

Mike

Stoller,

complaint

and

Frank

for vicarious

Music

Corporation

and contributory

filed a

copyright

infringement on behalf of a putative class of similarly-situated music publishers ("music publisher

No. C 99-5183 MHP, No. C 00-0074 MHP

plaintiffs")

against Napster,

Eileen Richardson.

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

The

Inc.

music

and

former

CEO

publisher plaintiffs

filed a first amended complaint on April 6, 2000, and on May 24, 2000, the court entered a stipulation of dismissal of all claims against Richardson. Now before this court is the record company and music publisher plaintiffs' joint motion to preliminarily

enjoin Napster, Inc. from engaging in or assisting others in transmitting,

114 F. Supp. 2d 896

without the express permission of the rights owner. In opposition to this motion, defendant seeks to expand the "fair use" doctrine articulated in Sony

August 10, 2000

Corp. of America vy. Universal City Studios, Inc., 464

The matter before the court concerns the boundary between sharing and theft, personal use and the unauthorized worldwide distribution of copyrighted music and sound recordings.’ On December

6,

1999,

A&M

Records

and

US. 417, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984), to encompass the massive downloading of MP3 files by Napster users. Alternatively, defendant contends that, even if this third-party activity constitutes direct copyright infringement, plaintiffs have not shown probable success on the merits of their contributory and vicarious infringement claims. Defendant also asks the court to find that copyright holders are not

seventeen

other record companies ("record company plaintiffs") filed a complaint for contributory and vicarious copyright infringement, violations of the California Civil Code section 980(a)(2), and unfair competition

against Napster,

copying, downloading, uploading, or distributing copyrighted music

injured by a service created and promoted to facilitate

Inc.,’ an Internet start-up that

' Hereafter, the court will use the term "music" to encompass both musical compositions and

its software, servers, search functions, and indexing

sound recordings, unless otherwise specifically noted.

functions. Where "Napster" appears as an adjective, the aspect of the service to which the adjective refers

? For the sake of clarity, the court will refer to the defendant Internet company as "Napster, Inc." The term "Napster" will be used to denote Napster,

should be clear from the context. The term "Napster

Inc.'s integrated service, including but not limited to

software to download and/or upload files.

user"

98

refers to any

individual

who

uses Napster

the free downloading of music files, the vast majority of which are copyrighted.

Inc., 2000 WL 573136, at *1 (N.D. Cal. May 2000) (citing Def.'s Mot. for Summ. Adjud.) at 4.

Having considered the parties' arguments, the court grants plaintiffs' motion for a preliminary injunction against Napster, Inc. The court makes the

2. Although Napster was the brainchild of a college

student who wanted to facilitate music-swapping by his roommate, see 1 Frackman Dec., Exh. B (Fanning

following Findings of Fact and Conclusions of Law

Dep.) at 31:10-35:1, it is far from a simple tool of

to support the preliminary injunction under Federal Rules of Civil Procedure 65(d).

distribution among friends and family. According to defendant's internal documents, there will be 75 million Napster users by the end of 2000. See 1 Frackman Dec., Exh. A (Richardson Dep.) at 318:19319:1, Exh. 166 at 002725. At one point, defendant estimated that even without marketing, its "viral service" was growing by more than 200 percent per month. Id., Exh. 127 at ER00130. Approximately 10,000 music files are shared per second using Napster, and every second more than 100 users attempt to connect to the system. See Kessler Dec. P

I. FINDINGS OF FACT A. MP3 Technology 1. Digital compression technology makes it possible

to store audio recordings in a digital format that uses less memory and may be uploaded and downloaded over the Internet. See David M. Lisi Dec. (Tygar Rep.) at 11. ***

29.

2. Consumers typically acquire MP3 files in two ways. First, users may download audio recordings that have already been converted into MP3 format by

3. Napster, Inc. currently collects no revenues and charges its clientele no fees; it is a free service. See, e.g., | Frackman Dec., Exh. A (Richardson Dep.) at

using an Internet service such as Napster. See Lisi

179:15.

Dec. (Tygar Rep.) at 11. Second, "ripping" software makes it possible to copy an audio compact disc ("CD") directly onto a computer hard-drive; ripping

software

compresses

the

millions

of

bytes

of

information on a typical CD into a smaller MP3

file

However,

been

a

non-profit

Defendant eventually plans to "monetize" its user base. See id. at 115:24-116:13; Teece Rep. at 4, 7-11. Potential revenue sources include targeted email; advertising; commissions from links to commercial

websites;

and

direct marketing

of CDs,

Napster products, and CD burners and rippers. ***

B. Defendant's Business

4. Napster Inc.'s value--which is measured, at least in part, by the size of its user base--lies between 60 and

1. Napster, Inc. is a start-up company based in San Mateo, California. It distributes its proprietary file-

its Internet

80 million dollars. See Teece Rep. at 11-12; Def.'s

website. People who have downloaded this software can log-on to the Napster system and share MP3 music files with other users who are also logged-on to the system. See Kessler Dec. P 6. It is uncontradicted that Napster users currently upload or

Opp. at 35. Defendant obtained substantial capital infusions after the onset of this litigation. For example, in May 2000, the venture firm Hummer Winblad purchased a _ twenty-percent ownership interest in the company for 13 million dollars; other imvestors simultaneously invested 1.5 million dollars. See Hank Barry Dec. P 7.

download

MP3

free

never

user base. ***

Kessler Dec. P 32; 1 Laurence F. Pulgram Dec., Exh. A (Conroy Dep.) at 13:19-24.

software

it has

organization. See id. at 116:10. It plans to delay the maximization of revenues while it attracts a large

that requires a fraction of the storage space. See id.;

sharing

12,

of charge

files without

via

payment to each other,

defendant, or copyright owners. According to a Napster, Inc. executive summary, the Napster service gives its users the unprecedented

5. The evidence shows that virtually all Napster users download or upload copyrighted files and that the vast majority of the music available on Napster is

ability to "locate music by their favorite artists in MP3 format." | Frackman Dec., Exh. A (Richardson Dep.), Exh. 127 at ER00031. Defendant boasts that it "takes

the

frustration

out of locating

servers

copyrighted.

Eighty-seven

percent

of

the

files

sampled by plaintiffs' expert, Dr. Ingram Olkin, "belong to or are administered by plaintiffs or other copyright holders." Olkin Rep. at 7. After analyzing

with

MP3 files" by providing a peer-to-peer file-sharing system that allows Napster account holders to conduct relatively sophisticated searches for music files on the hard drives of millions of other

Olkin's data, Charles J. Hausman, anti-piracy counsel for the RIAA, determined that 834 out of 1,150 files in Olkin's download database belong to or are

anonymous users. See A&M Records, Inc. v. Napster,

99

administered by plaintiffs; plaintiffs alone own the

Napster website advertised the ease with which users

copyrights to more than seventy percent of the 1,150 files. See Charles J. Hausman Dec. P 8. Napster users shared these files without authorization. See id.

could find their favorite popular music without "wading through page after page of unknown artists." 1 Frackman Dec., Exh. C (Parker Dep.) at 104:16105:10, Exh. 235. Defendant did not even create the New Artist Program that runs on its Internet website

6.

Napster,

Inc.

has

never

obtained

licenses

to

until April 2000--well after plaintiffs filed this action.

distribute or download, or to facilitate others in distributing or downloading, the music that plaintiffs own. See Kevin Conroy Dec. P 4; Richard Cottrell Dec. P 5; Mark R. Eisenberg Dec. P 21; Lawrence Kenswil Dec. P 15; Paul Vidich Dec. P 8; Mike Stoller Dec. P 11.

See Krause Dec. P 9, Exh. A. *** 10. Defendant employs the term "space-shifting" to refer to the process of converting a CD the consumer

already owns into MP3 format and using Napster to transfer

1

Frackman

162:14,

Dec.,

Exh.

254,

Exh.

at

C

(Parker

SF00099

Dep.),

(declaring

the

music

to

a different

computer--from

home to office, for example.'° See Def. Opp. at 12.

7. Defendant's internal documents indicate that it seeks to take over, or at least threaten, plaintiffs' role in the promotion and distribution of music. See, e.g.,

The court finds that space-shifting accounts for a de minimis portion of Napster use and is not a significant aspect of defendant's business. According to the court's understanding of the Napster technology, a user who wanted to space-shift files

160:1-

that

"ultimately Napster could evolve into a full-fledged music distribution platform, usurping the record industry as we know it today and allowing us to digitally promote and distribute emerging artists at a

from her home to her office would have to log-on to the system from her home computer, leave that computer online, commute to work, and log-on to

Napster from her office computer to access the desired file. In the meantime, many users might download it before she reached the office. Common

fraction of the cost" but noting that "we should focus on our realistic short-term goals while wooing the industry before we try to undermine it").

sense dictates that this use does not draw users to the

system. Defendant fails to cite a single Napster, Inc.

8. Defendant's internal documents also demonstrate that its executives knew Napster users were engaging

document indicating that the company saw spaceshifting as an attraction for its user base, and survey

in unauthorized downloading and uploading of copyrighted music. See, e.g., 1 Frackman Dec., Exh.

evidence shows that almost half of college-student

C (Parker Dep.) at 160:1-162:14, Exh. 254 at SF00100 (stating that Napster users "are exchanging pirated music."); id. at SFO0102 ("We are not just making pirated music available but also pushing demand"). Several Napster executives admitted in their depositions that they believed many of the millions of MP3 music files available on Napster were copyrighted. See, e.g., | Frackman Dec., Exh. B (Fanning Dep.) at 105:10-108:2.

survey respondents previously owned less than ten percent of the songs they have downloaded. See E. Deborah Jay Rep. at 4, 21 & Tbl. 7.

C. The Napster Technology '° Defendant also provides an audio player capable of playing MP3 files on a user's hard drive,

regardless of how

9. At least on paper, the promotion of new artists constituted an aspect of defendant's plan as early as October 1999. See Sean F. Parker Dec. P 5 & Exh. B

n8; Scott Krause Dec. P 6. New or unsigned artists now may promote their works and distribute them in MP3 format via the Napster service. See Krause Dec. PP 8-15. Napster, Inc. has sought business alliances

and

developed

both

Internet-

and

software-based

See

relief.

See

id. While

a consumer

might rip CDs and then play the resultant MP3 files on the Napster player, the court rejects any suggestion that this activity constitutes a substantial, non-infringing use of Napster for the same reasons it dismisses defendant’ argument about space-shifting from home to office. The court also notes that, because the audio player can only play music files which a user already possesses, it cannot be used for sampling.

However, the court finds that the New Artist Program accounts for a small portion of Napster use and did not become central to defendant's business strategy until this action made it convenient to give

top billing. An

obtained.

upload or download music and, hence, is not relevant

to the requested

technologies to support its New Artist Program. See Parker Dec.

the program

those files were

Edward Kessler Reply Dec. in Support of Def.'s Mot. for Summ. Adjud. P 29. Neither party has briefed the function of the audio player in support of its position on the necessity of a preliminary injunction. However, the player has little or no connection to the alleged copying that occurs when Napster users

early version of the

100

1.

Internet

users

may

download

by employing the hotlist tool featured in the client software. See id. P 12.

defendant's

proprietary MusicShare software free of charge from the Napster website. This free software enables users to access the Napster computer network. See Kessler

7. An account holder may use the search tools included in the Napster client software to find MP3 files. See id. P 10. The server-side application software maintains a search index that is updated in

Dec. P 6. 2. The software becomes fully functional after users

real time as users log-on and -off of the system. ***

register with Napster by selecting an account name, or "user name," and a password. See Kessler Dec. PP 6, 23. Persons who register may include biographical

9. The content of the actual MP3 file is transferred over the Internet between users, not through the Napster servers. See Kessler Dec. P 12; A&M

data, but registration does not require a real name or address. See 2 Frackman Dec., Exh. E (Kessler Dep.) at 255:20-257:22. Napster does not associate user

Records, Inc. v. Napster, Inc., 2000 WL 573136, at *7

(N.D. Cal. May 12, 2000). However, users would not

be able

names with the biographical information that individuals provide at registration. See id. Indeed, after a user logs-on, her physical address information is no longer available to the Napster server. See id. 3. The

software

features a browser

interface,

Napster system.

users to compile

and

store

the

uploaded

file names

and

***

11. Defendant also provides Napster users with a chat service. Its central servers permit users who are logged-on to communicate with other online users, including those whose user names comprise the

search

engine, and chat functions that operate in conjunction with defendant's online network of servers. See id. PP 6, 13. The software also contains a "hotlist" tool that

allows

to access

corresponding routing data without signing on to the

hotlist.

lists of other

See

Kessler

Dec.

P

13.

Aside

from

communicating with specific online users logged-on to the same cluster of servers, the chat service allows users to communicate in groups. Defendant organizes these groups within "channels" or "chat rooms"

account holders' user names. See id. P 8. In addition, the Napster software may be used to play and categorize audio files, which users can store in specific file directories on their hard drives. See id. PP 6-7. Those directories, which allow account holders to share files on Napster, constitute the "user library." Id. Some users store their MP3 files in such directories; others do not. See id.

named

after particular musical

genres.

See id.; 2

Pulgram Dec., Exh. B (2 Fanning Dep.) at 219:4-14. Alternatively, users can create their own channels in which to communicate. See Kessler Dec. P 13.

13. Account holders who access the Napster network

12. Defendant's New Artist Program technology functions in two interrelated environments: (a) on its Internet website and (b) through its network-client browser and search technology. See Krause Dec. PP

may

of

9-15. The website version performs several functions.

designated hotlist names only within the cluster to which they are assigned. See id. Users can access the

that consists of certain biographical and descriptive

4. Defendant maintains clusters of servers that compose its network or system. See Kessler Dec. P communicate,

share

files,

and

learn

It allows new or unsigned artists to create a "profile" data including artist and band names, similar artists or influences, and news about the band. See id. PP 910, Exh. C. Defendant only accepts completed forms if the submitting artist authorizes Napster users to

network of servers free of charge.

5. Once an account holder signs on to the Napster network,

the

Napster

browser

interacts

with

its

proprietary server-side software. See id. PP 7, 8; 2

share his music. See id. P 10, Exh. D. Once defendant

Frackman

accepts the profile, it stores all of the relevant information in a database linked to its Internet website. See id. P 11. Defendant has accepted several

Dec.,

Exh.

E

(Kessler

Dep.)

at

54:16-

56:10. If a user sets the "allowable uploads" function of the MusicShare software above zero, all of the

thousand such profiles. ***

MP3 file names she stores in her user library automatically become available to other online Napster users. See Kessler Dec. P 7.***

Napster account holders who use MusicShare software and log-on to the Napster system can locate and download new artists' songs in the same manner

6. A user who is logged-on to the Napster servers via

they would find and utilizing the search libraries. See id. P 9. both new artists and

the client software may access the content of other users' uploaded "locations" in one of two ways: (a) by utilizing defendant's proprietary search engine, or (b)

101

download any other files: by engine, or by browsing user While on the Napster network, other users may use the chat

function to market music directly or learn about new

E. Effect of Napster on the Market for Plaintiffs’

artists. See id. PP 8, 15.

Copyrighted Works

D. Plaintiffs' Business

1. The court finds that Napster use is likely to reduce CD purchases by college students, whom defendant admits constitute a key demographic. ***

1. The music publisher plaintiffs compose music and write songs. See, e.g., Stoller Dec. P 2. They depend financially upon the sale of sound recordings because they earn royalties from such sales. See id. at PP 2, 11, 13. However, they do not get a royalty

2. Because plaintiffs entered the digital download market very recently, or plan to enter it in the next few months, they are especially vulnerable to direct competition from Napster, Inc. See Teece Rep. at 1516. The court finds that, in choosing between the free Napster service and _ pay-per-download _ sites, consumers are likely to choose Napster. See id. at 14; Jay Rep. at 4, 18 (reaching this conclusion with regard to a survey sample of college students).

when a Napster user uploads or downloads an MP3 file

of

their

authorization.

compositions

See id. P

without

payment

11. The record

or

company

plaintiffs' sound recordings also result from a substantial investment of money, time, manpower, and creativity. See Conroy Dec. P 5; Cottrell Dec. 5; Eisenberg Dec. PP 5, 21; Kenswil Dec. P 5.

Defendant's economic expert, Dr. Robert E. Hall, opines that plaintiffs' music could still command a high price after a period when the price has been zero due to Napster use; thus, he concludes, plaintiffs will not suffer irreparable harm between now and a trial verdict against defendant. See Lisi Dec. (Hall Rep.) PP 39, 54. This argument does not square with Hall's assertion that preliminarily enjoining defendant will put it out of business because users will switch to services offered by "kindred spirits." Hall Rep. P 1519, 73; see also Barry Dec. P 13. If this is true, consumers will not necessarily resume buying music

In contrast, defendant invests nothing in the content of the music which means that, compared with plaintiffs, it incurs virtually no costs in providing a wide array of music to satisfy consumer demand. See Teece Rep. at 14. 2. To make a profit, the record company plaintiffs largely rely on the success of "hit" or popular recordings, which may constitute as little as ten or fifteen percent of albums released. See. e.g., Eisenberg Dec. P 7. Many, or all, of their top

recordings have been available for free on Napster.

if Napster is enjoined; rather, they will go to other sites offering free MP3 files. Indeed, as Dr. David J.

See Frank Creighton Dec. P 5.

Teece

3. The record company plaintiffs have invested substantial time, effort, and funds in actual or planned entry into the digital downloading market.

who

obtain

MP3

so

files for

free using Napster can retain and play them indefinitely--and, even if they download a song to make a purchasing decision, they may decide not to buy the music.

contributed

to

a

new

downloading

Hall also maintains that Napster, Inc. will increase the volume of plaintiffs' online sales by stimulating consumer investment in the hardware and software needed to obtain and play MP3 files. See Hall Rep. PP 45-49. However, he ignores evidence of reduced CD-buying among college students due to Napster use, see Jay Rep. at 18, and the data upon which he relies to argue that Napster has enhanced sales is either weak (in the case of the Fader Report) or unavailable for the court's review. *** The court therefore finds that the barriers to commercial

that users can only play them for a finite period of time--often less than a month. *** In contrast, persons

has

free--an attitude that creates formidable hurdles for

4. Promotional samples offered by plaintiffs and other retail sites differ significantly from using Napster to decide whether to buy a CD. The record company plaintiffs have made some free downloads available but have limited them in amount and duration. They have not provided entire albums, and

typically have been "timed-out"

defendant

the establishment of a commercial market. See Teece Rep. at 14-18.

28 KK

the downloads

avers,

attitude that digitally-downloaded songs ought to be

distribution

While Napster users can burn CDs

comprised of unauthorized downloads they obtained to "sample" new songs, sampling on sites affiliated with plaintiffs does not substitute for purchasing the

sense

of

entitlement to free music probably outweigh benefits that defendant purports to confer.

posed

by

an

emerging

the

3. Downloading on Napster also has the potential to disrupt plaintiffs’ promotional efforts because it does not involve any of the restrictions on timing, amount,

entire disc. See Teece Rep. at 17.

or selection that plaintiffs impose when they offer free music

102

files. See Conroy

Dec.

P 9-17; Cottrell

Dec. P 15; Eisenberg Dec. P 13; Kenswil Dec. P 12; Vidich Dec. PP 7(d), 8; see also Teece Rep. at 18. a CD,

4. In the instant action, the purpose and character of the use militates against a finding of fair use. Ascertaining whether the new work transforms the copyrighted material satisfies the main goal of the

sampling on Napster is vastly different than that offered by plaintiffs. On Napster, the user--not the

first factor. See Campbell v. Acuff-Rose Music, Inc., 510 US. 569, 579, 127 L. Ed. 2d 500, 114 S. Ct. 1164

copyright owner--determines how sample and how long to keep it. ***

(1994). Plaintiff persuasively argues that downloading MP3 files does not transform the copyrighted music. See UMG Recordings, Inc. v. MP3.com. Inc., 92 F. Supp. 2d 349, 351 (S.D.N.Y.

Even if Napster users sometimes download files to determine

whether

C.

they

Affirmative

want

to purchase

Defense

much

music

of Fair

Use

to and

Substantial Non-Infringing Use

2000)

1. Defendant asserts the affirmative defenses of fair use and substantial non-infringing use. The latter

defense

is also

known

as

the

staple

article

of

commerce doctrine. See Sony, 464 U.S. at 442. Sony

of commercially significant noninfringing uses." Id.

Supreme

Court also declared

in Sony,

commercial

"Any

the

burden

of

proving

these

defenses. See Bateman v. Mnemonics,

1532,

repackaging

copyrighted

use

weighs

against,

but

does

not

preclude, a determination of fairness. See Acuff-Rose,

individual may reproduce a copyrighted work for a ‘fair use'; the copyright holder does not possess the exclusive right to such a use." Jd. at 433. Defendant

bears

that

5. Under the first factor, the court must also determine whether the use is commercial. In AcuffRose, the Supreme Court clarified that a finding of

stands for the rule that a manufacturer is not liable for selling a "staple article of commerce" that is "capable The

(concluding

recordings in MP3 format suitable for downloading "adds no 'new aesthetics, new insights and understandings' to the original").

510 U.S. at 584. 6. If a use is non-commercial, the plaintiff bears the burden of showing a meaningful likelihood that it would adversely affect the potential market for the

affirmative Inc., 79 F.3d

1542 n.22 (11th Cir. 1996) ("It is clear the

copyrighted work if it became widespread. See Sony, 464 US. at 451.

burden of proving fair use is always on the putative infringer.").

7. Although downloading and uploading MP3 music files is not paradigmatic commercial activity, it is

2. For the reasons set forth below, the court finds that any potential non-infringing use of the Napster service is minimal or connected to the infringing activity, or both. The substantial or commercially significant use of the service was, and continues to

also not personal use in the traditional sense. Plaintiffs have not shown that the majority of Napster users download music to sell--that is, for profit. However, given the vast scale of Napster use among anonymous individuals, the court finds that

be, the unauthorized downloading and uploading of popular music, most of which is copyrighted.

downloading and uploading MP3 music files with the assistance of Napster are not private uses. At the very least, a host user sending a file cannot be said to engage in a personal use when distributing that file to an anonymous requester. Moreover, the fact that Napster users get for free something they would ordinarily have to buy suggests that they reap economic advantages from Napster use. See Seger Enters. Ltd. v. MAPHIA, 857 F. Supp. 679, 687 (N.D. Cal. 1994) ("Sega I") (holding that copying to save users expense of purchasing authorized copies has commercial character and thus weighs against finding

3. Section 107 of the Copyright Act provides a nonexhaustive list of fair use factors. These factors include:

(1) the purpose and character of the use, including whether such use is of a

commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the

copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the

of fair use); cf.

American

Texaco,

F.3d

Inc.,

60

913,

Geophysical 922

(2d

Union v. Cir.

1994)

(holding that for-profit enterprise which made unauthorized copies of scholarly articles to facilitate scientific research reaped indirect economic advantage from copying and, hence, that copying

copyrighted work.

17 USC. § 107.

constituted commercial use).

103

musical

Conroy Dec. P 9; Eisenberg Dec. P 16. They only

compositions and sound recordings are creative in nature; they constitute entertainment, which cuts against a finding of fair use under the second factor.

make promotional downloads available on a highly restricted basis. See Conroy Dec. P 9-17; Cottrell

See Harper & Row Publishers, Inc. v. Nation Enters.,

Vidich Dec. PP 7(d), 8. Copyright owners also earn royalties from streamed song samples on retail

8. The

court

finds

that the copyrighted

Dec. P 15; Eisenberg Dec. P 13; Kenswil Dec. P 12;

471 US. 539, 563, 85 L. Ed. 2d 588, 105 S. Ct. 2218

websites like Amazon.com. See Lambert Reply Dec. P 3. Second, the majority of VCR purchasers in Sony

(1985); Sega I, 857 F. Supp. at 687; Playboy Enters., Inc. v. Frena, 839 F. Supp. 1552, 1558 (M.D. Fla. 1993) (citing In re New Era Publications Int'l v.

did not distribute taped television broadcasts, but merely enjoyed them at home. See id at 423. In contrast, a Napster user who downloads a copy of a song to her hard drive may make that song available to millions of other individuals, even if she eventually chooses to purchase the CD. So-called sampling on Napster may quickly facilitate unauthorized distribution at an exponential rate.

Carol Publ'g, 904 F.2d 152, 157-58 (2d Cir.), cert. denied, 498 U.S. 92], 112 L. Ed. 2d 25], 111 S. Ct. 297 (1990)). 9. With regard to the third factor, it is undisputed that downloading or uploading MP3 music files involves copying the entirety of the copyrighted work. The

Ninth Circuit held prior to Sony that "wholesale copying of copyrighted material precludes application of the fair use doctrine." Marcus v.

Defendant's argument that using Napster to sample music is akin to visiting a free listening station in a record store, or listening to song samples on a retail website, fails to convince the court because Napster users can keep the music they download. Whether or not they decide to buy the CD,

Rowley, 695 F.2d 1171, 1176 (9th Cir. 1983). Even after Sony, wholesale copying for private home use tips the fair use analysis in plaintiffs' favor if such

copying is likely to adversely affect the market for

they still obtain a permanent copy of the song. In

the copyrighted material. See Sony, 464 U.S. at 449-

contrast, second Lambert from the out" See Kenswil

50, 456. 10. The fourth factor, the effect on the potential market for the copyrighted work, also weighs against

a finding

of fair

use.

Plaintiffs

have

produced

evidence that Napster use harms the market for their copyrighted musical compositions and sound recordings in at least two ways. First, it reduces CD

12. Even if the type of sampling supposedly done on

Napster were a non-commercial use, plaintiffs have demonstrated a substantial likelihood that it would

sales among college students. See Jay Rep. at 4, 18; cf.

Fine

plaintiffs’

Rep.

at

entry

1.

into

Second,

the

it raises

market

for

barriers

the

to

adversely affect the potential market for their copyrighted works if it became widespread. See Sony, 464 U.S. at 45]. ***

digital

downloading of music. See Teece Rep. at 12-18. 11. Defendant asserts several potential fair uses of the Napster service-including sampling, space-shifting, and the authorized distribution of new artists’ work. Sampling on Napster is not a personal use in the

traditional

sense

that

courts

have

Defendant maintains that sampling does not decrease retail music sales and may even stimulate them. To support this assertion, it relies heavily on the Fader Report, which concludes that consumers do not view MP3 files as perfect substitutes for CDs. See Lisi Dec. (Fader Rep.) P 63. Fader cites a survey that he did not conduct for the assertion that "60% of online users who download free digital music do so to preview music before buying the CD." Fader Rep. P 74, Examining the results of a different survey that

recognized--

copying which occurs within the household and does not confer any financial benefit on the user. See, e.g., Sony, 464 U.S. at 423, 449-50. Instead, sampling on Napster amounts to obtaining permanent copies of songs that users would otherwise have to purchase; it

also carries the potential millions

of

people.

for viral distribution

Defendant

ignores

many retail sites only offer thirty-to-sixtysamples in streaming audio format, see Reply Dec. P 2, and promotional downloads record company plaintiffs are often "timedCottrell Dec. P 15; Eisenberg Dec. P 13; Dec. P 12; Vidich Dec. PP 7(d), 8.

to

he

critical

purportedly

designed,

but

did

not

carefully

supervise, he reports that about twenty-eight percent of Napster users indicate that their music purchases have increased since they began using the Napster

differences between sampling songs on Napster and VCR usage in Sony. First, while "time-shifting [TV broadcasts] merely enables a viewer to see ... a work

software. See id. P 43. For reasons explained in the court's evidentiary order, the Fader Report is unreliable and falls to rebut plaintiffs' showing of

which he has been invited to witness in its entirety

free of charge," plaintiffs in this action almost always charge for their music-- even if it is downloaded song-by-song. Sony, 464 U.S. at 449-50; see e.g.,

harm.

104

Plaintiffs

have

demonstrated

a

meaningful

likelihood that the activity defendant calls sampling actually decreases retail sales of their music. 13. Any potential enhancement of plaintiffs’ sales due

implies that space-shifting music is sufficiently analogous to time-shifting television broadcasts to merit the protection of Sony. According to the gravely flawed Fader Report, space-shifting--like

to sampling would not tip the fair use analysis conclusively in favor of defendant. Indeed, courts

time-shifting--leaves the value of the copyrights unscathed because it does not displace sales. See

have rejected the suggestion that a positive impact on sales negates the copyright holder's entitlement to licensing fees or access to derivative markets. See Ringgold v. Black Entertainment Television, 126 F.3d

Fader Rep. P 77; Sony, 464 U.S. at 421 (concluding that plaintiffs did not prove that time-shifting created any likelihood of harm). ***The court has already held that the Jay Report bears greater indicia of reliability than the Fader Report. Moreover, under

70, 81 n.16 (2d Cir. 1997) ***

either analysis, the instant matter is distinguishable

The MP3.com opinion is especially instructive. Although MP3.com's activities arguably stimulated

from Sony because the Supreme Court determined in

Sony

CD sales, the plaintiffs "adduced substantial evidence

that they ... [had] taken steps to enter [the digital

infringement.

Under

Sony,

the

copyright

holder

cannot extend his monopoly to products "capable of substantial noninfringing uses." Sony, 464 U.S. at 442. Defendant fails to show that space-shifting constitutes a commercially significant use of Napster.

PP 6-17; Eisenberg Dec. PP 9-22; Vidich Dec. PP 710. Plaintiffs' economic expert opined that the availability of free MP3 files will reduce the market

Indeed,

the

most

credible

explanation

for

the

exponential growth of traffic to the website is the vast

for authorized, commercial downloading. See Teece Dec. at 14-18. This point is corroborated by the fact

array of free MP3 files offered by other users--not the ability of each individual to space-shift music she already owns. Thus, even if space-shifting is a fair use, it is not substantial enough to preclude liability under the staple article of commerce doctrine. See Cable/Home Communication Corp. v. Network

that all forty-nine songs available for purchase on Sony's website can be obtained for free using

Dec.

the principal,

15. Defendant argues that, if space-shifting is deemed a fair use, the staple article of commerce doctrine precludes liability for contributory or vicarious

downloads. See Conroy Dec. PP 9-18; Cottrell Dec.

See Eisenberg

represented

US. at 421.

downloading market]." MP3.com, 92 F. Supp. 2d at 352. The fourth factor thus weighed against a finding of fair use. Plaintiffs in the instant action similarly allege that Napster use impedes their entry into the online market. The record company plaintiffs have already expended considerable funds and effort to commence Internet sales and licensing for digital

Napster.

that time-shifting

rather than an occasional use of VCRs. See Sony, 464

P 16. If consumers

choose to buy, rather than burn, entire CDs they are

still more likely to obtain permanent copies of songs on Napster than buy them from Sony's site or listen to

Prods., Inc., 902 F.2d 829, 846 (Ith Cir.

1990)

(affirming finding of contributory infringement where defendant primarily promoted pirate computer chips and other devices capable of descrambling payTV broadcasts as infringement aids); A&M Records

streamed samples at other online locations. The court concludes that, even assuming the sampling alleged in this case is a non-commercial use, the record company plaintiffs have demonstrated a meaningful likelihood that it would adversely affect their entry into the online market if it became widespread. See Sony, 464 U.S. at 451. Moreover, it deprives the music publisher plaintiffs of royalties for individual songs. The unauthorized downloading of plaintiffs' music to sample songs would not constitute a fair use, even if it enhanced CD sales.

v. General Audio

Video Cassettes, Inc., 948 F. Supp.

1449, 1456 (C.D. Cal. 1996) (rejecting Sony defense because counterfeiting was chief purpose of timeloaded cassettes that defendant sold). 16. This court also declines to apply the staple article of commerce doctrine because, as paragraphs (D)(6) and (E)(2) of the legal conclusions explain, Napster exercises ongoing control over its service. In Sony,

14. The court is also unconvinced that Sony applies to space-shifting. Defendant erroneously relies on the

the defendant's participation did not extend past manufacturing and selling the VCRs: "the only

Ninth

contact between Sony and the users of the Betamax

Circuit's

assertion,

in a case

involving

an

inapplicable statute, that space-shifting constitutes noncommercial personal use. See Recording Indus.

... occurred at the moment of sale." Sony, 464 U.S. at

438. Here, in contrast, Napster, Inc. maintains and supervises an integrated system that users must

Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1079 (9th Cir. 1999) (discussing the applicability of the Audio

1992 to the Rio MP3

Home

player). ***

access

to upload

or download

files.

***

Given

defendant's control over the service, as opposed to mere manufacturing or selling, the existence of a

Recording Act of

Defendant also

105

potentially

unobjectionable

use like space-shifting

D. Contributory Copyright Infringement

does not defeat plaintiffs' claims. 1. Once they have shown direct infringement by Napster users, plaintiffs must demonstrate a likelihood of success on _ their contributory infringement claim. A contributory infringer is "one

17. Nor do other potential non-infringing uses of Napster preclude contributory or vicarious liability. Defendant claims that it engages in the authorized

promotion of independent artists, ninety-eight percent of whom are not represented by the record company plaintiffs. See Def.'s Opp. at 10 (citing, inter alia, Krause Dec. P Program may

commercially

who,

16), 27. However, the New Artist not represent a_ substantial or

significant

aspect

of Napster.

with

knowledge

of the

infringing

activity,

induces, causes or materially contributes to the infringing conduct of another." Gershwin Publ’g Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971); see Fonovisa, Inc. v.

The

Cherry Auction,

evidence suggests that defendant initially promoted the availability of songs by major stars, as opposed to "page after page of unknown artists." See 1 Frackman Dec., Exh. C (Parker Dep.) at 104:16-105:10, Exh. 235. Its purported mission of distributing music by artists unable to obtain record-label representation

1996).

Courts

Inc.,

do

76 F.3d 259,

not

require

264

actual

(9th

Cir.

knowledge;

rather, a defendant incurs contributory copyright liability if he has reason to know of the third party's

direct infringement. See Cable/Home Communication Corp., 902 F.2d at 846; Sega Enter. Ltd. v. MAPHIA,

948 F. Supp. 923, 933 (N.D. Cal. 1996) ("Sega II").

appears to have been developed later. Other facts point to the conclusion that the New Artists Program was an afterthought, not a major aspect of the Napster business plan. Former CEO Eileen Richardson claimed in her deposition that she told the press Napster is not about known artists like

2. Plaintiffs present convincing evidence that Napster executives actually knew about and sought to protect use of the service to transfer illegal MP3 files. For example, a document authored by co-founder Sean

Madonna. But, tellingly, discovery related to downloads by Napster executives reveals that Richardson's own computer contained about five Madonna files obtained using Napster. See |

real

Parker mentions the need to remain ignorant of users’ names

and

IP

addresses

"since

they

are

exchanging pirated music." | Frackman Dec., Exh. C (Parker Dep.) at 160:1-162:14, Exh. 254 at SFO0100 (emphasis added). The same document states that, in

Frackman Dec., Exh. A (Richardson Dep.) at 238:2-

bargaining with the RIAA,

240:25. Defendant did not launch the website aspect of its New Artist Program until after plaintiffs filed suit, and as recently as July 2000, bona fide new

from the fact that "we are not just making pirated

music available but also pushing demand." Id. at 160:1-162:14, Exh. 254 at SF00102 (emphasis

artists constituted a very small percentage of music available on Napster. See Krause Dec. P 9, Exh. A; Olkin Reply Dec. PP 3-5; Hausman Reply Dec. PP 3-

added). These admissions suggest that facilitating the unauthorized exchange of copyrighted music was a central part of Napster, Inc.'s business strategy from the inception.

6. In

any

event,

Napster's

primary

role

of

Plaintiff also demonstrate that defendant had actual notice of direct infringement because the RIAA informed it of more than 12,000 infringing files. See Creighton 12/3/99 Dec., Exh. D. Although Napster, Inc. purportedly terminated the users offering these files, the songs are still available using the Napster service, as are the copyrighted works which the record company plaintiffs identified in Schedules A and B of their complaint. See Creighton Supp. Dec. PP 3-4.

facilitating the unauthorized copying and distribution established artists' songs renders Sony inapplicable.

See General Audio Video, 948 F. Supp. at 1456-57; RCA Records, 594 F. Supp. at 339. 18. Plaintiffs do not object to all of the supposedly

non-infringing uses of Napster. They do not seek an injunction covering the New Artist authorized by rights Nor do they seek to

defendant will benefit

chat rooms or message boards, Program or any distribution holders. See Pl.'s Reply at 19. enjoin applications unrelated to

3. The law does not require actual knowledge of specific acts of infringement. See

the music recording industry. Because plaintiffs do not ask the court to shut down such satellite

Gershwin, 443 F.2d at 1163 (holding that general knowledge that third parties

activities, the fact that these activities may be non-

infringing does not lessen plaintiffs' likelihood of success. The court therefore finds that plaintiffs have established a reasonable probability of proving thirdparty infringement.

performed copyrighted works _ satisfied knowledge element of contributory infringement); Sega [| 857 F. Supp. at 686-87 (concluding

106

that

plaintiffs

established

knowledge element, even though electronic bulletin board company did not know exactly when infringing video games would be uploaded to or downloaded from bulletin board). Accordingly, the court rejects

70:14-16, Exh. 230, P 3-5; Exh. B (Fanning Dep.), Exhs. 174-76. Such conduct satisfies the objective test for constructive knowledge--defendant had reason to know about infringement by third parties. See Cable/Home Communication Corp., 902 F.2d at 846. n24

defendant's argument that titles in the Napster directory

cannot

be

used

to

distinguish

infringing from non-infringing files and thus that

defendant

cannot

know

6. Plaintiffs have also shown that defendant materially contributed to the infringing activity. In

about

infringement by any particular user of any

Fonovisa, the owners of copyrights for musical recordings stated a contributory infringement claim against the operators of a swap meet at which

particular musical recording or composition. See Lisi Dec. (Tygar Rep.) at 29 (offering

expert opinion about difficulty of identifying

independent vendors sold counterfeit recordings. See

copyrighted works by file name); Lars Ulrich Dep. at 36:16-37:2 (stating that in the past he did not object to individuals taping his band's concerts and making MP3 files of such concerts available via Napster); Sanders Dep. at 24:23-29:13 (discussing complex process

Fonovisa,

76 F.3d at 264. The Ninth Circuit held the

copyright owners' allegations were "sufficient to show material contribution" because "it would have been difficult for the infringing activity to take place in the massive quantities alleged without the support services provided by the swap meet." Id. According to plaintiffs in the instant action, "Napster is

for determining chain of title for copyright

essentially

owners).

an

Internet

swap

meet--more

technologically sophisticated but in many ways indistinguishable from the [defendant] in Fonovisa." Pl.'s Br. at 6. The court largely agrees with this characterization.

4. Defendant's reliance on Religious Technology Center y. Netcom On-Line Communication Services,

Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), does not alter the court's conclusion that plaintiffs have a

Unlike

reasonable likelihood of proving contributory liability. The cited passage from Religious Technology Center states:

offer

their

the swap

infringing

meet

vendors,

music

for

Napster

free.

users

However,

defendant's material contribution is still analogous to that of the swap meet in Fonovisa. The swap meet

provided support services like parking, booth space, Where a BBS

advertising,

[bulletin board service]

operator cannot reasonably verify a claim of infringement, either because

the copyright holder's failure to provide the necessary documentation to show that there is likely infringement, the operator's lack of knowledge will be found reasonable and there will be no liability for contributory infringement for allowing the continued distribution of the works on its system.

Defendant marshals two district court cases in an

attempt to rebut plaintiffs' argument about material contribution. See /ntellectual Reserve, Inc. v. Utah Lighthouse Ministry, 75 F. Supp. 2d 1290, 1293 (D. Utah 1999) (holding that posting links to infringing websites did not contribute to infringement by those websites' operators); Bernstein v. J.C. Penney, Inc.,

1998 U.S. Dist. LEXIS 19048, 50 U.S.P.Q.2D (BNA) 1063 (C.D. Cal. 1998) (paraphrasing defendant's apparently successful argument that "multiple linking does not constitute substantial participation in any

executives their own

infringement where the linking website does not mention the fact that Internet users could, by

computers using the service and promoted the website with screen shots listing infringing files. See 2 Frackman Dec., Exh. D (Brooks Dep.) at 51:8-24,

54:25-56:11, Exh. 64 at 2-4, Exh.

76 F.3d at

the proprietary and means of

KK

least, defendant had constructive its users' illegal conduct... The

evidence indicates that Napster downloaded infringing material to

supplies servers,

Without the support services defendant provides, Napster users could not find and download the music they want with the ease of which defendant boasts.

of copyright notices on the copies, or

very of

See Fonovisa,

establishing a connection between users' computers.

of a possible fair use defense, the lack

5. At the knowledge

and clientele.

264. Here, Napster, Inc. software, search engine,

following the links, find infringing material on another website"). The Bernstein court offered no reasoning for its dismissal of the complaint. Neither case is factually apposite, for Napster provides its

126 at 002260,

002263; 1 Frackman Dec., Exh. A (Richardson Dep.) at 20:5-22:10, 25:2-26:1; Exh. C (Parker Dep.) at

107

users with much more than hyperlinking; Napster is

Dec.

an integrated service designed to enable users to locate and download MP3 music files. In keeping with its view that Napster, Inc. plays a more active

service attracts more and more users by offering an increasing amount of quality music for free. See, e.g., 1 Frackman Dec., Exh. A (Richardson Dep.) at 112:18-113:2. It hopes to "monetize" its user base

role in facilitating file-sharing than an Internet service provider acting as a passive conduit, this court finds it probable that defendant materially contributed to unlawful conduct. 7. Because

they have

made

a convincing

showing

443

artists

does,

police

limited

to

not

exercise

443 F.2d at 1161-63.

depend

upon

argument

its

service.

centers

on

This

the

First

fact

that

not itself contain copyrighted material. Directories have been accorded First Amendment protection. See Princeton Community Phone Book,

Inc. v. Bate,

582

F.2d 706, 710-11 (3d Cir.) (holding that First Amendment affords as much protection to listing in

directory as it does to newspaper advertisement), cert. denied, 439 U.S. 966, 58 L. Ed. 2d 424, 99S. Ct. 454

(1978).

2. Although an overbroad injunction might implicate the First Amendment, free speech concerns "are

its

protected

by

and

doctrine." Nihon Bus. Data, Inc.,

Religious Tech.

coextensive

with

the

Keizai Shimbun, Inc. 166 F.3d 65, 74 (2d

Ctr., 907 F. Supp.

fair

use

v. Comline Cir. 1999);

at 1377 (stating

that, where otherwise appropriate, imposing liability for copyright infringement does not necessarily create First Amendment concerns because the fair use defense encompasses this issue). This court has already determined that plaintiffs do not seek to

its

supervisory powers to be deemed capable of doing so. See Gershwin,

injunction

defendant offers an electronic directory, which does

material fact about vicarious liability). need

that

Amendment

could delete specific postings raised genuine issue of defendant

an

1. According to Napster, Inc., the requested injunction would impose a prior restraint on its free speech, as well as that of its users and the unsigned

F.2d at

service. See Religious Tech. Ctr., 907 F. Supp. at 1376 (concluding that evidence that Internet access provider acted to suspend subscribers' accounts and

a

non-infringing,

F. Defendant's First Amendment Challenge

Although Napster, Inc. argues that it is technologically difficult, and perhaps infeasible, to distinguish legal and illegal conduct, plaintiffs have shown that defendant supervises Napster use. Indeed, Napster, Inc. itself takes pains to inform the court of its improved methods of blocking users about whom rights holders complain. See Def.'s Opp. Br. at 19 (citing Kessler Dec. P 22), 33 (citing Kessler Dec. PP 23-24). This is tantamount to an admission that

Moreover,

were

4. Plaintiffs have shown a reasonable likelihood of success on their vicarious infringement claims.

right to terminate vendors at will; it also controlled customers' access and promoted its services. See id.

sometimes

Napster

attracts Napster's financially-valuable user base.

2. In Fonovisa, the swap meet operator satisfied the first element of vicarious liability because it had the

and

The

Defendant's representations about the primacy of its legitimate uses thus appear disingenuous. The ability to download myriad popular music files without payment seems to constitute the glittering object that

to supervise the infringing activity and also has a direct financial interest in such activities." Fonovisa,

can,

n25

unlawful activity would not have such a dire impact.

1. Even in the absence of an employment relationship, a defendant incurs liability for vicarious copyright infringement if he "has the right and ability

defendant

251.

If many of defendant's commercially significant uses

E. Vicarious Copyright Infringement

Gershwin,

Exh.

noted in the factual findings. ***

reasonable likelihood of success on their contributory infringement claims.

(quoting

Dep.),

through one of several generation revenue models

with regard to both the knowledge and material contribution elements, plaintiffs have established a

76 F.3d at 262 1162).

(Parker

The court

therefore finds that Napster, Inc. has the right and ability to supervise its users' infringing conduct.

enjoin any fair uses of the Napster service that are not completely contrived or peripheral to its existence.

3. Plaintiffs have shown a reasonable likelihood that

3. The parties dispute the extent to which infringing

Napster,

and

Inc. has a direct financial

interest in the

infringing currently

activity. *** Although Napster, Inc. generates no revenue, its internal

documents

state

directly from

that

it "will

increases

drive

in userbase."

[sic]

non-infringing

aspects

of

the

service

are

separable. Napster, Inc.'s interim CEO Hank Barry and Vice President of Engineering Edward Kessler both opine that the requested injunction would have

revenues

1 Frackman

the

108

practical

effect

of compelling

defendant

to

exclude all songs from its system, including those which plaintiffs do not own. See Barry Dec. P 13;

American Med. Ass'n,

Kessler Dec. P 39. In this view, the injunction would

(finding licensing agreement precluding use of competitor's products to be misuse), and cert. denied 522 U.S. 933 (1997); see also, e.g., Alcatel USA, Inc.

(1997), as amended

destroy the Napster service, or if the service did not shut down completely, forcibly supplant peer-to-peer file-sharing with a model under which defendant dictated the content. See Kessler Dec. P 39. Barry

v.

avers that, as a result of the injunction, Napster would lose its competitive edge vis-a-vis similar services. In contrast, plaintiffs contend that Napster's New for

business

and _ scientific

Dec. PP 3-4. ***

Dec. P 21; Kenswil Stoller Dec. P 11.

infringing and non-infringing aspects of its service, its First Amendment argument still fails. Courts will

Inc., 109 F.3d 1394,

1406 (9th Cir.)

(enjoining entire book that included parody in of Dr. Seuss poem because defendant proceeded book production after onset of litigation), dismissed, //8 S. Ct. 27 (1997). Even if technologically impossible for Napster, Inc. to

772,

792-95

of

misuse

court

still

must

take

action

P

15; Vidich

rejects

the

Dec.

P 8;

misuse

of

K. Balance of the Hardships

style with cert. it is offer

1. The court cannot give much weight to defendant's lament that the requested relief will put it out of business. See Sun Microsystems, Inc. v. Microsoft

Corp.,

such functions as its directory without facilitating the

Dec.

3. Accordingly, this court copyright defense. ***

not sustain a First Amendment challenge where the defendant entraps itself in an “all-or-nothing predicament." Dr. Seuss Enters. L.P. v. Penguin

infringement,

F.3d

rejection

See Conroy Dec. P 4; Cottrell Dec. P 5; Eisenberg

In the event that Napster, Inc. cannot separate the

USA,

166

court's

licensees from developing own products constituted misuse). Plaintiffs have granted no licenses to defendant, let alone impermissibly restrictive ones.

research would remain viable if the court granted the requested relief. See Pl.'s Reply at 19; Daniel Farmer

Books

Inc,

district

Reynolds, 911 F.2d 970, 978-79 (4th Cir. 1990) (concluding that exclusive licensing clause inhibiting

Artist Program, message boards, chat rooms, and file-

applications

Tech,

defense based on licensing agreement allowing plaintiff to gain control over uncopyrighted products), reh'g and reh'g en banc denied, /80 F.3d 267 (Sth Cir. 1999); Lasercomb Am., Inc. vy.

See Barry Dec. P 13.

sharing

DGI

(overturning

121 F.3d 516, 521 (9th Cir.)

133 F.3d 1140 (9th Cir. 1998)

188

F.3d

1115,

1119

(9th

Cir.

1999).

Although even a narrow injunction may so fully eviscerate Napster, Inc. as to destroy its user base n30 or make its service technologically infeasible, the

to

protect plaintiffs’ copyrights. See, e.g., Orth-OVision, Inc. v. Home Box Office, 474 F. Supp. 672, 686 n.14 (S.D.N.Y. 1979).

business interests of an infringer do not trump a rights holder's entitlement to copyright protection. Nor does defendant's supposed

G. Misuse of Copyright Defense

inability to separate

infringing and non-infringing elements of its service constitute a valid reason for denying plaintiffs relief or for issuing a stay. See Dr. Seuss, 109 F.3d at 1406.

1. Defendant essentially raises an antitrust argument

as

an

equitable

defense

against

the

preliminary

injunction motion. Under the rubric of misuse of copyright, Napster, Inc. argues that plaintiffs seek to aggrandize their monopoly beyond the scope of their copyrights by (1) restricting the flow of unsigned artists’ music, which competes with their own, and

(2) controlling the distribution of music

Any destruction of Napster, Inc. by a preliminary injunction is speculative compared to the statistical evidence of massive, unauthorized downloading and uploading of plaintiffs' copyrighted works--as many as 10,000 files per second, by defendant's own admission. See Kessler Dec. P 29. The court has every reason to believe that, without a preliminary injunction, these numbers will mushroom as Napster users, and newcomers attracted by the publicity,

over the

Internet. Alleged antitrust violations by a copyright plaintiff generally do not afford a valid defense

against an infringement action and ought not to dissuade a court from granting injunctive relief. See 4 Nimmer on Copyright §

13.09[A], at 13-286 (citing,

scramble to obtain as much free music as possible

inter alia, Orth-O-Vision, 474 F. Supp. at 687).

before trial.

2. Furthermore, most of the cases defendant cites deal

2. Napster, Inc. contends that its service poses no harm to plaintiffs because future SDMI specifications will protect their music releases in both CD and downloadable formats. Defendant purportedly

with improper attempts to enlarge a copyright monopoly through restricted or exclusive licensing. See, e.g., Practice Management Info. Corp. v.

109

intends to support SDMI-compliant

compensate defendant for its losses in the event that

formats when

they become available. See Kessler Dec. P 37. However, this argument suffers from two fatal flaws. First, assuming SDMI protections work, they will

this injunction is reversed or vacated.

only affect plaintiffs' new releases; neither the copyrighted material in Schedules A and B of the

IT IS SO ORDERED. MARILYN HALL PATEL

complaint nor any other existing music that plaintiffs own will be covered. See 1 Pulgram Dec. (Vidich Dep.) at 54:6-55:4, 59:8-62:10. Second, because the

Chief Judge, United States District Court

SDMI specifications have not yet taken effect, they cannot shield plaintiffs from irreparable harm at this

moment--the moment in which the preliminary injunction is sought See id. at 59:8-62:10. A rightsfriendly regime scheduled for implementation, at the earliest, by the end of 2000 does nothing to staunch the

illegal

flow

of plaintiffs'

copyrighted

material

over the Internet in the summer and autumn of this year. 3. Thus, even if the court were required to balance

the hardships, which it is not because plaintiffs have raised serious questions and shown a_ strong likelihood of success on the merits, plaintiffs would

prevail in their motion for a preliminary injunction. Ill. CONCLUSION

For the foregoing reasons, the court GRANTS plaintiffs' motion for a preliminary injunction against Napster, Inc. Defendant is hereby preliminarily

ENJOINED from engaging in, or facilitating others in copying, downloading, uploading, transmitting, or distributing

plaintiffs’

| copyrighted

= musical

compositions and sound recordings, protected by either federal or state law, without express permission of the rights owner. This injunction applies to all such works that plaintiffs own; it is not

limited to those listed in Schedules A and B of the complaint. Plaintiffs have shown persuasively that they own the copyrights to more than seventy percent of the

music available on the Napster system. See Hausman Dec. P 8. Because defendant has contributed to illegal copying on a scale that is bears the burden of developing with the injunction. Defendant work owned by plaintiffs which

without precedent, it a means to comply must insure that no neither defendant nor

Napster users have permission to use or distribute is uploaded or downloaded on Napster. The court ORDERS plaintiffs to cooperate with defendant in identifying the works to which they own copyrights. To this end, plaintiffs must file a written plan no later than

September

expedient

method

5,

2000,

by

which

ascertained. The court also post a bond for the sum

describing

their rights

the

most

can

be

ORDERS plaintiffs to of $ 5,000,000.00 to

110

MGM

v. GROKSTER

electronic files by universities, government agencies, corporations, and libraries, among others. *

No. 04-480

Other users of peer-to-peer networks include individual recipients of Grokster's and StreamCast's software, and although the networks that they enjoy through using the software can be used to share any type of digital file, they have prominently employed those networks in sharing copyrighted music and

SUPREME COURT OF THE UNITED STATES

125 S. Ct. 2764; 162 L. Ed. 2d 781; 2005 U.S

video files without authorization. A group of copyright holders (MGM for short, but including motion picture studios, recording companies, songwriters, and music publishers) sued Grokster and StreamCast for their users' copyright infringements, alleging that they knowingly and intentionally distributed their software to enable users to reproduce and distribute the copyrighted works in violation of the Copyright Act, 77 U.S.C. § 101 et

June 27, 2005

JUSTICE SOUTER delivered the opinion of the

Court.

seq. (2000 ed. and Supp. II). MGM sought damages and an injunction. ***

The question is under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product. We hold that one who distributes a device with the object

The copied file is placed in a designated sharing

folder on the requesting user's computer, where it is

of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of

available for other users to download in turn, along with any other file in that folder. ***

infringement by third parties.

As this description indicates, Grokster and StreamCast use no servers to intercept the content of the search requests or to mediate the file transfers conducted by users of the software, there being no

I A

central point through which the substance of the

Respondents, Grokster, Ltd., and StreamCast Networks, Inc., defendants in the trial court,

communications passes in either direction. 4

distribute free software products that allow computer users to share electronic files through peer-to-peer

Although Grokster and StreamCast do not

therefore know when particular files are copied, a few searches using their software would show what is

networks, so called because users' computers communicate directly with each other, not through central servers. The advantage of peer-to-peer networks over information networks of other types shows up in their substantial and growing popularity. Because they need no central computer server to mediate the exchange of information or files among users, the high-bandwidth communications capacity for a server may be dispensed with, and the need for costly server storage space is eliminated. Since copies of a file (particularly a popular one) are available on many users' computers, file requests and retrievals may be faster than on other types of networks, and since file exchanges do not travel through a server, communications can take place

available on the networks the software reaches. MGM commissioned a statistician to conduct a > Peer-to-peer networks have disadvantages as well. Searches on peer-to-peer networks may not reach and uncover all available files because search requests may not be transmitted to every computer on the network. There may be redundant copies of popular files. The creator of the software has no incentive to minimize storage or bandwidth consumption, the costs of which are borne by every user of the network. Most relevant here, it is more difficult to control the content of files available for

retrieval and the behavior of users.

between any computers that remain connected to the network without risk that a glitch in the server will disable the network in its entirety. Given these benefits in security, cost, and efficiency, peer-to-peer networks are employed to store and distribute

and

* There is some evidence that both Grokster StreamCast previously operated supernodes,

which compiled indexes of files available on all of the nodes connected to them. This evidence, pertaining to previous versions of the defendants’ software, is not before us and would not affect our

conclusions in any event.

111

systematic search, and his study showed that nearly

the companies of 8 million copyrighted files that

90% of the files available for download on the FastTrack system were copyrighted works.” Grokster and StreamCast dispute this figure, raising

could be obtained using their software.

methodological problems and arguing that free copying even of copyrighted works may be authorized by the rightholders. They also argue that potential noninfringing uses of their software are significant in kind, even if infrequent in practice.

Some musical performers, for example, have gained new audiences by distributing their copyrighted works for free across peer-to-peer networks, and some distributors of unprotected content have used peer-to-peer networks to disseminate files, Shakespeare being an example. Indeed, StreamCast has given Morpheus users the opportunity to

download the briefs in this very case, though their popularity has not been quantified. As for quantification, the parties' anecdotal and statistical evidence entered thus far to show the content available on the FastTrack and Gnutella networks does not say much about which files are actually downloaded by users, and no one can say how often the software is used to obtain copies of

unprotected material. But MGM's evidence gives reason to think that the vast majority of users’ downloads are acts of infringement, and because well

Grokster and StreamCast are not, however,

merely passive recipients of information about

infringing use. The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one

clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement. After the notorious file-sharing service, Napster, was sued by copyright holders for facilitation of copyright infringement, A & M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (ND Cal. 2000),

affd in part, rev'd in part, 239 F.3d 1004 (CA9 2001), 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. Evidence indicates that "it was always [StreamCast's] intent to use [its OpenNap network] to be able to capture email addresses of [its] initial target market so that [it] could promote [its]

StreamCast Morpheus interface to them," App. 861; indeed, the OpenNap program was engineered "'to leverage Napster's 50 million user base," id., at 746.

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

StreamCast monitored both the number of users

downloading its OpenNap program and the number of music files they downloaded. Jd., at 859, 863, 866.

networks each month, the probable scope of

It also used the resulting OpenNap network to

copyright infringement is staggering.

distribute copies of the Morpheus software and to encourage users to adopt it. Jd, at 861, 867, 1039.

Grokster and StreamCast concede the

infringement in most downloads, Brief for Respondents 10, and it is uncontested that they are

aware that users employ their software primarily to download copyrighted files, even if the decentralized FastTrack and Gnutella networks fail to reveal which files are being copied, and when. 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.

App. 559-563, 808-816, 939-954. And MGM notified

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. /d., at 861. A kit

developed by StreamCast to be delivered to advertisers, for example, contained press articles about StreamCast's potential to capture former Napster users, id., at 568-572, and it introduced itself to some potential advertisers as a company "which is similar to what Napster was," id., at 884. It broadcast banner advertisements to users of other Napstercompatible software, urging them to adopt its

OpenNap. /d., at 586. An internal e-mail from a company executive stated: "We have put this ° By comparison, evidence introduced by

the plaintiffs in A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (CA9 2001), showed that 87% of files available on the Napster filesharing network were copyrighted, id, at 1013.

network in place so that when Napster pulls the plug on their free service . . . or if the Court orders them shut down prior to that . . . we will be positioned to capture the flood of their 32 million users that will be actively looking for an alternative." /d., at 588-589,

861.

Thus, StreamCast developed promotional materials to market its service as the best Napster alternative. One proposed advertisement read: "Napster Inc. has announced that it will soon begin

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

charging you a fee. That's if the courts don't order it shut down first. What will you do to get around it?"

Grokster and Morpheus users while they are employing the programs. As the number of users of each program increases, advertising opportunities become worth more. Cf. App. 539, 804. While there

Id., at 897. Another proposed ad touted StreamCast's

software as the " # 1 alternative to Napster" and asked "when the lights went off at Napster . . . where

is doubtless some demand for free Shakespeare, the

did the users go?" Jd., at 836 (ellipsis in original).’

evidence shows that substantive volume is a function of free access to copyrighted work. Users seeking

StreamCast even planned to flaunt the illegal uses of its software; when it launched the OpenNap network,

Top 40 songs, for example, or the latest release by Modest Mouse, are certain to be far more numerous than those seeking a free Decameron, and Grokster

the chief technology officer of the company averred that "the goal is to get in trouble with the law and get sued. It's the best way to get in the news." /d., at 916.

and StreamCast translated that demand into dollars.

The evidence that Grokster sought to capture the market of former Napster users is sparser but revealing, for Grokster launched its own OpenNap system called Swaptor and inserted digital codes into

Finally, there is no evidence that either company

engines to look for "Napster" or "free filesharing"

made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files. Although Grokster appears to have sent e-mails warning users about infringing content when it received threatening notice from the

would be directed to the Grokster Web site, where

copyright holders, it never blocked anyone from

they could download the Grokster software. /d., at

continuing to use its software to share copyrighted files. [d., at 75-76. StreamCast not only rejected another company's offer of help to monitor infringement, id., at 928-929, but blocked the Internet Protocol addresses of entities it believed were trying to engage in such monitoring on its networks, id., at

its Web site so that computer users using Web search

992-993. And Grokster's name is an apparent derivative of Napster. StreamCast's executives monitored the number of songs by certain commercial artists available on their networks, and an internal communication

917-922.

indicates they aimed to have a larger number of

B

copyrighted songs available on their networks than

other file-sharing networks. /d., at 868. The point, of

*** The District Court held that those who used

course, would be to attract users of a mind to

the Grokster and Morpheus software to download copyrighted media files directly infringed MGM's

infringe, just as it would be with their promotional materials developed showing copyrighted songs as examples of the kinds of files available through

copyrights, a conclusion not contested on appeal, but the court nonetheless granted summary judgment in

Morpheus. /d., at 848. Morpheus in fact allowed

favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of their software. Distributing that software gave rise

users to search specifically for "Top 40" songs, id., at 735, which were inevitably copyrighted. Similarly, Grokster sent users a newsletter promoting its ability

to no liability in the court's view, because its use did

to provide particular, popular copyrighted materials.

not provide the distributors with actual knowledge of specific acts of infringement.

In addition to this evidence of express promotion, marketing, and intent to promote further, the business models employed by Grokster and StreamCast confirm that their principal object was use of their software to download copyrighted works.

The Court of Appeals affirmed. 380 F.3d 1154 (CA9 2004). In the court's analysis, a defendant was liable as a contributory infringer when it had knowledge of direct infringement and materially

contributed to the infringement. But the court read Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984), as holding that distribution of a commercial product capable of substantial noninfringing uses could not give rise to contributory liability for infringement unless the distributor had actual

’ The record makes clear that StreamCast developed these promotional materials whether it released them to the public. these advertisements were not released public and do not show encouragement infringe, they illuminate StreamCast's

but not Even if to the to

knowledge of specific instances of infringement and failed to act on that knowledge. The fact that the

purposes.

113

software was capable of substantial noninfringing

today as the videocassette recorder or VCR.

uses in the Ninth Circuit's view meant that Grokster and StreamCast were not liable, because they had no such actual knowledge, owing to the decentralized

Copyright holders sued Sony as the manufacturer, claiming it was contributorily liable for infringement that occurred when VCR owners taped copyrighted programs because it supplied the means used to infringe, and it had constructive knowledge that

architecture of their software. The court also held that Grokster and StreamCast did not materially contribute to their users' infringement because it was

infringement would occur. At the trial on the merits,

the users themselves who searched for, retrieved, and

the evidence showed that the principal use of the VCR was for "'time-shifting,"" or taping a program

stored the infringing files, with no involvement by

the defendants beyond providing the software in the first place. The Ninth Circuit also considered whether Grokster and StreamCast could be liable under a

theory of vicarious infringement. The court held against liability because the defendants did not monitor or control the use of the software, had no agreed-upon right or current ability to supervise its use, and had no independent duty to police infringement. We granted certiorari. 543 US. __,

160 L. Ed. 2d 518, 125 S. Ct. 686 (2004). Hl A MGM and many of the amici fault the Court of Appeals's holding for upsetting a sound balance between the respective values of supporting creative

pursuits through copyright protection and promoting innovation in new communication technologies by limiting the incidence of liability for copyright

infringement. The more artistic protection is favored, the more technological innovation may be discouraged; the administration of copyright law is an

exercise in managing the trade-off. *** When a widely shared service or product is used

to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the

copying device for secondary liability on a theory of contributory or vicarious infringement. See Jn re Aimster Copyright Litigation, 334 F.3d 643, 645-646 (CA7 2003). ***

object of bringing about taping in violation of copyright or had taken active steps to increase its

profits from unlawful taping. Id., at 438, 78 L. Ed. 2d 574, 1048. Ct. 774. Although Sony's advertisements urged consumers to buy the VCR to "record favorite shows" or "build a library'" of recorded programs,

id., at 459, 78 L. Ed. 2d 574, 104 S. Ct. 774 (Blackmun, J., dissenting), neither of these uses was necessarily infringing, id., at 424, 454-455, 78 L. Ed.

2d 574, 104'S. Ct. 774. On those facts, with no evidence of stated or indicated intent to promote infringing uses, the only conceivable basis for imposing liability was on a

theory of contributory infringement arising from its sale of VCRs to consumers with knowledge that some would use them to infringe. Jd. at 439, 78 L. Ed. 2d 574, 104 S. Ct. 774. But because the VCR was

"capable of commercially significant noninfringing uses," we held the manufacturer could not be faulted solely on the basis of its distribution. /d., at 442,

78

L. Ed. 2d 574, 104 S. Ct. 774. *** In sum, where an article is "good for nothing else" but infringement, Canda v. Michigan Malleable lron Co., supra, at 489, there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to

infringe, see Henry v. A. B. Dick Co., 224 U.S. 1, 48, 56 L. Ed. 645, 32'S. Ct. 364, 1912 Dec. Comm'r Pat. 575 (1912), overruled on other grounds, Motion Picture Patents Co. v. Universal Film Mfg. Co., 243

B Despite the currency of these principles of

secondary liability, this Court has dealt with secondary copyright infringement in only one recent case, and because MGM

for later viewing at a more convenient time, which the Court found to be a fair, not an infringing, use. Id., at 423-424,78 L. Ed. 2d 574, 1048. Ct. 774. There was no evidence that Sony had expressed an

has tailored its principal

claim to our opinion there, a look at our earlier holding is in order. In Sony Corp. v. Universal City Studios, supra, this Court addressed a claim that

secondary liability for infringement can arise from the very distribution of a commercial product. There, the product, novel at the time, was what we know

U.S. 502, 61 L. Ed. 871, 37S. Ct. 416, 1917 Dec. Comm'r Pat. 391 (1917). Conversely, the doctrine

absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than

the mere understanding that some of one's products will be misused. It leaves breathing room for innovation and a vigorous commerce. See Sony Corp. v. Universal City Studios, supra, at 442; Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176,

221, 65 L. Ed. 2d 696, 100 S. Ct. 2601 (1980); Henry

v. A. B. Dick Co., supra, at 48, 56 L. Ed. 645, 32S.

Kalem Co. v. Harper Brothers, 222 U.S., at 62-63, 56

Ct. 364.

L. Ed. 2d 92, 32S. Ct. 20 (copyright infringement).

We agree with MGM that the Court of Appeals

For the same reasons that Sony took the staplearticle doctrine of patent law as a model for its copyright safe-harbor rule, the inducement rule, too, is a sensible one for copyright. We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as

misapplied Sony, which it read as limiting secondary

liability quite beyond the circumstances to which the case applied. Sony barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of

a product capable of substantial lawful use, which the distributor knows is in fact used for infringement.

shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the

The Ninth Circuit has read Sony's limitation to mean

that whenever a product is capable of substantial lawful use, the producer can never be held

development of technologies with lawful and

contributorily liable for third parties' infringing use of it; it read the rule as being this broad, even when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of the product, unless the distributors had "specific

unlawful potential. Accordingly, just as Sony did not

find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe, 464 U.S., at 439, n. 19, 78 L. Ed. 2d 574, 104 S. Ct. 774, mere knowledge of infringing potential or of actual infringing uses would not be

knowledge of infringement at a time at which they contributed to the infringement, and failed to act upon that information." 380 F.3d at 1162 (internal quotation marks and alterations omitted). Because the

enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on

Circuit found the StreamCast and Grokster software capable of substantial lawful use, it concluded on the basis of its reading of Sony that neither company could be held liable, since there was no showing that

purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.

their software, being without any central server,

afforded them knowledge of specific unlawful uses. This view of Sony, however, was error, converting the case from one about liability resting on imputed intent to one about liability on any theory. Because Sony did not displace other theories

* OK OK

In sum, this case is significantly different from Sony and reliance on that case to rule in favor of StreamCast and Grokster was error. Sony dealt with a claim of liability based solely on distributing a product with alternative lawful and unlawful uses, with knowledge that some users would follow the unlawful course. The case struck a balance between the interests of protection and innovation by holding that the product's capability of substantial lawful employment should bar the imputation of fault and consequent secondary liability for the unlawful acts of others.

of secondary liability, and because we find below that it was error to grant summary judgment to the companies on MGM's inducement claim, we do not revisit Sony further, as MGM

requests, to add a more

quantified description of the point of balance between protection and commerce when liability rests solely on distribution with knowledge that unlawful use will occur. It is enough to note that the Ninth Circuit's judgment rested on an erroneous understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.

MGM's evidence in this case most obviously addresses a different basis of liability for distributing

Cc

a product open to alternative uses. Here, evidence of the distributors' words and deeds going beyond

*** The classic case of direct evidence of

unlawful purpose occurs when one induces commission of infringement by another, or "entices

distribution as such shows a purpose to cause and

or persuades another" to infringe, Black's Law Dictionary 790 (8th ed. 2004), as by advertising.

profit from third-party acts of copyright infringement.

Thus at common law a copyright or patent defendant

found, it will not be on the basis of presuming or imputing fault, but from inferring a patently illegal

If liability for inducing infringement is ultimately

who "not only expected but invoked [infringing use] by advertisement" was liable for infringement "on principles recognized in every part of the law."

objective from statements and actions showing what that objective was.

115

further proceedings. 259 F. Supp. 2d, at 1035. This

There is substantial evidence in MGM's favor on all elements of inducement, and summary judgment

conclusion appears to rest almost entirely on the collection of declarations submitted by Grokster and StreamCast. /bid. Review of these declarations reveals mostly anecdotal evidence, sometimes obtained second-hand, of authorized copyrighted works or public domain works available online and

in favor of Grokster and StreamCast was error. On remand, reconsideration of MGM's motion for summary judgment will be in order. The judgment of the Court of Appeals is vacated, and the case is remanded for further

shared through peer-to-peer networks, and general statements about the benefits of peer-to-peer technology. *** These declarations do not support summary judgment in the face of evidence, proffered by MGM, of overwhelming use of Grokster's and

proceedings consistent with this opinion. It is so ordered.

JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and JUSTICE KENNEDY join, concurring

StreamCast's software for infringement. Even if the absolute number of noninfringing files copied using the Grokster and StreamCast

At bottom, however labeled, the question in this case is whether Grokster and StreamCast are liable for the direct infringing acts of others. Liability under our jurisprudence may be predicated on actively encouraging (or inducing) infringement through specific acts (as the Court's opinion develops) or on distributing a product distributees use to infringe copyrights, if the product is not capable of "substantial" or "commercially significant"

software is large, it does not follow that the products are therefore put to substantial noninfringing uses and are thus immune from liability. The number of noninfringing copies may be reflective of, and dwarfed by, the huge total volume of files shared. Further, the District Court and the Court of Appeals did not sharply distinguish between uses of Grokster's

and StreamCast's software products (which this case is about) and uses of peer-to-peer technology generally (which this case is not about).

noninfringing uses. Sony, 464 U.S., at 442, 78 L. Ed. 2d 574, 1048S. Ct. 774; see also 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 12.04[A][2] (2005). While the two categories overlap, they capture different culpable behavior. Long coexisting,

In sum, when the record in this case was

developed, there was evidence that Grokster's and

both are now codified in patent law. Compare 35

StreamCast's products were, and had been for some time, overwhelmingly used to infringe, ante, at 4-6; App. 434-439, 476-481, and that this infringement was the overwhelming source of revenue from the products, ante, at 8-9; 259 F. Supp. 2d, at 1043-1044.

U.S.C. § 271(b) (active inducement liability), with ¢ 271(c) (contributory liability for distribution of a product not "suitable for substantial noninfringing use"). ***

Fairly appraised, the evidence was insufficient to

This case differs markedly from Sony. Cf. Peters, Brace Memorial Lecture: Copyright Enters the Public Domain, 51 J. Copyright Soc. 701, 724 (2004) ("The Grokster panel's reading of Sony is the broadest that any court has given it... ."). Here, there has been no finding of any fair use and little beyond anecdotal evidence of noninfringing uses. In finding the

demonstrate, beyond genuine debate, a reasonable

prospect that substantial or commercially significant noninfringing uses were likely to develop over time. On this record, the District Court should not have

ruled dispositively on the contributory infringement charge by granting summary judgment to Grokster and StreamCast.

Grokster and StreamCast software products capable of substantial noninfringing uses, the District Court and the Court of Appeals appear to have relied largely on declarations submitted by the defendants. These declarations include assertions (some of them hearsay) that a number of copyright owners authorize

If, on remand, the case is not resolved on

summary judgment in favor of MGM based on Grokster and StreamCast actively inducing infringement, the Court of Appeals, I would emphasize, should reconsider, on a fuller record, its

distribution of their works on the Internet and that some public domain material is available through peer-to-peer networks including those accessed through Grokster's and StreamCast's software. 380 F.3d at 1161; 259 F. Supp. 2d 1029, 1035-1036 (CD

interpretation of Sony's product distribution holding. JUSTICE BREYER, with whom JUSTICE STEVENS and JUSTICE O'CONNOR join, concurring. I agree with the Court that the distributor of a dual-use technology may be liable for the infringing

Cal. 2003); App. 125-171. The District Court declared it "undisputed that there are substantial noninfringing uses for Defendants’ software," thus obviating the need for

activities of third parties where he or she actively seeks to advance the infringement. Ante, at 1.1

116

further agree that, in light of our holding today, we need not now "revisit" Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 78 L. Ed.

2d 574, 104S. Ct. 774 (1984). Ante, at 17. Other Members of the Court, however, take up the Sony question: whether Grokster's product is "capable of

442, 78 L. Ed. 2d 574, 104 S. Ct. 774. It pointed to patent law's "staple article of commerce" doctrine, ibid., under which a distributor of a product is not liable for patent infringement by its customers unless that product is "unsuited for any commercial

noninfringing use." Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176, 198, 65 L. Ed. 2d 696, 100

‘substantial’ or 'commercially significant' noninfringing uses." Ante, at | (GINSBURG, J.,

S. Ct. 260] (1980). The Court wrote that the sale of

concurring) (quoting Sony, supra, at 442, 78 L. Ed.

copying equipment, "like the sale of other articles of

2d 574, 104 S. Ct. 774). And they answer that question by stating that the Court of Appeals was wrong when it granted summary judgment on the

commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses."

issue in Grokster's favor. Ante, at 4. I write to explain

Sony, 464 U.S., at 442, 78 L. Ed. 2d 574, 104 S. Ct. 774 (emphasis added). The Court ultimately characterized the legal "question" in the particular

why I disagree with them on this matter.

I The Court's opinion in Sony and the record evidence (as described and analyzed in the many

briefs before us) together convince me that the Court of Appeals' conclusion has adequate legal support.

case as "whether [Sony's VCR] is capable of commercially significant noninfringing uses" (while declining to give "precise content" to these terms). Ibid. (emphasis added). ***

The Court found that the magnitude of

A I begin with Sony's standard. In Sony, the Court considered the potential copyright liability of a company that did not itself illegally copy protected material, but rather sold a machine -- a Video Cassette Recorder (VCR) -- that could be used to do so. A buyer could use that machine for noninfringing purposes, such as recording for later viewing (sometimes called 'time-shifting," Sony, 464 U.S., at 421, 78 L. Ed. 2d 574, 104 S. Ct. 774) uncopyrighted television programs or copyrighted programs with a copyright holder's permission. The buyer could use

authorized programming was "significant," and it also noted the "significant potential for future authorized copying." *** The Court, in using the key word "substantial," indicated that these circumstances alone constituted a sufficient basis for rejecting the imposition of secondary liability. See id., at 456, 78 L. Ed. 2d 574, 104 S. Ct. 774 ("Sony demonstrated a significant likelihood that substantial numbers of copyright

holders" would not object to time-shifting (emphasis added)). Nonetheless, the Court buttressed its

the machine for infringing purposes as well, such as building libraries of taped copyrighted programs. Or, the buyer might use the machine to record

conclusion by finding separately that, in any event, unauthorized time- shifting often constituted not

copyrighted programs under circumstances in which

2d 574, 104S. Ct. 774.

the legal status of the act of recording was uncertain (i.e., where the copying may, or may not, have constituted a "fair use," id, at 425-426,

78 L. Ed. 2d

574, 1048. Ct. 774). Sony knew many customers would use its VCRs to engage in unauthorized copying and "library-building."" /d., at 458-459, 78

L. Ed. 2d 574, 104 S. Ct. 774 (Blackmun, J., dissenting). But that fact, said the Court, was insufficient to make Sony itself an infringer. And the

infringement, but "fair use." /d., at 447-456, 78 L. Ed.

B When measured against Sony's underlying evidence and analysis, the evidence now before us shows that Grokster passes Sony's test -- that is, whether the company's product is capable of substantial or commercially significant noninfringing

uses. Id., at 442, 78 L. Ed. 2d 574, 104'S. Ct. 774. For

Court ultimately held that Sony was not liable for its

one thing, petitioners’ (hereinafter MGM) own expert declared that 75% of current files available on

customers' acts of infringement.

Grokster are infringing and 15% are "likely

In reaching this conclusion, the Court

recognized the need for the law, in fixing secondary copyright liability, to "strike a balance between a copyright holder's legitimate demand for effective -not merely symbolic -- protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce." /d., at

infringing." See App. 436-439, PP6-17 (Decl. of Dr. Ingram Olkin); cf. ante, at 4 (opinion of the Court).

That leaves some number of files near 10% that apparently are noninfringing, a figure very similar to the 9% or so of authorized time-shifting uses of the VCR that the Court faced in Sony. ***

There may be other now-unforeseen noninfringing uses that develop for peer-to-peer software, just as the home-video rental industry (unmentioned in Sony) developed for the VCR. But the foreseeable development of such uses, when taken together with an estimated 10% noninfringing material, is sufficient to meet Sony's standard. And while Sony considered the record following a trial, there are no facts asserted by MGM in its summary

judgment filings that lead me to believe the outcome after a trial here could be any different. The lower

courts reached the same conclusion. *** I The real question here, I believe, is not whether the record evidence satisfies Sony. As I have interpreted the standard set forth in that case, it does. KOK

Instead, the real question is whether we should modify the Sony standard, as MGM requests, or interpret Sony more strictly, as I believe JUSTICE GINSBURG's approach would do in practice. *** As [ have said, Sony itself sought to "strike a

balance between a copyright holder's legitimate demand for effective -- not merely symbolic -protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce." Id, at 442, 78 L. Ed. 2d 574, 104 S. Ct. 774. Thus, to determine whether modification, or a strict interpretation, of Sony is needed, I would ask whether MGM has shown that Sony incorrectly balanced copyright and new-

Court's holding today reinforces (by adding a weapon to the copyright holder's legal arsenal). Sony's rule is strongly technology protecting. The rule deliberately makes it difficult for courts to

find secondary liability where new technology is at issue. It establishes that the law will not impose copyright liability upon the distributors of dual-use technologies (who do not themselves engage in

unauthorized copying) unless the product in question will be used almost exclusively to infringe copyrights (or unless they actively induce infringements as we today describe). Sony thereby recognizes that the copyright laws are not intended to discourage or to control the emergence of new technologies, including

(perhaps especially) those that help disseminate information and ideas more broadly or more efficiently. Thus Sony’s rule shelters VCRs, typewriters, tape recorders, photocopiers, computers, cassette players, compact disc burners, digital video recorders, MP3 players, Internet search engines, and

peer-to-peer software. But Sony's rule does not shelter descramblers, even if one could theoretically use a descrambler in a noninfringing way. 464 U.S.,

at 441-442, 78 L. Ed. 2d 574, 104 S. Ct. 774; Compare Cable/Home Communication Corp., supra, at 837-850 (developer liable for advertising television signal descrambler), with Vault Corp., supra, at 262 (primary use infringing but a substantial noninfringing use).

new or necessary copyright-related benefits outweigh

Sony's rule is forward looking. It does not confine its scope to a static snapshot of a product's current uses (thereby threatening technologies that have undeveloped future markets). Rather, as the VCR example makes clear, a product's market can evolve dramatically over time. And Sony -- by referring to a capacity for substantial noninfringing uses -- recognizes that fact. Sony’s word "capable"

any such weakening?

refers to a plausible, not simply a theoretical,

technology interests. In particular: (1) Has Sony (as I interpret it) worked to protect new technology? (2) If so, would modification or strict interpretation significantly weaken that protection? (3) If so, would

A The first question is the easiest to answer. Sony's rule, as I interpret it, has provided entrepreneurs with needed assurance that they will be shielded from copyright liability as they bring valuable new technologies to market.

Sony's rule is clear. That clarity allows those who develop new products that are capable of

substantial noninfringing uses to know, ex ante, that distribution of their product will not yield massive monetary liability. At the same time, it helps deter them from distributing products that have no other real function than -- or that are specifically intended for -- copyright infringement, deterrence that the

likelihood that such uses will come to pass, and that fact anchors Sony in practical reality. Cf. Aimster, supra, at 651. Sony's rule is mindful of the limitations facing judges where matters of technology are concerned. Judges have no specialized technical ability to answer questions about present or future technological

feasibilility or commercial viability where technology professionals, engineers, and venture capitalists themselves may radically disagree and where

answers may differ depending upon whether one focuses upon the time of product development or the time of distribution. Consider, for example, the question whether devices can be added to Grokster's software that will filter out infringing files. MGM tells us this is easy enough to do, as do several amici

that produce and sell the filtering technology. See, e.g., Brief for Motion Picture Studio Petitioners 11; Brief for Audible Magic Corp. et al. as Amicus Curiae 3-10. Grokster says it is not at all easy to do,

technologies). Moreover, Sony has been the law for some time. And that fact imposes a serious burden upon copyright holders like MGM to show a need for change in the current rules of the game, including a

and not an efficient solution in any event, and several apparently disinterested computer science professors agree. See Brief for Respondents 31; Brief for

more strict interpretation of the test. See, e.g., Brief for Motion Picture Studio Petitioners 31 (Sony should not protect products when the "primary or principal"

Computer Science Professors as Amicus Curiae 6-10, 14-18. Which account should a judge credit? Sony says that the judge will not necessarily have to decide.

use is infringing). In any event, the evidence now available does

not, in my view, make out a sufficiently strong case

for change. To say this is not to doubt the basic need to protect copyrighted material from infringement.

Given the nature of the Sony rule, it is not surprising that in the last 20 years, there have been relatively few contributory infringement suits --

The Constitution itself stresses the vital role that

copyright plays in advancing the "useful Arts." Art. I,

based on a product distribution theory -- brought

§ 8, cl. 8. No one disputes that "reward to the author or artist serves to induce release to the public of the products of his creative genius." United States v.

against technology providers (a small handful of federal appellate court cases and perhaps fewer than two dozen District Court cases in the last 20 years). I

Paramount Pictures, Inc., 334 U.S. 131, 158, 92 L.

have found nothing in the briefs or the record that shows that Sony has failed to achieve its innovationprotecting objective.

Ed. 1260, 68 S. Ct. 915 (1948). And deliberate

unlawful copying is no less an unlawful taking of property than garden-variety theft. See, e.g., /8 U.S.C. § 2319 (criminal copyright infringement); ¢ 1961(1)(B) (copyright infringement can be a predicate act under the Racketeer Influenced and Corrupt Organizations Act); § 1956(c)(7)(D) (money

B The second, more difficult, question is whether a modified Sony rule (or a strict interpretation) would significantly weaken the law's ability to protect new technology. JUSTICE GINSBURG's approach would require defendants to produce considerably more concrete evidence -- more than was presented here -to earn Sony's shelter. That heavier evidentiary

laundering includes the receipt of proceeds from copyright infringement). But these highly general principles cannot by themselves tell us how to balance the interests at issue in Sony or whether Sony's standard needs modification. And at certain key points, information is lacking.

demand, and especially the more dramatic (case-bycase balancing) modifications that MGM and the Government seek, would, I believe, undercut the protection that Sony now offers. ***

Will an unmodified Sony lead to a significant diminution in the amount or quality of creative work produced? Since copyright's basic objective is creation and its revenue objectives but a means to

Cc

that end, this is the underlying copyright question.

The third question -- whether a positive copyright impact would outweigh any technologyrelated loss -- I find the most difficult of the three. I do not doubt that a more intrusive Sony test would generally provide greater revenue security for copyright holders. But it is harder to conclude that the gains on the copyright swings would exceed the losses on the technology roundabouts.

See Twentieth Century Music Corp. v. Aiken, 422

U.S. 151, 156, 45 L. Ed. 2d 84, 95 S. Ct. 2040 (1975) ("Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the

cause of promoting broad public availability of literature, music, and the other arts"). And its answer is far from clear. More importantly, copyright holders at least potentially have other tools available to reduce piracy and to abate whatever threat it poses to creative production. As today's opinion makes clear, a copyright holder may proceed against a technology

For one thing, the law disfavors equating the two different kinds of gain and loss; rather, it leans in favor of protecting technology. As Sony itself makes clear, the producer of a technology which permits unlawful copying does not himself engage in unlawful copying -- a fact that makes the attachment

provider where a provable specific intent to infringe (of the kind the Court describes) is present. Ante, at 24 (opinion of the Court). Services like Grokster may

of copyright liability to the creation, production, or distribution of the technology an exceptional thing. See 464 U.S., at 431, 78 L. Ed. 2d 574, 1048S. Ct. 774

well be liable under an inducement theory.

(courts "must be circumspect" in construing the copyright laws to preclude distribution of new

In addition, a copyright holder has always had the legal authority to bring a traditional infringement

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For these reasons, | disagree with JUSTICE

suit against one who wrongfully copies. Indeed, since September 2003, the Recording Industry Association of America (RIAA) has filed "thousands of suits against people for sharing copyrighted material." Walker, New Movement Hits Universities: Get Legal Music, Washington Post, Mar. 17, 2005, p. El. ***

GINSBURG, but I agree with the Court and join its opinion.

Further, copyright holders may develop new

technological devices that will help curb unlawful infringement. Some new technology, called "digital ‘watermarking" and "digital fingerprinting," can encode within the file information about the author and the copyright scope and date, which "fingerprints" can help to expose infringers. *** At the same time, advances in technology have discouraged unlawful copying by making lawful copying (e.g., downloading music with the copyright

holder's permission) cheaper and easier to achieve. Several services now sell music for less than $ | per song. (Walmart.com, for example, charges $ 0.88 each). Consequently, many consumers initially attracted to the convenience and flexibility of

services like Grokster are now migrating to lawful paid services (services with copying permission) where they can enjoy at little cost even greater convenience and flexibility without engaging in unlawful swapping. See Wu, When Code Isn't Law,

89 Va. L. Rev. 679, 731-735 (2003) *** Finally, as Sony recognized, the legislative option remains available. Courts are less well suited

than Congress to the task of "accommodating fully the varied permutations of competing interests that are inevitably implicated by such new technology." Sony, 464 U.S., at 431, 78 L. Ed. 2d 574, 1048S. Ct. 774; see, e.g., Audio Home Recording Act of 1992, 106 Stat. 4237 (adding 17 U.S.C., ch. 10); Protecting

Innovation and Art While Preventing Piracy: Hearing Before the Senate Comm. on the Judiciary, 108th Cong., 2d Sess. (July 22, 2004). I do not know whether these developments and similar alternatives will prove sufficient, but | am

reasonably certain that, given their existence, a strong demonstrated need for modifying Sony (or for interpreting Sony's standard more strictly) has not yet been shown. That fact, along with the added risks that modification (or strict interpretation) would impose

upon technological innovation, leads me to the conclusion that we should maintain Sony, reading its standard as I have read it. As so read, it requires affirmance of the Ninth Circuit's determination of the relevant aspects of the Sony question. eK

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Copyright is only one of a number of forms of intellectual property protection.

Patents

and trade secrets are alternative forms of protection, and trademarks serve to identify a product,

company or service. In addition, owners of intellectual property have more recently turned to an alternative method of protection: licensing. Technically, licensing is simply a form of legal contract; it was never specifically designed as a method of intellectual property protection. However, it has become increasingly popular, particularly with the onset of clickwrap licensing. The Uniform Computer Information Transactions Act (UCITA) has been enacted in two states: Maryland and Virginia. Among other things, this law makes so-called “clickwrap” licenses valid and enforceable, without a large degree of scrutiny over what goes in them. The law attempts to manage all aspects of computer and information transactions, and is indeed a dauntingly large piece of legislation. It covers a large variety of situations, and thus is extremely significant in the states where it governs. Furthermore, it permits interested parties from other states to use its provisions even if their transactions do not involve Maryland or Virginia. For that reason, the full table of contents and selected excerpted provisions are included here.

Code of Virginia Title 59.1 - TRADE AND COMMERCE. Chapter 43 - Uniform Computer Information Transactions Act

59.1-501.1 Title 59.1-501.2 Definitions 59.1-501.3 Scope; exclusions 59.1-501.4 Description unavailable 59.1-501.4:1 Consumer protection law governs 59.1-501.5 Relation to federal law; fundamental public policy...

59.1-501.6 Rule of construction 59.1-501.7 Legal recognition of electronic record and authent... 59.1-501.8 Proof and effect of authentication 59.1-501.9 Choice of law 59.1-501.10 Contractual choice of forum 59.1-501.11 Unconscionable contract or term 59.1-501.12 Manifesting assent 59.1-501.13 Description unavailable

59.1-501.13:1 Opportunity to review 59.1-501.14 Description unavailable 59.1-501.14:1 Pretransaction disclosures in Internet-type transa... 59.1-501.15 Variation by agreement; commercial practice 59.1-501.16 Supplemental principles; good faith; commercial pr... 59.1-501.17 Decision for court; legal consequences; reasonable...

59.1-501.18 through 59.1-502 59.1-502.1 59.1-502.2 59.1-502.3 59.1-502.4

Formal requirements Formation in general Offer and acceptance in general Acceptance with varying terms

59.1-502.5 Conditional offer or acceptance 59.1-502.6 Offer and acceptance; electronic agents 59.1-502.7 Formation; releases of informational rights

59.1-502.8 Adopting terms of records 59.1-502.9 Mass-market license 59.1-502.10 Terms of contract formed by conduct

$9.1-502.11 Description unavailable 59.1-502.12 Efficacy and commercial reasonableness of attribut... 59.1-502.13 Determining attribution 59.1-502.14 Electronic error; consumer defenses 59.1-502.15 Electronic message; when effective; effect of ackn...

59.1-502.16 Idea or information submission 59.1-502.17 through 59.1-503

59.1-503.1 Parol or extrinsic evidence 59.1-503.2 59.1-503.3 59.1-503.4 59.1-503.5

Practical construction Modification and rescission Continuing contractual terms Terms to be specified

59.1-503.6 Performance under open terms 59.1-503.7 Interpretation and requirements for grant 59.1-503.8 Description unavailable 59.1-503.9 Agreement for performance to party’s satisfaction... 59.1-503.10 Licenses to nonprofit libraries, archives or educa...

59.1-503.11 through 59. 1-504 59.1-504.1 Warranty and obligations concerning noninterferenc...

59.1-504.2 Express warranty 59.1-504.3 Implied warranty; merchantability of computer prog...

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59.1-504.4 59.1-504.5 59.1-504.6 59.1-504.7

Implied warranty; informational content Implied warranty; licensee’s purpose; system integ... Disclaimer or modification of warranty Modification of computer program

59.1-504.8 Cumulation and conflict of warranties 59.1-504.9 Third-party beneficiaries of warranty 59.1-504.10 No implied warranties for free software

59.1-504.11 through 59.1-505 59.1-505.1 Ownership of informational rights

59.1-505.2 Title to copy 59.1-505.3 Transfer of contractual interest

59.1-505.4 Effect of transfer of contractual interest 59.1-505.5 Performance by delegate; subcontract 59.1-505.6 Transfer by licensee 59.1-505.7 Financing if financier does not become licensee

59.1-505.8 Finance licenses 59.1-505.9 Financing arrangements; obligations irrevocable

59.1-505.10 Financing arrangements; remedies or enforcement 59.1-505.11 Financing arrangements; effect on licensor’s right...

59.1-505.12 through 59.1-506 59.1-506.1 Performance of contract in general 59.1-506.2 Licensor’s obligations to enable use

59.1-506.3 59.1-506.4 59.1-506.5 59.1-506.6

Submissions of information to satisfaction of part... Immediately completed performance Electronic regulation of performance Copy; delivery; tender of delivery

59.1-506.7 Copy; performance related to delivery; payment 59.1-506.8 Copy; right to inspect; payment before inspection... 59.1-506.9 Copy; when acceptance occurs

59.1-506.10 Copy; effect of acceptance; burden of establishing... 59.1-506.11 59.1-506.12 59.1-506.13 59.1-506.14 59.1-506.15 59.1-506.16 59.1-506.17

Access contracts Correction and support contracts Contracts involving publishers, dealers, and end u... Risk of loss of copy Excuse by failure of presupposed conditions Termination; survival of obligations Notice of termination

59.1-506.18 Termination; enforcement

59.1-506.19 through 59.1-507 59.1-507.1

Breach of contract; material breach

59.1-507.2 Waiver of remedy for breach of contract 59.1-507.3 Cure of breach of contract 59.1-507.4 Copy; refusal of defective tender 59.1-507.5 Copy; contract with previous vested grant of right... 59.1-507.6 Copy; duties upon rightful refusal 59.1-507.7 Copy; revocation of acceptance 59.1-507.8 Adequate assurance of performance 59.1-507.9 Anticipatory repudiation 59.1-507.10 Retraction of anticipatory repudiation

59.1-507.11 through 59.1-508 59.1-508.1 Remedies in general 59.1-508.2 Cancellation 59.1-508.3 Contractual modification of remedy 59.1-508.4 Liquidation of damages

59.1-508.5 Limitation of actions 59.1-508.6 Remedies for fraud

59.1-508.7 Measurement of damages in general 59.1-508.8 Licensor’s damages 59.1-508.9 Licensee’s damages 59.1-508.10 Recoupment

59.1-508.11 Specific performance 59.1-508.12 Completing performance 59.1-508.13 Continuing use 59.1-508.14 Discontinuing access 59.1-508.15 Right to possession and to prevent use

59.1-508.16 Limitations on electronic self-help 59.1-508.17 through 59.1-509 59.1-509.1 Severability 59.1-509.2 Previous rights and transactions Va. Code Ann. § 59.1-501.5. Relation to federal law; fundamental public policy; transactions subject to other state law.

(a) A provision of this chapter that is preempted by federal law is unenforceable to the extent of the preemption. (b) If a term of a contract violates a fundamental public policy, the court may refuse to enforce the contract, enforce the remainder of the contract without the impermissible term, or limit the application of the impermissible term so as to avoid a result contrary to public policy, in each case to the extent that the interest in enforcement is clearly outweighed by a public policy against enforcement of the term.

(c) In a transaction in which a copy of computer information in its final form is made generally available, a term of a contract is unenforceable to the extent that the term prohibits an end-user licensee from engaging in otherwise lawful public discussion relating to the computer information. However, this subsection does not preclude enforcement

of a term

that establishes

or enforces

rights under trade

secret, trademark,

defamation,

commercial

disparagement, or other laws. This subsection does not alter the applicability of subsection (b) to any term not

rendered unenforceable under this subsection. (d) This chapter does not apply to an intellectual property notice that is based solely on intellectual property rights and is not part of a contract. The effect of such a notice is determined by law other than this chapter. (e) If a law of the Commonwealth in effect on the effective date of this chapter applies to a transaction governed by this chapter, the following rules apply: (1) A requirement that a term, waiver, notice, or disclaimer be in a writing is satisfied by a record. (2) A requirement that a record, writing, or term be signed is satisfied by an authentication. (3) A requirement that a term be conspicuous, or the like, is satisfied by a term that is conspicuous under

this chapter. (4) A requirement of consent or agreement to a term is satisfied by a manifestation of assent to the term in accordance with this chapter. Va. Code agents.

Ann.

§ 59.1-501.7.

Legal

recognition

of electronic

record

and

authentication;

use

of electronic

(a) A record or authentication may not be denied legal effect or enforceability solely because it is in electronic form. (b) This chapter does not require that a record or authentication be generated, stored, sent, received, or otherwise processed by electronic means or in electronic form. (c) In any transaction, a person may establish requirements regarding the type of authentication or record acceptable to that person.

(d) A person using an electronic agent that he has selected for making an authentication, performance, or agreement, including manifestation of assent, is bound by the operations of the electronic agent, even if no individual was aware of or reviewed the agent’s operations or the results of the operations.

Va. Code Ann. § 59.1-501.8. Proof and effect of authentication. (a) Authentication may be proven in any manner, including a showing that a party made use of information or access that could have been available only if it engaged in conduct or operations that authenticated the record or term.

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(b) Compliance with a commercially reasonable attribution procedure agreed to or adopted by the parties or

established by law for authenticating a record authenticates the record as a matter of law. Va. Code Ann. § 59.1-501.9. Choice of law. (a) The parties in their agreement may choose the applicable law. However, the choice is not enforceable in a consumer contract to the extent it would vary a statute, administrative rule, or regulation that may not be varied by agreement under the law of Virginia. (b) In the absence of an enforceable agreement on choice of law, the contract is governed by the law of Virginia. Va. Code Ann. § 59.1-501.10. Contractual choice of forum. (a) The parties in their agreement may choose an exclusive judicial forum unless the choice is unreasonable or unjust. (b) A judicial forum specified in an agreement is not exclusive unless the agreement expressly so provides and, in a mass-market transaction, expressly and conspicuously so provides. Va. Code Ann. § 59.1-501.11. Unconscionable contract or term. (a) If a court as a matter of law finds a contract or a term thereof to have been unconscionable at the time it was made, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable

term, or limit the application of the unconscionable term so as to avoid an unconscionable result. (b) If a court as a matter of law finds a contract or a term thereof has been induced by unconscionable conduct

or that unconscionable conduct has occurred in the collection of a claim arising from the contract, the court may grant appropriate relief. (c) If it is claimed or appears to the court that a contract or term thereof may be unconscionable, the parties must be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination. Va. Code Ann. § 59.1-501.12. Manifesting assent.

(a) A person manifests assent to a record or term if the person, acting with knowledge of, or after having an opportunity to review the record or term or a copy of it: (1) authenticates the record or term with intent to adopt or accept it; or (2) intentionally engages in conduct or makes statements with reason to know that the other party or its electronic agent may infer from the conduct or statement that the person assents to the record or term. (b) An electronic agent manifests assent to a record or term if, after having an opportunity to review it, the electronic agent: (1) authenticates the record or term; or (2) engages in operations that in the circumstances indicate acceptance of the record or term. (c) If this chapter or other law requires assent to a specific term, a manifestation of assent must relate specifically to the term. (d) Conduct or operations manifesting assent may be proved in any manner, including showing that a person or an electronic agent obtained or used the information or informational rights and that a procedure existed by which a person or an electronic agent must have engaged in the conduct or operations in order to do so. Proof of compliance with subsection (a) (2) is sufficient if there is conduct that assents and subsequent conduct that reaffirms assent by electronic means. (e) The effect of provisions of this section may be modified by an agreement setting out standards applicable to future transactions between the parties. (f) Providers of online services, network access, and telecommunications services, or the operators of facilities

thereof, do not manifest assent to a contractual relationship simply by their provision of these services to other parties, including but not limited to transmission, routing, or providing connections, linking, caching, hosting,

information location tools, or storage of materials at the request or initiation of a person other than the service provider.

Va. Code Ann. § 59.1-501.13. Repealed by Acts 2004, c. 794.

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Va. Code Ann. § 59.1-501.13:1. Opportunity to review. (a) A person has an opportunity to review a record or term only if it is made available in a manner that ought to call it to the attention of a reasonable person and permit review. (b) An electronic agent has an opportunity to review a record or term only if it is made available in a manner

that would enable a reasonably configured electronic agent to react to the record or term. (c) If a record or term is available for review only after a person becomes

obligated to pay or begins its

performance, the person has an opportunity to review only if he has a right to a return if he rejects the record. However, a right to a return is not required if: (1) the record proposes a modification of contract or provides particulars of performance under § 59.1503.5; or

(2) the primary performance is other than delivery or acceptance of a copy, the agreement is not a massmarket transaction, and the parties at the time of contracting had reason to know that a record or term would be presented after performance, use, or access to the information began. (d) The right to a return under this section may arise by law or by agreement.

(e) The effect of this section may be modified by an agreement setting out standards applicable to future transactions between the parties. Va. Code Ann. § 59.1-501.14. Repealed by Acts 2004, c. 794. Va. Code Ann. § 59.1-501.14:1. Pretransaction disclosures in Internet-type transactions.

This section applies to a licensor that makes its computer information available to a licensee by electronic means from its Internet or similar electronic site. In such a case, the licensor affords an opportunity to review the terms of a standard form license, which opportunity satisfies § 59.1-501.13:1 with respect to a licensee that acquires the information from that site, if the licensor: (1) makes the standard terms of the license readily available for review by the licensee before the information is delivered or the licensee becomes obligated to pay, whichever occurs first, by: (A) displaying prominently and in close proximity to a description of the computer information, or

to instructions or steps for acquiring it, the standard terms or a reference to an electronic location from which they can be readily obtained; or (B) disclosing the availability of the standard terms in a prominent place on the site from which the computer information is offered and promptly furnishing a copy of the standard terms on request before the transfer of the computer information; and (2) does not take affirmative acts to prevent printing or storage of the standard terms for archival or review purposes by the licensee.

Failure to provide an opportunity to review under this section does not preclude a person from providing a person an opportunity to review by other means pursuant to § 59.1-501.13:1 or law other than this chapter. Va. Code Ann. § 59.1-501.15. Variation by agreement; commercial practice. (a) The effect of any provision of this chapter, including an allocation of risk or imposition of a burden, may be varied by agreement of the parties. (b) The following rules are not variable by agreement:

(1) Obligations of good faith, diligence, reasonableness, and care imposed by this chapter may not be disclaimed by agreement, but the parties by agreement may determine the standards by which the of the obligation is to be measured if the standards are not manifestly unreasonable; (2) The limitations on enforceability imposed by unconscionability under § 59.1-501.11 and public policy under § 59.1-501.5 (b) may not be varied by agreement; and (3) Limitations on enforceability of, or agreement to, a contract, term, or right expressly sections listed in the following subsections may not be varied by agreement except to the extent each section: (A) the limitations on agreed choice of law in § 59.1-501.9 (a); (B) the limitations on agreed choice of forum in § 59.1-501.10;

performance fundamental stated in the provided in

(C) the requirements for manifesting assent in § 59.1-501.12 and opportunity for review in § 59.1501.13:1; (D) the limitations on enforceability in § 59.1-502.1; (E) the limitations on a mass-market license in § 59.1-502.9;

126

(F) the consumer defense arising from an electronic error in § 59.1-502.14; (G) the requirements for an enforceable term in §§ 59.1-503.3 (b), 59.1-503.7 (g), 59.1-504.6 (b) and (c), and 59.1-508.4 (a); (H) the requirements of § 59.1-503.4 (b) (2); (I) the limitations on a financier in §§ 59.1-505.7 through 59.1-505.11; (J) the restrictions on altering the period of limitations in § 59.1-508.5 (a) and (b); and (K) the limitations on self-help repossession in §§ 59.1-508.15 (b) and 59.1-508.16.

Va. Code Ann. § 59.1-502.2. Formation in general. (a) A contract may be formed in any manner sufficient to show agreement, including offer and acceptance or conduct of both parties or operations of electronic agents which recognize the existence of a contract. (b) If the parties so intend, an agreement sufficient to constitute a contract may be found even if the time of its making is undetermined, one or more terms are left open or to be agreed upon, the records of the parties do not otherwise establish a contract, or one party reserves the right to modify terms. (c) Even if one or more terms are left open or to be agreed upon, a contract does not fail for indefiniteness if the

parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. (d) In the absence of conduct or performance by both parties to the contrary, a contract is not formed if there is a material disagreement about a material term, including a term concerning scope. (e) If a term is to be adopted by later agreement and the parties intend not to be bound unless the term is so adopted, a contract is not formed if the parties do not agree to the term. In that case, each party shall deliver to the other party, or with the consent of the other party destroy, all copies of information, access materials, and other materials received or made, and each party is entitled to a return with respect to any contract fee paid for which

performance has not been received, has not been accepted, or has been redelivered without any benefit being retained. The parties remain bound by any contractual use term only with respect to information or copies received

or made from copies received pursuant to the agreement, but the contractual use term does not apply to information or copies properly received or obtained from another source. Va. Code Ann. § 59.1-502.3. Offer and acceptance in general.

Unless otherwise unambiguously indicated by the language or the circumstances: (1) An offer to make a contract invites acceptance in any manner and by any medium reasonable under the circumstances. (2) An order or other offer to acquire a copy for prompt or current delivery invites acceptance by either a

prompt promise to ship or a prompt or current shipment of a conforming or nonconforming copy. However, a shipment of a nonconforming copy is not an acceptance if the licensor seasonably notifies the licensee that the

shipment is offered only as an accommodation to the licensee. (3) If the beginning of a requested performance is a reasonable mode of acceptance, an offeror that is not notified of acceptance or performance within a reasonable time may treat the offer as having lapsed before

acceptance. (4) If an offer in an electronic message evokes an electronic message accepting the offer, a contract is formed: (A) when an electronic acceptance is received; or (B) if the response consists of beginning performance, full performance, or giving access to information, when the performance is received or the access is enabled and necessary access materials are received. Va. Code Ann. § 59.1-502.6. Offer and acceptance; electronic agents. (a) A contract may be formed by the interaction of electronic agents. If the interaction results in the electronic

agents’ engaging in operations that under the circumstances indicate acceptance of an offer, a contract is formed, but a court may grant appropriate relief if the operations resulted from fraud, electronic mistake, or the like. (b) A

contract

may

be formed

by the interaction

of an electronic

agent and

an individual

acting on the

individual’s own behalf or for another person. A contract is formed if the individual takes an action or makes a statement that the individual can refuse to take or say and that the individual has reason to know will:

(1) cause the electronic agent to perform, provide benefits, or allow the use or access that is the subject of the contract, or send instructions to do so; or

(2) indicate acceptance, regardless of other expressions or actions by the individual to which the individual has reason to know the electronic agent cannot react. (c) The terms of a contract formed under subsection (b) are determined under § 59.1-502.8 or § 59.1-502.9 but do not include a term provided by the individual if the individual had reason to know that the electronic agent could not react to the term.

These provisions (which are only a small part of UCITA) provide an idea of the overall

perspective of UCITA and some of the ways it handles complex transactional issues.

VI. A.

Computer Crimes

The Virginia Computer Crimes Act.

Va. Code Ann. § 18.2-152.1. Short title. This article shall be known and may be cited as the “Virginia Computer Crimes Act.” Va. Code Ann. § 18.2-152.2. Definitions.

For purposes of this article: “Computer” means an electronic, magnetic, optical, hydraulic or organic device or group of devices which, pursuant to a computer program, to human instruction, or to permanent instructions contained in the device or group of devices, can automatically perform computer operations with or on computer data and can communicate the

results to another computer or to a person. The term “computer” includes any connected or directly related device, equipment, or facility which enables the computer to store, retrieve or communicate computer programs, computer data or the results of computer operations to or from a person, another computer or another device. “Computer data” means any representation of information, knowledge, facts, concepts, or instructions which is being prepared or has been prepared and is intended to be processed, is being processed, or has been processed in a

computer or computer network. “Computer data” may be in any form, whether readable only by a computer or only by a human or by either, including, but not limited to, computer printouts, magnetic storage media, punched cards,

or stored internally in the memory of the computer. “Computer network” means two or more computers connected by a network. “Computer operation” means arithmetic, logical, monitoring, storage or retrieval

functions

and

any

combination thereof, and includes, but is not limited to, communication with, storage of data to, or retrieval of data

from any device or human hand manipulation of electronic or magnetic impulses. A “computer operation” for a particular computer may also be any function for which that computer was generally designed. “Computer program” means an ordered set of data representing coded instructions or statements that, when executed by a computer, causes the computer to perform one or more computer operations. “Computer services” means computer time or services, including data processing, services, Internet services, electronic mail services, electronic message services, or information or data stored in connection therewith.

“Computer software” means a set of computer programs, procedures and associated documentation concerned with computer data or with the operation of a computer, computer program, or computer network. “Electronic mail service provider’ (EMSP) means any person who (i) is an intermediary in sending or receiving electronic mail and (ii) provides to end-users of electronic mail services the ability to send or receive

electronic mail. “Financial instrument” includes, but is not limited to, any check, draft, warrant, money order, note, certificate of deposit, letter of credit, bill of exchange, credit or debit card, transaction authorization mechanism, marketable security, or any computerized representation thereof.

“Network” means any combination of digital transmission facilities and packet switches, routers, and similar equipment interconnected to enable the exchange of computer data. “Owner” means an owner or lessee of a computer or a computer network or an owner, lessee, or licensce of

computer data, computer programs, or computer software. “Person” shall include any individual, partnership, association, corporation or joint venture.

“Property” shall include: 1. Real property; 2. Computers and computer networks; 3.

Financial

instruments, computer data, computer programs,

computer software and all other personal

property regardless of whether they are: a. Tangible or intangible; b. In a format readable by humans or by a computer;

c.

In transit between computers or within a computer network or between any devices which

comprise a computer; or d. Located on any paper or in any device on which it is stored by a computer or by a human; and 4. Computer services.

129

A person “uses” a computer or computer network when he attempts to cause or causes: 1. 2. data or 3.

A computer or computer network The withholding or denial of the computer software to another user; A person to put false information

to perform or to stop performing computer operations; use of a computer, computer network, computer program, computer or into a computer.

A person is “without authority’ when he has no right or permission of the owner to use a computer or computer network or he uses a computer or computer network in a manner exceeding such right or permission. Va. Code Ann. § 18.2-152.3. Computer fraud. Any person who uses a computer or computer network without authority and with the intent to: 1. Obtain property or services by false pretenses; 2. Embezzle or commit larceny; or 3. Convert the property of another

is guilty of the crime of computer fraud. If the value of the property or services obtained is $200 or more, the crime of computer fraud shall be punishable as a Class 5 felony. Where the value of the property or services obtained is less than $200, the crime of

computer fraud shall be punishable as a Class 1 misdemeanor. Va. Code Ann. § 18.2-152.3:1. Transmission of unsolicited bulk electronic mail (spam); penalty. A. Any person who: 1. Uses a computer or computer network with the intent to falsify or forge electronic mail transmission information or other routing information in any manner in connection with the transmission of unsolicited

bulk electronic mail through or into the computer network of an electronic mail service provider or its subscribers; or

2. Knowingly sells, gives, or otherwise distributes or possesses with the intent to sell, give, or distribute software that (i) is primarily designed or produced for the purpose of facilitating or enabling the falsification of electronic mail transmission information or other.routing information; (ii) has only limited commercially significant purpose or use other than to facilitate or enable the falsification of electronic

mail transmission information or other routing information; or (iii) is marketed by that person acting alone or with another for use in facilitating or enabling the falsification of electronic mail transmission information or other routing information is guilty of a Class 1 misdemeanor. B. A person is guilty of a Class 6 felony if he commits a violation of subsection A and:

1. The volume of UBE transmitted exceeded 10,000 attempted recipients in any 24-hour period, 100,000 attempted recipients in any 30-day time period, or one million attempted recipients in any one-year time period; or 2. The revenue generated from a specific UBE

transmission exceeded $1,000 or the total revenue generated

from all UBE transmitted to any EMSP exceeded $50,000. C. A person is guilty of a Class 6 felony if he knowingly hires, employs, uses, or permits any minor to assist in the transmission of UBE in violation of subdivision B 1 or subdivision B 2. Va. Code Ann. § 18.2-152.4. Computer trespass; penalty. A. It shall be unlawful for any person to use a computer or computer network without authority and with the intent to: 1. Temporarily or permanently remove, halt, or otherwise disable any computer data, computer programs, or computer software from a computer or computer network; 2. Cause a computer to malfunction, regardless of how long the malfunction persists; 3. Alter or erase any computer data, computer programs, or computer software; 4. Effect the creation or alteration of a financial instrument or of an electronic transfer of funds; 5. Cause physical injury to the property of another; or 6. Make or cause to be made an unauthorized copy, in any form, including, but not limited to, any printed or electronic form of computer data, computer programs, or computer software residing in, communicated by, or produced by a computer or computer network.

B. Any person who violates this section shal! be guilty of computer trespass, which offense shall be punishable as a Class 1 misdemeanor. If there is damage to the property of another valued at $2,500 or more caused by such

person’s malicious act in violation of this section, the offense shall be punishable as a Class 6 felony.

30

C. Nothing in this section shall be construed to interfere with or prohibit terms or conditions in a contract or license related to computers, computer data, computer networks, computer operations, computer programs, computer services, or computer software or to create any liability by reason of terms or conditions adopted by, or technical measures implemented by, a Virginia-based electronic mail service provider to prevent the transmission of unsolicited electronic mail in violation of this article. Nothing in this section shall be construed to prohibit the monitoring of computer usage of, the otherwise lawful copying of data of, or the denial of computer or Internet access to a minor by a parent or legal guardian of the minor. Va. Code Ann. § 18.2-152.5. Computer invasion of privacy. A. A person is guilty of the crime of computer invasion of privacy when he uses a computer or computer network and intentionally examines without authority any employment, salary, credit or any other financial or personal information relating to any other person. “Examination” under this section requires the offender to review the information relating to any other person after the time at which the offender knows or should know that he is without authority to view the information displayed. B. The crime of computer invasion of privacy shall be punishable as a Class 1 misdemeanor. Va. Code Ann. § 18.2-152.6. Theft of computer services. Any person who willfully uses a computer or computer network, with intent to obtain computer

services

without authority, shall be guilty of the crime of theft of computer services, which shall be punishable as a Class | misdemeanor. If the theft of computer services is valued at $2,500 or more, he is guilty of a Class 6 felony. Va. Code Ann. § 18.2-152.7. Personal trespass by computer.

A. A person is guilty of the crime of personal trespass by computer when he uses a computer or computer network without authority and with the intent to cause physical injury to an individual. B. If committed maliciously, the crime of personal trespass by computer shall be punishable as a Class 3

felony. If such act is done unlawfully but not maliciously, the crime of personal trespass by computer shall be punishable as a Class 6 felony. Va. Code Ann. § 18.2-152.7:1. Harassment by computer; penalty. If any person, with the intent to coerce, intimidate, or harass any person, shall use a computer or computer network to communicate obscene, vulgar, profane, lewd, lascivious, or indecent language, or make any suggestion or proposal of an obscene nature, or threaten any illegal or immoral act, he shall be guilty of a Class 1 misdemeanor. Va. Code Ann. § 18.2-152.8. Property capable of embezzlement. For purposes of § 18.2-111, personal property subject to embezzlement shall include: 1. Computers and computer networks; 2. Financial instruments, computer data, computer programs, computer software and all other personal property regardless of whether they are: a. Tangible or intangible; b. In a format readable by humans or by a computer; c. In transit between computers or within a computer network or between any devices which comprise a computer; or d. Located on any paper or in any device on which it is stored by a computer or by a human; and 3. Computer services.

Va. Code Ann. § 18.2-152.9. Limitation of prosecution. Notwithstanding the provisions of § 19.2-8, prosecution of a crime which is punishable as a misdemeanor pursuant to this article must be commenced before the earlier of (i) five years after the commission of the last act in the course of conduct constituting a violation of this article or (ii) one year after the existence of the illegal act and

the identity of the offender are discovered by the Commonwealth, by the owner, or by anyone else who is damaged by such violation. Va. Code Ann. § 18.2-152.10. Venue for prosecution. For the purpose of venue under this article, any violation of this article shall be considered to have been committed in any county or city: 1. In which any act was performed in furtherance of any course of conduct which violated this article;

131

2. In which the owner has his principal place of business in the Commonwealth; 3. In which any offender had control or possession of any proceeds of the violation or of any books, records, documents, property, financial instrument, computer software, computer program, computer data, or other material or objects which were used in furtherance of the violation;

4. From which, to which, or through which any access to a computer or computer network was made whether by wires, electromagnetic waves, microwaves, or any other means of communication;

5. In which the offender resides; or 6. In which any computer which is an object or an instrument of the violation is located at the time of the alleged offense. Va. Code Ann. § 18.2-152.11. Article not exclusive.

The provisions of this article shall not be construed to preclude the applicability of any other provision of the criminal law of this Commonwealth which presently applies or may in the future apply to any transaction or course of conduct which violates this article, unless such provision is clearly inconsistent with the terms of this article. Va. Code Ann. § 18.2-152.12. Civil relief; damages. A. Any person whose property or person is injured by reason of a violation of any provision of this article may sue therefor and recover for any damages sustained and the costs of suit. Without limiting the generality of the term,

“damages” shall include loss of profits. B. If the injury under this article arises from the transmission

of unsolicited

bulk electronic

mail

in

contravention of the authority granted by or in violation of the policies set by the electronic mail service provider where the defendant has knowledge of the authority or policies of the EMSP or where the authority or policies of the EMSP are available on the electronic mail service provider’s website, the injured person, other than an electronic mail service provider, may also recover attorneys’ fees and costs, and may elect, in lieu of actual damages, to recover the lesser of $10 for each and every unsolicited bulk electronic mail message transmitted in violation of this article, or $25,000 per day. The injured person shall not have a cause of action against the electronic mail service

provider that merely transmits the unsolicited bulk electronic mail over its computer network. Transmission of electronic mail from an organization to its members shall not be deemed to be unsolicited bulk electronic mail. C. If the injury under this article arises from the transmission of unsolicited bulk electronic mail in contravention of the authority granted by or in violation of the policies set by the electronic mail service provider where the defendant has knowledge of the authority or policies of the EMSP or where the authority or policies of the EMSP are available on the electronic mail service provider’s website, an injured electronic mail service provider

may also recover attorneys’ fees and costs, and may elect, in lieu of actual damages, to recover $1 for each and every intended recipient of an unsolicited bulk electronic mail message where the intended recipient is an end user of the EMSP or $25,000 for each day an attempt is made to transmit an unsolicited bulk electronic mail message to an end user of the EMSP. In calculating the statutory damages under this provision, the court may adjust the amount

awarded as necessary, but in doing so shall take into account the number of complaints to the EMSP generated by the defendant’s messages, the defendant’s degree of culpability, the defendant’s prior history of such conduct, and the extent of economic gain resulting from the conduct. Transmission of electronic mail from an organization to its members shall not be deemed to be unsolicited bulk electronic mail. D. At the request of any party to an action brought pursuant to this section, the court may, in its discretion, conduct all legal proceedings in such a way as to protect the secrecy and security of the computer, computer network, computer data, computer program and computer software involved in order to prevent possible recurrence of the same or a similar act by another person and to protect any trade secrets of any party and in such a way as to protect the privacy of nonparties who complain about violations of this section. E. The provisions of this article shall not be construed to limit any person’s right to pursue any additional civil remedy otherwise allowed by law.

F. A civil action under this section must be commenced before expiration of the time period prescribed in § 8.01-40.1. In actions alleging injury arising from the transmission of unsolicited bulk electronic mail, personal jurisdiction may be exercised pursuant to § 8.01-328.1.

Va. Code Ann. § 18.2-152.13. Severability. If any provision or clause of this article or application thereof to any person or circumstances is held to be invalid, such invalidity shall not affect other provisions or applications of this article which can be given effect

without the invalid provision or application, and to this end the provisions of this article are declared to be severable.

132

Va. Code Ann. § 18.2-152.14. Computer as instrument of forgery. The creation, alteration, or deletion of any computer data contained in any computer or computer network, which if done on a tangible document or instrument would constitute forgery under Article | (§ 18.2-168 et seq.) of Chapter 6 of this Title, will also be deemed to be forgery. The absence of a tangible writing directly created or altered by the offender shall not be a defense to any crime set forth in Article | (§ 18.2-168 et seq.) of Chapter 6 of this Title if a creation, alteration, or deletion of computer data was involved in lieu of a tangible document or

instrument. Va. Code Ann. § 18.2-152.15. Encryption used in criminal activity.

Any person who willfully uses encryption to further any criminal activity shall be guilty of an offense which is separate and distinct from the predicate criminal activity and punishable as a Class 1 misdemeanor.

“Encryption”

means the enciphering

unintelligible data into intelligible form.

of intelligible data into unintelligible form

or the deciphering of

Present: Hassell, C.J., Koontz, Kinser, Lemons, Agee,’ and Goodwyn, JJ., and Lacy, S.J. JEREMY

v.

JAYNES

Record

No.

OPINION JUSTICE G.

062388

September COMMONWEALTH

OF

BY STEVEN

12,

AGEE

2008°

VIRGINIA

FROM THE COURT OF APPEALS Upon rehearing pursuant to April 28, 2008 and May

OF VIRGINIA orders dated 19, 2008

Jeremy Jaynes appeals from the judgment of the Court of Appeals which affirmed his convictions in the Circuit Court of Loudoun County for violations of Code § 18.2-152.3:1, the unsolicited bulk electronic mail (e-mail)

provision of the Virginia Computer Crimes Act, Code §§ 18.2-152.1 through —152.15. For the reasons set forth below, we will reverse the judgment of the Court of Appeals.

I. From several

mails Inc.

2003,

his

within (AOL)

a on

Jaynes

in

26, had

routers

each

sent

of

he

requested

intentionally

“ Justice

and

PROCEEDINGS

North

and

three

Carolina,

servers

to

Jaynes

send

subscribers

separate

of

occasions.

over

Online,

On

16,

July

transmission

information

onto

any

19,

19,104.

2003,

None

of

communication the

header

participated

in

he

the from

sent

the

24,172,

Jaynes.

hearing

and

and

with

AOL’s

recipients

information

e-

America

e-mail

July

used 10,000

unsolicited

sent

pieces

to

BELOW

of

On

falsified

Agee

MATERIAL

period

12,197

network.

2003,

AND

Raleigh,

24-hour

routing

proprietary

mails

home

computers,

falsified

July

BACKGROUND

and

of

on

the

e-

He sender

domain

decision

of

this case prior to his retirement from the Court on June 30, 2008. * The prior opinion rendered February 29, 2008, reported at 275 Va. 341, 657 S.E.2d 478 (2008), was withdrawn by the Court after a petition for rehearing was granted by Orders dated April 28, 2008 and May 19, 2008.

134

names

before

transmitting

the

However,

investigators

used

identify

Jaynes

sender

arrested

and

provides

in A. 1

as

the

charged

with

relevant

a

e-mails

to

the

recipients.°®

sophisticated of

the

violating

database

e-mails. 7

Code

§

search

Jaynes

to

was

18.2-152.3:1,

which

part:

Any person who: Uses a computer or computer network with the intent to falsify or forge electronic mail transmission information or other routing information in any manner in connection with the transmission of

unsolicited the

bulk

computer

provider Class

1

or

electronic

network

its

of

an

subscribers

mail

through

electronic

.

.

.

or

mail

is

into service

guilty

of

a

misdemeanor.

A person is guilty of a Class 6 felony if he commits a violation of subsection A and: The volume of UBE transmitted exceeded 10,000 attempted recipients in any 24-hour period, 100,000 attempted recipients in any 30-day time period, or

one

million

time

While a

cache

e-mail

also

AOL

of

executing compact

addresses

led

to

e-mail

account

the

attempted

recipients

in

any

one-year

period.

a

search

discs and

1.3

(CDs)

information

of

information for

Jaynes’

containing

billion

confiscation

address

of

millions

e-mail

storage

and of

other AOL

home,

police

over user

discs

176

million

names.

The

which

personal

discovered

search

contained

and

subscribers.

full

private The

AOL

° Simple Mail Transfer Protocol (SMTP) is what an e-mail server uses to transmit an e-mail message, and the SMTP requires verification of the sender’s IP address and domain. Evidence at trial demonstrated that Jaynes sent the e-mails with domain names which did not correspond to the domain names assigned to the sending IP addresses.

135

user and

information was

in

Jaynes’

demonstrated

recipients in

part,

had

stolen

from

possession.

that

of

been

Jaynes

his

During

knew

that

unsolicited

because

the

e-mail

AOL

by

a

trial,

all

of

e-mails

of

employee

evidence

the

were

addresses

former

more

than

50,000

subscribers

all

to

recipients

AOL,

ended

in

“@aol.com.”? An were

expert

not

witness

consistent

constituted

with

e-mail)

header

information

mails.

Other were

Loudoun

County

and

others

were

the

to

dismiss

statute

The

circuit

court strike

denied in

which

disguised

the

charges

that he

the

and

dormant

violated

motion.

Jaynes

challenged

the

him

filed

e-

AOL’s

William

First

and

located

on

Commerce

the

the

of

were

against

as

sender

all

Prince

to

send

that

Jaynes

rather

true to

some

in

by

referred

addresses

located

sent but

the

although

violated

vague,

e-mail,

demonstrated

Virginia,

unconstitutionally

to

trial

e-mails

(sometimes

multiple

in

was

motion

at

had

located

moved

that

used

the

bulk

e-mail

Jaynes

and

evidence

servers

Jaynes

bulk

because

that

solicited

unsolicited

“spam”

grounds

testified

in

County. the Clause,

Amendment.

a

separate

jurisdiction

of

the

7 Computers may be identified by their unique IP address number, which consists of blocks of numerals

separated by periods. Jaynes’ e-mails advertised one of refund claims product, (2) a “Penny

“History potential

which

Eraser”

product.

buyers

would

redirected

consummate

the

them

To

click

outside

three Stock

purchase on

a

the

purchase.

136

products: Picker,”

(1) and

of

products,

one

hyperlink

e-mail,

these within

where

the

they

a FedEx (3) a e-mail,

could

circuit

court.

denied

the

A

The

motion

jury

in

and

prison

consecutively The

Court

of

an

on

Jaynes

of

circuit

each an

Court

affirmed

Va.

App.

673,

the

of

his

makes of

634

four

Appeals.

assignments First,

he

of

error

assigns

on

charged.

Second,

Jaynes

First

Amendment

crimes

“abridge[s] and

it

was

Separately, Appeals

vagueness. Commerce

the error

not

Jaynes to

Lastly, Clause

hold

that

Jaynes

of

the

Jaynes

the

Code

§

asserts

circuit

posits

to

three

run

of

nine

Jaynes

v.

(2006).

We

years.

awarded

18.2-152.3:1

because

judgment

Code

his

error

to

§

18.2-

failure

statute

him

anonymous

18.2-152.3:1 the

over

convictions

the

of

the

jurisdiction

right

that

States

to

contends

§

the

is

on

that

of

the

void

for

violates

the

Constitution.

JURISDICTION

the

had

had

as

to

error

reverse

Code

United

that

court

to

assigns

A.

that

357

to

Code

ANALYSIS

court

of

sentences

S.E.2d

circuit

Court

Jaynes

convictions,

the

basis.

and

violating

imprisonment

that

speech,”

of

sentenced

with

term

counts

determination

152.3:1

jurisdiction

appeal.

Jaynes

the

had

three

count,

II.

the

it

court

active

Appeals 48

determined

strike.

the

for

Commonwealth,

Jaynes

to

convicted

18.2-152.3:1,

years

court

Court

of

Appeals

jurisdiction he

did

137

not

over “use”

erred

him a

for

in

holding

violating

computer

in

§

Virginia. only

in

He the

send

Jaynes

the

committed

no

the

did

have

an

v.

Baskerville,

the

basis

that

In

crime.

transmissions prove intent

of

must

also

prove

provider’s

is

occurred computer

not or

subscriber

that

complete

into

the

containing

e-mails,

he

the

circuit

crime

must

the

a

and

connection for

until computer

the

with

that

there

is

network

false

of

§

elements

of

no

18.2-

such The

use

with

of

routing an

e-mail

Thus,

e-mail

transmission

of

e-mail

the

was

Commonwealth

false

use

of

Commonwealth

transmission.

routing

138

the

be

volume

that

such

Moreno not

had

the

the

information.

transmission

network

the

period,

computer

under

void.

all

of

actions

courts.

Code

establish

time

routing

are

he

no

could

court

under

element

his

(1995),

convictions

is

computers

had

and

Jaynes,

a

he

Virginia,

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his

occur

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argues

by

used

in

because

in

used

North

him

specific

the

Raleigh,

over

to

falsifying

only

653

Commonwealth

sender

he

can

information

S.E.2d

and

a

statute

Further,

452

prosecute

within

the

through

him

addition

the

information

16,

to

successfully the

crime

Va.

the

in

result”

jurisdiction

152.3:1(B),

must

“immediate

over

home

that

routing

because

Virginia. of

of

e-mail

that

his

routing

according

jurisdiction To

in

249

for

Therefore,

from

violation

the

maintains

crime

over

a

where

e-mails

control not

that

location

falsified. to

contends

information.

the

passing

provider

or

Jaynes be

routed

argues

through

established,

server AOL

in

AOL

all

e-mail

must

reach

subscribers

as

his

that

located

The

in

standard

reasonable

e-mails

of

he

review

to

AOL

Jaynes’

action,

acts

intended

to,

has

a

that

and

long may

be

though

he

is

events

of

which

are

do

been

person

state

a

charged

beyond the

may

fact,

the evil

the

AOL’s public.

an

utilize

intended

was

Applying

along the

with

and

all

evidence that

AOL’s

transmission

are

servers

intended

and

in

servers

knew

the

servers

necessary

through

produce

of

place

the

jurisdiction

outside

jurisdiction is

AOL

that

exercise

commonplace in

ended

he

the

Virginia.

committed

in

of

and

because

conclude

e-mail

in

knew

presented

would

Thus

the

occurred

Furthermore,

we

Jaynes

Virginia.

the

e-mail

selecting

servers

general

evidence

subscribers

of

criminal

the

that

the

By

e-mails

location

to

that

in

network,

the

therefrom,

located

computer

that

to

are

result

whose

to

evidence

recipient’s

Jaynes AOL

happened

the

recipient.

utilize

users

that

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the

recipients,

accessible

conclusion

sent

through

established

and

inferences the

to

e-mails

disagree.

intended

would

evidence

easily

We

e-mail

send

Virginia,

information

supports

to

sent

flow

the

e-mails

intended

“@aol.com.”

which

his

“merely

servers.”

to

clearly

‘It

he

order

intended

our

that

harm

where

”

but

the

liability

the

when

state,

within

criminal

fruit.’

139

the

over

he

evil

starts

Travelers

are

state.

that

™

a

results,

the

train

Health

of

Ass'n

v.

Commonwealth,

(citing

Strassheim

Jaynes, referred

to

conduct

as if

and

who,

17-18, kK

parties

turn,

of

at

argues different

the

route

type

of

an

mail

control

used.

reliance

affirmative

act

between

not

the

the

drugs

is

out-of-state

defendant,

to

an

while

accomplice

the

drugs

to

two

the

drugs

in

Virginia.

in

other 249

the

result”

of

Jaynes’

action,

e-mails

e-mails.

service the

handling

networks

before

the

and

an

of

deliver

of

principle,

through

crime

charged

fails

Va.

and

regardless

or and

of

use

as computer

the

“immediate

intermediate

of

the

computer

its

subscribers

140

above,

any

use

the

use

the

*

noted

AOL’s was

*

of

the

because

as

is

*

subscribers

use

such

cannot

Moreno.

because,

a

e-mail

contends,

in

AOL

the

sender

Jaynes

occurred

insured

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e-mail

routing,

selecting

e-mails

provider

could

that

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to

the

his

on

network

part

this

routed

which

of

e-mail

(1911)).

that

Moreno,

(1949)

284-85

doctrine,”

of

e-mail

Such

recipients

an

269

be

intervention

Jaynes’

by

sold

263,

654.

that

destination,

taken

In

delivery

ultimately

S.E.2d

280,

intervene

delivered

its

Jaynes’

U.S.

result

harm.

for

S.E.2d

argues

“immediate

reaches

same

221

51

*

Jaynes number

892,

Moreno,

in-state

in

452

kek

on

third

who

877,

Daily,

arranged

accomplices

at

v.

the

the

Arizona,

Arizona

Va.

relying

applicable

in

188

routes

network

is

an

integral

of

AOL’s

e-mail

of

servers Jaynes of

was

the

was

Code

§

“immediate

amenable

to

over

Jaynes

next

Amendment

and

the

Court

that

Virginia

to §

FIRST

of

that

raise

his

a

First

*

not

18.2-152.3:1

as

exists

which

Salerno, the That

481

statute is,

by

Jaynes

potentially

he

U.S.

hold

that

violation

court

had

cannot

affirming

motion

to

dismiss

without

was

in

the

on

need

to

of

but a

He

circuit

that

that

challenge, nature

First

enforced.

deciding

the

the

the

be

in

Amendment

make

does

basis. Jaynes

had

concluded

trespass

address

the

First

a not

STANDING

pure

facial

argue

“that

the

Act

would

739,

745

(1987).

contends the

under

is

*

claiming

reach

a

18.2-152.3:1

overbroad

1.

under

we

for

circuit

erred

eliminating *

§

statute

assumed

18.2-152.3:1

does

acts,

OVERBREADTH

Code

as

Appeals

Appeals

issue.

Jaynes

the

AMENDMENT

the

denying

thereby

Amendment

Accordingly,

therefore

Court

of

Code

statute,

in

deficient

ruling

standing

prosecution

contends

constitutionally

The

Jaynes’

Jaynes. B.

court’s

of

18.2-152.3:1.

jurisdiction

argues

result”

it

is

that

protected

be

challenge

to

no

circumstances

set

§

valid.”

United

States

Instead,

Jaynes

challenges

unconstitutional because speech

141

of

Code

the of

as

overbroad.

statute

could

a

party,

third

v.

he

(Jaynes)

is

entitled

unprotected

speech.”

The First

Commonwealth

Amendment

However, actually

when

in

Commonwealth’s

I”) a

policies (RRHA).

Court

which

no

otherwise

standing

of

the

First

to

raise

the

standing

issue

longstanding Amendment

proceedings,

we

Va.

at

RRHA

damage

offenses,

55-56,

property but

a

Fourteenth

rights

are

with

the

disagree

arrest

and

assert

that

the

barred

from

access

at

conviction, RRHA

and

563

standing

676-77. Hicks

its

thus

of

to

to

and

S.E.2d

that

made

at

Upon

prior

his

asserted

RRHA

determining were

had

which

been

property

property.

Id.

trespass a

right

persons

overbroad

was

had

and

subsequent he

to

Authority

Hicks

on

(2002)

certain

trespass

that

conviction

to

678-79.

674

defendant

Housing

trespass

properties his

563

challenge

S.E.2d

because

policies

to

48,

Redevelopment

continued

S.E.2d

Va.

overbreadth

264

from

264

accorded

Richmond

Amendment

context and

Hicks,

the

banned

First

v.

Amendment

563

the II,

by

of

52-53,

has

his

arguments.

this

First

in

Hicks

court

Commonwealth

(“Hicks

at

in

Jaynes

for

defense.

viewed

state

exoneration

contends

jurisprudence

applicable

In

claim

overbreadth

presented

Amendment

raise

to

invalid.

would

under Id.

to be

the at

54,

° The Commonwealth also argues that Jaynes did not preserve this issue for appeal because he did not raise

his overbreadth challenge in the circuit court. This contention is without merit. Jaynes raised it in his brief in support

142

563

S.E.2d

engaged under

at

in

any

which

reversed policy

his

protected

by

kek

As

an

a

of

the

issue

and

United

of

that

matter

the

conduct

Court the

that

Id. at

that

trespass

this

concluded

States

First

issue of

58,

had

statute in

RRHA

are

he

Hicks

I

trespass

clearly

563

S.E.2d

at

680.

Amendment

was

First

Supreme

placed

standing

before

Amendment

Court

the

standing

in Hicks

only

in

Court:

was

the

whether

subject

to

courts.

the

of

doctrine of

substantive is

the

guise

a

standing

challenge

accept

substantive the

that

contend

*

as-~applied

under

of

Amendment.”

federal

rules

To

it

the

the

overbreadth federal

not

invalid,

speech

expansion

by wk

was

because

First

did

or

prohibits

which

state’s

review

conduct

convicted

opinion

II addressed

a

Hicks

*

[T]he

context

was

conviction

by

kek

Although

expressive

he

“also

kK

677-78.

of

the

First

constitutional that

to

a

would

standing,

a

view

state

rights

*

of

Amendment

exception

otherwise

statute.

Commonwealth’s

constitutional

Fourteenth

law,

* of

court

to

limit

state a

and

party

to

* Hicks

II

to

ignore

citizens

in

would

permit,

the

contravention

Amendment.

of his motion to dismiss, the Commonwealth addressed a facial challenge in response and the circuit court in its

letter opinion labeled Jaynes’ argument “a broad, general, facial First Amendment challenge.”

143

Accordingly, Amendment

we

hold

overbreadth

Jaynes

has

standing

to

raise

the

First

claim.?° 2. TRESPASS

The Commonwealth argues, in the alternative, that if Jaynes has standing to raise a First Amendment overbreadth claim, that claim is not proper for consideration because his conduct was a form of trespass and thus not entitled to First Amendment protection. Code § 18.2-152.3:1, in the Commonwealth’s view, is like a trespass statute, prohibiting trespassing on the privately owned

e-mail

Amendment position

servers

through

the

intentional

use

of false

protection is afforded in that circumstance.

and

held

Jaynes’

First

Amendment

information

and

that no

The Court of Appeals

argument

was

“not

First

adopted this

relevant.”

Jaynes

Commonwealth, 48 Va. App. 673, 693, 634 S.E.2d 357, 367 (2006). * * * We disagree.

Trespass property.

S.E.2d

the

See

890,

personal owner

is

the

e.g.,

894

assumpsit.”)

Vines

(1992)

property may

unauthorized

of

bring

v.

Branch,

(“Where another

an

(emphasis

use

a

of

or

244

person

entry

onto

another’s

185,

190,

418

Va.

has

illegally

and

converted

it

in

trespass,

trover,

action added);

Code

§

to

18.2-119,

his

seized own

the

use,

detinue,

-125,

or

-128,

-

132. Significantly, unauthorized

10 The

use

of

Commonwealth

standing

in

First

Code

§

18.2-152.3:1

privately

also

owned

argues

Amendment

does

e-mail

prohibit

servers.

an alternate

overbreadth

not

cases

The

standing not

the statute

rule:

extend

that

to

persons who engage only in commercial speech. That rule was previously rejected in Bigelow v. Virginia, 421 U.S. 809, 817 (1975); see also Virginia State Bd. of Pharmacy v. Virginia

144

_v.

only in

prohibits

connection

Thus,

even

if

using

server,

the

Code

§

ok

sender

that

this

not

is First

a

the

this

now

[*

could

These

through

information such

specifically

names

under

use

*

action

right

property,

claimed

First

is

*

or

allowed

to

Code

servers.

use

§

its

18.2-152.3:1

trespass.

Therefore,

statute.

]

use

not

cases

Commonwealth’s

3.

is

routing

domain

trespass

constituted

trespass

private

the

We

a

unauthorized

Amendment

impacting

in

and

prosecuted

between

claim

property.

reject

not

false

e-mail

unauthorized

is

property

Amendment

of

be

of

provider

addresses

no

the

private

erred

IP

litigation

held

owner

certain

service

could

was

use

O*

providers’

the

e-mail

false

there

In

First

an

sending

18.2-152.3:1

k

have

intentional

with

persons

although

the

private

the

courts

of

the

Internet

service

common

law

trespass

and

be

raised

have

no

by

private

a

not

but

parties,

relevance

being

argument

the

and

hold

owner

of

and the

action

Accordingly, the

a

because

against

government

right.

owner

here

property

asserted

against

Amendment

against

that

Court

of

we Appeals

regard. CONSTITUTIONALITY

turn

to

unconstitutionally

Jaynes’

OF

CODE

contention

overbroad.

To

§

18.2-152.3:1

that

Code

§

address

this

challenge,

Citizens Consumer Council, 425 U.S. 748, 770 speech, like other varieties, is protected”).

145

(1976)

18.2-152.3:1 we

(“commercial

first

review

mails. use

In

a

certain

transmitting

protocol

must

send

to

information sender

which

another.**

are

or

The

domain

names

which

and

versa.

The

IP

sender,

can

if

the

IP

organization,

domain

can

file

or

with

domain

the

may

not

be

registration

a

eventually

registration

name

transmission

domain

address

registering name

addresses

of

which the

is

e-mail;

discoverable

contact

not

or

domain

database lead

not

to

the

however,

through

a

fee

and

A

will the

database

in

is of

a

IP

provides

searchable

an

IP

address

identify

acquired the

the

from

address

or

information

on

sender’s

not

an

organization.

with

contact

organizations.

IP

obtain

directly

search

registered

a

name

the

private

contained

do

servers

for

and

To

name

IP

address

prevent

identity

search

of

and

the

use

sender

of

information.’?

'' The protocol is the product of private collaboration and not established by a governmental entity. "2 Tn this case Jaynes used registered IP addresses, although the domain names were false.

146

e-

computer

name

by

of

routing

registering

domain

name

one

names

pays

are

the

domain

the

e-mail

the

process.

registrant

associate

and

a

servers

to

the

that

Domain

registration the

IP

and

Internet

transmission

information

e-mail.

information

and

address

but

a

the

requires

address

to

of

e-mails,

what

SMTP

each

name,

contact

database vice

of

through

domain

identifying

IP

assigned

organizations

receiving

This

an

recipient

addresses

and

aspects

prescribes

contain

and

address

technical

a

As

shown

protocol

the

mail

is

to

like

the

only enter

150

(2002),

documents

a

protected

of

of

such

does,

scrutiny

test.

constitutional

compelling

IP

address

or

on

Tract

that are

to

Society IP

only

domain

publish domain

in

the

v.

names

536

at

166.

prohibiting Code

Supreme

false §

burden

“core

it

interest.

test is

Id.

as

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invalid

at

147

347.

or

protected 514

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in on

that

of

as

this

subject

to

a

to

the

strict

deemed

further

applying

the

regulations

regulation

be

the

U.S.

speech,”

will

drawn

by

infringes

and

in

religious

information

direct

statute

narrowly

engage

characterized

political

a

to

Comm’n,

routing

has

[the

political

18.2-152.3:1

speech

345.

of

speech

536

registration

right

Elections

Court

Id. at

that

The

anonymous

Ohio

neighborhoods

domain

surrender

v.

office

and

a

e-

Therefore,

Stratton,

in

of

name.

and

the

anonymous

of

result[]

freedom

for

Village

bases

the

an

private

addresses

U.S.

name

mayor’s

data

of

if

transmission

and

canvass

presumptively

Under

state

file

searchable

anonymous

speech.”

statutes

can

chose

e-mails, The

address

speaker

McIntyre

By

right.

prohibiting

statute

&

aspect

(1995).

dissemination

State

who

e-mail

a

particularly

Amendment.”

342

IP

record

through

“an

an

registered

speech, is

content

false

anonymity.”

anonymous

because

of

such

“necessarily

speaker’s]

334,

way

Bible

discoverable

First

entry

persons

Watchtower

speech,

record,

registration

identifying

U.S.

the

requires

sender,

in

by

this

a

test,

we

must

also

consider

constitutional,

S.E.2d

761,

that

City

764

(1984), must

Phillips,

81,

There control

is

the

generally Act,

Va. no

and

Many

states

unlike

*

*

Jaynes

fraudulent

strict tailored

not

of or

scrutiny to

§

In

of

of

270,

518,

validity.

272

e-mail.

15

the

such

was

In re

enacted

bulk

federal

e-mail §

CAN-SPAM the

7701 (a) (2).

bulk

regulation

to

e-mail,

threatened

U.S.C.

unsolicited

311

(2003).

commercial

bulk

523,

regarding

18.2-152.3:1

enacting

commercial

Va.

doubt

favor

unsolicited

contest

not

e-mail

to

limited

defamation

standard, the

Commonwealth’s

illegal

illegal

protect

the

commercial

transmission

pornography

Code

restricted

otherwise is

transmission

in

S.E.2d

regulated

unsolicited

18.2-152.3:1

226

but,

commercial

*

or

fraudulent

have

574

SPAM.

that

have

does

controlling

as

convenience

Virginia,

e-mails.

to

of

presumed

reasonable

resolved

that

are

Newsome,

any

85-86,

stated

efficiency

other

be

transmission

Congress

v.

and

dispute

referred

statutes

Council

constitutionality

265

state

to

bulk

e-mail.

e-mail,

or

otherwise

nor

speech.

Code

e-mail

§

of is

it

18.2-152.3:1 interests

SUBSTANTIAL

148

OVERBREADTH

in as

Code

speech

viewed

is

not

advanced

§

or

restricted

unprotected

Commonwealth. 4.

well

commercial

Therefore,

compelling

as

Nevertheless,

instances

of

interest

under

to such the

narrowly by

the

as

The

Commonwealth

enforcement

of

Code

§

unconstitutionally statutes

that

substantial of

a

all

a

facial

circumstances.

*

A

argues

overbroad

content

applications

of

its

provisions

unsolicited and

bulk

unsolicited

obscene

images.

hypothetical as

applied The

U.S.

does

United

Amendment

e-mail

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not

128

S.Ct.

The

the

to

those

concept

of

constitutionality flowing

successful

facial

overbreadth

of

the

from

affected

statute

18.2-152.3:1

is

a

in

Code does

the

not

e-mail

would bulk

be

impose

and

is

a

not

any

“most”

constitutional,

commercial

proposes that

§

citing

e-mail,

criminal

defamatory

transaction, or

contains

to

the

Commonwealth

an

where

the

Act

unconstitutional

render

States

overbreadth ,

that

e-mail

situation

limited

remedy

it

of

unsolicited

bulk

is

if

the

because

the

to

to

that

on

application

of

preclude

*

restrictions

its

test

application

*

Commonwealth

substantially

remedy

related

challenge. the

a

not even

overbroad.

not

policy

precludes

The

is

should

because,

that

substantially

but

we

18.2-152.3:1

overbreadth

successful

that

overbroad,

are

statute,

challenge

argues

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Supreme doctrine

1830

(2008).

Act

might

substantially

Court in

be

recently

United The

Court

“imagine[d]

overbroad.”

reviewed

States

v.

the

Williams,

First 553

noted

[i]n order to maintain an appropriate balance, we have vigorously enforced the requirement that a statute’s overbreadth be substantial, not only in an absolute sense,

149

but

also

relative

to

the

statute’s

plainly

legitimate

sweep. [I]t

reaches

is

too

impossible

far

without

128

S.Ct.

to

determine

first

whether

knowing

what

a

statute

the

statute

covers. 553

U.S.

at

Williams

in

,

this

18.2-152.3:1 political, were

*

*

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facial

thus

is

not

Code

§

can

be

invalidating

the

statute.

Commonwealth

would

to

involve

“unsolicited criminal

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applies provider

adopted

be

only

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asserts

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this a

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statute.

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because

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that

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the

150

the

would

statute

obscene we

receiving

bulk

declare

prevent

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e-mail

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not

limiting

that

construction

defamation

where

we

because

non-commercial

Commonwealth

instances

via

CONSTRUCTION

declaration

bulk

anonymous example,

the

fail

§

overbroad.”

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activity,

the

in

a

violate

under

Code

today

must

18.2-152.3:1

unconstitutional

construction

apply

would

as

For

published

§

Commonwealth

18.2-152.3:1

speech.

argument

Code

inquiry

containing

Commonwealth’s

“substantially

the

e-mail

being

Publius

that

straightforward

expressive

5. NARROWING Lastly,

Applying

bulk

just

by

the

to

all

other

Papers

reject

challenge

statute

or

transmission

1838.

relatively

prohibit

Federalist

that *

would

is

religious,

the

mail,

case

at

e-mail.”

that

to

does

the not

does

not

materials.” hold

Internet

the

statute

service

Our avoid 597 cure

a

jurisprudence constitutional

S.E.2d

195,

Caldwell, statute

is

256 cannot

(1997);

(1988).

(2004).

151,

be

General

*

v.

*

Assembly,

269

Va.

to

not

303,

313,

608

lies

courts.

For

the

foregoing

properly

had

jurisdiction

Code

standing §

on

transmission containing

its of

a That

face all

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to

the

because

United

Va.

2,

statutes

to

such Life

v.

(1998).

A

constitutional

884-85

&

nn.49-50

Ass'n,

484

the

province

906

hold

U.S.

Fidelity

(2005)

that We

Amendment

statute

religious

816-17

v.

1,

when

Human

within

844,

Jaynes.

unsolicited

political,

it

within

we

over First

for

814,

901,

268

to

*

383,

of &

*

the

Deposit

*

CONCLUSION

reasons,

raise

18.2-152.3:1.

overbroad

First

to

only

Soc’y

Jackson

S.E.2d

statute

Warden,

allowed

U.S.

a

construing

Booksellers

task

the

v.

S.E.2d

521

American

a

is

bring

III.

has

Burns

500

ACLU,

Such

interpret

Virginia

157,

v.

to

Nevertheless,

rewritten

Reno

*

infirmity.

reasonable.

Virginia

us

deficiencies

Va.

requirements.

Co.,

196

constitutional

construction

397

requires

it

is

also

or

States

151

circuit

hold

overbreadth

court

that claim

Jaynes as

to

unconstitutionally

prohibits bulk

the

the

e-mails

other

anonymous

including

speech

those

protected

Constitution.

by

the

Accordingly,

Reversed

and

'? Yn light of this holding, we do not address Jayne’s other assignments of error.

152

final

judgment.

B.

The Computer Fraud and Abuse Act

18 U.S.C. § 1030.

Fraud and related activity in connection with computers

(a) Whoever— (1) having knowingly accessed a computer without authorization or exceeding authorized access, and by means of such conduct having obtained information that has been determined by the United States Government pursuant to an Executive order or statute to require protection against unauthorized disclosure for reasons of

national defense or foreign relations, or any restricted data, as defined in paragraph y. of section 11 of the Atomic Energy Act of 1954, with reason to believe that such information so obtained could be used to the injury of the United States, or to the advantage of any foreign nation willfully communicates, delivers, transmits, or causes to be communicated, delivered, or transmitted, or attempts to communicate, deliver, transmit or cause to be communicated, delivered, or transmitted the same to any person not entitled to receive it, or willfully retains the same and fails to deliver it to the officer or employee of the United States entitled to receive it; (2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains—

(A) information contained in a financial record of a financial institution, or of a card issuer as defined in section 1602(n) of title 15, or contained in a file of a consumer reporting agency on a consumer, as such terms are defined in the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.); (B) information from any department or agency of the United States; or (C) information from any protected computer if the conduct involved an interstate or foreign communication; (3) intentionally, without authorization to access any nonpublic computer of a department or agency of the United States, accesses such a computer of that department or agency that is exclusively for the use of the Government of the United States or, in the case of a computer not exclusively for such use, is used by or for the Government of the United States and such conduct affects that use by or for the Government of the United States;

(4) knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $ 5,000 in any 1-year period; (5) (A) (i) knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer; (ii) intentionally accesses a protected computer without authorization, and as a result of such conduct, recklessly causes damage; or (iii) intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage; and (B) by conduct described in clause (i), (ii), or (iii) of subparagraph (A), caused (or, in the case of an attempted offense, would, if completed, have caused)— (i) loss to 1 or more persons during any 1-year period (and, for purposes of an investigation, prosecution, or other proceeding brought by the United States only, loss resulting from a related course of conduct affecting 1 or more other protected computers) aggregating at least $ 5,000 in value; (ii) the modification or impairment, or potential modification or impairment, of the medical examination, diagnosis, treatment, or care of 1 or more individuals; (iii) physical injury to any person; (iv) a threat to public health or safety; or (v) damage affecting a computer system used by or for a government entity in furtherance of the administration of justice, national defense, or national security; (6) knowingly and with intent to defraud traffics (as defined in section 1029) in any password or similar information through which a computer may be accessed without authorization, if—

(A) such trafficking affects interstate or foreign commerce; or

153

(B) such computer is used by or for the Government of the United States; (7) with intent to extort from any person any money or other thing of value, transmits in interstate or foreign commerce any communication containing any threat to cause damage to a protected computer; shall be punished as provided in subsection (c) of this section. (b) Whoever attempts to commit an offense under subsection (a) of this section shall be punished as provided in subsection (c) of this section. (c) The punishment for an offense under subsection (a) or (b) of this section is— (1) (A) a fine under this title or imprisonment for not more than ten years, or both, in the case of an offense under subsection (a)(1) of this section which does not occur after a conviction for another offense under this section, or an attempt to commit an offense punishable under this subparagraph; and (B) a fine under this title or imprisonment for not more than twenty years, or both, in the case of an offense under subsection (a)(1) of this section which occurs after a conviction for another offense under this section; or an attempt to commit an offense punishable under this subparagraph; (2) (A) except as provided in subparagraph (B), a fine under this title or imprisonment for not more than one year, or both, in the case of an offense under subsection (a)(2), (a)(3), (a)(5)(A)(iii), or (a)(6) of this section which does not occur after a conviction for another offense under this section, or an attempt to commit an offense punishable under this subparagraph; (B) a fine under this title or imprisonment for not more than 5 years, or both, in the case of an offense under subsection (a)(2), or an attempt to commit an offense punishable under this subparagraph, if—

(i) the offense was committed for purposes of commercial advantage or private financial gain; (ii) the offense was committed in furtherance of any criminal or tortious act in violation of the Constitution or laws of the United States or of any State; or (iii) the value of the information obtained exceeds $ 5,000; and (C) a fine under this title or imprisonment for not more than ten years, or both, in the case of an offense under subsection (a)(2), (a)(3) or (a)(6) of this section which occurs after a conviction for another offense

under this section, or an attempt to commit an offense punishable under this subparagraph; (3) (A) a fine under this title or imprisonment for not more than five years, or both, in the case of an offense under subsection (a)(4) or (a)(7) of this section which does not occur after a conviction for another offense under this section, or an attempt to commit an offense punishable under this subparagraph; and (B) a fine under this title or imprisonment for not more than ten years, or both, in the case of an offense under subsection (a)(4), (a)(5)(A)(iii), or (a)(7) of this section which occurs after a conviction for another offense under this section, or an attempt to commit an offense punishable under this section; (4) (A) except as provided in paragraph (5), a fine under this title, imprisonment for not more than 10 years, or both, in the case of an offense under subsection (a)(5)(A)(i), or an attempt to commit an offense punishable under that subsection; (B) a fine under this title, imprisonment for not more than 5 years, or both, in the case of an offense under subsection (a)(5)(A)(ii), or an attempt to commit an offense punishable under that subsection; (C) except as provided in paragraph (5), a fine under this title, imprisonment for not more than 20 years, or both, in the case of an offense under subsection (a)(5)(A)(i) or (a)(5)(A)(ii), or an attempt to commit an offense punishable under either subsection, that occurs after a conviction for another offense under this section; and (5) (A) if the offender knowingly or recklessly causes or attempts to cause serious bodily injury from conduct in violation of subsection (a)(5)(A)(i), a fine under this title or imprisonment for not more than 20 years, or both; and (B) if the offender knowingly or recklessly causes or attempts to cause death from conduct in violation of subsection (a)(5)(A)(i), a fine under this title or imprisonment for any term of years or for life, or both.

(d) (1) The United States Secret Service shall, in addition to any other agency having such authority, have the authority to investigate offenses under this section. (2) The Federal Bureau of Investigation shall have primary authority to investigate offenses under subsection (a)(1) for any cases involving espionage, foreign counterintelligence, information protected against unauthorized disclosure for reasons of national defense or foreign relations, or Restricted Data (as that term is defined in section 1 ly of the Atomic Energy Act of 1954 (42 U.S.C. 2014(y)), except for offenses affecting the duties of the United States Secret Service pursuant to section 3056(a) of this title. (3) Such authority shall be exercised in accordance with an agreement which shall be entered into by the

Secretary of the Treasury and the Attorney General.

154

(e) As used in this section— (1) the term “computer” means an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions, and includes any data storage facility or communications facility directly related to or operating in conjunction with such device, but such term does not include an automated typewriter or typesetter, a portable hand held calculator, or other similar device; (2) the term “protected computer” means a computer— (A) exclusively for the use of a financial institution or the United States Government, or, in the case of a computer not exclusively for such use, used by or for a financial institution or the United States

Government and the conduct constituting the offense affects that use by or for the financial institution or the Government; or (B) which is used in interstate or foreign commerce or communication,

including a computer located

outside the United States that is used in a manner that affects interstate or foreign commerce

or

communication of the United States; (3) the term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, and any other commonwealth, possession or territory of the United States; (4) the term “financial institution” means— (A) an institution, with deposits insured by the Federal Deposit Insurance Corporation; (B) the Federal Reserve or a member of the Federal Reserve including any Federal Reserve Bank; (C) a credit union with accounts insured by the National Credit Union Administration; (D) a member of the Federal home loan bank system and any home loan bank; (E) any institution of the Farm Credit System under the Farm Credit Act of 1971; (F) a broker-dealer registered with the Securities and Exchange Commission pursuant to section 15 of the Securities Exchange Act of 1934; (G) the Securities Investor Protection Corporation; (H) a branch or agency of a foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978); and (1) an organization operating under section 25 or section 25(a) of the Federal Reserve Act; (5) the term “financial record” means information derived from any record held by a financial institution pertaining to a customer’s relationship with the financial institution; (6) the term “exceeds authorized access” means to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter; (7) the term “department of the United States” means the legislative or judicial branch of the Government or

one of the executive department enumerated in section 101 of title 5; (8) the term “damage” means any impairment to the integrity or availability of data, a program, a system, or information; (9) the term “government entity” includes the Government of the United States, any State or political subdivision of the United States, any foreign country, and any state, province, municipality, or other political

subdivision of a foreign country; (10) the term “conviction” shall include a conviction under the law of any State for a crime punishable by imprisonment

for more

than

| year,

an element

of which

is unauthorized

access,

or exceeding

authorized

access, to a computer; (11) the term “loss” means any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service; and (12) the term “person” means any individual, firm, corporation, educational institution, financial institution, governmental entity, or legal or other entity.

(f) This section does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of the United States, a State, or a political subdivision of a State, or of an intelligence agency of the United States.

(g) Any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief. A civil action for a violation of this section may be brought only if the conduct involves | of the factors set forth in clause (i), (ii), (iii), (iv), or (v) of subsection (a)(5)(B). Damages for a violation involving only conduct described in subsection (a)(5)(B)(i) are limited to economic damages. No action may be brought under this subsection unless such action is begun within 2 years of the date of the act complained of or the date of the discovery of the damage. No action may

155

be brought under this subsection for the negligent design or manufacture of computer hardware, computer software, or firmware.

(h) The Attorney General and the Secretary of the Treasury shall report to the Congress annually, during the first 3 years following the date of the enactment of this subsection, concerning investigations and prosecutions under subsection (a)(5).

EF Cultural Travel BV v. Explorica, Inc. The scraper has been likened to a “robot,” a

No. 01-2000

tool that is extensively used on the Internet. Robots are used to gather information for countless purposes, ranging from compiling results for search engines

UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

such as Yahoo! to filtering for inappropriate content. The widespread deployment of robots enables global Internet users to find comprehensive information

274 F.3d 577

quickly and almost effortlessly. December

17, 2001, Decided

Like a robot, the scraper sought information COFFIN, J.: Appellant Explorica, Inc. (“Explorica’”) and several of its employees challenge a preliminary injunction issued against them for

through the Internet. Unlike other robots, however, the scraper focused solely on EF’s website, using

alleged violations of the Computer Fraud and Abuse

Specifically, Zefer utilized tour codes whose significance was not readily understandable to the public. With the tour codes, the scraper accessed

information

Act (“CFAA”), 18 U.S.C. § 1030. * * * We affirm the district court’s conclusion that appellees will

that

other

robots

would

not

have.

EF’s website repeatedly and easily obtained pricing information for those specific tours. The scraper sent more than 30,000 inquiries to EF’s website and recorded the pricing information into a spreadsheet.”

likely succeed on the merits of their CFAA claim, but rest on a narrower basis than the court below. I. Background Explorica was formed in 2000 to compete in

the field of global tours for high school students. Several of Explorica’s employees formerly were

2 John Hawley, one of Zefer’s senior technical associates, explained the technical progression of the scraper in an affidavit: {a.] Open an Excel spreadsheet. The spreadsheet initially contains EFTours gateway and destination city codes, which are available on the EFTours web site. [b.] Identify the first gateway and destination city codes [on the] Excel spreadsheet. [c.] Create a [website address] request for the EFTours tour prices page based on a combination of gateway and destination city. Example: show me all the

employed by appellee EF, which has been in business for more than thirty-five years. EF and its partners and subsidiaries make up the world’s largest private student travel organization. Shortly after the individual defendants left EF in the beginning of 2000, Explorica began competing in the teenage tour market. The company’s vice president (and former vice president of information strategy at EF), Philip Gormley, envisioned that Explorica could gain a substantial advantage over all other student tour companies, and especially EF, by undercutting EF’s already competitive prices on student tours. Gormley considered several ways to obtain and utilize EF’s

prices for a London trip leaving JFK. which

is

[d.] View the requested web page retained in the random access

prices: by manually keying in the information from EF’s brochures and other printed materials; by using

memory of the requesting computer in the

a scanner to record

* KOK

that same

information;

form of HTML

or, by

manually searching for each tour offered through EF’s website. Ultimately, however, Gormley engaged Zefer,

Explorica’s

Internet consultant,

to design

[computer

language]

code.

[e.] Search the HTML for the tour prices for each season, year, etc. [f.] Store the prices into the Excel spreadsheet.

a

computer program called a “scraper” to glean all of the necessary information from EF’s website. Zefer

[g.] Identify the next gateway and city codes in the spreadsheet.

designed the program in three days.

156

on EF’s website.” The court next found that the manner by which Explorica accessed EF’s website likely violated a confidentiality agreement between appellant Gormley and EF, because Gormley

Zefer ran the scraper program twice, first to retrieve the 2000 tour prices and then the 2001 prices. All told, the scraper downloaded 60,000 lines of data, the equivalent of eight telephone directories of information. * * * Once Zefer “scraped” all of the

provided to Zefer technical instructions concerning the creation of the scraper. Finally, the district court noted without elaboration that the scraper bypassed

prices, it sent a spreadsheet containing EF’s pricing

technical

information to Explorica, which then systematically undercut EF’s prices. *** Explorica thereafter printed its own brochures and began competing in EF’s tour market.

restrictions embedded

in the website to

acquire the information. The court therefore let stand

its earlier decision granting the preliminary injunction. Appellants contend that the district court erred

in

taking

too

narrow

a

view

of

what

is

and use of the scraper

authorized under the CFAA and similarly mistook the

came to light about a year and a half later during state-court litigation regarding appellant Olsson’s departure from appellee EFICE. EF then filed this action, alleging violations of the CFAA; the

reach of the confidentiality agreement. Appellants also argue that the district court erred in finding that and that the preliminary injunction violates the First

Copyright

Amendment.

The

development

Act

of

1976,

17

U.S.C.

§

101;

appellees suffered a “loss,” as defined by the CFAA,

the

Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961; and various related state laws. It sought a preliminary injunction barring Explorica and Zefer from using the scraper program and demanded the return of all materials generated through use of the scraper.

Il. Standard of Review A district court may issue a preliminary injunction only upon considering “(1) the likelihood of success on the merits; (2) the potential for

irreparable harm if the injunction is denied; (3) the On May 30, 2001, the district court granted a preliminary injunction against Explorica based on the CFAA, which criminally and civilly prohibits certain access to computers. See 18 U.S.C. § 1030(a)(4). The court found that EF would likely prove that Explorica violated the CFAA when it used EF’s website in a manner outside the “reasonable

balance of relevant impositions . . .; and (4) the effect (if any) of the court’s ruling on the public interest.” *** Appellants challenge only the district court’s finding that appellees are likely to succeed on the merits, and we thus confine our review to that factor.

expectations” of both EF and its ordinary users. The

Il. The Computer Fraud and Abuse Act

*

court also concluded that EF could show that it suffered a loss, as required by the statute, consisting of reduced business, harm to its goodwill, and the cost of diagnostic measures it incurred to evaluate possible harm to EF’s systems, although it could not show that Explorica’s actions physically damaged its computers. In a supplemental opinion * ** the district court further articulated its “reasonable expectations” standard and explained that copyright, contractual and technical restraints sufficiently notified Explorica that its use of a scraper would be unauthorized and thus would violate the CFAA.

Although

statement

***

should

reasonable

person

finding

have may

that

dispelled have

“such

any had

a

violations

of

[Whoever] knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value . . . shall be punished.

18 U.S.C. § 1030(a)(4).° Appellees

clear

notion that

alleged

1030(a)(4). * * * That section provides

and a link directing users with questions to contact company,

appellees

three provisions of the CFAA, the district court found that they were likely to succeed only under section

The district court first relied on EF’s use of a copyright symbol on one of the pages of its website the

OK *

knowingly

allege

and with

that

the

appellants

intent to defraud accessed the

a the

8

‘presumption of open access’ applied to information

Although the CFAA is primarily a

criminal statute, under § 1030(g), “any person who suffers damage or loss . . . may maintain a civil action . . . for compensatory damages and injunctive

[8.] Repeat steps 3-7 for all gateway and destination city combinations.

relief or other equitable relief.”

157

server hosting EF’s website more than 30,000 times

third party, either orally or in writing, any

to obtain proprietary pricing and tour information, and confidential information about appellees’ technical abilities. At the heart of the parties’ dispute

Confidential or Proprietary Information . . . and never to at any time (i) directly or indirectly publish, disseminate or otherwise disclose, deliver or make available to anybody any Confidential or Proprietary Information or (ii) use such Confidential or Proprietary Information for Employee’s own benefit or for the benefit of any other person or business entity other than EF.

is whether appellants’ actions either were “without authorization” or “exceeded authorized access” as defined by the CFAA.” We conclude that because of

the

broad

confidentiality

actions “exceeded

agreement

authorized

access,”

appellants’ and so we do

not reach the more general arguments made about statutory meaning, including whether use of a scraper alone renders access unauthorized."°

As

used

in this

Agreement,

the

term “Confidential or _ Proprietary Information” means (a) any trade or business secrets or confidential information of EF, whether or not reduced to writing . . .; (b) any technical, business, or financial information, the use or disclosure of which might reasonably be construed to be contrary to the interests of EF....

A. “Exceeds authorized access”

Congress defined “exceeds authorized access,” as accessing “a computer with authorization and [using] such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6). EF is likely to prove such excessive access based on the confidentiality agreement between Gormley and EF.

The record contains at least two communications from Gormley to Zefer seeming to

Pertinently, that agreement provides:

rely on information about EF to which he was privy only because of his employment there. First, in an email to Zefer employee Joseph Alt exploring the use

Employee agrees to maintain in strict confidence and not to disclose to any

of a scraper, Gormley wrote: “might one of the team

be able to write a program to automatically extract

° At oral argument, appellants contended that they had no “intent to defraud” as

prices

defined by the CFAA. That argument was not raised in

the

briefs

and

thus

has

been

waived.

. . . ? I could

Likewise, at oral argument Explorica attempted to

Congress did not define the phrase “without authorization,” perhaps assuming that the

2001

Appellees

the scraper program.

related to [its] intended

based

on

includes

contend that the result

the “exceeds

authorized

*

*

On

a high

speed

Furthermore,

the voluminous

spreadsheet containing all of the scraped information the

tour

codes,

which

EF

claims

are

proprietary information. Each page of the spreadsheet

would be the same under either test, but we need not resolve this dispute because we affirm the court’s

ruling

*

This documentary evidence points to Gormley’s heavy involvement in the conception of

Circuit’s reasoning that

function,” United States v. Morris, 928 F.2d 504, 510

1991).

prices.

connection it is possible to move quickly from one price table to the next by hitting backspace and then the down arrow.

computer use is “without authorization” only if the

(2d Cir.

the

gateway from a list of about 100 domestic gateways (middle drop down menu). When you select your origin gateway a page with a couple of tables comes up. One table has 1999-2000 prices and the other has 2000-

words speak for themselves. The meaning, however, has proven to be elusive. The district court applied what it termed the “default rule” that conduct is without authorization only if it is not “in line with the reasonable expectations” of the website owner and its users. Appellants argue that this is an overly broad reading that restricts access and is at odds with the Internet’s intended purpose of providing the “open and free exchange of information.” They urge us to

is not “in any way

on

150 tours. * * * You then select your origin

0

use

him/her

Here is a link to the page where you can grab EF’s prices. There are two important drop down menus on the right. . . . With the lowest one you select one of about

* * *

instead the Second

with

to Zefer employee John Hawley:

* * *

adopt appellant Zefer’s argument that the preliminary injunction violates the First Amendment. The lateness of Explorica’s attempt renders it fruitless.

adopt

work

specification.” Gormley also sent the following email

produced

by Zefer

includes

the tour and

gateway

codes, the date of travel, and the price for the tour.

access”

An uninformed reader would regard the tour codes as

prong of § 1030(a)(4).

158

nothing but gibberish. * * * Although the codes can be correlated to the actual tours and destination points, the codes standing alone need to be “translated” to be meaningful.

scraper.'° Accordingly, the district court’s finding that Explorica likely violated the CFAA was not clearly erroneous. B. Damage or Loss under section 1030(g)

Explorica argues that none of the information Gormley provided Zefer was confidential

an

Appellants also challenge the district court’s finding that the appellees would likely prove they met the CFAA’s “damage or loss” requirements. Under the CFAA, EF may maintain a private cause of action if it suffered “damage or loss.” 18 U.S.C.

employee’s non-compete agreement. The opinion mentioned in passing that there was no actionable misuse of confidential information because the only

to the integrity or availability of data, a program, a system, or information that . . . causes loss

evidence

aggregating at least $ 5,000

and that the confidentiality agreement therefore is irrelevant. * * * The case on which they rely, Lanier Professional Services, Inc. v. Ricci, 192 F.3d 1, 5 (Ist

Cir.

1999),

focused

that

the

almost

employee

exclusively

had

taken

information was a “practically worthless” from the employee’s successor. Id. at 5. Here,

evidence

that

on

the

other

Gormley

hand,

there

provided

on

protected affidavit

is

ample

Explorica

proprietary information about the structure of the website and the tour codes. To be sure, gathering manually the various codes through repeated searching and deciphering of the URLs * ** theoretically may be possible. Practically speaking, however, if proven, Explorica’s wholesale use of

EF’s travel codes to facilitate gathering EF’s prices

§ 1030(g). “Damage” is defined as “any impairment in value during any

l-year period to one or more individuals ... . “ 18 U.S.C. § 1030(e)(8). “Loss” is not defined. The district court held that although EF could not show any “damage” it would likely be able to show “loss” under the statute. It reasoned that a general understanding of the word “loss” would fairly encompass a loss of business, goodwill, and the cost

of diagnostic measures that EF took after it learned of Explorica’s access to its website.'? Appellants respond that such diagnostic measures cannot be included in the $5,000 threshold because their

from its website reeks of use--and, indeed, abuse--of

proprietary information that goes authorized use of EF’s website."

beyond

any

Gormley voluntarily entered a_ broad confidentiality agreement prohibiting his disclosure

of any

information

“which

might

reasonably

be

construed to be contrary to the interests of EF.” * * * Appellants would face an uphill battle trying to argue

that it was not against EF’s interests for appellants to use the tour codes to mine EF’s pricing data. * * * If EF’s allegations are proven, it will likely prove that whatever authorization Explorica had to navigate around EF’s site (even in a competitive vein), it exceeded that authorization by providing proprietary information and know-how to Zefer to create the “ Among the several emails in the record is one from Zefer employee Joseph Alt to the Explorica “team” at Zefer:

Below is the information needed to log into EF’s site as a tour leader. Please use

this to gather competitor information from both a business and experience design perspective. We may also be able to glean

'6 EF also claims that Explorica skirted the website’s technical restraints. To learn about a specific tour, a user must navigate through several different web pages by “clicking” on various drop-down menus and choosing the desired departure location, date, tour destination, tour length, and price

range.

The

district court

found

that the

scraper

circumvented the technical restraints by operating at

a warp

speed

that the website was

not normally

intended to accommodate.

We

need

argument

was

a violation

that this alone

not reach

the

of the

CFAA, however, because the apparent transfer of information in violation of the Confidentiality Agreement furnishes a sufficient basis for injunctive relief. Likewise, we express no opinion on the district court’s ruling that EF’s copyright notice served as a “clear statement [that] should have dispelled any notion a reasonable person may have had the ‘presumption of open access’” to EF’s website.

"7

It is undisputed that appellees paid

$ 20,944.92 to assess whether their website had been

knowledge of their technical abilities. As with all of our information, this is extremely

compromised. Appellees also claim costs exceeding $ 40,000 that they will incur to “remedy and secure their website and computer.” We need not consider

confidential. anyone.

whether these expenses constitute loss because the initial $ 20,944.92 greatly exceeds the threshold.

Please

do not share

it with

actions

neither

caused

any

physical

damage

nor

will loom

placed any stress on EF’s website. Few courts have endeavored to resolve the contours of damage and loss under the CFAA. * * * Two district courts that have addressed the issue have

found that expenses such as those borne by EF do fall

We

agree

with

this

construction

the

In the absence of a statutory definition for

“Joss,” we

apply the well-known

undefined

words

***

of

The

their normal,

word

“loss”

Inc.

rule of assigning “detriment,

disadvantage, or deprivation from failure to keep, have or get.” * * * Appellees unquestionably suffered

a detriment and a disadvantage by having to expend

Privacy

Litigation,

154

F.

Supp.

2d

497

$ 5,000 resulting from a party’s intrusion are “losses” for purposes of the “damage or loss” requirement of the CFAA.

is fortunate, but it does not lessen

the loss represented

to restrict the

11. We therefore conclude that expenses of at least

substantial sums to assess the extent, if any, of the physical damage to their website caused by appellants’ intrusion. That the physical components were not damaged

were

(S.D.N.Y. 2001), that Congress could not have intended other types of loss to support recovery unless that threshold were met. Indeed, the Senate Report explicitly states that “if the loss to the victim meets the required monetary threshold,” the victim is entitled to relief under the CFAA. S. Rep. 104-357, at

everyday meaning. means

If we

We do not hold, however, that any loss is compensable. The CFAA provides recovery for “damage” only if it results in a loss of at least $ 5,000. We agree with the court in In re Doubleclick

under the statute.

CFAA.

ever-larger.

statute as appellants urge, we would flout Congress’s intent by effectively permitting the CFAA to languish in the twentieth century, as violators of the Act move into the twenty-first century and beyond.

by consultant fees. Congress’s

use of the disjunctive, “damage or loss,” confirms

IV. Conclusion

that it anticipated recovery in cases involving other

than purely physical damage. *** To parse the words in any other way would not only impair Congress’s intended scope of the Act, but would also serve to reward sophisticated intruders. As we move into an increasingly electronic world, the instances of physical damage will likely be fewer while the value to the victim of what has been stolen and the victim’s

For the foregoing reasons, we agree with the district court that appellees will likely succeed on the

merits

of their

CFAA

claim

under

18

U.S.C.

§ 1030(a)(4). Accordingly, the preliminary injunction was properly ordered. Affirmed.

costs in shoring up its security features undoubtedly

160

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