Background

The doctrine of secondary liability is not explicitly recognized in the copyright statute. Instead, it has evolved through court decisions. Currently there are three theories of secondary liability: contributory infringement, vicarious infringement, and inducement. Contributory infringement applies in situations where one person knows that another is going to infringe and aids in the infringement. Vicarious liability arises in situations where a person financially benefits from another's infringement, has the right and ability to stop it and yet chooses not to. For example, in Fonovisa Inc. v. Cherry Auction Inc., the Ninth Circuit Court of Appeals held that the owner of a flea market where a vendor sold infringing CDs was liable for both contributory and vicarious infringement. He was liable as a contributory infringer because he provided the site and facilities for infringement and knew of the infringement. He was liable as a vicarious infringer because he failed to police his premises and revoke the vendor’s license despite having the ability to do so. Furthermore, he benefited financially because the counterfeit CDs attracted more customers to the market. Inducement arises in situations where a person distributes a product with the “object of promoting its use to infringe copyright.” The theory was first formulated by the Supreme Court in MGM Studios, Inc. v. Grokster Ltd., a case we will discuss in further detail below.