Sony Corp. of America v. Universal City Studios, Inc.

Sony Corp. of America v. Universal City Studios, Inc.
Supreme Court of the United States
Argued January 18, 1983 Reargued October 3, 1983 Decided January 17, 1984
Full case name	Sony Corporation of America et al. v. Universal City Studios, Inc., et al.
Citations	464 U.S. 417 (more) 104 S. Ct. 774; 78 L. Ed. 2d 574; 1984 U.S. LEXIS 19; 52 U.S.L.W. 4090; 220 U.S.P.Q. (BNA) 665; 224 U.S.P.Q. (BNA) 736; 55 Rad. Reg. 2d (P & F) 156
Prior history	Unfair competition claims dismissed, 429 F. Supp. 407 (C.D. Cal. 1977); judgment for defendants, 480 F. Supp. 429 (C.D. Cal. 1979); affirmed in part, reversed in part and remanded, 659 F.2d 963 (9th Cir. 1981); rehearing denied, 9th Circuit, 1982; cert. granted, 457 U.S. 1116 (1982); reargument scheduled, 463 U.S. 1226 (1983)
Subsequent history	Rehearing denied, 465 U.S. 1112 (1984)
Holding
Manufacturers of home video recording machines could not be liable for contributory copyright infringement for the potential uses by its purchasers, because the devices were sold for legitimate purposes and had substantial non-infringing uses. Personal use of the machines to record broadcast television programs for later viewing constituted fair use. Ninth Circuit Court of Appeals reversed.
Court membership
Chief Justice Warren E. Burger Associate Justices William J. Brennan, Jr. · Byron White Thurgood Marshall · Harry Blackmun Lewis F. Powell, Jr. · William Rehnquist John P. Stevens · Sandra Day O'Connor
Case opinions
Majority	Stevens, joined by Burger, Brennan, White, O'Connor
Dissent	Blackmun, joined by Marshall, Powell, Rehnquist
Laws applied
17 U.S.C. § 101 et seq. (Copyright Act of 1976)

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), also known as the “Betamax case”, is a decision by the Supreme Court of the United States which ruled that the making of individual copies of complete television shows for purposes of time shifting does not constitute copyright infringement, but is fair use. The Court also ruled that the manufacturers of home video recording devices, such as Betamax or other VCRs (referred to as VTRs in the case), cannot be liable for infringement. The case was a boon to the home video market as it created a legal safe haven for the technology. Ironically, the popularity of VCRs significantly benefited the film industry through the sale of pre-recorded movies.

The broader legal consequence of the Court's decision was its establishment of a general test for determining whether a device with copying or recording capabilities ran afoul of copyright law. This test has created some interpretative challenges to courts in applying the case to more recent file sharing technologies available for use on home computers and over the Internet.

Background of the case

In the 1970s, Sony developed the Betamax video tape recording format. Universal Studios and the Walt Disney Company were among the film industry members who were wary of this development, but were also aware the U.S. Congress was in the final stages of a major revision of copyright law and would likely be hesitant to undertake any new protections for the film industry. The companies therefore opted to sue Sony and its distributors in California District Court in 1976, alleging that because Sony was manufacturing a device that could be used for copyright infringement, they were thus liable for any infringement committed by its purchasers. The complaint additionally included an unfair competition claim under the Lanham Act, but this was dismissed early in the course of the lawsuit.

Two years later, the District Court ruled for Sony, on the basis that noncommercial home use recording was considered fair use, that access to free public information is a First Amendment public interest served by this use. However, this ruling was reversed in part by the Ninth Circuit Court, which held Sony liable for contributory infringement. The court also held Betamax was not a staple article because its main purpose was copying. It went on to suggest damages, injunctive relief, and compulsory licenses in lieu of other relief.

The case centered around Sony's manufacture of the Betamax VCR, which used cassettes like this to store potentially copyrighted information.

The Court's decision

Conflict within the Court

After hearing oral arguments in the case, the Supreme Court was conflicted as to the outcome. The papers of Justice Thurgood Marshall, released nearly a decade later, reveal that a majority of justices were initially inclined to affirm the Ninth Circuit. Justice Harry Blackmun was assigned to write a majority opinion to that effect, while Justice John Paul Stevens drafted a dissenting opinion. Sensing that some members of the Court might be persuaded to change their votes, Stevens wrote a dissent that read like a majority opinion, and could be changed to one with the substitution of a few words.

Stevens, in his initial draft, expressed great concern with the possibility that an individual might be liable for copyright infringement for copying a single program in his own home, and for his own use. At the same time, Justice Brennan was wavering on affirming based on the presence of non-infringing uses of the technology—but Brennan was not prepared to say that making home copies for repeated personal use did not constitute an infringement. Justice White, noting Brennan's position, suggested that Stevens shift the basis of his opinion away from arguments about whether home-use was, in fact, an infringement. White pointed out that the issue need not be resolved, because the suit was not against home-users, but against the producers of the technology that enabled them.

Justice O'Connor, also initially inclined to affirm the Ninth Circuit, had concerns about the potential to shift the burden of proving harm away from the plaintiff. The District Court had found that the plaintiffs had failed to prove that they were harmed; O'Connor was unable to come to terms with Blackmun's reluctance to agree that the actual harm must be provable.

Stevens therefore adjusted his draft to accommodate the positions taken by Brennan and O'Connor. In so doing, he shifted the vote of the Court from a 6-3 majority for affirming the Ninth Circuit to a 5-4 majority for reversing the Ninth Circuit.

Majority opinion

The Court's 5-4 ruling to reverse the Ninth Circuit in favor of Sony hinged on the possibility that the technology in question had significant non-infringing uses, and that the plaintiffs were unable to prove otherwise.

On the question of whether Sony could be described as "contributing" to copyright infringement, the Court stated:

[There must be] 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. Accordingly, the sale of copying equipment, like the sale of other articles of 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....

The question is thus whether the Betamax is capable of commercially significant noninfringing uses ... one potential use of the Betamax plainly satisfies this standard, however it is understood: private, noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court's factual findings reveal that even the unauthorized home time-shifting of respondents' programs is legitimate fair use….

If there are millions of owners of VTR's who make copies of televised sports events, religious broadcasts, and educational programs ... 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....

When one considers the nature of a televised copyrighted 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 ... does not have its ordinary effect of militating against a finding of fair use.

Combined with the noncommercial, nonprofit nature of time-shifting, he concluded that it was indeed a fair use.

Children's television personality Mr. Rogers' testimony supporting the manufacturers of VCRs before the District Court was taken into consideration for the decision. The Court stated that his views were a notable piece of evidence "that many [television] producers are willing to allow private time-shifting to continue" and even quoted his testimony in a footnote.

Blackmun's dissent

Justice Harry Blackmun dissented, joined by Justices Marshall, Powell, and Rehnquist. With regard to the issue of unauthorized time-shifting, he wrote:

Section 106 of the 1976 [Copyright Revision] Act grants the owner of a copyright a variety of exclusive rights in the copyrighted work, including ... the right "to reproduce the copyrighted work in copies or phonorecords." ... Although the word "copies" is in the plural in 107(1), there can be no question that under the Act the making of even a single unauthorized copy is prohibited....

The 1976 Act and its accompanying Reports specify in some detail the situations in which a single copy of a copyrighted work may be made without infringement concerns ... But neither the statute nor its legislative history suggests any intent to create a general exemption for a single copy made for personal or private use....

Fair use may be found when a work is used "for purposes such as criticism, comment, news reporting, teaching, . . . scholarship, or research." ... other examples may be found in the case law. Each of these uses, however, reflects a common theme: each is a productive use, resulting in some added benefit to the public beyond that produced by the first author's work....

It may be that an injunction prohibiting the sale of VTR's would harm the interests of copyright holders who have no objection to others making copies of their programs. But such concerns should and would be taken into account in fashioning an appropriate remedy once liability has been found. Remedies may well be available that would not interfere with authorized time-shifting at all ... Sony may be able, for example, to build a VTR that enables broadcasters to scramble the signal of individual programs and "jam" the unauthorized recording of them....

The Court explains that a manufacturer of a product is not liable for contributory infringement as long as the product is "capable of substantial noninfringing uses" ... Such a definition essentially eviscerates the concept of contributory infringement. Only the most unimaginative manufacturer would be unable to demonstrate that an image-duplicating product is "capable" of substantial noninfringing uses. Surely Congress desired to prevent the sale of products that are used almost exclusively to infringe copyrights.

Subsequent developments

Immediately after their loss in the Supreme Court, the plaintiffs lobbied Congress to pass legislation that would protect them from the effects of home copying. However, in the eight years that had passed since the suit was initially filed, the use of home recording devices had become so widespread that Congress was not prepared to take any actions to the detriment of the significant population of VCR owners. The film industry lobbied Congress to impose a small statutory royalty on the sale of blank videotapes, but Congress would not do so, noting the increased profits for film studios in the home video rental and sales market.

“ Renting movies every day encourages [people] to go see them when they first come out ” — Film producer Jeff Lourie, 1987

Rather than destroying film studios, videotape sales became increasingly important to their revenue. The press discussed the VCR "and the viewing habits it has engendered — the Saturday night trip down to the tape rental store to pick out for a couple of bucks the movie you want to see when you want to see it". Film studios opened new divisions to produce prerecorded tapes, and by 1985 their sales were about the same as box office revenue; the Associated Press reported that "because of the VCR, even a bad movie can make money". Although the VCR received blame for a 25% decline in the summer 1985 box office compared to 1984's, and closing movie theaters, by 1987 it was credited with causing a record-high box office, as videotapes' popularity encouraged consumers' interest in films and watching them in theaters. Cable movie channels worried about VCRs affecting subscriptions, but began to offer more films for owners who wanted to build a home library, even encouraging time shifting by broadcasting the movies during the night so VCRs could record them while their owners slept.

In 1989 Sony purchased Columbia Pictures and became owner of its own Hollywood studio. By 1995 more than half of Hollywood's American revenue came from home video compared to less than a quarter from movie theaters. Forbes wrote in 2001 that the VCR was no longer "arguably believed to be the death knell of the movie business. Instead it became arguably its savior" because consumers much preferred buying or renting films to recording their own onto blank tapes.

Pamela Samuelson, has remarked that "the Sony decision is the most significant legacy of Justice Stevens in the field of intellectual property law and its significance is likely to continue in mediating disputes between copyright industries and creative information technology developers and users of information technology." The DMCA modified the law that the Sony decision was based upon in several ways, and new interpretations are still being handed down. Many of the same points of law that were litigated in this case are still being argued in various cases, particularly in light of recent peer-to-peer lawsuits; for example, in A&M Records, Inc. v. Napster, Inc. 239 F.3d (9th Cir. 2001), the Ninth Circuit Court of Appeals rejected a fair use "space shifting" argument raised as an analogy to the time-shifting argument that prevailed in Sony. The Ninth Circuit further distinguished the cases because the Napster defendants operated a system that allowed them to monitor and control the potentially infringing activities of its users.

In August 2004, in the case of MGM Studios, Inc. v. Grokster, Ltd., the Ninth Circuit Court of Appeals ruled in Grokster's favor due to its "substantial noninfringing uses". The Supreme Court heard oral arguments in the case on March 29, 2005. The Supreme Court decision of June 27, 2005 reversed the decision of the Ninth Court of Appeals "Because substantial evidence supports MGM on all elements, summary judgment for the respondents was error. On remand, reconsideration of MGM's summary judgment motion will be in order." pp. 23–24 380 F.3d 1154, vacated and remanded. The Supreme Court unanimously concurred that Grokster could be liable for inducing copyright infringement. In the opinion, Justice Souter stated that

"[t]he rule on inducement of infringement as developed in the early cases is no different today. [A]dvertising an infringing use or instructing how to engage in an infringing use, show an affirmative intent that the product be used to infringe, and a showing that infringement was encouraged overcomes the law's reluctance to find liability when a defendant merely sells a commercial product suitable for some lawful use…"

See also

• Home Taping Is Killing Music
• In re Aimster Copyright Litigation
• List of United States Supreme Court cases, volume 464

Further reading

• James Lardner, Fast Forward: Hollywood, the Japanese, and the VCR Wars (1987) (book reviewing the economy and case)

External links

Works related to Sony Corp. of America v. Universal City Studios, Inc. at Wikisource

• Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) (opinion full text).
• Oyez summary