Fonovisa Inc. v. Cherry Auction, Inc.
76 F.3d 259 (9th Cir. 1996)

  • Cherry Auction ran a swap meet. Vendors would rent tables and sell whatever they wanted, while Cherry Auction collected an entrance fee from buyers, and provided advertising.
    • Shockingly, some of the vendors were found to be selling bootleg music!
  • Fonovisa, who owned the copyright on some of the bootleg music, sued Cherry Auction for copyright infringement.
    • Fonovisa argued that Cherry Auction was (or should have been) aware that vendors were selling illegal music on their premises.
      • Therefore, Cherry Auction was guilty of contributory copyright infringement, and vicarious copyright infringement.
    • Cherry Auction argued that they only provided the space, it wasn't their job to police what the vendors sold.
  • The Trial Court found for Cherry Auction in summary judgment. Fonovisa appealed.
    • The Trial Court found that, as a matter of law, Cherry Auction could not be liable for sales by vendors who leased their premises.
  • The Appellate Court reversed and remanded for trial.
    • The Appellate Court looked to Shapiro, Bernstein and Co. v. H.L. Green Co. (316 F.2d 304 (1963)), and found that with regard to vicarious liability, there were two lines of cases:
      • In "landlord-tenant" cases, the courts had held that a landlord who lacked knowledge of infringing acts of its tenants and who exercised no control over the leased premises was not liable for infringing sales by the tenants.
      • In "dance hall" cases, the courts had found that a landlord can be liable for infringing performances when the landlord could control the premises, and obtained a direct financial benefit from the audience who paid to enjoy the infringing performance.
    • The Court found that since Cherry Auction retained the right to kick any vendor out the 'controlled the premises', and since they collected admission at the door from people who came to buy bootleg music, they obtained a 'direct financial benefit', so there was evidence they were vicarious copyright infringers.
    • The Court defined contributory copyright infringement as where "one who, with knowledge of the infringing activities, induces, causes, or materially contributes to the infringing conduct."
      • The Court found that Cherry Auction knew about the bootleg music, and advertised to get more people to come to the swap meet, there was evidence that they were contributory copyright infringers.