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
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
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
Cherry Auction argued that
they only provided the space, it wasn't their job to police what the
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
"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
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
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