Small Business Technology Transfer Program Reauthorization Act of 2001

Public Law 107-50107th Congress An Act To reauthorize the Small Business Technology Transfer Program, and for other purposes. <> Be it enacted by the Senate and House of Representatives of the United States of America in Congress <> assembled,SECTION 1. SHORT TITLE. <> This Act may be cited as the ``Small Business Technology Transfer Program Reauthorization Act of 2001''.SEC. 2. EXTENSION OF PROGRAM AND EXPENDITURE AMOUNTS. (a) In General.--Section 9(n)(1) of the Small Business Act (15 U.S.C. 638(n)(1)) is amended to read as follows: ``(1) Required expenditure amounts.-- ``(A) In general.--With respect to each fiscal year through fiscal year 2009, each Federal agency that has an extramural budget for research, or research and development, in excess of $1,000,000,000 for that fiscal year, shall expend with small business concerns not less than the percentage of that extramural budget specified in subparagraph (B), specifically in connection with STTR programs that meet the requirements of this section and any policy directives and regulations issued under this section. ``(B) Expenditure amounts.--The percentage of the extramural budget required to be expended by an agency in accordance with subparagraph (A) shall be-- ``(i) 0.15 percent for each fiscal year through fiscal year 2003; and ``(ii) 0.3 percent for fiscal year 2004 and each fiscal year thereafter.''. (b) Conforming Amendment.--Section 9 of the Small Business Act (15 U.S.C. 638) is amended in subsections (b)(4) and (e)(6), by striking ``pilot'' each place it appears.SEC. 3. INCREASE IN AUTHORIZED PHASE II AWARDS. (a) In General.--Section 9(p)(2)(B)(ix) of the Small Business Act (15 U.S.C. 638(p)(2)(B)(ix)) is amended-- (1) by striking ``$500,000'' and inserting ``$750,000''; and (2) by inserting before the semicolon at the end the following: ``, and shorter or longer periods of time to be approved at the discretion of the awarding agency where appropriate for a particular project''. (b) Effective Date.--The <> amendments made by subsection (a) shall be effective beginning in fiscal year 2004.[[Page 115 STAT. 264]]SEC. 4. AGENCY OUTREACH. Section 9(o) of the Small Business Act (15 U.S.C. 638(o)) is amended-- (1) in paragraph (12), by striking ``and'' at the end; (2) in paragraph (13), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: ``(14) implement an outreach program to research institutions and small business concerns for the purpose of enhancing its STTR program, in conjunction with any such outreach done for purposes of the SBIR program; and''.SEC. 5. POLICY DIRECTIVE MODIFICATIONS. Section 9(p) of the Small Business Act (15 U.S.C. 638(p)) is amended by adding at the end the following: ``(3) <> Modifications.--Not later than 120 days after the date of enactment of this paragraph, the Administrator shall modify the policy directive issued pursuant to this subsection to clarify that the rights provided for under paragraph (2)(B)(v) apply to all Federal funding awards under this section, including the first phase (as described in subsection (e)(6)(A)), the second phase (as described in subsection (e)(6)(B)), and the third phase (as described in subsection (e)(6)(C)).''.SEC. 6. STTR PROGRAM DATA COLLECTION. (a) In General.--Section 9(o) of the Small Business Act (15 U.S.C. 638(o)), as amended by this Act, is amended by adding at the end the following: ``(15) collect, and maintain in a common format in accordance with subsection (v), such information from awardees as is necessary to assess the STTR program, including information necessary to maintain the database described in subsection (k).''. (b) Database.--Section 9(k) of the Small Business Act (15 U.S.C. 638(k)) is amended-- (1) in paragraph (1)-- (A) by inserting ``or STTR'' after ``SBIR'' each place it appears; (B) in subparagraph (C), by striking ``and'' at the end; (C) in subparagraph (D), by striking the period at the end and inserting ``; and''; and (D) by adding at the end the following: ``(E) with respect to assistance under the STTR program only-- ``(i) whether the small business concern or the research institution initiated their collaboration on each assisted STTR project; ``(ii) whether the small business concern or the research institution originated any technology relating to the assisted STTR project; ``(iii) the length of time it took to negotiate any licensing agreement between the small business concern and the research institution under each assisted STTR project; and ``(iv) how the proceeds from commercialization, marketing, or sale of technology resulting from each assisted STTR project were allocated (by percentage)[[Page 115 STAT. 265]] between the small business concern and the research institution.''; and (2) in paragraph (2)-- (A) by inserting ``or an STTR program pursuant to subsection (n)(1)'' after ``(f)(1)''; (B) by striking ``solely for SBIR'' and inserting ``exclusively for SBIR and STTR''; (C) in subparagraph (A)(iii), by inserting ``and STTR'' after ``SBIR''; and (D) in subparagraph (D), by inserting ``or STTR'' after ``SBIR''. (c) Simplified Reporting Requirements.--Section 9(v) of the Small Business Act (15 U.S.C. 638(v)) is amended by inserting ``or STTR'' after ``SBIR'' each place it appears. (d) Reports to Congress.--Section 9(b)(7) of the Small Business Act (15 U.S.C. 638(b)(7)) is amended by striking ``and (o)(9),'' and inserting ``, (o)(9), and (o)(15), the number of proposals received from, and the number and total amount of awards to, HUBZone small business concerns under each of the SBIR and STTR programs,''.SEC. 7. STTR PROGRAM-WIDE MODEL AGREEMENT FOR INTELLECTUAL PROPERTY RIGHTS. (a) Development of Model Agreement.--Section 9 of the Small Business Act (15 U.S.C. 638) is amended by adding at the end the following: ``(w) STTR Model Agreement for Intellectual Property Rights.-- ``(1) <> In general.--The Administrator shall promulgate regulations establishing a single model agreement for use in the STTR program that allocates between small business concerns and research institutions intellectual property rights and rights, if any, to carry out follow-on research, development, or commercialization. ``(2) Opportunity for comment.--In promulgating regulations under paragraph (1), the Administrator shall provide to affected agencies, small business concerns, research institutions, and other interested parties the opportunity to submit written comments.''. (b) Adoption of Model Agreement by Federal Agencies.--Section 9(o)(11) of the Small Business Act (15 U.S.C. 638(o)(11)) is amended by striking ``develop a model agreement not later than July 31, 1993, to be approved by the Administration,'' and inserting ``adopt the agreement developed by the Administrator under subsection (w) as the agency's model agreement''.SEC. 8. FAST PROGRAM ASSISTANCE TO WOMEN-OWNED AND MINORITY-OWNED SMALL BUSINESS CONCERNS AND CONCERNS LOCATED IN AREAS NOT PARTICIPATING IN SBIR AND STTR. (a) Selection Consideration.--Section 34(c)(2)(B) of the Small Business Act (15 U.S.C. 657d(c)(2)(B)) is amended-- (1) in clause (iv), by striking ``and'' at the end; (2) in clause (v), by striking the period at the end and inserting ``; and''; and (3) by adding at the end the following new clause: ``(vi) whether the proposal addresses the needs of small business concerns--[[Page 115 STAT. 266]] ``(I) owned and controlled by women; ``(II) owned and controlled by minorities; and ``(III) located in areas that have historically not participated in the SBIR and STTR programs.''. (b) Regulations.--Section 34(c)(4) of the Small Business Act (15 U.S.C. 657d(c)(4)) is amended by adding at the end the following: ``The Administrator shall promulgate regulations establishing standards for the consideration of proposals under paragraph (2), including standards regarding each of the considerations identified in paragraph (2)(B).''. Approved October 15, 2001.LEGISLATIVE HISTORY--H.R. 1860 (S. 856):---------------------------------------------------------------------------HOUSE REPORTS: No. 107-213, Pt. 1 (Comm. on Small Business).SENATE REPORTS: No. 107-54 accompanying S. 856 (Comm. on Small Business).CONGRESSIONAL RECORD, Vol. 147 (2001): Sept. 24, considered and passed House. Sept. 26, considered and passed Senate.

Religious Technology Center vs. Netcom

INTRODUCTORY AVERMENTS 1. Defendant Dennis Erlich ("Erlich") has been engaged in extensive and continuing infringement of copyrights andmisappropriation of trade secrets belonging to plaintiffs. Erlich has been posting plaintiffs' proprietary materials ontothe Internet computer network ("the Internet") withoutauthorization from plaintiffs and continues to do so despiteseveral warnings from plaintiffs to cease and desist hisactivities in violation of their rights. Erlich has stated that "[n]o local government or court in the US has the power to tellme otherwise." (Exhibit J.) Erlich's access to the Internet is achieved through two service providers which act as Erlich'sgateway to pass his unlawful copies onto the Internet, where they may potentially be recopied by millions of users who are able to access the Internet. Defendant Netcom On-Line CommunicationServices, Inc. ("Netcom") provides the computer facilitiesthrough which Erlich obtains access to the Internet for hisunauthorized copies. Defendant Tom Klemesrud, dba Clearwood Data Services ("Klemesrud") is a subscriber to Netcom's services andthrough a bulletin board service which Klemesrud maintains, acts as the link between Erlich and Netcom, thereby facilitatingErlich's infringements and misappropriations to reach theInternet and, in effect, recopying and publishing theunauthorized copies posted by Erlich. Both Klemesrud and Netcom have refused to cease and desist from providing this entree onto the Internet for Erlich's infringements and thereby contributing to these infringements, in the face of multiple warnings to cease and desist. JURISDICTION AND VENUE 2. Subject matter jurisdiction of this action existspursuant to 28 U.S.C. 1331 and 1338(a) and (b) in that this is an action for copyright infringement under 17 U.S.C. 501 joined with a claim for unfair competition through trade secretsmisappropriation. In addition, this court has pendentjurisdiction over the trade secrets misappropriation claimalleged herein, as an unfair competition claim that arises out of the same transactions and occurrences. 3. Venue is proper in this District pursuant to 28 U.S.C. 1391(b) in that events or omissions giving rise to the claimsoccurred in this district and one of the defendants is deemed to reside in this judicial district. THE PARTIES 4. RTC is, and was at all times relevant herein, aCalifornia non-profit religious corporation having its principal office in the City of Los Angeles, County of Los Angeles, Stateof California. 5. BPI is, and was at all times relevant therein, aCalifornia non-profit religious corporation having its principal office in the City of Los Angeles, County of Los Angeles, Stateof California. 6. Plaintiffs are informed and believe, and on that basis allege, that defendant Netcom is a Delaware corporation havingits principal place of business in the City of San Jose, Countyof Santa Clara, State of California. 7. Plaintiffs are informed and believe, and on that basis allege, that defendant Erlich is a resident of the City ofGlendale, County of Los Angeles, State of California. 8. Plaintiffs are informed and believe, and on that basis allege, that defendant Klemesrud, is a resident of the City ofNorth Hollywood, County of Los Angeles, State of California. GENERAL ALLEGATIONSA. The Copyrighted Published and Unpublished Works of L. Ron Hubbard 9. L. Ron Hubbard, a United States citizen who died in1986, was a world-renowned philosopher and the prolific author of numerous original works on applied religious philosophy andspiritual healing technology, including training materials andcourse manuals of the Scientology religion (hereinafter the"Religion") of which Mr. Hubbard was the founder. Certain of Mr. Hubbard's original written and recorded works have been published and made generally available, while others have not. Among the unpublished works is a body of special works, hereinaftersometimes referred to as the "Advanced Technology materials,"which contains confidential and proprietary information ("theAdvanced Technology") constituting trade secrets. 10. A list of the published literary works (hereinafter the "Published Literary Works") that were created by Mr. Hubbard and are relevant to this action is attached hereto as Exhibit "A,"showing the titles of the works along with the numbers and dates of the applicable United States copyright registrations. Copies of the Published Literary Works are not attached in view of their bulk, but will be available separately. 11. A list of the unpublished literary works (hereinafterthe "Unpublished Confidential Works") that were created by Mr.Hubbard and are relevant to this action is attached as Exhibit"B," showing the titles of the works along with the numbers anddates of the applicable United States copyright registrations. Copies of the Unpublished Confidential Works are not attached in view of their bulk and confidentiality, but redacted copies will be made available separately. 12. Initially, L. Ron Hubbard owned all rights in hisliterary works, both published and unpublished, and all rightsthe Advanced Technology, and granted licenses to others under hrights, including the right to publish the Published LiteraryWorks and the right to use and license the use of the AdvancedTechnology, with the obligation to protect the confidentiality of the Advanced Technology and the Advanced Technology materials. 13. In 1982, L. Ron Hubbard assigned to plaintiff RTC hisentire right, title and interest (apart from copyrights) in andto the Advanced Technology, including all rights to use and tolicense the use of the Advanced Technology in the United States. This assignment includes the obligation to protect theconfidentiality of the Advanced Technology and enforce theobligation of confidentiality of all those who have receiveddisclosures of the Advanced Technology. A true and correct copy of this assignment is annexed as Exhibit C to this Complaint. 14. Following Mr. Hubbard's death in 1986, ownership of the copyrights in the Published Literary Works and the UnpublishedConfidential Works passed to his Estate, which granted to RTC, on September 17, 1987, an exclusive license in the copyrightspertaining to the Unpublished Confidential Works, with the right and obligation to enforce all the copyrights in those works. Atrue and correct copy of this License Agreement is annexed tothis complaint as Exhibit D. 15. In 1989, the assets of the Estate of L. Ron Hubbard,including the copyrights pertaining to the Literary Works and the Unpublished Confidential Works, were distributed to Author'sFamily Trust-B ("the Trust"), and in 1993, the assets of theTrust were distributed to Church of Spiritual Technology, aCalifornia nonprofit religious corporation ("CST") which now isthe owner of the copyrights in the Published Literary Works andthe Unpublished Confidential Works. While the copyrights inthese works were held by the Trust, the Trustee entered into anexclusive license agreement with BPI (hereinafter "the LiteraryAgreement") which granted to BPI, inter alia, the exclusive right to print, publish and sell the Published Literary Works, and tomake and publish compilations and derivative works of and fromthe Published Literary Works, and to enforce all rights in thePublished Literary Works. A true and correct copy of theLiterary Agreement is attached hereto as Exhibit E. 16. In an agreement dated November 29, 1993, CST assumedand affirmed the Trust's September 17, 1987, license to RTCregarding all copyrights pertaining to the Unpublished LiteraryWorks with the right and obligation to enforce all the copyrights in these works. A true and correct copy of that Assignment and Assumption agreement is attached as Exhibit F. In an agreementdated November 29, 1993, CST also assumed and affirmed theLiterary Agreement with BPI. A true and correct copy of thatAssignment and Assumption agreement is attached as Exhibit G. 17. The Published Literary Works and the UnpublishedConfidential Works were wholly original with Mr. Hubbard and are copyrightable subject matter under the laws of the United States. Mr. Hubbard and his successors and licensees have complied in all respects with the copyright laws of the United States, securedthe exclusive rights in and to the copyrights in the works, andreceived from the Register of Copyrights Certificates ofRegistration of these copyrights. Attached hereto as Exhibit Hare true and correct copies of those Certificates ofRegistration. 18. The Advanced Technology contained in the UnpublishedConfidential Works is of immense value to plaintiffs, who havetaken and continue to take substantial measures to protect theconfidentiality of the Advanced Technology. These measuresinclude, inter alia, the numbering of all copies of the materials containing Advanced Technology; locking all such materials inlocked cabinets or safes when not in use; logging of thematerials upon each use; electronically connecting the materials to the cabinets in which they are stored and to the tables onwhich they are used and monitoring of those connections bysecurity computers and alarm systems; issuing photo-identitycards to those who are authorized to access the materials;separating the Advanced Technology course rooms from all otherparts of the organization; locking the doors of the AdvancedTechnology course rooms at all times and magnetically lockingthem while materials are moving between a file cabinet and thetable where they will be used; and posting security personnel at all times. RTC derives independent economic value from theAdvanced Technology, which is not generally known to the publicor to others who can obtain economic value from its disclosure or use.B. Defendant's Violations of Plaintiff's Rights 19. Defendants have been infringing plaintiffs' copyrights in the Published Literary Works (Exhibit A) and in theUnpublished Confidential Works (Exhibit B) by reproducing each of those works electronically and publishing the works on theInternet, all without any authorization from the plaintiffs. 20. Erlich is a former Scientologist who became aparishioner of the Religion in or about 1968 and served invarious capacities in Churches of Scientology in the UnitedStates between 1968 and about 1982. While a parishioner andstaff member of the Religion, Erlich received Scientologyministerial training to enable him to provide ministerialcounselling services, known as "auditing," and received access to a wide variety of written materials pertaining to the Religionand its services and training, including the Published LiteraryMaterials and the Unpublished Confidential Materials. 21. Erlich left the Religion in or about 1982, andsubsequently has been engaged in activities hostile to theReligion. Among those activities are the unauthorized copying of the Published Literary Works and the Unpublished ConfidentialWorks, and the unauthorized publication of those copies on theInternet. 22. No one has access to the Unpublished Confidential Works without permission or unless they were obtained through illicitmeans. Erlich could only have obtained copies of these materials through his own theft, or by having received stolen property from another. 23. Plaintiffs are informed and believe, and on that basis allege, that defendant Netcom is engaged in the business ofproviding access to others to the Internet for fees, and for that purpose maintains and operates one or more computer facilities in this judicial district through which customers of Netcom areelectronically connected to the Internet and send and receiveelectronic messages that pass through the Internet to others. 24. Plaintiffs are informed and believe, and on that basis allege, that Defendant Klemesrud is engaged in the business ofoperating a computer service for subscribers, for fees, and forthat purpose maintains and operates one or more computerfacilities that, among other things, provide access to theInternet through Netcom's computer facility, to which Klemesrudis a subscriber and for which service Klemesrud pays Netcom afee. Plaintiffs are informed and believe, and on that basisallege, that Klemesrud's service is in the nature of a computerBulletin Board Service ("BBS"). 25. Plaintiffs are informed and believe, and on that basis allege, that, during the past approximately six months or less,Erlich has, without authorization, reproduced the UnpublishedConfidential Works listed in Exhibit "B," in which the exclusive rights under copyrights are owned by RTC, and has, withoutauthorization, electronically published copies of these works in violation of the copyrights of RTC. 26. Plaintiffs are informed and believe, and on that basisallege, that, during the past approximately six months or less,Erlich has, without authorization, reproduced the PublishedLiterary Works listed in Exhibit "A," in which the exclusiverights under copyrights are owned by BPI, and has, withoutauthorization, electronically published copies of these works in violation of the copyrights of BPI. 27. Plaintiffs are informed and believe, and on that basis allege, that the infringing acts of Erlich alleged in paragraphs 23 and 24 of this Complaint, and each such infringing act, were performed through and with the assistance of the computerfacilities of Klemesrud and Netcom, and of each of them, andcaused those copies to be published, without authorization, onthe Internet through a newsgroup, or public discussion group,called "alt.religion.scientology"; and further that Klemesrud and Netcom, and each of them, thus have reproduced and publishedplaintiffs' works listed in Exhibits A and B, and each such work, without the authorization of plaintiffs. In this manner,Klemesrud and Netcom have infringed, and contributorilyinfringed, plaintiffs' copyrights. 28. Plaintiffs have objected repeatedly to the actions ofErlich, Klemesrud and Netcom, as aforesaid, have informed each of them that the actions constitute copyright infringement and trade secret misappropriation, and have demanded that they cease anddesist from further infringement, misappropriation, andcontributory infringement. True and correct copies of selectedletters of plaintiffs' counsel to defendants are attached hereto as Exhibit "I." 29. Erlich has refused to cease and desist from hisinfringement, and has responded to plaintiffs' letters withfurther unauthorized reproduction and publication in violation of plaintiffs' copyrights. Erlich also has made defiant responsesto plaintiffs claiming the right to violate plaintiffs' rights. He has said no local government or court in the U.S. has thepower to tell him otherwise. True and correct copies of Erlich's responses are attached hereto as Exhibit "J". 30. Klemesrud and Netcom have refused to cease and desistfrom receiving, transmitting and publishing Erlich's unauthorized copies of plaintiffs' copyrighted works. True and correct copies of Klemesrud's and Netcom's responses are attached hereto asExhibits "K" and "L," respectively. 31. All copying and publishing by Erlich of the workslisted in Exhibits A and B has been unauthorized and constitutewillful copyright infringement. 32. All copying and publication by Klemesrud and Netcom of works transmitted through their facilities by Erlich after theyreceived notice of plaintiffs' rights and the continuingviolation of those rights by Erlich constitute willful copyright infringement. FIRST CLAIM FOR RELIEF (Copyright Infringement of Published Literary Works, 17 U.S.C. 101 et seq., Against All Defendants by BPI) 33. BPI incorporates by reference the allegations contained in paragraphs 2 through 31 above as though set forth fullyherein. 34. The Published Literary Works are protected under the Copyright Act of 1909, 17 U.S.C. 1 et seq. (repealed), andthe Copyright Act of 1976, 17 U.S.C. 101 et seq., as amended. 35. The foregoing acts of defendants violate BPI'sexclusive rights to reproduce, publish and display the Published Literary Works, listed in Exhibit A hereto, all in violation ofBPI's exclusive copyrights under 17 U.S.C. 106. Such actsconstitute copyright infringement under 17 U.S.C. 501 and have contributed to infringement by others. 36. Unless restrained, defendants will continue the actscomplained of herein, to BPI's irreparable injury. 37. Defendants' unlawful acts set forth above constitutewillful copyright infringement under 17 U.S.C. 504. 38. As a direct and proximate result of the foregoing acts of defendant, BPI has suffered damages in an amount which cannot now be ascertained but that is capable of proof at trial. 39. In the alternative, BPI seeks statutory damages fromdefendants under 17 U.S.C. 504(c)(1) and (2) for suchinfringement of BPI's copyrights in the Published Literary Works, in the amount of $100,000 for each such work. SECOND CLAIM FOR RELIEF (Copyright Infringement of Unpublished Confidential Works 17 U.S.C. 101 et seq. Against All Defendants by RTC) 40. RTC incorporates by reference the allegations contained in paragraphs 2 through 31 above as though set forth fullyherein. 41. The unpublished Confidential Works are protected under the Copyright Act of 1909, 17 U.S.C. 1 et seq. (repealed), and the Copyright Act of 1976, 17 U.S.C. 101 et seq. 42. The foregoing acts of defendants violate RTC'sexclusive rights to reproduce, publish and display theUnpublished Confidential Works, listed in Exhibit B hereto, allin violation of RTC's exclusive copyrights under 17 U.S.C. 106. Such acts constitute copyright infringement under 17 U.S.C. 501 and have contributed to infringement by others. 43. Unless restrained, defendants will continue the actscomplained of herein, to RTC's irreparable injury. 44. Defendants' unlawful acts set forth above constitute willfulcopyright infringement under 17 U.S.C. 504. 45. As a direct and proximate result of the foregoing acts of defendant, RTC has suffered damages in an amount which cannot now be ascertained or computed but that is capable of proof attrial. 46. In the alternative, RTC seeks statutory damages fromdefendants under 17 U.S.C. 504(c)(1) and (2) for infringementof RTC's copyrights in the Unpublished Confidential Works, in the amount of $100,000 for such work. THIRD CLAIM FOR RELIEF (Misappropriation of Trade Secrets, Against Erlich by RTC) 47. RTC incorporates by reference the allegations inparagraphs 2 through 31 above as though set forth fully herein. 48. Erlich was employed between 1975 and 1982 as a memberof the staff of the Church of Scientology Flag Serviceorganization ("Flag"). Prior to working for Flag, Erlich was aparishioner of another advanced Church of Scientology known asChurch of Scientology Advanced organization of Los Angeles("AOLA"). Flag is licensed by RTC for the use of the AdvancedTechnology in accordance with Church doctrine, with disclosurestrictly limited to its staff and parishioners who are qualified, according to religious tenets, to receive these materials, and who undertake the obligation to maintain their confidentiality. All staff members of Flag, including Erlich, were and arerequired to agree to be bound by all administrative andecclesiastical policies of the Church of Scientology, whichrequire that all Advanced Technology materials be keptconfidential at all times and that each person who receives adisclosure of any of the Advanced Technology materials agree not to disclose the Advanced Technology to anyone not authorized toreceive it. 49. At various times from 1968 through 1982, Erlichreceived Scientology ministerial training to enable him toprovide ministerial counselling services, known within theChurches of Scientology as "auditing," to the Church'sparishioners. During this training and as a staff member ofFlag, Erlich studied, acknowledged, and agreed to be bound by the policy requiring extreme security precautions to be taken withregard to the Advanced Technology materials and the requirementof agreeing to maintain the confidentiality and the security ofthe Advanced Technology materials before being permitted accessto the Advanced Technology. 50. As a staff member of Flag, Erlich agreed that he would protect and maintain confidential all information contained inthe Advanced Technology that was disclosed to him. As a resultof his acceptance of those confidentiality obligations,confidential information contained in the Advanced Technologymaterials and constituting trade secrets, including theUnpublished Confidential Works, was disclosed to Erlich. Suchinformation was of a highly confidential and proprietary natureand Erlich received the information in trust and confidence. 51. RTC and BPI are members of the group of entities forwhose benefit the contracts, policies, rules and doctrines ofFlag are created and maintained. 52. Erlich left the Religion in or about 1982 and hassubsequently been engaged in various activities hostile to theReligion. Upon leaving the Religion, Erlich lost any rights and privileges he had acquired as a Scientology minister and anyright to hold himself out as such. 53. By his acts, as aforesaid, Erlich has disclosed,without authorization, confidential, trade secrets informationconstituting portions of the Advanced Technology that arecontained in the Unpublished Confidential Works listed in Exhibit B hereto, in violation of his long-standing obligations tomaintain and protect the secrecy of that information. 54. Erlich's acts, as aforesaid, were done with fullknowledge that the Unpublished Confidential Works containedconfidential trade secrets information, and with intent topublicize that confidential information. 55. By his acts, as aforesaid, Erlich has misappropriatedRTC's trade secrets in violation of RTC's rights under California law, California Civil Code 3426.1 et seq. 56. Unless restrained by this Court, Erlich will continuethe acts complained of herein, and RTC will incur (and iscurrently incurring) irreparable injury, for which there is noadequate remedy at law. 57. As a direct and proximate result of the foregoing acts of Erlich, RTC has suffered damages in an amount which cannot now be ascertained but that is capable of proof at trial. 58. Plaintiff RTC is informed and believes, and on thatbasis alleges, that, in committing the foregoing acts, Erlichacted with fraud, oppression and malice, thereby entitlingplaintiff to punitive damages in an amount not less that$500,000. WHEREFORE, plaintiffs pray for the entry of judgment against defendants as follows: 1. ON THE FIRST CLAIM FOR RELIEF: (a) For an award of damages to BPI against defendants, and each of them according to proof at trial, and for all gains, profits and advantages derived by defendants by theirinfringement of the copyrights of BPI in the Published LiteraryWorks; (b) For an award of statutory damages to BPI under 17 U.S.C. 504(c)(1) of $20,000.00 for each of the PublishedLiterary Works infringed by defendants Klemesrud and Netcom and, in addition, an award of statutory damages to BPI of $100,000.00 for each of the Published Literary Works infringed by Erlich,pursuant to 17 U.S.C. 504(c)(2); (c) For an order that defendants, and each of them,and all of their officers, agents, employees, partners andattorneys, and all persons in active concert or participationwith them having notice of this order, be enjoined, during thependency of this action, and permanently thereafter, from making or publishing, or causing to be made or published, anyunauthorized reproductions of the Published Literary Works or of the Unpublished Confidential Works, including, withoutlimitation, transmitting or loading of any of them into, ordownloading any copies of them from, any computer, database,information service, electronic bulletin board service ornetwork; and that defendants, and each of them, be required toremove from the Internet, Netcom's computer facilities,Klemesrud's computer facilities, and any other computer facility, database, information service, bulletin board service, ornetwork, or other medium, all copies of the Published LiteraryWorks and the Unpublished Confidential Works which defendants, or any of them, have loaded or caused to be loaded; and (d) For an award of BPI's attorneys' fees and costspursuant to 17 U.S.C. 505. 2. ON THE SECOND CLAIM FOR RELIEF: (a) For an award of damages to RTC against defendants, and each of them according to proof at trial, and for all gains, profits and advantages derived by defendants by theirinfringement of the copyrights of RTC in the UnpublishedConfidential Works; (b) For an award of statutory damages to RTC under 17 U.S.C. 504(c)(1) of $20,000.00 for infringement of thecopyrights in the Unpublished Confidential Works by defendantsKlemesrud and Netcom and, in addition, an award of statutorydamages to RTC of $100,000.00 for each of the UnpublishedConfidential Works infringed by Erlich, pursuant to 17 U.S.C. 504(c)(2); (c) For an order that defendants, and each of them,and all of their officers, agents, employees, partners andattorneys, and all persons in active concert or participationwith them having notice of this order, be enjoined, during thependency of this action and permanently thereafter, from makingor publishing, or causing to be made or published, anyunauthorized reproductions of the Unpublished Confidential Works, including, without limitation, the transmitting or loading of any of them onto, or downloading any copies of them from, anycomputer, database, information service, electronic bulletinboard service or network, and that defendants, and each of them, be required to remove from the Netcom's computer facilities, and Klemesrud's computer facilities, and any other computer facility database, information service, bulletin board service, ornetwork, or other medium, all copies of the UnpublishedConfidential Works which defendants, or any of them loaded, orcaused to be loaded; and (d) For an award of RTC's attorneys' fees and costspursuant to 17 U.S.C. 505. 3. ON THE THIRD CLAIM FOR RELIEF: (a) For an order that Erlich, and all his agents,employees, partners and attorneys, and all persons in activeconcert or participation with them having notice of this Order,be enjoined, during the pendency of this action and permanentlythereafter, from further unauthorized disclosure of any of theUnpublished Confidential Works or any of the Advanced Technology, and specifically from transmitting or otherwise loading of any of the Advanced Technology materials onto the Netcom's computerfacilities, or Klemesrud's Computer facilities, or any computer, database information service, electronic bulletin board serviceor network, or other medium; (b) For an order directing Erlich, and his agents,employees, partners and attorneys, and all persons in activeconcert or participation with them having notice of this order,to return immediately to counsel of record herein for plaintiffReligious Technology Center all documents in their possession,custody or control that contain any of the Advanced Technology; (c) For an order enjoining Erlich and his agents,employees, partners and attorneys, and all persons in activeconcert of participation with them having notice of this Order,from filing with the Court, except under seal, and from otherwise disclosing, any documents that contain any of the AdvancedTechnology; (d) For compensatory damages according to proof attrial; and (e) For punitive damages in an amount to be determined at trial. 4. For such other and further relief as this Court deemsjust and proper.DATED: February /8/, 1995 WILSON, RYAN & CAMPILONGO By: /s/ Andrew H. Wilson Thomas M. Small Janet A. Kobrin SMALL, LARKIN & KIDDE Helena K. Kobrin Attorneys for Plaintiffs RELIGIOUS TECHNOLOGY CENTER and BRIDGE PUBLICATIONS, INC. VERIFICATION I, Warren McShane, am the President of Religious TechnologyCenter, plaintiff in this action. I have read the VERIFIEDCOMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES FOR: (1) COPYRIGHTINFRINGEMENT; AND (2) TRADE SECRETS MISAPPROPRIATION (CAL. CIV. 3426.1) and know the contents thereof. The same is true of my own knowledge, except as to matterswhich are stated on information and belief, or are based on thepersonal knowledge of a co-plaintiff, and as to those matters, I believe them to be true. I declare under penalty of perjury that the foregoing istrue and correct. Executed this 7th day of February 1995, at Los Angeles, California. /s/ Warren McShane VERIFICATION I, John Goodwin, am the President of Bridge Publications,Inc., plaintiff in this action. I have read the VERIFIEDCOMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES FOR: (1) COPYRIGHTINFRINGEMENT; AND (2) TRADE SECRETS MISAPPROPRIATION (CAL. CIV. 3426.1) and know the contents thereof. The same is true of my own knowledge, except as to matterswhich are stated on information and belief, or are based on thepersonal knowledge of a co-plaintiff, and as to those matters, I believe them to be true. I declare under penalty of perjury that the foregoing istrue and correct. Executed this 7th day of February 1995, at Los Angeles, California. /s/ John GoodwinIN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF CALIFORNIARELIGIOUS TECHNOLOGY CENTER, aCalifornia non-profit corporation; and BRIDGEPUBLICATIONS, INC., a California non-profitcorporation, Plaintiffs, v.NETCOM ON-LINE COMMUNICATIONSERVICES, INC., a Delaware corporation;DENNIS ERLICH, an individual; and TOMKLEMESRUD, an individual, dbaCLEARWOOD DATA SERVICES, Defendants.NO. C-95-20091 RMWORDER DENYING DEFENDANTNETCOM'S MOTION FOR SUMMARYJUDGMENT; DENYING DEFENDANTKLEMESRUD'S MOTION FOR JUDGMENTON THE PLEADINGS; AND DENYINGPLAINTIFFS' MOTION FOR PRELIMINARYINJUNCTION AGAINST NETCOM ANDKLEMESRUDThis case concerns an issue of first impression regarding intellectualproperty rights in cyberspace. [1] Specifically, this order addresseswhether the operator of a computer bulletin board service ("BBS"), andthe large Internet [2] access provider that allows that BBS to reachthe Internet,[page 2]should be liable for copyright infringement committed by a subscriberof the BBS.Plaintiffs Religious Technology Center ("RTC") and BridgePublications, Inc. ("BPI") hold copyrights in the unpublished andpublished works of L. Ron Hubbard, the late founder of the Church ofScientology ("the Church"). Defendant Dennis Erlich ("Erlich") is aformer minister of Scientology turned vocal critic of the Church,whose pulpit is now the Usenet newsgroup [4] alt.religion.scientology("a.r.s."), an on-line forum for discussion and criticism ofScientology. Plaintiffs maintain that Erlich infringed theircopyrights when he posted portions of their works on[page 3]a.r.s. Erlich gained his access to the Internet through defendantThomas Klemesrud's ("Klemesrud's") BBS "support.com." Klemesrud's BBSis not directly linked to the Internet, but gains its connectionthrough the facilities of defendant Netcom On-Line Communications,Inc. ("Netcom"), one of the largest providers of Internet access inthe United States.After failing to convince Erlich to stop his postings, plaintiffscontacted defendants Klemesrud and Netcom. Klemesrud responded toplaintiffs' demands that Erlich be kept off his system by askingplaintiffs to prove that they owned the copyrights to the works postedby Erlich. However, plaintiffs refused Klemesrud's request asunreasonable. Netcom similarly refused plaintiffs' request thatErlich not be allowed to gain access to the Internet through itssystem. Netcom contended that it would be impossible to prescreenErlich's postings and that to kick Erlich off the Internet meantkicking off the hundreds of users of Klemesrud's BBS. Consequently,plaintiffs named Klemesrud and Netcom in their suit against Erlich,although only on the copyright infringement claims. [5]On June 23, 1995, this court heard the parties' arguments on eightmotions, three of which relate to Netcom and Klemesrud and arediscussed in this order: (1) Netcom's motion for summary judgment;(2) Klemesrud's motion for judgment on the pleadings; [6] and (3)plaintiffs' motion for a preliminary injunction against Netcom andKlemesrud. For the reasons set forth below, the court grants in partand denies in part Netcom's motion for summary judgment andKlemesrud's motion for judgment on the pleadings and deniesplaintiffs' motion for a preliminary injunction._____________________________________________________[1] Cyberspace is a popular term for the world of electroniccommunications over computer networks. See Trotter Hardy, The ProperLegal Regime for "Cyberspace," 55 U.Pitt.L.Rev. 993, 994 (1994).[2] "The Internet today is a worldwide entity whose nature cannot beeasily or simply defined. From a technical definition, the Internetis the 'set of all interconnected IP networks' -- the collection ofseveral thousand local, regional, and global computer networksinterconnected in real time via the TCP/IP Internetworking Protocolsuite. . . ." Daniel P. Dern, The Internet Guide for New Users 16(1994).One article described the Internet as a collection of thousands of local, regional, and global Internet Protocol networks. What it means in practical terms is that millions of computers in schools, universities, corporations, and other organizations are tied together via telephone lines. The Internet enables users to share files, search for information, send electronic mail, and log onto remote computers. But it isn't a program or even a particular computer resource. It remains only a means to link computer users together. Unlike on-line computer services such as CompuServe and America On Line, no one runs the Internet. . . . No one pays for the Internet because the network itself doesn't exist as a separate entity. Instead various universities and organizations pay for the dedicated lines linking their computers. Individual users may pay an Internet provider for access to the Internet via its server.David Bruning, Along the InfoBahn, Astronomy, vol. 23, No. 6, p. 76(June 1995).[3] Issues of Erlich's liability were addressed in this court's orderof September 22, 1995. That order concludes in part that apreliminary injunction against Erlich is warranted because plaintiffshave shown a likelihood of success on their copyrighted infringementclaims against him. Plaintiffs likely own valid copyrights inHubbard's published and unpublished works and Erlich's near-verbatimcopying of substantial portions of plaintiffs' works was not likely afair use. To the extent that Netcom and Klemesrud argue thatplaintiffs' copyrights are invalid and that Netcom and Klemesrud arenot liable because Erlich had a valid fair use defense, the courtpreviously rejected these arguments and will not reconsider them here.[4] The Usenet has been described as a worldwide community of electronic BBSs that is closely associated with the Internet and with the Internet community. The messages in Usenet are organized into thousands of topical groups, or "Newsgroups". . . . As a Usenet user, you read and contribute ("post") to your local Usenet site. Each Usenet site distributes its users' postings to other Usenet sites based on various implicit and explicit configuration settings, and in turn receives postings from other sites. Usenet traffic typically consists of as much as 30 to 50 Mbytes of messages per day. Usenet is read and contributed to on a daily basis by a total population of millions of people. . . . There is no specific network that is the Usenet. Usenet traffic flows over a wide range of networks, including the Internet and dial-up phone links.Dern, supra, at 196-97.[5] The First Amended Complaint ("FAC") contains three claims: (1)copyright infringement of BPI's published literary works against alldefendants; (2) copyright infringement of RTC's unpublishedconfidential works against all defendants; and (3) misappropriation ofRTC's trade secrets against defendant Erlich only.[6] Klemesrud alternatively filed a motion for summary judgment,which will not be considered at this time because Klemesrud wasunavailable to be deposed in time for plaintiffs' opposition. In aprevious order, the court struck those portions of the motion thatreferred to matters outside of the pleadings.[page 4]I. NETCOM'S MOTION FOR SUMMARY JUDGMENT OF NONINFRINGEMENTA. Summary Judgment StandardsBecause the court is looking beyond the pleadings in examining thismotion, it will be treated as a motion for summary judgment ratherthan a motion to dismiss. Grove v. Mead School District, 753 F.2d1528, 1532 (9th Cir. 1985). Summary judgment is proper when "thepleadings, depositions, answers to interrogatories, and admissions onfile, together with the affidavits, if any, show that there is nogenuine issue as to any material fact and that the moving party isentitled to judgment as a matter of law." Fed.R.Civ.P.56(c). Thereis a "genuine" issue of material fact only when there is sufficientevidence such that a reasonable juror could find for the partyopposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,251-52 (1986). Entry of summary judgment is mandated against a partyif, after adequate time for discovery and upon motion, the partyfails to make a showing sufficient to establish the existence of anelement essential to that party's case, and on which that party willbear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S.317, 322 (1986). The court, however, must draw all justifiableinferences in favor of the nonmoving parties, including questions ofcredibility and of the weight to be accorded particular evidence.Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520 (1991).B. Copyright InfringementTo establish a claim of copyright infringement, a plaintiff mustdemonstrate (1) ownership of a valid copyright and (2) "copying" [7]of protectable expression by the defendant. Baxter v. MCA, Inc., 812F.2d 421, 423 (9th Cir.), cert. denied, 484 U.S. 954 (1987).Infringement occurs when a defendant violates one of the exclusiverights of the copyright holder. 17 U.S.C. Section 501(a). Theserights include the right to reproduce the copyrighted work, the rightto prepare derivative works, the right to distribute copies to thepublic, and the right to publicly display the work. 17 U.S.C.Sections 106(1)-(3) & (5). The court has already determined thatplaintiffs have established that they own the[page 5]copyrights to all of the Exhibit A and B works, except item 4 ofExhibit A. [8] The court also found plaintiffs likely to succeed ontheir claim that defendant Erlich copied the Exhibit A and B works andwas not entitled to a fair use defense. Plaintiffs argue that,although Netcom was not itself a source of any of the infringingmaterials on its system, it nonetheless should be liable forinfringement, either directly, contributorily, or vicariously. [9]Netcom disputes these theories of infringement and further aruges thatit is entitled to its own fair use defense.1. Direct InfringementInfringement consists of the unauthorized exercise of one of theexclusive rights of the copyright holder delineated in section 106.17 U.S.C. Section 501. Direct infringement does not require intent onany particular state of mind, [10] although willfulness is relevant tothe award of statutory damages. 17 U.S.C. Section 504(c).Many of the facts pertaining to this motion are undisputed. The courtwill address the relevant facts to determine whether a theory ofdirect infringement can be supported based on Netcom's allegedreproduction of plaintiffs' works. The court will look at onecontrolling Ninth Circuit decision addressing copying in the contextof computers and two district court opinions addressing the liabilityof BBS operators for the infringing activities of subscribers. Thecourt will additionally examine whether Netcom is liable forinfringing plaintiffs' exclusive rights to publicly distribute anddisplay their works.____________________________________________________[7] In this context, "copying" is "shorthand for the infringing ofany of the copyright owner's five exclusive rights." S.O.S., Inc. v.Payday, Inc., 886 F.2d 1081, 1085 n.3 (9th Cir. 1989).[8] The court has under submission plaintiffs' request to expand thepreliminary injunction against Erlich.[9] Plaintiffs have argued at times during this litigation thatNetcom should only be required to respond after being given notice,which is only relevant to contributory infringement. Nevertheless,the court will address all three theories of infringement liability.[10] The strict liability for copyright infringement is in contrastto another area of liability affecting online service providers:defamation. Recent decisions have held that where a BBS exercisedlittle control over the content of the material on its service, it wasmore like a "distributor" than a "republisher" and was thus onlyliable for defamation on its system where it knew or should have knownof the defamatory statements. Cubby, Inc. v. CompuServe, Inc., 775F.Supp. 135 (S.D.N.Y. 1991). By contrast, a New York state courtjudge found that Prodigy was a publisher because it held itself out tobe controlling the content of its services and because its usedsoftware to automatically prescreen messages that were offensive or inbad taste. Stratton Oakmont, Inc. v. Prodigy Services Co., TheRecorder, June 1, 1995, at 7 (excerpting May 24, 1995 Order GrantingPartial Summary Judgment to Plaintiffs)..[page 6]a. Undisputed FactsThe parties do not dispute the basic processes that occur whenErlich posts his allegedly infringing messages to a.r.s. Erlichconnects to Klemesrud's BBS using a telephone and a modem.Erlich then transmits his message to Klemesrud's computer, wherethey are automatically briefly stored. According to aprearranged pattern established by Netcom's software, Erlich'sinitial act of posting a message to the Usenet results in theautomatic copying of Erlich's message from Klemesrud's computeronto Netcom's computer and onto other computers on the Usenet.In order to ease transmission and for the convenience of Usenetusers, usenet servers maintain postings from newsgroups for ashort period of time -- eleven days for Netcom's system and threedays for Klemesrud's system. Once on Netcom's computers,messages are available to Netcom's customers and Usenetneighbors, who may then download the messages to their owncomputers. Netcom's local server makes available its postings toa group of Usenet servers, which do the same for other serversuntil all Usenet sites worldwide have obtained access to thepostings, which takes a matter of hours. Francis Decl. Paragraph5.Unlike some other large on-line service providers, such asCompuServe, America Online, and Prodigy, Netcom does not createor control the content of the information available to itssubscribers. It also does not monitor messages as they areposted. It has, however, suspended the accounts of subscriberswho violated its terms and conditions, such as where they hadcommercial software in their posted files. Netcom admits that,although not currently configured to do this, it may be possibleto reprogram its system to screen postings containing particularwords or coming from particular individuals. Netcom, however,took no action after it was told by plaintiffs that Erlich hadposted messages through Netcom's system that violated plaintiffs'copyrights, instead claiming that it could not shut out Erlichwithout shutting out all of the users of Klemesrud's BBS.b. Creation of Fixed CopiesThe Ninth Circuit addressed the question of what constitutesinfringement in the context of storage of digital information ina computer's random access memory ("RAM"). MAI Systems Corp. v.Peak Computer, Inc., 991 F.2d 511, 518 (9th Cir. 1993). In MAI,the Ninth Circuit upheld a finding of copyright infringementwhere a repair person, who was not authorized to use the computer[page 7]owner's licensed operating system software, turned on thecomputer, thus loading the operating system into RAM for longenough to check an "error log." Id. at 518-19. Copyrightprotection subsists in original works of authorship "*fixed* inany tangible medium of expression, now known or later developed,from which they can be perceived, reproduced, or otherwisecommunicated, either directly or with the aid of a machine ordevice." 17 U.S.C. Section 102 (emphasis added). A work is"fixed" when its "embodiment in a copy . . . is sufficientlypermanent or stable to permit it to be perceived, reproduced, orotherwise communicated for a period of more than transitoryduration." Id. Section 101. MAI established that the loading ofdata from a storage device into RAM constitutes copying becausethat data stays in RAM long enough for it to be perceived. MAISystems, 991 F.2d at 518.In the present case, there is no question after MAI that "copies"were created, as Erlich's act of sending a message to a.r.s.caused reproductions of portions of plaintiffs' works on bothKlemesrud's and Netcom's storage devices. Even though themessages remained on their systems for at most eleven days, theywere sufficiently "fixed" to constitute recognizable copies underthe Copyright Act. See Information Infrastructure Task Force,Intellectual Property and the National InformationInfrastructure: The Report of the Working Group on IntellectualProperty Rights 66 (1995) ("IITF Report").c. Is Netcom Directly Liable for Making the Copies?Accepting that copies were made, Netcom argues that Erlich, andnot Netcom, is directly liable for the copying. MAI did notaddress the question raised in this case: whether possessors ofcomputers are liable for incidental copies automatically made ontheir computers using their software as part of a processinitiated by a third party. Netcom correctly distinguishes MAIon the ground that Netcom did not take any affirmative actionthat directly resulted in copying plaintiffs' works other than byinstalling and maintaining a system whereby software automaticllyforwards messages received from subscribers onto the Usenet, andtemporarily stores copies on its system. Netcom's actions, tothe extent that they created a copy of plaintiffs' works, werenecessary to having a working system for transmitting Usenetpostings to and from the Internet. Unlike the defendant in MAI,neither Netcom nor Klemesrud initiated the copying. Thedefendants in MAI turned on their[page 8]customers' computers thereby creating temporary copies of theoperating system, whereas Netcom's and Klemesrud's systems canoperate without any human intervention. Thus, unlike MAI, themere fact that Netcom's system incidentally makes temporarycopies of plaintiffs' works does not mean Netcom has caused thecopying. [11] The court believes that Netcom's act of designingor implementing a system that automatically and uniformly createstemporary copies of all data sent through it is not unlike thatof the owner of a copying machine who lets the public make copieswith it. [12] Although some of the people using the machine maydirectly infringe copyrights, courts analyze the machine owner'sliability under the rubric of contributory infringement, notdirect infringement.___________________________________________________________[11] One commentator addressed the difficulty in translatingcopyright concepts, including the public/private dichotomy, tothe digitized environment. See Niva Elkins-Koren, Copyright Lawand Social Dialogue on the Information Superhighway: The CaseAgainst Copyright Liability of Bulletin Board Operators, 13Cardozo Arts&Ent.L.J. 346, 390 (1993). This commentator notedthat one way to characterize a BBS operation is that it "providessubscribers with access and services. As such, BBS operators donot create copies, and do not transfer them in any way. Userspost the copies on the BBS, which other users can then read ordownload." Id. at 356.[12] Netcom compares itself to a common carrier that merely actsas a passive conduit for information. In a sense, a Usenetserver that forwards all messages acts like a common carrier,passively retransmitting every message that gets sent through it.Netcom would seem no more liable than the phone company forcarrying an infringing facsimile transmission or storing aninfringing audio recording on its voice mail. As Netcom'scounsel argued, holding such a server liable would be likeholding the owner of the highway, or at least the operator of atoll booth, liable for the criminal activities that occur on itsroads. Since other similar carriers of information are notliable for infringement, there is some basis for exemptingInternet access providers from liability for infringement bytheir users. The IITF Report concluded that "[i]f an entityprovided only the wires and conduits -- such as the telephonecompany, it would have a good argument for an exemption if it wastruly in the same position as a common carrier and could notcontrol who or what was on its system." IITF Report at 122.Here, perhaps, the analogy is not completely appropriate asNetcom does more than just "provide the wire and conduits."Further, Internet providers are not natural monopolies that arebound to carry all the traffic that one wishes to pass throughthem, as with the usual common carrier. See id. at 122 n.392(citing Federal Communications Commission v. Midwest Video Corp.,440 U.S. 689, 701 (1979)). Section 111 of the Copyright Actcodifies the exemption for passive carriers who are otherwiseliable for a secondary transmission. 3 Melville B. Nimmer andDavid Nimmer, Nimmer on Copyright Section 12.04[B][3], at 12-99(1995). However, the carrier must not have any direct orindirect control over the content or selection of the primarytransmission. Id.; 17 U.S.C. Section 111(a)(3). Cf. infra partI.B.3.a. In any event, common carriers are granted statutoryexemptions for liability that might otherwise exist. Here,Netcom does not fall under this statutory exemption, and thusfaces the usual strict liability scheme that exists forcopyright. Whether a new exemption should be carved out foronline service providers is to be resolved by Congress, not thecourts. Compare Comment, "Online Service Providers and CopyrightLaw: The Need for Change," 1 Syracuse J.Legis.&Pol'y 197, 202(1995) (citing recommendations of online service providers foramending the Copyright Act to create liability only where a"provider has 'actual knowledge that a work that is being or hasbeen transmitted onto, or stored on, its system is infringing,'and has the 'ability and authority' to stop the transmission, andhas, after a reasonable amount of time, allowed the infringingactivity to continue'") with IITF Report at 122 (recommendingthat Congress not exempt service providers from strict liabilityfor direct infringements)..[page 9]See, e.g., RCA Records v. All-Fast System, Inc., 594 F.Supp.335(S.D.N.Y. 1984); 3 Melville B. Nimmer & David Nimmer, Nimmer onCopyright Section 12.04[A][2][b], at 12-78 to -79 (1995) ("Nimmeron Copyright"); Elkin-Koren, supra, at 363 (arguing that"contributory infringement is more appropriate for dealing withBBS liability, first, because it focuses attention on theBBS-users relationship and the way imposing liability on BBSoperators may shape this relationship, and second because itbetter addresses the complexity of the relationship between BBSoperators and subscribers"). Plaintiffs' theory would createmany separate acts of infringement and, carried to its naturalextreme, would lead to unreasonable liability. It is notdifficult to conclude that Erlich infringes by copying aprotected work onto his computer and by posting a message to anewsgroup. However, plaintiffs' theory further implicates aUsenet server that carries Erlich's message to other serversregardless of whether that server acts without any humanintervention beyond the initial setting up of the system. Itwould also result in liability for every single Usenet server inthe worldwide link of computers transmitting Erlich's message toevery other computer. These parties, who are liable underplaintiffs' theory, do no more than operate or implement a systemthat is essential if Usenet messages are to be widelydistributed. There is no need to construe the Act to make all ofthese parties infringers. Although copyright is a strictliability statute, there should still be some element of volitionor causation which is lacking where a defendant's system ismerely used to create a copy by a third party.Plaintiffs point out that the infringing copies resided foreleven days on Netcom's computer and were sent out from it ontothe "Information Superhighway." However, under plaintiffs'theory, any storage of a copy that occurs in the process ofsending a message to the Usenet is an infringement. While it ispossible that less "damage" would have been done if Netcom hadheeded plaintiffs' warnings and acted to prevent Erlich's messagefrom being forwarded, [13] this is not relevant to its *direct*liability for copying. The same argument is true of Klemesrudand any other Usenet server. Whether a defendant makes a directcopy that constitutes infringement cannot depend on[page 10]whether it received a warning to delete the message. See D.C.Comics, Inc. v Mini Gift, 912 F.2d 29, 35 (2d Cir. 1990). Thisdistinction may be relevant to contributory infringement,however.The court will now consider two district court opinions that haveaddressed the liability of BBS operators for infringing filesuploaded by subscribers.d. Playboy CasePlayboy Enterprises, Inc. v. Frena involvd a suit against theoperator of a small BBS whose system contained files of eroticpictures. 839 F.Supp. 1552, 1534 (M.D. Fla. 1993). A subscriberof the defendant's BBS had uploaded files containing digitizedpictures copied from the plaintiff's copyrighted magazine, whichfiles remained on the BBS for other subscribers to download. Id.The court did not conclude, as plaintiffs suggest in this case,that the BBS is itself liable for the unauthorized *reproduction*of plaintiffs' work; instead, the court concluded that the BBSoperator was liable for violating the plaintiff's right topublicly *distribute and display* copies of its work. Id. at1556-57.In support of their argument that Netcom is directly liable forcopying plaintiffs' works, plaintiffs cite to the court'sconclusion that "[t]here is no dispute that [the BBS operator]supplied a product containing unauthorized copies of acopyrighted work. It does not matter that [the BBS operator]claims he did not make the copies [him]self." Id. at 1556. Itis clear from the context of this discussion [14] that thePlayboy court was looking only at the exclusive right todistribute copies to the public, where liability existsregardless of whether the defendant makes copies. Here, however,plaintiffs do not argue that Netcom is liable for its publicdistribution of copies. Instead, they claim that Netcom isliable because its computers in fact made copies. Therefore, theabove-quoted language has no bearing on the issue of directliability for unauthorized reproductions.________________________________________________________[13] The court notes, however, that stopping the distribution ofinformation once it is on the Internet is not easy. Thedecentralized network was designed so that if one link on thechain be closed off, the information will be dynamically reroutedthrough another link. This was meant to allow the system to beused for communication after a catastrophic event that shuts downpart of it. Francis Decl. Paragraph 4.[14] The paragraph in Playboy containing the quotation beginswith a description of the right of public distribution. Id.Further, the above quoted language is followed by a citation to adiscussion of the right of public distribution in Jay Dratler,Jr., Intellectual Property Law: Commercial, Creative andIndustrial Property Section 6.01[3], at 6-15 (1991). Thistreatise states that "the distribution right may be decisive, if,for example, a distributor supplies products containingunauthorized copies of a copyrighted work but has not made thecopies itself." Id. (citing to Williams Electronics, Inc. v.Arctic International, Inc., 685 F.2d 870, 876 (3d Cir. 1982)).In any event, the Williams holding regarding public distributionwas dicta, as the court found that the defendant had also madecopies. Id..[page 11]Notwithstanding Playboy's holding that a BBS operator may bedirectly liable for *distribution or displaying* to the publiccopies of protected works, [15] this court holds that the storageon a defendant's system of infringing copies and retransmissionto other servers is not a direct infringement by the BBS operatorof the exclusive right to *reproduce* the work where such copiesare uploaded by an infringing user. Playboy does not holdotherwise. [16]e. Sega CaseA court in this district addressed the issue of whether a BBSoperator is liable for copyright infringement where it solicitedsubscribers to upload files containing copyrighted materials tothe BBS that were available for others to download. SegaEnterprises Ltd. v. MAPHIA, 857 F.Supp. 679, 683 (N.D. Cal.1994). The defendant's "MAPHIA" BBS contained copies ofplaintiff Sega's video game programs that were uploaded by users.Id. at 683. The defendant solicited the uploading of suchprograms and received consideration for the right to downloadfiles. Id. Access was given for a fee or to those purchasingthe defendant's hardware device that allowed Sega video gamecartridges to be copied. Id. at 683-84. The court granted apreliminary injunction against the defendant, finding thatplaintiffs had shown a prima facie case of direct andcontributory infringement. Id. at 687. The court found thatcopies were made by unknown users of the BBS when files wereuploaded and downloaded. Id. Further, the court found that thedefendant's knowledge of the infringing activities,encouragement, direction and provision of the facilities throughhis operation of the BBS constituted contributory infringement,even though the defendant did not know exactly when files wereuploaded or downloaded. Id. at 686-87.This court is not convinced that Sega provides support for afinding of direct infringement where copies are made on adefendant's BBS by users who upload files. Although there issome language in Sega regarding *direct* infringement, it isentirely conclusory: Sega has established a prima facie case of direct copyright infringement under 17 U.S.C. Section 501. Sega has established that unauthorized copies of its games are made when such games are uploaded to the MAPHIA bulletin board, here with the knowledge of Defendant Scherman. These games are thereby placed on the storage media of the electronic bulletin board by unknown users.Id. at 686 (emphasis added). The court's refrence to the"knowledge of Defendant" indicates that the court was focusing oncontributory infringement, as knowledge is not an element ofdirect infringement. Perhaps, Sega's references to directinfringement and that "copies . . . are made" are to the directliability of the "unknown users," as there can be no contributoryinfringement by a defendant without direct infringement byanother. See 3 Nimmer on Copyright Section 12.04[A][3][a], at12-89. Thus, the court finds that neither Playboy nor Segarequires finding Netcom liable for direct infringement ofplaintiffs' exclusive right to reproduce their works. [17]f. Public Distribution and Display?Plaintiffs allege that Netcom is directly liable for makingcopies of their works. See FAC Paragraph 25. They also allegethat Netcom violated their exclusive rights to publicly displaycopies of their works. FAC Paragraphs 44, 51. There are noallegations that Netcom violated plaintiffs' exclusive right topublicly distribute their works. However, in their discussion ofdirect infringement, plaintiffs insist that Netcom is liable for"maintain[ing] copies of [Erlich's] messages on its server foreleven days for access by its subscribers and 'USENET neighbors'"and they compare this case to the Playboy case, which discussedthe right of public distribution. Opp'n at 7. Plaintiffs alsoargued this theory of infringement at oral argument. Tr. [18]5:22. Because this could be an attempt to argue that Netcom hasinfringed plaintiffs' rights of public distribution and display,the court will address these arguments._______________________________________________________[15] Given the ambiguity in plaintiffs' reference to a violationof the right to "publish" and to Playboy it is possible thatplaintiffs are also claiming that Netcom infringed theirexclusive right to publicly distribute their works. The courtwill address this argument infra.[16] The court further notes that Playboy has been muchcriticized. See, e.g., L. Rose, NetLaw 91-92 (1995). Thefinding of direct infringement was perhaps influenced by the factthat there was some evidence that defendants in fact knew of theinfringing nature of the works, which were digitized photographslabeled "Playboy" and "Playmate."[17] To the extent that Sega holds that BBS operators aredirectly liable for copyright infringement when users uploadinfringing works to their systems, this court respectfullydisagrees with the court's holding for the reasons discussedabove. Further, such a holding was dicta, as there was evidencethat the defendant knew of the infringing uploads by users and,in fact, actively encouraged such activity, thus supporting thecontributory infringement theory. Id. at 683.[18] Refrences to "Tr." are to the reporter's transcript of theJune 23, 1995 hearing on these motions..[page 13]Playboy concluded that the defendant infringed the plaintiff'sexclusive rights to publicly distribute and display copies of itsworks. 839 F.Supp. at 1556-57. The court is not entirelyconvinced that the mere possession of a digital copy on a BBSthat is accessible to some members of the public constitutesdirect infringement by the BBS operator. Such a holding suffersfrom the same problem of causation as the reproduction argument.Only the subscriber should be liable for causing the distributionof plaintiffs' work, as the contributing actions of the BBSprovider are automatic and indiscriminate. Erlich could haveposted his messages through countless access providers and theoutcome would be the same: anyone with access to Usenetnewsgroups would be able to read his messages. There is nological reason to draw a line around Netcom and Klemesrud and saythat they are uniquely responsible for distributing Erlich'smessages. Netcom is not even the first link in the chain ofdistribution -- Erlich had no direct relationship with Netcom butdealt solely with Klemesrud's BBS, which used Netcom to gain itsInternet access. Every Usenet server has a role in thedistribution, so plaintiffs' argument would create unreasonableliability. Where the BBS merely stores and passes along allmessages sent by its subscribers and others, the BBS should notbe seen as causing these works to be publicly distributed ordisplayed.Even accepting the Playboy court's holding, the case is factuallydistinguishable. Unlike the BBS in that case, Netcom does notmaintain an archive of files for its users. Thus, it cannot besaid to be "suppl[ying] a product." In contrast to some of itslarger competitors, Netcom does not create or control the contentof the information available to its subscribers; it merelyprovides *access* to the Internet, whose content is controlled byno single entity. Although the Internet consists of manydifferent computers networked together, some of which may containinfringing files, it does not make sense to hold the operator ofeach computer liable as an infringer merely because his or hercomputer is linked to a computer with an infringing file. Itwould be especially inappropriate to hold liable a service thatacts more like a conduit, in other words, one that does notitself keep an archive of files for more than a short duration.Finding such a service liable would involve an unreasonably broadconstruction of public distribution and display rights. Nopurpose would be served by holding liable those who have noability to control the information to which their subscribershave access, even though they might be in some sense helping toachieve the Internet's automatic "public[page 14]distribution" and the users' "public" display of files.g. ConclusionThe court is not persuaded by plaintiffs' argument that Netcom isdirectly liable for the copies that are made and stored on itscomputer. Where the infringing subscriber is clearly directlyliable for the same act, it does not make sense to adopt a rulethat could lead to the liability of countless parties whose rolein the infringement is nothing more than setting up and operatinga system that is necessary for the functioning of the Internet.Such a result is unnecessary as there is already a party directlyliable for causing the copies to be made. Plaintiffsoccasionally claim that they only seek to hold liable a partythat refuses to delete infringing files after they have beenwarned. However, such liability cannot be based on a theory ofdirect infringement, where knowledge is irrelevant. The courtdoes not find workable a theory of infringement that would holdthe entire Internet liable for activities that cannot reasonablybe deterred. Billions of bits of data flow through the Internetand are necessarily stored on servers throughout the network andit is thus practically impossible to screen out infringing bitsfrom noninfringing bits. Because the court cannot see anymeaningful distinction (without regard to knowledge) between whatNetcom did and what every other Usenet server does, the courtfinds that Netcom cannot be held liable for direct infringement.Cf. IITF Report at 69 (noting uncertainty regarding whether BBSoperator should be directly liable for reproduction ordistribution of files uploaded by a subscriber). [19]2. Contributory InfringementNetcom is not free from liability just because it did notdirectly infringe plaintiffs' works; it may still be liable as acontributory infringer. Although there is no statutory rule ofliability for infringement committed by others, [t]he absence of such express language in the copyright statute does[page 15] not preclude the imposition of liability for copyright infringement on certain parties who have not themselves engaged 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 circumstances in which it is just to hold one individual accountable for the actions of another.Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 435(1984) (footnote omitted). Liability for participation in theinfringement will be established where the defendant, "withknowledge of the infringing activity, induces, causes ormaterially contributes to the infringing conduct of another."Gershwin Publishing Corp. v. Columbia Artists Management, Inc.,443 F.2d 1159, 1162 (2d Cir., 1971).__________________________________________[19] Despite that uncertainty, the IITF Report recommends astrict liability paradigm for BBS operators. See IITF Report at122-24. It recommends that Congress not exempt on-line serviceproviders from strict liability because this would prematurelydeprive the system of an incentive to get providers to reduce thedamage to copyright holders by reducing the chances that userswill infringe by educating them, requiring indemnification,purchasing insurance, and where efficient, developingtechnological solutions to screening out infringement. Denyingstrict liability in many cases would leave copyright ownerswithout an adequate remedy since direct infringers may actanonymously or pseudonymously or may not have the resources topay a judgment. id.: see also Hardy, supra..a. Knowledge of Infringing ActivityPlaintiffs insist that Netcom knew that Erlich was infringingtheir copyrights at least after receiving notice from plaintiffs'counsel indicating that Erlich has posted copies of their worksonto a.r.s. through Netcom's system. Despite this knowledge,Netcom continued to allow Erlich to post messages to a.r.s. andleft the allegedly infringing messages on its system so thatNetcom's subscribers and other Usenet servers could access them.Netcom argues that it did not possess the necessary type ofknowledge because (1) it did not know of Erlich's plannedinfringing activities when it agreed to lease its facilities toKlemesrud, (2) it did not know that Erlich would infringe priorto any of his postings, (3) it is unable to screen out infringingpostings before they are made, and (4) its knowledge of theinfringing nature of Erlich's postings was too equivocal giventhe difficulty in assessing whether the registrations were validand whether Erlich's use was fair. The court will address thesearguments in turn.Netcom cites cases holding that there is no contributoryinfringement by the lessors of premises that are later used forinfringement unless the lessor had knowledge of the intended useat the time of the signing of the lease. See e.g., Deutsch v.Arnold, 98 F.2d 686, 688 (2d Cir. 1938). [20] The contributionto the infringement by the defendant in Deutsch was merely tolease use of the[page 16]premises to the infringer. Here, Netcom not only leases spacebut also serves as an access provider, which includes the storageand transmission of informaton necessary to facilitate Erlich'spostings to a.r.s. Unlike a landlord, Netcom retains somecontrol over the use of its system. See infra part I.B.3.a.Thus, the relevant time frame for knowledge is not when Netcomentered into an agreement with Klemesrud. It should be whenNetcom provided its services to allow Erlich to infringeplaintiffs' copyrights. Cf. Screen Gems-Columbia Music, Inc. v.Mark-Fi Records, Inc., 256 F.Supp. 399, 403 (S.D.N.Y. 1966)(analyzing knowledge at time that defendant rendered itparticular service). It is undisputed that Netcom did not knowthat Erlich was infringing before it received notice fromplaintiffs. Netcom points out that the alleged instances ofinfringement occurring on Netcom's system all happened prior toDecember 29, 1994, the date on which Netcom first received noticeof plaintiffs' infringement claim against Erlich. See PisaniFeb. 8, 1995 Decl., Paragraph 6 & Exs. (showing latest postingmade on December 29, 1994); McShane Feb. 8, 1995 Decl.; FACParagraphs 36-38 & Ex. I. Thus, there is no question as towhether Netcom knew or should have known of Erlich's infringingactivities that occurred more than 11 days before receipt of theDecember 28, 1994 letter.However, the evidence reveals a question of fact as to whetherNetcom knew or should have known that Erlich had infringedplaintiffs' copyrights following receipt of plaintiffs' letter.Because Netcom was arguably participating in Erlich's publicdistribution of plaintiffs' works, there is a genuine issue as towhether Netcom knew of any infringement by Erlich before it wastoo late to do anything about it. If plaintiffs can prove theknowledge element, Netcom will be liable for contributoryinfringement since its failure to simply cancel Erlich'sinfringing message and thereby stop an infringing copy from beingdistributed worldwide constitutes substantial participation inErlich's public distribution of the message. Cf. R. T. Nimmer,The Law of Computer Technology Paragraph 15.11B, at S15-42 (2ded. 1994) (opining that "where information service is lessdirectly involved in the enterprise of creating unauthorizedcopies, a finding of contributory infringement is not likely").Netcom argues that its knowledge after receiving notice ofErlich's alleged infringing activities was too equivocal giventhe difficulty in assessing whether registrations are valid and[page 17]whether use is fair. Although a mere unsupported allegation ofinfringement by a copyright owner may not automaticlly put adefendant on notice of infringing activity, Netcom's positionthat liability must be unequivocal is unsupportable. Whileperhaps the typical infringing activities of BBSs will involvecopying software, where BBS operators are better equipped tojudge infringement, the fact that this involves written worksshould not distinguish it. Where works contain copyright noticeswithin them, as here, it is difficult to argue that a defendantdid not know that the works were copyrighted. To require proofof valid registrations would be impractical and would perhapstake too long to verify, making it impossible for a copyrightholder to protect his or her works in some cases, as works areautomatically deleted less than two weeks after they are posted.The court is more persuaded by the argument that it is beyond theability of a BBS operator to quickly and fairly determine when ause is not infringement where there is at least a colorable claimof fair use. Where a BBS operator cannot reasonably verify aclaim of infringement, either because of a possible fair usedefense, the lack of copyright notices on the copies, or thecopyright holder's failure to provide the necessary documentationto show that there is a likely infringement, the operator's lackof knowledge will be found reasonable and there will be noliability for contributory infringement for allowing thecontinued distribution of the works on its system.Since Netcom was given notice of an infringement claim beforeErlich had completed his infringing activity, there may be aquestion of fact as to whether Netcom knew or should have knownthat such activities were infringing. Given the context of adispute between a former member and a church he is criticizing,Netcom may be able to show that its lack of knowledge that Erlichwas infringing was reasonable. However, Netcom admits that itdid not even look at the postings once given notice and that hadit looked at the copyright notice and statements regardingauthorship, it would have triggered an investigation into whetherthere was an infringement. Kobrin June 7, 1995 Dcl., Ex. H,Hoffman Depo. at 125-128. These facts are sufficient to raise aquestion as to Netcom's knowledge once it received a letter fromplaintiffs on December 29, 1994. [21]_____________________________________________________________[20] Adopting such a rule would relieve a BBS of liability forfailing to take steps to remove infringing works from its systemeven after being handed a court's order finding infringement.This would be undesirable and is inconsistent with Netcom'scounsel's admission that Netcom would have an obligation to actin such circumstances. Tr. 35:25; see also Tr. 42:18-42:20[21] The court does not see the relevance of plaintiffs'argument that Netcom's failure to investigate their claims ofinfringement or take actions against Erlich was a departure fromNetcom's normal procedure. A policy and practice of acting tostop postings where there is inadequate knowledge of infringementin no way creates a higher standard of care under the CopyrightAct as to subsequent claims of user infringement..[page 18]b. Substantial ParticipationWhere a defendant has knowledge of the primary infringer'sinfringing activities, it will be liable if it "induces, causesor materially contributes to the infringing conduct of" theprimary infringer. Gershwin Publishing, 443 F.2d at 1162. Suchparticipation must be substantial. Apple Computer, Inc. v.Microsoft Corp., 821 F.Supp. 616, 625 (N.D.Cal. 1993), aff'd, 35F.3d 1435 (9th Cir. 1994); Demetriades v. Kaufmann, 690 F.Supp.289, 294 (S.D.N.Y. 1988).Providing a service that allows for the automatic distribution ofall Usenet postings, infringing and noninfringing, goes wellbeyond renting a premises to an infringer. See Fonovisa, Inc. v.Cherry Auction, Inc., 847 F.Supp. 1492, 1496 (E.D. Cal. 1994)(finding that renting space at swap meet to known bootleggers not"substantial participation" in the infringers' activities). Itis more akin to the radio stations that were found liable forrebroadcasting an infringing broadcast. See, e.g., SelectTheatres Corp. v. Ronzoni Macaroni Corp., 59 U.S.P.Q. 288, 281(S.D.N.Y. 1943). Netcom allows Erlich's infringing messages toremain on its system and be further distributed to other Usenetservers worldwide. It does not completely relinquish controlover how its system is used, unlike a landlord. Thus, it isfair, assuming Netcom is able to take simple measures to preventfurther damage to plaintiffs' copyrighted works, to hold Netcomliable for contributory infringement where Netcom has knowledgeof Erlich's infringing postings yet continues to aid in theaccomplishment of Erlich's purpose of publicly distributing thepostings. Accordingly, plaintiffs do raise a genuine issue ofmaterial fact as to their theory of contributory infringement asto the postings made after Netcom was on notice of plaintiffs'infringement claim.3. Vicarious LiabilityEven if plaintiffs cannot prove that Netcom is contributorilyliable for its participation in infringing activity, it may stillseek to prove vicarious infringement based on Netcom'srelationship to Erlich. A defendant is liable for vicariousliability for the actions of a primary infringer where the[page 19]defendant (1) has the right and ability to control theinfringer's acts and (2) receives a direct financial benefit fromthe infringement. See Shapiro, Bernstein & Co. v. H. L. GreenCo., 316 F.2d 304, 306 (2d Cir. 1963). Unlike contributoryinfringement, knowledge is not an element of vicarious liability.3 Nimmer on Copyright Section 12.04[A][1], at 12-70.a. Right and Ability to ControlThe first element of vicarious liability will be met ifplaintiffs can show that Netcom has the right and ability tosupervise the conduct of its subscribers. Netcom argues that itdoes not have the right to control its users' postings beforethey occur. Plaintiffs dispute this and argue that Netcom'sterms and conditions, to which its subscribers [22] must agree,specify that Netcom reserves the right to take remedial actionagainst subscribers. See, e.g., Francis Depo. at 124-126.Plaintiffs argue that under "netiquette," the informal rules andcustoms that have developed on the Internet, violation ofcopyrights by a user is unacceptable and the access provider hasa duty [sic] take measures to prevent this; where the immediateservice provider fails, the next service provider up thetransmission stream must act. See Castleman Decl. Paragraphs32-43. Further evidence of Netcom's right to restrict infringingactivity is its prohibition of copyright infringement and itsrequirement that its subscribers indemnify it for any damage tothird parties. See Kobrin May 5, 1995 Decl., Ex. G. Plaintiffshave thus raised a question of fact as to Netcom's right tocontrol Erlich's use of its services.___________________________________________________[22] In this case, Netcom is even further removed from Erlich'sactivities. Erlich was in a contractual relationship only withKlemesrud. Netcom thus dealt directly only with Klemesrud.However, it is not crucial that Erlich does not obtain accessdirectly through Netcom. The issue is Netcom's right and abilityto control the use of its system, which it can do indirectly bycontrolling Klemesrud's use..

A. G. Horniman

A. G. Horniman was a British national who was active in the Indian Independence Movement during the early-20th century. He promoted militant nationalism through the issues of the Bombay chronicle, and himself participated in activities associated with the Satyagraha. He published detailed accounts of Jallianwala Bagh massacre for which one of his correspondents (namely, Goverdhan Das) was imprisoned for three years. Horniman was also arrested, and deported to London.
Mumbai’s Horniman Circle Gardens, a large park in South Mumbai, India, is named after him.

Today's featured article

West Wycombe Park is a country house near the village of West Wycombe in Buckinghamshire, England. Built between 1740 and 1800 as a pleasure palace for the decadent 18th century libertine and dilettante Sir Francis Dashwood, the house is long and rectangular, and all four façades are columned and pedimented, three theatrically so. The house combines and encapsulates the entire progression of British 18th century architecture from early idiosyncratic Palladian to the Neoclassical, although anomalies in the design of the house make it architecturally unique. It is in an 18th century landscaped park, surrounded by smaller temples that act as satellites to the greater temple, the house. The house was given to the National Trust in 1943 by Sir John Dashwood, 10th Baronet, an action strongly resented by his heir. Dashwood retained ownership of the contents of the house, much of which he sold; after his death, the house was restored at the expense of his son, Sir Francis Dashwood. Today, while the structure is owned by the National Trust, the house is the home of Sir Edward Dashwood and his family. The house is open to the public during the summer months and a venue for civil weddings and corporate entertainment, which help to fund its maintenance and upkeep. (more...)
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Early history

Life was born January 4, 1883, in a New York City artist's studio at 1155 Broadway. The founding publisher was John Ames Mitchell, a 37-year old illustrator, who used a $10,000 inheritance to launch the weekly magazine. Mitchell created the first Life nameplate with cupids as mascots; he later drew its masthead of a knight leveling his lance at the posterior of a fleeing devil. Mitchell took advantage of a revolutionary new printing process using zinc-coated plates, which improved the reproduction of his illustrations and artwork. This edge helped because Life faced stiff competition from the bestselling humor magazines The Judge and Puck, which were already established and successful. Edward Sandford Martin was brought on as Life’s first literary editor; the recent Harvard graduate was a founder of the Harvard Lampoon.
The motto of the first issue of Life was “While there’s Life, there’s hope.” The new magazine set forth its principles and policies to its readers: “We wish to have some fun in this paper... We shall try to domesticate as much as possible of the casual cheerfulness that is drifting about in an unfriendly world... We shall have something to say about religion, about politics, fashion, society, literature, the stage, the stock exchange, and the police station, and we will speak out what is in our mind as fairly, as truthfully, and as decently as we know how.”[1]
The magazine was a success and soon attracted the industry’s leading contributors. Among the most important was Charles Dana Gibson. Three years after the magazine was founded, the Massachusetts native sold Life his first contribution for $4: a dog outside his kennel howling at the moon. Encouraged by a publisher who was also an artist, Gibson was joined in Life’s early days by such well-known illustrators as Palmer Cox (creator of the Brownie (elf), A. B. Frost, Oliver Herford, and E. W. Kemble. Life attracted an impressive literary roster too: John Kendrick Bangs, James Whitcomb Riley, and Brander Matthews all wrote for the magazine at the turn of the Century.
However, Life also had its dark side. Mitchell was sometimes accused of outright anti-Semitism. When the magazine blamed the theatrical team of Klaw & Erlanger for Chicago’s grisly Iroquois Theater Fire in 1903, a national uproar ensued. Life’s drama critic, the rascal James Stetson Metcalfe, was barred from the 47 Manhattan theatres controlled by the so-called Theatrical Syndicate. His magazine hit back with terrible cartoons of grotesque Jews with enormous noses.
Life became a place that discovered new talent; this was particularly true among illustrators. In 1908 Robert Ripley published his first cartoon in Life, 20 years before his Believe It or Not! fame. Norman Rockwell’s first cover for Life, "Tain’t You", was published May 10, 1917. Rockwell's paintings were featured on Life’s cover 28 times between 1917 and 1924. Rea Irvin, the first art director of The New Yorker and creator of Eustace Tilley, got his start drawing covers for Life.
Just as pictures would later become Life’s most compelling feature, Charles Dana Gibson dreamed up its most celebrated figure. His creation, the Gibson Girl, was a tall, regal beauty. After her early Life appearances in the 1890s, the Gibson Girl became the nation’s feminine ideal. The Gibson Girl was a publishing sensation and earned a place in fashion history.
This version of Life took sides in politics and international affairs, and published fiery pro-American editorials. Mitchell and Gibson were incensed when Germany attacked Belgium; in 1914 they undertook a campaign to push America into the war. Mitchell’s seven years spent at Paris art schools made him partial to the French; there wasn’t a shred of unbiased coverage of the war. Gibson drew the Kaiser as a bloody madman, insulting Uncle Sam, sneering at crippled soldiers, and even shooting Red Cross nurses. Mitchell lived just long enough to see Life’s crusade result in the U. S. declaration of war in 1917.
Following Mitchell’s death in 1918, Gibson bought the magazine for $1 million. But the world was a different place for Gibson’s publication. It was not the Gay Nineties where family-style humor prevailed and the chaste Gibson Girls wore floor-length dresses. World War I had spurred changing tastes among the magazine-reading public. Life’s brand of fun, clean, cultivated, humor began to pale before the new variety: crude, sexy, and cynical. Life struggled to compete on newsstands with such risqué rivals.

1922 cover, "The Flapper" by F. X. Leyendecker
In 1920 Gibson tapped former Vanity Fair staffer Robert E. Sherwood to be editor. A World War I veteran and member of the Algonquin Round Table, Sherwood tried to inject sophisticated humor onto the pages. Life published Ivy League jokes, cartoons, flapper sayings, and all-burlesque issues. Beginning in 1920 Life undertook a crusade against Prohibition. It also tapped the humorous writings of Frank Sullivan, Robert Benchley, Dorothy Parker, Franklin P. Adams, and Corey Ford. Among the illustrators and cartoonists were Ralph Barton, Percy Crosby, Don Herold, Ellison Hoover, H. T. Webster, Art Young, and John Held Jr.
Despite such all-star talents on staff, Life had passed its prime, and was sliding toward financial ruin. The New Yorker, debuting in February 1925, copied many of the features and styles of Life; it even raided its editorial and art departments. Another blow to Life’s circulation came from raunchy humor periodicals such as Ballyhoo and Hooey, which ran what can be termed outhouse gags. Esquire joined Life’s competitors in 1933. A little more than three years after purchasing Life, Gibson quit and turned the decaying property over to Publisher Clair Maxwell and Treasurer Henry Richter. Gibson retired to Maine to paint and lost active interest in the magazine, which he left deeply in the red.
Life had 250,000 readers in 1920. But as the Jazz Age rolled into the Great Depression, the magazine lost money and subscribers. By the time Maxwell and Editor George Eggleston took over, Life had switched from publishing weekly to monthly. The two men went to work revamping its editorial style to meet the times, and in the process it did win new readers. Life struggled to make a profit in the 1930s when Henry Luce pursued purchasing it.
Announcing the death of Life, Maxwell declared: “We cannot claim, like Mr. Gene Tunney, that we resigned our championship undefeated in our prime. But at least we hope to retire gracefully from a world still friendly.”
For Life’s final issue in its original format, 80 year-old Edward Sandford Martin was recalled from editorial retirement to compose its obituary. He wrote, “That Life should be passing into the hands of new owners and directors is of the liveliest interest to the sole survivor of the little group that saw it born in January 1883. ... As for me, I wish it all good fortune; grace, mercy and peace and usefulness to a distracted world that does not know which way to turn nor what will happen to it next. A wonderful time for a new voice to make a noise that needs to be heard!”[2]