Sony v. Universal

Case brief: template

Case name:	Sony Corporation v. Universal City Studios
Court:	Supreme Court of the United States
Citation; Date:	464 U.S. 417; January 17, 1984.

PROCEDURAL HISTORY
Trial court:		Appeal court (for appeal cases only):
Plaintiff:	Universal City Studios	Appellant:	Sony
Defendant:	Sony	Respondent:	Universal City Studios

Facts of the case:
Sony sells Betamax video tape recorders (VTRs). Universal Studios and co-plaintiffs alleged that some Betamax users recorded some of the plaintiffs' "copyrighted works which had been exhibited on commercially sponsored television," thereby committing copyright infringement.

Remedy sought:	The plaintiffs filed a suit for money damages, a share of Betamax profits, and an injunction against the "manufacture and marketing of Betamax VTR's."

Court opinion (including key issues and arguments):
"The question presented is whether the sale of petitioners' copying equipment to the general public violates rights" conferred upon the plaintiffs by the Copyright Act. The case is an "unprecedented attempt to impose copyright liability upon the distributors of copying equipment" rather than on consumers of the equipment who might have used it in ways that violate the Copyright Act. The Court found that "the average member of the public" uses a VTR principally for "time-shifting": recording a program to view once at a later time. Time-shifting enlarges the television viewing audience, which is not objectionable to copyright owners. None of the plaintiffs could prove that time-shifting causes harm, nor did they offer any evidence of a decrease in regular television viewing by Betamax owners. Sony also "introduced considerable evidence describing television programs that could be copied without objection from any copyright holder," such as sports, religious, and educational programming. "The District Court concluded that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works and did not constitute copyright infringement. It emphasized the fact that the material was broadcast free to the public at large, the noncommercial character of the use, and the private character of the activity conducted entirely within the home. Moreover, the court found that the purpose of this use served the public interest in increasing access to television programming, an interest that 'is consistent with the First Amendment policy of providing the fullest possible access to information through the public airwaves.'" The District Court also "concluded that an injunction was wholly inappropriate because any possible harm to respondents was outweighed by the fact that 'the Betamax could still legally be used to record noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the-air recording.'" The Court of Appeals reversed and recommended considering "statutory damages," an injunction, and a system of royalties collected as a part of a compulsory licensing arrangement. The Supreme Court reversed the Court of Appeals and noted that "the Constitution makes plain" that it is up to Congress to specify the monopoly rights authorized under the Copyright Act. At the time of the case, the Copyright Act "does not expressly render anyone liable for infringement committed by another." So Sony is not responsible for copyright infringement by the owners of its equipment. "Sony supplies a piece of equipment that is generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the copyright holder would prefer not to have copied." The copyrighted works of the plaintiffs amount to "less than 10 percent" of the total programming available for copying.

Disposition of case:
Reversed. Sale of home videotape recorders held not to constitute contributory infringement of television program copyrights.

ECONOMIC ANALYSIS OF THE CASE

Efficiency/incentive issues discussed in the court opinion:

As noted in the Supreme Court decision: "The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired."
The Supreme Court opinion was not unanimous, and the dissent was more receptive to the concerns expressed by the copyright holders (the plaintiffs).

Other efficiency/incentive issues relevant to the case:

The case concerns intellectual property rights. The trade-offs at stake are the incentive to produce creative works (dynamic efficiency) and the benefits from increasing access to existing creative works (static efficiency).

Assessment of the economic consequences of the court decision:

It is difficult to determine where best to draw the line. In this case, the Supreme Court ruled that the Copyright Act as written at the time does not prohibit the sale of "dual use" equipment which is suitable for both the authorized and unauthorized copying of programs. It is left to copyright holders to sue equipment users for infringing uses of the equipment they own. Since much copying is socially productive, this decision strikes a sensible balance. It is plausibly less costly to society to make copyright holders find ways to block the infringement of specific works than to block all copying.
Alternative approaches to copyright protection may increase efficiency. For example, the appeals court suggested a royalty system--each tape sold could include a royalty charge. Buyers building a library of copyrighted works would pay more in royalties than time-shifters who would be more likely re-use their videotapes. The Supreme Court was unwilling to legislate such alternatives by judicial decision, leaving it to Congress to decide whether or not to amend the Copyright Act.