Opinion of the Majority:
Sony Corp. v. Universal City Studios
STEVENS, J., delivered the opinion of the Court in which BURGER, C. J., and BRENNAN, WHITE, and O’CONNOR, JJ., joined. BLACKMUN, J., filed a dissenting opinion in which MARSHALL, POWELL, and REHNQUIST, JJ., joined, post, p. 457.
JUSTICE STEVENS delivered the opinion of the Court.
Petitioners manufacture and sell home video tape recorders. Respondents own the copyrights on some of the television [p.420] programs that are broadcast on the public airwaves. Some members of the general public use video tape recorders sold by petitioners to record some of these broadcasts, as well as a large number of other broadcasts. The question presented is whether the sale of petitioners’ copying equipment to the general public violates any of the rights conferred upon respondents by the Copyright Act.
Respondents commenced this copyright infringement action against petitioners in the United States District Court for the Central District of California in 1976. Respondents alleged that some individuals had used Betamax video tape recorders (VTR’s) to record some of respondents’ copyrighted works which had been exhibited on commercially sponsored television and contended that these individuals had thereby infringed respondents’ copyrights. Respondents further maintained that petitioners were liable for the copyright infringement allegedly committed by Betamax consumers because of petitioners’ marketing of the Betamax VTR’s. n1 Respondents sought no relief against any Betamax consumer. Instead, they sought money damages and an equitable accounting of profits from petitioners, as well as an injunction against the manufacture and marketing of Betamax VTR’s.
n1 The respondents also asserted causes of action under state law and Sect. 43(a) of the Trademark Act of 1946, 60 Stat. 441, 15 U. S. C. Section 1125(a). These claims are not before this Court.
After a lengthy trial, the District Court denied respondents all the relief they sought and entered judgment for petitioners. 480 F.Supp. 429 (1979). The United States Court of Appeals for the Ninth Circuit reversed the District Court’s judgment on respondents’ copyright claim, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief. 659 F.2d 963 (1981). [p.421] We granted certiorari, 457 U.S. 1116 (1982); since we had not completed our study of the case last Term, we ordered reargument, 463 U.S. 1226 (1983). We now reverse.
An explanation of our rejection of respondents’ unprecedented attempt to impose copyright liability upon the distributors of copying equipment requires a quite detailed recitation of the findings of the District Court. In summary, those findings reveal that the average member of the public uses a VTR principally to record a program he cannot view as it is being televised and then to watch it once at a later time. This practice, known as "time-shifting," enlarges the television viewing audience. For that reason, a significant amount of television programming may be used in this manner without objection from the owners of the copyrights on the programs. For the same reason, even the two respondents in this case, who do assert objections to time-shifting in this litigation, were unable to prove that the practice has impaired the commercial value of their copyrights or has created any likelihood of future harm. Given these findings, there is no basis in the Copyright Act upon which respondents can hold petitioners liable for distributing VTR’s to the general public. The Court of Appeals’ holding that respondents are entitled to enjoin the distribution of VTR’s, to collect royalties on the sale of such equipment, or to obtain other relief, if affirmed, would enlarge the scope of respondents’ statutory monopolies to encompass control over an article of commerce that is not the subject of copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress.
The two respondents in this action, Universal City Studios, Inc., and Walt Disney Productions, produce and hold the copyrights on a substantial number of motion pictures and other audiovisual works. In the current marketplace, they can exploit their rights in these works in a number of ways: [p.422] by authorizing theatrical exhibitions, by licensing limited showings on cable and network television, by selling syndication rights for repeated airings on local television stations, and by marketing programs on prerecorded videotapes or videodiscs. Some works are suitable for exploitation through all of these avenues, while the market for other works is more limited.
Petitioner Sony manufactures millions of Betamax video tape recorders and markets these devices through numerous retail establishments, some of which are also petitioners in this action. n2 Sony’s Betamax VTR is a mechanism consisting of three basic components: (1) a tuner, which receives electromagnetic signals transmitted over the television band of the public airwaves and separates them into audio and visual signals; (2) a recorder, which records such signals on a magnetic tape; and (3) an adapter, which converts the audio and visual signals on the tape into a composite signal that can be received by a television set.
n2 The four retailers are Carter Hawley Hales Stores, Inc., Associated Dry Goods Corp., Federated Department Stores, Inc., and Henry’s Camera Corp. The principal defendants are Sony Corporation, the manufacturer of the equipment, and its wholly owned subsidiary, Sony Corporation of America. The advertising agency of Doyle Dane Bernback, Inc., also involved in marketing the Betamax, is also a petitioner. An individual VTR user, William Griffiths, was named as a defendant in the District Court, but respondents sought no relief against him. Griffiths is not a petitioner. For convenience, we shall refer to petitioners collectively as Sony.
Several capabilities of the machine are noteworthy. The separate tuner in the Betamax enables it to record a broadcast off one station while the television set is tuned to another channel, permitting the viewer, for example, to watch two simultaneous news broadcasts by watching one "live" and recording the other for later viewing. Tapes may be reused, and programs that have been recorded may be erased either before or after viewing. A timer in the Betamax can be used to activate and deactivate the equipment at predetermined [p.423] times, enabling an intended viewer to record programs that are transmitted when he or she is not at home. Thus a person may watch a program at home in the evening even though it was broadcast while the viewer was at work during the afternoon. The Betamax is also equipped with a pause button and a fast-forward control. The pause button, when depressed, deactivates the recorder until it is released, thus enabling a viewer to omit a commercial advertisement from the recording, provided, of course, that the viewer is present when the program is recorded. The fast-forward control enables the viewer of a previously recorded program to run the tape rapidly when a segment he or she does not desire to see is being played back on the television screen.
The respondents and Sony both conducted surveys of the way the Betamax machine was used by several hundred owners during a sample period in 1978. Although there were some differences in the surveys, they both showed that the primary use of the machine for most owners was "time-shifting" -- the practice of recording a program to view it once at a later time, and thereafter erasing it. Time-shifting enables viewers to see programs they otherwise would miss because they are not at home, are occupied with other tasks, or are viewing a program on another station at the time of a broadcast that they desire to watch. Both surveys also showed, however, that a substantial number of interviewees had accumulated libraries of tapes. n3 Sony’s survey indicated [p.424] that over 80% of the interviewees watched at least as much regular television as they had before owning a Betamax. n4 Respondents offered no evidence of decreased television viewing by Betamax owners. n5
n3 As evidence of how a VTR may be used, respondents offered the testimony of William Griffiths. Griffiths, although named as an individual defendant, was a client of plaintiffs’ law firm. The District Court summarized his testimony as follows:
"He owns approximately 100 tapes. When Griffiths bought his Betamax, he intended not only to time-shift (record, play- back and then erase) but also to build a library of cassettes. Maintaining a library, however, proved too expensive, and he is now erasing some earlier tapes and reusing them.
"Griffiths copied about 20 minutes of a Universal motion picture called ’Never Give An Inch,’ and two episodes from Universal television series entitled ’Baa Baa Black Sheep’ and ’Holmes and Yo Yo.’ He would have erased each of these but for the request of plaintiffs’ counsel that it be kept. Griffiths also testified that he had copied but already erased Universal films called ’Alpha Caper’ (erased before anyone saw it) and ’Amelia Earhart.’ At the time of his deposition Griffiths did not intend to keep any Universal film in his library.
"Griffiths has also recorded documentaries, news broadcasts, sporting events and political programs such as a rerun of the Nixon/Kennedy debate." 480 F.Supp. 429, 436-437 (1979).
Four other witnesses testified to having engaged in similar activity.
n4 The District Court summarized some of the findings in these surveys as follows:
"According to plaintiffs’ survey, 75.4% of the VTR owners use their machines to record for time-shifting purposes half or most of the time. Defendants’ survey showed that 96% of the Betamax owners had used the machine to record programs they otherwise would have missed.
"When plaintiffs asked interviewees how many cassettes were in their library, 55.8% said there were 10 or fewer. In defendants’ survey, of the total programs viewed by interviewees in the past month, 70.4% had been viewed only that one time and for 57.9%, there were no plans for further viewing." Id., at 438.
n5 "81.9% of the defendants’ interviewees watched the same amount or more of regular television as they did before owning a Betamax. 83.2% reported their frequency of movie going was unaffected by Betamax." Id., at 439.
Sony introduced considerable evidence describing television programs that could be copied without objection from any copyright holder, with special emphasis on sports, religious, and educational programming. For example, their survey indicated that 7.3% of all Betamax use is to record sports events, and representatives of professional baseball, football, basketball, and hockey testified that they had no objection to the recording of their televised events for home use. n6
n6 See Defendants’ Exh. OT, Table 20; Tr. 2447-2450, 2480, 2486-2487, 2515-2516, 2530-2534.
[p.425] Respondents offered opinion evidence concerning the future impact of the unrestricted sale of VTR’s on the commercial value of their copyrights. The District Court found, however, that they had failed to prove any likelihood of future harm from the use of VTR’s for time-shifting. 480 F.Supp., at 469.
The District Court’s Decision
The lengthy trial of the case in the District Court concerned the private, home use of VTR’s for recording programs broadcast on the public airwaves without charge to the viewer. n7 No issue concerning the transfer of tapes to other persons, the use of home-recorded tapes for public performances, or the copying of programs transmitted on pay or cable television systems was raised. See id., at 432-433, 442.
n7 The trial also briefly touched upon demonstrations of the Betamax by the retailer petitioners which were alleged to be infringements by respondents. The District Court held against respondents on this claim, 480 F.Supp., at 456-457, the Court of Appeals affirmed this holding, 659 F.2d 963, 976 (1981), and respondents did not cross-petition on this issue.
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. Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U.S. 94, 102." Id., at 454. n8 Even when an entire copyrighted work was recorded, [p.426] the District Court regarded the copying as fair use "because there is no accompanying reduction in the market for ’plaintiff’s original work.’" Ibid.
n8 The court also found that this "access is not just a matter of convenience, as plaintiffs have suggested. Access has been limited not simply by inconvenience but by the basic need to work. Access to the better program has also been limited by the competitive practice of counterprogramming." 480 F.Supp., at 454.
As an independent ground of decision, the District Court also concluded that Sony could not be held liable as a contributory infringer even if the home use of a VTR was considered an infringing use. The District Court noted that Sony had no direct involvement with any Betamax purchasers who recorded copyrighted works off the air. Sony’s advertising was silent on the subject of possible copyright infringement, but its instruction booklet contained the following statement:
"Television programs, films, videotapes and other materials may be copyrighted. Unauthorized recording of such material may be contrary to the provisions of the United States copyright laws." Id., at 436.
The District Court assumed that Sony had constructive knowledge of the probability that the Betamax machine would be used to record copyrighted programs, but found that Sony merely sold a "product capable of a variety of uses, some of them allegedly infringing." Id., at 461. It reasoned:
"Selling a staple article of commerce -- e. g., a typewriter, a recorder, a camera, a photocopying machine -- technically contributes to any infringing use subsequently made thereof, but this kind of ’contribution,’ if deemed sufficient as a basis for liability, would expand the theory beyond precedent and arguably beyond judicial management.
. . . .
". . . Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they ’constructively’ knew that some purchasers on some occasions would use their product [p.427] for a purpose which a court later deemed, as a matter of first impression, to be an infringement." Ibid.
Finally, the District Court discussed the respondents’ prayer for injunctive relief, noting that they had asked for an injunction either preventing the future sale of Betamax machines, or requiring that the machines be rendered incapable of recording copyrighted works off the air. The court stated that it had "found no case in which the manufacturers, distributors, retailers and advertisers of the instrument enabling the infringement were sued by the copyright holders," and that the request for relief in this case "is unique." Id., at 465.
It 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." Id., at 468.
The Court of Appeals’ Decision
The Court of Appeals reversed the District Court’s judgment on respondents’ copyright claim. It did not set aside any of the District Court’s findings of fact. Rather, it concluded as a matter of law that the home use of a VTR was not a fair use because it was not a "productive use." n9 It therefore held that it was unnecessary for plaintiffs to prove any harm to the potential market for the copyrighted works, but then observed that it seemed clear that the cumulative effect of mass reproduction made possible by VTR’s would tend to diminish the potential market for respondents’ works. 659 F.2d, at 974.
n9 "Without a ’productive use,’ i. e. when copyrighted material is reproduced for its intrinsic use, the mass copying of the sort involved in this case precludes an application of fair use." 659 F.2d, at 971-972.
[p.428] On the issue of contributory infringement, the Court of Appeals first rejected the analogy to staple articles of commerce such as tape recorders or photocopying machines. It noted that such machines "may have substantial benefit for some purposes" and do not "even remotely raise copyright problems." Id., at 975. VTR’s, however, are sold "for the primary purpose of reproducing television programming" and "[virtually] all" such programming is copyrighted material. Ibid. The Court of Appeals concluded, therefore, that VTR’s were not suitable for any substantial noninfringing use even if some copyright owners elect not to enforce their rights.
The Court of Appeals also rejected the District Court’s reliance on Sony’s lack of knowledge that home use constituted infringement. Assuming that the statutory provisions defining the remedies for infringement applied also to the nonstatutory tort of contributory infringement, the court stated that a defendant’s good faith would merely reduce his damages liability but would not excuse the infringing conduct. It held that Sony was chargeable with knowledge of the homeowner’s infringing activity because the reproduction of copyrighted materials was either "the most conspicuous use" or "the major use" of the Betamax product. Ibid.
On the matter of relief, the Court of Appeals concluded that "statutory damages may be appropriate" and that the District Court should reconsider its determination that an injunction would not be an appropriate remedy; and, referring to "the analogous photocopying area," suggested that a continuing royalty pursuant to a judicially created compulsory license may very well be an acceptable resolution of the relief issue. Id., at 976.