RTC v. Netcom: The Volitional-Conduct Rule That Shaped ISP Liability

Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), is the decision that taught copyright law how to think about the internet’s plumbing. When a former Scientology minister posted copyrighted church scriptures to a Usenet newsgroup, the copyright holders sued not only him but also the small bulletin-board service he used and Netcom, the access provider that connected that board to the internet. Judge Ronald M. Whyte held that Netcom was not a direct infringer merely because its servers automatically copied and relayed the postings — direct infringement, he reasoned, requires “some element of volition or causation.” That single move, refusing to apply strict liability to a passive conduit, became the volitional-conduct rule and the intellectual foundation for the safe harbors Congress would enact three years later in the Digital Millennium Copyright Act.

At a glance

• Case: Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995)
• Court: United States District Court for the Northern District of California
• Decided: November 21, 1995 (order on cross-motions for summary judgment)
• Opinion: District Judge Ronald M. Whyte
• Subject matter: Whether a Usenet access provider and a bulletin-board operator are liable — directly, contributorily, or vicariously — for a subscriber’s posting of copyrighted works
• Holding: An access provider whose system automatically copies material at a user’s direction is not a direct infringer for lack of volitional conduct; it may face contributory liability if it knew of and materially contributed to the infringement, but is not vicariously liable absent a direct financial benefit

The facts and posture

Dennis Erlich was a former minister of the Church of Scientology who became a vocal critic. He posted portions of copyrighted works by L. Ron Hubbard — the copyrights and confidential religious texts held and administered by the Religious Technology Center — to the Usenet newsgroup dedicated to discussing Scientology. Erlich reached Usenet through a bulletin-board system operated by Thomas Klemesrud, and Klemesrud’s board connected to the broader internet through Netcom, then one of the largest independent internet access providers.

The plaintiffs sued Erlich, Klemesrud, and Netcom for copyright infringement. When RTC notified Netcom and Klemesrud that Erlich was posting infringing material and asked them to cut off his access, both declined, taking the position that they could not feasibly screen or excise one user’s postings from the automated flow of Usenet traffic. Netcom and Klemesrud moved for summary judgment. The resulting opinion works methodically through the three theories of secondary and primary liability, and it is the direct-infringement analysis that made history.

Volition and the limits of strict liability

Copyright infringement is ordinarily a strict-liability tort: a defendant who copies a protected work infringes regardless of intent or knowledge. RTC pressed that principle, arguing that Netcom’s computers indisputably made copies of Erlich’s postings as they propagated across Usenet, so Netcom was strictly liable as a direct infringer. Two then-recent decisions — Playboy Enterprises v. Frena and MAI Systems Corp. v. Peak Computer — supplied surface support for treating any system that generates copies as a direct infringer.

Judge Whyte rejected that reading. He held that direct liability requires “some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party.” Netcom’s role was passive and automatic: its equipment copied and forwarded every posting uniformly, without any human decision to reproduce Erlich’s material in particular. To hold Netcom liable on that basis, the court reasoned, would be to hold “the owner of the copy machine” or “the phone company” liable for whatever its facilities were used to reproduce — a result that would make every internet intermediary a strict-liability insurer of its users’ conduct. The court distinguished MAI and declined to follow Frena insofar as it dispensed with the volition requirement. Copies made automatically at a subscriber’s command were the subscriber’s copies, not the provider’s.

Contributory and vicarious liability

Clearing Netcom of direct liability did not end the inquiry, because a party can be secondarily liable for another’s infringement. On contributory infringement — knowledge of the infringing activity plus a material contribution to it — the court found a genuine dispute of fact and denied summary judgment. Once RTC’s notice letter arrived, a jury could find that Netcom knew Erlich was infringing; and because Netcom had the technical ability to cancel the offending postings or terminate his access and allegedly declined to do so, a jury could find that its inaction materially contributed to the continuing infringement. The court was careful to note that a bare, unsupported allegation of infringement might not by itself establish the requisite knowledge, but Netcom’s demand for unequivocal proof set the bar too high.

On vicarious infringement — liability for one who has the right and ability to supervise the infringing activity and a direct financial interest in it — the court granted Netcom summary judgment. Even assuming Netcom could exercise some control, RTC produced no evidence that Netcom derived a direct financial benefit from Erlich’s specific infringement. Netcom charged a flat fee unaffected by the content its subscribers posted, and there was no showing that the infringing material drew or retained customers. Without that financial nexus, vicarious liability failed as a matter of law. The court also left the fair-use question for trial, finding factual disputes on the purpose and market effect of Erlich’s postings.

Open questions

Netcom answered the direct-liability question but left the reach of the volitional-conduct rule to later courts. How automatic must a system be, and how attenuated the provider’s involvement, before volition drops out? The Fourth Circuit embraced and extended the rule in CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004), and the Second Circuit invoked it for transient buffer copies in Cartoon Network. Yet the Supreme Court’s decision in American Broadcasting Cos. v. Aereo (2014) declined to lean on volitional conduct in the public-performance context, prompting a vigorous dissent that accused the majority of ignoring Netcom’s logic. The precise boundary between passive conduit and volitional copier — especially for services that curate, cache, or transcode — remains contested.

Implications

• Automatic copying is not direct infringement. A provider whose systems reproduce material indiscriminately at users’ command lacks the volition needed for direct liability, notwithstanding copyright’s usual strict-liability rule.
• Notice can create contributory exposure. Once a provider learns of specific infringement and can readily stop it, continued inaction may amount to a material contribution — a dynamic later formalized in the DMCA’s notice-and-takedown regime.
• Follow the money for vicarious claims. Vicarious liability needs a direct financial benefit tied to the infringement; flat-fee access, without more, does not supply it.
• The blueprint for Section 512. Congress treated Netcom as the leading authority when crafting the DMCA safe harbors, which codified conduit immunity and the takedown mechanism the case foreshadowed.

Frequently asked questions

What is the volitional-conduct rule from Netcom? Direct copyright infringement requires some element of volition or causation by the defendant. A service provider whose equipment automatically and indiscriminately copies material at a user’s command has not itself engaged in the volitional act of copying, so it is not directly liable, even though copyright infringement is otherwise a strict-liability tort.

Was Netcom off the hook entirely? No. The court granted summary judgment to Netcom on direct and vicarious infringement but denied it on contributory infringement, finding a triable issue over whether Netcom, after receiving notice, knew of the infringement and materially contributed by failing to cancel the postings or the user’s access.

How did Netcom influence the DMCA? Congress pointed to Netcom as the leading judicial decision on online service-provider liability when it enacted the DMCA’s Section 512 safe harbors in 1998, which codified and expanded protections for providers that act as passive conduits or respond to takedown notices.

Authorities and sources

• Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) (decided November 21, 1995; Whyte, J.). Justia full-text opinion.
• Volitional-conduct, contributory, and vicarious holdings, plus the case’s role in the DMCA’s legislative history, corroborated by Wikipedia: Religious Technology Center v. Netcom
• DMCA safe-harbor text: 17 U.S.C. § 512 (Cornell Legal Information Institute).
• Extension of the volitional-conduct rule: CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004), Justia.