Co Star V. Loop Net - Holdings of Appellate Court

Holdings of Appellate Court

The appellate court supported the Netcom decision as "a particularly rational interpretation of § 106 ." The court reasoned that similar to a copying machine, an ISP who owned an electronic facility that responded automatically to users' input was not a direct infringer. The court also reasoned that temporary electronic copies made during the transmission were not "fixed" because such copies were used to automatically transmit users' material and they were not "of more than transitory duration."

In response to CoStar’s argument that the DMCA made the Netcom case irrelevant, the court held that the DMCA was not exclusive and that the Netcom case was still a valid precedent. The court first reasoned that the DMCA specifically provided that despite a failure to meet the safe-harbor conditions of § 512, an ISP was still entitled to all other arguments under the law. Second, the court reasoned that when Congress codified a common law principle, the common law remained good law. Third, the court reasoned that legislative history suggested that Congress intended the DMCA's safe harbor for ISPs to be a floor, not a ceiling, of protection.

As for CoStar's argument that the screening process by a LoopNet employee rendered LoopNet liable for direct copyright infringement, the court held that this conduct did not add volition to LoopNet's involvement in storing the copy. The court reasoned that the employee's look was so cursory as to be insignificant, and if it had any significance, it only lessened the possibility of copyright infringement. LoopNet still lacked the necessary volition or causation for direct copyright infringement.