Sony Corp. of America v. Universal City Studios

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SONY CORP. OF AMERICA V. UNIVERSAL CITY STUDIOS

In Sony Corp. of America v. Universal City Studios, 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984), also known as the Betamax case, the U.S. Supreme Court determined that Sony, a manufacturer of videocassette recorders (VCRs) did not infringe on copyrights owned by Universal City Studios and Walt Disney Productions by manufacturing and marketing Betamax VCRs. (The Court's opinion uses the terms videotape recorders and VTRs in referring to VCRs.) Universal and Disney, which owned copyrights on many popular television programs in the late 1970s, sued Sony after Sony introduced its Betamax VCR in 1976. Universal and Disney claimed that the Copyright Revision Act (17 U.S.C.A. § 101 et seq. [1976]) did not permit home viewers to record their television programs without their permission. The studios argued that Sony contributed to the copyright infringement by enabling and encouraging Betamax owners to record the copyrighted television programs.

The Supreme Court, in a 5–4 vote, determined that Sony did not infringe on the studios' copyrights by manufacturing and marketing Betamax VCRs. The decision, which analyzed difficult questions of copyright law, turned on two important legal concepts. First, the Court held that home recording of copyrighted television programs is a "fair use" of the copyrighted material and, thus, does not violate the Copyright Act. The Court's discussion of the "fair use doctrine" makes the Betamax case a landmark decision in copyright law. The Court also held that Sony was not liable for "contributory infringement" of the studios' copyrights. In other words, Sony was not liable to Universal and Disney for supplying television viewers with the means to record copyrighted television programs.

In 1976 Sony introduced the Betamax video-cassette recorder. The Betamax was the first compact, affordable VCR available to consumers. Sony encouraged potential Betamax buyers to engage in "time-shift viewing" by recording television programs and viewing them later. Universal and Disney believed that the unauthorized recording of television programs by home viewers infringed on the copyrights they held on those programs. The studios filed suit in federal district court against Sony, Sony's U.S. subsidiary, Sony's advertising agency, four retailers of Betamax VCRs, and one individual Betamax owner.

The district court ruled against Universal and Disney, finding an implied exemption for home video recording in the 1976 Copyright Revision Act (Universal City Studios, Inc. v. Sony Corp. of America, 480 F. Supp. 429 [C.D. Calif. 1979]). The district court also held that Sony was not a contributory infringer of the studios' copyrights because it did not know that home video recording was an infringement when it manufactured and sold the VCRs. Most importantly, the district court held that home video recording was a fair use of the copyrighted television programs. Universal and Disney believed that the district court was the first court to hold that copying copyrighted material for mere entertainment or convenience could be a fair use, and they immediately appealed.

The Ninth Circuit Court of Appeals reversed the district court, holding that private home videotaping infringed on the studios' copyrights (Universal City Studios, Inc. v. Sony Corp. of America, 659 F. 2d 963 [1981]). The appeals court also determined that Sony was liable to the studios for contributory infringement because it knew that Betamax VCRs would be used to reproduce copyrighted programs. The Supreme Court agreed to hear Sony's appeal.

On January 17, 1984, the Supreme Court announced its decision reversing the Ninth Circuit court, holding that Sony had not infringed on copyrights held by Universal and Disney by manufacturing and marketing Betamax VCRs. The Court was sharply divided, and both Justice john paul stevens, who wrote for the majority, and Justice harry a. blackmun, who wrote for the dissent, issued lengthy opinions. As noted earlier, the Betamax case focused on two main issues: (1) whether home recording of copyrighted television programs constitutes a "fair use" of the copyrighted material, and (2) whether Sony committed "contributory infringement" by selling VCRs, thereby enabling VCR owners to copy the copyrighted television programs.

Article I of the U.S. Constitution grants Congress the power to pass laws to protect the works of "Authors and Inventors" from copying by others. Pursuant to this power, Congress created copyrights and patents. To encourage creativity, Congress gave copyright holders the exclusive right to their creative works. The courts, however, have permitted reproduction of copyrighted works without the copyright holder's permission for a "fair use"; the copyright owner does not possess the exclusive right to a fair use. For example, a teacher may reproduce limited portions of a copyrighted book for the purpose of teaching without the permission of the author. This concept is referred to as the "fair use doctrine," which was codified by Congress in the Copyright Revision Act of 1976 (17 U.S.C.A. § 107). The Betamax decision is one of the most important cases interpreting this doctrine.

In determining that home recording of copyrighted television programs was a fair use under the copyright laws, the Supreme Court focused on the noncommercial nature of home recording. The Court stated that noncommercial use of copyrighted material is presumptively fair. The majority of the Court agreed with the district court that home recording of copyrighted television programs simply does not harm the owners of the copyrights. The Court noted that television programs are broadcast free of charge and that Betamax VCRs enable viewers to watch programs they might otherwise miss. The Court also pointed out that copyright owners besides Universal and Disney had testified at trial that they did not object to the home recording of their television programs. Based on all of these factors, the Court held that home recording of copyrighted television programs constitutes a fair use of the copyrighted material.

Clearly, Sony was not itself infringing on the copyrights owned by Universal and Disney, regardless of whether home recording of television programs could be considered a fair use. Thus, the studios argued instead that Sony was liable for contributory infringement of their copyrights. The studios' theory was that Sony supplied the means for the copyright infringement and actively encouraged infringement through advertising. The Supreme Court rejected the studios' argument. The Court agreed that contributory infringement of a copyright could occur in certain circumstances; however, manufacturing and marketing the Betamax could not constitute contributory infringement because the Betamax was capable of a number of uses that did not infringe on any copyrights. As examples of non-infringing uses, the Court noted that many copyright owners did not object to having their television programs recorded. Also, the Betamax could be used to play rented or purchased tapes of copyrighted programs, thereby compensating the copyright holders for the right to view their works.

Justices Blackmun, thurgood marshall, lewis f. powell jr., and william h. rehnquist dissented in an opinion by Blackmun. First, the dissent found that home recording of copyrighted television programs was not a fair use of the copyrighted material. Blackmun stated that "when a user reproduces an entire work and uses it for its original purpose, with no added benefit to the public, the doctrine of fair use usually does not apply." Although the majority found no harm in allowing VCR owners to record copyrighted television programs, the dissent claimed that these recordings could harm the owners of the copyrights. The dissent pointed out, for example, that persons who tape television programs for later viewing are much more likely to skip through the commercials that ultimately pay for the television program, thereby potentially reducing advertising revenue. Also, the television ratings system, on which advertising prices are based, is unable to account for taped programs. The dissent further believed that Sony could be liable to the studios for contributory infringement of their copyrights, stating that "if virtually all of the product's use … is to infringe, contributory liability may be imposed." The dissent would have remanded the case to determine whether the Betamax VCRs were used primarily for infringing or non-infringing uses.