Wall Street Journal 11/28/95 
Netcom Loses Copyright Fight In Federal Court

By Joan E. Rigdon
  Staff Reporter of The Wall Street Journal

  Internet access providers may be responsible for policing the
postings of their members after all.

  In a surprise move, a federal judge in San Jose, Calif., has
ruled that Netcom On-Line Communication Services Inc. may be
liable for copyright infringement because Netcom refused to
remove a subscriber's postings of text copyrighted by the Church
of Scientology.

  Because Netcom may have known the postings infringed on
copyrights and could have removed them but didn't, Netcom may be
liable for "contributory" copyright infringement, U.S. District
Judge Ronald M. Whyte wrote in a summary judgment.

  Netcom, however, isn't liable for direct copyright
infringement or for "vicarious" infringement, according to the
ruling, which was first reported by the San Jose Mercury News.

  The ruling allows Church of Scientology affiliates to proceed
with a copyright infringement lawsuit against Netcom. The trial
is expected to take place in the middle of next year. It will
hinge on whether Netcom knew about the infringement. Netcom
claims it didn't know, despite complaints by the Church of
Scientology.

  Netcom was disappointed by the ruling, but Internet advocates
called it a victory. The ruling says "you're not going to
automatically hold system operators liable for the posts of
users," said Shari Steele, lawyer for the Electronic Frontier
Foundation, San Francisco.

  "The only time they'll even consider holding system operators
liable is if they know" about copyright infringement, she said.
"That's perfectly reasonable."

  Still, the news took Internet watchers by surprise because
Internet access providers have rarely been held responsible for
the postings of their subscribers. Just last week, a securities
firm that had sued Prodigy Services Co. for libel dropped its
lawsuit when Prodigy agreed to apologize. The firm, Stratton
Oakmont Inc. of Lake Success, N.Y., had argued that Prodigy was
liable for the content of items posted on its on-line service.
When the suit was dropped, Prodigy quickly moved to overturn a
ruling that it could be held liable.

  In the Netcom case, Dennis Erlich of Garden Grove, Calif.,
posted excerpts from the writings of L. Ron Hubbard, the
science-fiction writer who founded the Scientology religion, on
a bulletin-board service run by Clearwood Data Services.
Clearwood uses Netcom to distribute postings of its members to
newsgroups on the Internet.

  Religious Technology Center, a member of the Church of
Scientology, and Bridge Publications, the church's publishing
arm, saw the postings and asked Netcom to remove them. Netcom
refused. The plaintiffs filed suit against Netcom, Clearwood and
Mr. Erlich in February in U.S. District Court for the Northern
District of California.

  Netcom had hoped to remain above the fray by arguing that it is
legally like a landlord, who isn't responsible for the actions
of his tenants. But according to Judge Whyte's ruling,
"providing a service that allows for the automatic distribution
[of postings] goes well beyond renting a premises to an
infringer."

  Netcom's lawyer said the ruling could chill debate on the
Internet. "If access providers are exposed to liability each
time somebody complains that their copyright is violated, then I
think what they will do is simply remove material" rather than
investigate the complaints, counsel Randolf Rice said.

  The plaintiffs counter that they don't expect Netcom to ferret
out copyright infringements. Instead, they want Netcom to remove
copyrighted material when a copyright owner complains. According
to pretrial information, Netcom has so far suspended 1,200
accounts of members who violated Netcom's rules by, for example,
posting child pornography, said Helena Kobrin, counsel for the
Religious Technology Center and Bridge Publishing. "If they're
going to respond to some complaints, they should respond to all
complaints," she said.

  As for the idea that the ruling could chill Internet debate,
she said "that is absurd."

  Ms. Kobrin said Religious Technology Center and Bridge
Publications filed a similar lawsuit in August against Reston,
Va., Internet access provider Gateway Digital Services Inc. In
that suit, filed in federal district court for the Eastern
District of Virginia, a subscriber allegedly posted unpublished
writings copyrighted by the Church of Scientology. The trial is
set for Jan. 29. Gateway said late yesterday the only official
who could comment on the case wasn't available.