Copyright liability concerns for internet service providers:
A party is guilty of copyright infringement if they violate one of the five exclusive rights given to copyright owners under the Copyright Act (as is explained in more detail in the BitLaw discussion on the scope of copyright protection). Included in those rights are the right to prevent others from reproducing (or copying) a work, publicly displaying a work, or distributing a work. It is clear that on-line service providers will be liable for copyright infringement if they are directly involved in the copying of protected material. For example, if a service provider were to place an electronic copy of the latest best-selling novel (or a pirated copy of Microsoft Word) on their bulletin board or web site, they would be guilty of copyright infringement. In these circumstances, an ISP is no different than any other party.
However, Internet Service Providers can be found liable for copyright infringement even where they are not directly engaged in the copying of protected materials. For instance, ISPs are responsible for equipment, such as a computer operating as a server, that is capable of making copies without any direct involvement of any person. Consequently, one relevant question is: "when is an ISP liable under copyright law for the copies made by its equipment?" As one example, the newsgroup servers controlled by ISPs make thousands of copies of newsgroup files everyday. Although some of these files undoubtedly contain copyrighted materials, no ISP has yet to be found guilty of copyright infringement merely for the unknown, autonomous action of their newsgroup servers.
Nevertheless, an ISP must be aware of the theories under the Copyright Act by which a party can be held liable for infringement even if they do not directly take part in the copying or distribution of a work. Under the concept of "contributory infringement," a party may be guilty of copyright infringement when they cause or contribute to the infringing conduct of another with knowledge of the other party's infringing activities. In addition, under the concept of "vicariously liability," a person may be liable for the infringing actions of another if the person has the right and ability to control the infringer's acts and receives a direct financial benefit from the infringement. Vicarious liability can be established without the defendant having actual knowledge of the infringer's activity. Under these two theories, it is possible for an ISP to be held liable for copyright infringement, even if the ISP was not directly involved in making the infringing copy.