Secondary Liability

What is Secondary Liability?

Secondary liability is the responsibility that falls on a party when the party with the primary liability is unable to fulfill their legal obligations.

Understanding Secondary Liability

Simply put, secondary liability is where one party assumes legal responsibility for the actions of another party. Secondary liability occurs when one party facilitates, materially contributes to, induces, or is in some other way responsible for the infringing acts performed by the another party. Secondary liability is typically applied to the violation of copyrights and other intellectual property rights, including trademark and patent infringements.

There are essentially two types of secondary liability: vicarious liability and contributory liability.

• Vicarious liability exists under the doctrine of agency under common law, also known as respondeat superior. It covers the responsibilities of superiors for the actions of their agents or employees, under the traditional master-servant principle. However, vicarious liability has been extended by the courts to include those who profit from infringing activities, when an enterprise has both the ability and the right to prevent such infringement.

For example, in Dreamland Ball Room v. Shapiro, Bernstein & Co., the owner of a dance hall was found to be liable for asking an orchestra to play copyrighted works, without compensating the copyright holder, because the dance hall owner profited from this violation. Even though the orchestra was employed as an independent contractor, vicarious liability was assigned to the employer under the respondeat superior principle.

• Contributory liability, also known as contributory infringement, comes from tort theory and holds the third party liable if they are aware of or supported the primary act. In the case of contributory liability, liability is assigned to parties who contributed to the infringements committed by others. Contributory liability requires both knowledge of the infringements and material contributions to them. Parties must know that they are materially contributing to the infringement of copyrights in order to be held liable via contributory liability.

The case Sony Corp. of America v. Universal City Studios, Inc. tested the scope of contributory liability to be applied to new technologies. Universal City Studios sued Sony, arguing that their sale of a home VCR materially contributed to illegal copyright infringement. The Supreme Court of the United States found that, even though Sony may have knowingly and materially contributed to copyright infringement via the sale of its Betamax VCRs, contributory liability could not be applied because the technology could be “widely used for legitimate, unobjectionable purposes,” namely, playing authorized copies of video tapes for home viewing. Therefore, contributory liability cannot be applied to new technologies, as long as that technology is “capable of substantial non-infringing uses.”