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Chapter 8 Intellectual Property

Case 8.1

41 S.Ct. 113 254 U.S. 143 COCA-COLA CO. v. KOKE CO. OF AMERICA et al. No. 101. Argued Nov. 18 & 19, 1920. Decided Dec. 6, 1920. Mr. Justice HOLMES delivered the opinion of the Court. This is a bill in equity brought by the Coca-Cola Company to prevent the infringement of its trade-mark Coca-Cola and unfair competition with it in its business of making and selling the beverage for which the trade-mark is used. The District Court gave the plaintiff a decree. 235 Fed. 408. This was reversed by the Circuit Court of Appeals. Koke Co. v. Coca-Cola Co., 255 Fed. 894, 167 C. C. A. 214. Subsequently a writ of certiorari was granted by this Court. 250 U. S. 637, 39 Sup. Ct. 493, 63 L. Ed. 1183. It appears that after the plaintiff's predecessors in title had used the mark for some years it was registered under the Act of Congress of March 3, 1881 (21 Stat. 502), and again under the Act of February 20, 1905, c. 592, 33 Stat. 724 (Comp. St. section 9485 et seq.). Both the Courts below agree that subject to the one question to be considered the plaintiff has a right to equitable relief. Whatever may have been its original weakness, the mark for years has acquired a secondary significance and has indicated the plaintiff's product alone. It is found that defendant's mixture is made and sold in imitation of the plaintiff's and that the word "Koke' was chosen for the purpose of reaping the benefit of the advertising done by the plaintiff and of selling the imitation as and for the plaintiff's goods. The only obstacle found by the Circuit Court of Appeals in the way of continuing the injunction granted below was its opinion that the trade-mark in itself and the advertisements accompanying it made such fraudulent representations to the public that the plaintiff had lost its claim to any help from the Court. That is the question upon which the writ of certiorari was granted and the main one that we shall discuss. (1) Of course a man is not to be protected in the use of a device the very purpose and effect of which is to swindle the public. But the defects of a plaintiff do not offer a very broad ground for allowing another to swindle him. The defence relied on here should be scrutinized with a critical eye. The main point is this: Before 1900 the beginning of the good will was more or less helped by the presence of cocaine, a drug that, like alcohol of caffein or opium, may be described as a deadly poison or as a valuable item of the pharmacopoeia according to the rhetorical purposes in view. The amount seems to have been very small, but it may have been enough to begin a bad habit and after the Food and Drug Act of June 30, 1906, c. 3915 (Comp. St. sections 8717-8728), if not earlier, long before this suit was brought, it was eliminated from the plaintiff's compound. Coca leaves still are used, to be sure, but after they have been subjected to a drastic process that removes from them every characteristic substance except a little tannin and still less chlorophyl. The cola nut, at best, on its side furnishes but a small portion of the 122 123 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW caffein, which now is the only element that has appreciable effect. The comes mainly from other sources. It is argued that the continued use of the name imports a representation that has ceased to be true and that the representation is reinforced by a picture of coca leaves and cola nuts upon the label and by advertisements, which however were many years before this suit was brought, that the drink is an "ideal nerve tonic and stimulant,' etc., and that thus the very thing sought to be protected is used as a fraud. The agrument does not satisfy us. We are dealing here with a popular drink not with a medicine, and although what has been said might suggest that its attraction lay in producing the expectation of a toxic effect the facts point to a different conclusion. Since 1900 the sales have increased at a very great rate corresponding to a like increase in advertising. The name now characterizes a beverage to be had at almost any soda fountain. It means a single thing coming from a single source, and well known to the community. It hardly would be too much to say that the drink characterizes the name as much as the name the drink. In other words "Coca-Cola' probably means to most persons the plaintiff's familiar product to be had everywhere rather than a compound of particular substances. Although the fact did not appear in United States v. Coca-Cola Co., 241 U. S. 265, 289, 36 Sup. Ct. 573, 60 L. Ed. 995, Ann. Cas. 1917C, 487, we see no reason to doubt that, as we have said, it has acquired a secondary meaning in which perhaps the product is more emphasized than the producer but to which the producer is entitled. The coca leaves and whatever of cola nut is employed may be used to justify the continuance of the name or they may affect the flavor as the plaintiff contends, but before this suit was brought the plaintiff had advertised to the public that it must not expect and would not find cocaine, and had eliminated everything tending to suggest cocaine effects except the name and the picture of the leaves and nuts, which probably conveyed little or nothing to most who saw it. It appears to us that it would be going too far to deny the plaintiff relief against a palpable fraud because possibly here and there an ignorant person might call for the drink with the hope for incipient cocaine intoxication. The plaintiff's position must be judged by the facts as they were when the suit was begun, not by the facts of a different condition and an earlier time. (2) The decree of the District Court restrains the defendant from using the word "Dope.' The plaintiff illustrated in a very striking way the fact that the word is one of the most featureless known even to the language of those who are incapable of discriminating speech. In some places it would be used to call for Coca-Cola. It equally would have been used to call for anything else having about it a faint aureole of poison. It does not suggest Coca-Cola by similarity and whatever objections there may be to its use, objections which the plaintiff equally makes to its application to Coca-Cola, we see no ground on which the plaintiff can claim a personal right to exclude the defendant from using it. The product including the coloring matter is free to all who can make it if no extrinsic deceiving element is present. The injunction should be modified also in this respect. Decree reversed. Decree of District Court modified and affirmed. Case 8.2 409 F.Supp.2d 412 United States District Court,S.D. New York. Ronit MENASHE and Audrey Quock, Plaintiffs, v. V SECRET CATALOGUE, INC., Victoria's Secret Stores, Inc., Intimate Beauty Corporation d/b/a Victoria's Secret Beauty, and Victoria's Secret Direct, LLC, Defendants. No. 05 Civ. 239(HB). Jan. 10, 2006. , District Judge. I. BACKGROUND On January 11, 2005, Ronit Menashe (“Menashe”) and Audrey Quock (“Quock”) (together “Plaintiffs”), filed this declaratory judgment action for non-infringement of the trademark “SEXY LITTLE THINGS” (the “Mark”) under the Lanham Act, et seq., and at common law against Defendants V Secret Catalogue, Inc., Victoria's Secret Stores, Inc., Intimate Beauty Corporation, and Victoria's Secret Direct, LLC (collectively “Victoria's Secret”). Plaintiffs also sought a declaratory judgment of non-cybersquatting under the Anticybersquatting Consumer Protection Act (“ACPA”), , a judgment of tortious/fraudulent misrepresentation, punitive damages, and reasonable attorney's fees. On July 7, 2005, this Court denied Victoria's Secret's motion to dismiss the Complaint pursuant to and , or in the alternative for summary judgment. . Trial was held on December 13-14, 2005. II. FINDINGS OF FACT A. Plaintiffs' Adoption of the Mark On or about June 1, 2004, Menashe, a publicist, and Quock, a fashion model and *416 actress, embarked on a joint business venture to produce and launch a line of women's underwear. Trial Declaration of Ronit Menashe (“Menashe Decl.”) (undated) ¶ ¶ 4, 6; Trial Declaration of Audrey Quock (“Quock Decl.”) (undated) ¶ ¶ 3, 5. Sometime in July 2004, they decided to name their line “SEXY LITTLE THINGS.” Menashe Decl. ¶ 7; Quock Decl. ¶ 11. Also in July 2004, Quock purchased 400 sample pieces of plain stock underwear from a manufacturer in China and in late July or early August 2004, heat pressed her designs consisting of words and logos onto the stock underwear. Quock Decl. ¶ ¶ 7, 13. She also heat pressed the Mark onto the back of the underwear where a label would normally be attached. Id. CHAPTER 8: INTELLECTUAL PROPERTY 124

In late July or early August 2004, Menashe and Quock came up with the phrase “SEXY LITTLE THING, SEXY LITTLE THINGS,” a variation of their chosen name that they believed yielded many creative possibilities for design and advertising. Menashe Decl. ¶ 8; Quock Decl. ¶ 12. On August 31, 2004, Quock registered the domain name www.sexylittlethings.com in preparation for building a website to sell the underwear line over the Internet. Quock Decl. ¶ 18. Subsequently, on September 13, 2004, after searching the website of the United States Patent and Trademark Office (“USPTO”) and finding that the Mark was available, Menashe and Quock filed an intent-to-use (“ITU”) application with the USPTO for “SEXY LITTLE THING, SEXY LITTLE THINGS” for lingerie. Menashe Decl. ¶ 9-10; Quock Decl. ¶ 20. About ten days later, Quock hired a website designer to create the www.sexylittlethings.com site. Quock Decl. ¶ 21. By early September 2004, Quock initiated negotiations with her manufacturer in China to silkscreen print her designs on bulk shipments of underwear. Id. ¶ 24. In October 2004, she sent the manufacturer eight designs to make prototype prints, and started negotiations for an order of 6,000 pieces of underwear. Id. ¶ 24, 26. The manufacturer sent Quock the eight prototypes on November 13, 2004. Id. ¶ 28. By then, she had also sent the manufacturer diagrams for the production of labels carrying the mark “SEXY LITTLE THINGS.” Id. Meanwhile, Plaintiffs had also set about publicizing their line. Sometime in September or October 2004, Quock did an interview with www.ediets.com, and an article that mentioned the name of Plaintiffs' line and the www.sexylittlethings.com website appeared online at the ediets.com website in the week of November 19, 2004. Id. ¶ 34. On August 19, 2004, Quock did a photo shoot for Stuff Magazine in which she modeled a pair of “SEXY LITTLE THINGS” underwear. Id. ¶ 31. The photographs were published in Stuff Magazine in March of 2005 with an accompanying article that featured Quock's venture into women's lingerie, but did not mention the name of the line. Id. ¶ ¶ 32, 47. In late September or early October 2004, Quock did an interview with Beyond Fitness magazine in which she promoted her underwear line, but was unaware whether the article was ever published. Id. ¶ 38; 12/13/2005 Trial Transcript (“Tr.”) at 48-49. In mid-November, she flew to Milan for a photo shoot featuring “SEXY LITTLE THINGS” underwear. Quock Decl. ¶ 40. The photographs were never published. Tr. at 51-53. On October 14, 2004, Quock e-mailed Menashe an outline of a business plan for the underwear line and indicated that they were ready to seek buyers. Quock Decl. ¶ 37; 10/14/2004 e-mail from Quock to Menashe, Plaintiffs Trial Exhibit (“Pls.Ex.”) 14. Sometime in November 2004, Quock contacted a friend who was a buyer for *417 Fred Segal stores about selling the underwear line in boutiques in Los Angeles, California. Quock Decl. ¶ 39; Tr. at 44. As noted below, this effort too was never consummated. On November 16, 2004, Menashe received a letter from Victoria's Secret's outside counsel informing her that Victoria's Secret had been using “SEXY LITTLE THINGS” as a trademark for lingerie since prior to the filing date of Plaintiffs' ITU application. Menashe Decl. ¶ 12; see 11/15/2004 Cease and Desist Letter, Ex. A to 03/14/2005 Am. Compl., at 1. The letter warned that “SEXY LITTLE THING, SEXY LITTLE THINGS,” the subject of Plaintiffs' ITU application, was confusingly similar to Victoria's Secret's mark and, if used, would constitute trademark infringement. See id. at 2. Further, the letter demanded that Plaintiffs cease and desist all plans to use “SEXY LITTLE THING, SEXY LITTLE THINGS,” abandon their ITU application, and transfer the domain name www.sexylittlethings.com to Victoria's Secret. See id. Finally, the letter requested a response by November 19, 2004. See id. Victoria's Secret's letter caused Plaintiffs to halt production of their underwear project, instruct Stuff Magazine not to mention the name of their underwear line, discontinue other publicity efforts, stop development of their website, and cease their attempts to find retail outlets for their product. Quock Decl. ¶ ¶ 44, 46, 50. Plaintiffs also ordered two trademark investigations into Victoria's Secret's claims to the Mark. Id. ¶ 52. They were informed that no one had used the Mark prior to the filing of their ITU application. Id. One investigation reported that Victoria's Secret's Resort 2005 catalogue, which had been sent with the cease and desist letter as proof of Victoria's Secret's use of the Mark, was not mailed out until December 28, 2004. Id. ¶ 53. At trial-while it stretches credulity-Menashe testified that since the time she received the cease and desist letter, she has not been in a Victoria's Secret store or looked at a Victoria's Secret catalogue to see whether Victoria's Secret was selling merchandise under the name “SEXY LITTLE THINGS.” Tr. at 64-65. Quock testified that she did not visit a Victoria's Secret store nor look at a Victoria's Secret catalogue until some time after receipt of the cease and desist letter, when she walked into a Victoria's Secret store and saw a display for “SEXY LITTLE THINGS.” Tr. at 54-55. B. Victoria's Secret's Adoption and Use of the Mark As early as Fall 2002, Victoria's Secret began to develop the concept and marketing for a panty collection. Tr. at 207. Victoria's Secret's decision to expand its panty business stemmed from a desire to capitalize on a major fashion trend that appeared to herald “decorated bottoms”- seen in the popularity of low rise pants and the vogue among young women for wearing lingerie style items as outerwear. Tr. at 206. Sometime between March 30 and June 1, 2004, Victoria's Secret's marketing department settled on the name “SEXY LITTLE THINGS” for its panty collection. Tr. at 181, 185. The collection, characterized as “fun, flirty, and playfully sexy,” was designed to appeal to women in their twenties and early thirties, and was comprised of over eighty items that included panties, camisoles, and other underwear. Tr. at 184, 196; Sexy Little Things Brand Strategy, Defendants Trial Exhibit (“Defs.Ex.”) K. Some of these items were already being sold in Victoria Secret stores as general merchandise prior to the introduction of the “SEXY LITTLE THINGS” collection (the “Collection”), but the majority of the items were placed in stores for *418 the first time when the Collection was rolled out in July 2004. Tr. at 186-87. On or around July 28, 2004, the Collection was scheduled to make its first appearance in five Victoria's Secret stores in Ohio, Michigan, and California. 12/01/2005 Trial Declaration of Pamela K. Rice, Director of Merchandising for Sexy Little Things for Victoria's Secret Stores, Inc. (“Rice Decl.”) ¶ 7. On that date, the mark “SEXY LITTLE THINGS” was displayed with the Collection in four of the five stores in the form of hangtags, store signage, permanent fixtures, or in window exposures. Id. ¶ 8. For example, in one of the Ohio stores, denominated Easton # 1300, the Mark appeared as a large illuminated sign on a “focal wall,” a specially constructed vertical unit of nine compartments, each compartment containing a plastic “buttock” on which a pair of panties was displayed. See Defs. Ex. D, VS 732. In that store, the Mark also appeared prominently on hangtags attached to hangers that displayed panties, on labels adhered to pull-out compartments of something called a “panty bar”-a horizontal case that displayed merchandise in each compartment-and with window displays of the same merchandise. Id., VS 728-29, 738, 745-46, 749-50. Further, on July 28, 2004, the testimony recites that the “selling environments” for “SEXY LITTLE THINGS” merchandise, comprising the various described displays, opened to consumers in the Ohio roll-out stores. Rice Decl. ¶ 9; 11/30/2005 Trial 125 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

Declaration of Polly Jean Sinesi, Director of Prototype Design for Limited Store Planning, Inc. (“Sinesi Decl.”) ¶ 13. The roll-out at the Briarwood, Michigan store was delayed owing to technical difficulties related to signage. Tr. at 177-78. Maria Thurston, a co-manager of the Briarwood store from October 2001 until November 27, 2004, testified that while construction for a “panty boutique” was completed on July 28, 2004, no “SEXY LITTLE THINGS” signs appeared in the store until the second week of September 2004. Trial Declaration of Maria E. Thurston, Former Co-Manager of Victoria's Secret Briarwood Store # 105 (“Thurston Decl.”) (undated), ¶ ¶ 6-9. Ms. Thurston also testified that through September 2004, she never received brand guides from corporate headquarters with instructions for displaying “SEXY LITTLE THINGS” merchandise in the store. Tr. at 80-81. The “SEXY LITTLE THINGS” collection was rolled out to more Victoria's Secret stores in September and October 2004, and by October 19, 2004, the Collection was available to consumers in all nine hundred and twenty-three Victoria's Secret retail lingerie stores nationwide. Rice Decl. ¶ ¶ 11-13. In each of the stores, there was some form of focal wall or table signage that displayed the “SEXY LITTLE THINGS” mark together with garments from the Collection. Tr. at 178, 196. No labels displaying the Mark were sewn on the merchandise, however, until June 2005. Tr. at 195-96, 199. Moreover, when the Collection was rolled out, store receipts did not indicate that the consumer had bought a “SEXY LITTLE THINGS” item. Tr. at 211. The Collection was also available to consumers through catalogues and online. The Collection, according to the uncontradicted testimony and exhibits, first appeared in the Major Fall 2 edition of the Victoria's Secret catalogue that was mailed out to approximately 2.9 million consumers nationwide between September 4, 2004 and September 9, 2004. 11/30/2005 Trial Declaration of James J. Pozy, Controller of Victoria's Secret Direct, LLC (“Pozy Decl.”) ¶ ¶ 6, 9. Because Victoria's Secret Direct simultaneously makes most of its *419 catalogues available online through its website, the Major Fall 2 catalogue became available online on or about September 9, 2004. Id. ¶ 7. Beginning with the Major Fall 2 edition, the Collection has appeared in approximately twenty-two editions of the Victoria's Secret catalogue. Id. ¶ 14. Typically, the catalogues contained several pages dedicated to the display of “SEXY LITTLE THINGS” merchandise. Copies from Victoria's Secret Catalogues, Defs. Ex. BB. The Mark was prominently displayed on these pages together with “SEXY LITTLE THINGS” items. Occasionally, together with “SEXY LITTLE THINGS” merchandise, these pages also displayed a few items from Victoria's Secret's other trademarked collections, sub-brands such as Angels by Victoria, Body by Victoria, and Very Sexy, so as to suggest to the consumer various looks that could be created using pieces from different collections. Tr. at 242-43, 245-46, 248, 250. When this happened, the catalogue copy stated the name of the collection to which the item belonged. Tr. at 260. In addition, a few items advertised as part of the “SEXY LITTLE THINGS” collection were advertised in other editions of the catalogue as part of another trademarked collection or simply as general merchandise not belonging to any particular collection. Tr. at 239-41, 250-51. In the period July 31, 2004 through November 19, 2005, Victoria's Secret sold over thirteen million units of “SEXY LITTLE THINGS” merchandise for total sales of $119,052,756. 11/30/2005 Trial Declaration of Joseph Hippler, Controller of Victoria's Secret Stores, Inc. (“Hippler Decl.”), ¶ 9. The “SEXY LITTLE THINGS” brand accounted for approximately 4% of Victoria Secret Stores' total company sales for fiscal year 2005. Id. ¶ 10. On November 11, 2004, Victoria's Secret applied to register “SEXY LITTLE THINGS” for lingerie on the USPTO's Principal Register based on first use in commerce dating from July 28, 2004. See Victoria's Secret's Trademark Application File Wrapper, Defs. Ex. II. At about this time, Victoria's Secret learned of Plaintiffs' ITU application for “SEXY LITTLE THING, SEXY LITTLE THINGS” and of their registration of the domain name www.sexylittlethings.com. See 11/15/2004 Cease and Desist Letter, Ex. A to 03/14/2005 Am. Compl., at 1. On November 15, 2004, as recounted in Section II.A supra, Victoria's Secret's outside counsel sent Plaintiffs a cease and desist letter. Id. On March 28, 2005, the USPTO suspended further action on Victoria's Secret's trademark application pending the disposition of Plaintiffs' ITU application. See Victoria's Secret's Notice of Opposition to Plaintiffs' Trademark Application, Defs. Ex. JJ, at 2-3. On September 13, 2005, the USPTO published Plaintiffs' ITU application for opposition in the Official Gazette. See id. at 2. Victoria's Secret filed its notice of opposition to Plaintiffs' application on September 30, 2005, on the grounds that Victoria's Secret has priority of use as to the Mark, and that registration of Plaintiffs' “SEXY LITTLE THING, SEXY LITTLE THINGS” mark for identical goods would be likely to cause consumer confusion. See id. at 3-5. That action is still pending before the Trademark Trial and Appeal Board (“TTAB”). Tr. at 6. On January 11, 2005, Plaintiffs filed the instant action for declaratory judgment of trademark non-infringement. III. CONCLUSIONS OF LAW A. Subject Matter Jurisdiction Victoria's Secret contends that this Court lacks subject matter jurisdiction on *420 two grounds: (i) ITU applicants have no standing to bring civil actions prior to registration; and (ii) the jurisdictional requirements of the Declaratory Judgment Act are not met because there is no actual case or controversy presented. Victoria's Secret previously raised these arguments in its motion to dismiss the Complaint, and because I assume familiarity with my discussion of these issues in my July 7, 2005 decision denying Victoria's Secret's motion, I address these arguments again only briefly. See (Baer, J.). 1. Standing of ITU Applicant to Bring Civil Action Plaintiffs concede that ITU applicants have no Lanham Act rights to bring an offensive action in federal court-i.e., to charge another party with infringement-but argue that they may defend against claims of infringement by another party. Plaintiffs contend that by bringing a declaratory judgment action for non-infringement, they are acting defensively. In my July 7, 2005 decision, I held that the Second Circuit's decision in , may be read to allow an ITU applicant to preemptively file an action for declaratory judgment of non-infringement. See In that case, WarnerVision had sued Empire for trademark infringement. Empire argued that its predecessor in interest had filed an ITU application prior to WarnerVision's use of the contested mark, and hence Empire should not be enjoined from using the mark and completing the ITU registration process. See The Second Circuit agreed that Empire could assert the ITU filing to defend against WarnerVision's efforts to prevent it from completing the ITU registration process. See The Circuit reasoned that enjoining Empire from using the mark, and hence achieving registration, would defeat the very purpose of the ITU provisions, which are to allow an applicant time to make the use of a mark necessary for registration. See CHAPTER 8: INTELLECTUAL PROPERTY 126

In my July 7, 2005 decision, I extended the Circuit's reasoning to allow Plaintiffs here to preemptively defend against Victoria's Secret's efforts to prevent them from completing the ITU registration process. See . Victoria's Secret attempts to distinguish from the instant case in two ways. First, Victoria's Secret argues that in the ITU applicant was the defendant, not the plaintiff. Second, and more important, Victoria's Secret asserts that in the party that sought to prevent the ITU applicant from completing its registration process began use of the contested mark only after the ITU filing date whereas here, Victoria's Secret used the Mark before Plaintiffs' ITU filing. As further discussed at Section III.B.2 infra, Victoria's Secret argues that its use-based rights to the Mark trump any constructive use rights Plaintiffs may attain by completing the ITU registration process. Victoria's Secret's first argument failed to convince me before, and fails to convince me now. Plaintiffs do not seek to prevent Victoria's Secret from using the Mark, but rather request a ruling that they may use the Mark without incurring liability for infringement so as to complete the registration process. The formalities of case caption nomenclature should not be elevated over the substance of Plaintiffs' position. Victoria's Secret's second argument based on its use of the Mark before Plaintiffs' ITU filing would be persuasive if its *421 claim of prior use were unquestioned. To the contrary, however, Plaintiffs challenge Victoria's Secret's priority. Plaintiffs assert that even if Victoria's Secret commenced use of the Mark before Plaintiff's ITU filing, the Mark is descriptive or, in the alternative, Victoria's Secret used the Mark in a descriptive manner, and therefore Victoria's Secret is not entitled to priority without proof that the Mark had acquired secondary meaning by the time Plaintiffs filed their ITU application. If Plaintiffs are correct, then the constructive use rights they would obtain as a result of achieving registration would trump Victoria's Secret's claims to the Mark. Accordingly, Plaintiffs are at least entitled to the opportunity to prove, as part of their prayer for a declaratory judgment of non-infringement, that the Mark is descriptive or was used descriptively and had failed to achieve secondary meaning by the time they filed their ITU application. Finally, policy considerations are important here, especially the promotion of certainty in business transactions by fixing an applicant's priority right as of the date of its filing an application, and the encouragement and reward of early filing so as to put claims to marks on the public record as soon as possible. See , U.S.Code Cong. & Admin.News 1988, 5577, 5658. If I declined to hear this case for lack of subject matter jurisdiction, Plaintiffs would be faced with the hard choice of abandoning their application or attempting to complete the registration process and, in so doing, risk liability for infringement. This predicament would neither promote commercial certainty nor reward early filing. 2. Jurisdiction Under Declaratory Judgment Act Victoria's Secret next contends that this Court lacks subject matter jurisdiction under the Declaratory Judgment Act because there is no actual case or controversy presented. Victoria's Secret asserts that discovery has revealed that Plaintiffs made only a small monetary investment in their business venture and had no evidence that their proposed lingerie line was ready to be sold to the public. Plaintiffs counter that Victoria's Secret's cease and desist letter caused them reasonably to fear liability for infringement, and that when they received the letter, they were virtually about to launch their line. The test for an actual case or controversy in trademark actions is two pronged: (i) has the defendant's conduct created a real and reasonable apprehension of liability on the part of the plaintiff; and (ii) has the plaintiff engaged in a course of conduct which has brought it into adversarial conflict with the defendant. See . An indirect threat of suit is sufficient to satisfy the first prong. See . The court in a declaratory judgment action for patent infringement, found a real and reasonable apprehension of liability on facts very similar to those here. See ; see also (noting that declaratory judgment actions involving trademarks are analogous to those involving patents). In the declaratory defendant had sent the declaratory plaintiff a cease and desist letter through its outside attorney that implied it would sue for patent infringement and gave the defendant only a short period of time to respond. See Additionally, the defendant had informed the plaintiff's distributor and customer*422 that there was a pending lawsuit between the parties. See All factors but the last are present here. Victoria's Secret sent its cease and desist letter to Plaintiffs through its outside counsel. The letter warned that “SEXY LITTLE THING, SEXY LITTLE THINGS” was confusingly similar to “SEXY LITTLE THINGS” and, if used, “would constitute trademark infringement” and “false designation of origin” in violation of the Lanham Act and common law. 11/15/2004 Cease and Desist Letter, Ex. A to 03/14/2005 Am. Compl., at 2. The letter continued that use of their mark “may subject [Plaintiffs] to Victoria's Secret for an injunction, profits, damages and attorneys' fees and costs.” Id. This language may reasonably be read as a thinly veiled threat to sue for trademark infringement should Plaintiffs commence use of their mark. Finally, the letter gave Plaintiffs only three days from the date of receipt to respond. See id. In light of the totality of the circumstances, including the David and Goliath fact pattern present here, Victoria's Secret's letter fairly created a real and reasonable apprehension of liability on the part of Plaintiffs. As to the second prong, Plaintiffs must show that they had taken specific steps and had a concrete intention to use their mark. See Plaintiffs testified at trial that they had purchased 400 sample pieces of stock underwear from a manufacturer in China and had arranged with the manufacturer to produce samples of their lingerie. Plaintiffs had also started negotiations for silkscreen printing of bulk shipments of underwear. Further, Plaintiffs testified and submitted documentary evidence that they had engaged in publicity to promote their line, had engaged a website designer to build their site, and had contacted a retailer about selling their underwear in its stores. These specific steps are more than sufficient for me to conclude that Plaintiffs had a concrete intention to use their mark, and support my determination that Plaintiffs had engaged in a course of conduct that put them in adversarial conflict with Victoria's Secret. Accordingly, Plaintiffs have satisfied both prongs of the test for an actual case or controversy under the Declaratory Judgment Act. B. Non-Infringement Under Lanham Act & Common Law Plaintiffs claim that Victoria's Secret has no right of priority in the Mark because “SEXY LITTLE THINGS” for lingerie is a descriptive term that had not attained secondary meaning by the time Plaintiffs filed their ITU application. Consequently, Plaintiffs assert that they have priority based on their constructive use rights that date back to the filing of their ITU application on September 13, 2004. Victoria's Secret counters that the Mark is suggestive and thus qualifies for trademark protection without proof of secondary meaning. Therefore, Victoria's Secret has priority by virtue of its bona fide use of the Mark in commerce beginning July 28, 2004. governs the infringement of non-registered marks such as the one at issue. In determining infringement under this statute, the court first ascertains whether the mark is protectable. See . Then, the court assesses whether there is a likelihood of consumer confusion. See Where, 127 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW as here, the marks and goods are nearly identical, however, the focus in the second step shifts from likelihood of confusion to “basic rules of trademark priority” to “determine use and ownership of the mark.” *423. The elements of unfair competition under New York law are very similar to those for Lanham Act claims under . See (Baer, J.). Therefore, my analysis under the Lanham Act also applies to Plaintiffs' common law claim. 1. Protectability of the Mark To merit trademark protection, a mark “must be capable of distinguishing the products it marks from those of others.” . As set forth by Judge Friendly in the landmark case of the four categories of terms to be considered in determining the protectability of a mark, listed in order of the degree of protection accorded, are (i) generic, (ii) descriptive, (iii) suggestive, and (iv) arbitrary or fanciful. See . A descriptive term “forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods.” In contrast, a suggestive term “requires imagination, thought and perception to reach a conclusion as to the nature of the goods.” Suggestive marks are automatically protected because they are inherently distinctive, i.e. “[t]heir intrinsic nature serves to identify a particular source of a product.” Descriptive marks are not inherently distinctive and may only be protected on a showing of secondary meaning, i.e. that the purchasing public associates the mark with a particular source. See . Classification of a mark is a question of fact. See The fact-finder must decide, based on the evidence, whether prospective purchasers would perceive the mark to be suggestive or merely descriptive. A composite mark-one comprising more than one term-must be assessed as a whole and not by its parts. See A leading trademark authority has proposed the following three-part test to distinguish suggestive from descriptive marks: (i) whether the purchaser must use some imagination to connect the mark to some characteristic of the product; (ii) whether competitors have used the term descriptively or rather as a trademark; and (iii) whether the proposed use would deprive competitors of a way to describe their goods. See (citing 1 McCarthy, Trademarks and Unfair Competition § § 11.21A-C (2d ed.1984) and adopting test). Applying this three-part test, I find “SEXY LITTLE THINGS” to be suggestive. First, while the term describes the erotically stimulating quality of the trademarked lingerie, it also calls to mind the phrase “sexy little thing” popularly used to refer to attractive lithe young women. Hence, the Mark prompts the purchaser to mentally associate the lingerie with its targeted twenty to thirty year-old consumers. Courts have classified marks that both describe the product and evoke other associations as inherently distinctive. See, e.g., (“POLY PITCHER” for polyethylene pitchers is a fanciful mark because it is reminiscent of Molly Pitcher of Revolutionary time); *424 ( “SUGAR & SPICE” for baked goods is distinctive because it not only describes ingredients but recalls pleasant connotations from a well-known nursery rhyme); (“SHEER ELEGANCE” for pantyhose is suggestive because it both describes sheerness of texture and suggests the “ultimate in elegance”). The second factor is not at issue here as neither party has submitted evidence of competitors' usage of the term. Considering the third factor, however, it is hard to believe that Victoria's Secret's use of the Mark will deprive competitors of ways to describe their lingerie products. Indeed, Victoria's Secret's own descriptions of its lingerie in its catalogues and website illustrate that there are numerous ways to describe provocative underwear. 2. Priority Plaintiffs' alternative contention is that even though the Mark may be suggestive, Victoria's Secret has used it in a descriptive manner, i.e. that Victoria's Secret used the words “sexy little things” to describe its lingerie rather than to identify itself as the source of the goods. Although not crystal clear, the thrust of Plaintiffs' argument appears to be that Victoria's Secret never sold a distinct collection of lingerie under the “SEXY LITTLE THINGS” mark, and hence the term could not have been used as a trademark, but only as a description of various items of underwear drawn from Victoria's Secret's several sub-brands or from the retailer's general merchandise. Consequently, Victoria's Secret is not entitled to priority in the Mark. The Second Circuit has held that “the right to exclusive use of a trademark derives from its appropriation and subsequent use in the marketplace.” . A single use suffices to prove priority if the proponent demonstrates that his subsequent use was “deliberate and continuous.” The later filing of an ITU application by another party does not defeat these use-based rights. See . The use must, however, be bona fide “use in commerce” as defined in . Under this statute, the mark must be “placed in any manner on the goods or their containers or the displays associated therewith or on tags or labels affixed thereto.” . Prominent use of a mark in a catalog with a picture and description of the product constitutes a display associated with goods and not mere advertising because of the “point of sale” nature of the display. See . The same principle can reasonably be extended to “point of sale” website displays. Whether or not a term has been used as a trademark must be determined from the perspective of the prospective purchaser. See . At trial, Plaintiffs highlighted the delay in the roll-out of the Collection to the Briarwood, Michigan store. They painstakingly pointed to evidence that a few items sold as “SEXY LITTLE THINGS” had previously been sold under one of Victoria's Secret's other trademarks, or as part of a store's general merchandise. Plaintiffs also made much of the fact that in Victoria's Secret's catalogues and on its website, a few items from other trademarked collections were included in pages displaying “SEXY LITTLE THINGS” lingerie. Finally, Plaintiffs argued that the late introduction of sewn-in garment labels *425 bearing the Mark and the delay in indicating on receipts that an item was from the “SEXY LITTLE THINGS” collection proved that there was no “SEXY LITTLE THINGS” collection prior to the filing of their ITU application. Plaintiffs' determination to ignore the model for the underwear fails to overcome the overwhelming evidence that Victoria's Secret used “SEXY LITTLE THINGS” as a trademark in commerce beginning on July 28, 2004. Commencing on that date, the prominent use of the Mark in four stores on focal wall and table signage, on hangtags, and in window and floor displays in close association with the lingerie satisfies the “use in commerce” requirement of . Similarly, Victoria's Secret's prominent use of the Mark in its catalogues beginning on September 4, 2004, and on its website beginning on or about September 9, 2004, together with pictures and descriptions of the goods meets the test, as both mediums were “point of sale” displays. Moreover, Victoria's Secret produced abundant testimony that, dating from July 28, 2004, it continuously used the Mark in association with lingerie sold through its retail stores, catalogues, and online. That Victoria's Secret sold a few garments as part of more than one collection, or that it occasionally included garments from other collections in the catalogue spreads showing “SEXY LITTLE THINGS” lingerie do not detract from such trademark use. CHAPTER 8: INTELLECTUAL PROPERTY 128

Prospective purchasers of underwear, whose perception is determinative on the question of trademark use here, are unlikely to undertake the type of microscopic scrutiny Plaintiffs engaged in to unearth these details for purposes of this litigation. I find that because Victoria's Secret made bona fide trademark use of “SEXY LITTLE THINGS” in commerce before Plaintiffs filed their ITU application, and has continued to use that Mark in commerce, Victoria Secret has acquired priority in the Mark. Consequently, Plaintiffs are not entitled to a declaratory judgment of non-infringement under the Lanham Act or at common law. C. Cybersquatting Plaintiffs contend that a declaration of no-cybersquatting is proper because they registered the domain name www.sexylittlethings.com in good faith and did not know, nor should have known, of Victoria's Secret's use of the Mark. Victoria's Secret responds that this Court has no jurisdiction over this claim because Plaintiffs did not obtain Lanham Act rights through mere registration of their domain name, and there is no actual case or controversy because Victoria's Secret never threatened Plaintiffs with suit for cybersquatting. I agree with Victoria's Secret that Plaintiffs have failed to establish the existence of an actual case or controversy related to cybersquatting. Victoria's Secret's cease and desist letter may not reasonably be read to threaten Plaintiffs with suit for cybersquatting. The letter made no reference to cybersquatting. Victoria's Secret did demand that Plaintiffs transfer their domain name to it, but this demand was in a separate paragraph and logically unconnected to the sections of the letter that discuss infringement, the only sections that may be read to threaten litigation. See 11/15/2004 Cease and Desist Letter, Ex. A to 03/14/2005 Am. Compl., at 2. Moreover, , which regulates cybersquatting, requires a showing that the defendant “has a bad faith intent to profit” from a mark. Id. As Plaintiffs claim that they registered the domain name in good faith, they had no reason to fear liability for cybersquatting. Consequently, Plaintiffs fail to persuade *426 me that they had a real and reasonable apprehension of liability for cybersquatting as required for jurisdiction under the Declaratory Judgment Act, and this Court lacks subject matter jurisdiction over this claim. See Section III.A.2 supra. D. Tortious/Fraudulent Misrepresentation Plaintiffs claim that Victoria's Secret representation of its rights to the Mark together with its threats of litigation against Plaintiffs constitute tortious or fraudulent misrepresentation. Victoria's Secret contends that Plaintiffs have not established any of the elements required for this cause of action. In order to state a claim for fraudulent misrepresentation under New York law, Plaintiffs must show that: (i) Victoria's Secret knowingly or recklessly made a material false representation; (ii) Victoria's Secret intended to defraud Plaintiffs thereby; (iii) Plaintiffs reasonably relied on the representation; and (iv) Plaintiffs suffered damages as a result of such reliance. See . As I concluded at Section III.B.2 supra, it was not unreasonable for Victoria's Secret to believe that it owned the Mark through prior adoption and use in commerce. Accordingly, Victoria's Secret did not knowingly and recklessly make a material false representation and did not intend to defraud Plaintiffs by claiming that it had rights to the Mark. Plaintiffs are unable to establish these essential elements of this cause of action. E. Punitive Damages Plaintiffs seek punitive damages on the ground that Victoria's Secret's cease and desist letter egregiously misrepresented its rights to the Mark and fraudulently attempted to coerce Plaintiffs into abandoning their ITU application and domain name. Victoria's Secret argues that Plaintiffs fail to meet the high threshold required to prove entitlement to punitive damages. In New York, punitive damages will only be awarded on a showing of “aggravation or outrage, such as spite or ‘malice,’ or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that the conduct may be called willful or wanton.” . In light of my conclusion in Section III.D supra, Plaintiffs fall far short of making the required showing. F. Costs and Reasonable Attorneys' Fees Plaintiffs seek to recover the costs of this action and reasonable attorneys' fees based on Victoria's Secret's allegedly tortious actions. In its turn, Victoria's Secret requests an award of costs and attorneys' fees incurred in defending against Plaintiffs' frivolous claims. In New York, attorneys' fees may only be awarded to a prevailing party if there is an agreement between the parties, a statute, or a court rule that provides for such an award. See . In addition, a court has the authority to award attorneys' fees to the prevailing party if the opposing party or its attorneys prosecute or defend in “bad faith, vexatiously, wantonly, or for oppressive reasons.” (citation omitted). Because Plaintiffs have not prevailed in this action, there is no need to *427 dwell any further on their claim for costs and attorneys' fees. As to Victoria's Secret's claim, I find that neither the nor the tests are met. At trial, Victoria's Secret emphasized that Plaintiffs never bothered to go into a Victoria's Secret store or look in its catalogues after receiving the cease and desist letter in order to ascertain whether Victoria's Secret was using the Mark, despite having easy access to both. While Plaintiffs appear to have demonstrated a singular lack of curiosity in this regard, there is nothing in this record to suggest that they acted in “bad faith, vexatiously, wantonly, or for oppressive reasons.” Even if Plaintiffs had conducted this investigation themselves, and seen the various displays of the Mark, they may still have believed that Victoria's Secret's usage was descriptive given that they are not trademark law mavens and that sewn-in garment labels had not yet been introduced when they filed their Complaint. Moreover, Plaintiffs had commissioned two trademark investigations that reported that no one had used the Mark prior to their ITU filing. Even though those reports turned out to have been erroneous, it was not vexatious or wanton for Plaintiffs to have relied on them. Finally, while it might have been precipitate of Plaintiffs to have filed suit without first attempting to communicate with Victoria's Secret's outside counsel, it cannot be said that their response was undertaken in bad faith or for oppressive reasons given the imperious tone of the cease and desist letter. IV. CONCLUSION AND ORDER OF JUDGMENT Plaintiffs are not entitled to a declaratory judgment of non-infringement under the Lanham Act or at common law. Neither are they entitled to a declaratory judgment of no-cybersquatting, a judgment of tortious/fraudulent misrepresentation, an award of punitive damages, nor costs and reasonable attorneys' fees. Consequently, the Complaint must be dismissed in its entirety. Victoria's Secret is not entitled to an award of costs and reasonable attorneys' fees. The Clerk of the Court is instructed to close any open motions and remove this case from my docket. SO ORDERED. 129 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

Case 8.3

127 S.Ct. 1727, 167 L.Ed.2d 705, 75 USLW 4289, 82 U.S.P.Q.2d 1385, 07 Cal. Daily Op. Serv. 4654, 20 Fla. L. Weekly Fed. S 248 Supreme Court of the United States KSR INTERNATIONAL CO., Petitioner, v. TELEFLEX INC. et al. No. 04-1350. Argued Nov. 28, 2006. Decided April 30, 2007. Justice KENNEDY delivered the opinion of the Court.Teleflex Incorporated and its subsidiary Technology Holding Company-both referred to here as Teleflex-sued KSR International Company for patent infringement. The patent at issue, United States Patent No. 6,237,565 B1, is entitled “Adjustable Pedal Assembly With Electronic Throttle Control.” Supplemental App. 1. The patentee is Steven J. Engelgau, and the patent is referred to as “the Engelgau patent.” Teleflex holds the exclusive license to the patent.Claim 4 of the Engelgau patent describes a mechanism for combining an electronic sensor with an adjustable automobile pedal so the pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine. When Teleflex accused KSR of infringing the Engelgau patent by adding an electronic sensor to one of KSR's previously designed pedals, KSR countered that claim 4 was invalid under the Patent Act, 35 U.S.C. § 103, because its subject matter was obvious.Section 103 forbids issuance of a patent when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), the Court set out a framework for applying the statutory language of § 103, language itself based on the logic of the earlier decision in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683 (1851), and its progeny. See 383 U.S., at 15-17, 86 S.Ct. 684. The analysis is objective:“Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.” Id., at 17-18, 86 S.Ct. 684.While the sequence of these questions might be reordered in any particular case, the factors continue to define the inquiry that controls. If a court, or patent examiner, conducts this analysis and concludes the claimed subject matter was obvious, the claim is invalid under § 103.Seeking to resolve the question of obviousness with more uniformity and consistency, the Court of Appeals for the Federal Circuit has employed an approach referred to by the parties as the “teaching, suggestion, or motivation” test (TSM test), under which a patent claim is only proved obvious if “some motivation or suggestion to combine the prior art teachings” can be found in the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art. See, e.g., Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1323-1324 (C.A.Fed.1999). KSR challenges that test, or at least its application in this case. See 119 Fed.Appx. 282, 286-290 (C.A.Fed.2005). Because the Court of Appeals addressed the question of obviousness in a manner contrary to § 103 and our precedents, we granted certiorari, 547 U.S. ----, 126 S.Ct. 2965, 165 L.Ed.2d 949 (2006). We now reverse. I A In car engines without computer-controlled throttles, the accelerator pedal interacts with the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating around a pivot point. In a cable-actuated throttle control the rotation caused by pushing down the pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection unit. The wider the valves open, the more fuel and air are released, causing combustion to increase and the car to accelerate. When the driver takes his foot off the pedal, the opposite occurs as the cable is released and the valves slide closed.In the 1990's it became more common to install computers in cars to control engine operation. Computer-controlled throttles open and close valves in response to electronic signals, not through force transferred from the pedal by a mechanical link. Constant, delicate adjustments of air and fuel mixture are possible. The computer's rapid processing of factors beyond the pedal's position improves fuel efficiency and engine performance.For a computer-controlled throttle to respond to a driver's operation of the car, the computer must know what is happening with the pedal. A cable or mechanical link does not suffice for this purpose; at some point, an electronic sensor is necessary to translate the mechanical operation into digital data the computer can understand.Before discussing sensors further we turn to the mechanical design of the pedal itself. In the traditional design a pedal can be pushed down or released but cannot have its position in the footwell adjusted by sliding the pedal forward or back. As a result, a driver who wishes to be closer or farther from the pedal must either reposition himself in the driver's seat or move the seat in some way. In cars with deep footwells these are imperfect solutions for drivers of smaller stature. To solve the problem, inventors, beginning in the 1970's, designed pedals that could be adjusted to change their location in the footwell. Important for this case are two adjustable pedals disclosed in U.S. Patent Nos. 5,010,782 (filed July 28, 1989) (Asano) and 5,460,061 (filed Sept. 17, 1993) (Redding). The Asano patent reveals a support structure that houses the pedal so that even when the pedal location is adjusted relative to the driver, one of the pedal's pivot points stays fixed. The pedal is also designed so that the force necessary to push the pedal down is the same CHAPTER 8: INTELLECTUAL PROPERTY 130 regardless of adjustments to its location. The Redding patent reveals a different, sliding mechanism where both the pedal and the pivot point are adjusted.We return to sensors. Well before Engelgau applied for his challenged patent, some inventors had obtained patents involving electronic pedal sensors for computer-controlled throttles. These inventions, such as the device disclosed in U.S. Patent No. 5,241,936 (filed Sept. 9, 1991) ('936), taught that it was preferable to detect the pedal's position in the pedal assembly, not in the engine. The '936 patent disclosed a pedal with an electronic sensor on a pivot point in the pedal assembly. U.S. Patent No. 5,063,811 (filed July 9, 1990) (Smith) taught that to prevent the wires connecting the sensor to the computer from chafing and wearing out, and to avoid grime and damage from the driver's foot, the sensor should be put on a fixed part of the pedal assembly rather than in or on the pedal's footpad.In addition to patents for pedals with integrated sensors inventors obtained patents for self-contained modular sensors. A modular sensor is designed independently of a given pedal so that it can be taken off the shelf and attached to mechanical pedals of various sorts, enabling the pedals to be used in automobiles with computer- controlled throttles. One such sensor was disclosed in U.S. Patent No. 5,385,068 (filed Dec. 18, 1992) ('068). In 1994, Chevrolet manufactured a line of trucks using modular sensors “attached to the pedal support bracket, adjacent to the pedal and engaged with the pivot shaft about which the pedal rotates in operation.” 298 F.Supp.2d 581, 589 (E.D.Mich.2003).The prior art contained patents involving the placement of sensors on adjustable pedals as well. For example, U.S. Patent No. 5,819,593 (filed Aug. 17, 1995) (Rixon) discloses an adjustable pedal assembly with an electronic sensor for detecting the pedal's position. In the Rixon pedal the sensor is located in the pedal footpad. The Rixon pedal was known to suffer from wire chafing when the pedal was depressed and released.This short account of pedal and sensor technology leads to the instant case. B KSR, a Canadian company, manufactures and supplies auto parts, including pedal systems. Ford Motor Company hired KSR in 1998 to supply an adjustable pedal system for various lines of automobiles with cable-actuated throttle controls. KSR developed an adjustable mechanical pedal for Ford and obtained U.S. Patent No. 6,151,976 (filed July 16, 1999) ('976) for the design. In 2000, KSR was chosen by General Motors Corporation (GMC or GM) to supply adjustable pedal systems for Chevrolet and GMC light trucks that used engines with computer-controlled throttles. To make the '976 pedal compatible with the trucks, KSR merely took that design and added a modular sensor.Teleflex is a rival to KSR in the design and manufacture of adjustable pedals. As noted, it is the exclusive licensee of the Engelgau patent. Engelgau filed the patent application on August 22, 2000 as a continuation of a previous application for U.S. Patent No. 6,109,241, which was filed on January 26, 1999. He has sworn he invented the patent's subject matter on February 14, 1998. The Engelgau patent discloses an adjustable electronic pedal described in the specification as a “simplified vehicle control pedal assembly that is less expensive, and which uses fewer parts and is easier to package within the vehicle.” Engelgau, col. 2, lines 2-5, Supplemental App. 6. Claim 4 of the patent, at issue here, describes:“A vehicle control pedal apparatus comprising:a support adapted to be mounted to a vehicle structure;an adjustable pedal assembly having a pedal arm moveable in for[e] and aft directions with respect to said support;a pivot for pivotally supporting said adjustable pedal assembly with respect to said support and defining a pivot axis; andan electronic control attached to said support for controlling a vehicle system;said apparatus characterized by said electronic control being responsive to said pivot for providing a signal that corresponds to pedal arm position as said pedal arm pivots about said pivot axis between rest and applied positions wherein the position of said pivot remains constant while said pedal arm moves in fore and aft directions with respect to said pivot.” Id., col. 6, lines 17-36, Supplemental App. 8 (diagram numbers omitted).We agree with the District Court that the claim discloses “a position-adjustable pedal assembly with an electronic pedal position sensor attached to the support member of the pedal assembly. Attaching the sensor to the support member allows the sensor to remain in a fixed position while the driver adjusts the pedal.” 298 F.Supp.2d, at 586-587.Before issuing the Engelgau patent the U.S. Patent and Trademark Office (PTO) rejected one of the patent claims that was similar to, but broader than, the present claim 4. The claim did not include the requirement that the sensor be placed on a fixed pivot point. The PTO concluded the claim was an obvious combination of the prior art disclosed in Redding and Smith, explaining:“ ‘Since the prior ar[t] references are from the field of endeavor, the purpose disclosed ... would have been recognized in the pertinent art of Redding. Therefore it would have been obvious ... to provide the device of Redding with the ... means attached to a support member as taught by Smith.’ ” Id., at 595. In other words Redding provided an example of an adjustable pedal and Smith explained how to mount a sensor on a pedal's support structure, and the rejected patent claim merely put these two teachings together.Although the broader claim was rejected, claim 4 was later allowed because it included the limitation of a fixed pivot point, which distinguished the design from Redding's. Ibid . Engelgau had not included Asano among the prior art references, and Asano was not mentioned in the patent's prosecution. Thus, the PTO did not have before it an adjustable pedal with a fixed pivot point. The patent issued on May 29, 2001 and was assigned to Teleflex.Upon learning of KSR's design for GM, Teleflex sent a warning letter informing KSR that its proposal would violate the Engelgau patent. “ ‘Teleflex believes that any supplier of a product that combines an adjustable pedal with an electronic throttle control necessarily employs technology covered by one or more’ ” of Teleflex's patents. Id., at 585. KSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for infringement, asserting KSR's pedal infringed the Engelgau patent and two other patents. Ibid. Teleflex later abandoned its claims regarding the other patents and dedicated the patents to the public. The remaining contention was that KSR's pedal system for GM infringed claim 4 of the Engelgau patent. Teleflex has not argued that the other three claims of the patent are infringed by KSR's pedal, nor has Teleflex argued that the mechanical adjustable pedal designed by KSR for Ford infringed any of its patents. C The District Court granted summary judgment in KSR's favor. After reviewing the pertinent history of pedal design, the scope of the Engelgau patent, and the relevant prior art, the court considered the validity of the contested claim. By direction of 35 U.S.C. § 282, an issued patent is presumed valid. The District Court applied Graham's framework to determine whether under summary-judgment standards KSR had overcome the presumption and demonstrated that claim 4 was obvious in light of the prior art in existence when the claimed subject matter was invented. See § 102(a).The District Court determined, in light of the expert testimony and the parties' stipulations, that the level of ordinary skill in pedal design was “ ‘an undergraduate degree in mechanical engineering (or an equivalent amount of industry experience) [and] familiarity with pedal control systems for vehicles.’ ” 298 F.Supp.2d, at 590. The court then set forth the relevant prior art, including the patents and pedal designs described above.Following Graham's direction, the court compared the teachings of the prior art to the claims of Engelgau. It found “little difference.” 298 F.Supp.2d, at 590. Asano taught everything contained in claim 4 except the use of a sensor to detect the pedal's position and 131 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW transmit it to the computer controlling the throttle. That additional aspect was revealed in sources such as the '068 patent and the sensors used by Chevrolet.Under the controlling cases from the Court of Appeals for the Federal Circuit, however, the District Court was not permitted to stop there. The court was required also to apply the TSM test. The District Court held KSR had satisfied the test. It reasoned (1) the state of the industry would lead inevitably to combinations of electronic sensors and adjustable pedals, (2) Rixon provided the basis for these developments, and (3) Smith taught a solution to the wire chafing problems in Rixon, namely locating the sensor on the fixed structure of the pedal. This could lead to the combination of Asano, or a pedal like it, with a pedal position sensor.The conclusion that the Engelgau design was obvious was supported, in the District Court's view, by the PTO's rejection of the broader version of claim 4. Had Engelgau included Asano in his patent application, it reasoned, the PTO would have found claim 4 to be an obvious combination of Asano and Smith, as it had found the broader version an obvious combination of Redding and Smith. As a final matter, the District Court held that the secondary factor of Teleflex's commercial success with pedals based on Engelgau's design did not alter its conclusion. The District Court granted summary judgment for KSR. With principal reliance on the TSM test, the Court of Appeals reversed. It ruled the District Court had not been strict enough in applying the test, having failed to make “ ‘finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention’ ... to attach an electronic control to the support bracket of the Asano assembly.” 119 Fed.Appx., at 288 (brackets in original) (quoting In re Kotzab, 217 F.3d 1365, 1371 (C.A.Fed.2000)). The Court of Appeals held that the District Court was incorrect that the nature of the problem to be solved satisfied this requirement because unless the “prior art references address[ed] the precise problem that the patentee was trying to solve,” the problem would not motivate an inventor to look at those references. 119 Fed.Appx., at 288.Here, the Court of Appeals found, the Asano pedal was designed to solve the “ ‘constant ratio problem’ ”-that is, to ensure that the force required to depress the pedal is the same no matter how the pedal is adjusted-whereas Engelgau sought to provide a simpler, smaller, cheaper adjustable electronic pedal. Ibid. As for Rixon, the court explained, that pedal suffered from the problem of wire chafing but was not designed to solve it. In the court's view Rixon did not teach anything helpful to Engelgau's purpose. Smith, in turn, did not relate to adjustable pedals and did not “necessarily go to the issue of motivation to attach the electronic control on the support bracket of the pedal assembly.” Ibid. When the patents were interpreted in this way, the Court of Appeals held, they would not have led a person of ordinary skill to put a sensor on the sort of pedal described in Asano.That it might have been obvious to try the combination of Asano and a sensor was likewise irrelevant, in the court's view, because “ ‘ “[o]bvious to try” has long been held not to constitute obviousness.’ ” Id., at 289 (quoting In re Deuel, 51 F.3d 1552, 1559 (C.A.Fed.1995)).The Court of Appeals also faulted the District Court's consideration of the PTO's rejection of the broader version of claim 4. The District Court's role, the Court of Appeals explained, was not to speculate regarding what the PTO might have done had the Engelgau patent mentioned Asano. Rather, the court held, the District Court was obliged first to presume that the issued patent was valid and then to render its own independent judgment of obviousness based on a review of the prior art. The fact that the PTO had rejected the broader version of claim 4, the Court of Appeals said, had no place in that analysis.The Court of Appeals further held that genuine issues of material fact precluded summary judgment. Teleflex had proffered statements from one expert that claim 4 “ ‘was a simple, elegant, and novel combination of features,’ ” 119 Fed.Appx., at 290, compared to Rixon, and from another expert that claim 4 was nonobvious because, unlike in Rixon, the sensor was mounted on the support bracket rather than the pedal itself. This evidence, the court concluded, sufficed to require a trial. II A We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here. To be sure, Graham recognized the need for “uniformity and definiteness.” 383 U.S., at 18, 86 S.Ct. 684. Yet the principles laid down in Graham reaffirmed the “functional approach” of Hotchkiss, 11 How. 248, 13 L.Ed. 683. See 383 U.S., at 12, 86 S.Ct. 684. To this end, Graham set forth a broad inquiry and invited courts, where appropriate, to look at any secondary considerations that would prove instructive. Id., at 17, 86 S.Ct. 684.Neither the enactment of § 103 nor the analysis in Graham disturbed this Court's earlier instructions concerning the need for caution in granting a patent based on the combination of elements found in the prior art . For over a half century, the Court has held that a “patent for a combination which only unites old elements with no change in their respective functions ... obviously withdraws what is already known into the field of its monopoly and diminishes the resources available to skillful men.” Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 95 L.Ed. 162 (1950). This is a principal reason for declining to allow patents for what is obvious. The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. Three cases decided after Graham illustrate the application of this doctrine.In United States v. Adams, 383 U.S. 39, 40, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966), a companion case to Graham, the Court considered the obviousness of a “wet battery” that varied from prior designs in two ways: It contained water, rather than the acids conventionally employed in storage batteries; and its electrodes were magnesium and cuprous chloride, rather than zinc and silver chloride. The Court recognized that when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result. 383 U.S., at 50-51, 86 S.Ct. 708. It nevertheless rejected the Government's claim that Adams's battery was obvious. The Court relied upon the corollary principle that when the prior art teaches away from combining certain known elements, discovery of a successful means of combining them is more likely to be nonobvious. Id., at 51-52, 86 S.Ct. 708. When Adams designed his battery, the prior art warned that risks were involved in using the types of electrodes he employed. The fact that the elements worked together in an unexpected and fruitful manner supported the conclusion that Adams's design was not obvious to those skilled in the art.In Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969), the Court elaborated on this approach. The subject matter of the patent before the Court was a device combining two pre-existing elements: a radiant-heat burner and a paving machine. The device, the Court concluded, did not create some new synergy: The radiant-heat burner functioned just as a burner was expected to function; and the paving machine did the same. The two in combination did no more than they would in separate, sequential operation. Id., at 60-62, 90 S.Ct. 305. In those circumstances, “while the combination of old elements performed a useful function, it added nothing to the nature and quality of the radiant-heat burner already patented,” and the patent failed under § 103. Id., at 62, 90 S.Ct. 305 (footnote omitted).Finally, in Sakraida v. Ag Pro, Inc., 425 U.S. 273, 96 S.Ct. 1532, 47 CHAPTER 8: INTELLECTUAL PROPERTY 132

L.Ed.2d 784 (1976), the Court derived from the precedents the conclusion that when a patent “simply arranges old elements with each performing the same function it had been known to perform” and yields no more than one would expect from such an arrangement, the combination is obvious. Id., at 282, 96 S.Ct. 1532.[1] The principles underlying these cases are instructive when the question is whether a patent claiming the combination of elements of prior art is obvious. When a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. Sakraida and Anderson's-Black Rock are illustrative-a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.Following these principles may be more difficult in other cases than it is here because the claimed subject matter may involve more than the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement. Often, it will be necessary for a court to look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue. To facilitate review, this analysis should be made explicit. See In re Kahn, 441 F.3d 977, 988 (C.A.Fed.2006) (“[R]ejections on obviousness grounds cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness”). As our precedents make clear, however, the analysis need not seek out precise teachings directed to the specific subject matter of the challenged claim, for a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ. B [2] When it first established the requirement of demonstrating a teaching, suggestion, or motivation to combine known elements in order to show that the combination is obvious, the Court of Customs and Patent Appeals captured a helpful insight. See Application of Bergel, 48 C.C.P.A. 1102, 292 F.2d 955, 956-957 (1961). As is clear from cases such as Adams, a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art. Although common sense directs one to look with care at a patent application that claims as innovation the combination of two known devices according to their established functions, it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does. This is so because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.Helpful insights, however, need not become rigid and mandatory formulas; and when it is so applied, the TSM test is incompatible with our precedents. The obviousness analysis cannot be confined by a formalistic conception of the words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents. The diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way. In many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends. Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility.In the years since the Court of Customs and Patent Appeals set forth the essence of the TSM test, the Court of Appeals no doubt has applied the test in accord with these principles in many cases. There is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis. But when a court transforms the general principle into a rigid rule that limits the obviousness inquiry, as the Court of Appeals did here, it errs. C [3] [4] The flaws in the analysis of the Court of Appeals relate for the most part to the court's narrow conception of the obviousness inquiry reflected in its application of the TSM test. In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls. What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under § 103. One of the ways in which a patent's subject matter can be proved obvious is by noting that there existed at the time of invention a known problem for which there was an obvious solution encompassed by the patent's claims. [5] The first error of the Court of Appeals in this case was to foreclose this reasoning by holding that courts and patent examiners should look only to the problem the patentee was trying to solve. 119 Fed.Appx., at 288. The Court of Appeals failed to recognize that the problem motivating the patentee may be only one of many addressed by the patent's subject matter. The question is not whether the combination was obvious to the patentee but whether the combination was obvious to a person with ordinary skill in the art. Under the correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. Ibid. The primary purpose of Asano was solving the constant ratio problem; so, the court concluded, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal. Ibid. Common sense teaches, however, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. Regardless of Asano's primary purpose, the design provided an obvious example of an adjustable pedal with a fixed pivot point; and the prior art was replete with patents indicating that a fixed pivot point was an ideal mount for a sensor. The idea that a designer hoping to make an adjustable electronic pedal would ignore Asano because Asano was designed to solve the constant ratio problem makes little sense. A person of ordinary skill is also a person of ordinary creativity, not an automaton.[6] The same constricted analysis led the Court of Appeals to conclude, in error, that a patent claim cannot be proved obvious merely by showing that the combination of elements was “obvious to try.” Id., at 289 (internal quotation marks omitted). When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try 133 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW might show that it was obvious under § 103.The Court of Appeals, finally, drew the wrong conclusion from the risk of courts and patent examiners falling prey to hindsight bias. A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning. See Graham, 383 U.S., at 36, 86 S.Ct. 684 (warning against a “temptation to read into the prior art the teachings of the invention in issue” and instructing courts to “ ‘guard against slipping into the use of hindsight’ ” (quoting Monroe Auto Equipment Co. v. Heckethorn Mfg. & Supply Co., 332 F.2d 406, 412 (C.A.6 1964))). Rigid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it.We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter. See, e.g., DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356, 1367 (2006) (“Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense”); Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (2006) (“There is flexibility in our obviousness jurisprudence because a motivation may be found implicitly in the prior art. We do not have a rigid test that requires an actual teaching to combine ...”). Those decisions, of course, are not now before us and do not correct the errors of law made by the Court of Appeals in this case. The extent to which they may describe an analysis more consistent with our earlier precedents and our decision here is a matter for the Court of Appeals to consider in its future cases. What we hold is that the fundamental misunderstandings identified above led the Court of Appeals in this case to apply a test inconsistent with our patent law decisions. III [7] When we apply the standards we have explained to the instant facts, claim 4 must be found obvious. We agree with and adopt the District Court's recitation of the relevant prior art and its determination of the level of ordinary skill in the field. As did the District Court, we see little difference between the teachings of Asano and Smith and the adjustable electronic pedal disclosed in claim 4 of the Engelgau patent. A person having ordinary skill in the art could have combined Asano with a pedal position sensor in a fashion encompassed by claim 4, and would have seen the benefits of doing so. A Teleflex argues in passing that the Asano pedal cannot be combined with a sensor in the manner described by claim 4 because of the design of Asano's pivot mechanisms. See Brief for Respondents 48-49, and n. 17. Therefore, Teleflex reasons, even if adding a sensor to Asano was obvious, that does not establish that claim 4 encompasses obvious subject matter. This argument was not, however, raised before the District Court. There Teleflex was content to assert only that the problem motivating the invention claimed by the Engelgau patent would not lead to the solution of combining of Asano with a sensor. See Teleflex's Response to KSR's Motion for Summary Judgment of Invalidity in No. 02-74586 (ED Mich.), pp. 18-20, App. 144a-146a. It is also unclear whether the current argument was raised before the Court of Appeals, where Teleflex advanced the nonspecific, conclusory contention that combining Asano with a sensor would not satisfy the limitations of claim 4. See Brief for Plaintiffs-Appellants in No. 04-1152 (CA Fed.), pp. 42-44. Teleflex's own expert declarations, moreover, do not support the point Teleflex now raises. See Declaration of Clark J. Radcliffe, Ph.D., Supplemental App. 204-207; Declaration of Timothy L. Andresen, id., at 208-210. The only statement in either declaration that might bear on the argument is found in the Radcliffe declaration:“Asano ... and Rixon ... are complex mechanical linkage-based devices that are expensive to produce and assemble and difficult to package. It is exactly these difficulties with prior art designs that [Engelgau] resolves. The use of an adjustable pedal with a single pivot reflecting pedal position combined with an electronic control mounted between the support and the adjustment assembly at that pivot was a simple, elegant, and novel combination of features in the Engelgau '565 patent.” Id., at 206, ¶ 16.Read in the context of the declaration as a whole this is best interpreted to mean that Asano could not be used to solve “[t]he problem addressed by Engelgau '565[:] to provide a less expensive, more quickly assembled, and smaller package adjustable pedal assembly with electronic control.” Id., at 205, ¶ 10.The District Court found that combining Asano with a pivot-mounted pedal position sensor fell within the scope of claim 4. 298 F.Supp.2d, at 592-593. Given the sigificance of that finding to the District Court's judgment, it is apparent that Teleflex would have made clearer challenges to it if it intended to preserve this claim. In light of Teleflex's failure to raise the argument in a clear fashion, and the silence of the Court of Appeals on the issue, we take the District Court's conclusion on the point to be correct. B The District Court was correct to conclude that, as of the time Engelgau designed the subject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with a pivot-mounted pedal position sensor. There then existed a marketplace that created a strong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a number of methods for achieving this advance. The Court of Appeals considered the issue too narrowly by, in effect, asking whether a pedal designer writing on a blank slate would have chosen both Asano and a modular sensor similar to the ones used in the Chevrolet truckline and disclosed in the '068 patent. The District Court employed this narrow inquiry as well, though it reached the correct result nevertheless. The proper question to have asked was whether a pedal designer of ordinary skill, facing the wide range of needs created by developments in the field of endeavor, would have seen a benefit to upgrading Asano with a sensor.In automotive design, as in many other fields, the interaction of multiple components means that changing one component often requires the others to be modified as well. Technological developments made it clear that engines using computer-controlled throttles would become standard. As a result, designers might have decided to design new pedals from scratch; but they also would have had reason to make pre- existing pedals work with the new engines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now accused of infringing the Engelgau patent.For a designer starting with Asano, the question was where to attach the sensor. The consequent legal question, then, is whether a pedal designer of ordinary skill starting with Asano would have found it obvious to put the sensor on a fixed pivot point. The prior art discussed above leads us to the conclusion that attaching the sensor where both KSR and Engelgau put it would have been obvious to a person of ordinary skill.The '936 patent taught the utility of putting the sensor on the pedal device, not in the engine. Smith, in turn, explained to put the sensor not on the pedal's footpad but instead on its support structure. And from the known wire-chafing problems of Rixon, and Smith's teaching that “the pedal assemblies must not precipitate any motion in the connecting wires,” Smith, col. 1, lines 35-37, Supplemental App. 274, the designer would know to place the sensor on a nonmoving part of the pedal structure. The most obvious nonmoving point on the structure from which a sensor can easily detect the pedal's position is a pivot point. The designer, accordingly, would follow Smith in mounting the sensor on a CHAPTER 8: INTELLECTUAL PROPERTY 134 pivot, thereby designing an adjustable electronic pedal covered by claim 4.Just as it was possible to begin with the objective to upgrade Asano to work with a computer-controlled throttle, so too was it possible to take an adjustable electronic pedal like Rixon and seek an improvement that would avoid the wire-chafing problem. Following similar steps to those just explained, a designer would learn from Smith to avoid sensor movement and would come, thereby, to Asano because Asano disclosed an adjustable pedal with a fixed pivot.Teleflex indirectly argues that the prior art taught away from attaching a sensor to Asano because Asano in its view is bulky, complex, and expensive. The only evidence Teleflex marshals in support of this argument, however, is the Radcliffe declaration, which merely indicates that Asano would not have solved Engelgau's goal of making a small, simple, and inexpensive pedal. What the declaration does not indicate is that Asano was somehow so flawed that there was no reason to upgrade it, or pedals like it, to be compatible with modern engines. Indeed, Teleflex's own declarations refute this conclusion. Dr. Radcliffe states that Rixon suffered from the same bulk and complexity as did Asano. See id., at 206. Teleflex's other expert, however, explained that Rixon was itself designed by adding a sensor to a pre-existing mechanical pedal. See id., at 209. If Rixon's base pedal was not too flawed to upgrade, then Dr. Radcliffe's declaration does not show Asano was either. Teleflex may have made a plausible argument that Asano is inefficient as compared to Engelgau's preferred embodiment, but to judge Asano against Engelgau would be to engage in the very hindsight bias Teleflex rightly urges must be avoided. Accordingly, Teleflex has not shown anything in the prior art that taught away from the use of Asano.Like the District Court, finally, we conclude Teleflex has shown no secondary factors to dislodge the determination that claim 4 is obvious. Proper application of Graham and our other precedents to these facts therefore leads to the conclusion that claim 4 encompassed obvious subject matter. As a result, the claim fails to meet the requirement of § 103.We need not reach the question whether the failure to disclose Asano during the prosecution of Engelgau voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption-that the PTO, in its expertise, has approved the claim-seems much diminished here. IV [8] A separate ground the Court of Appeals gave for reversing the order for summary judgment was the existence of a dispute over an issue of material fact. We disagree with the Court of Appeals on this point as well. To the extent the court understood the Graham approach to exclude the possibility of summary judgment when an expert provides a conclusory affidavit addressing the question of obviousness, it misunderstood the role expert testimony plays in the analysis. In considering summary judgment on that question the district court can and should take into account expert testimony, which may resolve or keep open certain questions of fact. That is not the end of the issue, however. The ultimate judgment of obviousness is a legal determination. Graham, 383 U.S., at 17, 86 S.Ct. 684. Where, as here, the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate. Nothing in the declarations proffered by Teleflex prevented the District Court from reaching the careful conclusions underlying its order for summary judgment in this case. * * * We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. See U.S. Const., Art. I, § 8, cl. 8. These premises led to the bar on patents claiming obvious subject matter established in Hotchkiss and codified in § 103. Application of the bar must not be confined within a test or formulation too constrained to serve its purpose. KSR provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals analyzed the issue in a narrow, rigid manner inconsistent with § 103 and our precedents. The judgment of the Court of Appeals is reversed, and the case remanded for further proceedings consistent with this opinion. It is so ordered.

Case 8.4

Slip Copy, 2007 WL 81822 (M.D.Ga.) SONY BMG MUSIC ENTERTAINMENT, a Delaware general partnership; UMG Recordings, Inc., a Delaware corporation; Warner Bros. Records Inc., a Delaware corporation; Virgin Records America, Inc., a California corporation; Capitol Records, Inc. a Delaware corporation; and BMG Music, a New York general partnership, Plaintiffs, v. Sharon VILLARREAL, Defendant. No. 5:06-CV-323(CAR). Jan. 5, 2007. 135 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

, United States District Judge. *1 The present case arises out of Defendant Sharon Villarreal's alleged unlawful acquisition and distribution of copyrighted recordings owned or licensed exclusively to Plaintiffs in violation of the Copyright Act, et. seq. Currently before the Court is Plaintiffs' motion [Doc. 6] for entry of default judgment and for an award of statutory damages and costs. Plaintiffs likewise seek entry of an injunction barring Defendant from future infringement of their copyrights. Defendant has not, as of the date of this Order, made an appearance in this case nor responded to either the entry of default against her or to the present motion for entry of default judgment. The Court, having considered the present motion, the complaint filed, the evidence submitted, and the relevant law, finds that Plaintiffs' motion is due to be GRANTED. DISCUSSION Plaintiffs Sony BMG Entertainment, UMG Recordings, Inc., Warner Bros. Records Inc., Virgin Records America, Inc., Capitol Records, and BMG Music (herein “Plaintiffs”) are the copyright owners or licensees of exclusive rights under United States copyrights with respect to certain sound recordings. On September 19, 2006, Plaintiffs filed the present action pursuant to the Copyright Act, et. seq, alleging that Defendant Sharon Villarreal has, without the permission or consent of Plaintiffs, used (and continues to use) an online media distribution system to download Plaintiffs' copyrighted recordings, to distribute the copyrighted recordings to the public, and/or to make the copyrighted recordings available for distribution to others. Defendant was served with notice of this suit on September 19, 2006, but did not file an answer. As such, on November 10, 2006, Plaintiffs moved for entry of default and default was entered by the Clerk of Court on November 13, 2006. Plaintiffs now move this Court to enter default judgment in its favor and to further award damages and costs to Plaintiffs and to enter an injunction barring Defendant from further infringing upon Plaintiffs' copyrights. Prior to ruling on the present motion, however, this Court must first note that “[a] defendant's default does not itself warrant the court entering a default judgment.” (quoting ). Rather, “[t]here must be a sufficient basis in the pleadings for the judgment entered.... The defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” Id. Simply put, a default should not be “treated as an absolute confession of the defendant of his liability and of the plaintiff's right to recover.” Id. “Even after default [ ] it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action.” . *2 Having considered Plaintiffs' well-plead allegations in this case, the Court does find a sufficient basis in the Complaint [Doc. 1] for a judgment to be entered in Plaintiffs favor for violations the Copyright Act. Here, as mentioned above, Plaintiffs plainly allege that Defendant has, without the permission or consent of Plaintiffs, used an online media distribution system to download Plaintiffs' copyrighted recordings, to distribute the copyrighted recordings to the public, and/or to make the copyrighted recordings available for distribution to others. These allegations do state a claim for copyright infringement. See e.g., (suggesting that downloads of copyrighted materials were acts of infringement); (agreeing that act of downloading copyrighted recordings infringed upon copyright holder's exclusive rights of production and distribution); (finding plaintiffs stated a claim for copyright infringement on allegations that defendant, without permission of copyright owners, downloaded copyrighted recordings and made them available for distribution to the public). And, of course, by her default in this case, Defendant has admitted these allegations as true. See (“A defaulting party is taken to have conceded the truth of the factual allegations in the complaint as establishing the grounds for liability....”). This Court therefore finds that Plaintiffs have sufficiently stated claims for relief under the Copyright Act and that, by defaulting, Defendant has admitted her liability for such violations. Plaintiffs' motion for entry of default judgment is accordingly GRANTED. Having concluded that Plaintiffs are entitled to entry of default judgment, the Court must now turn its attention to the relief requested. Under the Federal Rules of Civil Procedure, the district court may enter a default judgment awarding damages without a hearing “if the amount of damages is a liquidated sum, an amount capable of mathematical calculation, or an amount demonstrated by detailed affidavits.” . Ultimately, “[t]he decision whether to call for a hearing before awarding damages in a default judgment rests in the district court's discretion.” Id.; see also (“If ... it is necessary to ... determine the amount of damages ..., the court may conduct such hearings or order such references as it deems necessary and proper). Here, having considered both the evidence submitted by Plaintiffs in support of the present motion and the type of relief ultimately sought, this Court finds that a hearing on the issue of damages is not warranted. Relief shall be granted as follows: A. Compensatory Damages *3 In this case, Plaintiffs seek an award of statutory damages in the amount of $6,000.00. The damages provision of the Copyright Act does provide that a copyright owner may elect, at any time before final judgment is rendered, to recover an award of statutory damages in lieu of actual damages and lost profits. . This section further provides that statutory damages may be recovered for “all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually ... in a sum not less than $750 or more than $30,000 as the court considers just.” Id. Thus, if the copyright owner so elects, he is entitled to recover, at least, $750 for each act of infringement. Clearly, “[i]n determining the statutory damages under the Copyright Act, the unit of damages is based not on the number of violations, but on the number of works infringed upon.” ; . Therefore, to affix the measure of damages, the Court only “need only sum the number of separate, individual works which were the subject of a defendant's infringing activities.” . Here, in support of the present motion, Plaintiffs show that eight (8) of their copyrighted recordings were downloaded and distributed (or made available for distribution) by Defendant. These recordings include: “Goodbye Earl”, recorded by the Dixie Chicks; “I Got a Girl” recorded by Lou Bega; “A Long December,” recorded by Counting Crows; “Black Balloon,” recorded by Goo Goo Dolls; “Like a Virgin,” recorded by Madonna; “Steal My Kisses,” recorded by Ben Harper; “Another Brick in the Wall, Pt. 2,” recorded by Pink Floyd; and “I Might Get Over You,” recorded by Kenny Chesney. Applying the statutory formula for calculating damages in this case, this Court will simply multiply the minimum $750.00 statutory penalty by eight (8), the number of works infringed upon. Having done so, this Court agrees that an award of compensatory damages in the amount of $ 6,000.00 is appropriate. B. Costs In the present motion, Plaintiffs likewise seek to recover their costs incurred in bringing this action. Section 505 of the Copyright Act does provide that a district court may, in its discretion, allow a copyright owner to recover full costs. . Here, Plaintiffs have submitted the affidavit of counsel declaring that Plaintiffs have incurred costs in this case in the amount of $490.00. Having considered the matter, this Court agrees that CHAPTER 8: INTELLECTUAL PROPERTY 136 an award of $490.00 in costs is reasonable. C. Injunctive Relief Finally, Plaintiffs move this Court for entry of a permanent injunction barring Defendant from directly or indirectly infringing on Plaintiffs' copyrights, whether now in existence or later created. Plaintiffs further request that the Court require Defendant to destroy all copies of Plaintiffs' copyrighted recordings that Defendant has downloaded or has transferred onto any physical medium or device in Defendant's possession, custody, or control. Again, the Copyright Act provides for such relief to granted. Section 502(a) of the Act specifically permits a district court to “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” ; (noting that the Copyright Act empowers a district court to enter an injunction “on such terms as it may deem reasonable to prevent or restrain infringement of a copyright”). *4 “Injunctions are regularly issued pursuant to the mandate of because ‘the public interest is the interest in upholding copyrighted protection.’ “ (quoting ). Here, having considered the copyright infringements at issue, this Court finds that Defendant's past and current conduct has and will, unless enjoined, cause Plaintiffs irreparable injury that cannot be fully compensated or measured in money. Moreover, in light of Defendant's admitted infringement in this case, the need to protect Plaintiffs' copyrighted works, and the public interest in upholding copyright protection, the Court further finds that an injunction barring Defendant from infringing upon all of Plaintiffs' copyrighted recordings, and not just those eight recordings listed herein, is appropriate. For the same reasons, and because Plaintiffs will continually create new works, which may be vulnerable to similar infringement and would require future litigation, the Court finds that the injunction entered in this case should likewise cover works created in the future. See (enjoining defendants from infringing on any of the copyrighted works owned by plaintiffs, including those not listed in the complaint and any works created in the future). The injunctive relief requested by Plaintiffs is therefore appropriate and should be entered. CONCLUSION Accordingly, and for the reasons set forth above, it is hereby ORDERED that: (1) Defendant Sharon Villarreal be permanently enjoined from directly or indirectly infringing on Plaintiffs' rights under federal or state law in the copyrighted recordings and any sound recording, whether now in existence or later created, that is owned or controlled by Plaintiffs (or any parent, subsidiary, or affiliate record label of Plaintiffs), including without limitation by using the Internet or any online media distribution system to reproduce or download any of Plaintiffs' copyrighted recordings, to distribute or upload any of Plaintiffs' copyrighted recordings, or to make any of Plaintiffs' copyrighted recordings otherwise available for distribution to the public, except pursuant to a lawful license or with the express authority of Plaintiffs; (2) Defendant Sharon Villarreal destroy all copies of Plaintiffs' copyrighted recordings that Defendant has downloaded onto any computer hard drive or server without Plaintiffs' authorization and destroy all copies of those downloaded recordings transferred onto any physical medium or device in Defendant's possession, custody, or control; and (3) The Clerk of Court enter final default judgment providing that Plaintiffs be awarded $6,000.00 in compensatory damages. The judgment shall further provide that Plaintiffs recover $ 490.00 for costs incurred in bringing the present action. *5 SO ORDERED, this 5th day of January, 2007.

Supplemental Case Printout for: Contemporary Legal Debates

464 U.S. 417, 104 S.Ct. 774, 55 Rad. Reg. 2d (P & F) 156, 78 L.Ed.2d 574, 220 U.S.P.Q. 665, 1984 Copr.L.Dec. P 25,615 Supreme Court of the United States SONY CORPORATION OF AMERICA, et al., Petitioners v. UNIVERSAL CITY STUDIOS, INC., etc., et al. No. 81-1687. Argued Jan. 18, 1983. Reargued Oct. 3, 1983. Decided Jan. 17, 1984. Rehearing Denied March 19, 1984. See U.S., 104 S.Ct. 1619. Justice STEVENS delivered the opinion of the Court.Petitioners manufacture and sell home video tape recorders. Respondents own the copyrights on some of the television programs that are broadcast on the public airwaves. Some members of the general public use video tape recorders sold by petitioners to record some of these broadcasts, as well as a large number of other broadcasts. The question presented is 137 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW whether the sale of petitioners' copying equipment to the general public violates any of the rights conferred upon respondents by the Copyright Act.Respondents commenced this copyright infringement action against petitioners in the United States District Court for the Central District of California in 1976. Respondents alleged that some individuals had used Betamax video tape recorders (VTR's) to record some of respondents' copyrighted works which had been exhibited on commercially sponsored television and contended that these individuals had thereby infringed respondents' copyrights. Respondents further maintained that petitioners were liable for the copyright infringement allegedly committed by Betamax consumers because of petitioners' marketing of the Betamax VTR's. FN1 Respondents sought no relief against any Betamax consumer. Instead, they sought money damages and an equitable accounting of profits from petitioners, as well as an injunction against the manufacture and marketing of Betamax VTR's. FN1. The respondents also asserted causes of action under state law and § 43(a) of the Trademark Act of 1946, 60 Stat. 441, 15 U.S.C. § 1125(a). These claims are not before this Court. After a lengthy trial, the District Court denied respondents all the relief they sought and entered judgment for petitioners. 480 F.Supp. 429 (1979). The United States Court of Appeals for the Ninth Circuit reversed the District Court's judgment on respondent's copyright claim, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief. 659 F.2d 963 (1981). We granted certiorari, 457 U.S. 1116, 102 S.Ct. 2926, 73 L.Ed.2d 1328 (1982); since we had not completed our study of the case last Term, we ordered reargument, 463 U.S. 1226, 103 S.Ct. 3568, 77 L.Ed.2d 1409 (1983). We now reverse.An explanation of our rejection of respondents' unprecedented attempt to impose copyright liability upon the distributors of copying equipment requires a quite detailed recitation of the findings of the District Court. In summary, those findings reveal that the average member of the public uses a VTR principally to record a program he cannot view as it is being televised and then to watch it once at a later time. This practice, known as “time-shifting,” enlarges the television viewing audience. For that reason, a significant amount of television programming may be used in this manner without objection from the owners of the copyrights on the programs. For the same reason, even the two respondents in this case, who do assert objections to time-shifting in this litigation, were unable to prove that the practice has impaired the commercial value of their copyrights or has created any likelihood of future harm. Given these findings, there is no basis in the Copyright Act upon which respondents can hold petitioners liable for distributing VTR's to the general public. The Court of Appeals' holding that respondents are entitled to enjoin the distribution of VTR's, to collect royalties on the sale of such equipment, or to obtain other relief, if affirmed, would enlarge the scope of respondents' statutory monopolies to encompass control over an article of commerce that is not the subject of copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress. I The two respondents in this action, Universal Studios, Inc. and Walt Disney Productions, produce and hold the copyrights on a substantial number of motion pictures and other audiovisual works. In the current marketplace, they can exploit their rights in these works in a number of ways: by authorizing theatrical exhibitions, by licensing limited showings on cable and network television, by selling syndication rights for repeated airings on local television stations, and by marketing programs on prerecorded videotapes or videodiscs. Some works are suitable for exploitation through all of these avenues, while the market for other works is more limited.Petitioner Sony manufactures millions of Betamax video tape recorders and markets these devices through numerous retail establishments, some of which are also petitioners in this action. FN2 Sony's Betamax VTR is a mechanism consisting of three basic components: (1) a tuner, which receives electromagnetic signals transmitted over the television band of the public airwaves and separates them into audio and visual signals; (2) a recorder, which records such signals on a magnetic tape; and (3) an adapter, which converts the audio and visual signals on the tape into a composite signal that can be received by a television set. FN2. The four retailers are Carter, Hawley, Hales, Stores, Inc.; Associated Dry Goods Corp.; Federated Department Stores, Inc.; and Henry's Camera Corp. The principal defendants are Sony Corporation, the manufacturer of the equipment, and its wholly owned subsidiary, Sony Corporation of America. The advertising agency of Doyle, Dane, Burnbock, Inc., also involved in marketing the Betamax, is also a petitioner. An individual VTR user, Willis Griffiths, was named as a defendant in the District Court, but respondent sought no relief against him. Griffiths is not a petitioner. For convenience, we shall refer to petitioners collectively as Sony. Several capabilities of the machine are noteworthy. The separate tuner in the Betamax enables it to record a broadcast off one station while the television set is tuned to another channel, permitting the viewer, for example, to watch two simultaneous news broadcasts by watching one “live” and recording the other for later viewing. Tapes may be reused, and programs that have been recorded may be erased either before or after viewing. A timer in the Betamax can be used to activate and deactivate the equipment at predetermined times, enabling an intended viewer to record programs that are transmitted when he or she is not at home. Thus a person may watch a program at home in the evening even though it was broadcast while the viewer was at work during the afternoon. The Betamax is also equipped with a pause button and a fast-forward control. The pause button, when depressed, deactivates the recorder until it is released, thus enabling a viewer to omit a commercial advertisement from the recording, provided, of course, that the viewer is present when the program is recorded. The fast forward control enables the viewer of a previously recorded program to run the tape rapidly when a segment he or she does not desire to see is being played back on the television screen.The respondents and Sony both conducted surveys of the way the Betamax machine was used by several hundred owners during a sample period in 1978. Although there were some differences in the surveys, they both showed that the primary use of the machine for most owners was “time-shifting,”-the practice of recording a program to view it once at a later time, and thereafter erasing it. Time-shifting enables viewers to see programs they otherwise would miss because they are not at home, are occupied with other tasks, or are viewing a program on another station at the time of a broadcast that they desire to watch. Both surveys also showed, however, that a substantial number of interviewees had accumulated libraries of tapes.FN3 Sony's survey indicated that over 80% of the interviewees watched at least as much regular television as they had before owning a Betamax.FN4 Respondents offered no evidence of decreased television viewing by Betamax owners.FN5 FN3. As evidence of how a VTR may be used, respondents offered the testimony of William Griffiths. Griffiths, although named as an individual defendant, was a client of plaintiffs' law firm. The District Court summarized his testimony as follows: “He owns approximately 100 tapes. When Griffiths bought his Betamax, he intended not only to time-shift (record, play-back and then erase) CHAPTER 8: INTELLECTUAL PROPERTY 138 but also to build a library of cassettes. Maintaining a library, however, proved too expensive, and he is now erasing some earlier tapes and reusing them. “Griffiths copied about 20 minutes of a Universal motion picture called ‘Never Give An Inch,’ and two episodes from Universal television series entitled ‘Baa Baa Black Sheep’ and ‘Holmes and Yo Yo.’ He would have erased each of these but for the request of plaintiffs' counsel that it be kept. Griffiths also testified that he had copied but already erased Universal films called ‘Alpha Caper’ (erased before anyone saw it) and ‘Amelia Earhart.’ At the time of his deposition Griffiths did not intend to keep any Universal film in his library. “Griffiths has also recorded documentaries, news broadcasts, sporting events and political programs such as a rerun of the Nixon/Kennedy debate.” 480 F.Supp., at 436-437. Four other witnesses testified to having engaged in similar activity. FN4. The District Court summarized some of the findings in these surveys as follows: “According to plaintiffs' survey, 75.4% of the VTR owners use their machines to record for time-shifting purposes half or most of the time. Defendants' survey showed that 96% of the Betamax owners had used the machine to record programs they otherwise would have missed. “When plaintiffs asked interviewees how many cassettes were in their library, 55.8% said there were 10 or fewer. In defendants' survey, of the total programs viewed by interviewees in the past month, 70.4% had been viewed only that one time and for 57.9%, there were no plans for further viewing.” 480 F.Supp., at 438. FN5. “81.9% of the defendants' interviewees watched the same amount or more of regular television as they did before owning a Betamax. 83.2% reported their frequency of movie going was unaffected by Betamax.” 480 F.Supp., at 439. Sony introduced considerable evidence describing television programs that could be copied without objection from any copyright holder, with special emphasis on sports, religious, and educational programming. For example, their survey indicated that 7.3% of all Betamax use is to record sports events, and representatives of professional baseball, football, basketball, and hockey testified that they had no objection to the recording of their televised events for home use.FN6 FN6. See Def.Exh. OT, Table 20; Tr. 2447-2450, 2480, 2486-2487, 2515-2516, 2530-2534. Respondents offered opinion evidence concerning the future impact of the unrestricted sale of VTR's on the commercial value of their copyrights. The District Court found, however, that they had failed to prove any likelihood of future harm from the use of VTR's for time- shifting. Id., at 469. The District Court's Decision The lengthy trial of the case in the District Court concerned the private, home use of VTR's for recording programs broadcast on the public airwaves without charge to the viewer.FN7 No issue concerning the transfer of tapes to other persons, the use of home-recorded tapes for public performances, or the copying of programs transmitted on pay or cable television systems was raised. See 480 F.Supp. 429, 432-433, 442 (1979). FN7. The trial also briefly touched upon demonstrations of the Betamax by the retailer petitioners which were alleged to be infringements by respondents. The District Court held against respondents on this claim, 480 F.Supp., at 456-457, the Court of Appeals affirmed this holding, 659 F.2d, at 976, and respondents did not cross-petition on this issue. The District Court concluded that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works and did not constitute copyright infringement. It emphasized the fact that the material was broadcast free to the public at large, the noncommercial character of the use, and the private character of the activity conducted entirely within the home. Moreover, the court found that the purpose of this use served the public interest in increasing access to television programming, an interest that “is consistent with the First Amendment policy of providing the fullest possible access to information through the public airwaves. Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U.S. 94, 102 [93 S.Ct. 2080, 2086, 36 L.Ed.2d 772].” 480 F.Supp., at 454. FN8 Even when an entire copyrighted work was recorded, the District Court regarded the copying as fair use “because there is no accompanying reduction in the market for ‘plaintiff's original work.’ ” Ibid. FN8. The court also found that this “access is not just a matter of convenience, as plaintiffs have suggested. Access has been limited not simply by inconvenience but by the basic need to work. Access to the better program has also been limited by the competitive practice of counterprogramming.” 480 F.Supp., at 454. As an independent ground of decision, the District Court also concluded that Sony could not be held liable as a contributory infringer even if the home use of a VTR was considered an infringing use. The District Court noted that Sony had no direct involvement with any Betamax purchasers who recorded copyrighted works off the air. Sony's advertising was silent on the subject of possible copyright infringement, but its instruction booklet contained the following statement:“Television programs, films, videotapes and other materials may be copyrighted. Unauthorized recording of such material may be contrary to the provisions of the United States copyright laws.” Id., at 436.The District Court assumed that Sony had constructive knowledge of the probability that the Betamax machine would be used to record copyrighted programs, but found that Sony merely sold a “product capable of a variety of uses, some of them allegedly infringing.” Id., at 461. It reasoned:“Selling a staple article of commerce e.g., a typewriter, a recorder, a camera, a photocopying machine technically contributes to any infringing use subsequently made thereof, but this kind of ‘contribution,’ if deemed sufficient as a basis for liability, would expand the theory beyond precedent and arguably beyond judicial management.“Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they ‘constructively’ knew that some purchasers on some occasions would use their product for a purpose which a court later deemed, as a matter of first impression, to be an infringement.” Ibid.Finally, the District Court discussed the respondents' prayer for injunctive relief, noting that they had asked for an injunction either preventing the future sale of Betamax machines, or requiring that the machines be rendered incapable of recording copyrighted works off the air. The court stated that it had “found no case in which the manufacturers, distributors, retailers, and advertisors of the instrument enabling the infringement were sued by the copyright holders,” and that the request for relief in this case “is unique.” 480 F.Supp., at 465.It concluded that an injunction was wholly inappropriate because any possible harm to respondents was outweighed by the fact that “the Betamax could still legally be used to record noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the- 139 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW air recording.” 480 F.Supp., at 468. The Court of Appeals' Decision The Court of Appeals reversed the District Court's judgment on respondents' copyright claim. It did not set aside any of the District Court's findings of fact. Rather, it concluded as a matter of law that the home use of a VTR was not a fair use because it was not a “productive use.” FN9 It therefore held that it was unnecessary for plaintiffs to prove any harm to the potential market for the copyrighted works, but then observed that it seemed clear that the cumulative effect of mass reproduction made possible by VTR's would tend to diminish the potential market for respondents' works. 659 F.2d, at 974. FN9. “Without a ‘productive use’, i.e. when copyrighted material is reproduced for its intrinsic use, the mass copying of the sort involved in this case precludes an application of fair use.” 659 F.2d, at 971-972. On the issue of contributory infringement, the Court of Appeals first rejected the analogy to staple articles of commerce such as tape recorders or photocopying machines. It noted that such machines “may have substantial benefit for some purposes” and do not “even remotely raise copyright problems.” Id., at 975. VTR's, however, are sold “for the primary purpose of reproducing television programming” and “virtually all” such programming is copyrighted material. Ibid. The Court of Appeals concluded, therefore, that VTR's were not suitable for any substantial noninfringing use even if some copyright owners elect not to enforce their rights.The Court of Appeals also rejected the District Court's reliance on Sony's lack of knowledge that home use constituted infringement. Assuming that the statutory provisions defining the remedies for infringement applied also to the non-statutory tort of contributory infringement, the court stated that a defendant's good faith would merely reduce his damages liability but would not excuse the infringing conduct. It held that Sony was chargeable with knowledge of the homeowner's infringing activity because the reproduction of copyrighted materials was either “the most conspicuous use” or “the major use” of the Betamax product. Ibid.On the matter of relief, the Court of Appeals concluded that “statutory damages may be appropriate,” that the District Court should reconsider its determination that an injunction would not be an appropriate remedy; and, referring to “the analogous photocopying area,” suggested that a continuing royalty pursuant to a judicially created compulsory license may very well be an acceptable resolution of the relief issue. 659 F.2d, at 976. II Article I, Sec. 8 of the Constitution provides that:“The Congress shall have Power ... to Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” [1] The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.“The copyright law, like the patent statute, makes reward to the owner a secondary consideration. In Fox Film Corp. v. Doyal, 286 U.S. 123, 127 [52 S.Ct. 546, 547, 76 L.Ed. 1010], Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress, ‘The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.’ It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius.” United States v. Paramount Pictures, 334 U.S. 131, 158, 68 S.Ct. 915, 929, 92 L.Ed. 1260.As the text of the Constitution makes plain, it is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors or to inventors in order to give the public appropriate access to their work product. Because this task involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand, our patent and copyright statutes have been amended repeatedly. FN10 FN10. In its report accompanying the comprehensive revision of the Copyright Act in 1909, the Judiciary Committee of the House of Representatives explained this balance: “The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings, ... but upon the ground that the welfare of the public will be served and progress of science and useful arts will be promoted by securing to authors for limited periods the exclusive rights to their writings. * * * “In enacting a copyright law Congress must consider ... two questions: First, how much will the legislation stimulate the producer and so benefit the public, and, second, how much will the monopoly granted be detrimental to the public? The granting of such exclusive rights, under the proper terms and conditions, confers a benefit upon the public that outweighs the evils of the temporary monopoly.” H.R.Rep. No. 2222, 60th Cong., 2d Sess. 7 (1909). [2] From its beginning, the law of copyright has developed in response to significant changes in technology. FN11 Indeed, it was the invention of a new form of copying equipment-the printing press-that gave rise to the original need for copyright protection. FN12 Repeatedly, as new developments have occurred in this country, it has been the Congress that has fashioned the new rules that new technology made necessary. Thus, long before the enactment of the Copyright Act of 1909, 35 Stat. 1075, it was settled that the protection given to copyrights is wholly statutory. Wheaton v. Peters, 33 U.S. (8 Peters) 591, 661-662, 8 L.Ed. 1055 (1834). The remedies for infringement “are only those prescribed by Congress.” Thompson v. Hubbard, 131 U.S. 123, 151, 9 S.Ct. 710, 720, 33 L.Ed. 76 (1889). FN11. Thus, for example, the development and marketing of player pianos and perforated roles of music, see White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 (1908), preceded the enactment of the Copyright Act of 1909; innovations in copying techniques gave rise to the statutory exemption for library copying embodied in § 108 of the 1976 revision of the Copyright law; the development of the technology that made it possible to retransmit television programs by cable or by microwave systems, see Fortnightly Corp. v. United Artists, 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968), and Teleprompter Corp. v. CBS, 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974), prompted the enactment of the complex provisions set forth in 17 U.S.C. § 111(d)(2)(B) and § 111(d)(5) after years of detailed congressional study, see Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 129 (CA2 1982). By enacting the Sound Recording Amendment of 1971, 85 Stat. 391, Congress also provided the solution to the “record piracy” problems that CHAPTER 8: INTELLECTUAL PROPERTY 140 had been created by the development of the audio tape recorder. Sony argues that the legislative history of that Act, see especially H.Rep. No. 487, 92nd Cong., 1st Sess., p. 7, indicates that Congress did not intend to prohibit the private home use of either audio or video tape recording equipment. In view of our disposition of the contributory infringement issue, we express no opinion on that question. FN12. “Copyright protection became necessary with the invention of the printing press and had its early beginnings in the British censorship laws. The fortunes of the law of copyright have always been closely connected with freedom of expression, on the one hand, and with technological improvements in means of dissemination, on the other. Successive ages have drawn different balances among the interest of the writer in the control and exploitation of his intellectual property, the related interest of the publisher, and the competing interest of society in the untrammeled dissemination of ideas.” Foreword to B. Kaplan, An Unhurried View of Copyright vii-viii (1967). The judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. See, e.g., Teleprompter Corp. v. CBS, 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974); Fortnightly Corp. v. United Artists, 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968); White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 (1908); Williams and Wilkins v. United States, 487 F.2d 1345, 203 Ct.Cl. 74 (1973), affirmed by an equally divided court, 420 U.S. 376, 95 S.Ct. 1344, 43 L.Ed.2d 264 (1975). Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology.In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests. In doing so, we are guided by Justice Stewart's exposition of the correct approach to ambiguities in the law of copyright: “The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an ‘author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. ‘The sole interest of the United States and the primary object in conferring the monopoly,’ this Court has said, ‘lie in the general benefits derived by the public from the labors of authors.’ Fox Film Corp. v. Doyal, 286 U.S. 123, 127 [52 S.Ct. 546, 547, 76 L.Ed. 1010]. See Kendall v. Winsor, 21 How. 322, 327-328 [16 L.Ed. 165]; Grant v. Raymond, 6 Pet. 218, 241-242 [8 L.Ed. 376]. When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose.” Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2043, 45 L.Ed.2d 84 (footnotes omitted).[3] [4] [5] Copyright protection “subsists ... in original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). This protection has never accorded the copyright owner complete control over all possible uses of his work. FN13 Rather, the Copyright Act grants the copyright holder “exclusive” rights to use and to authorize the use of his work in five qualified ways, including reproduction of the copyrighted work in copies. Id., § 106.FN14 All reproductions of the work, however, are not within the exclusive domain of the copyright owner; some are in the public domain. Any individual may reproduce a copyrighted work for a “fair use;” the copyright owner does not possess the exclusive right to such a use. Compare id., § 106 with id., § 107. FN13. See, e.g., White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 19, 28 S.Ct. 319, 323, 52 L.Ed. 655 (1908); cf. Deep South Packing Co. v. Lathram Corp., 406 U.S. 518, 530-531, 92 S.Ct. 1700, 1707-1708, 32 L.Ed.2d 273 (1972). While the law has never recognized an author's right to absolute control of his work, the natural tendency of legal rights to express themselves in absolute terms to the exclusion of all else is particularly pronounced in the history of the constitutionally sanctioned monopolies of the copyright and the patent. See e.g., United States v. Paramount Pictures, 334 U.S. 131, 156-158, 68 S.Ct. 915, 928-929, 92 L.Ed. 1260 (1948) (copyright owners claiming right to tie license of one film to license of another under copyright law); Fox Film Corp. v. Doyal, 286 U.S. 123, 52 S.Ct. 546, 76 L.Ed. 1010 (1932) (copyright owner claiming copyright renders it immune from state taxation of copyright royalties); Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 349-351, 28 S.Ct. 722, 725-726, 52 L.Ed. 1086 (1908) (copyright owner claiming that a right to fix resale price of his works within the scope of his copyright); International Business Machines v. United States, 298 U.S. 131, 56 S.Ct. 701, 80 L.Ed. 1085 (1936) (patentees claiming right to tie sale of unpatented article to lease of patented device). FN14. Section 106 of the Act provides: “ ‘ Subject to sections 107 through 118, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly.” [6] “Anyone who violates any of the exclusive rights of the copyright owner,” that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work in one of the five ways set forth in the statute, “is an infringer of the copyright.” Id., § 501(a). Conversely, anyone who is authorized by the copyright owner to use the copyrighted work in a way specified in the statute or who makes a fair use of the work is not an infringer of the copyright with respect to such use.[7] [8] The Copyright Act provides the owner of a copyright with a potent arsenal of remedies against an infringer of his work, including an injunction to restrain the infringer from violating his rights, the impoundment and destruction of all reproductions of his work made in violation of his rights, a recovery of his actual damages and any additional profits realized by the infringer or a recovery of statutory damages, and attorneys fees. Id., §§ 502-505.FN15 FN15. Moreover, anyone who willfully infringes the copyright to reproduce a motion picture for purposes of commercial advantage or private 141 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW financial gain is subject to criminal penalties of one year imprisonment and a $25,000 fine for the first offense and two years imprisonment and a $50,000 fine for each subsequent offense, 17 U.S.C. § 506(a), and the fruits and instrumentalities of the crime are forfeited upon conviction, id., § 506(b). The two respondents in this case do not seek relief against the Betamax users who have allegedly infringed their copyrights. Moreover, this is not a class action on behalf of all copyright owners who license their works for television broadcast, and respondents have no right to invoke whatever rights other copyright holders may have to bring infringement actions based on Betamax copying of their works. FN16 As was made clear by their own evidence, the copying of the respondents' programs represents a small portion of the total use of VTR's. It is, however, the taping of respondents own copyrighted programs that provides them with standing to charge Sony with contributory infringement. To prevail, they have the burden of proving that users of the Betamax have infringed their copyrights and that Sony should be held responsible for that infringement. FN16. In this regard, we reject respondent's attempt to cast this action as comparable to a class action because of the positions taken by amici with copyright interests and their attempt to treat the statements made by amici as evidence in this case. See Brief for Respondent, at 1, and n. 1, 6, 52, 53 and n. 116. The stated desires of amici concerning the outcome of this or any litigation are no substitute for a class action, are not evidence in the case, and do not influence our decision; we examine an amicus curiae brief solely for whatever aid it provides in analyzing the legal questions before us. III The Copyright Act does not expressly render anyone liable for infringement committed by another. In contrast, the Patent Act expressly brands anyone who “actively induces infringement of a patent” as an infringer, 35 U.S.C. § 271(b), and further imposes liability on certain individuals labeled “contributory” infringers, id., § 271(c). The absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringements on certain parties who have not themselves engaged in the infringing activity. FN17 For vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another. FN17. As the District Court correctly observed, however, “the lines between direct infringement, contributory infringement, and vicarious liability are not clearly drawn....” 480 F.Supp. 457-458. The lack of clarity in this area may, in part, be attributable to the fact that an infringer is not merely one who uses a work without authorization by the copyright owner, but also one who authorizes the use of a copyrighted work without actual authority from the copyright owner. We note the parties' statements that the questions of petitioners' liability under the “doctrines” of “direct infringement” and “vicarious liability” are not nominally before this Court. Compare Respondents' Brief, at 9, n. 22, 41, n. 90 with Petitioners' Reply Brief, at 1, n. 2. We also observe, however, that reasoned analysis of respondents' unprecedented contributory infringement claim necessarily entails consideration of arguments and case law which may also be forwarded under the other labels, and indeed the parties to a large extent rely upon such arguments and authority in support of their respective positions on the issue of contributory infringement. [9] Such circumstances were plainly present in Kalem Co. v. Harper Brothers, 222 U.S. 55, 32 S.Ct. 20, 56 L.Ed. 92 (1911), the copyright decision of this Court on which respondents place their principal reliance. In Kalem, the Court held that the producer of an unauthorized film dramatization of the copyrighted book Ben Hur was liable for his sale of the motion picture to jobbers, who in turn arranged for the commercial exhibition of the film. Justice Holmes, writing for the Court, explained:“The defendant not only expected but invoked by advertisement the use of its films for dramatic reproduction of the story. That was the most conspicuous purpose for which they could be used, and the one for which especially they were made. If the defendant did not contribute to the infringement it is impossible to do so except by taking part in the final act. It is liable on principles recognized in every part of the law.” 222 U.S., at 63, 32 S.Ct., at 22.The use for which the item sold in Kalem had been “especially” made was, of course, to display the performance that had already been recorded upon it. The producer had personally appropriated the copyright owner's protected work and, as the owner of the tangible medium of expression upon which the protected work was recorded, authorized that use by his sale of the film to jobbers. But that use of the film was not his to authorize: the copyright owner possessed the exclusive right to authorize public performances of his work. Further, the producer personally advertised the unauthorized public performances, dispelling any possible doubt as to the use of the film which he had authorized.Respondents argue that Kalem stands for the proposition that supplying the “means” to accomplish an infringing activity and encouraging that activity through advertisement are sufficient to establish liability for copyright infringement. This argument rests on a gross generalization that cannot withstand scrutiny. The producer in Kalem did not merely provide the “means” to accomplish an infringing activity; the producer supplied the work itself, albeit in a new medium of expression. Petitioners in the instant case do not supply Betamax consumers with respondents' works; respondents do. Petitioners supply a piece of equipment that is generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the copyright holder would prefer not to have copied. The Betamax can be used to make authorized or unauthorized uses of copyrighted works, but the range of its potential use is much broader than the particular infringing use of the film Ben Hur involved in Kalem. Kalem does not support respondents' novel theory of liability.Justice Holmes stated that the producer had “contributed” to the infringement of the copyright, and the label “contributory infringement” has been applied in a number of lower court copyright cases involving an ongoing relationship between the direct infringer and the contributory infringer at the time the infringing conduct occurred. In such cases, as in other situations in which the imposition of vicarious liability is manifestly just, the “contributory” infringer was in a position to control the use of copyrighted works by others and had authorized the use without permission from the copyright owner. FN18 This case, however, plainly does not fall in that category. The only contact between Sony and the users of the Betamax that is disclosed by this record occurred at the moment of sale. The District Court expressly found that “no employee of Sony, Sonam or DDBI had either direct involvement with the allegedly infringing activity or direct contact with purchasers of Betamax who recorded copyrighted works off-the-air.” 480 F.Supp., at 460. And it further found that “there was no evidence that any of the copies made by Griffiths or the other individual witnesses in this suit were influenced or encouraged by [Sony's] advertisements.” Ibid. FN18. The so-called “dance hall cases,” Famous Music Corp. v. Bay State Harness Horse Racing and Breeding Ass'n, 554 F.2d 1213 (CA1 CHAPTER 8: INTELLECTUAL PROPERTY 142

1977) (racetrack retained infringer to supply music to paying customers); KECA MUSIC, Inc. v. Dingus McGee's Co., 432 F.Supp. 72 (W.D.Mo.1977) (cocktail lounge hired musicians to supply music to paying customers); Dreamland Ball Room v. Shapiro, Bernstein & Co., 36 F.2d 354 (CA7 1929) (dance hall hired orchestra to supply music to paying customers) are often contrasted with the so-called landlord-tenant cases, in which landlords who leased premises to a direct infringer for a fixed rental and did not participate directly in any infringing activity were found not to be liable for contributory infringement. E.g., Deutsch v. Arnold, 98 F.2d 686 (CA2 1938). In Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (CA2 1963) the owner of twenty-three chain stores retained the direct infringer to run its record departments. The relationship was structured as a licensing arrangement, so that the defendant bore none of the business risk of running the department. Instead, it received 10% or 12% of the direct infringer's gross receipts. The Court of Appeals concluded: “[The dance-hall cases] and this one lie closer on the spectrum to the employer-employee model, than to the landlord-tenant model. On the particular facts before us, ... Green's relationship to its infringing licensee, as well as its strong concern for the financial success of the phonograph record concession, renders it liable for the unauthorized sales of the ‘bootleg’ records. “[T]he imposition of vicarious liability in the case before us cannot be deemed unduly harsh or unfair. Green has the power to police carefully the conduct of its concessionaire; our judgment will simply encourage it to do so, thus placing responsibility where it can and should be effectively exercised.” Id., at 308 (emphasis in original). In Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (CA2 1971), the direct infringers retained the contributory infringer to manage their performances. The contributory infringer would contact each direct infringer, obtain the titles of the musical compositions to be performed, print the programs, and then sell the programs to its own local organizations for distribution at the time of the direct infringement. Id., at 1161. The Court of Appeals emphasized that the contributory infringer had actual knowledge that the artists it was managing were performing copyrighted works, was in a position to police the infringing conduct of the artists, and derived substantial benefit from the actions of the primary infringers. Id., at 1163. In Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F.Supp. 399 (SDNY 1966), the direct infringer manufactured and sold bootleg records. In denying a motion for summary judgment, the District Court held that the infringer's advertising agency, the radio stations that advertised the infringer's works, and the service agency that boxed and mailed the infringing goods could all be held liable, if at trial it could be demonstrated that they knew or should have known that they were dealing in illegal goods. [10] If vicarious liability is to be imposed on petitioners in this case, it must rest on the fact that they have sold equipment with constructive knowledge of the fact that their customers may use that equipment to make unauthorized copies of copyrighted material. There is no precedent in the law of copyright for the imposition of vicarious liability on such a theory. The closest analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship between patent law and copyright law. FN19 FN19. E.g., United States v. Paramount Pictures, 334 U.S. 131, 158, 68 S.Ct. 915, 929, 92 L.Ed. 1260 (1948); Fox Film Corp. v. Doyal, 286 U.S. 123, 131, 52 S.Ct. 546, 548, 76 L.Ed. 1010 (1932); Wheaton and Donaldson v. Peters and Grigg, 33 U.S. (8 Pet.) 591, 657-658, 8 L.Ed. 1055 (1834). The two areas of the law, naturally, are not identical twins, and we exercise the caution which we have expressed in the past in applying doctrine formulated in one area to the other. See generally, Mazer v. Stein, 347 U.S. 201, 217-218, 74 S.Ct. 460, 470, 98 L.Ed. 630 (1954); Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 345, 28 S.Ct. 722, 724, 52 L.Ed. 1086 (1908). We have consistently rejected the proposition that a similar kinship exists between copyright law and trademark law, and in the process of doing so have recognized the basic similarities between copyrights and patents. The Trade-Mark Cases, 100 U.S. 82, 91-92, 25 L.Ed. 550 (1879); see also, United Drug Co. v. Rectanus Co., 248 U.S. 90, 97, 39 S.Ct. 48, 50, 63 L.Ed. 141 (1918) (trademark right “has little or no analogy” to copyright or patent); McLean v. Fleming, 96 U.S. 245, 254 (1877); Canal Co. v. Clark, 13 Wall. 311, 322, 20 L.Ed. 581 (1871). Given the fundamental differences between copyright law and trademark law, in this copyright case we do not look to the standard for contributory infringement set forth in Inwood Laboratories v. Ives Laboratories, 456 U.S. 844, 854-855, 102 S.Ct. 2182, 2188, 72 L.Ed.2d 606 (1982), which was crafted for application in trademark cases. There we observed that a manufacturer or distributor could be held liable to the owner of a trademark if it intentionally induced a merchant down the chain of distribution to pass off its product as that of the trademark owner's or if it continued to supply a product which could readily be passed off to a particular merchant whom it knew was mislabeling the product with the trademark owner's mark. If Inwood's narrow standard for contributory trademark infringement governed here, respondents' claim of contributory infringement would merit little discussion. Sony certainly does not “intentionally induce[ ]” its customers to make infringing uses of respondents' copyrights, nor does it supply its products to identified individuals known by it to be engaging in continuing infringement of respondents' copyrights, see id., at 855, 102 S.Ct., at 2188. In the Patent Code both the concept of infringement and the concept of contributory infringement are expressly defined by statute. FN20 The prohibition against contributory infringement is confined to the knowing sale of a component especially made for use in connection with a particular patent. There is no suggestion in the statute that one patentee may object to the sale of a product that might be used in connection with other patents. Moreover, the Act expressly provides that the sale of a “staple article or commodity of commerce suitable for substantial noninfringing use” is not contributory infringement. FN20. 35 U.S.C. § 271 provides: “(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent. “(b) Whoever actively induces infringement of a patent shall be liable as an infringer. “ (c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. “(d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts 143 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement.” When a charge of contributory infringement is predicated entirely on the sale of an article of commerce that is used by the purchaser to infringe a patent, the public interest in access to that article of commerce is necessarily implicated. A finding of contributory infringement does not, of course, remove the article from the market altogether; it does, however, give the patentee effective control over the sale of that item. Indeed, a finding of contributory infringement is normally the functional equivalent of holding that the disputed article is within the monopoly granted to the patentee. FN21 FN21. It seems extraordinary to suggest that the Copyright Act confers upon all copyright owners collectively, much less the two respondents in this case, the exclusive right to distribute VTR's simply because they may be used to infringe copyrights. That, however, is the logical implication of their claim. The request for an injunction below indicates that respondents seek, in effect, to declare VTR's contraband. Their suggestion in this Court that a continuing royalty pursuant to a judicially created compulsory license would be an acceptable remedy merely indicates that respondents, for their part, would be willing to license their claimed monopoly interest in VTR's to petitioners in return for a royalty. For that reason, in contributory infringement cases arising under the patent laws the Court has always recognized the critical importance of not allowing the patentee to extend his monopoly beyond the limits of his specific grant. These cases deny the patentee any right to control the distribution of unpatented articles unless they are “unsuited for any commercial noninfringing use.” Dawson Chemical Co. v. Rohm & Hass Co., 448 U.S. 176, 198, 100 S.Ct. 2601, 2614, 65 L.Ed.2d 696 (1980). Unless a commodity “has no use except through practice of the patented method,” ibid, the patentee has no right to claim that its distribution constitutes contributory infringement. “To form the basis for contributory infringement the item must almost be uniquely suited as a component of the patented invention.” P. Rosenberg, Patent Law Fundamentals § 17.02[2] (1982). “[A] sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce.” Henry v. A.B. Dick Co., 224 U.S. 1, 48, 32 S.Ct. 364, 379, 56 L.Ed. 645 (1912), overruled on other grounds, Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 517, 37 S.Ct. 416, 421, 61 L.Ed. 871 (1917).[11] We recognize there are substantial differences between the patent and copyright laws. But in both areas the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possible. The staple article of commerce doctrine must strike a balance between a copyright holder's legitimate demand for effective-not merely symbolic-protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses. IV [12] The question is thus whether the Betamax is capable of commercially significant noninfringing uses. In order to resolve that question, we need not explore all the different potential uses of the machine and determine whether or not they would constitute infringement. Rather, we need only consider whether on the basis of the facts as found by the district court a significant number of them would be non-infringing. Moreover, in order to resolve this case we need not give precise content to the question of how much use is commercially significant. For one potential use of the Betamax plainly satisfies this standard, however it is understood: private, noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court's factual findings reveal that even the unauthorized home time-shifting of respondents' programs is legitimate fair use. A. Authorized Time Shifting Each of the respondents owns a large inventory of valuable copyrights, but in the total spectrum of television programming their combined market share is small. The exact percentage is not specified, but it is well below 10%. FN22 If they were to prevail, the outcome of this litigation would have a significant impact on both the producers and the viewers of the remaining 90% of the programming in the Nation. No doubt, many other producers share respondents' concern about the possible consequences of unrestricted copying. Nevertheless the findings of the District Court make it clear that time-shifting may enlarge the total viewing audience and that many producers are willing to allow private time-shifting to continue, at least for an experimental time period.FN23 FN22. The record suggests that Disney's programs at the time of trial consisted of approximately one hour a week of network television and one syndicated series. Universal's percentage in the Los Angeles market on commercial television stations was under 5%. See Tr. 532-533, 549-550. FN23. The District Court did not make any explicit findings with regard to how much broadcasting is wholly uncopyrighted. The record does include testimony that at least one movie- My Man Godfrey -falls within that category, Tr. 2300-2301, and certain broadcasts produced by the federal government are also uncopyrighted. See 17 U.S.C. § 105. Cf. Schnapper v. Foley, 667 F.2d 102 (CADC 1981) (explaining distinction between work produced by the government and work commissioned by the government). To the extent such broadcasting is now significant, it further bolsters our conclusion. Moreover, since copyright protection is not perpetual, the number of audiovisual works in the public domain necessarily increases each year. The District Court found:“Even if it were deemed that home-use recording of copyrighted material constituted infringement, the Betamax could still legally be used to record noncopyrighted material or material whose owners consented to the copying. An injunction would deprive the public of the ability to use the Betamax for this noninfringing off-the-air recording.“Defendants introduced considerable testimony at trial about the potential for such copying of sports, religious, educational and other programming. This included testimony from representatives of the Offices of the Commissioners of the National Football, Basketball, Baseball and Hockey Leagues and Associations, the Executive Director of National Religious Broadcasters and various educational communications agencies. Plaintiffs attack the weight of the testimony offered and also contend that an injunction is warranted because infringing uses outweigh noninfringing uses.”“Whatever the future percentage of legal versus illegal home-use recording might be, an injunction which seeks to deprive the public of the very tool or article of commerce capable of some CHAPTER 8: INTELLECTUAL PROPERTY 144 noninfringing use would be an extremely harsh remedy, as well as one unprecedented in copyright law.” 480 F.Supp., at 468.Although the District Court made these statements in the context of considering the propriety of injunctive relief, the statements constitute a finding that the evidence concerning “sports, religious, educational, and other programming” was sufficient to establish a significant quantity of broadcasting whose copying is now authorized, and a significant potential for future authorized copying. That finding is amply supported by the record. In addition to the religious and sports officials identified explicitly by the District Court,FN24 two items in the record deserve specific mention. FN24. See Tr. 2447-2450 (Alexander Hadden, Major League Baseball); Tr. 2480, 2486-2487 (Jay Moyer, National Football League); Tr. 2515- 2516 (David Stern, National Basketball Association); Tr. 2530-2534 (Gilbert Stein, National Hockey League); Tr. 2543-2552 (Thomas Hansen, National Collegiate Athletic Association); Tr. 2565-2572 (Benjamin Armstrong, National Religious Broadcasters). Those officials were authorized to be the official spokespersons for their respective institutions in this litigation. Tr. 2432, 2479, 2509-2510, 2530, 2538, 2563. See Fed.Rules Civ.Proc. 30(b)(6). First is the testimony of John Kenaston, the station manager of Channel 58, an educational station in Los Angeles affiliated with the Public Broadcasting Service. He explained and authenticated the station's published guide to its programs. FN25 For each program, the guide tells whether unlimited home taping is authorized, home taping is authorized subject to certain restrictions (such as erasure within seven days), or home taping is not authorized at all. The Spring 1978 edition of the guide described 107 programs. Sixty-two of those programs or 58% authorize some home taping. Twenty-one of them or almost 20% authorize unrestricted home taping.FN26 FN25. Tr. 2863-2902; Def. Exh. PI. FN26. See also Tr. 2833-2844 (similar testimony by executive director of New Jersey Public Broadcasting Authority). Cf. Tr. 2592-2605 (testimony by chief of New York Education Department's Bureau of Mass Communications approving home taping for educational purposes). Second is the testimony of Fred Rogers, president of the corporation that produces and owns the copyright on Mr. Rogers' Neighborhood. The program is carried by more public television stations than any other program. Its audience numbers over 3,000,000 families a day. He testified that he had absolutely no objection to home taping for noncommercial use and expressed the opinion that it is a real service to families to be able to record children's programs and to show them at appropriate times.FN27 FN27. “Some public stations, as well as commercial stations, program the ‘Neighborhood’ at hours when some children cannot use it. I think that it's a real service to families to be able to record such programs and show them at appropriate times. I have always felt that with the advent of all of this new technology that allows people to tape the ‘Neighborhood’ off-the-air, and I'm speaking for the ‘Neighborhood’ because that's what I produce, that they then become much more active in the programming of their family's television life. Very frankly, I am opposed to people being programmed by others. My whole approach in broadcasting has always been ‘You are an important person just the way you are. You can make healthy decisions.’ Maybe I'm going on too long, but I just feel that anything that allows a person to be more active in the control of his or her life, in a healthy way, is important.” T.R. 2920-2921. See also Def. Exh. PI, p. 85. If there are millions of owners of VTR's who make copies of televised sports events, religious broadcasts, and educational programs such as Mister Rogers' Neighborhood, and if the proprietors of those programs welcome the practice, the business of supplying the equipment that makes such copying feasible should not be stifled simply because the equipment is used by some individuals to make unauthorized reproductions of respondents' works. The respondents do not represent a class composed of all copyright holders. Yet a finding of contributory infringement would inevitably frustrate the interests of broadcasters in reaching the portion of their audience that is available only through time- shifting.[13] Of course, the fact that other copyright holders may welcome the practice of time-shifting does not mean that respondents should be deemed to have granted a license to copy their programs. Third party conduct would be wholly irrelevant in an action for direct infringement of respondents' copyrights. But in an action for contributory infringement against the seller of copying equipment, the copyright holder may not prevail unless the relief that he seeks affects only his programs, or unless he speaks for virtually all copyright holders with an interest in the outcome. In this case, the record makes it perfectly clear that there are many important producers of national and local television programs who find nothing objectionable about the enlargement in the size of the television audience that results from the practice of time-shifting for private home use.FN28 The seller of the equipment that expands those producers' audiences cannot be a contributory infringer if, as is true in this case, it has had no direct involvement with any infringing activity. FN28. It may be rare for large numbers of copyright owners to authorize duplication of their works without demanding a fee from the copier. In the context of public broadcasting, however, the user of the copyrighted work is not required to pay a fee for access to the underlying work. The traditional method by which copyright owners capitalize upon the television medium-commercially sponsored free public broadcast over the public airwaves-is predicated upon the assumption that compensation for the value of displaying the works will be received in the form of advertising revenues. In the context of television programming, some producers evidently believe that permitting home viewers to make copies of their works off the air actually enhances the value of their copyrights. Irrespective of their reasons for authorizing the practice, they do so, and in significant enough numbers to create a substantial market for a non-infringing use of the Sony VTR's. No one could dispute the legitimacy of that market if the producers had authorized home taping of their programs in exchange for a license fee paid directly by the home user. The legitimacy of that market is not compromised simply because these producers have authorized home taping of their programs without demanding a fee from the home user. The copyright law does not require a copyright owner to charge a fee for the use of his works, and as this record clearly demonstrates, the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier. It is not the role of the courts to tell copyright holders the best way for them to exploit their copyrights: even if respondents' competitors were ill-advised in authorizing home videotaping, that would not change the fact that they have created a substantial market for a paradigmatic non-infringing use of petitioners' product. B. Unauthorized Time-Shifting [14] Even unauthorized uses of a copyrighted work are not necessarily infringing. An unlicensed use of the copyright is not an infringement unless it conflicts with one of the specific exclusive rights conferred by the copyright statute. Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 154-155, 95 S.Ct. 2040, 2043, 45 L.Ed.2d 84. Moreover, the definition of exclusive rights in § 106 of the present Act is prefaced by the 145 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW words “subject to sections 107 through 118.” Those sections describe a variety of uses of copyrighted material that “are not infringements of copyright notwithstanding the provisions of § 106.” The most pertinent in this case is § 107, the legislative endorsement of the doctrine of “fair use.” FN29 FN29. The Copyright Act of 1909, 35 Stat. 1075, did not have a “fair use” provision. Although that Act's compendium of exclusive rights “to print, reprint, publish, copy, and vend the copyrighted work” was broad enough to encompass virtually all potential interactions with a copyrighted work, the statute was never so construed. The courts simply refused to read the statute literally in every situation. When Congress amended the statute in 1976, it indicated that it “intended to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way.” House Report No. 94-1476, 94th Cong., 2d Sess., p. 66, U.S.Code Code & Admin.News 1976, pp. 5659, 5679. That section identifies various factors FN30 that enable a Court to apply an “equitable rule of reason” analysis to particular claims of infringement.FN31 Although not conclusive, the first factor requires that “the commercial or nonprofit character of an activity” be weighed in any fair use decision.FN32 If the Betamax were used to make copies for a commercial or profit-making purpose, such use would presumptively be unfair. The contrary presumption is appropriate here, however, because the District Court's findings plainly establish that time-shifting for private home use must be characterized as a noncommercial, nonprofit activity. Moreover, when one considers the nature of a televised copyrighted audiovisual work, see 17 U.S.C. § 107(2), and that timeshifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced, see id., at § 107(3), does not have its ordinary effect of militating against a finding of fair use.FN33 FN30. Section 107 provides: “ Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include- “(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; “(2) the nature of the copyrighted work; “(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and “(4) the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107. FN31. The House Report expressly stated that the fair use doctrine is an “equitable rule of reason” in its explanation of the fair use section: “Although the courts have considered and ruled upon the fair use doctrine over and over again, no real definition of the concept has ever emerged. Indeed, since the doctrine is an equitable rule of reason, no generally applicable definition is possible, and each case raising the question must be decided on its own facts.... General intention behind the provision “The statement of the fair use doctrine in section 107 offers some guidance to users in determining when the principles of the doctrine apply. However, the endless variety of situations and combinations of circumstances that can rise in particular cases precludes the formulation of exact rules in the statute. The bill endorses the purpose and general scope of the judicial doctrine of fair use, but there is no disposition to freeze the doctrine in the statute, especially during a period of rapid technological change. Beyond a very broad statutory explanation of what fair use is and some of the criteria applicable to it, the courts must be free to adapt the doctrine to particular situations on a case-by-case basis.” H.Rep. No. 94-1476, pp. 65-66, U.S.Code Cong. & Admin.News 1976, p. 5680. The Senate Committee similarly eschewed a rigid, bright line approach to fair use. The Senate Report endorsed the view “that off-the-air recording for convenience” could be considered “fair use” under some circumstances, although it then made it clear that it did not intend to suggest that off-the-air recording for convenience should be deemed fair use under any circumstances imaginable. Senate Report 94-473, pp. 65- 66. The latter qualifying statement is quoted by the dissent, post, at 809, and if read in isolation, would indicate that the Committee intended to condemn all off-the-air recording for convenience. Read in context, however, it is quite clear that that was the farthest thing from the Committee's intention. FN32. “The Committee has amended the first of the criteria to be considered-‘the purpose and character of the use’-to state explicitly that this factor includes a consideration of ‘whether such use is of a commercial nature or is for non-profit educational purposes.’ This amendment is not intended to be interpreted as any sort of not-for-profit limitation on educational uses of copyrighted works. It is an express recognition that, as under the present law, the commercial or non-profit character of an activity, while not conclusive with respect to fair use, can and should be weighed along with other factors in fair use decisions.” H.Rep. No. 94-1476, p. 66, U.S.Code Cong. & Admin.News 1976, p. 5679. FN33. It has been suggested that “consumptive uses of copyrights by home VTR users are commercial even if the consumer does not sell the homemade tape because the consumer will not buy tapes separately sold by the copyrightholder.” Home Recording of Copyrighted Works: Hearing before Subcommittee on Courts, Civil Liberties and the Administration of Justice of the House Committee on the Judiciary, 97th Congress, 2d Session, pt. 2, p. 1250 (1982) (memorandum of Prof. Laurence H. Tribe). Furthermore, “[t]he error in excusing such theft as noncommercial,” we are told, “can be seen by simple analogy: jewel theft is not converted into a noncommercial veniality if stolen jewels are simply worn rather than sold.” Ibid. The premise and the analogy are indeed simple, but they add nothing to the argument. The use to which stolen jewelery is put is quite irrelevant in determining whether depriving its true owner of his present possessory interest in it is venial; because of the nature of the item and the true owner's interests in physical possession of it, the law finds the taking objectionable even if the thief does not use the item at all. Theft of a particular item of personal property of course may have commercial significance, for the thief deprives the owner of his right to sell that particular item to any individual. Timeshifting does not even remotely entail comparable consequences to the copyright owner. Moreover, the timeshifter no more steals the program by watching it once than does the live viewer, and the live viewer is no more likely to buy pre-recorded videotapes than is the timeshifter. Indeed, no live viewer would buy a pre-recorded videotape if he did not have access to a VTR. This is not, however, the end of the inquiry because Congress has also directed us to consider “the effect of the use upon the potential market for CHAPTER 8: INTELLECTUAL PROPERTY 146 or value of the copyrighted work.” Id., at § 107(4). The purpose of copyright is to create incentives for creative effort. Even copying for noncommercial purposes may impair the copyright holder's ability to obtain the rewards that Congress intended him to have. But a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create. The prohibition of such noncommercial uses would merely inhibit access to ideas without any countervailing benefit. FN34 FN34. Cf. Latman, Fair Use of Copyrighted Works (1958), reprinted as Study No. 14 in Senate Judiciary Committee, Copyright Law Revision, Studies Prepared for the Subcommittee on Patents, Trademarks, and Copyrights, 86th Cong., 2d Sess., p. 30 (1960): “In certain situations, the copyright owner suffers no substantial harm from the use of the work.... Here again, is the partial marriage between the doctrine of fair use and the legal maxim de minimis non curat lex.” [15] Thus, although every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright, noncommercial uses are a different matter. A challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential market for the copyrighted work. Actual present harm need not be shown; such a requirement would leave the copyright holder with no defense against predictable damage. Nor is it necessary to show with certainty that future harm will result. What is necessary is a showing by a preponderance of the evidence that some meaningful likelihood of future harm exists. If the intended use is for commercial gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated.In this case, respondents failed to carry their burden with regard to home time-shifting. The District Court described respondents' evidence as follows:“Plaintiffs' experts admitted at several points in the trial that the time-shifting without librarying would result in ‘not a great deal of harm.’ Plaintiffs' greatest concern about time-shifting is with ‘a point of important philosophy that transcends even commercial judgment.’ They fear that with any Betamax usage, ‘invisible boundaries' are passed: ‘the copyright owner has lost control over his program.’ ” 480 F.Supp., at 467.Later in its opinion, the District Court observed:“Most of plaintiffs' predictions of harm hinge on speculation about audience viewing patterns and ratings, a measurement system which Sidney Sheinberg, MCA's president, calls a ‘black art’ because of the significant level of imprecision involved in the calculations.” Id., at 469.FN35 FN35. See also 480 F.Supp., at 451: “It should be noted, however, that plaintiffs' argument is more complicated and speculative than was the plaintiff's in Williams & Wilkins.... Here, plaintiffs ask the court to find harm based on many more assumptions.... As is discussed more fully in Part IV, infra, some of these assumptions are based on neither fact nor experience, and plaintiffs admit that they are to some extent inconsistent and illogical.” There was no need for the District Court to say much about past harm. “Plaintiffs have admitted that no actual harm to their copyrights has occurred to date.” Id., at 451.On the question of potential future harm from time-shifting, the District Court offered a more detailed analysis of the evidence. It rejected respondents' “fear that persons ‘watching’ the original telecast of a program will not be measured in the live audience and the ratings and revenues will decrease,” by observing that current measurement technology allows the Betamax audience to be reflected. Id., at 466.FN36 It rejected respondents' prediction “that live television or movie audiences will decrease as more people watch Betamax tapes as an alternative,” with the observation that “[t]here is no factual basis for [the underlying] assumption.” Ibid. FN37 It rejected respondents' “fear that time-shifting will reduce audiences for telecast reruns,” and concluded instead that “given current market practices, this should aid plaintiffs rather than harm them.” Ibid. FN38 And it declared that respondents' suggestion “that theater or film rental exhibition of a program will suffer because of time-shift recording of that program” “lacks merit.” 480 F.Supp., at 467. FN39 FN36. “There was testimony at trial, however, that Nielsen Ratings has already developed the ability to measure when a Betamax in a sample home is recording the program. Thus, the Betamax will be measured as a part of the live audience. The later diary can augment that measurement with information about subsequent viewing.” 480 F.Supp., at 466. In a separate section, the District Court rejected plaintiffs' suggestion that the commercial attractiveness of television broadcasts would be diminished because Betamax owners would use the pause button or fast-forward control to avoid viewing advertisements: “ It must be remembered, however, that to omit commercials, Betamax owners must view the program, including the commercials, while recording. To avoid commercials during playback, the viewer must fast-forward and, for the most part, guess as to when the commercial has passed. For most recordings, either practice may be too tedious. As defendants' survey showed, 92% of the programs were recorded with commercials and only 25% of the owners fast-forward through them. Advertisers will have to make the same kinds of judgments they do now about whether persons viewing televised programs actually watch the advertisements which interrupt them.” Id., at 468. FN37. “Here plaintiffs assume that people will view copies when they would otherwise be watching television or going to the movie theater. There is no factual basis for this assumption. It seems equally likely that Betamax owners will play their tapes when there is nothing on television they wish to see and no movie they want to attend. Defendants' survey does not show any negative effect of Betamax ownership on television viewing or theater attendance.” Ibid. FN38. “The underlying assumptions here are particularly difficult to accept. Plaintiffs explain that the Betamax increases access to the original televised material and that the more people there are in this original audience, the fewer people the rerun will attract. Yet current marketing practices, including the success of syndication, show just the opposite. Today, the larger the audience for the original telecast, the higher the price plaintiffs can demand from broadcasters from rerun rights. There is no survey within the knowledge of this court to show that the rerun audience is comprised of persons who have not seen the program. In any event, if ratings can reflect Betamax recording, original audiences may increase and, given market practices, this should aid plaintiffs rather than harm them.” Ibid. FN39. “This suggestion lacks merit. By definition, time-shift recording entails viewing and erasing, so the program will no longer be on tape when the later theater run begins. Of course, plaintiffs may fear that the Betamax will keep the tapes long enough to satisfy all their interest in the program and will, therefore, not patronize later theater exhibitions. To the extent this practice involves librarying, it is addressed in section V.C., infra. It should also be noted that there is no evidence to suggest that the public interest in later theatrical exhibitions of motion pictures will be reduced any more by Betamax recording than it already is by the television broadcast of the film.” 480 F.Supp., at 467. 147 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

After completing that review, the District Court restated its overall conclusion several times, in several different ways. “Harm from time-shifting is speculative and, at best, minimal.” Ibid. “The audience benefits from the time-shifting capability have already been discussed. It is not implausible that benefits could also accrue to plaintiffs, broadcasters, and advertisers, as the Betamax makes it possible for more persons to view their broadcasts.” Ibid. “No likelihood of harm was shown at trial, and plaintiffs admitted that there had been no actual harm to date.” Id., at 468-469. “Testimony at trial suggested that Betamax may require adjustments in marketing strategy, but it did not establish even a likelihood of harm.” Id., at 469. “Television production by plaintiffs today is more profitable than it has ever been, and, in five weeks of trial, there was no concrete evidence to suggest that the Betamax will change the studios' financial picture.” Ibid.The District Court's conclusions are buttressed by the fact that to the extent time-shifting expands public access to freely broadcast television programs, it yields societal benefits. Earlier this year, in Community Television of Southern California v. Gottfried, --- U.S. ----, ------, n. 12, 103 S.Ct. 885, 891-892, 74 L.Ed.2d 705 (1983), we acknowledged the public interest in making television broadcasting more available. Concededly, that interest is not unlimited. But it supports an interpretation of the concept of “fair use” that requires the copyright holder to demonstrate some likelihood of harm before he may condemn a private act of time-shifting as a violation of federal law.When these factors are all weighed in the “equitable rule of reason” balance, we must conclude that this record amply supports the District Court's conclusion that home time-shifting is fair use. In light of the findings of the District Court regarding the state of the empirical data, it is clear that the Court of Appeals erred in holding that the statute as presently written bars such conduct.FN40 FN40. The Court of Appeals chose not to engage in any “equitable rule of reason” analysis in this case. Instead, it assumed that the category of “fair use” is rigidly circumscribed by a requirement that every such use must be “productive.” It therefore concluded that copying a television program merely to enable the viewer to receive information or entertainment that he would otherwise miss because of a personal scheduling conflict could never be fair use. That understanding of “fair use” was erroneous. Congress has plainly instructed us that fair use analysis calls for a sensitive balancing of interests. The distinction between “productive” and “unproductive” uses may be helpful in calibrating the balance, but it cannot be wholly determinative. Although copying to promote a scholarly endeavor certainly has a stronger claim to fair use than copying to avoid interrupting a poker game, the question is not simply two-dimensional. For one thing, it is not true that all copyrights are fungible. Some copyrights govern material with broad potential secondary markets. Such material may well have a broader claim to protection because of the greater potential for commercial harm. Copying a news broadcast may have a stronger claim to fair use than copying a motion picture. And, of course, not all uses are fungible. Copying for commercial gain has a much weaker claim to fair use than copying for personal enrichment. But the notion of social “productivity” cannot be a complete answer to this analysis. A teacher who copies to prepare lecture notes is clearly productive. But so is a teacher who copies for the sake of broadening his personal understanding of his specialty. Or a legislator who copies for the sake of broadening her understanding of what her constituents are watching; or a constituent who copies a news program to help make a decision on how to vote. Making a copy of a copyrighted work for the convenience of a blind person is expressly identified by the House Committee Report as an example of fair use, with no suggestion that anything more than a purpose to entertain or to inform need motivate the copying. In a hospital setting, using a VTR to enable a patient to see programs he would otherwise miss has no productive purpose other than contributing to the psychological well-being of the patient. Virtually any time-shifting that increases viewer access to television programming may result in a comparable benefit. The statutory language does not identify any dichotomy between productive and nonproductive time-shifting, but does require consideration of the economic consequences of copying. In summary, the record and findings of the District Court lead us to two conclusions. First, Sony demonstrated a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcasts time-shifted by private viewers. And second, respondents failed to demonstrate that time-shifting would cause any likelihood of nonminimal harm to the potential market for, or the value of, their copyrighted works. The Betamax is, therefore, capable of substantial noninfringing uses. Sony's sale of such equipment to the general public does not constitute contributory infringement of respondent's copyrights. V “ The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.” Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530, 92 S.Ct. 1700, 1707, 32 L.Ed.2d 273 (1972).One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible.It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be reversed.It is so ordered.

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