## Facts

- CoStar operated a commercial real estate information service and owned copyrights in a large collection of photographs of commercial properties.
- CoStar licensed database access on terms barring customers from posting CoStar photos on other websites.
- LoopNet operated a website that hosted commercial real estate listings and photographs uploaded by subscribers; LoopNet did not create the listings.
- LoopNet’s system stored tens of thousands of subscriber-uploaded photographs and added thousands of listings daily.
- After CoStar complained of infringement, LoopNet implemented a manual screening step in which an employee briefly reviewed uploaded images to confirm they depicted commercial real estate and to look for obvious copyright notices or text; images failing either check were not posted.
- CoStar located more than 300 of its copyrighted photos among the subscriber-uploaded images on LoopNet’s site; LoopNet removed images upon receiving takedown notices.
- CoStar sued LoopNet for direct copyright infringement, arguing LoopNet was strictly liable because the photos were copied into and displayed from LoopNet’s computer system.

## Issues

1. Whether an internet hosting service is directly liable for copyright infringement when user-uploaded images are copied and displayed through an automated system initiated by users, absent a volitional act by the service.
2. Whether the DMCA safe-harbor regime eliminated or superseded any requirement of volitional conduct as an element limiting direct infringement liability.
3. Whether LoopNet’s limited manual screening and approval of uploads constitutes sufficient volitional conduct to impose direct infringement liability.

## Decision

- The Fourth Circuit affirmed summary judgment for LoopNet on CoStar’s direct infringement claim.
- Direct infringement required some volitional conduct by the defendant; operating a system that automatically copies material at users’ direction did not make LoopNet the “copier.”
- The DMCA was treated as providing additional defenses for service providers and did not displace the preexisting volitional-conduct limitation on direct liability.
- LoopNet’s cursory screening for relevance and obvious copyright indicators did not convert it into a direct infringer, and imposing strict liability based on such screening risked discouraging efforts to deter infringement.

## Legal Principles

- Direct copyright infringement is not imposed on an online service provider solely because user-directed, automated processes store or display infringing material on the provider’s servers; direct liability requires a volitional act of copying attributable to the defendant.
- An ISP that is the owner and manager of a system used by third parties to infringe, without itself initiating the copying, is generally not a direct infringer on a strict-liability theory.
- Limited, non-substantive screening of user uploads for obvious infringement markers and basic relevance may remain consistent with an otherwise automatic hosting function and does not necessarily supply the required volitional conduct.
- The DMCA safe-harbor provisions supplement, rather than replace, existing doctrinal limits on when direct infringement liability attaches.

## Conclusion

The Fourth Circuit held that LoopNet’s user-driven hosting service did not directly infringe CoStar’s photo copyrights because the copying was initiated by subscribers and lacked the required volitional conduct by LoopNet; the court also concluded the DMCA did not supplant this volition requirement, and LoopNet’s limited screening did not alter the result.


CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004)