## Facts

- Copyright owners held rights in several popular musical compositions.
- A concessionaire operated phonograph record departments inside 23 variety stores owned by H. L. Green Co.
- The concessionaire manufactured and sold unauthorized “bootleg” records that closely copied popular licensed recordings, without license or statutory notice.
- Concession agreements required the concessionaire and its employees to follow the store’s rules and policies.
- The store retained authority, in its discretion, to discharge concession employees believed to be acting improperly.
- The store received a percentage of the concessionaire’s gross receipts from record sales (generally 10%–12%).
- The concessionaire handled ordering, purchasing, billing, and payment for inventory, and made sales at the in-store departments.
- The district court held the concessionaire liable for infringement but dismissed the claim against the store, concluding the store did not sell the records and was not liable for the concessionaire’s sales.

## Issues

1. Whether a store owner is vicariously liable for copyright infringement committed by an in-store concessionaire selling unauthorized records.
2. Whether proof of the store owner’s knowledge of the infringement is required for vicarious liability.
3. Whether statutory royalties and damages for the same infringing sales may be recovered multiple times from different defendants, or only once on a joint-and-several basis.

## Decision

- The Second Circuit reversed the dismissal of the claims against the store.
- The court held the store vicariously liable for the infringing sales because it retained the right of supervision over the concession and had a direct financial interest in the sales through its percentage of gross receipts.
- The court did not require proof that the store knew of the infringement.
- The court treated the store and concessionaire as jointly and severally liable for the statutory royalty obligation, rejecting duplicative multiple recoveries for the same infringing records.

## Legal Principles

- A party may be vicariously liable for another’s copyright infringement when it has (1) the right and ability to supervise the infringing activity and (2) a direct financial interest in the exploitation of the copyrighted work.
- Vicarious liability may attach even without proof of the defendant’s knowledge or intent where the defendant can police the conduct and profits from it.
- A business that goes beyond a passive landlord role—by reserving operational control and sharing in sales proceeds—may be liable for infringing activity conducted on its premises by a concessionaire.
- Statutory royalties for the same infringing sales are recoverable once; responsible parties may be held jointly and severally liable rather than subjected to duplicative awards.

## Conclusion

The court imposed vicarious copyright liability on a retail store that profited from and retained supervisory control over an in-store record concession, holding that knowledge of infringement was unnecessary and that monetary relief for the infringing sales was subject to joint-and-several, non-duplicative recovery.


Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963)