PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


COSTAR GROUP, INCORPORATED;            
COSTAR REALTY INFORMATION,
INCORPORATED,
              Plaintiffs-Appellants,
                 v.
LOOPNET, INCORPORATED,
               Defendant-Appellee.


BMG MUSIC; EMI MUSIC, North
America; SONY MUSIC                       No. 03-1911
ENTERTAINMENT, INCORPORATED;
UNIVERSAL MUSIC GROUP; UNIVISION
MUSIC, LLC; COLUMBIA PICTURES
INDUSTRIES, INCORPORATED; METRO-
GOLDWYN-MAYER STUDIOS,
INCORPORATED; PARAMOUNT PICTURES
CORPORATION; TWENTIETH CENTURY
FOX FILM CORPORATION; UNIVERSAL
CITY STUDIOS, LLLP,
       Amici Supporting Appellants,
                                       
2                 COSTAR GROUP v. LOOPNET, INC.


BELLSOUTH TELECOMMUNICATIONS,         
INCORPORATED; NETCOALITION; EBAY
INCORPORATED; COMPUTER &
COMMUNICATIONS INDUSTRY
ASSOCIATION; GOOGLE INCORPORATED;
YAHOO! INCORPORATED; AMAZON.COM,
INCORPORATED; UNITED STATES           
INTERNET SERVICE PROVIDER
ASSOCIATION; VERIZON
COMMUNICATIONS, INCORPORATED;
U.S. INTERNET INDUSTRY
ASSOCIATION,
         Amici Supporting Appellee.
                                      
           Appeal from the United States District Court
            for the District of Maryland, at Greenbelt.
              Deborah K. Chasanow, District Judge.
                       (CA-99-2983-DKC)

                      Argued: May 6, 2004

                     Decided: June 21, 2004

Before NIEMEYER, MICHAEL, and GREGORY, Circuit Judges.



Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Michael joined. Judge Gregory wrote a dissenting
opinion.


                           COUNSEL

ARGUED: Jonathan D. Hacker, O’MELVENY & MYERS, L.L.P.,
Washington, D.C., for Appellants. Kurt B. Opsahl, PERKINS COIE,
L.L.P., San Francisco, California, for Appellee. Bruce G. Joseph,
                    COSTAR GROUP v. LOOPNET, INC.                      3
WILEY, REIN & FIELDING, L.L.P., Washington, D.C., for Amici
Supporting Appellee. ON BRIEF: Walter Dellinger, O’MELVENY
& MYERS, L.L.P., Washington, D.C., for Appellants. Kenneth B.
Wilson, PERKINS COIE, L.L.P., San Francisco, California, for
Appellee. Paul B. Gaffney, Joseph M. Terry, Manish K. Mital, WIL-
LIAMS & CONNOLLY, L.L.P., Washington, D.C., for Amici Sup-
porting Appellants. Scott E. Bain, WILEY, REIN & FIELDING,
L.L.P., Washington, D.C., for Amici Supporting Appellee.


                              OPINION

NIEMEYER, Circuit Judge:

   CoStar Group, Inc. and CoStar Realty Information, Inc. (collec-
tively "CoStar"), a copyright owner of numerous photographs of com-
mercial real estate, commenced this copyright infringement action
against LoopNet, Inc., an Internet service provider, for direct infringe-
ment under §§ 501 and 106 of the Copyright Act because CoStar’s
copyrighted photographs were posted by LoopNet’s subscribers on
LoopNet’s website. CoStar contended that the photographs were cop-
ied into LoopNet’s computer system and that LoopNet therefore was
a copier strictly liable for infringement of CoStar’s rights under § 106,
regardless of whether LoopNet’s role was passive when the photo-
graphs were copied into its system.

   Relying on Religious Technology Center v. Netcom On-Line Com-
munications Services, Inc., 

(N.D. Cal. 1995), the
district court entered summary judgment in favor of LoopNet on the
claim of direct infringement under § 106. We agree with the district
court. Because LoopNet, as an Internet service provider, is simply the
owner and manager of a system used by others who are violating
CoStar’s copyrights and is not an actual duplicator itself, it is not
directly liable for copyright infringement. We therefore affirm.

                                    I

  CoStar is a national provider of commercial real estate information,
and it claims to have collected the most comprehensive database of
4                  COSTAR GROUP v. LOOPNET, INC.
information on commercial real estate markets and commercial prop-
erties in the United States and the United Kingdom. Its database
includes a large collection of photographs of commercial properties,
and CoStar owns the copyright in the vast majority of these photo-
graphs. CoStar makes its database, including photographs, available
to customers through the Internet and otherwise, and each customer
agrees not to post CoStar’s photographs on its own website or on the
website of a third party.

   LoopNet is an Internet service provider ("ISP") whose website
allows subscribers, generally real estate brokers, to post listings of
commercial real estate on the Internet. It claims that its computer sys-
tem contains over 100,000 customer listings of commercial real
estate, including approximately 33,000 photographs, and that it was,
during the district court proceedings, adding about 2200 listings each
day, 250 of which include photographs. LoopNet does not post real
estate listings on its own account. Rather it provides a "web hosting
service that enables users who wish to display real estate over the
Internet to post listings for those properties on LoopNet’s web site."

   When using LoopNet’s services, a subscriber fills out a form and
agrees to "Terms and Conditions" that include a promise not to post
copies of photographs without authorization. If the subscriber
includes a photograph for a listing, it must fill out another form and
agree again to the "Terms and Conditions," along with an additional
express warranty that the subscriber has "all necessary rights and
authorizations" from the copyright owner of the photographs. The
subscriber then uploads the photographs into a folder in LoopNet’s
system, and the photograph is transferred to the RAM of one of Loop-
Net’s computers for review. A LoopNet employee then cursorily
reviews the photograph (1) to determine whether the photograph in
fact depicts commercial real estate, and (2) to identify any obvious
evidence, such as a text message or copyright notice, that the photo-
graph may have been copyrighted by another. If the photograph fails
either one of these criteria, the employee deletes the photograph and
notifies the subscriber. Otherwise, the employee clicks an "accept"
button that prompts LoopNet’s system to associate the photograph
with the web page for the property listing, making the photograph
available for viewing.
                   COSTAR GROUP v. LOOPNET, INC.                     5
   Beginning in early 1998, CoStar became aware that photographs
for which it held copyrights were being posted on LoopNet’s website
by LoopNet’s subscribers. When CoStar informed LoopNet of the
violations, LoopNet removed the photographs. In addition, LoopNet
instituted and followed a policy of marking properties to which
infringing photographs had been posted so that if other photographs
were posted to that property, LoopNet could inspect the photographs
side-by-side to make sure that the new photographs were not the
infringing photographs. By late summer 1999, CoStar had discovered
112 infringing photographs on LoopNet’s website, and by September
2001, it had found over 300. At that time, LoopNet had in its system
about 33,000 photographs posted by its subscribers.

   CoStar commenced this action in September 1999 against Loop-
Net, alleging copyright infringement, violation of the Lanham Act,
and several state-law causes of action. On cross-motions for summary
judgment, the district court concluded that LoopNet had not engaged
in direct infringement under the Copyright Act. It left open, however,
CoStar’s claims that LoopNet might have contributorily infringed
CoStar’s copyrights and that LoopNet was not entitled to the "safe
harbor" immunity provided by the Digital Millennium Copyright Act,
17 U.S.C. § 512. When the parties stipulated to the dismissal of all
claims except the district court’s summary judgment in favor of Loop-
Net on direct infringement, the district court entered final judgment
on that issue in favor of LoopNet. From entry of the judgment, CoStar
noticed this appeal.

                                  II

   CoStar contends principally that the district court erred in provid-
ing LoopNet "conclusive immunity," as a "‘passive’ provider of Inter-
net" services, from strict liability for its hosting of CoStar’s
copyrighted pictures on LoopNet’s website. The district court based
its decision on the reasoning of Religious Technology Center v. Net-
com On-Line Communication Services, Inc., 

(N.D.
Cal. 1995) ("Netcom"), which held that an ISP serving as a passive
conduit for copyrighted material is not liable as a direct infringer.
CoStar asserts that LoopNet is strictly liable for infringement of
CoStar’s rights protected by § 106 of the Copyright Act. According
to CoStar, any immunity for the passive conduct of an ISP such as
6                   COSTAR GROUP v. LOOPNET, INC.
LoopNet must come from the safe harbor immunity provided by the
Digital Millennium Computer Act ("DMCA"), if at all, because the
DMCA codified and supplanted the Netcom holding. Because Loop-
Net could not meet the conditions for immunity under the DMCA as
to many of the copyrighted photographs, LoopNet accordingly would
be liable under CoStar’s terms for direct copyright infringement for
hosting web pages containing the infringing photos.

    Stated otherwise, CoStar argues (1) that the Netcom decision was
a pragmatic and temporary limitation of traditional copyright liability,
which would otherwise have held ISPs strictly liable, and that in view
of the enactment of the DMCA, Netcom’s limitation is no longer nec-
essary; (2) that Congress considered Netcom in enacting the DMCA,
codifying its principles and thereby supplanting and preempting Net-
com as the only exemption from liability for direct infringement; and
(3) that because LoopNet cannot satisfy the conditions of the DMCA,
it remains strictly liable for direct infringement under §§ 106 and 501
of the Copyright Act. We will address CoStar’s points, determining
first the nature and applicability of the Netcom decision and second
the impact of the DMCA on Netcom.

                                   A

   In Netcom, the court held, among other things, that neither the ISP
providing Internet access, nor the bulletin board service storing the
posted material, was liable for direct copyright infringement under
§ 106 when a subscriber posted copyrighted materials on the Internet.
The court observed that "[a]lthough copyright is a strict liability stat-
ute, there should still be some element of volition or causation which
is lacking where a defendant’s system is merely used to use a copy
by a third 

. In responding to the argument
that the ISP’s computers stored and thereby "copied" copyrighted
material on its system for a period of days in rendering its service, the
court stated:

    Where the infringing subscriber is clearly directly liable for
    the same act, it does not make sense to adopt a rule that
    would lead to the liability of countless parties whose role in
    the infringement is nothing more than setting up and operat-
    ing a system that is necessary for the functioning of the
                   COSTAR GROUP v. LOOPNET, INC.                      7
    Internet. . . . The court does not find workable a theory of
    infringement that would hold the entire Internet liable for
    activities that cannot reasonable be deterred. Billions of bits
    of data flow through the Internet and are necessarily stored
    on servers throughout the network and it is thus practically
    impossible to screen out infringing bits from noninfringing
    bits. Because the court cannot see any meaningful distinc-
    tion (without regard to knowledge) between what Netcom
    did and what every other Usenet server does, the court finds
    that Netcom cannot be held liable for direct infringement.

   CoStar argues, in view of the court’s explanation, that the Netcom
decision was driven by expedience and that its holding is inconsistent
with the established law of copyright, as represented by Playboy
Enterprises, Inc. v. Frena, 

(M.D. Fla. 1993) (hold-
ing an ISP strictly liable for illegal copying on its computer system).
It maintains that the court made a policy judgment based not on what
the law was but on the fact that the Internet would have been crippled
as a medium if preexisting law had been applied. It argues further that
since the enactment of the DMCA in 1998, the problem identified in
Netcom has been solved by the DMCA, and consequently there is no
longer any need for the courts to continue to uphold this "special
exemption" from § 106 liability for ISPs.

   While the court in Netcom did point out the dramatic consequences
of a decision that would hold ISPs strictly liable for transmitting
copyrighted materials through their systems without knowledge of
what was being transmitted, the court grounded its ruling principally
on its interpretation of § 106 of the Copyright Act as implying a
requirement of "volition or causation" by the purported infringer. This
construction is one for which we have already indicated our prefer-
ence over the contrary decision described in Frena. See ALS Scan,
Inc. v. RemarQ Communities, Inc., 

, 622 (4th Cir. 2001).
There are several reasons to commend this approach.

   "[T]he 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." Sony
8                   COSTAR GROUP v. LOOPNET, INC.
Corp. v. Universal City Studios, Inc., 

, 432-33 (1984).
And it provides that "[a]nyone who violates any of the exclusive
rights of the copyright owner . . . is an infringer of the copyright." 17
U.S.C. § 501. Stated at a general level, "[t]o establish infringement,
two elements must be proven: (1) ownership of a valid copyright, and
(2) copying of constituent elements of the work that are original."
Feist Publications, Inc. v. Rural Tel. Serv. Co., 

, 361
(1991). A direct infringer has thus been characterized as one who
"trespasses into [the copyright owner’s] exclusive domain" estab-
lished in § 106, subject to the limitations of §§ 107 through 118. 

; see also 17 U.S.C. § 106 (specifying limitations).

   While the Copyright Act does not require that the infringer know
that he is infringing or that his conduct amount to a willful violation
of the copyright owner’s rights, it nonetheless requires conduct by a
person who causes in some meaningful way an infringement. Were
this not so, the Supreme Court could not have held, as it did in Sony,
that a manufacturer of copy machines, possessing constructive knowl-
edge that purchasers of its machine may be using them to engage in
copyright infringement, is not strictly liable for 

. This, of course, does not mean that a manufacturer or
owner of machines used for copyright violations could not have some
indirect liability, such as contributory or vicarious liability. But such
extensions of liability would require a showing of additional elements
such as knowledge coupled with inducement or supervision coupled
with a financial interest in the illegal copying.

   The Copyright Act does not specifically provide for such extended
liability, instead describing only the party who actually engages in
infringing conduct — the one who directly violates the prohibitions.
Yet under general principles of law, vicarious liability or contributory
liability may be imposed:

    The absence of such express language in the copyright stat-
    ute does not preclude the imposition of liability for copy-
    right infringements on certain parties who have not
    themselves engaged in the infringing activity. 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
                    COSTAR GROUP v. LOOPNET, INC.                       9
     which it is just to hold one individual accountable for the
     actions of another.

. Under a theory of contributory infringement,
"one who, with knowledge of the infringing activity, induces, causes
or materially contributes to the infringing conduct of another" is liable
for the infringement, too. Gershwin Publishing Corp. v. Columbia
Artists Mgmt., Inc., 

, 1162 (2d Cir. 1971) (footnote
omitted). Under a theory of vicarious liability, a defendant who "has
the right and ability to supervise the infringing activity and also has
a direct financial interest in such activities" is similarly liable. 

establish direct liability under §§ 501 and 106 of the Act,
something more must be shown than mere ownership of a machine
used by others to make illegal copies. There must be actual infringing
conduct with a nexus sufficiently close and causal to the illegal copy-
ing that one could conclude that the machine owner himself tres-
passed on the exclusive domain of the copyright owner. The Netcom
court described this nexus as requiring some aspect of volition or cau-

. Indeed, counsel for both parties agreed
at oral argument that a copy machine owner who makes the machine
available to the public to use for copying is not, without more, strictly
liable under § 106 for illegal copying by a customer. The ISP in this
case is an analogue to the owner of a traditional copying machine
whose customers pay a fixed amount per copy and operate the
machine themselves to make copies. When a customer duplicates an
infringing work, the owner of the copy machine is not considered a
direct infringer. Similarly, an ISP who owns an electronic facility that
responds automatically to users’ input is not a direct infringer. If the
Copyright Act does not hold the owner of the copying machine liable
as a direct infringer when its customer copies infringing material
without knowledge of the owner, the ISP should not be found liable
as a direct infringer when its facility is used by a subscriber to violate
a copyright without intervening conduct of the ISP.

  Moreover, in the context of the conduct typically engaged in by an
ISP, construing the Copyright Act to require some aspect of volition
and meaningful causation — as distinct from passive ownership and
management of an electronic Internet facility — receives additional
support from the Act’s concept of "copying." A violation of § 106
10                  COSTAR GROUP v. LOOPNET, INC.
requires copying or the making of copies. See 17 U.S.C. § 106(1), (3);

Feist 

. And the term "copies"
refers to "material objects . . . in which a work is fixed." 17 U.S.C.
§ 101 ("Definitions") (emphasis added). A work is "fixed" in a
medium when it is embodied in a copy "sufficiently permanent or sta-
ble to permit it to be perceived, reproduced, or otherwise communi-
cated for a period of more than transitory duration." 

When an electronic infrastructure is designed and managed as
a conduit of information and data that connects users over the Inter-
net, the owner and manager of the conduit hardly "copies" the infor-
mation and data in the sense that it fixes a copy in its system of more
than transitory duration. Even if the information and data are "down-
loaded" onto the owner’s RAM or other component as part of the
transmission function, that downloading is a temporary, automatic
response to the user’s request, and the entire system functions solely
to transmit the user’s data to the Internet. Under such an arrangement,
the ISP provides a system that automatically transmits users’ material
but is itself totally indifferent to the material’s content. In this way,
it functions as does a traditional telephone company when it transmits
the contents of its users’ conversations. While temporary electronic
copies may be made in this transmission process, they would appear
not to be "fixed" in the sense that they are "of more than transitory
duration," and the ISP therefore would not be a "copier" to make it
directly liable under the Copyright Act. With additional facts, of
course, an ISP could become indirectly liable.

   In concluding that an ISP has not itself fixed a copy in its system
of more than transitory duration when it provides an Internet hosting
service to its subscribers, we do not hold that a computer owner who
downloads copyrighted software onto a computer cannot infringe the
software’s copyright. See, e.g., MAI Systems Corp. v. Peak Computer,
Inc., 

, 518-19 (9th Cir. 1993). When the computer owner
downloads copyrighted software, it possesses the software, which
then functions in the service of the computer or its owner, and the
copying is no longer of a transitory nature. See, e.g., Vault Corp. v.
Quaid Software Ltd., 

, 260 (5th Cir. 1988). "Transitory
duration" is thus both a qualitative and quantitative characterization.
It is quantitative insofar as it describes the period during which the
function occurs, and it is qualitative in the sense that it describes the
status of transition. Thus, when the copyrighted software is down-
                   COSTAR GROUP v. LOOPNET, INC.                    11
loaded onto the computer, because it may be used to serve the com-
puter or the computer owner, it no longer remains transitory. This,
however, is unlike an ISP, which provides a system that automatically
receives a subscriber’s infringing material and transmits it to the
Internet at the instigation of the subscriber.

   Accordingly, we conclude that Netcom made a particularly rational
interpretation of § 106 when it concluded that a person had to engage
in volitional conduct — specifically, the act constituting infringement
— to become a direct infringer. As the court in Netcom concluded,
such a construction of the Act is especially important when it is
applied to cyberspace. There are thousands of owners, contractors,
servers, and users involved in the Internet whose role involves the
storage and transmission of data in the establishment and maintenance
of an Internet facility. Yet their conduct is not truly "copying" as
understood by the Act; rather, they are conduits from or to would-be
copiers and have no interest in the copy itself. See Doe v. GTE Corp.,

, 659 (7th Cir. 2003) ("A web host, like a delivery ser-
vice or phone company, is an intermediary and normally is indifferent
to the content of what it transmits"). To conclude that these persons
are copyright infringers simply because they are involved in the own-
ership, operation, or maintenance of a transmission facility that auto-
matically records material — copyrighted or not — would miss the
thrust of the protections afforded by the Copyright Act. In rejecting
even contributory infringement in some of such circumstances, the
Supreme Court stated:

    The staple article of commerce doctrine must strike a bal-
    ance between a copyright holder’s legitimate demand for
    effective — not merely symbolic — protection of the statu-
    tory monopoly, and the rights of others freely to engage in
    substantially unrelated areas of commerce.

. We thus find it an overstatement by CoStar to
argue that Netcom represented the adoption of a new "special
liability-limiting rule for Internet servers."

                                  B

  CoStar rests its position not only on the marginalization of the Net-
com holding, but also on the assertion that the DMCA rendered Net-
12                  COSTAR GROUP v. LOOPNET, INC.
com no longer necessary — indeed, even codified and preempted
Netcom — by imposing an exclusive safe harbor for ISPs that fulfill
the conditions of the DMCA. CoStar argues that because the DMCA
supplanted Netcom, LoopNet must rely for its defense exclusively on
the immunity conferred by the DMCA. This argument, however, is
belied by the plain language of the DMCA itself.

   The DMCA was enacted as § 512 of the Copyright Act. The rele-
vant subsection of § 512 provides limitations on liability "for
infringement of copyright by reason of the storage at the direction of
a user of material that resides on a system or network controlled or
operated by or for the service for the [Internet] service provider" if the
ISP lacks scienter about a copyright violation by a user, does not
profit directly from the violation, and responds expeditiously to a
proper notice of the violation. See 17 U.S.C. § 512(c)(1). In order to
enjoy the safe harbor provided by § 512(c), the ISP must also fulfill
other conditions imposed by the DMCA. See 

(i). Even
though the DMCA was designed to provide ISPs with a safe harbor
from copyright liability, nothing in the language of § 512 indicates
that the limitation on liability described therein is exclusive. Indeed,
another section of the DMCA provides explicitly that the DMCA is
not exclusive:

     Other defenses not affected. — The failure of a service pro-
     vider’s conduct to qualify for limitation of liability under
     this section shall not bear adversely upon the consideration
     of a defense by the service provider that the service provid-
     er’s conduct is not infringing under this title or any other
     defense.

Thus the statute specifically provides that despite a fail-
ure to meet the safe-harbor conditions in § 512(c) and (i), an ISP is
still entitled to all other arguments under the law — whether by way
of an affirmative defense or through an argument that conduct simply
does not constitute a prima facie case of infringement under the
Copyright Act.

   Given that the statute declares its intent not to "bear adversely
upon" any of the ISP’s defenses under law, including the defense that
the plaintiff has not made out a prima facie case for infringement, it
                    COSTAR GROUP v. LOOPNET, INC.                      13
is difficult to argue, as CoStar does, that the statute in fact precludes
ISPs from relying on an entire strain of case law holding that direct
infringement must involve conduct having a volitional or causal
aspect. Giving such a construction to the DMCA would in fact "bear
adversely upon the consideration" of this defense, in direct contraven-
tion of § 512(l). We conclude that in enacting the DMCA, Congress
did not preempt the decision in Netcom nor foreclose the continuing
development of liability through court decisions interpreting §§ 106
and 501 of the Copyright Act.

   CoStar advances the additional argument that because "Congress
‘codified’ Netcom in the DMCA . . . it can only be to the DMCA that
we look for enforcement of those principles." The brief of several
amici echoes this point with the assertion that "if Congress intended
Netcom to survive the DMCA, there would have been no need to
enact the statute in the first place." CoStar and the amici, however,
have this point of statutory construction exactly backward. When
Congress codifies a common-law principle, the common law remains
not only good law, but a valuable touchstone for interpreting the stat-
ute, unless Congress explicitly states that it intends to supplant the
common law. "The normal rule of statutory construction is that if
Congress intends for legislation to change the interpretation of a judi-
cially created concept, it makes that intent specific." Midatlantic Nat’l
Bank v. N.J. Dep’t of Envtl. Prot., 

, 501 (1986) (citing
Edmonds v. Compagnie Generale Transatlantique, 

,
266-67 (1979)); Harper & Rowe, Publishers, Inc. v. Nation Enter-
prises, 

, 549 (1985) (observing that § 107 of the Copy-
right Act, articulating the elements of the fair use defense, "‘restate[s]
[not changes] pre-existing judicial doctrine") (quoting H.R. Rep. No.
94-1476, at 66 (1976)). Thus, without explicit statutory instructions,
the cases drawn upon by Congress in writing legislation are not sup-
planted by the legislation, and courts may — indeed should — con-
tinue to look to these cases for guidance.

   CoStar’s argument that the DMCA supplanted and preempted Net-
com is further undermined by the DMCA’s legislative history. Con-
gress actually expressed its intent that the courts would continue to
determine how to apply the Copyright Act to the Internet and that the
DMCA would merely create a floor of protection for ISPs. After cit-
ing the conflicting decisions in Netcom and Frena, the Senate Com-
14                  COSTAR GROUP v. LOOPNET, INC.
mittee on the Judiciary explained that "rather than embarking upon a
wholesale clarification of these doctrines, the Committee decided to
leave current law in its evolving state and, instead, to create a series
of ‘safe harbors,’ for certain common activities of service providers."
S. Rep. No. 105-190, at 19 (1998). The Ninth Circuit has found this
language persuasive, citing it in finding that "[t]he DMCA did not
simply rewrite copyright law for the on-line world." Ellison v. Robert-
son, 

, 1077 (9th Cir. 2004). Furthermore, the final con-
ference report supports this passage, stating:

     As provided in subsection (l), Section 512 is not intended to
     imply that a service provider is or is not liable as an
     infringer either for conduct that qualifies for a limitation of
     liability or for conduct that fails to so qualify. Rather, the
     limitations of liability apply if the provider is found to be
     liable under existing principles of law.

H.R. Conf. Rep. No. 105-796, at 73 (1998), reprinted in 1998
U.S.C.C.A.N. 639, 649. Thus the DMCA was intended not to change
the "evolving" doctrines on ISP liability for copyright infringement,
which included Netcom and Frena, but to offer a certain safe harbor
for ISPs. Courts were left free to continue to construe the Copyright
Act in deciding the scope and nature of prima facie liability. The leg-
islative "compromise" repeatedly invoked by CoStar and its amici
was that Congress would not end the debate by importing and fixing
copyright infringement liability in the form articulated by Netcom, but
rather would provide a limited safe harbor immediately necessary to
ISPs, and allow the courts to continue defining what constitutes a
prima facie case of copyright infringement against an ISP.

  CoStar challenges our conclusion by relying also on a passage from
ALS Scan, which is concededly ambiguous when taken out of context,
where we wrote:

     Although we find the Netcom court reasoning more persua-
     sive, the ultimate conclusion on this point is controlled by
     Congress’ codification of the Netcom principles in Title II
     of the DMCA. As the House Report for that Act states,

         The bill distinguishes between direct infringement
         and secondary liability, treating each separately.
                    COSTAR GROUP v. LOOPNET, INC.                      15
         This structure is consistent with evolving case law,
         and appropriate in light of the different legal bases
         for and policies behind the different forms of lia-
         bility.

         As to direct infringement, liability is ruled out for
         passive, automatic acts engaged in through a tech-
         nological process initiated by another. Thus the
         bill essentially codifies the result in the leading
         and most thoughtful judicial decision to date: Reli-
         gious Technology Center v. Netcom On-Line Com-
         munications Services, Inc., 

         (N.D. Cal. 1995). In doing so, it overrules these
         aspects of Playboy Enterprises, Inc. v. Frena, 

(M.D. Fla. 1993), insofar as that
         case suggests that such acts by service providers
         could constitute direct infringement, and provides
         certainty that Netcom and its progeny, so far only
         a few district court cases, will be the law of the
         land.

    H.R. Rep. No. 105-551(I), at 11 (1998). Accordingly, we
    address only ALS Scan’s claims brought under the DMCA
    itself.

ALS 

. This portion of legislative history was
referring to an earlier version of the legislation, in which the entire
holding of Netcom was imported.* The distinction between this ear-

  *The earlier version of the bill, to which this language referred, read:
   (a) Limitation. . . . [A] provider shall not be liable for —
   (1) direct infringement, based solely on the intermediate storage
   and transmission of material through a system or network con-
   trolled or operated by or for that provider, if —
   (A) the transmission was initiated by another person;
   (B) the storage and transmission is carried out through an auto-
   matic technological process, without any selection of that mate-
   rial by the provider; and
16                   COSTAR GROUP v. LOOPNET, INC.
lier bill and the legislation as ultimately passed was not relevant to the
holding in ALS Scan, where we denied summary judgment to both
parties and remanded for the district court to determine facts that
would be relevant to whether the defendant had committed contribu-
tory or vicarious infringement, such as whether the defendant sys-
tem’s "‘sole purpose’ [was] infringement of ALS Scan’s copyrights,"
and whether "‘virtually all’ the images posted in the newsgroups
[were] infringing." 

Indeed, we noted that "[i]t would
appear that ALS Scan’s allegations amount more to a claim of con-
tributory infringement . . . than to a claim of direct infringement." 

n.1.

   With respect to the issue of what creates liability for direct
infringement, the distinction between the two bills is more important.
The earlier version of the bill was meant to incorporate all of Net-
com’s protections, whereas the final law reflected the above-
mentioned compromise between the earlier version and the concerns

     (C) no copy of the material thereby made by the provider is
     maintained on the provider’s system or network in a manner
     ordinarily accessible to anyone other than the recipients antici-
     pated by the person who initiated the transmission, and no such
     copy is maintained on the system or network in a manner ordi-
     narily accessible to such recipients for a longer period than is
     reasonably necessary for the transmission. . . .
H.R. Rep. No. 105-551, pt. 1, at 7-8 (1998). These provisions most
closely resemble those codified at 17 U.S.C. § 512(a), but the final legis-
lation differs in several ways that are important to this case. First, the law
as enacted draws no distinction between direct and indirect liability for
infringement. Second, the earlier version does not appear to address how
to treat material for which the ISP acts as a host server, allowing users
to post the information in anticipation that other users will request the
information to be transmitted to them, as LoopNet and many other ISPs
do. In the final legislation, "[i]nformation residing on systems or net-
works at [the] direction of users" is specifically addressed. 17 U.S.C.
§ 512(c). Finally, unlike the earlier version, which would have exempted
ISPs unconditionally for direct liability for automatic processes, the
enacted law requires ISPs to fulfill certain "[c]onditions for eligibility"
for the safe harbors. 

                    COSTAR GROUP v. LOOPNET, INC.                     17
of copyright-holders. Congress would enact certain safe-harbor provi-
sions absolutely necessary to the immediate survival of ISPs, while
courts would continue to consider the question of whether passive
ISPs could ever be directly liable for violations of copyright commit-
ted using their systems.

   It is clear that Congress intended the DMCA’s safe harbor for ISPs
to be a floor, not a ceiling, of protection. Congress said nothing about
whether passive ISPs should ever be held strictly liable as direct
infringers or whether plaintiffs suing ISPs should instead proceed
under contributory theories. The DMCA has merely added a second
step to assessing infringement liability for Internet service providers,
after it is determined whether they are infringers in the first place
under the preexisting Copyright Act. Thus, the DMCA is irrelevant
to determining what constitutes a prima facie case of copyright
infringement.

   At bottom, we hold that ISPs, when passively storing material at
the direction of users in order to make that material available to other
users upon their request, do not "copy" the material in direct violation
of § 106 of the Copyright Act. Agreeing with the analysis in Netcom,
we hold that the automatic copying, storage, and transmission of
copyrighted materials, when instigated by others, does not render an
ISP strictly liable for copyright infringement under §§ 501 and 106 of
the Copyright Act. An ISP, however, can become liable indirectly
upon a showing of additional involvement sufficient to establish a
contributory or vicarious violation of the Act. In that case, the ISP
could still look to the DMCA for a safe harbor if it fulfilled the condi-
tions therein.

                                   III

   CoStar contends that even under Netcom’s construction of copy-
right infringement liability for ISPs, LoopNet’s conduct in this case
is more than passive, in that LoopNet screens photographs posted by
its subscribers. In CoStar’s opinion, this screening process renders
LoopNet liable for direct copyright infringement.

   LoopNet, like other ISPs, affords its subscribers an Internet-based
facility on which to post materials, but the materials posted are of a
18                  COSTAR GROUP v. LOOPNET, INC.
type and kind selected by the subscriber and at a time initiated by the
subscriber. Similarly, users who wish to access a subscriber’s infor-
mation may do so without intervention from LoopNet. A subscriber
seeking to post a listing on LoopNet’s website containing only text
fills out a form and agrees to LoopNet’s "Terms and Conditions,"
which include the obligation to respect others’ copyrights. Once the
subscriber has filled out the form and agreed to the "Terms and Con-
ditions," an identification number is automatically assigned to the list-
ing, and a web page containing the listing and the identification
number is automatically created. The web page is then hosted on
LoopNet’s website to be viewed by users who request the listing.
CoStar does not contend that LoopNet’s activity in signing up sub-
scribers with only textual property listings is anything other than pas-
sive.

    To argue that LoopNet loses its status as a passive ISP and there-
fore becomes liable for direct copyright infringement, CoStar focuses
on LoopNet’s gatekeeping practice with respect to photographs. To
add a photograph to a listing, the subscriber must fill out another form
and again agree to the "Terms and Conditions." After expressly war-
ranting that he has "all necessary rights and authorizations from the
. . . copyright owner of the photographs," the subscriber uploads the
photograph into a folder in LoopNet’s system. The photograph is then
transferred to the RAM of one of LoopNet’s computers for review.
A LoopNet employee reviews the photo for two purposes: (1) to
block photographs that do not depict commercial real estate, and (2)
to block photographs with obvious signs that they are copyrighted by
a third party. If the photograph carries a copyright notice or represents
subject matter other than commercial real estate, the employee deletes
the photograph; otherwise, she clicks a button marked "accept," and
LoopNet’s system automatically associates the photograph with the
subscriber’s web page for the property listing, making it available for
use. Unless a question arises, this entire process takes "a few sec-
onds."

   Although LoopNet engages in volitional conduct to block photo-
graphs measured by two grossly defined criteria, this conduct, which
takes only seconds, does not amount to "copying," nor does it add
volition to LoopNet’s involvement in storing the copy. The employ-
ee’s look is so cursory as to be insignificant, and if it has any signifi-
                    COSTAR GROUP v. LOOPNET, INC.                     19
cance, it tends only to lessen the possibility that LoopNet’s automatic
electronic responses will inadvertently enable others to trespass on a
copyright owner’s rights. In performing this gatekeeping function,
LoopNet does not attempt to search out or select photographs for
duplication; it merely prevents users from duplicating certain photo-
graphs. To invoke again the analogy of the shop with the copy
machine, LoopNet can be compared to an owner of a copy machine
who has stationed a guard by the door to turn away customers who
are attempting to duplicate clearly copyrighted works. LoopNet has
not by this screening process become engaged as a "copier" of copy-
righted works who can be held liable under §§ 501 and 106 of the
Copyright Act.

   To the extent that LoopNet’s intervention in screening photographs
goes further than the simple gatekeeping function described above, it
is because of CoStar’s complaints about copyright violations. When-
ever CoStar has complained to LoopNet about a particular photo-
graph, LoopNet has removed the photograph, and the property listing
with which the photograph was associated has been marked. The next
time the user tries to post a photograph to accompany that listing,
LoopNet conducts a manual side-by-side review to make sure that the
user is not reposting the infringing photograph. CoStar and other
copyright holders benefit significantly from this type of response. If
they find such conduct by an ISP too active, they can avoid it by
adding a copyright notice to their photographs, which CoStar does not
do. CoStar can hardly request LoopNet to prevent its users from
infringing upon particular unmarked photographs and then subse-
quently seek to hold LoopNet liable as a direct infringer when Loop-
Net complies with CoStar’s request.

   In short, we do not conclude that LoopNet’s perfunctory gatekeep-
ing process, which furthers the goals of the Copyright Act, can be
taken to create liability for LoopNet as a direct infringer when its con-
duct otherwise does not amount to direct infringement.

  For the reasons given, we affirm the judgment of the district court.

                                                            AFFIRMED
20                  COSTAR GROUP v. LOOPNET, INC.
GREGORY, Circuit Judge, dissenting:

   While I largely agree with the majority’s careful explication of the
direct infringement doctrine within the cybersphere post-DMCA, I
cannot join the majority’s application of that law. First, I disagree
with the majority’s characterizations of LoopNet as "an analogue to
the owner of a traditional copying machine whose customers pay a
fixed amount per copy and operate the machine themselves to make
copies," ante at 9, and its comparison of the company to "an owner
of a copy machine who has stationed a guard by the door to turn away
customers who are attempting to duplicate clearly copyrighted
works," 

Specifically, these ill-fitting characterizations lead
the majority to the erroneous conclusion that LoopNet is not liable for
direct infringement despite its volitional screening process. Because
I would hold that LoopNet engages in non-passive, volitional conduct
with respect to the photographs on its website such that the Netcom
defense does not apply, I respectfully dissent.

                                    I

   In examining whether LoopNet is a passive provider not subject to
direct infringement liability, the majority conducts a comparison of
LoopNet’s posting processes as to text and images. The majority
properly recognizes, and CoStar does not dispute, that when a sub-
scriber posts text to LoopNet’s website the process is completely pas-
sive. Indeed, whatever text the subscriber enters into LoopNet’s form
is automatically uploaded to, and immediately accessible on, Loop-
Net’s website. By contrast, when a subscriber wishes to post a photo-
graph on the site, such posting is not automatic or immediate. Instead,
the photograph is transferred to LoopNet’s computers where one of
the company’s employees can review the photo to ensure (1) it is an
image of commercial real estate, and (2) it is not an obviously copy-
righted image.

   At this stage of the process the LoopNet employee has a choice, he
or she can reject the photograph because it does not comply with the
above-noted criteria, or he or she can "accept" the photograph, at
which time it becomes accessible on the subscriber’s web page to
which the text was previously and automatically uploaded. The
majority thus finds itself in a bind, namely how is this decision by the
                    COSTAR GROUP v. LOOPNET, INC.                      21
LoopNet employee whether or not to "accept" an image akin to the
automated posting of text such that it, too, does not constitute direct
infringement. The majority attempts to resolve this paradox by first
admitting, "LoopNet engages in volitional conduct to block photo-
graphs," ante at 18 (emphasis added), however, it reasons, "this con-
duct, which takes only seconds, does not amount to ‘copying,’ nor
does it add volition to LoopNet’s involvement in storing the copy.
The employee’s look is so cursory as to be insignificant . . . . In per-
forming this gatekeeping function, LoopNet does not attempt to
search out or select photographs for duplication; it merely prevents
users from duplicating certain photographs." 

added). In so determining that LoopNet’s "gatekeeping function" does
not expose it to direct infringement liability, I submit that the majority
expands the non-volitional defense well beyond Netcom and subse-
quent holdings, and gives direct infringers in the commercial cyber-
sphere far greater protections than they would be accorded in print
and other more traditional media.

                                    II

   In Netcom, the court recognized that traditional strict liability copy-
right principles were ill-suited to cyberspace. 

. Bulletin board operators and other ISPs provided a forum
for content, a truly open communicative space over which they exer-
cised no control; in a sense, they were publishers who did not — and
could not, because of their automated processes — review their own
"publications." In recognizing the realities of this new information
domain, the Netcom court rejected copyright owners’ claims against
an ISP, reasoning that the ISP did not take any affirmative action that
resulted in copying plaintiffs’ works other than maintaining a system
through which software automatically forwarded subscribers’ mes-
sages onto Usenet. See 

. The court
observed that the ISP did not "initiate[ ] the copying," and its system
operated without any human interaction, thus "the mere fact that [the
ISP’s] system incidentally makes temporary copies of plaintiffs’
works does not mean [the ISP] has caused the copying." 

69. The Netcom court concluded: "Although copyright is a strict lia-
bility statute, there should still be some element of volition or causa-
tion which is lacking . . . ." 

Accordingly, the Netcom rule
was fashioned to protect computer systems that automatically transfer
22                  COSTAR GROUP v. LOOPNET, INC.
data with no realistic manner by which the operator can monitor con-
tent. See 

(stating plaintiff’s theory "would result in lia-
bility for every single Usenet server in the worldwide link of
computers transmitting [the message] to every other computer. These
parties, who are liable under plaintiffs’ theory, do no more than oper-
ate or implement a system that is essential if Usenet messages are to
be widely distributed." (emphasis added)); see also Perfect 10, Inc. v.
Cybernet Ventures, Inc., 

, 1167 (C.D. Cal. 2002)
("Computer technology, and in particular the Internet, has created a
challenge to copyright’s strict liability scheme. Because of the archi-
tecture of the web and the workings of computer technology, almost
any business that utilizes computer hardware to create access to the
Internet or to store content may find its hardware creating or display-
ing infringing material as a result of decisions by third-parties (the
system’s users) without the business doing any truly volitional
actions." (emphasis added)).

   Since Netcom, courts have recognized that the non-volitional
defense to direct infringement claims extends only to "passive" ser-
vice providers, through which data flow is "automatic." In ALS Scan,
we stated of Netcom, "when an Internet provider serves, without
human intervention, as a passive conduit for copyrighted material, it
is not liable as a direct 

(Niemeyer, J.)
(emphasis added); see also Playboy Enters., Inc. v. Webbworld, Inc.,

, 552 (N.D. Tex. 1997); Playboy Enters., Inc. v. Russ
Hardenburgh, Inc., 

, 513 (N.D. Ohio 1997). In this
case, however, the majority profoundly deviates from the passivity
approach.

   The difference between LoopNet’s conduct in this case and the
protection originally afforded by Netcom is illustrated by examining
the Netcom court’s aforementioned statement that "Netcom did not
take any affirmative action that directly resulted in copying plaintiffs’
works other than by installing and maintaining a system whereby
software automatically forwards messages received from subscribers
onto the Usenet, and temporarily stores copies on its system." 907 F.
Supp. at 1368 (emphasis added). Here, however, LoopNet’s conduct
with regard to the photos is anything but automatic. In contrast to the
real estate property descriptions which are automatically uploaded to
                     COSTAR GROUP v. LOOPNET, INC.                         23
the website without any service provider input, the photos cannot
appear on LoopNet’s site without operator approval.

   The majority tries to diminish the importance of this fact by argu-
ing that the review is very brief and the reviewer presses a single but-
ton. At the heart of the review, however, is an inherently "volitional"
action without which the subscriber’s photos would not be accessible.
For every photograph submitted, a LoopNet employee must deter-
mine: (1) is this real estate and (2) does the photo comply — on its
face, at least — with our terms and conditions. These inquiries are the
antitheses of passive, automatic actions. See Russ Hardenburgh, 

(denying Netcom immunity to BBS operator
which (1) encouraged subscribers to upload files and (2) employed "a
screening procedure in which [the operator’s] employees viewed all
files in the upload file and moved them into the generally available
files for subscribers" (emphasis added)); 

facts
"transform Defendants from passive providers of a space in which
infringing activities happened to occur to active participants in the
process of copyright infringement"); cf. Webbworld, Inc., 991 F.
Supp. 543, 552 (N.D. Tex. 1997) (refusing to apply Netcom immunity
to defendant that "did not function as a mere provider of access," but
provided content and functioned as a "commercial destination within
the Internet"). As the district court in Perfect 10, Inc. v. Cybernet
Ventures, 

, recently remarked "[t]he prin-
ciple distilled from these [cyber direct infringement] cases is that
defendants must actively engage in one of the activities recognized in
the Copyright Act." Similarly, we emphasized in ALS 

, it was the lack of "human intervention" which rendered Net-
com a passive service provider. Here, however, humans employed by
LoopNet limited the content of postings and screened and sometimes
edited photos to keep quality consistent, thus taking the case far out-
side the previously understood scope of coverage for Netcom’s voli-
tional defense.

   The majority downplays LoopNet’s volition, and the break from
previous application of the volitional defense, by focusing on the fact
that it is the subscriber, not LoopNet, who begins the volitional pro-
cess, i.e., the subscriber is the initial direct infringer.1 This distinction,
  1
  The majority also seemingly attempts to garner support for its argu-
ment by implying that LoopNet is a "conduit[ ] from or to would-be cop-
24                  COSTAR GROUP v. LOOPNET, INC.
however, is illusory, as I believe is demonstrated by analyzing Loop-
Net’s actions through the hypothetical of a more traditional copyright
context.

   Consider the following example: LoopNet Magazine is a for-profit
publication freely distributed in curbside boxes that displays commer-
cial real estate listings. LoopNet Magazine solicits listings from its
readership, but neither the reader who submits the listing, nor the
reader accessing the listing pays for the service. Instead, LoopNet
Magazine subsists on advertising revenue and other products it sells
through the publication. Readers may electronically submit textual
listings, or those with text and graphics. When LoopNet Magazine
receives a text listing, its computers automatically transfer the content
into the template for the next issue. However, when a reader submits
a photograph, he or she must submit a digital image and sign a terms
and conditions release stating that he or she has not infringed the
copyright of the image submitted. LoopNet Magazine employees
engage in a quick review of the images to determine that they are, in
fact, pictures of real estate and that no obvious copyright has been
violated.

   Reader X sends LoopNet Magazine text describing commercial
office space for rent in New York City’s renowned Flatiron Building;
the text describing the property is, of course, automatically inserted
into the LoopNet Magazine template and is ready for publication.
Reader X has also submitted a photograph of the Flatiron Building,
and signs the terms and conditions form. Reader X knows, however,
that she has not complied with the terms and conditions because the
photo is not hers, rather it is Edward Steichen’s 1905 photograph, The
Flatiron. LoopNet Magazine’s Intern Y receives the photo of the Flat-

iers [who] ha[s] no interest in the copy itself." Ante at 11 (citing Doe v.
GTE Corp., 

, 659 (7th Cir. 2003). However, unlike the web-
host in Doe v. GTE Corp., which was "an intermediary . . . indifferent
to the content of what it 

, LoopNet has a
deeply vested interest in its content. Its entire screening process takes
place to further its commercial aims, ensuring that the photos which
appear comply with the website’s purpose, namely advertising commer-
cial real estate.
                     COSTAR GROUP v. LOOPNET, INC.                        25
iron Building, notes Reader X has signed the terms and conditions,
and evaluates the photo for a few seconds. Intern Y finds the image
to be a beautiful depiction of the building, precisely the type of mate-
rial LoopNet Magazine seeks to display, and does not recognize it as
the copyrighted Steichen image. However, Intern Y finds that the
image was "uploaded in a format that’s not correct," so he takes steps
to remedy the image "so that it can appear [in the publication] without
any technical problems." J.A. 175 (deposition testimony of Fed. R.
Civ. P. Rule 30(b)(6) designee Dennis DeAndre, LoopNet’s CEO,
regarding formatting in which the company sometimes engages after
the screening process). Once properly formatted, the image appears
in the next issue of LoopNet Magazine, and Steichen’s estate sues
both Reader X and LoopNet Magazine for direct infringement. Is
LoopNet Magazine relieved of direct infringement liability because its
screening process was most brief, a simple "yes" or "no" inquiry con-
ducted by an intern, followed by a formatting correction? Of course
not,2 but no different is the situation here.

   That another person initiated the process which led to LoopNet’s
infringement is of no consequence. LoopNet remains the pivotal voli-
tional actor, "but for" whose action, the images would never appear
on the website. Indeed, "volition" is defined as "the act of willing or
choosing[;] the act of deciding (as on a course of action or an end to
be striven for)[;] the exercise of the will . . . [or] the termination of
an act or exercise of choosing or willing[;] a state of decision or
choice." Webster’s Third New International Dictionary of the English
Language, unabridged 2562 (1981). Under any analytical framework,
LoopNet has engaged in active, volitional conduct; its employees
make a conscious choice as to whether a given image will appear in
its electronic publication, or whether the image will be deleted from
the company’s system.3 Nothing in the brief nature of LoopNet’s
  2
     See generally Keeler Brass Co. v. Cont’l Brass Co., 

,
1065 (4th Cir. 1988) (discussing elements of a direct infringement
claim); see also Ortiz-Gonzalez v. Fonovisa, 

, 62 (1st Cir.
2002) (stating "if [defendant] distributed copies of [plaintiff’s] copy-
righted work, the act of distribution is a direct infringement itself, not an
act of contributory or vicarious infringement").
   3
     The majority also attempts to argue that LoopNet has not made a
"copy" of the image. In doing so, it largely accepts LoopNet’s argument
26                   COSTAR GROUP v. LOOPNET, INC.
review makes the company akin to a copy machine owner or a secur-
ity guard by the owner’s door. LoopNet is the publisher of LoopNet
Magazine in cyberform; a volitional copier of images to whom direct
infringement liability applies. Because I believe that the Netcom voli-
tional defense should focus on passivity and the automated nature of
the act — not the fact that a user’s initial volition somehow extermi-
nates liability for later volitional acts — I would reverse the district
court. Accordingly, I respectfully dissent.

that rather than copying the images, the company simply "moves" an
image already stored by modifying the computer’s directory, thus trans-
forming the image from one not accessible by users who "hit" the web-
site to one that users can view. The majority states "downloading is a
temporary, automatic response to the user’s request, and the entire sys-
tem functions solely to transmit the user’s data to the Internet." Ante at
10; see also 

The majority’s analysis, however, rests on a techni-
cality that does not comport with reality. While LoopNet may not "copy"
the images in a traditional sense, the fact is that without LoopNet’s voli-
tional action, the subscriber’s image would never be uploaded to the sub-
scriber’s webspace on the LoopNet site no matter how much that
subscriber might desire to have the image so appear. See Advanced Com-
puter Sys., Inc. v. Peak Computer Sys., inc., 

, 519 (9th Cir.
1993) (holding loading of data to RAM "creates a ‘copy’ under the
Copyright Act"). Thus, LoopNet is in every sense a publisher controlling
content. In short, it is LoopNet, not the subscriber, who has the final say
in selecting and determining photographic content on the website.