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Factual Background Edit
The Fresno County Sheriff's Department seized 38,000 counterfeit tapes (copyright holders unstated) from a swap meet approximately a year and a half before the plaintiff filed suit. Additionally, the swap meet had received a letter six months before the suit from a police officer who "observed that several casual vendors of Latin audio music tapes had abandoned their booths upon his arrival." Finally, three months before the suit an investigator for the plaintiff witnessed infringing sales of counterfeit goods. After the First Amended Complaint was served, investigators then revisited the swap meet where they found many vendors selling "counterfeits at tellingly low prices."
Appellate Court Proceedings Edit
The Ninth Circuit had "little difficulty" in holding the allegations directed at a swap meet, where the vendors were selling counterfeit goods, sufficient to show material contribution. The Court held that a plaintiff stated a claim of vicarious liability for copyright infringement against the operators of a flea market where pirated CDs were bought and sold, by alleging that defendants benefitted financially from fixed daily rental fees paid by each infringing vendor. As the Court observed, "it would be difficult for the infringing activity to take place in the massive quantities alleged without the support services provided by the swap meet," including the provision of space, utilities, parking, advertising, plumbing and customers.
The Ninth Circuit expressly rejected defendant's argument that the financial benefit prong of the test for finding vicarious liability could only be satisfied if the defendant earned a commission directly tied to the sale of a particular infringing item.