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When the right and ability to supervise coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials, even in the absence of actual knowledge that the copyright monopoly is being impaired, the purposes of copyright law may be best effectuated by the imposition of liability upon the beneficiary of that exploitation.
Plaintiffs Shapiro, Bernstein & Co., Inc., et al. were the copyright proprietors of several musical compositions. Defendant was a company with a record department in each of its stores. Third party defendant was a record manufacturer and dealer who sold records in defendant's stores. Plaintiffs sued third party defendant for manufacturing knock off records, which were copies of plaintiffs' records, and selling them without a license. Moreover, plaintiffs sued defendant for infringing the copyrights on their songs. Plaintiffs prevailed on their claims against third party defendant but their suit against defendant was dismissed. Plaintiffs challenged the district court's dismissal of their claims against defendant.
Under the circumstances, could the defendant be held liable for copyright infringement?
The court granted plaintiffs’ claim for relief from the district court’s dismissal of their claims against defendant, a record seller accused of copyright infringement, and the case was remanded for further proceedings on the issue of illegal sales. According to the court, the defendant could be held liable for illegal sales, even in the absence of intent to infringe, on the basis that knowledge was imputed to defendant. The court further stated that defendant's liability would stem from a finding that third party defendant was also liable for unlawful sales.