Ever since the Supreme Court's 2005 Grokster decision, copyright lawyers have been debating whether the "inducement" theory of copyright infringement explicated in Judge Souter's opinion is a stand-alone claim, or merely a sub-species of contributory infringement. Most complaints I've seen that include claims of secondary liability allege inducement as a separate theory (on top of contributory and vicarious liability), perhaps out of an abundance of caution.
A new decision from Judge William Pauley in the Southern District of New York, however, suggests a consensus is developing that inducement of infringement is indeed merely a subspecies of contributory infringement, and need not be pled separately. In Capitol Records, Inc. v. MP3Tunes LLC, a case involving music "storage lockers," the plaintiffs (EMI-owned record labels and music publishers) alleged the full panoply of secondary liability theories, including contributory infringement and inducement. The defendants moved to dismiss, arguing that the inducement claim was duplicative of the contributory infringement claim. Judge Pauley granted the motion on that point, citing Grokster's holding that "[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement." His holding follows a similar ruling earlier this year in KBL Corp. v. Arnouts, __ F. Supp. 2d __, 2009 WL 302060 (S.D.N.Y. Feb. 9, 2009). Of course, the concept of inducement was not birthed by the Supreme Court in 2005; it has long been the law that "[o]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer." Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971). So, while Judge Pauley dismissed the plaintiffs' stand-alone inducement claim, that would seem to have no practical import here, as they may pursue the exact same claim within the confines of their (still-extant) contributory infringement cause of action.
Also in the order, Judge Pauley reversed his previous ruling that MP3Tunes.com founder, CEO, shareholder, and lone director Michael Robertson, whom the plaintiffs sued personally, was not subject to personal jurisdiction in New York. [Corrected to note that Robertson is not the "sole" shareholder.] His order relied on testimony from Emily Richards, MP3Tunes' former president, who left the company in September 2008. In a post-employment deposition, Richards testified that Robertson was involved in day-to-day management decisions, an apparent reversal of her testimony at an April 2008 deposition, while she was still employed at the company. In his order, Judge Pauley stated flatly that "Richards was untruthful at one of her depositions," but he did not indicate which version of her testimony he believed, instead saying merely that he was required under the law to accept the plaintiffs' version of the jurisdictional facts at this stage of the litigation. Judge Pauley also ruled that the plaintiffs did not act improperly by contacting Richards after her employment with MP3Tunes ended, or by offering to pay up to $10,000 of her legal expenses incurred in connection with her second deposition.