Facts of the Case
Sony created the Betamax video tape recording format in the 1970s. Universal Studios and the Walt Disney Company were among the film industry members concerned about this development, but they were also aware that the United States Congress was nearing the end of a major revision of copyright law and would be hesitant to enact any new safeguards for the film industry. In 1976, the companies chose to sue Sony and its distributors in the United States District Court for the Central District of California, claiming that because Sony was manufacturing a device that could be used for copyright infringement, they were liable for any infringement committed by its purchasers.

The complaint also included an unfair competition claim under the Lanham Act, but this was dismissed early in the litigation.

Furthermore, the court determined that Sony could not be held liable as contributory infringers even if the home use of a VTR was considered an infringing use.

Two years later, the District Court ruled in favour of Sony, stating that access to free public information is a First Amendment public interest served by this use and that non-commercial home use recording is considered fair use. The Ninth Circuit Court, however, overturned this ruling in part, holding Sony liable for contributory infringement. The court also determined that Betamax was not a staple item because its primary purpose was copying. In lieu of other relief, it proposed damages, injunctive relief, and mandatory licences.

Question’s Raised
Does Sony’s general public sale of “Betamax” video tape recorders constitute contributory infringement of copyrighted public broadcasts under the Copyright Act?

The Court’s Decision
The Court ruled 5-4, with Justice John Paul Stevens writing, that “[t]he sale of the VTRs to the general public does not constitute contributory infringement of Universal’s copyrights.” The Court concluded that there was a significant likelihood that a significant number of copyright holders who licence their works for free public broadcasts would not object to having their broadcasts time-shifted by private viewers, and that Universal had failed to demonstrate that time-shifting would cause non-minimal harm to the potential market for, or value of, their copyrighted works. The sale of copying equipment ..does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes, or, indeed, is merely capable of substantial non-infringing uses,” was written by Justice Stevens for the Court.