Background
Fonovisa, Inc. was a copyright holder of Latin music recordings. Vendors at Cherry Auction’s flea market (swap meet) sold counterfeit recordings that infringed Fonovisa’s copyrights. The sheriff’s department had notified Cherry Auction of the infringing sales occurring at its facility, but Cherry Auction continued to permit the vendors to sell at the market and continued to profit from the vendors’ rental fees, parking fees, and the general commercial draw of the market. Fonovisa sued Cherry Auction for contributory and vicarious copyright infringement.
The district court dismissed the complaint, finding Cherry Auction was not liable under either theory because it did not specifically supervise the infringing sales and its financial benefit was indirect. Fonovisa appealed.
The Court’s Holding
The Ninth Circuit reversed on both theories. On vicarious liability: Cherry Auction had the right and ability to supervise the vendors (it could expel vendors violating its rules) and received a direct financial benefit from the infringing activity (the vendors’ presence, including infringing vendors, drew customers to the market, generating parking and admission revenue for Cherry Auction). The direct financial benefit does not require that the infringement be the sole source of revenue — an indirect but tangible benefit is sufficient.
On contributory infringement: Cherry Auction had actual knowledge (from the sheriff’s notice) of the specific infringing vendors and had the ability to do something about it by excluding them. By continuing to provide the market facilities to known infringers, Cherry Auction materially contributed to the infringement.
Key Takeaways
- Vicarious copyright liability attaches when a party has (1) the right and ability to supervise infringing activity and (2) a direct financial benefit from the infringement — where the benefit can be indirect (the infringing vendors draw customers who generate other revenue for the market operator).
- Contributory copyright infringement requires (1) knowledge of the infringing activity and (2) material contribution to that infringement — providing a venue or platform to known infringers satisfies both elements when the operator can exclude infringers but chooses not to.
- The Fonovisa framework for flea market secondary liability provided the legal template directly applicable to online platforms: online marketplaces, hosting services, and internet platforms that profit from user activity and have the ability to monitor and remove infringing content can face similar vicarious and contributory liability analysis.
- Platform operators with knowledge of specific infringing activity (through notice or monitoring) must take reasonable steps to address the infringement — ignoring known infringement while continuing to profit from the infringing users’ presence creates secondary liability exposure.
Why It Matters
Fonovisa v. Cherry Auction was one of the foundational secondary copyright liability decisions of the 1990s — establishing the vicarious liability and contributory infringement frameworks that were directly applied to online platforms in the internet era. The case provided the legal architecture for A&M Records v. Napster (2001), Tiffany v. eBay (2010), and many other secondary liability cases against digital platforms that profit from user activity while having the technical ability to monitor and control infringing content.
The decision’s significance extends beyond copyright: its vicarious liability framework (right to supervise + direct financial benefit) became the model for analyzing platform liability across intellectual property law, including contributory trademark infringement by marketplaces and hosts. Fonovisa represents the transition from the traditional landlord-tenant immunity for third-party torts to a more demanding standard that holds venue operators and platform hosts accountable when they profit from and can control infringing activity by those they host.