On March 31, 2006, Judge Simandle, a federal district judge in New Jersey, handed down a lengthy opinion in Arista Records, Inc. v. Flea World, Inc. The case involved a not unusual set of facts: a flea market rents space to vendors on a flat fee basis, has a policy of not permitting the sale of counterfeit copyrighted works, polices compliance with its rules, but turns a blind eye to the sale of counterfeited products, and has history of raids; in this case, 27 raids from July 1999 t0 May 2003. Defendants claim they had no specific knowledge of infringement and did not directly benefit from infringement by its vendors; liability is found.
What makes the case noteworthy is that it is post-Grokster and addresses some of the issues raised in Grokster outside of the digital environment. On the vicarious infringement claim, the court rejected reliance on the Ninth Circuit's "knowledge of specific acts of infringement," finding it not applicable outside of peer-to-peer software (but not opining if it was still applicable there); on contributory infringement, the court rejected the relevance of an inducement claim outside of the Grokster context. The common law works in strange and wonderful ways.