The plaintiff Religious Technology Center ("RTC") argued that defendant Netcom was directly, contributorily, and vicariously liable for copyright infringement.

Plaintiff RTC held copyrights in the unpublished and published works of L. Ron Hubbard, the late founder of the Church of Scientology.

Erlich gained his access to the Internet through defendant Tom Klemesrud's bulletin board service ("BBS"), which had approximately 500 paying users.

Netcom similarly refused RTC's request that Erlich not be allowed to access the Internet through its system.

RTC also alleged that Netcom violated its exclusive rights to publicly display copies of its works.

In the oral argument, RTC argued that Netcom violated its exclusive right to publicly distribute its works.

The court first reasoned that in contrast with the MAI case, Netcom did not take any affirmative action that could result in copying of RTC's work.

Similar to the creation of fixed copies, since there was no causation, Netcom should not be held liable for copyright infringement.

The court also found that there was no logical reason to hold Netcom uniquely responsible for distributing Erlich's messages.

Adopting a rule that held Netcom liable could lead to the liability of countless parties whose role in the infringement was nothing more than setting up and operating a system that was necessary for the functioning of the Internet.

The court concluded that RTC raised a genuine issue of fact as to whether Netcom had the right and ability to exercise control over the activities of its subscribers.

The court held that imposing liability for copyright infringement where it was otherwise appropriate did not necessarily raise a First Amendment issue, since the copyright concepts of the idea/expression dichotomy and the fair use defense balanced the First Amendment and "promoting the progress of science and useful arts" clause of United States Constitution.

Citing Sony v. Universal, the court stated that the mere fact that all of a work was copied was not determinative of the fair use question.

The court held that since Netcom copied no more than necessary to function as a Usenet server, this factor should not defeat an otherwise valid defense.

The court held that evidence raised a genuine issue of fact as to the possibility of market harm, which precluded summary judgment.