Important Appeals Court Ruling States Clearly That Merely Having An IP Address Is Insufficient For Infringement Claims

from the a-good-ruling dept

Tons of copyright lawsuits (and even more copyright trolling shakedowns that never even reach court) are based on one single bit of data: the IP address. We've seen numerous district courts reject using a bare IP address as evidence of infringement, but now we have a very important (even if short and to the point) ruling in the 9th Circuit that could put a serious damper on copyright trolling.

In this copyright action, we consider whether a bare allegation that a defendant is the registered subscriber of an Internet Protocol (“IP”) address associated with infringing activity is sufficient to state a claim for direct or contributory infringement. We conclude that it is not.

The case involved well known copyright trolling lawyer Carl Crowell representing Cobbler Nevada LLC. As we discussed in our article on the district court decision, the actions in this case were particularly nefarious. Crowell quickly learned that the IP address in question belonged to an adult foster care home, but decided to go after the operator, Thomas Gonzales, even though he was aware that any of the many residents or staff may have actually been responsible for the infringement. Gonzales (reasonably) refused to just cough up the names and details of residents and staff without a court order, and Crowell's response was just to go after Gonzales directly. But the facts of this case made it especially easy for the lower court to highlight how a mere IP address is not nearly enough to allege infringement.

The district court properly dismissed Cobbler Nevada’s claims. The direct infringement claim fails because Gonzales’s status as the registered subscriber of an infringing IP address, standing alone, does not create a reasonable inference that he is also the infringer. Because multiple devices and individuals may be able to connect via an IP address, simply identifying the IP subscriber solves only part of the puzzle. A plaintiff must allege something more to create a reasonable inference that a subscriber is also an infringer. Nor can Cobbler Nevada succeed on a contributory infringement theory because, without allegations of intentional encouragement or inducement of infringement, an individual’s failure to take affirmative steps to police his internet connection is insufficient to state a claim.

The direct infringement part is easy. Obviously, there's no evidence presented with a single IP address that Gonzales was downloading, so it's on its face ridiculous to claim to have evidence of direct infringement.

The only connection between Gonzales and the infringement was that he was the registered internet subscriber and that he was sent infringement notices. To establish a claim of copyright infringement, Cobbler Nevada “must show that [it] owns the copyright and that the defendant himself violated one or more of the plaintiff’s exclusive rights under the Copyright Act.” Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). Cobbler Nevada has not done so.

The more important part here is the contributory infringement argument. Crowell/Cobbler claimed that Gonzales could be liable for contributory infringement for failing to lock down and police his internet connection. That's a pretty big leap and the court is not impressed. It first highlights the ever important Betamax ruling that you can't make a third party liable for infringement for distributing a product or service that is "widely used for legitimate, non-infringing purposes." Internet access counts. It also points to the Grokster ruling, in which the Supreme Court said that "inducement" to infringe could be seen as contributory liability. But merely failing to police your internet connection is, in no way, inducement.

Cobbler Nevada’s complaint lacks any allegations that Gonzales “actively encourage[ed] (or induc[ed]) infringement through specific acts.”... Nothing in Cobbler Nevada’s complaint alleges, or even suggests, that Gonzales actively induced or materially contributed to the infringement through “purposeful, culpable expression and conduct.” ... No allegations suggest that Gonzales made any “clear expression” or took “affirmative steps” to foster the infringement—Gonzales’s only action was his failure to “secure, police and protect” the connection.

And, based on the Betamax test, Gonzales is in the clear as well:

Providing internet access can hardly be said to be distributing a product or service that is not “capable of substantial” or “commercially significant noninfringing uses.”

The court has some additional words on Crowell trying to push his theory of contributory liability:

We note that Cobbler Nevada’s theory both strays from precedent and effectively creates an affirmative duty for private internet subscribers to actively monitor their internet service for infringement. Imposing such a duty would put at risk any purchaser of internet service who shares access with a family member or roommate, or who is not technologically savvy enough to secure the connection to block access by a frugal neighbor. This situation hardly seems to be one of “the circumstances in which it is just to hold one individual accountable for the actions of another.”

The court then upholds the lower court's awarding of attorney's fees to Gonzales, noting the "objective unreasonableness" of Cobbler's arguments.

Specifically, the court flagged as unreasonable Cobbler Nevada’s decision to name Gonzales as the defendant, even after concluding that Gonzales was not “a regular occupant of the residence or a likely infringer.” The court also considered deterrence: it reasoned that awarding fees would deter Cobbler Nevada from an “overaggressive pursuit of alleged infringers without a reasonable factual basis” while encouraging defendants with valid defenses to defend their rights. See Fogerty, 510 U.S. at 534 n.19. The court’s rationale is in keeping with the purposes of the Copyright Act. See Kirtsaeng, 136 S. Ct. at 1988–89 (a district court “may order fee-shifting . . . to deter . . . overaggressive assertions of copyright claims”).

Now, where this case may have a bigger impact is in lawsuits against ISPs for failing to police their networks. You may have heard of a few of these cases recently. Just last week Cox settled one of those cases, but it's facing an even bigger one from all the major record labels.

But that case is not unlike this one, just on a different scale. In this case, Gonzales is the ISP, and got sued for failing to police his network, despite receiving many infringement notices. As the court makes clear, that does not make him liable for infringement. In the Cox case, it too is the ISP who was sued for failing to police its network, despite receiving many infringement notices (indeed, Cox did much more than Gonzales). So it would appear that we may have a bit of a circuit clash here, in which the 4th Circuit says that ISPs can be liable for infringement based solely on notices of evidence that is nothing more than IP addresses, while the 9th Circuit (correctly) understands the implications of such a ruling, even to the point of finding it "objectively unreasonable."

Filed Under: 9th circuit, carl crowell, contributory infringement, copyright, copyright trolling, evidence, inducement, ip address

Copyright Troll Carl Crowell Ups The Ante: Now Demands Accused Pirates Hand Over Their Hard Drives

from the nope dept

Carl Crowell is a special kind of copyright troll who has graced our pages in the past. The lawyer who worked with Voltage Pictures and whose tactics were underhanded enough to warrant a lawsuit from his former business partner and for a federal judge to setup a pro bono legal team for the targets of his trolling threat letters, Crowell has always operated at the far end of the spectrum when it comes to copyright trolls. That said, a recent demand he made of someone he accused of pirating the film Mechanic: Resurrection takes things a step further by simply demanding the accused turn over his computer upon accusation.

Bill Sheldon mostly uses his personal computer, a Hewlett-Packard Envy laptop, to watch how-to videos for car repairs so he can make an extra buck now and then by fixing a neighbor's radiator. So Sheldon, a 55-year-old Portlander, was surprised in early April when he was sued for copyright infringement for allegedly using BitTorrent software to illegally download a movie called Mechanic: Resurrection—a Jason Statham flick he says he'd never heard of before seeing the title on the court papers. He soon received an even bigger surprise. On April 28, a second letter arrived, asking Sheldon to hand over his computer's hard drive for testing.

Sheldon refused and adamantly insisted he's never heard of either the film or the term "bittorrent" before. Instead, he was afforded a pro bono lawyer, who was mandated to only work for three hours on his case, but who instead chose to stay on once he saw that Crowell had demanded that Sheldon turn over his personal and private property for review.

"There's no judicial oversight of what [Crowell] can and cannot do with the hard drives," says Perriguey. "There's no order to destroy the data or to keep it safe. He's getting access to people's highly private and personal information, including legally protected health information."

Crowell says he asked for Sheldon's computer only to make sure he had stopped illegally downloading movies.

"I have neither the time nor the interest to review the personal information that might be on a party's computer," Crowell says.

Which is, of course, entirely besides the point. And, it should be noted, taking Crowell at his word after he has spent the better part of the decade being a factory for settlement threat letters built on flimsy evidence and fear doesn't seem like a reasonable course of action, either. Whatever you think of Crowell and his copyright trolling ways, there are proper and improper tactics to use in a copyright infringement case. Demanding the receipt of private property that almost certainly contains highly private information about what is merely an accused copyright infringer is plainly bonkers. It's worth repeating at this point that it isn't only Crowell's victims crying foul, but also those on the other side who have worked with him on his copyright efforts.

James S. Davis, a former law school classmate of Crowell's who helped him bring dozens of copyright cases in California, sued Crowell in July for allegedly misleading him about the legitimacy of his cases. His suit alleges Crowell has not done enough to prove the cases have merit or even that his clients own the right to sue for copyright infringement.

Nicholas Ranallo, Davis' attorney, says Crowell's cases use scare tactics to drive defendants into settlements.

It seems to me that when every side of an issue thinks you're doing something wrong, you probably are. For Sheldon's case, Crowell attempted to drop the case, suddenly proclaiming that he believed Sheldon was telling the truth. But he refused to pay Sheldon's legal fees for what was apparently a self-admitted frivolous case. And so the case goes on as Sheldon tries to get his piece of justice.

Filed Under: bill sheldon, carl crowell, copyright, copyright troll, hard drives

Voltage Picture's Lawyer Sues Copyright Trolling Participants, Calls Lawsuits Unethical

from the burnt-by-trolls dept

Another copyright trolling operation appears to be headed off the rails. The spectacular disintegration of the porn trolling Prenda Law firm has been a joy to behold, ultimately ending in federal indictments for Paul Hansmeier and John Steele. Where this one is headed, it's too early to say, but it appears one lawyer employed by litigious subsidiaries of Voltage Pictures has had enough. (h/t FightCopyrightTrolls)

An attorney who filed dozens of BitTorrent copyright cases on behalf of Voltage Pictures and Millennium Films has renounced the practice, saying he was duped into participating in unethical copyright “trolling.”

James S. Davis filed suit against his former legal partner and his former clients in San Diego Superior Court in July. In the complaint, he says that he was recruited into the BitTorrent litigation by a former law school classmate, Carl Crowell, who told him he had a “good litigation business opportunity.”

As part of trolling operation's "warm body" legal counsel hiring plan, Davis was plucked from the world of immigration law and put to work filing sloppy complaints against IP addresses on behalf of his new employers. And there are several of those. The complaint [PDF] lists a number of familiar LLCs as defendants, including LHF, Dallas Buyers Club, Cobbler Nevada, and the infamous Guardaley.

The allegations are pretty thin at this point. Davis says the multiple entities withheld information that might have made him reconsider his involvement in the scheme. Thanks to stuff uncovered during recent lawsuits, Davis appears to want out officially and litigiously out before the whole things falls apart.

[I]n the course of preparing his response [to a defendant's motion questioning the plaintiff's claims of copyright ownership], [Davis] began asking questions and uncovering facts that undermined “his belief in the value and ethical propriety” of the copyright suits.

In a separate copyright case in San Diego, Davis says he uncovered additional troubling facts in the course of drafting a response to a judge’s threat to dismiss the case. He says he had a meeting in Santa Monica with the key figures on the plaintiff’s side, after which he “concluded that both the legal and factual basis of the Copyright Litigation campaign were unsound, and that each had been misrepresented to him.”

Davis, who had already filed 58 lawsuits on behalf of the companies, sought more info from those above him. According to his complaint, he has been repeatedly stonewalled by the companies involved in the copyright litigation scheme. Davis also alleges he hasn't been paid for his participation in the litigation -- at least not as much as was agreed to. When you start stiffing your legal reps, things tend to get litigious in a hurry.

Two allegations are particularly direct:

Defendants have been unjustly enriched as a result of Davis rendering services in cases that lacked a valid legal or factual basis and were therefore impossible for Davis to successfully litigate.

[...]

Defendants breached their respective covenants of good faith and fair dealing by, inter alia, refusing to appear at or participate in the Copyright Litigation Campaign when their participation was required by necessity or court order.

So, basically like any other large-scale trolling operations: file tons of lawsuits, hope for enough quick settlements to turn a profit, and duck out of any cases as quickly as possible when defendants push back. It's probably safe to assume any illegal activity by the Voltage Pictures' subsidiaries isn't limited to defrauding one of its legal reps.

Davis is seeking at least $300,000 in damages. He may get it too, if the defendants are looking to steer clear of discovery motions that might expose further malfeasance by the involved companies. This is Davis' second attempt to sue his former employers. The first attempt was filed in federal court but rejected by the judge for a lack of diversity. For now, all the action's taking place at state level in San Diego's Superior Court.

Trolling operations are notoriously sketchy. They start with the worst assumptions (an IP address is a person), bundle suits together wherever possible to save on legal fees, and quickly dismiss cases whenever friction is encountered. The only surprise here is a participating lawyer's opting out via lawsuit before the judicial (or federal) hammer comes down.

Filed Under: abuse, carl crowell, copyright, copyright trolling, dallas buyers club, james davis, the cobbler
Companies: millennium films, voltage pictures

Federal Judge MAY Set Up Pro Bono Legal Assistance For Defendants Sued By Voltage Pictures/Carl Crowell [UPDATED]

from the it-couldn't-happen-to-a-lousier-person dept

[Update: as has been pointed out by Ars Technica's Joe Mullin, Judge Mosman is not a chief judge yet and could not have signed those orders. As was correctly noted by Fight Copyright Trolls [and in the part I quoted!], these are only drafts. So, these have not been implemented at this point, but appear to be in the works. My apologies for raising the hopes of those on the receiving end of Crowell's tactics and for failing to note that these were drafts in my post.]

It looks like Voltage Pictures' hired gun, Carl Crowell, may soon need to find another state to ply his copyright trolling wares. Crowell has already established a reputation as being both shady and willfully obtuse. That reputation appears to have finally reached the federal court system.

Crowell, if you'll recall, thought Oregon would be accommodating to his brand of trolling. Not content to simply sue dozens of Does for alleged copyright infringement, Crowell tried to take advantage of the state's trademark law to pursue pirates. This hinged on the dubious claim that torrents of Dallas Buyers Club somehow veered into the production of counterfeit products. That seems to have gone nowhere, as has Crowell's other legal pursuits.

Crowell also claimed simply being in possession of Popcorn Time (a torrent-based, entirely unauthorized streaming service) was a criminal act -- calling it a "burglar's tool." Conflating theft and copyright infringement is nothing new for copyright trolls -- but claiming the software was roughly analogous to… I don't know, a ski mask and a bag with "$$$" printed on it -- was novel. Of course, judges are rarely enamored with novel legal theories and Crowell's assertion did little to win him powerful friends where he needed them most.

Now, it appears Crowell has made an enemy in the federal court system. Unfortunately for him, this enemy is presiding over most of his Doe lawsuits. Fight Copyright Trolls reports federal judge Michael W. Mosman has set up Default Judgment Roadblock, Esq. in response to Crowell's tactics.

Out of [Crowell's] recent sleazes, the most disturbing is the practice of deposing putative defendants prior to amending the complaint (replacing “John Doe” with an actual name). Since the majority of the targeted are laypeople of modest means, they tend not to spend money on attorneys, so they make a grave mistake of agreeing to be deposed without a lawyer. I don’t think it makes sense to explain why it is a real problem...

Apparently, the judges are not deaf and blind, and they are increasingly concerned with both the sheer volume of docket-clogging lawsuits, and the troll lawyers’ overreach. Chief Judge Michael Mosman recently drafted a standing order urging putative defendants to seek legal help.

Mosman's order, if implemented, has would set up a panel of lawyers who will provide up to three hours of pro bono assistance to anyone accused of copyright infringement by Crowell. That should be enough time to generate the small amount of friction needed to convince the trolling entities to drop the case. Trolling is built on easy wins, not actual courtroom battles.

On top of that, Judge Mosman isn't going to may not let Crowell file lawsuits against single plaintiffs en masse in hopes of increasing his default rate. Not only will this funnel Crowell's lawsuits into Mosman's courtroom, but it will force Crowell and the company he represents to inform defendants of the free legal assistance being provided by the state. The draft order also requires any communications to defendants be put on the record. Crowell will have to file copies of any contact made with defendants, as well as submit proof that these communications were received.

Considering the hurdles Mosman is considering forcing Crowell to leap, it wouldn't be too much of a surprise to find him exiting the trolling business… at least in Oregon.

Filed Under: carl crowell, copyright troll, oregon, pro bono
Companies: voltage pictures

Movie Studio & Copyright Troll Claim 'Mere Possession' Of Popcorn Time Is Illegal And Could Result In A Year In Jail

from the nutty-copyright-trolling-theories dept

Meet Carl Crowell. Willamette Week recently ran a profile on his copyright trolling practice, based out of Oregon. Unlike copyright trolls like Malibu Media and Prenda Law, who focused on porn, Crowell has tried to cultivate a copyright trolling client list straight out of Hollywood -- which is how he ended up as the copyright trolling lawyer working for Voltage Pictures on the Dallas Buyers Club trolling efforts in Oregon. You may remember those, because he was the apparent mastermind behind the attempt to abuse trademark law to go after people in Oregon. As we noted at the time, the trademark claims were ridiculous, and clearly seemed to be an attempt to look for a more friendly state court, rather than having to go into federal court with the copyright claims.

Crowell, it appears, has other bizarre legal theories in his copyright trolling bag of tricks -- and now he's testing them out on Popcorn Time users. As you may have heard, a few weeks ago, the makers of the total flop movie, The Cobbler, with Adam Sandler (9% fresh rating on Rotten Tomatoes -- sample reviews include "grindingly dull" and "ill-conceived curio"), decided to sue a bunch of Popcorn Time users for watching the film. And, you may have heard that a very similar lawsuit was filed this week, targeting Popcorn Time users for watching another flop of a film, Survivor, starring Pierce Brosnan (8% fresh rating on Rotten Tomatoes -- with one review stating "there's a reason you probably never heard of it.").

Crowell is the lawyer behind both lawsuits, and while everyone is pretty much focused on the "ooh, they're suing Popcorn Time users" aspect of it, the lawsuits have some absolutely insanely ridiculous claims, beyond just copyright infringement -- including trying to argue that mere possession of Popcorn Time is a criminal act under an Oregon state law barring the possession of "burglary tools." From the lawsuit:

The mere possession of a software program like Popcorn Time is the type of conduct that the State of Oregon has criminalized in ORS 164.235, which reads in part:

164.235 Possession of a burglary tool or theft device. (1) A person commits the crime of possession of a burglary tool or theft device if the person possesses a burglary tool or theft device and the person:

(a) Intends to use the tool or device to commit or facilitate … a theft by a physical taking; or
(b) Knows that another person intends to use the tool or device to commit or facilitate a … theft by a physical taking.

(2) For purposes of this section, “burglary tool or theft device” means … [any] instrument or other article adapted or designed for committing or facilitating a … theft by a physical taking.
(3) Possession of a burglary tool or theft device is a Class A misdemeanor.

It is acknowledged that the transfer of data, storing of the physical data locally on a hard drive and facilitation and redistribution of the stolen data to others may or may not be a “physical taking” under Oregon law.

Whether or not the mere possession and use of Popcorn Time is a Class A misdemeanor under Oregon Law and punishable by up to one year in jail (ORS 161.615(1)) and a fine of $6,250.00 (ORS 161.635(1)(a)) may be argued.

It's one thing to bury this deep within your legal filing (even though the actual claim for relief is only on copyright infringement). It's another to scream this bit of simply wrong legal theory in a press release. But, that's apparently what Dimiter Nikolov of the studio behind the total flop of a movie, Survivor, is announcing in the press release, reiterating the wacky legal theory Crowell shoved into the end of both of the Popcorn Time lawsuits filed so far:

"The mere possession of a software program like Popcorn Time is akin to the type of conduct that the State of Oregon has criminalized in ORS 164.235, which deems the possession and/or use of a burglary tool or theft device as a Class A misdemeanor," says Dimiter Nikolov, Vice President of Business & Legal Affairs at Nu Image, Inc. "It is our belief that the transfer of data, storing of physical data locally on a hard drive and facilitation and redistribution of stolen data to others should be considered a 'physical taking' under Oregon law and we felt compelled to take this opportunity to fight back and ensure that those who choose to engage in this type of behavior face real repercussions, just as a person would if they shoplifted a DVD or other physical consumer product from a retailer."

In case you're wondering, this "legal theory" is completely bullshit. First of all, copyright infringement is not theft (even if the lawsuits pretend the two are interchangeable). So the Oregon law doesn't even come close to applying. Second, even if, in some twisted way a judge considered copyright infringement to be theft, it still wouldn't matter, because 17 USC 301, which defines copyright preemption, makes it clear that federal copyright law "preempts" any state law attempts to create state level copyright laws.

Given that, and the fact that the actual claims in the lawsuit focus solely on the federal copyright claims, it makes you wonder what game Crowell and Nu Image are playing with this completely laughable legal theory. Do they really think that lying about the law will magically get people to pay for their crappy movies? Maybe, instead of inventing bogus legal theories, they should invest in making better movies.

Filed Under: burglary tools, carl crowell, cobbler, copyright, copyright preemption, copyright trolling, oregon, popcorn time, survivor
Companies: nu image