Magistrate Judge Says Grande Shouldn't Be Able To Use The DMCA Safe Harbors Because It Didn't Really Terminate Infringers

from the one-piece-of-the-puzzle dept

We've written a few times about a key DMCA case in Texas, involving the ISP Grande Communications and Universal Music Group (and, by proxy, the copyright trolling operation Rightscorp). The case has had a lot of up and downs, with the judge tossing UMG's "vicarious infringement" claims, while letting the "contributory infringement" claims move forward. In October, the court rejected UMG's attempt to bring back the vicarious infringement claims which had already been dismissed, with some fairly harsh words directed at UMG for attempting that.

The latest, as first noted by Torrentfreak, is that the magistrate judge has recommended rejecting Grande's use of the DMCA safe harbor defense. I still have general issues with the idea that the "repeat infringer" part of the DMCA is being accurately described in these cases (specifically: the courts are now applying it to accusations of infringement, rather than actual infringers, which requires a court adjudication). However, the magistrate basically points out that Grande can't make use of the safe harbors because... it had no repeat infringer policy at all. Or, rather, it did, but in 2010 it stopped using it, and then never had a policy through 2016.

So, without a policy, they couldn't have reasonably implemented it... and thus, no safe harbors. Given the facts of the case, that's perhaps not that surprising. The DMCA requires you to have a reasonably implemented policy (Cox lost its similar lawsuit not because it didn't have a policy, but because it didn't follow its own policy).

Of course, that doesn't necessarily mean that UMG is going to win the case. Not having the safe harbor makes it harder for Grande, but not fatal. UMG will still need to prove contributory infringement, which is going to be fairly difficult to show. Earlier in the case, the court had noted "that this is not yet a well-defined area of law, and that there are good arguments on both sides of this issue." Effectively, UMG will need to show that Grande "induced" infringement by its actions, and Grande will claim it did no such thing. But it can't just use the DMCA safe harbors to get the case dismissed, rather it will need to focus specifically on the question of whether it induced people to infringe.

Filed Under: contributory infringement, copyright, dmca, repeat infringer policy, safe harbors
Companies: grande, grande communications, riaa, rightscorp, universal music group

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

Judge Dismisses Playboy's Dumb Copyright Lawsuit Against BoingBoing

from the with-leave-to-amend dept

Well, that was incredibly quick. The district court judge hearing the case that Playboy filed against BoingBoing back in November has already dismissed it, though without prejudice, leaving it open for Playboy to try again. The judge noted that, given the facts before the court so far, it wasn't even necessary to hold a hearing, since BoingBoing was so clearly in the right and Playboy so clearly had no case. While the ruling does note that Playboy and its legal team can try again, it warns them that it's hard to see how there's a case here:

The court will grant defendant’s Motion and dismiss plaintiff’s First Amended Complaint... with leave to amend. In preparing the Second Amended Complaint, plaintiff shall carefully evaluate the contentions set forth in defendant’s Motion. For example, the court is skeptical that plaintiff has sufficiently alleged facts to support either its inducement or material contribution theories of copyright infringement.... see Tarantino v. Gawker Media, LLC, 2014 WL 2434647, *3 (C.D. Cal. 2014) (“An allegation that a defendant merely provided the means to accomplish an infringing activity is insufficient to establish a claim for copyright infringement. Rather, liability exists if the defendant engages in personal conduct that encourages or assists the infringement.”) (internal citations omitted); Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 672 (9th Cir.), cert. denied, 138 S.Ct. 504 (2017) (“We have described the inducement theory as having four elements: (1) the distribution of a device or product, (2) acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation.”) (internal quotation marks omitted).

It will be interesting to see what happens next. As we noted in our original post, the lawyers representing Playboy, Donger and Burroughs have been making every effort over the last year or so to move beyond their reputation as fabric copyright trolls, and seeking out opportunities for high profile, if silly, cases including "sounds like" music cases. While one of the two partners, Scott Burroughs, has busied himself over at Above the Law (who really should think more carefully about the lawyers they bring in as posters) to post increasingly silly things about copyright law -- including trying to argue that linking is infringing and the EFF is wrong to argue that it's not.

That article -- written about the same time that the BoingBoing lawsuit was filed -- looks particularly bad now that a court has rejected the same argument in a case in which Burroughs is listed as a lawyer for Playboy, and in which EFF helped write the Motion to Dismiss that said that Burroughs was wrong. Just days ago, another lawyer posting at Above the Law explained why Burroughs' own case had no chance (without mentioning Burroughs' own writings on the site).

I'm guessing that Playboy will file an amended complaint, though as we noted earlier, in copyright law, it's much easier to have legal fees awarded for filing frivolous cases, and as the quote above notes, the judge is "skeptical" that Playboy has any case at all.

Filed Under: boing boing, contributory infringement, copyright, inducement, infringement, linking, motion to dismiss, scott burroughs, stephen doniger
Companies: boing boing, doniger burroughs, happy mutants, playboy

Federal Judge Says Providing Web Hosting Isn't Even Close To The Same Thing As Contributory Infringement

from the only-entity-responsible-for-infringement-is-the-infringer dept

A federal judge has just let a plaintiff know there's a big difference between providing hosting for infringing content and actually participating in copyright infringement. ALS Scan sued basically everybody for copyright infringement after discovering adult images that it owned posted all over the web. In addition to Steadfast Holdings -- the defendant just dismissed from this suit -- ALS Scan sued Cloudflare, Juicy Ads, and a number of other hosting services and Does.

One by one, these defendants have been excused from the suit. The underlying logic for the dismissals is solid. Providing web hosting is not the same thing as contributory infringement, no matter how much ALS Scan wants it to be.

In the Steadfast ruling, Wu said that merely hosting a pirate site does not make the hosting service liable for any copyright infringement actions the site may be guilty of.

In its motion to dismiss, Steadfast argued that it did not manage or operate the Imagebam site, and that it only provided computer storage.

"The court is unaware of any authority holding that merely alleging that a defendant provides some form of 'hosting' service to an infringing website is sufficient to establish contributory copyright infringement," Wu wrote.

“The court would therefore find that the [complaint] fails to allege facts establishing that Steadfast materially contributed to the infringement,” Wu wrote.

There's a lot more Steadfast (and the other hosting companies) would have to do to be considered contributory infringers, and the hosting companies are doing none of those things. ALS Scan wants hosting sites to do more than they're legally obligated to do. But it can't sue just because it doesn't agree with their practices. From the opinion [PDF]:

[T]he only allegations specific to Steadfast that are raised in the SAC are that Steadfast “hosts” pirate sites, including Imagebam, and that Plaintiff has sent numerous notifications to Steadfast of infringing content on Imagebam, but Steadfast has failed to implement or enforce a repeat infringer policy by removing Imagebam from its servers.

Beyond that, ALS's complaint contains nothing that shows evidence of its claims.

Steadfast also contends that the SAC fails to allege material contribution or inducement. The Court would agree. The SAC alleges only that Steadfast “hosts” pirate sites that feature infringing content. It is entirely unclear what services Steadfast provides to Imagebam; what type of infringing activity Imagebam conducts (or even what Imagebam is); or how Steadfast contributes to or facilitates that infringing activity. As such, the Court would find that the SAC fails to plead material contribution.

The same goes for the rest of the allegations. Steadfast did not induce or contribute to infringing activity at hosted sites, nor did it somehow violate ALS's trademarks by hosting sites where infringing images could be found.

As Judge Wu's opinion points out, it's not up to the court to determine whether sued websites are "responsive enough" to rightsholders' demands. The law rightsholders wanted -- the DMCA -- sets the rules and as long as sites and hosts follow the statutory requirements, they're insulated from most infringement claims.

It appears ALS is engaging in pray-and-spray litigating. Beyond the Does, there's been no attempt made to target those actually participating in copyright infringement. Instead, ALS sued a bunch of hosting companies (and an ad network) in hopes of landing a settlement or two before its allegations were exposed as weak and baseless by the presiding judge.

Filed Under: advertising, cdn, contributory infringement, dmca, secondary liability, web hosting
Companies: als scan, cloudflare, juicy ads, steadfast holdings

$25 Million Jury Verdict In Rightscorp Case Raises Serious Questions About Copyright Law

from the but-of-course dept

This wasn't a huge surprise after Judge Liam O'Grady's questionable reading of the DMCA a few weeks back (along with his general disdain for the internet), but a jury yesterday awarded BMG $25 million from Cox Communications, claiming that Cox was guilty of willful "contributory infringement" in not kicking accused file sharers off the internet. The jury found Cox not guilty of "vicarious liability," which is at least marginally surprising, as many people who don't spend their lives wrapped up in copyright law have difficulty distinguishing the difference between "contributory infringement" and "vicarious" (if you're confused too, Wikipedia's overview is a decent place to start). And based on that, the jury hit Cox with the $25 million award for BMG.

This will undoubtedly go to appeal, and it would seem that Cox has some pretty strong arguments. First up, the original decision that Cox is not subject to the DMCA's safe harbors is a highly questionable ruling, and would go against a number of previous rulings. As noted previously, some of Cox's actions did seem somewhat egregious, but this still involves a previously untested argument that the policy of requiring service providers to have a plan to terminate users applies to network service providers, rather than those who host content. That's a pretty big open question -- and how that issue is resolved will have a major impact on how the internet functions going forward. If Judge O'Grady's ruling stands, then the RIAA and MPAA just got a huge golden gift: it would effectively say that the US has a "three strikes"-like law where people can be kicked off the internet entirely, based solely on accusations of copyright infringement. That's a pretty scary result.

Even separate from that, the idea that Cox, an internet service provider, is guilty of "contributory liability" for infringement seems difficult to believe as well. The standard for contributory copyright infringement is basically one who "knowingly induces, causes or materially contributes" to copyright infringement done by someone else where that party "had knowledge, or reason to know, of infringement." So, in this case, the argument is that based on the notifications, Cox had the necessary knowledge of the infringement, and then "materially contributed" to that infringement by continuing to provide service. But, again, that's a huge stretch, and goes way beyond historical examples of contributory infringement, where you had things like Grokster, that actively advertised its software as being useful for infringement. In this case, all Cox did was not terminate users, and somehow that counts as "materially contributing" to infringement?

Again, if that stands, it has tremendously troubling implications for how the internet functions, and the ability of people to use copyright law to wreak havoc on the lives of others. We're talking about opening up the possibility of going way beyond the standard DMCA takedowns of content, to it becoming a weapon for killing internet access within households.

The $25 million verdict comes out to about $18,000 per each of the 1,397 copyrights listed in the case -- which is certainly less than the statutory maximum possibility of $150,000 per infringement. But, still... Either way, it's almost certain that Cox will appeal, and that's when the case will start to get a lot more interesting.

Filed Under: contributory infringement, copyright, copyright trolling, copyright trolls, dmca, safe harbors, secondary liability, vicarious liability
Companies: bmg, cox, cox communications, rightscorp

Michael Robertson Challenges Ruling That Says He Has To Pay Over $40 Million For Copyright Infringement

from the red-flags-indeed dept

Earlier this year, we wrote about the troubling ruling against MP3Tunes.com, in which it was found to be "willfully blind" to infringement on its music locker service -- raising serious questions for basically any cloud service provider. EMI, the record label suing, used an incredibly low standard for what it considered to be willful blindness, but the jury bought it. On top of that, it found MP3Tunes founder Michael Robertson not just personally liable for certain infringement, but said he'd have to pay somewhere around $41 million for it.

In response, Robertson is fighting back, asking the judge to basically overrule the jury on a number of different matters. There's a lot in the filing that's worth reading, but it highlights just how crazy some of the details are in this case. The biggest issue is the whole "willful blindness" issue or "red flag knowledge." As other courts have noted, this has to be in reference to specific instances of infringement -- but that wasn't shown for many of the files in this case. Rather, the jury was only told of general infringement. This was the issue at the center of the big YouTube/Viacom case, in which YouTube won the argument that Viacom had to show red flag knowledge of specific infringement, rather than just arguing general knowledge of infringement. Yet, in this case, the issue seems to have been flipped.

There's also the troubling aspect of how the jury found Robertson guilty of not just direct infringement (of 22 files), but also "vicarious and contributory liability" on a list of over 2000 additional works. But, as Robertson notes, for that to be the case, EMI would have to have shown Robertson receiving a direct financial benefit from that infringing activity, and, in fact, Robertson received nothing from the infringement, or the company -- instead, he lost millions.

The trial record is devoid of evidence that Robertson received any such direct financial benefit. In fact, not only did Robertson not receive any direct financial benefit from MP3tunes’ and its users’ infringing activity, he personally invested and lost over $6.8 million. Moreover, uncontroverted trial testimony shows that Robertson has (a) never taken a salary or a bonus from MP3tunes... and (b) never received any dividends or any distribution, even directly or indirectly through any of the trusts, from MP3tunes...

Tellingly, Plaintiffs do not dispute these facts. Instead, they argued that Robertson could have made money, if his plan had been a success.... But the Liability Charge rejected such hypothetical conjecture; rather, it requires that “Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.” .... Indeed, the very conjecture Plaintiffs assert is itself an implicit admission that Robertson did not receive a financial benefit. ... (“Had he succeeded and signed up millions of users, he could have taken the company public, gotten investors or sold the company”) (emphasis added)). Such speculative conjecture is too remote to support vicarious copyright liability

Furthermore, it notes how the jury appears to have confused benefit for the company with benefit for Robertson directly. Furthermore, he argues that some of the arguments seem entirely based on a made up concept of tertiary liability. Basically, the jury argued that MP3Tunes has secondary liability for the actions of its users (already a questionable statement, given its compliance with the DMCA's safe harbors), and beyond that Robertson thus has tertiary liability for MP3Tunes' secondary liability. Anyone who believes in the nature of a limited liability corporation, and separating the liability of the company from its staff, might want to pay attention to that issue.

Under the charge, Robertson may be liable for MP3tunes’ secondary liability without any proof of his knowledge of, benefit from, or contribution in, the users’ direct infringement; and without any direct infringement by MP3tunes. That simply is not the law, and is contrary to the fundamental limits of secondary liability.

On the willful blindness/red flag issue, Robertson notes the made up and artificial standard that EMI uses, that if they had recieved DMCA notices with 10 or more links to a particular website, they had red flag knowledge that all links from that website must be infringing.

Plaintiffs simply counted the number of occurrences of domains in their takedown notices, and when the count reached 10, assigned to MP3tunes willful blindness or red flag knowledge that all sideloads from such domain were infringing. That is insufficient. MP3tunes could not discern any specific instances of infringement merely from the fact that any particular domain was present more than 10 times on takedown notices. In fact, counting the number of occurrences on takedown notices does not even rise to a showing of “a high probability of general infringement” or “a generalized awareness of infringement,” which are not enough to establish willful blindness or red flag knowledge.

In addition, the number “10” was plucked from thin air. Why not three? Why not 15 or 20? Where was the evidence showing the significance of 10 occurrences? Moreover, the lack of notice of specifically infringed works means MP3tunes had to conduct an investigation to determine which works were infringed: (i) which domains met the threshold of 10; (ii) which works were owned by Plaintiffs; and (iii) which works were sideloaded without authorization.

He further presents proof that EMI itself miscounted. Five out of thirteen domains they listed had errors. On top of that, he points out that EMI itself authorized free MP3s on many of those domains. In other words, there were authorized works on those same sites, which EMI insists Robertson must have known were infringing.

There are other issues raised in the filing as well, which you can read below, including questions about liability on cover art images. The specific legal issues in the case concerning secondary liability and red flag knowledge are quite important, because it will absolutely be cited as precedent in other cases as well. Unfortunately, as we've noted for a while there's sometimes a difference between "real law" and "file sharing law" in which courts decide if something feels like infringement and then twists itself to make it so. This case has all the indications of a court feeling like Robertson did something wrong, even if it doesn't seem to actually fit under the law. Thus, the effort here may be quite a long shot. Unfortunately, the ramifications of that will be felt by tons of other services, especially those in the cloud computing space.

Filed Under: contributory infringement, copyright, dmca, michael robertson, red flag knowledge, safe harbors, secondary liability, tertiary liability
Companies: emi, mp3tunes

Quentin Tarantino Loses Big In Trying To Paint Gawker As A Copyright Infringer

from the nice-try,-quentin dept

We didn't write about this case when it came out because it just seemed so ridiculous, but filmmaker Quentin Tarantino sued Gawker Media earlier this year for linking to a script he had apparently been working on. There had been a bunch of media coverage over the fact that his script for The Hateful Eight leaked, and was being shared around Hollywood, though not online. Gawker then asked anyone if they'd seen a copy, leading to a followup post which included a link to the newly leaked script.

Tarantino argued that by soliciting from the public a copy of the script and then subsequently linking to it, Gawker was guilty of contributory infringement. Thankfully, a federal court that actually understands copyright law has quickly disabused Tarantino of that bizarre interpretation of copyright law, granting Gawker's motion to dismiss. The big problem: at no point anywhere in the process above, did Tarantino's lawyer show how Gawker's actions resulted in anyone infringing on anyone's copyright. That makes it quite hard to pin "contributory infringement" when there's no direct infringement in the first place:

However, nowhere in these paragraphs or anywhere else in the Complaint does Plaintiff allege a single act of direct infringement committed by any member of the general public that would support Plaintiff’s claim for contributory infringement. Instead, Plaintiff merely speculates that some direct infringement must have taken place. For example, Plaintiff’s Complaint fails to allege the identity of a single third-party infringer, the date, the time, or the details of a single instance of third-party infringement, or, more importantly, how Defendant allegedly caused, induced, or materially contributed to the infringement by those third parties

In a footnote, the court further notes that even if Tarantino's lawyers could dredge up some example of direct infringement based on someone reading the script, the lawsuit still wouldn't make any sense:

Even if Plaintiff alleged that individuals accessed the links contained in Defendant’s article in order to read Plaintiff’s script, such an allegation would still not support Plaintiff’s contributory infringement claim against Defendant. Simply viewing a copy of allegedly infringing work on one’s own computer does not constitute the direct infringement necessary to support Plaintiff’s contributory infringement claim. See Perfect 10, Inc., 508 F.3d at 1169 (where alleged primary infringers merely view pages containing infringing images, but do not “store[] infringing images on their computers,” there is no infringement). In addition, based on the allegations of the Complaint, there can be little doubt that Plaintiff has a strong claim for direct infringement against Doe 1, a/k/a AnonFiles.com. However, Plaintiff has not alleged and it is highly unlikely that Plaintiff will be able to plead facts demonstrating that Defendant somehow induced, caused, or materially contributed to the infringing conduct by publishing a link to the screenplay after it was wrongfully posted on AnonFiles.com.

The court notes that Gawker spent a lot of effort explaining why this is fair use but notes that, "albeit persuasive and potentially dispositive," it doesn't even need to bother with that argument since there's no infringement to defend against fair use here anyway.

Once again, it seems like people who grow up totally immersed in a world of copyright maximalism automatically leap to the conclusion that "something I don't like" must be an infringement of copyright. Thankfully, the law (mostly) doesn't work that way.

Filed Under: contributory infringement, copyright, direct infringement, quentin tarantino, scripts, the hateful eight
Companies: gawker media

Court Tosses Lawsuit That Said MMS Was An Illegal File Sharing Network

from the let-it-go dept

A few years ago, we wrote about a really ridiculous lawsuit filed by (then) regular Techdirt commenter Max Davis against all of the mobile operators: AT&T, Verizon Wireless, Sprint and T-Mobile. Davis runs a company, called Luvdarts, that creates silly "content" for multimedia messaging (MMS) on phones, and also had big dreams of setting up some sort of collective licensing system by which the telcos would all pay him a fee for every MMS sent. When the telcos showed no interest in such a pointless plan, he sued, arguing that they were just like file sharing networks, because users were able to "forward" the MMS content his company created without any problem. Two years ago, that case was dismissed, with the court being pretty clear that it had no chance. Davis actually sent over a press release about his own loss, talking about how happy he was with this result and that he was going to appeal.

That appeal has happened and... second verse, same as the first. The appeals court made short work of this lawsuit, dismissing it in a quick and clean 10 page opinion. To say the court was not impressed would be an understatement. The court repeatedly points out that Luvdarts appears to be pushing completely novel legal interpretations of vicarious and contributory infringement with no basis whatsoever. Basically, the company insists, first, that individuals passing along MMS messages makes the operators liable. That was quickly tossed out because of protections against secondary liability.

Luvdarts's principal argument is that the Carriers are liable for the infringement committed by third parties over their networks under either vicarious or contributory copyright liability. As the Supreme Court has observed, the Copyright Act does not explicitly render a third person liable for another person's infringement.

Luvdarts argued that the operators failure to implement a system to block such forwards proves liability, and the court points out that this is ridiculous.

In this case, Luvdarts concedes that the Carriers presently have no way of supervising the use of their networks for copyright infringement. Instead, Luvdarts's complaint alleges only that the Carriers could “establish[]. . .a system” that would give them the right and ability to supervise the infringing activity. Luvdarts argues that this allegation is sufficient to survive a motion to dismiss. Luvdarts fails to cite any authority to support this proposition, which runs contrary to our precedent. In Napster, this court held that “right and ability to supervise” should be evaluated in the context of a system’s “current architecture.” Napster Inc., 239 F.3d at 1024. Moreover, as we noted in Perfect 10, Inc. v. Amazon.com, Inc., resting vicarious liability on the Carriers’ failure to change their behavior would tend to blur the distinction between contributory liability and vicarious liability. 508 F.3d 1146, 1175 (9th Cir. 2007) (“[I]n general, contributory liability is based on the defendant’s failure to stop its own actions which facilitate third-party infringement, while vicarious liability is based on the defendant’s failure to cause a third party to stop its directly infringing activities.”). For example, under contributory liability the Carriers’ failure to implement a digital rights management system may be used as circumstantial evidence of “the object of promoting” infringement. See Grokster, 545 U.S. at 936–37. But under vicarious liability, it cannot substitute for an allegation of a capacity to supervise. Luvdarts's failure to allege that the Carriers have at least something like a capacity to supervise is fatal to a claim of vicarious liability.

On top of that, Luvdarts tried to claim contributory (not vicarious) infringement, arguing that these MMS systems were similar to Napster, Grokster or Limewire. In part, this is because Luvdarts sent the telcos a list of every bit of "content" they offer, and demanded they be blocked from being forwarded. Again, the courts don't see it (because there's nothing to see):

Luvdarts fails to allege that the Carriers had the requisite specific knowledge of infringement. Luvdarts's conclusory allegations that the Carriers had the required knowledge of infringement are plainly insufficient. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”).

In the alternative, Luvdarts argues that the “notices” it sent to the Carriers, referenced in the complaint, sufficed to establish actual knowledge of infringement. However, these notices failed to notify the Carriers of any meaningful fact. The notices were 150-page-long lists of titles, apparently just a transcription of every title copyrighted by Luvdarts, which indicated that they wanted “accountability” for the unauthorized distribution of those titles for the period from May 2008 to November 2009. These notices do not identify which of these titles were infringed, who infringed them, or when the infringement occurred. The Digital Millennium Copyright Act of 1998 (“DMCA”), by which the notices purport to be governed, clearly precludes notices as vague as the notices here. 17 U.S.C. § 512 (DCMA takedown notice requires the producer to provide “[i]dentification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient

This is yet another useful ruling in that it highlights that service providers need to have specific knowledge of infringement, and that "general knowledge" is clearly not enough.

Of course, I believe this is only one of two such lawsuits filed by Luvdarts against the same basic companies. In the other one, they seem to be claiming that there's some sort of antitrust violation in that these MMS providers haven't implemented the filters that this lawsuit says they're not required to implement. I can't imagine that one going very far either.

Filed Under: contributory infringement, copyright, file sharing, max davis, mms, vicarious infringement
Companies: at&t, sprint, t-mobile, verizon wireless

IsoHunt Still Guilty Of Contributory Infringement

from the chipping-away-at-safe-harbors dept

The 9th Circuit has finally ruled in the appeal of the IsoHunt case, and has found, once again, that Gary Fung is guilty of contributory copyright infringement, as per the Supreme Court's ruling in the Grokster case. They basically agree with the district court ruling, which found that IsoHunt hit on all of the factors that were present to create "inducement" (a theory of copyright that Congress had previously rejected, but which the Supreme Court decided to make exist in the Grokster case). That is, the court agreed that there was distribution of a "device or product", including acts of infringement, and (most importantly) that IsoHunt itself was promoting the product's use to infringe on copyrights. However, on the (slightly) good side of things, the court rejected the district court's broad injunction against IsoHunt as going overboard.

The court goes through the "Grokster" inducement factors, but the results are bit troubling. The first factor is the distribution of a device or product for infringement. Here, IsoHunt argued that it was just providing a service for searching and finding stuff, but wasn't actually distributing any file sharing software "product" or "device." The court doesn't buy it, but I find its argument troubling.

Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a “device.” As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the infringement. For example, a retail copying service that accepts and copies copyrighted material for customers after broadly promoting its willingness to do so may be liable for the resulting infringement although it does not produce any copying machines or sell them; all it provides is the “service” of copying. Whether the service makes copies using machines of its own manufacture, machines it owns, or machines in someone else’s shop would not matter, as copyright liability depends on one’s purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement.

That's problematic on multiple levels. First, it's clearly expanding the Supreme Courts limitations in Grokster, by arguing that effectively the requirement for distributing a product or service used to infringe is no longer a requirement at all! In other words, they basically argue that the first factor doesn't matter. Furthermore, the example they use doesn't make much sense either. The "retail copying service" they describe doesn't need inducement theory to be found guilty, as they appear to be violating the reproduction right directly.

The second factor is not difficult to prove. It's obvious that some people used IsoHunt to infringe. There's no real argument there. The third element gets a little trickier. It's the question of how much did IsoHunt promote "its use to infringe." The appeals court, like the district court, uses the fact that IsoHunt had a listing of "box office movies" as proof of promoting infringing uses, along with some of IsoHunt operator Gary Fung's own actions:

For a time, for example, isoHunt prominently featured a list of “Box Office Movies,” containing the 20 highest-grossing movies then playing in U.S. theaters. When a user clicked on a listed title, she would be invited to “upload [a] torrent” file for that movie. In other words, she would be asked to upload a file that, once downloaded by other users, would lead directly to their obtaining infringing content. Fung also posted numerous messages to the isoHunt forum requesting that users upload torrents for specific copyrighted films; in other posts, he provided links to torrent files for copyrighted movies, urging users to download them

While you can see why this might be seen as promoting the use to infringe, there's a leap here: which is that it assumes that any and all box office movies couldn't possibly also have torrents. That's not definitively the case. It is entirely possible that a movie could put up a legitimate torrent -- which the court doesn't even consider as a possibility. They also point out that Fung did not develop a filter and made money from advertising. I can't see how either is relevant, as there is no requirement for a filter, nor is it illegal to make money from advertising.

The most troubling part of the ruling, however, is in the way the court looks at the "causation" question. Here are the different views presented:

Fung and amicus curiae Google argue that the acts of infringement must be caused by the manifestations of the distributor’s improper object—that is, by the inducing messages themselves. Columbia, on the other hand, maintains that it need only prove that the “acts of infringement by third parties” were caused by the product distributed or services provided.

The court sides with Columbia on this one, but that basically seems to completely wipe out the fourth factor as well. Because they more or less argue if you can show both infringement (third factor) and the product (first factor) you've automatically got the fourth factor proven as well. So why do we even have that fourth factor?

The court claims that it recognizes this could go too far, but then tries to "strike a balance."

We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation requirement is that the product or service at issue was used to infringe the plaintiff’s copyrights. The possible reach of liability is enormous, particularly in the digital age.

So... how does it deal with this? It... basically punts. It goes into a long discussion, highlighting how it's true that IsoHunt and Fung may have a reasonable argument that the infringements that happened were not caused by IsoHunt at all. For example:

Fung argues, on this basis, that some of the acts of infringement by third parties relied upon by the district court may not have involved his websites at all. He points out, for example, that by far the largest number of torrents tracked by the Torrentbox tracker are obtained from somewhere other than Torrentbox.com. If a user obtained a torrent from a source other than his websites, Fung maintains, he cannot be held liable for the infringement that resulted.

The court just punts the issue back to the district court:

We do not decide the degree to which Fung can be held liable for having caused infringements by users of his sites or trackers. The only issue presently before us is the permanent injunction, which, as in Grokster III, does not in this case depend on the “exact calculation of infringing use[] as a basis for a claim of damages.” 545 U.S. at 941. We therefore need not further entertain Fung’s causation arguments at this time, but leave it to the district court to consider them, in light of the observations we have made, when it calculates damages.

Separately, in discussing the DMCA safe harbors, the ruling does push back on the lower court's rulings, saying that its reasoning for rejecting safe harbors was not accurate. The lower court said that IsoHunt could not get a DMCA 512(a) safe harbor because that only applied to "transitory" networks, and since the content never actually touched IsoHunt, it didn't apply. The appeals court rejects this, however.

The district court should not have rejected this safe harbor on the ground it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), held that the § 512(a) safe harbor does not require that the service provider transmit or route infringing material, explaining that “[t]here is no requirement in the statute that the communications must themselves be infringing, and we see no reason to import such a requirement.” Id. at 1116; see also id. (“Service providers are immune for transmitting all digital online communications, not just those that directly infringe.”).

However, they still reject safe harbors for IsoHunt because of other activity by Fung, namely using trackers to generate info that is used to "induce further infringing use of his websites and trackers." Basically, the court says that Fung's website may be protected, but his trackers are not protected as service providers.

There are two other troubling parts of the ruling. The first concerns "red flag knowledge." This is the issue that is key to the YouTube/Viacom case. There's a problem with the DMCA, in that it first notes that takedowns only need to occur with a valid DMCA notice. That suggests that an invalid DMCA notice should not necessarily lead to a takedown. But, it also has a section saying that you can be liable if there's "red flag knowledge." But if you need a valid DMCA notice, would an invalid one count as red flag knowledge? The whole thing gets tricky fast. Most courts tend to avoid this by repeatedly saying that there is no red flag knowledge without specific knowledge of infringing files (usually in the form of takedown notices). The Fung case is really the only major case where red flag knowledge was considered reasonable. And the court just rubber stamps that decision with little discussion. It just says because Fung encouraged people to upload and download copyrighted works, that proves he had red flag knowledge. Again, this seems to assume that he must have known it was infringing.

The other troubling part is that the court argues that having advertising on the site constitutes direct financial benefit from the infringement. Other courts have noted that just having advertising on a site where infringement occurs does not mean that the financial benefit is directly attributable to the infringement, but the court here walks that back somewhat:

Under these circumstances, we hold the connection between the infringing activity and Fung’s income stream derived from advertising is sufficiently direct to meet the direct “financial benefit” prong of § 512(c)(1)(B). Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fung’s revenue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he received.

This is very worrisome, because contrary to what the court suggests here, the revenue stream is not tied to infringement, but tied to providing a popular service that people want. That is the success of the revenue stream does not increase or decrease with each infringement, but with each use of the overall service -- some of which is infringing, some of which is not. Fung doesn't make any more money if the ad is viewed by an infringing user vs. a non-infringing user. It would seem that this should be a prerequisite for requiring that there be a financial benefit from the infringement. Unfortunately, the court seems to lump this all together as "well there are ads and infringement and more infringement means more ads, so there's a direct financial relationship." But, under that theory, then pretty much any website that has any infringement could run afoul of that, and that's clearly not what the DMCA's safe harbors were supposed to be about.

Finally, one bit of good news in the ruling is that the court does rule that the injunction is against IsoHunt is too broad. This had been a major concern since the original court ordered a blockade that also blocked legitimate, authorized content. The court recognized this as a problem, noting that the injunction included all sorts of vague language that impose too much of an expectation that Fung can wave some sort of magic wand to block any and all "infringement-related terms in metadata for any webpages." The court agrees that this is too much:

Beyond the specifically-named examples, no one reading this injunction can tell what it means for a term to be “widely known to be associated with copyright infringement.” We understand the desire to build flexibility into the injunction. But Rule 65(d), overall, prefers certainty to flexibility. Subsection (ii) of the injunction’s definition of “Infringement-Related Terms” therefore must be modified to state simply that the phrase includes specifically named terms.

It also finds that some parts of the injunction are clearly too burdensome for Fung himself:

Fung maintains, and we agree, that certain provisions of the injunction could be interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright, even if those other companies are not themselves liable for primary or secondary copyright infringement.... We agree that insofar as the injunction can be interpreted to prohibit Fung from seeking legitimate employment, it is more burdensome than necessary to provide Plaintiffs relief.

On the whole, Fung still has lost big time with this ruling, and I'm still quite concerned about many parts of it. In a few areas the court has cut back on some excesses by the district court but, of course, this case is far from over.

Filed Under: contributory infringement, copyright, gary fung, inducement, injunction, liability, red flag
Companies: isohunt

RapidShare Ruled Legal... Yet Again

from the worst-of-the-worst? dept

While the entertainment industry has declared RapidShare to be one of the worst of the worst websites when it comes to copyright infringement, it's notable that the site continues to rack up legal victories. We've covered how it's been vindicated in lawsuits in the US and in Europe, where it's been noted that the site takes down infringing content when made aware of it, and has plenty of non-infringing uses (and users).

Now there's yet another ruling in favor of RapidShare, this time in Germany, where the Higher Regional Court of Dusseldorf ruled (again) that RapidShare takes "sufficient measures" to stop copyright infringement, in a case brought by Atari. Similar to Viacom in its lawsuit against YouTube, Atari suggested that RapidShare should be required to install a proactive filter, but the court said such a requirement would be unreasonable, since it might also block legitimate works.

Of course, with the US pushing for laws like COICA and standing behind questionable domain name seizures based on faulty evidence, it seems like this, once again, shows how unreasonable it is to simply listen to the RIAA or MPAA and accept their word as clear proof of infringement. As the courts are showing here, just because some industry rep claims a site is the "worst of the worst," it doesn't mean it's actually violating the law.

Filed Under: contributory infringement, copyright, germany, third party
Companies: atari, rapidshare