Why it matters: On May 8, 2015, a California district court found that copyright enforcement agent Rightscorp did not commit abuse of process by exploiting Section 512(h) of the Digital Millennium Copyright Act, which provides for the issuance of subpoenas to Internet service providers compelling them to identify their copyright infringing customers.

Detailed discussion: On May 8, 2015, District Judge Dale S. Fischer of the Central District of California issued an order in the ongoing case of Blaha v. Rightscorp, Inc. et al. granting the motion brought by copyright enforcement agent Rightscorp, Inc. (Rightscorp) to strike the abuse of process cause of action from the first amended class action complaint filed by plaintiff John Blaha (Blaha) on March 9, 2015. Blaha had filed his complaint against Rightscorp, certain management individuals and Rightscorp clients Warner Bros., BMG Rights Management (US) LLC and Does 1-10 alleging, among other things, that Rightscorp and its clients abused the legal process by exploiting Section 512(h) of the Digital Millennium Copyright Act (DMCA). Section 512(h) authorizes copyright owners to ask federal district court clerks to issue subpoenas to Internet service providers (ISPs), requiring the ISPs to identify suspected copyright infringing customers, even though no lawsuit has been filed and no judge is involved.

Blaha argued that Rightscorp knew that its use of the DMCA subpoena process was improper based not only on established case law but also because Rightscorp had “beat a hasty retreat” when recently challenged on its use of Section 512(h) in a Texas district court. Thus, Blaha argued, “copyright troll” Rightscorp abused the legal process when it subsequently sought to exploit Section 512(h) in California district court.

First, a brief description of Rightscorp’s business model: In court filings, Rightscorp described itself as being “in the business of digital rights enforcement and work[ing] on behalf of copyright owners to identify online infringements and to mitigate the damage caused by such infringers.” Rightscorp stated that it uses a patent-pending proprietary technology to identify the “unique” Internet addresses that Rightscorp in good faith believes are being used by infringers of its clients’ copyrighted works. It then issues infringement notices to various ISPs, asking them to, in turn, forward the notices to their customers at the Internet addresses identified by Rightscorp. If the alleged infringers respond to the notices forwarded by the ISP, Rightscorp attempts to settle the past infringements with them on behalf of its clients at a rate of $20 per infringement. If the alleged infringers do not respond to the notices, Rightscorp resorts to the subpoena process prescribed by Section 512(h) of the DMCA in order to obtain from the relevant ISPs the identities of the alleged infringers. It is these DMCA subpoenas and Rightscorp’s use of them to identify Blaha and others similarly situated that constituted the abuse of process cause of action in Blaha’s complaint.

In the May 8 order, Judge Fischer granted Rightscorp’s motion to strike the abuse of process cause of action based primarily on California’s Anti-Strategic Lawsuit Against Public Participation (Anti-SLAPP) statute, which had been enacted to deter meritless lawsuits designed to chill another’s First Amendment rights to free speech and petition in connection with a “public issue.” Before getting to the merits, the judge first addressed Blaha’s argument that the state Anti-SLAPP statute was inapplicable because his abuse of process claim was a federal one “arising under” the use of subpoenas authorized by a federal law. The Court disagreed, finding that “the Supreme Court has explicitly rejected the idea of a federal common law tort of abuse of process.”

With the applicability of California’s Anti-SLAPP statute so established, the Court next examined the “two-pronged” legal standard applicable to motions to strike brought under the statute. The Court stated that, under the first prong, it “must first decide ‘whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.’ ” If such a showing is made, the Court must decide under the second prong “ ‘whether the plaintiff has demonstrated a probability of prevailing on the claim.’ ” The Court concluded that only when both prongs of the Anti-SLAPP test are satisfied with respect to a cause of action, i.e., it “arises from protected speech or petitioning and lacks even minimal merit,” then it will be considered a SLAPP subject to being stricken under the statute.

Judge Fischer found “no question” that the first prong of the test was satisfied in this case. The abuse of power claim was specifically based on Rightscorp’s use of the Section 512(h) DMCA subpoena process in its efforts to identify suspected copyright infringers, which the Court found to be “protected action” specifically covered by the Anti-SLAPP statute.

The Court then considered the second prong of the test, finding that for Blaha to demonstrate a probability of prevailing on his abuse of process cause of action, he would have to show that Rightscorp had either an ulterior motive in pursuing the DMCA subpoenas or intended to use the process improperly. The Court found the “first fatal deficiency” in Blaha’s ability to prevail on his abuse of process claim to be his inability to claim an ulterior motive on the part of Rightscorp. The Court pointed out that, whether or not Rightscorp’s exploitation of Section 512(h) was valid under the circumstances, there was no allegation that Rightscorp sought to do anything with the DMCA subpoenas other than its stated intent, i.e., to learn the identity of alleged copyright infringers. Given that this was what Section 512(h) was created for, “a disclosed motive is, by definition, not ulterior.”

The Court found the “second fatal deficiency” in Blaha’s ability to prevail on the abuse of process claim to be the fact that it was barred by the California litigation privilege, which applies to communications made in judicial proceedings by litigants to “achieve the objects of the litigation” and that have some “connection or logical relation” to the litigation. The Court concluded that Blaha’s abuse of process claim was based entirely on the communications that Rightscorp made to the federal court clerks in order to obtain the DMCA subpoenas, which communications were clearly covered by the California litigation privilege.

With the abuse of process cause of action stricken by the Court (Blaha’s attorneys are considering an appeal to the Ninth Circuit), Blaha’s lawsuit will continue with respect to his other cause of action that Rightscorp violated the Telephone Consumer Protection Act with repeated robo-calls made to the alleged infringers’ cell phones in its effort to seek settlements. In the meantime, Rightscorp will in all probability continue exploiting the Section 512(h) DMCA subpoena process as it seeks the identities of recalcitrant infringers from ISPs, notwithstanding that the use of Section 512(h) has declined in recent years. This is mainly due to the landmark case of Recording Industry Association of America v. Verizon, 351 F.3d 1229 (D.C. Cir. 2003), where the RIAA had used the DMCA subpoena process in an attempt to get Verizon to identify infringing customers. The DC Circuit found that Section 512(h), as presently drafted, does not authorize the issuance of subpoenas to ISPs who merely provide Internet connections to suspected infringers (i.e., who act merely as a conduit) but do not actually store the allegedly infringing materials on their own servers. The DC Circuit’s opinion in Verizon was later followed by the Eighth Circuit inRecording Industry Association of America v. Charter Communications, Inc., 393 F.3d 771 (8th Cir. 2005), and both the DC Circuit and Eighth Circuit cases were recently cited as precedent in Georgia’s Northern District by Judge William S. Duffy in his ruling granting a motion to quash brought by an ISP in response to a DMCA subpoena served on it by Rightscorp. The case, titled In Re Subpoena Issued to Birch Communications, Inc. f/k/a CBeyond Communications LLC, arose out of the DMCA subpoenas obtained by Rightscorp in the Central District of California, and Judge Duffy granted the motion to quash just three days before Judge Fischer’s order in Blaha.

The Georgia and California district court orders are not inconsistent, however. Even though the ISP in the Georgia case had requested that sanctions be imposed against Rightscorp for its improper use of Section 512(h), Judge Duffy declined, stating that “[t]he issuance of a subpoena under Section 512(h) to a conduit ISP is an issue of first impression in our Circuit, and the Court agrees that Rightscorp’s interpretation of Section 512(h), ‘although not persuasive, is not frivolous, [was not illogical] and . . . Rightscorp’s issuance of the subpoena [was not] unreasonable.’ ” As Judge Fischer pointed out in the California case when striking the abuse of process claim, the issue before her was not the validity of Rightscorp’s exploitation of Section 512(h) to get DMCA subpoenas issued to ISPs; it was whether Rightscorp abused the legal process when it sought to do so. Judge Fischer concluded that it did not.

Click here to read the Order dated 5/8/15 in the case of Blaha v. Rightscorp Inc., et al., CV-14-9032 DSF (C.D. Cal.).

Click here to see the Order dated 5/5/15 in In Re Subpoena Issued to Birch Communications, Inc. f/k/a CBeyond Communications LLC, 1:14-cv-3904-WSD (N.D. Ga.).

For more on this matter, see Recording Industry Association of America v. Verizon, 351 F.3d 1229 (D.C. Cir. 2003) and Recording Industry Association of America v. Charter Communications, Inc., 393 F.3d 771 (8th Cir. 2005).