USDC N.D. California, August 18, 2008
In the ongoing suit by Viacom and other copyright owners against YouTube for contributory copyright infringement, the plaintiffs successfully moved to compel the production of requested documents from three venture-capital firms that invested in YouTube and/or played a role in Google’s acquisition of YouTube.
The four discovery requests in dispute call for documents relating to (1) any proposed or actual investments in YouTube, (2) Google’s acquisition of YouTube, (3) any actual or proposed indemnification for copyright infringement related to the merger with Google, and (4) any potential acquisitions of or mergers with YouTube. The respondent firms opposed the requested discovery because they are not parties to the litigation, and based on their contention that the documents are likely to be in defendants’ possession and plaintiffs should have to wait until defendants finished production to request discovery from non-parties. With respect to internal analyses and communications with potential investors, the firms also contended that such documents are irrelevant.
In their motion to compel production by respondent firms, plaintiffs contended that the requested documents relate to the knowledge and inducement elements of their theory of contributory copyright infringement, and that YouTube might not have all the documents due to poor record keeping when the company was started.
The court granted plaintiffs’ motion, stating that there is no general rule that plaintiffs cannot seek nonparty discovery of documents likely to be in defendants’ possession. “Plaintiffs have provided the court with sufficient reason to believe that respondents’ files may contain additional material. Defendant YouTube’s poor initial record keeping raises questions about the completeness of its files . . . and [one of the] respondents has already produced relevant documents not found in the more than one million pages produced by defendants.”
The court also held that the internal reports created by the respondent firms directly related to the plaintiffs’ theory of liability. “Plaintiffs’ theories of copyright infringement hinge on whether defendants intended to induce infringement, had knowledge of the infringing activity, and had a direct financial interest in such activity . . . . Defendants’ intent and knowledge is not publicly available data and may not be clear from documents produced by defendants. Due to respondents’ close relationships with defendants, respondents may have obtained information regarding defendants’ intent and knowledge.” In addressing the relevance of the internal documents, the court also stated that “there is a possibility that knowledge of respondents will be attributed to defendants if respondents were acting as agents of defendants.”
The court rejected the firms’ argument that plaintiffs must wait until defendants finish production to request discovery from non-parties, but the court did limit the dates for discovery documents to no earlier than when each firm contemplated investing in YouTube and, for two of the firms, no later than Google’s acquisition of YouTube. One firm that was instrumental in Google’s acquisition of YouTube also held a seat on Google’s Board of Directors and “thus was likely privy to numerous oral communications that may have been incorporated into documents presently in [its] possession,” so the dates for discovery documents included those through May, 2007.