USDC C.D. California, December 21, 2009

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  • In copyright infringement action against operator of BitTorrent websites, court grants summary judgment to plaintiff movie studios on liability for inducement to infringe.

Defendant Gary Fung operates several BitTorrent websites, i.e., a type of peer-to-peer website where users can locate copyrighted content such as movies and television shows and can download that content from other users. BitTorrent technology facilitates the downloading of large files by triggering the downloading from several different users simultaneously, rather than from a single user.

BitTorrent technology includes: (1) a software application that users download, which is commonly referred to as a “client application”; (2) websites, also known as “torrent sites,” which allow users to select “dot-torrent files” that they wish to download; and (3) servers, also known as “trackers,” that manage the download process. In order to download files from others in a BitTorrent network, users must complete several steps: (1) install a BitTorrent client application; (2) visit a torrent site for the purpose of locating dot-torrent files containing the content that they wish to download; and (3) click on the desired dot-torrent file. Once these steps are completed, the BitTorrent client will locate and download the actual content item. (The dot-torrent files do not contain the actual content item searched for; rather, the dot-torrent file contains the data used by the BitTorrent client to retrieve the content through a peer-to-peer transfer.) The BitTorrent client application then simultaneously downloads the pieces of the content file from as many users as are available at the time of the request, and then reassembles the content file on the requesting computer when the download is complete. Once a user downloads a given content file, he or she also becomes a source for future requests and downloads.

Plaintiffs are several major motion picture studios who alleged that defendants Fung and Isohunt Web Technologies, Inc. are liable for inducement to infringe, contributory infringement and vicarious infringement, based on direct infringement by sites’ users. According to the court, it is established in the Ninth Circuit that inducement and contributory infringement are distinct theories of liability. “Generally, inducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright; in contrast, material contribution . . . applies if the defendant ‘has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works’” and a defendant “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it” (citations omitted).

The court addressed only the theory of inducement because “defendants’ inducement liability is overwhelmingly clear.”

Under all secondary theories of liability for copyright infringement, a plaintiff must show (1) direct infringement by third parties and (2) that infringement took place in the U.S. The court rejected the defendants’ argument that plaintiffs must show that a particular copyrighted work was both uploaded and downloaded in the U.S. “[T]he acts of uploading and downloading are each independent grounds of copyright infringement liability. Uploading a copyrighted content file to other users (regardless of where those users are located) violates the copyright holder’s § 106(3) distribution right. Downloading a copyrighted content file from other users (regardless of where those users are located) violates the copyright holder’s § 106(1) reproduction right. Accordingly, plaintiffs need only show that United States users either uploaded or downloaded copyrighted works; plaintiffs need not show that a particular file was both uploaded and downloaded entirely within the United States” (citations omitted).

The plaintiffs presented “abundant evidence of copyright infringement using defendants’ site” including IP addresses and usage summary data provided by the defendants. Also, plaintiffs provided evidence that approximately 50% of about 400 actual downloads were made from the U.S.

The court then turned to liability for inducement. Under the U.S. Supreme Court’s ruling in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), one is liable for inducing third parties to infringe if one “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” The court added that liability may attach even if the defendant does not induce specific acts of infringement.

Inducement may be shown by defendants’ statements and advertisements that “stimulate others” to commit infringement; providing technical assistance to users seeking copyrighted works; implementation of technical features that promote infringement; and a business model that depends on massive infringing use. Plaintiffs provided undisputed evidence of defendants’ actions in all of these areas. For example, the court held that defendants’ creation on their websites of a Box Office Movies feature, in which defendants posted and updated a list of the top 20 highest-grossing movies playing in theatres with links for uploading dot-torrent files for those movies, was evidence that defendants engaged in direct solicitation of infringing activity. The court also called defendants’ statement on their websites that users should try Peer Guardian, a software application that can be used to frustrate copyright enforcement, a “classic instance of inducement.”

Plaintiffs also provided evidence that defendants provided technical assistance to users seeking copyrighted works (showing that defendants “did not maintain a hands-off approach to the operation of the sites”) and that the business model of defendants’ websites relied almost exclusively on advertising revenue which depends on the number of users visiting each site. The court held that the undisputed evidence shows that the defendants engaged in “purposeful, culpable expression and conduct” aimed at promoting infringing uses of the websites and accordingly the court granted summary judgment for the plaintiffs on the issue of liability for inducement to infringe.

The court also held that the defendants did not meet the requirements of the DMCA safe harbor for a provider of information location tools (17 U.S.C. § 512(d)). Under § 512(d), a provider of information location tools must satisfy all three of the following requirements: (1) the defendant: does not know or have reason to know of infringing activities, or does not remove infringing materials upon receipt of such knowledge; (2) does not profit from infringement where it has the power to control the infringement; and (3) upon receiving notice from the copyright holder, removes the infringing material. In the present case, the court held that plaintiffs established that defendants had reason to know of their users’ infringing activities. For example, defendant Fung admitted to downloading certain copyrighted works which the court said indicated that defendants knew that infringing material was available on the defendants’ websites. The court also held that defendants failed to satisfy their summary judgment burden by identifying facts showing that they were not aware of factors or circumstances from which infringing activity is apparent, and failed to introduce any evidence that they acted expeditiously to remove, or disable access to, infringing material once they became aware of it.

The court concluded by saying: “This case contains the same general pattern presented in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., A&M Records, Inc. v. Napster, Inc., and, more recently, Arista Records LLC v. Usenet.com, Inc. [citations omitted]. The Defendants in the present case attempt to distinguish their situation on three main grounds: first, that the BitTorrent technology is different from the other technologies because users do not download content files through Defendants’ websites; second that Defendants’ conduct is protected by the First Amendment; and third, that Defendants’ users are located across the globe, not just in the United States. On the evidence presented to the Court, none of these arguments raises a triable question of fact for the jury to decide. Defendants’ technology is nothing more than old wine in a new bottle.”