Monthly Archives: September 2014

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Malibu Media v. Does – The Maryland “Battle Royale”

The drama of BitTorrent culture with its free and open exchange of information through the Internet regularly buts heads with fundamental copyrights. There are those that want the Internet to live up to the promise of being the most complete free library in the world, and those that oppose their works, mainly movies and music, being pirated or stolen though online technologies.

In this conflict there has been a recent showdown in Maryland. With a large number of cases pending before the Maryland courts, several were consolidated before a three-judge panel to hear both sides. Much was made of this by the defendants, (presumably being those caught pirating movies) that oppose copyright enforcement. The arguments were comprehensive, exhaustive, and at times downright speculative. It was clear the three-judge panel was taking this seriously and this was going to be a bellwether event where all the allegations of improper enforcement would have their day and “the light of truth” would shine through.

Those defending against copyright enforcement claims were making a number of very aggressive arguments including:

  • An IP address is not proper or sufficient to identify an infringer.
  • The plaintiff Malibu Media had engaged in abusive tactics.
  • Malibu Media used investigation techniques that were flawed.
  • The investigators used by Malibu Media were improperly hired on a contingency fee.
  • Malibu Media engaged in deception and fraud.
  • Malibu was involved in champerty (improper contingency fee arrangements).
  • Various other speculative arguments and claims.

In the end the three-judge panel took evidence and heard arguments and found the claims of those fighting enforcement were either improper or simply without basis.  The court specifically found that even if some of the allegations, such as experts working on a contingency agreement were true, such agreements were not improper in these cases. In short the court found, “These issues have little relevance…”

As to abuse, the court found the allegations without merit and, “To the best of this Court’s knowledge, Malibu has complied with these procedures and this Court is unaware of any allegations of abuse in this district.”

The court went on to state:

The subscribers’ other arguments in their motions are either premature or far too speculative for the Court to consider at this stage in the litigation. For example, each subscriber argues that Malibu is engaged in a course of deception and fraud. The subscribers rely heavily on parallels to Ingenuity 13, LLC v. John Doe, No. 2:12-cv-8333-ODW(JCx), 2013 WL 1898633 (C.D. Cal. May 6, 2013). However, Ingenuity 13 involved actual and documented fraud, misrepresentations to the Court, and clearly improper activity. Although the subscribers try to allege similar improprieties on Malibu’s part, there is not presently before the Court any indication that Malibu has done anything improper or fraudulent in these cases.

In sum, in the promoted “Battle Royale” in Maryland, defendants threw everything at the wall and nothing stuck.  The judges ruled the cases would go forward.

Consolidated cases:

Malibu Media, LLC v. John Doe, 14-cv-00223-MJG, (D. Md., Sept. 18, 2014)

Malibu Media, LLC v. John Doe, 14-cv-00257-RWT, (D. Md., Sept. 18, 2014)

Malibu Media, LLC v. John Doe, 14-cv-00263-PWG, (D. Md., Sept. 18, 2014)

 

Consolidated opinion of the three-judge panel: Malibu Media v. Does – Maryland Bellwether

 

Edit / Update:

A similar outcome in a single party case from Michigan:  Malibu Media v. Pontello, 13-cv-12197 (E.D. Mich, July 16, 2014)

 

9th Circuit Misunderstands Observed Public Internet Activity

Oddly it is ok for our military to provide grenade launchers and armored assault vehicles to our public schools, but if they observe the public exchange of child pornography on the Internet, then that somehow crosses the line and causes offense.

In U.S. v. Dryer, a special agent of the Naval Criminal Investigative Service (NCIS) was conducting an investigation into publicly observable BitTorrent criminal activity focused on the state of Washington. The agent found evidence of the exchange of child pornography and when it was determined the party was not in the military, turned the evidence over to civilian law enforcement officials who conducted further investigations and prosecuted the defendant Dryer.

In a case in which the defendant was convicted of possessing and distributing child pornography, the 9th Circuit reversed the district court’s denial of a suppression motion and remanded for further proceedings holding the NCIS investigation into publicly observable conduct was in violation of the Posse Comitatus Act (PCA), 18 U.S.C. § 1385, which “prohibits Army and Air Force military personnel from participating in civilian law enforcement activities.”

Opinion:  US v. Dreyer, 13-30077, (Sept. 12, 2014, 9th Cir.)

WEB SITE LIABILITY – The Breach of CDA Immunity

Jane Doe v. Model Mayhem

A cornerstone supporting the Internet and free publication of information is the Communications Decency Act,(47 U.S.C. § 230) or CDA.  The CDA provides immunity for websites as the publisher or speaker of information posted by users. Thus, whatever may be posted on Facebook, or other public web pages by various parties does not impose liability on that web page.

In this case, Internet Brands operates Model Mayhem, (www.modelmayhem.com) a web site used by models who post information and photos. The plaintiff, Jane Doe No. 14, alleges two rapists used the website to lure her to a fake audition, where they drugged her, raped her, and recorded her for a pornographic video. She also alleges the defendant that owns the website, knew about the rapists but did not warn her or the website’s other users.

California law imposes a duty to warn a potential victim of third party harm when a person has a “special relationship to either the person whose conduct needs to be controlled or. . . to the foreseeable victim of that conduct.” Cal. Civ. Code § 43.92. Jane Doe filed an action against Internet Brands alleging liability for negligence under California law based on that failure to warn.

The 9th Circuit Court of Appeals held that Doe’s negligent failure to warn claim did not seek to hold Internet Brands liable as the “publisher or speaker of any information provided by another information content provider,” and therefore the CDA did not bar the claim. Jane Doe’s failure to warn claim had nothing to do with defendant’s efforts, or lack thereof, to edit or remove user generated content. The theory is that Internet Brands should be held liable, based on its knowledge of the rape scheme and for failing to warn users like Jane Doe. The case will go forward.

Expect this opinion to have ripple effects through the Internet community as many sites that skirt the law and support or even advocate inferentially illegal activity, from drug use to piracy either directly or through message boards, may face liability for their conduct. The liability will not for publishing information or allowing information to be published, but in their failure to warn users of the consequences of using the web page or the information in the web page.

 

Full text of opinion:  Jane Doe No. 14 v. Internet Brands, Inc. DBA Modelmayhem.com, 12-56638, (9th Cir., Sept. 17, 2014)

 

 

 

Recording artist Tim McGraw can still sing his song Everywhere, anytime.

In this action, Martinez claimed the Tim McGraw song Everywhere was a copy of his song Anytime, Anywhere, Amanda. The lower court dismissed his claim, and he appealed. The 6th Circuit upheld the dismissal as Martinez’s claims were based on unsupported “speculation or conjecture.” And while the news media broadcast headlines like, “Tim McGraw sued for $20 million,” and “McGraw’s Stolen Song” the facts of this case reveal the lengths people can go to try and make a claim.

In a copyright action the two things to prove are ownership of the original work, and that the work was copied. This is key, as there is no copying in an independent creation. If two artists write songs that are very similar, yet neither knows of the other’s work, then there is no copyright infringement. As rarely is someone caught outright, copying is generally proven by showing 1) access, and 2) substantial similarity between the two works.

While Martinez lost on multiple points, this case is an interesting relation of the extremes people will go to in trying to connect the dots. The district court found there was no substantial similarity between the works (upheld) but the key discussion relates to Martinez’s attempts to show access. Because McGraw could not have copied something he had never heard, Martinez had to show that somehow his song made it to McGraw (or his writers).

Martinez attempted to do so in a failed version of “seven degrees of separation.”   As a quick summary according to Martinez, he recording the song in July or August 1996. The song was never released, never offered for sale, no one had a print of the lyrics. It was performed only in South Texas. In the fall of 1996 he mailed a tape of the song to his friend Susan Tomac. Tomac says she then gave the tape to David Bartly, who had a photography studio in Tennessee. Bartly died in 2012, before he could be deposed for the case. (Note, the case was filed in 2005, so there was 7 years available to do this.) Martinez claims Bartly’s ex-wife states Bartley “could have” passed the tape on to Karen Phillips or maybe Lee Greenwood, but this is admittedly “guessing.” Martinez then claims both Bartley and Phillips passed the tape to Lee Greenwood, or Lee Greenwood’s attorney Ralph Gordon. Then somehow, since Greenwood and Reid (one of the authors of the Tim McGraw song) had met once 12 years prior, and not seen each other sense, the tape got back to Reid who is credited as an author of the McGraw song.

Disregarding the required element of time travel, the district court politely refers to this as “attenuated chains of hypothetical transmittals.” The 6th Circuit states, “the hypothetical transmittals fail to support a reasonable inference that any Defendant or associate of any Defendant received a copy of Anytime, much less that Wiseman or Reid, the alleged infringers, heard or had a reasonable opportunity to hear Anytime and copied it before they co-wrote Everywhere.”

As the court points out:

“[a]ccess may not be inferred through mere speculation or conjecture.” Blige, 558 F.3d at 493; see also Ellis, 177 F.3d at 506.

A plaintiff cannot rely on unsupported inferences to prove access. See e.g., Raum v. Norwood, 93 F. App’x 693, 696-97 (6th Cir. 2004); Ellis, 177 F.3d at 506.

The songs may be similar (the district court and Court of Appeals held they were not) but that is beside the point. A copyright claim requires someone copying. Two people with independent creation does not give rise to a copyright claim. And access needs to me more than a fanciful game of seven degrees of separation.   Though not discussed, under Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) this case approaches the standards for an award of attorney fees to McGraw.

Of course relevant headlines do not sell, so this all gets dumbed down to “Tim McGraw’s Stolen Song” for the masses.

Full text of 6th Circuit Opinion:   Martinez v. Tim McGraw, et al. 13-5796, 6th Cir., Sept. 15, 2014

 

 

 

MALIBU MEDIA – Looking Under The Hood of Infringement

One of the most active parties in enforcing against BitTorrent downloads is Malibu Media, who releases adult content under the X-Art brand. While the standard mantra is BitTorrent is largely innocent and about ‘file sharing,’ this is like calling a typhoon ‘rain sharing.’ The level of content distribution is far from trivial or inconsequential.

In a recent filing in the Southern District of Ohio (1:14-cv-493-TSB, Dkt. 9), Malibu Media has let the court see under the hood at some of what is going on. Depending on how you look at the data, Malibu has records of about 12,000 distinct IP addresses in Ohio sharing and distributing their content through BitTorrent. Based on this number, when compared to the population of Ohio (~12 million), there is evidence that approximately 1 in 1000 people in Ohio are ‘sharing’ X-Art’s media through BitTorrent.

Chart of Malibu Infringement Actions, p. 4 of 14-cv-493, Dkt. 9.

Malibu Media is by all accounts one of the most active copyright enforcement litigants in the United States with some sources reporting they filed 40% of all copyright suits in 2014. But with 172 suits in Ohio, and 12,000 known infringers, Malibu’s prolific filing of complaints is addressing less than 2% of the people stealing their work. Some may complain there are too many copyright suits filed (usually those who are being sued / have been caught) but the ratio of infringers to lawsuits is a disproportionate 70:1.  For any other kind of theft, 1 in 70 would lead to the calls for more enforcement, not complaints about excessive enforcement. If one in 70 cars were stolen, or if your car were stolen every 70 days, there would be a national call to action.

With respect to damages claimed and awarded, many may argue the $750.00 statutory minimum for copyright enforcement is draconian, but a one-month subscription to Malibu Media’s web site is $29.95. If Malibu Media’s claims are against 1 in 70 infringers, then the numbers pencil out to damages of at least $2,000 per defendant just to break even ($29.95 x 70 = $2,096.50).   In light of the extensive nature of the problem, the $750.00 statutory minimum starts to seem very reasonable.

Court Document:  Malibu Media v. John Doe, 1:14-cv-493-TSB, Dkt. 9 (S.D. Ohio Sept. 12, 2014)

 

 

 

 

 

 

LYING IS STILL BAD – Indiezone v. Rooke

Indiezone, Inc., et al. v. Todd Rooke, et al., 13-cv-4280 (N.D. Ca.)

In 2013 Indiezone filed suit against a number of former employees claiming they stole certain intellectual property. An arbitration agreement would have required the parties to arbitrate instead of bring their claims in court. To avoid arbitration Indiezone brought in co-plaintiff eoBuy which was not a party to the arbitration agreement. The only problem was eoBuy did not exist and was apparently fabricated for the sole purpose of avoiding arbitration.

In January several of the defendants filed to dismiss eoBuy and argued that arbitration was proper. Rather than concede that eoBuy did not exist Indiezone dug the hole deeper and began to fabricate evidence and make other claims that eventually unraveled under scrutiny. The result was severe sanctions from the court.

It is important to note that Indiezone may have had valid claims against the defendants but in their efforts to avoid arbitration they lied to the Court and as a result their claims were denied.

Judge Chhabria did not pull any punches:

The Court finds that the plaintiffs submitted multiple misleading and false declarations and fraudulent documents… Bad faith of this degree easily supports an award of sanctions under the Court’s inherent powers. See Chambers v. NASCO, Inc., 501 U.S. 32, 47 (1991).

The Court went on to find both the plaintiffs and their counsel liable for costs and fees,

Counsel for the plaintiffs also participated in this bad faith conduct. Despite having been put on notice that eoBuy did not exist … [counsel] continued to file the plaintiffs’ bad faith motions and to support and adopt [Indiezone’s] misrepresentations in his own declarations and through motion and oral argument. [Counsel’s] misrepresentations to the Court far exceed the ethical bounds of advocacy and constitute bad faith. At a minimum, [counsel] has been reckless regarding the truth of his representations to the Court. [Counsel’s] actions throughout this litigation also demonstrate his intent to unreasonably and vexatiously multiply and manipulate the proceedings, including filing numerous motions to amend, filing numerous requests for extension of time, and failing to abide by court order on multiple occasions. Sanctions are therefor appropriate … under the Court’s inherent authority, as well as 28 U.S.C. § 1927.

This case is also dismissed with prejudice, pursuant to the Court’s inherent power, because the plaintiffs have “engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings” and “willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (quoting Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 347, 348 (9th Cir. 1995)). Dismissal is warranted in a case such as this one where a party has knowingly submitted false and misleading documents. See Combs v. Rockwell Int’l Corp., 927 F.2d 486, 488-89 (9th Cir. 1991). Moreover, consideration of the five factors discussed in Leon warrants dismissal. See Leon, 464 at 958. The public’s interest in expeditious resolution of litigation and the Court’s need to manage its docket both support dismissal, because the sanctionable conduct has unnecessarily prolonged this case and wasted a tremendous amount of the Court’s time. Given the Court’s finding of bad faith and issuance of sanctions under its inherent authority, a showing of prejudice to the defendants is not needed (although the defendants have certainly labored under the misconduct of the sanctioned parties). Nursing Home Pension Fund v. Oracle Corp., 254 F.R.D. 559, 564-65 (N.D. Cal. 2008) (explaining that “a district court need not consider prejudice to the party moving for sanctions” when acting pursuant to its inherent authority).

 The lesson: Lying is (still) bad. Win a case on the merits.

Related documents:

Motion to Compel Arbitration and Dismiss eoBuy: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 29, 13-cv-4280 (N.D. Ca., Jan. 1, 2014)

Motion for Sanctions: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 104, 13-cv-4280 (N.D. Ca., May 1, 2014)

Order for Sanctions: Indiezone, Inc., et al. v. Todd Rooke, et al., Dkt. 145, 13-cv-4280 (N.D. Ca., Sept. 2, 2014)

 

JOINED BITTORRENT COPYRIGHT SUITS GO FORWARD IN HAWAII

Hawaii now joins the majority of states which allow joined BitTorrent copyright enforcement cases.  In early 2013 the Prenda scam was uncovered where a group of attorneys were revealed to be using shell games to operate a honeypot scheme for people that downloaded porn via BitTorrent.  In response courts across the nation clamped down on all BitTorrent cases as a precaution.   As the courts have become better educated they are recognizing the Prenda scam was unique and that joined BitTorrent copyright litigation is the most efficient and best way to enforce copyrights, especially in light of the massive scale of BitTorrent related infringement.

Single party cases are still being filed in many jurisdictions, but some studies put the average costs and attorney fees for copyright litigation at $300,000 to $2,000,000+ *. (Note, this is a National average for all copyright cases and many cases are resolved for significantly less.)   However the courts, and many wise defendants, recognize that by permitting joinder costs can be reduced dramatically, permitting rights enforcement and allowing cases to be economically resolved for less than 10% of the national average.

Related:

Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 20, Case No. 1:14-cv-00330
Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 22, Case No. 1:14-cv-00331

 

Opinions of the court allowing discover in the joined case to proceed:

Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 20, Dkt. 10, Case No. 1:14-cv-00330, (D. Haw. Aug. 28, 2014), Order allowing subpoenas.
Hawaii: Dallas Buyers Club, LLC, v. Does 1 – 22, Dkt. 9, Case No. 1:14-cv-00331, (D. Haw. Aug. 28, 2014), Order allowing subpoenas.

 

* Amer. Intl. Prop. L. Assoc’n, Report of the Economic Survey.