Monthly Archives: April 2015

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More than you can chew

Mass tort litigation can promote judicial economy and efficiency in managing cases. As often quoted, the purpose of joinder is “to promote trial convenience and expedite the final resolution of disputes, thereby preventing multiple lawsuits, extra expense to the parties, and loss of time to the court as well as the litigants appearing before it.” West Coast Productions, Inc. v Does 1–5,829, 275 FRD 9, 15 (DDC 2011)

However, with great cases comes great responsibility. In the pending We 3 Kings, Inc. v. The Steve Harvey Show, et al. case the plaintiff complained that The Steve Harvey Show incorporated cue music in its production without a license. Rather that bring suit against the production company and distributor, plaintiff named each TV station that aired the show, for a total of over 200 defendants. This action also listed each time the music was used in the entire season, 268 times, and claimed $700 in damages for each use against each TV station individually for a total of 225 x 268 x $700 or $42,000,000+. (Note, the case claims $42,310,000 not $42,210,000, which may simply be a math error, or may incorporate additional defendants.)

One thing plaintiff seemed to have overlooked is that this case actually has over 200 defendants. Each defendant is a party to the case and more than simply a number in a damages calculation. When faced with the massive task of serving 200+ defendants, the plaintiff failed to follow through and effect service and then failed to dismiss the outstanding defendants. (There are other indications that the attorneys for plaintiff were non-responsive and generally failing to follow through on a number of issues.) In March 2015, well after the deadline for all defendants to be served, several of the defendants who had been served filed a motion to dismiss the balance of the parties.   The court then on its own issued a Show Cause Order demanding an explanation from the plainitff.

The result was predictable. As per the court order:

On April 13, 2015, Plaintiff and its counsel were ordered to show cause why they should not be sanctioned in the amount of $1,000 for (1) their unnecessary joinder of an extremely large number of defendants whom they apparently had no interest in pursuing in this Court and (2) their failure to respond to either the motion to dismiss or the Court’s OSC. Plaintiff’s response states only that Plaintiff is seeking new counsel and finding new counsel is taking longer than expected. For reasons left to the imagination, Plaintiff – or at least its counsel – seems to believe that this explains the failure to serve the extremely large number of defendants who were named in this case. It does not. In addition, the response fails to offer any reason for Plaintiff’s failure to respond to the motion and the OSC or for its joinder of numerous defendants it has failed to serve.

Plaintiff and its counsel are therefore sanctioned, jointly and severally, in the amount of $1,000. This amount is to be paid to the Clerk of Court no later than May 4, 2015. Counsel must file a declaration no later than May 5, 2015 stating that the sanctions have been paid.

– Order of April 24, 2015

A few things to keep in mind on this case:

– This is a $1,000 sanction in a multi-million dollar case. Copyright liability is strict and it is likely the defendants will eventually pay the plaintiff far more than this sanction of the court.

– The real lesson here: joinder may make cases more efficient, but it does not make them easy. With great cases comes great responsibility… and a lot of work. You still have to do the work.

Key documents:

The complaint: We Three Kings v. The Steve Harvey Show et al., 2:14-cv-08816, (C.D. Cal.)

April 24, 2015 Order of Judge Dale S. Fisher, 2:14-cv-08816, (C.D. Cal.)

Internet Subscriber Liability For BitTorrent Use

In a default judgment opinion, Judge Robert M. Dow, Jr., carefully scrutinized and questioned plaintiff’s motives and actions. After reviewing a number of the criticisms against BitTorrent infringement claims the Judge concluded:

Plaintiff, however, does more than merely identify Defendant as the account holder at the relevant IP address. It also offers evidence linking that IP address to bit-exchanges involving hundreds of digital media files in just three months. Taken together, these facts plausibly suggest that Defendant—the controlling account holder of an IP address associated with frequent BitTorrent use—is the infringing user. See Malibu Media, LLC v. Doe, 2015 WL 857408, at *4 (D. Md. Feb. 26, 2015) (“That the Defendant’s IP address was used to obtain 2,034 other third party files through BitTorrent over an 18–month period supports the reasonable inference that the Defendant-and not some other person using the Defendant’s IP address—was the infringer.”). The Court therefore finds a plausible claim of direct copyright infringement.

The court went on to find that even if the infringer was not the defendant, the defendant was still liable as the subscriber finding:

Plaintiff also states a plausible claim for contributory copyright infringement. “A defendant is liable for contributory copyright infringement when it with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.” Monotype Imaging, Inc. v. Bitstream, Inc., 376 F. Supp. 2d 877, 883 (N.D. Ill. 2005) (citations and internal quotation marks omitted); see also PHE, 2014 WL 1856755, at *2.

And while declining to find willful infringement, contra Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008)(In a default, “all factual allegations in the complaint are deemed true, including the allegation of [] willful infringement …”) the court did award all costs and fees and entered an injunction against the defendant and awarded plaintiff $11,525.00.

Once again the courts continue to extend liability for BitTorrent infringement to the account holders and subscribers.  The lesson: If you pay the bill, make sure no one is using BitTorrent.

The full opinion is: Malibu Media v. Funderburg, 1:13-cv-02614, N.D. Ill. (April 24, 2014)

### UPDATE:  On review of the Amended Complaint it appears the Judge’s finding of contributory infringement was not plead by plaintiff.  The Judge appears to have brought an alternative finding of contributory infringement to this opinion on their own based on the evidence.

The filed Amended Complaint is: Amended Complaint : Malibu Media v. Funderburg, 1:13-cv-02614, N.D. Ill.

A case where a motion for default is granted in part & denied in part

Riding Films Inc. (Plaintiff) Versus 129-193 John Does (Defendants)

In determining whether to enter judgment by default, courts often consider the following factors:

• the amount of money potentially involved;
• whether material issues of fact or issues of substantial public importance are at issue;
• whether the default is largely technical;
• whether plaintiff has been substantially prejudiced by the delay involved;
• and whether the grounds for default are clearly established or are in doubt.

The court may also consider;

• how harsh an effect of a default judgment might have
• or whether the default was caused by a good faith mistake or by excusable or inexcusable neglect on the part of the defendant

Defaulting defendant – considered to have admitted all the well-pleaded allegations relating to the liability. To succeed in this case,

Plaintiff must prove valid ownership of the motion picture copyright.

Defendant must be proven to have violated on or more of plaintiff’s exclusive rights (e.g. by copying and distributing plaintiffs copyrighted movie picture without authorization).

However, only within court’s discretion will the default judgment be granted and not through mere determination of the liability of the defendant.

In the Dawn Rider case, the factors militate in granting default judgment’s favour. Recommendation for the plaintiff’s motion for default judgment be granted in part and denied in part. The defendant James McLean;

Permanently Enjoined

– from directly or indirectly infringing plaintiff’s copyrighted works

Ordered

– to destroy all copies of Dawn Rider from his hard drive to any physical device in his possession where he may have transferred it to

Read the full report below:

Report & Recommendation on Mtn. for Default against J. Mclean

Review calculates statutory damages per infringement via BitTorrent protocol

OHIO – Plaintiff TCYK LCC filed two separate lawsuits against Does 1-47 and 48-98 for allegedly violating copyright laws by downloading and sharing plaintiff’s motion picture, The Company You Keep, via BitTorrent protocol. One of the IP addresses was traced to one Joe Snodgrass and another to one Charles Ghent. Judge Marbley presided over the cases.

In the Snodgrass case, TCYK LLC initially sought $150,000 in statutory damages. Nonetheless, the Court owns the substantial discretion to set the statutory damages within the allowable range, guided by certain variables:

“When determining the proper amount of statutory damages, courts have looked to: (1) whether defendants’ infringement was willful, knowing, or innocent; (2) defendants’ profit from infringement; (3) plaintiffs’ loss from infringement; and (4) deterring future violations by defendants and similarly situated entities.

The facts of this case do not justify plaintiff’s requested award. Although the entry of his default has established a copyright infringement by defendant, it is not necessarily the case that defendant was the original user who made plaintiff’s work available to the public. Moreover, there is no evidence that defendant profited from the infringement. The nature of BitTorrent is such that defendant would not likely have reaped any profit from his participation in the infringement of plaintiff’s copyright except for the amount that defendant saved by illegally downloading the motion picture.”

In both cases, the Court held that an award of $6,000 in statutory damages properly answers for the plaintiff’s loss, the defendant’s gain, and the public’s appeal to deter future copyright violations as “in the vast majority of [cases involving intentional copyright infringement by use of BitTorrent or other file sharing protocols], courts have found damages of no more than $6,500 per infringement to be sufficient compensation for the injured copyright holder.”

Motion for Default Filed for “The Company You Keep” Copyright Infringement

Failure to respond is almost always the reason behind a default judgment in courts, and this is exactly what happened to Richard Williams when TCYK, LLC filed a motion for default against him for downloading and sharing the motion picture, The Company You Keep, via BitTorrent.

Although 20 defendants were caught downloading the said movie at a specific time and date, Williams was filed with a motion for default for failing to plead or defend as required by law.

REPORT AND RECOMMENDATION

Part of the Report and Recommendation file dated January 8, 2015 says: “Plaintiff seeks $150,000 in statutory damages, $5,101.25 in attorneys’ fees, and $405.01 in costs; Plaintiff also asks that the Court permanently enjoin defendant Williams from infringing, directly or indirectly, Plaintiff’s copyrighted works.”

STATUTORY DAMAGES

The Plaintiff sought damages because “defendant’s conduct was wilful, because a maximum award will deter others, and because Plaintiff and the motion picture industry have suffered real and significant harm.” However, the court still had to determine the proper amount of statutory damages according to different factors.

THE COURT’S CONCLUSION

As a conclusion, the Plaintiff sought a permanent injunction that would “prohibit defendant’s use of the internet to reproduce or distribute Plaintiff’s motion pictures without license or express permission,” as well as to destroy all copies of The Company You Keep downloaded motion picture “onto any computer hard drive or server or transferred onto any physical medium or device in defendant’s possession, custody, or control.” The United States District Court of Ohio (Southern District) also concludes that aside from the statutory damages, the “Plaintiff is entitled to attorneys’ fees and costs, pursuant to 17 U.S.C. § 505, in the total amount of $1,905.01.”

Piracy = Jail Time

Civil enforcement of piracy gets a lot of press coverage, but one thing that needs to be kept in mind is there are both civil claims for copyright infringement and criminal penalties. Though rarely enforced, mainly due to a lack of resources, piracy can lead to jail time.

On the dockets right now in the United States there are several such cases, one being U.S. v. Brown. 14-CV-00080, N.D.Iowa. Based on court documents, Mr. Brown was caught with about 1,500 copies of movies and about 500 songs, all in violation of U.S. Copyright Law. He was charged under 18 USC 2319, which provides for five years in prison for a first offense.

It appears that in August of 2014, Mr. Brown plead guilty and is awaiting sentencing.  While not clear from public documents, it also appears the recommendation is for one year but a petition has been filed by Mr. Brown’s attorney for a reduced sentence.

Whether Mr. Brown goes to prison for 5 years, 1 year, or 6 months, as per Mr. Browns’ attorney’s request for leniency, “Let us not forget that as a result of this conviction Mr. Brown is now a felon and has lost countless rights and privileges as a result.”

Sentencing is currently set for July 16, 2015.

Relevant Documents:

U.S. v. Brown. 14-CV-00080, N.D.Iowa.–Information Complaint

U.S. v. Brown. 14-CV-00080, N.D.Iowa.–Recommendation on Guilty Plea

SoundExchange v. Muzak

On the Internet there is no shortage of stories about how little artists make off their music. Many notable Grammy winning artists make pennies per year for prominently played songs. Iggy Pop recently lamented, “If I had to depend on what I actually get from sales I’d be tending bars between sets. I mean honestly it’s become a patronage system.”

Music licensing and royalties are complex. Few people understand them. But in what almost reads like an April Fool’s parody, on April 1, 2015, the lawsuit SoundExchange v. Muzak shed a little light on why we are where we are.

First lets look at who is who in this case. From the Complaint:

1.  Defendant Muzak, LLC (“Muzak”) is the provider of one of the earliest digital music offerings in the United States – the “DishCD” offering provided to consumers as part of Dish satellite television packages. As such, Muzak was one of the first users of the Copyright Act’s “statutory license” to make digital transmissions of sound recordings. When Congress significantly revised that statutory license in 1998, it granted Muzak the special privilege of using copyrighted sound recordings at “preexisting subscription service” royalty rates that had been set below fair market value.

8. … SoundExchange is the sole entity in the United States designated by the Copyright Royalty Judges to collect digital performance royalties from statutory license users and to distribute those royalties to performing artists and copyright owners. Specifically, SoundExchange is charged by statute and regulation with administering the statutory license….

The parties defined, one thing stands out – Muzak and SoundExchange have a special place in the hearts of their Congressmen. How much better can it get than to have custom laws just for you?

Then there are the details of the dispute (abridged):

11.  As an alternative to having every music service negotiate separate licenses with every copyright owner, Congress has granted various eligible entities the ability to obtain a “statutory license,” 17 U.S.C. §§ 112(e), 114(d)(2), … This license allows eligible entities … to reproduce and publicly perform all commercial sound recordings without fear of copyright infringement.

14.  In October 1998, Congress passed the Digital Millennium Copyright Act…Among other things, the DMCA put in place a new royalty rate standard … digital audio transmissions must be set to reflect those that “would have been negotiated in the marketplace between a willing buyer and a willing seller.” …

15.  The DMCA created an exception, however, for … “preexisting” subscription services (“PSS”) that were in operation prior to the DMCA’s passage…[such as Muzak].

16.  PSS are not subject to the willing buyer/willing seller standard codified in § 114(f)(2)(B)….

19.  Congress’s purpose in grandfathering the PSS under the pre-DMCA statutory license provisions – including the pre-DMCA standard for setting royalty rates – was “to prevent disruption of the existing operations by such services.”…

To sum this up, SoundExchange has a sweetheart deal where everyone must pay them for music that gets played. Artists generally can’t negotiate what they want, but are subject to a “statutory license” rate set by the government.  Certain PSS’s (like Muzak) get a special side deal that instead of paying the rate of a “willing buyer/willing seller,” (decided by the government… not the artists) they pay an even lower rate.

At this point you can probably guess that the dispute is about SoundExchange wanting more money from Muzak. But I think there are bigger problems revealed in this case, such as:

  • Why artists can’t be the ones that decide what the rate should be for their music;
  • Why a government is deciding what a “willing buyer/willing seller,” would agree on; and
  • Why anyone should get to pay a rate for anything that is below the “willing buyer/willing seller” standard…. ever.

No matter who wins this one, it is clear the artists have lost.

The case and full Complaint is: SoundExchange v. Muzak, 15-cv-00476-RCL, (April 1, 2015, D.C.D.C.).

Honey Badger DOES Care

In the video “Honey Badger Don’t Care” the narrator walks the viewer through the activities of the ferocious honey badger sharing comments like, “The honey badger is really pretty badass. It has no regard for any other animal whatsoever” and generally explaining that pretty much no matter what happens, “the honey badger doesn’t care.”

But there is one thing that the honey badger, or at least its creator, does care about: copyright and trademark infringement.

It appears the retail outlet Hot Topic, recognizing the popularity of the Honey Badger video, released a number of items incorporating the Honey Badger theme, including shirts that state, “I’m Badass Like a Honey Badger,” and “What Would A Honey Badger Do?” The creator of the video, Christopher Gordon has objected and filed suit.

BA_HM

The video is a parody of traditional nature videos, and the complaint complaints about parody T-shirts of a parody video. Also keep in mind the trademarks and copyrights of Christopher Gordon do not include the phrases on the T-shirts. However, the reading of the compliant reveals that Hot Topic did more than merely incorporate the now pop-culture honey badger icon. It appears Hot Topic shared the related video through media outlets and co-promoted Gordon’s videos through its Facebook and Twitter feeds along with its goods, thus directly and intentionally trading on the honey badger video itself.

At the end of the day this is likely going to end up with Hot Topic claiming a version of the “but I found it on the Internet” fair use defense.   But once again, just because you can get something online for free, does not mean it is free.

(Insert Cheap Hot Topic / Hot Water Pun Here)

The video, part of a series of farcical wildlife narratives may be viewed at Christopher Gordon’s YouTube channel: https://www.youtube.com/watch?v=4r7wHMg5Yjg

Before you discount the value of such a video, consider that with advertising rates of $0.01 – $0.25 per view, this video has 72m+ views.

The complaint and exhibits: Gordon v. Hot Topic, 15-cv-02372, C.D. Cal, 2015.