Monthly Archives: October 2016

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Subscribers Sanctioned in BitTorrent Litigation

Paying for internet service does not by itself make a party liable for any infringing activity, but as two parties have recently learned failing to cooperate in helping identify the infringer may have serious consequences.

In a traditional bittorrent case when infringing activity is traced to an IP address the plaintiff must first identify the subscriber who pays for the service. Then if the subscriber is not the liable party further investigation is needed to identify the actual infringer who may be another party with access such as a roommate or someone else.

But if the subscriber refuses to cooperate with the plaintiff this does not end the process. In a recent pair of federal court cases subscribers have been found in contempt and sanctioned for their failure to respond to letters and court orders directing them to provide information on their internet service and assist in identifying the actual infringer.

As per the opinion:

…Dallas then served Pinnell with a Rule 45 subpoena via United States Mail requiring Pinnell’ s appearance at a deposition on August 9, 2016. After Pinnell failed to appear and participate at that deposition, as required by the Rule 45 subpoena, Dallas filed a motion for order to show cause.

            Pinnell failed to appear at the show cause hearing. The record indicates Pinnell has repeatedly failed to appear as required by the subpoena and this court’s show cause order. Further, Pinnell has made no attempt to provide excuses for her nonappearances and noncompliance with the court orders. As such, the court finds Pinnell in contempt.

Full text: Dallas Buyers Club v. Doe, 3:16-cv-00551 (D. Or. Oct. 21, 2016)

In a similar finding:

…LHF personally served Thompson with a Rule 45 subpoena which required Thompson’s appearance at a deposition on August 9, 2016. Thompson failed to appear at the deposition, thus violating a court order. Subsequently, LHF filed a Motion for Order to Show Cause.

            Thompson failed to appear at the show cause hearing and the record shows Thompson has repeatedly failed to appear, in violation of the subpoena and this court’s Order to Show Cause. Further, Thompson has made no attempt to provide an explanation for his nonappearances and noncompliance with the court orders. As such, the court finds Thompson in contempt.

Full text: LHF Productions v. Doe, 3:16-cv-00716 (D. Or. Oct. 21, 2016)

In both cases plaintiffs were awarded costs and fees.

 

Denmark – Court Awards Damages In Denmark BitTorrent Action

NJORD Law firm has just received the first favorable decision from the Danish courts in a bittorrent action for the download of their client’s motion picture.

The judgement for the Rights Holder was granted “based on the case as presented including the evidence submitted”.

The reasoning is short but strong. NJORD Law firm included in their submission all correspondence with the defendant containing the arguments and defenses as well as factual circumstances of the case.

The damages of the claim were set at DKK 5,000 (€ 667) being only a part of a potential bigger claim. The Rights Holder has been granted the full amount as well as interest and also awarded cost of DKK 1,560 (€ 208). The cost alone being higher than NJORDS settlement offer of € 200 and considered high in Danish court practice.

 

Pirate Queen of the Desert: Injunction and $10,500 judgment

In an action for the bittorrent download and distribution of their film Queen of the Desert, QOTD Film Investment has obtained an injunction together with a judgment for $10,500 for damages, costs and fees in the California federal court.

Copy of the Judgment: 3-16-cv-00749-DMS-AGS_Judgment_Order

Compelled Internet Subscriber Depositions

Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor.
         – Justice Souter in Footnote 12, MGM v. Grokster, 545 U.S. 913 (2005).

Piracy and copyright infringing activity that takes place over the Internet is problematic as often all a plaintiff or rights-holder only knows is the IP address used by the infringer. This IP address can lead to a users or subscriber’s account and the ISP may be able to tell the rights-holder who is behind paying the bill. But if the account goes to a house with several occupants, this does not answer the question of who might be the pirate. As Justice Souter made clear, paying the bill, without anything more, is not enough.

The Grokster footnote is often held as a shield for subscribers who do not personally use their internet service for infringing activity such a BitTorrent. But this shield is not as broad or strong as many might believe. Even after Grokster many courts continue to hold that if a party knows of infringing activity and fails to take action, then they are liable. See Perfect 10 v. Google, 508 F.3d 1146, 1171-72; citing A&M Records v. Napster, 239 F.3d 1004, 1021 (9th Cir., 2001)(“Because Napster knew of the availability of infringing music files, assisted users in accessing such files, and failed to block access to such files, we concluded that Napster materially contributed to infringement.”) See also, Religious Technology Center v. Netcom On-Line, 907 F.Supp. 1361, 1365-66 (N.D.Cal.1995)(Liability proper if party knew or should have known of infringing activity and failed to simply cancel account.) There is also the case of extending liability for providing an anonymizing TOR node, even without actual knowledge of any piracy. Dallas Buyers Club v. Huszar, 3:15-0907, (D.Or., April 28, 2016)(“Huszar actively and knowingly provided an unknown number of computer users worldwide with access to his Tor VM.”)

As a practical matter, even if the subscriber is not liable and knew nothing about the piracy through their network, they are still the person that paid the bill and the only one the rights-holder can identify through the IP address. Courts are recognizing this with California being the newest district to begin to compel subscribers who deny liability to appear and share what they know about who may be the infringer.

In several matching opinions, including QOTD Film Investment v. Doe, 3:16-cv-00749 (Oct. 4, 2016) and LHF Productions v. Doe, 3:16-cv-01157 (Sept. 30, 2016) the courts in California are now directing that subscribers who only pay the bill may be compelled to sit for a 1 hour deposition, cautioning plaintiffs:

Questions are limited to establishing the identity of the alleged infringer(s). The deposition is not to be treated as a fishing expedition for information other than the identity of the alleged infringer(s).

But the Courts are also cautioning subscribers:

Plaintiff shall notify the subscriber that ignoring a Court Order, a subpoena seeking the subscriber’s deposition, or a Summons and Complaint may result in sanctions including an award of attorney fees and possibly the entry of a default judgment for money damages.

These new California orders bring California in line with Louisiana (ELargo Holdings v. Doe, 2:16-cv-03144, June 24, 2016) and the well establishing Standing Orders of Oregon. Standing Order 2016-8, automatically granting a two our deposition of all subscribers in any bittorrent case filed, and Standing Order 2016-7, advising parties:

Notwithstanding contrary information available through the Internet, if a subscriber or defendant ignores a Court Order, a subpoena seeking the subscriber’s deposition, or a Summons and Complaint, then plaintiff may ask the Court for relief, including an award of attorney fees, and possibly the entry of a default judgment for money damages.

Accordingly, it is important that subscribers and defendants seek proper legal advice concerning their rights and obligations.

So while paying a bill (and nothing more) may allow a subscriber to escape liability, they can still be compelled to share what they know about who else may have been present and anyone that might have had access to their internet service which was used to commit piracy.

Default Gamble

To default or not to default, that is often a question when facing litigation.  In the realm of online copyright infringement it is no different.   Many attorneys actively advise clients to ignore letters and even complaints with the knowledge that sometimes Judges will only award $750 in damages, with costs and fees totaling only a few thousand dollars.

But the ignore strategy does not always go as planned, such as in the case of Dallas Buyers Club v. Scott. 3:15-cv-00730-AC (D.Or.). Possibly banking on a minimum damages, Scott was surprised to find a $5,000 default judgment entered against him (docket-41) together with a request for $1,800 more in fees. Scott hired an attorney and tried to set aside the default arguing he was never served and did not know about the case. (docket-54)

Defaults are often set aside as a matter of course, and often by agreement.   But in this case Dallas Buyers Club opposed setting aside the default. (docket-62) Scott replied and added the argument that at the time of the infringing activity he was not even living at the address. (docket-65)

In response, the Judge wrote in total:

Document Number: 68(No document attached)
Docket Text:

ORDER: DENYING Defendant’s Motion to Set Aside Default Judgment [54]. “If a default judgment is entered as the result of a defendant’s culpable conduct, however, [the Court] need not consider whether a meritorious defense was shown, or whether the plaintiff would suffer prejudice if the judgment were set aside.” Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) (citation omitted). “Defendant’s conduct is culpable if he has received actual or constructive notice of the filing of the action and intentionally failed to answer.” Id. Defendant was aware of potential litigation in October 2014, as he called Plaintiff’s counsel, and he admits to receiving a notice of default in December 2014. I find that he received at least constructive notice and therefore his failure to answer or otherwise defend was culpable conduct. As such, I DENY the Motion to Set Aside the Default Judgment. Defendant’s response to the Motion for Attorney Fees and Costs [44, 43] is due August 22, 2016. Ordered by Chief Judge Michael W. Mosman. (dls)

The Magistrate assigned the case then followed with:

Document Number: 69(No document attached)
Docket Text:

SCHEDULING ORDER by Judge Acosta – In light of the fact that defendant filed a motion to set aside default and default judgment (#54) and that motion being denied by Order (#68), which was filed on 8/2/16, the court still must address plaintiff’s Bill of Costs [43] and Motion for Attorney Fees and Costs[44]. Accordingly, as plaintiff had to prepare further briefing in response to the motion to set aside default and default judgment, plaintiff may, if it deems appropriate, file supplemental briefing in support of it’s motion for attorney fees and bill of costs by 8/22/16. If plaintiff does not intend to supplement it’s motions, counsel for plaintiff is to notify the court no later than 8/12/16. Defendant’s response(s) to plaintiff’s bill of costs and motion for attorney fees are due by 9/6/16. Plaintiff’s Motion for Attorney Fees [44] and Bill of Costs [43] will be taken under advisement by the court as of 9/22/16. (peg)

Taking the hint, the case concludes with a stipulation and judgment for an additional $7,000 in costs and fees against Scott to address the motion to set aside the default.

The result – Gambling on a $750 default resulted in $12,000 in costs, fees and damages.

 

Canada’s Anti-Piracy Laws Prompting Positive Change

New Notice-and-Notice Regime in the Canadian Context

In 2012, the Government of Canada enacted several new copyright laws aimed at fighting copyright piracy.  A key change was the “notice-and-notice” system, which formally came into force in January 2015 through amendments to the Copyright Act.

The Government designed the notice-and-notice system to discourage online copyright infringement.  The relevant provisions now present in the Copyright Act require Internet Service Providers (“ISPs”) to take action upon receiving notification of alleged copyright infringement from a copyright owner.  Upon receiving such a notice, ISPs are required forward the notice to users whose IP address  has been identified as the source of the alleged infringement. The system also imposes specific requirements for the contents of notices and record keeping.

Since the notice-and-notice system came into force in January 2015, it has been reported that piracy rates among Canadians have actually dropped. While some critics have remained stubbornly reticent to accept the new system, evidence continues to gather in support of its efficacy.

University of Manitoba Students Received 6000+ Notices

A recent story reported by Canada’s national news broadcaster, the CBC, is a perfect example.  Thousands of students at the University of Manitoba received copyright infringement notices forwarded from copyright owners.  The notices related to piracy of textbooks, television shows, music and movies. The University of Manitoba forwarded over 6,000 notices.

This number not only reveals an alarming trend pervasive on Canadian university campuses, it is also indicative of a broader trend in Canadian culture. One prominent copyright enforcement company reported that it sent more than 6 million notices just last year.

These numbers demonstrate that casual copyright piracy has become commonplace and copyright users have become numb to the consequences.  At the same time, the negative effects of widespread piracy are not only felt by individual copyright owners, but by creative industries as a whole.  This year the Government of Canada published the results of a questionnaire conducted as part of  nationwide consultation on “Canadian Content in the Digital Age”.  Responses indicated that most stakeholders considered “creator remuneration” to be the most urgent challenge facing Canadian media industries today.  Likewise, most considered “consumer expectations of free/low cost content” to be the most urgent barrier to Canadian media industries’ success in the future.

As situations such as that reported at the University of Manitoba continue to come to light, it becomes increasingly clear that the notice-and-notice system is prompting positive change.  The system is potentially disrupting the culture of casual copyright piracy that has developed in Canada in the digital age by bringing the problem into the public discourse.  Rights holders not only finally have an new tool to enforce their rights, but more importantly they now have the ability to remind consumers that illegal downloading is, in fact, illegal.

TCYK Case To Proceed in UK; Lawdit Billing Questioned

Defendant’s motion to strike out TCYK’s Claim for Bittorrent downloading denied, Judge ruled for the Claim to proceed to be argued in Court, and summoned Defendant to file their defence.

TCYK LLC brought claims against a wide array of individuals for infringing their copyrights by downloading their motion picture, The Company You Keep. The Defendant of the first case brought to Court, Michael Coyle of Lawdit Solicitors, filed an Application to strike out the Claim out of court, and deemed TCYK’s activities as “speculative invoicing”. The Judge however ended up questioning Mr Coyle on their invoicing.

As part of the Application to strike out the Claimant’s Claim out, Lawdit Solicitors submitted a Statement of Costs for £12,387. However, as the Judge pointed out, Lawdit Solicitors openly advertise their legal services for copyright infringement cases for the sum of £90. Michael Coyle explained that the firm has been funding their efforts against TCYK LLC from donations, yet they were still looking to ‘double dip’. After further questions, the Judge enquired if Mr. Coyle’s client was going to pay the £12,387 cost if the application got was denied. To this, Mr. Coyle failed to answer.

As much as one must appreciate the charitable legal work, be that volunteering or the use solicit of donations to cover costs, we would even should not look past the fact that Lawdit Solicitors are representing pirates, who illegally download content – more simplistically or more simply put, steal films. Nevertheless, one might find it rather ironic that their method of invoicing is being questioned in Court. It is also alarming, that while the service is publically advertised for £90, they are claiming £12,387 in fees. One might therefore wonder if the donations Lawdit has obtained would be handed over to their clients in any assessment of costs should they lose.

We must applaud Lawdit Solicitors for their clever business model. They raise money from donations, only ask for £90 from their clients, however yet claim £12,387 from their opponent. Should they lose, the cost will not be charged to the client – even though there is no legal agreement between Lawdit and their clients in this matter, as Mr. Coyle stated in Court. We would not, however, go as far as to call their invoicing methods speculative, although they are questionable at best.