Author Archives: Rationality

Respect the Copyright : $5000 Default Damages

A recent default judgment from Chief Judge Mosman out of the District of Oregon states parties that ignore copyright claims may be facing stiffer penalties.

In Automata Productions v. Sperry, Oregon 3:15-cv-02283-MO, Chief Judge Mosman writes:

Statutory damages pursuant to 17 U.S.C. § 504 are awarded to plaintiff in the amount of $5,000 to give the statute full force and effect and indicate to the general public that plaintiff’s claims and these proceedings should not be disregarded or ignored.

Whatever else Mr. Sperry may be, he is now a part of a message to the public that copyright violations are to be taken seriously.

The full text may be found at:  USDC Oregon 3:15-cv-02283-MO Judgment and Order

 

University of Houston Takes Bold Step To Fight Piracy

In an effort to fight BitTorrent piracy and network abuse the University of Houston has announced that it will no longer allow BitTorrent traffic on its Wi-Fi network and may extend the ban to wired networks.

The “fix” is apparently quite simple and it is likely other major institutions will follow.

A full copy of the announcement:

Untitled_UH_Page_1

Sharing Internet With Neighbors A Felony?

In the most recent iteration of U.S. v. Nosal the 9th Circuit Court of Appeals has held that using someone else’s password beyond the system provider’s authorization is a felony under the CFAA. (18 U.S. Code § 1030)

This is being reported as it might apply to things like Netflix accounts, commonly (though improperly) shared. But this opinion has applications far beyond things like Netflix, as it goes to just about any service or access that might be provided, including basic residential internet service.

As noted in the dissent by Reinhardt:

This case is about password sharing. People frequently share their passwords, notwithstanding the fact that websites and employers have policies prohibiting it.

So what happens when you share you Internet service? Arguably sharing internet service in violation of the terms of service is now a felony.

As noted by the court:

The key section of the CFAA at issue is 18 U.S.C. Sec. 1030(a)(4), which provides in relevant part:

Whoever . . . knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value . . . shall be punished . . . .

An examination of the terms of service for a common internet service provider (Time Warner) makes clear:

Your Right to Use our Services and Property is Limited

d) Personal, Non-commercial Use Only. The Services and Software are for your reasonable personal, non-commercial use only… You may not share our in-home Services or related Software with any person who is not a member or guest of your household or to persons outside your premises. You may not enable any person who is not a member of your household to access our out-of-home Services or related Software (for example, by providing them with your TWC ID and password).

This is further clarified:

(f) Theft of Service. If you knowingly access Services that you have not paid for, enable others to access Services that they have not paid for, or damage or alter our Equipment (or use Customer-Owned Equipment) in order to do so, you will have breached this Agreement and possibly subjected yourself to statutory damages, fines or criminal charges. Only TWC may service Customer Use Equipment. You will not allow anyone else to open, take apart or modify Customer Use Equipment.

Reference: https://help.twcable.com/twc_sub_agreement.html#section3

In other words – you are authorized to allow others in your home to use your internet service, but once they leave your home the authorization is revoked opening the door to CFAA liability.

So before you share your internet service with neighbors, keep in mind this may now be a felony under the CFAA.

But this should not be a surprise as most states have laws in place that already make theft of services criminal. Such as Texas Penal Code § 31.04:

(a) A person commits theft of service if, with intent to avoid payment for service that the actor knows is provided only for compensation:

(1) the actor intentionally or knowingly secures performance of the service by deception, threat, or false token;

(2) having control over the disposition of services of another to which the actor is not entitled, the actor intentionally or knowingly diverts the other’s services to the actor’s own benefit or to the benefit of another not entitled to the services;

(3) having control of personal property under a written rental agreement, the actor holds the property beyond the expiration of the rental period without the effective consent of the owner of the property, thereby depriving the owner of the property of its use in further rentals;  or

(4) the actor intentionally or knowingly secures the performance of the service by agreeing to provide compensation and, after the service is rendered, fails to make full payment after receiving notice demanding payment.

A full copy of the Nosal opinion may be found here: U.S. v. Nosal, 14-10037 (9th Cir. July 5, 2016)

Copyright Office 2016 White Paper on Remixes, First Sale, and Statutory Damages

The Copyright Office has released its 2016 White Paper to address some of the issues associated with remixes, the first sale doctrine and statutory damages with a focus on the interaction between copyright and modern technology, namely the Internet.

What the White Paper is: A review of some of the talking points of parties interested in the topics with some recommendations for possible improvements in the law and the enforcement of copyrights in the United States

What the White Paper is not: Law or policy or a final draft of any law or policy.

What the White Paper is for: Generating further discussion on ways to improve the Copyright system in the United States.

Key Points and Recommendations:

1) Remixes

Recognizing the value of remixes, the White Paper recommends:

  • The development of negotiated guidelines for providing greater clarity as to the application of fair use to remixes;
  • Expanding the availability of a wider variety of voluntary licensing options; and
  • Increasing educational efforts aimed at broadening an understanding of fair use.

2) First Sale Doctrine

In addressing the First Sale Doctrine in the modern Internet Age, the While Paper Recommends:

  • No changes in the law related to First Sale Doctrine;
  • Improved consumer education and making sure consumers understand licensing terms and making sure consumers understand the limits of leased and licensed content.

3) Statutory Damages

In addressing the growth of copyright litigation and online enforcement actions the White Paper makes four recommendations:

  • Incorporate into the Copyright Act a list of factors for courts and juries to consider when determining the amount of a statutory damages award;
  • Implement changes to the copyright notice provisions that would expand eligibility for the lower “innocent infringement” statutory damages awards;
  • In cases involving non-willful secondary liability for online services offering a large number of works, give courts discretion to assess statutory damages other than on a strict per-work basis; and
  • Creating of a “fast track” adjudication of smaller copyright claims through a centralized copyright office tribunal.

Some themes in the White Paper are that many of the perceived problems with the current copyright system are due to misunderstandings and misconceptions on what is and is not allowed. These are best addressed with promoting education, consistency and transparency, which are partly addressed in the listed factors suggested for the evaluation of copyright damages which include:

(1) The plaintiff’s revenues lost and the difficulty of proving damages.

(2) The defendant’s expenses saved, profits reaped, and other benefits from the infringement.

(3) The need to deter future infringements.

(4) The defendant’s financial situation.

(5) The value or nature of the work infringed.

(6) The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.

(7) In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.

(8) The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.

(9) In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment.

Of particular note, the While Paper rejects adjusting statutory damages of $750 – $150,000 per infringement, even for online personal use such as BitTorrent, but does propose that the statute should specifically include the nonexclusive factors in evaluating any such award, but notes individual file sharers may be properly liable in some cases for a full $150,000 damages award. As stated:

With respect to file-sharing, statutory damages must take into account not merely the defendant’s personal use, but his or her acts in uploading and distributing copies to potentially numerous recipients. And while statutory damage awards of $150,000 per work are rare, there may be cases, including in the context addressed in these proceedings, where such awards are justified due to the need to deter and punish willful infringement.

The White Paper also rejects action to address claims of litigation abuse by so-called “copyright-trolls,” stating:

… the Task Force heard concerns about so-called “copyright trolls” that use the threat of statutory damages to obtain settlement fees from alleged infringers. Some have suggested that Congress consider recalibrating statutory damages specifically to discourage misuse of the system. We do not recommend such changes at this time.

In sum, the biggest problems with the copyright system appear to be based on misunderstanding and confusion, which are best addressed through transparency and education.

 

Full text of the report: White Paper on Remixes, First Sale, and Statutory Damages (2016)

BitTorrent Defendant Counterclaims Struck – Costs and Fees Awarded to Plaintiff

In a case of an aggressive defense brought against Voltage Pictures and Dallas Buyers Club for their enforcement of their rights, the court has sided with Voltage and dismissed the defendant’s counterclaims, dismissed six of the seven affirmative defenses and awarded Voltage costs and fees for the overly aggressive stance taken by the defendant.

The complaint filed claims the defendant downloaded and distributed the motion picture Dallas Buyers Club through BitTorrent. Plaintiff Dallas Buyers Club seeks to enforce its copyrights in the motion picture and Voltage Pictures joins in the case asserting its state trademark rights.  In the answer filed the defendant asserted two counterclaims, one for a declaratory judgment of non-infringement and a second for abuse of process.  The court dismissed both counterclaims and awarded Voltage costs and fees.

The defendant also asserted seven counterclaims, including:

  1. Failure to state a claim.
  2. Misuse of copyright.
  3. Unclean hands.
  4. Damages sought are excessive.
  5. Plaintiffs have failed to join one or more indispensable parties to this action.
  6. Plaintiffs have improperly joined parties.
  7. Third party conduct.

The court struck six of the seven affirmative defenses as improper.  As statutory damages sought may range from $750 to $150,000 and have not been determined, the court left open the possibility that an eventual damages award may be excessive.

The full text of the opinion: Voltage v. Blake, 3:14-cv-01875-AC, (D.Or., Dec. 17, 2015)

Court finds Defendant willfully, intentionally and maliciously infringed 59 of Plaintiffs registered copyrights

Case: Malibu Media v. Doe, 1:14-cv-10155 (SDNY, Dec. 9, 2015)

Because the opinion says everything that needs to be said:

Plaintiff, Malibu Media, LLC, sued John Doe Defendant for using his computer, the internet and the BitTorrent protocol to download and distribute 59 of Plaintiffs registered copyrighted works. Defendant denied the allegations and argued that Plaintiff brought a frivolous case against him. During discovery, Plaintiffs computer forensic expert, Mr. Patrick Paige, examined Defendant’s computer. Mr. Paige’s report concludes Defendant used computer file destruction software immediately prior to the time he produced his computer over for forensic imaging and examination.

. . .

In late November, 2015, Defendant produced certain travel documents which he claimed proves that he was not in his home when the infringement was occurring. The day after receiving these documents, Plaintiff filed a Motion For Leave to Take Immediate Discovery. That Motion set forth facts strongly suggesting the dates on the travel documents were intentionally altered.

The Court granted Plaintiffs Motion. Thereafter, Plaintiff propounded third party subpoenas to various travel companies. In the interim, prior counsel withdrew and Defendant retained new counsel. Shortly after retaining new counsel, Defendant produced the unaltered travel documents proving he was at home when the infringement was occurring but was not at home when infringement was not occurring.

 

Defendant admits he committed four (4) wrongs: (a) infringement; (b) falsely denying the infringement; (c) altering evidence; and (d) unnecessarily causing Malibu to incur attorneys’ fees and costs. The Court takes note that Defendant’s apology and admissions only came after there was no doubt that Defendant could not escape the consequences of his conduct.

 

Based on the foregoing, the Court finds Defendant willfully, intentionally and maliciously infringed 59 of Plaintiffs registered copyrights in violation of Plaintiffs copyrights as set forth in 17 U.S.C. § 106. Consequently, a substantial penalty sufficient to punish Defendant and deter similar conduct by other defendants is warranted.

 

Via teleconference on December 3, 2015, Defendant’s counsel advised Plaintiff that

Defendant is in an emotionally fragile state. In response, Plaintiff advised that it does not wish to cause Defendant so much stress that he breaks. At a status conference held on December 8, 2015, Plaintiff admitted it wants Defendant to be punished but stated that it does not want the punishment to be so severe that Defendant is unable to move forward or recover from this experience. With this as background, at the status conference, the parties also stated that they may be able to reach a settlement. They each agreed to work toward that end in good faith. The Court advises the parties that if this matter proceeds Plaintiff would be entitled to substantial statutory damages and likely its reasonable attorneys’ fees. Accordingly, Plaintiff shall advise the Court by January 8, 2016 if the Parties have been able to reach a settlement or if further proceedings will be necessary. If a settlement is reached it shall be filed with the Court. Further, given the nature of the conduct in this matter, any settlement will be subject to the Court’s approval.

8th Circuit Court of Appeals: Suing an IP address subscriber is reasonable

In the case of Killer Joe Nevada v. Leaverton, Killer Joe Nevada, LLC sued internet subscriber Leigh Leaverton for infringement under the Copyright Act for the download and distribution of the motion picture Killer Joe. When on investigation it appeared Leaverton was only the subscriber who paid for the Internet service and not the infringer, Killer Joe moved to voluntarily dismiss its suit. Leaverton objected and demanded her attorney’s fees. The court dismissed the suit and denied Leaverton’s requests for attorney’s fees.

Leaverton appealed and the key issue on appeal was whether or not it was reasonable for a subscriber to be sued solely for being the party responsible for the internet service used by the infringer and whether the District Court abused its discretion in denying her attorney fees.

As per the Court of Appeals:

[Leaverton] argues that the district court erroneously ruled it was reasonable and not frivolous for Killer Joe Nevada to sue the subscriber for the IP address. Leaverton believes it is unreasonable for a Copyright Act plaintiff to sue the subscriber without first investigating whether the subscriber was responsible for the infringement.
          . . .
Leaverton cites no binding authority that a Copyright Act suit based on the infringer’s IP address is frivolous or unreasonable. The district court thus did not abuse its discretion by concluding that Killer Joe Nevada’s acts were reasonable.
          . . .
…because Killer Joe Nevada promptly dismissed its lawsuit once it learned Leaverton was not the infringer, Killer Joe Nevada had proper motives to sue the subscriber.

If nothing else, this case stands for the principal that providing internet service alone, though it may not make you liable for infringing activity, reasonably exposes you to potential litigation.

Full Text: Killer Joe Nevada v. Leaverton, No. 14-3274, 8th Circuit Court of Appeals, Dec. 4, 2015

Infringer Receives Lifetime Ban From BitTorrent

In an Order issued in the District of Oregon on Nov. 5, 2015, an infringer has received an lifetime ban forbidding his use of “BitTorrent or the Internet for the copying or downloading of unlicensed copyrighted content.”

The order states:

(3) Defendant Justin Klemmer’s conduct has been willful, intentional, in disregard of and indifferent to plaintiff’s rights with the intent to deprive plaintiff of income and cause plaintiff harm.

(4) Statutory damages are proper to both compensate the plaintiff and provide notice and to act as a deterrence to others. Sony BMG Music Entm’t v. Tenenbaum, 660 F.3d 487, 500 (!st Cir. 2011), cert. denied, (U.S. May 21, 2012). To compensate the plaintiff and provide proper notice and deterrence to others, statutory damages in the sum of $10,000 are awarded plaintiff.

(5) A permanent injunction is ordered enjoining defendant from infringing plaintiffs rights in their motion picture, including without limitation using the internet to reproduce, distribute or copy plaintiffs motion picture, and further directing defendant to destroy all unauthorized copies of plaintiffs motion pictures and to delete all software used to make or distribute those copies or exchange unlicensed content using the BitTorrent protocol.

(6) Defendant is further enjoined from using BitTorrent or the Internet for the copying or downloading of unlicensed copyrighted content.

Plaintiff was also awarded costs and fees to be determined.

The case is Dallas Buyers Club v. Klemmer, 6:15-cv-00612, D. OR. Nov. 5, 2015.

Final Form TPP Released

The final form of the Trans-Pacific Partnership or TPP trade agreement has been released and as expected it comes down hard on infringers and piracy.

Art. 18.2: Objectives

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

While many of the provisions mirror the current law in the United States, there are some expressions of artist rights that are affirming, such as:

Art. 18.60: Right of Distribution

Each Party shall provide to authors, performers and producers of phonograms the exclusive right to authorize or prohibit the making available to the public of the original and copies of their works, performances and phonograms through sale or other transfer of ownership.

With respect to penalties, the United States model appears largely intact.

Art. 18.74-3. Each Party shall provide that, in civil judicial proceedings, its judicial authorities have the authority at least to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.

Art. 18.74-6. (a) & (b) provide for statutory damages sufficient to deter others (Ref. Art. 18.74-8) and punitive damages will be added, together with costs and fees under Art. 18.74-17.

One point of note is with respect to criminal penalties under Art. 18.77 – The TPP provides for imprisonment of infringers for not only commercial piracy but for anything determined to have “a substantial prejudicial impact.”

Art. 18.77 Criminal Penalties
. . .
Including criminal penalties for (b) significant acts, not carried out for commercial advantage or financial gain, that have a substantial prejudicial impact on the interests of the copyright or related rights holder in relation to the marketplace.

What may constitute a “a substantial prejudicial impact” under the TPP is not defined, but in California, this number has already been established to be the distribution of as few as 10 copies through means such as BitTorrent. Cal. Pen. Code § 653aa

Another issue of note is the imposition of penalties for “aiding and abetting.” This would be expected to extend liability for development of tools and means for piracy, such as web pages, software and possibly even discussion forums which expressly promote piracy.

Art. 18.77 -5

With respect to the offences for which this Article requires a Party to provide for criminal procedures and penalties, each Party shall ensure that criminal liability for aiding and abetting is available under its law.

 

The full text may be found at the USTR web site.

 

Courts Affirm And Return to BitTorrent Joinder

Cobbler Nevada v. Does, 1:15-cv-05283 (N.D. Ill., Oct. 23, 2015)

In Bit Torrent litigation courts are affirming and returning to joinder, or the combining of many defendants into a single case as the proper and most efficient means to permit both plaintiffs and defendants to participate in the judicial process.

Joined cases generally allow the more efficient and economical management of claims. Individual cases may cost $5,000 or more each to prepare and file. When a case is against a single party, all those costs may then be borne by a single defendant. When multiple defendants are joined, the costs are spread out among the several defendants and no one party bears the full costs of a single case.

Many jurisdictions began to deny joinder or place restrictions on joinder when courts were faced with allegations of abuse. But investigations are finding such claims of abuse are often unsupported or overblown. In one case after the court ordered severance, defendants then complained that individual Doe cases were even “more nefarious.” Voltage Pictures, LLC v. Revitch, 6:14-cv-00301-AA, (Jan. 23, 2015.) Faced with defendants that first complained that joinder was improper and then argued that single party cases were unfair, and even demanding joinder, courts realized the real complaint of most defendants has nothing to do with joinder, but simply that defendants do not want to be caught.

As has been realized, arguments against joinder by defendants were a short-sighted effort to drive up costs for plaintiffs. Defendants forgot that when found liable they must then pay those costs. As a result, many defendants, and the courts, are returning to joined cases.

As per the opinion of Judge Coleman:

Looking to both the plain language of Rule 20 and the substantial body of persuasive authority in this district, this Court finds that Rule 20(a)(1) does not require a single transaction, direct transactions, or temporal overlap. Accordingly, multiple defendants need not participate in the swarm at the same time in order to be properly joined.

Here, Cobbler alleges that each defendant used BitTorrent to participate in a BitTorrent swarm and to download and upload identical pieces of the same copyrighted work within the span of less than one month. These allegations are adequate to establish that the defendants acted as part of the same series of transactions or occurrences. Furthermore, the purpose of judicial efficiency is best served by the continued joinder of the parties at this stage of the litigation.

Other jurisdictions following this trend include Washington (Dallas Buyers Club, LLC v. Does, 14-cv-1684 (W.D. WA., October 31, 2014)) and Oregon (Survivor Productions, Inc. v. Popcorn Time Users, 3:15-cv-01587-AA, (D. Or. Sept. 15, 2015))

The full text of the Judge Coleman opinion:
Cobbler Nevada v. Does, 1:15-cv-05283 (N.D. Ill., Oct. 23, 2015)