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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.

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)

Popcorn Time Breakup Exposes Dirty Secret

While Hollywood prepares to go from suing end users to the developers, the pressure has forced some key members of the Popcorn Time application to depart.  As is being reported in the Popcorn Time discussion forum and on Torrent Freak, the developers are becoming all too aware of the risks in their efforts.

One thing that is coming to light is that the application, touted as “free,” is not free at all as it is designed for users to purchase add-ons and VPN software to avoid facing litigation and fines, or worse.

Already people in Europe have been arrested for promoting Popcorn Time and in the United States the civil litigation side has pointed out that using the Popcorn Time application may expose a party to criminal liability:

From the complaint in The Cobbler v. Users of Popcorn Time; 3:15-cv-01550-ST

40.   Popcorn Time cannot be considered to have any reasonable legal or legitimate use.

41. The mere possession of a software program like Popcorn Time is the type of conduct that the State of Oregon has criminalized in ORS 164.235, which reads in part: 164.235 Possession of a burglary tool or theft device. (1) A person commits the crime of possession of a burglary tool or theft device if the person possesses a burglary tool or theft device and the person:

(a) Intends to use the tool or device to commit or facilitate … a theft by a physical taking; or

(b) Knows that another person intends to use the tool or device to commit or facilitate a … theft by a physical taking.

What is now apparent is some of the developers are seeing the financial rewards are no longer worth the risk as court records are showing the first Consent Judgments and Orders being entered against those caught using the application.

For a copy of one of the civil cases in the United States: The Cobbler v. Popcorn Time Users

Understanding Fair Use

Re:  Authors Guild v. Google, Inc.,13-4829, 2nd Cir. , Oct. 16, 2015

In a case that likely has one more stop along the way, the Second Circuit has issued its opinion in Authors Guild v. Google that relates to the Google Books project and the considerations of Fair Use.

As per the opinion:

Google has made digital copies of tens of millions of books, including Plaintiffs’, that were submitted to it for that purpose by major libraries. Google has scanned the digital copies and established a publicly available search function. An Internet user can use this function to search without charge to determine whether the book contains a specified word or term and also see “snippets” of text containing the searched-for terms. In addition, Google has allowed the participating libraries to download and retain digital copies of the books they submit, under agreements which commit the libraries not to use their digital copies in violation of the copyright laws.

In a simplistic view: Google has put millions of books online. But it is important to understand some key facts in this case, which include:

The Google Books search function also allows the user a limited viewing of text. In addition to telling the number of times the word or term selected by the searcher appears in the book, the search function will display a maximum of three “snippets” containing it. A snippet is a horizontal segment comprising ordinarily an eighth of a page.
      . . .
Google also disables snippet view entirely for types of books for which a single snippet is likely to satisfy the searcher’s present need for the book, such as dictionaries, cookbooks, and books of short poems. Finally, since 2005, Google will exclude any book altogether from snippet view at the request of the rights holder by the submission of an online form.

While it is true that Google has placed millions of copyrighted books online, it does not allow the viewers to read them, only to find out whether or not they might want to read them. As was critical in this case:

Google’s program does not, at this time and on the record before us, expose Plaintiffs to an unreasonable risk of loss of copyright value …

Google’s making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available information about Plaintiffs’ books without providing the public with a substantial substitute for matter protected by the Plaintiffs’ copyright interests in the original works or derivatives of them.

So the simplistic view is that Google is allowed to put millions of books online, but the proper understanding is that Google has created the world’s most effective card catalog to allow people to search and find books they may want to read, without making the books themselves available to read online.

After pages of tortured analysis of facts and factors, it all comes down to:

The ultimate goal of copyright is to expand public knowledge and understanding, which copyright seeks to achieve by giving potential creators exclusive control over copying of their works, thus giving them a financial incentive to create informative, intellectually enriching works for public consumption. . . .

Thus, while authors are undoubtedly important intended beneficiaries of copyright, the ultimate, primary intended beneficiary is the public, whose access to knowledge copyright seeks to advance by providing rewards for authorship.

There will be the inevitable confusion as many books on the Google Books project are available online in complete form, but it needs to be understood that the copyrights in those books have expired or been waived by the authors, thus they are properly free to the public.

For the full text:  Authors Guild v. Google, 13-4829

Deleting Files Costs $200,000 In Sanctions And Adverse Inference

Destroying evidence is always bad. Getting caught is often assured, and even worse. In the case of Clear-View Technologies v. Rasnick, et al., in the Northern District of California the severity and expanse of duties to preserve evidence have been further clarified. One thing the court makes clear, sometimes the only thing worse than a smoking gun, is a missing gun that has been thrown away leaving only traces of smoke.

As the court starts off:

Deployment of “Crap Cleaner” software—with a motion to compel pending. Lost media with relevant documents. False certification that document production was complete. Failure to take any steps to preserve or collect relevant documents for two years after discussing this very suit. Any one of these transgressions by Defendants … and their prior counsel might justify sanctions. Taken together, there can be no doubt.

Preservation of evidence is a duty, and it does not start when suit is filed.

“The duty to preserve evidence begins when litigation is ‘pending or reasonably foreseeable.’ Thus, ‘[s]poliation refers to the destruction or material alteration of evidence or to the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.’ This is an objective standard, asking not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation.”

This does not mean evidence must be preserved when a party learns about a suit or when a party is served with a complaint, it means the evidence must be preserved from the time when a reasonable person thinks they might be sued. The proverbial, “I’ll see you in court!” can result in a duty to preserve and further deletion may result in sanctions. (Or as the Court quotes, in this case, the statement “[K]eep it up and you’ll find [yourself] in court[.] Call Clyde again and I sue[.] Mark my words.”)   The standard is not subjective. This is an objective standard. Even if a party is not aware of their duty, ignorance is not an excuse.

But this case had it all. Laptops and cell phones were “lost.” Emails were deleted. Documents were not produced. And likely most damming element, parties installed and ran software called CCleaner or “Crap Cleaner” which was specifically designed to delete data in a manner that it could not be recovered. Having software that is designed to hide evidence might be suspect in and of itself, evidence of its use is something courts cannot overlook.

The result of this cover up was the court ruling:

Defendants and their prior counsel therefore are jointly and severally liable for the following fees, which the court finds reasonable in light of the extraordinary effort required to uncover this widespread abuse: … $212,320.

But even more significant than the money to be paid, was the court’s ruling on further sanctions.

All this warrants the adverse instruction that the unproduced material may be deemed to support [Plaintiff’s] contentions. The court orders the jury be instructed as follows:

Defendants have failed to prevent the destruction and loss of relevant evidence for [Plaintiff’s] use in this litigation. This is known as the “spoliation of evidence.”

I instruct you, as a matter of law, that Defendants failed to preserve evidence after its duty to preserve arose. This failure resulted from its failure to perform its discovery obligations.

You also may presume that [Plaintiff] has met its burden of proving the following two elements by a preponderance of the evidence: first, that relevant evidence was destroyed after the duty to preserve arose. Evidence is relevant if it would have clarified a fact at issue in the trial and otherwise would naturally have been introduced into evidence. And second, the lost evidence was favorable to [Plaintiff].

 

The result: everything missing or deleted, no matter how innocent it might be, is presumed to be favorable to plaintiff.

The full text of the opinion: Clear-View Technologies v. Rasnick, et al., 13-cv-02744 (N.D. Cal. May 13, 2015.)

The Name Game

There is an often misunderstood element of trademark law that is oversimplified to: You can’t trademark your name.  This comes from the Trademark Manual of Examining Procedure, or TMEP 1301.02(b)  Names of Characters or Personal Names as Service Marks

Under 15 U.S.C. §1127, a name or design of a character does not function as a service mark, unless it identifies and distinguishes services in addition to identifying the character.  If the name or design is used only to identify the character, it is not registrable as a service mark.  

People seem intent on simplifying this and reading the first part: “a name or design of a character does not function as a service mark…” and then last part, “If the name or design is used only to identify the character, it is not registrable as a service mark.” And completely skipping the middle: unless it identifies and distinguishes services in addition to identifying the character.  And therein is the key:  simply being a name, even a famous one, is not enough.

For example, in In re Lee Trevino Enterprises, Inc., 182 USPQ 253 (TTAB 1974) it was determined that the name of golfer Lee Trevino identified exactly what you might expect – a golfer named Lee Trevino.  As no other services or goods were associated with the name, it could not be registered.

But when the name means more, registration is allowed. The trademark registration database is filled with famous names that represent more than the mere people that carry them on their driver’s license. There are several FRANK SINATRA registrations for everything from entertainment services (as you would expect) to spaghetti sauce.  And the list of ELVIS related marks goes for pages.

So the adage, “you can’t trademark your name” is both true and incomplete. It might be better presented as, “you can’t trademark your name for being a name.”

There is further guidance in TMEP 1202.09(a)   Names and Pseudonyms of Authors and Performing Artists

Any mark consisting of the name of an author used on a written work, or the name of a performing artist on a sound recording, must be refused registration under §§1, 2, and 45 of the Trademark Act, 15 U.S.C. §§1051, 1052, and 1127, if the mark is used solely to identify the writer or the artist….

As with TMEP 1301.02(b), the name as a name is not registrable.  But take note of the distinction in TMEP 1202.09(b)   Names of Artists Used on Original Works of Art

An artist’s name or pseudonym affixed to an original work of art may be registered on the Principal Register without a showing that the name identifies a series.

Again, the question is does the name represent a person, or is it used to designate something about the goods or services or their origin.  The name, as a badge carried by a work of art representing its origin becomes registrable.

The USPTO has an excellent web page on this topic: http://www.uspto.gov/learning-and-resources/ip-policy/musicians-and-artists-profile

As to the recent news about artist Rihanna and her efforts to trademark her real first name ROBIN being opposed by D.C. Comics for being too similar Batman’s sidekick’s name ROBYN, the issues of that matter have little to do with a person’s name acting as a trademark.  For many people it was news that ROBIN was Rihanna’s real first name. (If a name is not used to identify someone then it is not subject to a TMEP 1301.02(b) rejection.)

The ROBIN – ROBYN conflicts are purely based on classic confusion, namely, will people be confused and think Rihanna associated goods and services sold under the ROBIN brand name will be somehow affiliated with Batman’s sidekick the Boy Wonder ROBYN.  Of course this all goes away in the movie deal when Rihanna signs on to play the actual Robyn in the next movie.  Stay tuned.

The ROBIN – ROBYN opposition filed by D.C. Comics may be viewed here: ttab-91221868_ROBYN-ROBIN_Opp

President’s 301 Report Calls For Stronger Copyright and Trademark Protections

The 2015 Special 301 Report on the state of intellectual property rights (“IPR”) has few surprises. In general, it calls for more and stronger protections and recognizes globalization needs to be addressed. As per the summary:

This Report reflects the Administration’s continued resolve to encourage and maintain adequate and effective IPR protection and enforcement worldwide. The Report identifies a wide range of concerns, including: (a) the deterioration in IPR protection, enforcement, and market access for persons relying on IPR in a number of trading partners; (b) reported inadequacies in trade secret protection in China, India, and elsewhere, as well as an increasing incidence of trade secret misappropriation; (c) troubling “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders in China; (d) the continuing challenges of online copyright piracy in countries such as Brazil, China, India, and Russia and trademark counterfeiting in China and elsewhere; (e) market access barriers, including nontransparent and discriminatory measures, that appear to impede access to products embodying IPR and measures that impede market access for U.S. entities that rely upon IPR protection; and (f) other ongoing, systemic IPR enforcement issues in many trading partners around the world.

There are a few interesting insights. Under a review of digital piracy, the report notes:

[P]iracy over the Internet has become the priority copyright enforcement issue… The availability of, and recourse by rights holders to enforcement procedures and remedies is a critical component of the online ecosystem. … Governments should avoid creating a domestic environment that offers a safe haven for piracy on the Internet.

The report then goes on to call out Switzerland specifically which recently exempted private use downloading of content from copyright enforcement and states:

The United States strongly urges Switzerland to demonstrate its commitment to provide robust copyright protection and to combat online piracy by taking concrete steps to ensure that rights holders can protect their rights.

And there is a notable reference to increased problematic criminal activity in Switzerland with the opening of the gates to private level piracy, which is no surprise.  If you freely allow unlimited minor theft on a large scale, the proverbial “million tiny cuts” eventually become lethal.

The report also brings up two very interesting points with respect to globalization and IPR. There is a relation of the importance of IPR and the environment:

Strong IPR protection and enforcement are essential to promoting investment in innovation in the environmental sector. Such innovation not only promotes economic growth and supports jobs, but also is critical to responding to environmental challenges. IPR provides incentives for R&D in this important sector, including through university research. Conversely, inadequate IPR protection and enforcement in foreign markets discourages entry into technology transfer arrangements in those markets. This may hinder the realization of the technological advances needed to meet environmental challenges, including the mitigation of, and adaptation to, climate change.

And there is a relation of the importance of the social impact of IPR and health:

IPR protection plays an important role in providing the incentives necessary for the development and marketing of new medicines. An effective, transparent, and predictable IPR system is necessary for both manufacturers of innovative medicines and manufacturers of generic medicines.

In summary, the report presents a picture that calls for stronger protections of intellectual property rights, accountability for countries, and outlines that stronger protections further the interests of all parties economically, environmentally and socially.

 

For Full Text: 2015 Special 301 Report