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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.)

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.

 

 

 

 

“I downloaded a movie and I should be awarded attorney fees.” AKA: The Worst Motion to Quash

Much is said about BitTorrent litigation, but sometimes it takes an honest defendant, or their counsel, to make things perfectly clear. One such exemplar is a recent Motion to Quash filed by counsel in the New Jersey case of Popular Oaks v. John Doe, 2:14-cv-07901.

To quote the motion:

I do not understand why I am being sued. I simply went online to a website that allows people to share files. I downloaded a movie and suddenly I am being sued in federal court for copyright infringement.

 If you do not understand why you are being sued after this statement, you probably also do not understand where babies come from. The motion goes on to complain:

Essentially, Plaintiff’s theory is that someone who downloads movies from the internet, and makes them available to anyone by way of so-called peer-to-peer software (which enable users to exchange files directly between their computers without intermediary services) has violated both the copyright owner’s right to make copies, 17 U.S. C. sec. 106(1), and the distribution right, 17 U.S.C. sec 106(3).

Yes. That is exactly the theory and the law. Thank you for the citations. As for the requested relief this person seeks:

The Court should order the subpoena quashed, vacate the Order Granting Discovery and dismiss the complaint in its entirety because: 1) An undue burden would be placed upon the Defendant, 2) Defendant’s First Amendment rights to free speech (on the Internet) has not been waived, and 3) Plaintiff has failed to allege facts supporting the existence of personal jurisdiction over Defendant. Additionally, Defendant should be awarded a reasonable attorney’s fee for having to file this motion…

The fact that this is a motion by a party (through counsel no less) that verifies they did in fact download the movie (“I downloaded a movie…”) and accurately recites the law that verifies this is a violation, and they still turn around and asks for their attorney fees defies logic. This demonstrates the fundamental disconnect in BitTorrent litigation, namely, those who fight it by and large simply believe they should be allowed to freely steal movies.

The case is Popular Oaks v. John Doe, 2:14-cv-07901 (D. NJ.)

The relevant motion is:14-cv-7901_Doc.6-Worst Motion to Quash

The opposition filed, which explains the problems with this motion in detail is: 2:14-cv-07901_8-Opposition to Worst Motion to Quash

Hall & Oats say “I Can’t Go for That” Re: Hauln’ Oats

Musicians Daryl Hall and John Oats, commonly referred to as Hall & Oats, who oddly operate under the business entity of Whole Oats Enterprises, itself a play on their name, have brought a claim against Early Bird Foods & Co., LLC for their use of the name Hauln’ Oats in connection with oatmeal and food delivery.

At issue will be whether anyone is likely to be deceived into believing Hauln’ Oats is in any way “provided by, or sponsored by, or approved by, or licensed by, or affiliated with or in some other way legitimately connected to” the musicians Hall & Oats. If so, then there is a very good chance Hall & Oats will prevail.

This complaint is apparently after real issues of confusion arose and a number of attempts by Hall & Oats’ counsel to get Early Bird to clarify matters with their customers and fans and stop their infringing activity as apparently they already license the name Hauln’ Oats to another similar company.  Hall & Oats are asking the court to force Early Bird to stop using the name and while no specific sum of money is demanded, there is a request turn over what Hall & Oats claim are wrongly acquired profits.

Some people may think Hall & Outs are “Out of Touch” on this one, but when asked about being associated with this new granola company they are quoted as saying, “I Can’t Go For That.”

Feel free to write your own bad puns.

The complaint is captioned Whole Oats Enterprises v. Early Bird Foods & Co., LLC, EDNY 1:15-cv-01124-RRM-JO.

The full text of the complaint may be found here: Whole Oats Enterprises v. Early Bird Foods & Co., LLC, EDNY 1:15-cv-01124-RRM-JO

Florida Judge Demands Joinder In BitTorrent Litigation

Across the nation there are arguments on whether or not a plaintiff may properly join defendants in BitTorrent litigation. Each case filed costs several thousand dollars and by joining multiple defendants there are notable cost savings. Often defendants argue against joinder in an attempt to make it harder for rights holders to enforce their copyrights, hoping the rights holders will not be able to afford to pursue them. On the other side, rights holders argue they need joinder in order to enforce their rights in a cost effective manner. Courts are split in whether or not defendants can force rights holders to sever cases and often there are different outcomes in the same district with some judges allowing joined cases and a different judge in the same district across the hall demanding individual cases.

Some plaintiffs have elected to skip over this issue and simply file against individual defendants in the initial suit, though this often results in very high awards even without any damages as individual cases are expensive. (Voltage v. Horner, 14-cv-1406, Jan. 7, 2015, D Or. $15,230 for “actual costs, fees but waiving any claim for damages.”) However, a Judge in Florida appears to be taking a different view and is not only allowing joined cases, she is demanding them.

In Good Man Productions v. Doe, 14-cv-62727-BB, in the Southern District of Florida Judge Bloom has ordered, “all future filings in this case shall be [joined with this case]” … “in the interests of judicial efficiency.”   While the joined v. individual suit arguments have often been fought on the issue of swarm size and location, Judge Bloom seems to have skipped over all the petty arguments and in a curt order recognized that when essentially the same claims, facts and often nearly identical complaints are at issue, joinder is proper and will be demanded.

Relevant Order: Good Man Productions v. Doe, 14-cv-62727-BB Feb. 12, 2015, Md. Fla.

Yelp – Live And Die By The Sword

Review site Yelp has been the topic of a number of lawsuits. Many of the suits relate to Yelp’s program of selling placement and advertising and the practice of improving a business’ ranking if the business is a paying Yelp ‘subscriber.’ There have also been suits were businesses have gone after Yelp reviewers and Yelp has fought to defend the identity of the people behind reviews for a number of reasons.

In general Yelp defends along the lines that it is an entertainment site and the business reviewed do not own or have a legitimate interest in the reviews.

In the 9th Circuit opinion of Levitt v. Yelp (2014) there was a long discussion by the court on the rights and duties of Yelp.  In sum, the court found Yelp could do what it wanted, delete reviews it wanted to delete, good or bad, and claims of extortion were really just “hard bargaining.”

We begin with Chan, who alleges that Yelp extorted her by removing positive reviews from her Yelp page. Chan asserts that she was deprived of the benefit of the positive reviews Yelp users posted to Yelp’s website . . . But Chan had no pre-existing right to have positive reviews appear on Yelp’s website. She alleges no contractual right pursuant to which Yelp must publish positive reviews, nor does any law require Yelp to publish them. By withholding the benefit of these positive reviews, Yelp is withholding a benefit that Yelp makes possible and maintains. It has no obligation to do so, however.

* * *

Levitt and Mercurio similarly allege that Yelp attempted to extort them by removing positive user reviews. … Here, too, however, [Levitt] and Mercurio have no claim that it is independently wrongful for Yelp to post and arrange actual user reviews on its website as it sees fit. The business owners may deem the posting or order of user reviews as a threat of economic harm, but it is not unlawful for Yelp to post and sequence the reviews. As Yelp has the right to charge for legitimate advertising services, the threat of economic harm that Yelp leveraged is, at most, hard bargaining.

But now, with the shoe on the other foot, Yelp has gone to court seeking to prevent others from posting reviews on its site. In Yelp v. Yelpdirector et al, the company seeks to shut down third party sites that promise to post positive reviews. Yelp claims:

Yelp’s online reviews are a trusted resource for consumers to learn about local businesses, unfortunately some try to game the system and undermine that trust, by building businesses based on fraudulent reviews, invasive spam, and conduct that otherwise violates the law as well as Yelp’s Terms of Service …

 * * *

Yelp was founded in 2004 to provide consumers with authentic reviews…reviews are genuine and unbiased.

 * * *

Yelp vigilantly protects the legitimacy and authenticity of the reviews on the Yelp Site. To that end, Yelp commits substantial resources to prevent fake, altered, or otherwise fraudulent reviews

So while business complain that Yelp demands money to allow good reviews to be posted and the courts agree that Yelp is free to adjust, re-order or even delete reviews as it wishes, Yelp cries foul when anyone else plays Yelp’s game.

Yelp is of course free to defend itself against others that improperly exploit and injure its platform.  But Yelp cannot go into one court and claim the purity and unbiased sanctity of its review system is being harmed, yet go into another court and claim the right to freely alter, delete and re-order reviews in the name of “hard bargaining” to get businesses to pay to be a part of a site that is as much entertainment as anything.

Yelp will soon need to decide if they are going to be a advotainment for profit site, or a legitimate unbiased review site.

Relevant documents –

Yelp’s Complaint in: Yelp v. Yelpdirector et al. (ND Cal., 2015)

The Opinion of the 9th Circuit: Levitt v. Yelp (9th Cir., 11-17676, 2014)

Trademark Liability For BitTorrent Download

In a first of its kind opinion, an order has issued enforcing Oregon state trademark law against a defendant who used BitTorrent to pirate a film.

According to the order, the defendant used BitTorrent to pirate the motion picture The Company You Keep. In addition to a conventional claim for copyright infringement, Voltage sought to enforce its rights in its trademark to enjoin against future infringement of not only the specific movie, but to protect against future infringement of the entire Voltage branded catalog.

As per the order:

Under ORS § 647.095, a person may not use a copy of a mark in connection with distribution of goods if it is likely to cause confusion or mistake or deceive as to the origin of the goods… plaintiffs have submitted evidence of the distribution of the motion picture involves a down sampled resolution reducing the quality of the product. Accordingly, a consumer could be confused into believing an inferior copy of the product is authorized by plaintiff Voltage Pictures because of the use of its trademark displayed with the inferior product.

Under ORS § 647.105(1) (a) the court may enjoin future use of a counterfeit or imitation of a registered mark. The court may also order all counterfeits or imitations destroyed. ORS § 647.105(1) (c) Accordingly, defendant is enjoined from further unauthorized use of plaintiff Voltage Pictures’ trademark and defendant shall destroy all unauthorized copies of plaintiffs’ motion pictures.

With this, the Federal Court has paved the way for BitTorrent piracy enforcement at the state level.

The case is: Voltage et al v. Smith, USDC OR 14-cv-1193-AA

 

Relevant Order: Voltage et al v. Smith 14-cv-1193-AA Dkt. 22

 

 

MISGUIDED BITTORRENT DEFENSES / OHIO AND OREGON MISFIRES

A standard defense in BitTorrent cases is that the defendant is the victim of abuse by the copyright holder and the whole process is nothing more than a shakedown scheme and a fraud on the courts with plaintiffs filing cases and settling for money. But there is a problem with this, and that is that our entire litigation system is based on reasonable people settling most cases and this overlooks the fundamental facts of the case: a copyright claim is premised on the defendant being the bad actor – for the case to exist the defendant must have first stolen from the plaintiff.

This trend of defenses that try to paint the plaintiff as the bad guy in an effort to divert attention from their own copyright theft sounds good to someone looking for an easy way out, but it does not hold up to scrutiny and the courts are shutting this defense down with painful results for some defendants. Thousands of dollars are being spent on these arguments and in the end, the defendants who might have been able to settle their clams for $5,000, have to pay not only their own attorneys thousands more, but as per the copyright law, also have to pay more to the rights holders that brought the case. A bad defense quickly turns a $5,000 case into a $50,000 case, and that is starting to sound like abuse, but for defendants who run up the legal bills, it is self-inflicted.

Two recent cases point this out. One in Ohio and a second in Oregon.

In Malibu v Doe, S.D. Ohio, 14-cv-00821, the defendant tried to assert counterclaims, arguing the copyright holder (Malibu) had committed bad acts and therefore could not enforce its claims and that the claims of Malibu were abusive and brought in bad faith.

As per the opinion –

[Defendant] alleges that Malibu brought the claim to humiliate him and extract money from him. … [but] even if Malibu brought the lawsuit with the intention of settling the case short of litigating it to conclusion, that purpose is not an ulterior motive because many claims are settled. A successful copyright lawsuit would result in money damages, so seeking a settlement by filing a complaint does not qualify as an ulterior motive…[the defendant] does not identify any act committed during the process that was improper …

 In other words, the defendant argued that Malibu was a bad person and that Malibu’s methodology of filing suit and demanding settlements for money was somehow improper. As the court correctly points out, there is not only nothing improper about Malibu’s conduct, but this is exactly how things should work when someone commits copyright theft.

In another recent case, Voltage v. Revitch, Oregon, 14-cv-00301, the defendant argued essentially the same type of thing, but brought in a lot of additional accusations claiming copyright misuse and unfair business practices, raised the “IP address is not a person defense,” and making several accusations related to the investigators and other parties working with Voltage. One of the key elements in the counterclaims of the defendant was an argument that Voltage had an improper claim that the defendant, by paying for Internet service was liable for providing the Internet access to another person who might be the actual infringer.

As per the opinion –

Defendant’s claim seeks to resolve the “continuing threat posed . . . by plaintiffs’ theory that their copyright registration imposes on [defendant] a “duty to police” the internet access he obtains as an Oregon consumer.” As noted above, plaintiffs’ allegations seek to hold defendant liable for alleged willful copying and distribution and do not assert some sort of strict liability. To the extent defendant asserts that plaintiffs have engaged in such conduct with others and that conduct bars enforcement of the copyright against him, the claim stretches the theory of copyright misuse beyond its contours.

. . .

This is not to say the issue of whether defendant is in fact liable for copyright violations engaged in by others may not be litigated, only that defendant may not properly allege a counterclaim for copyright misuse. Accordingly, defendant’s counterclaim for copyright misuse is dismissed.

Both cases support plaintiff’s right to legitimately enforce their copyrights and discard the copyright misuse defense. And in an interesting turn of events, the “IP address is not a person” defense has now been discarded so thoroughly that the courts are recognizing that someone that pays for Internet service may be “liable for copyright violations engaged in by others.”

Relevant court orders:

Malibu v Doe, S.D. Ohio, 14-cv-00821, Feb. 4, 2015

Voltage v. Revitch, Oregon, 14-cv-00301, Jan. 23, 2015