Tag Archives: Copyright

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)

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

Maverick Eye Data Analysis “Sees Through” Dynamic IPs

In a recent case filed on behalf of Glacier Films for infringement of the film American Heist, it is revealed BitTorrent monitor Maverick Eye has developed a system to “see through” dynamically assigned IP addresses allowing the tracking of infringing activity by a single infringer through multiple IP assignments.

As stated in the complaint –

14.  The defendant’s ISP CenturyLink is known to dynamically reassign IP addresses, sometimes assigning an IP address to a party for days, and at other times only for a very short period of time.

15.  Dynamically assigned IP addresses with very short durations may be problematic in identifying a specific infringer as there is only a limited window of data available to the rightsholder in the investigation of the identity of the infringer.

16.  While the identity of the subscriber is readily ascertainable even if only an instant of infringing conduct is observed, limited data creates a greater burden for a rightsholder in using subscriber data to correlate with observed infringer data to identify a specific liable infringing party who acted through the IP address of the subscriber.

17.  To assist in overcoming this issue, plaintiff’s investigator Maverick Eye, UG has developed technology to identify other IP addresses also likely assigned the same subscriber and therefor used by the same defendant.

18.  By expanding the window of known activity associated with a singular defendant across several IP addresses plaintiff is able to use a broader pool of observed activity to assist in identifying the actual infringer and liable party.

The complaint identifies 6 IP addresses all assigned to a single defendant and seeks statutory damages and costs and fees.

 

Copy:  Glacier Films v. Doe 3:15-cv-02016

Lying is Still Bad

In the long fought BitTorrent infringement case of Malibu Media v. Tashiro, (S.D. Indiana) the court appears to be close to closing this case with a resolution in favor of Malibu Media. As with just about every other case that has gone through substantive proceedings, the results appear to be either a finding of infringement, or defendants who lie and destroy evidence, resulting in a verdict in favor of the plaintiff.

This case, fought longer and harder than most, has resulting in a few extra points, one being with respect to a long fight about Plaintiff’s expert Patrick Page and efforts to discredit Mr. Paige. Curiously, these seem to have backfired as the court found Plaintiff’s expert Mr. Paige more credible than the expert offered by Defendants.

Based on the relative credentials of the parties’ experts, the Court concludes that Patrick Paige’s testimony is more accurate and more credible. As such, the Court finds it highly likely that thousands of files were deleted and were unrecoverable. This confirms that Defendant Charles did not temporarily delete relevant evidence; instead, he permanently destroyed that evidence. As a result, Charles is liable for spoliation.

But the real substance of this case relates to a husband and wife who the court found lied and destroyed evidence. Much has been written on this case about the lack of evidence, but the heart of the case deals with why the evidence was missing. As summarized by the Court:

Discovery in the federal system is intended “make a trial less a game of blind man’s bluff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.” United States v. Procter & Gamble Co., 356 U.S. 677, 682 (1958) (emphasis added). The rules governing discovery contemplate that parties will “obtain the fullest possible knowledge of the issues and facts before trial,” such that “civil trials in the federal courts no longer need be carried on in the dark.” Hickman v. Taylor, 329 U.S. 495, 501 (1947).

[Defendant’s] conduct is simply not consistent with these principles. By deleting files from the Stover drive, [Defendant] chose to conceal—not disclose—potentially relevant information. And by doing so, [Defendant] deprived Plaintiff of the ability to gain the “fullest possible knowledge” of the facts relevant to Plaintiff’s underlying copyright claim. [Defendant] thus flouted the important principles underpinning litigation carried on before this Court and other courts in the federal system, and his decision to do so cannot go unpunished.

In this case it was more than just the husband that got in trouble, but the Court specifically found the wife at fault as well.

[Defendant Wife’s] own testimony thus demonstrates that she repeatedly failed to discharge her duty to reasonably investigate whether her discovery responses were complete and accurate, and sanctions against [Defendant Wife] are therefore appropriate.

Additionally, [Defendant Wife’s] failure to investigate was especially egregious in light of her attorney’s representations to the contrary. … These misrepresentations are hardly consistent with a party’s duties to investigate and disclose relevant facts, confirming that sanctions against [Defendant Wife] are appropriate.

In essence, the court found the husband-wife team acted together on many fronts and they were liable for the bad acts of the other.  Protecting a family member may seem like a good idea, there are consequences when doing so involves lying or hiding evidence.

Based on these considerations, the Court concludes that the [Defendants] have the sort of “close family relationship,” Sebastian, 2008 WL 2875255, at *33, that would support extending a Fifth Amendment adverse inference from one party to another. Thus, when Plaintiff’s counsel asked whether [Defendant] had agreed with his wife to hide the truth in this case, the Court may infer that [Defendant] refused to answer not only to protect himself, but also to protect his wife.

And while the court found also fault with the Defendants’ attorney, he managed to escape without sanctions.

[Defendant’s attorney’s] conduct in this case borders on sanctionable. …. In these circumstances, the Court will exercise its discretion to refrain from sanctioning [Defendant’s attorney].

In summation, the court found the Defendants guilty of perjury with respect to hiding evidence, hiding hard drives and lying about the use of BitTorrent and directed that both husband and wife be found liable under Plaintiff’s claims.

Here, the Court finds by clear and convincing evidence that Defendants have engaged in a similar pattern of misconduct. Defendants spoiled evidence, committed perjury, and failed to discharge their duties to conduct discovery reasonably and in good faith. They lied to the opposing party; they withheld the existence of material evidence; and they deleted potentially damaging computer files the very night before they were to relinquish such files for discovery. Just as in the cases cited above, this extensive pattern of conduct warrants the harshest of sanctions, and the Magistrate Judge accordingly recommends that the Court enter default judgment against both Defendants.

Based on the long record of this case and likely hundreds of thousands in attorney fees, this may result in one of the most significant awards against defendants in any BitTorrent litigation.

 

The case and relevant opinion: Malibu Media, LLC v. Tashiro, et al. 1:13-cv-00205, (S.D. Indiana, May 18, 2015)

 

Internet Subscriber Liability For BitTorrent Use

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

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

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

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

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

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

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

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

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

Naming IP Address Subscriber “Objectively Reasonable”

The 11th Circuit Court of Appeals has issued a ruling that naming an IP address subscriber as a defendant is “objectively reasonable.”

In the case of Malibu Media v. Pelizzo the defendant demanded costs and fees after being named in a BitTorrent copyright case. A key issue was whether or not Malibu Media named the defendant in good faith when his IP address was shown to have been the source of notable infringing activity. Later evidence indicated that Pelizzo himself might not be the infringer.   Once it appeared Pelizzo might not be the infringer, Malibu offered to dismiss the case but Pelizzo rejected Malibu’s offer and demanded costs and fees. The District Court denied Pelizzo his attorney fees under the Copyright Act and Pelizzo appealed. The 11th Circuit Court of Appeals upheld the District Court and stated:

We find no abuse of discretion in the district court’s conclusion … that Malibu’s subjective motivation for filing suit was not improper or that the suit was not frivolous… To whomever the subject IP address was subscribed, it is undisputed that a genuinely phenomenal number of films was being downloaded using it. …   Because of the nature of the films, Pelizzo justly was ashamed to be a part of the litigation, but the magistrate judge found no record evidence that Malibu sued him for that reason, and Pelizzo has not presented any such evidence. Using detection methods it had used hundreds of times before, Malibu determined that the IP address apparently assigned to Pelizzo was the vehicle for the infringements and acted accordingly.

We also find no abuse of discretion in the district court’s conclusion that Malibu, up to a point, acted in an objectively reasonable manner and in a manner that served the purposes of the Copyright Act: compensation and deterrence. Contrary to Pelizzo’s assertion, Malibu could not have been expected simply to take his word for the fact that he had not infringed Malibu’s copyrights, given the substantial evidence implicating Pelizzo.

 A ruling that Pelizzo should be awarded $6,815.50, for what the Court called a “knee-jerk” reaction to Pelizzo’s initial demand for fees was not changed, but the court verified that the $24,000 in attorney fees sought by Pelizzo was properly denied.

The case is Malibu Media v. Leo Pelizzo, 14-11795 (11th Cir, 2015)
(S.D. FL. D.C. Docket No. 1:12-cv-22768-PAS)

Debunking the Troll Myth

With so much anecdotal evidence, real and serious investigation of the expansion of copyright litigation is hard to come by. But in an article published by Nova Southeastern University in a survey of over 1,500 BitTorrent related cases the author reviews the common defenses asserted, their general inadequacy, and concludes:

To the knowledge of the author, only three BitTorrent cases have gone to trial resulting in a judgment being entered. All three of these cases resulted in a judgment for the copyright owner, with substantial damages being awarded.

* * *

In the end analysis, the author found no cases in which a file-sharing defendant went to trial, and prevailed. The more common theme was a blanket denial, followed by an attempt to destroy the evidence.

The full article is worth reading for anyone who has any interest in this litigation:

Copyright Infringement Litigation Over BitTorrent File Sharing: Truth or Troll?

 

 

 

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

 

A Fatwa Against Piracy In Turkey

Recognizing that piracy is theft and against the teaching of The Prophet Muhammad, the Turkish Directorate of Religious Affairs (a/k/a “Diyanet”*) has issued a position statement that downloading movies, software and the like without license is “haram” or a sin.

“It is not permissible to download unauthorized work or other programs from the virtual world.”

“Wrongful acts [such as piracy] not only usurp the individuals’ rights, but also discourages people who work to create such things from creating new products, turning the matter into a public rights violation in a broader sense. Therefore, anything that has been downloaded through the Internet, software, and products such as books and music is not permitted without the permission of those who created it. ”

 

* The Diyanet is Turkey’s constitutional director of religious standards.

For official commentary from Diyanet: http://www.diyanet.tv/diyanet-ten-internet-fetvasi-/

For the CNN Turkey page on this story: http://www.cnnturk.com/haber/turkiye/diyanet-telif-odemeden-internetten-muzik-ve-program-indirmek-haram.

 

BitTorrent Defendant Tries to Hide Record From Public – Denied

In a BitTorrent-Infringer lawsuits that is advancing to trial, a defendant accused of downloading material has tried to seal portions of the record they would like to keep secret and hidden from the public and been denied across the board.

United States courts have a long tradition of being open keeping with the notion that justice is best administered in the light of day, not hidden from view. The judge noted the public at large has an interest in what happens in any judicial proceedings and that the defendant should not be able to hide matters from the public unless there is “good cause” and the matters to be sealed are “bona fide” confidential matters.

Finding he failed to present any good cause or have any legitimate confidentiality in the documents he wanted to keep secret, the judge denied all requests by the defendant.  The judge has asked the plaintiff Malibu Media and Comcast to comment if they would like any of the matters sealed before the Judge makes the defendant’s filings public.

The case is: Malibu Media v. Harrison, 1:12-cv-01117, Southern District of Indiana.

The opinion may be read here: Order on Defendant’s Motion to Seal, Dec. 23, 2014, Dkt. 297.