In the first part of this series, I asked whether pornographers are ruining it for everyone. Not all of the BitTorrent plaintiffs are pornographers, of course, but most estimates I’ve seen show that more of them are. A concern that a rights holder might have is that the strategy of suing mass numbers of anonymous BitTorrent defendants is already an aggressive strategy and requires a lot of cooperation from the court. With the addition of pornography to the mix, courts might find reasons to interfere with the process enough to make the strategy unprofitable for non-pornographers.

Not Industry Bias

I think pornography might make a difference (i.e., the answer to the question I posed might be “Yes”), but not necessarily because judges are biased—even unconsciously—against the pornography industry. The funny thing about judicial bias is that it pretty much has to be unconscious to have an effect. Judges are well aware that they are supposed to be unbiased—it’s baked right into the job description—and with some unfortunate exceptions, they do a good job of ignoring their personal biases. Judges are used to making unpopular rulings, and most people can distinguish between a judicial opinion and the judge’s personal beliefs.

Of course, you can’t guard against biases that you aren’t aware of, and we all know from our own personal experiences that we have (and have acted on) biases that we didn’t know we had. But is a judge going to be unaware of a bias against the pornography industry? Not very likely. To the contrary, as you read these opinions, you can tell that the judges are quite aware of the unsavory nature of the industry at issue. So their bias guard is going to be up and ready.

One place where bias might form is with the question of whether pornography deserves copyright protection at all. The Magistrate in In re BitTorrent Adult Film certainly thought it was an open question, even though it really isn’t. It would certainly resolve the judge’s human dilemma of having to rule in favor of an industry that neither the judge nor really anyone else respects. But, assuming the issue is adequately briefed by the lawyers (which, alas, isn’t always the case), the judge isn’t going to let his or her bias replace actual legal authority. Besides, a ruling against BitTorrent plaintiffs on this basis won’t affect the non-pornographic rights holders.

The Consequences of Outing the Wrong Person

Where pornography matters, I think, is how it throws into sharp relief the consequences of “outing” the defendants. Courts blithely regard being named as a defendant, even in meritless lawsuits, as a cost of citizenship* and assume that most people understand that being so named doesn’t mean you did the bad acts.

* Well, except non-citizens can be defendants. Perhaps it’d more accurate to say it’s a cost of democracy—anyone can sue anyone else.

What makes BitTorrent cases different is the potential for mistaken identity. It’s one thing to accuse someone of a bad act, but later be unable to prove every element necessary to establish liability. You at least know that the defendant did something. We can say to ourselves that, if you do those things, you shouldn’t be surprised if someone sues you (even if what you did was, in the final analysis, legal). With the BitTorrent cases, there’s a real chance that a named defendant is completely innocent. The summons that the process server hands you could come completely out of left field. And it will be a long time before you can show that it wasn’t you.

Pornography raises the stakes because viewing pornography is an immoral, but not illegal, act, and it’s done in private. No one is going to say: “Wait, Ginger couldn’t have run over that man with a cement mixer. Ginger can’t even drive a car!” Even if you have a reputation for moral rectitude, even if you’re 80 years old, it doesn’t matter.* If you have an internet connection, you are a potential consumer of pornography, and proving that negative is pretty hard.

* It doesn’t help that plaintiffs aren’t very willing to drop defendants who don’t pass the smell test, like elderly women accused of downloading Snoop Dogg.

Imagine you’re interviewing for a job, and the background check shows you’d been sued for illegal downloading, though the lawsuit was later voluntarily dismissed. Now imagine if the work in question was Teenage ***** *** **** Wh*res (or whatever).* Maybe the potential employer take the trouble to ask about it, and maybe the potential employer believes your explanation—or, maybe not.

* Or, worse, an online dating service.

A Proposal: Anonymity + Fee-Shifting

But how else are rights holders supposed to enforce their rights? For a variety of reasons, suing the intermediaries is impracticable, so that leaves suing the customers. There’s no other way to sue the customers other than to find out the IP addresses and times associated with a download, and subpoena the ISP for the subscriber information.* It’s imperfect, but what in the legal system is perfect? Plaintiffs don’t need to be perfect to win; they just need to be slightly better than 50% perfect.

* It won’t be long before even this method becomes impracticable. BitTorrent happens to be vulnerable to this method because it has to track the IP addresses of the computers participating in the “swarm.” But there are other systems, not quite as convenient as BiTorrent, that don’t track this information. Also, as the internet gets faster, “swarming” will become less necessary.

The obvious solution to this conundrum, which I’ve seen used only a handful of times, is to permit defendants in these cases to proceed anonymously, at least until such time as the correctness of their identities has been established. The plaintiffs would be told the defendant’s name and address, just enough so that they can be served with process, and a protective order would forbid (on pain of contempt) disclosure of that information.* This would remove the unfair advantage that plaintiffs have while letting them actually proceed against defendants.

* Although protective orders aren’t perfect, sophisticated litigants rely on them all the time to protect important trade secrets and other proprietary information that must be disclosed in litigation but can’t be disclosed to the public at large.

The main reason this solution is hardly ever used is that neither side of a case has reason to suggest it. The plaintiffs obviously want to put as much pressure on the defendants as possible. The defendants are hopeful that they can remain completely anonymous, such that they can’t even be served with process, and thus escape the bother of litigation entirely. The first time I ever saw a court use this solution, it did so sua sponte.

Those who are misidentified and must spend money proving as much should be protected. Normally, defendants are responsible for paying their legal costs, but the Copyright Act does have a fee-shifting provision, which Courts could use to force plaintiffs to reimburse mis-identified defendants. This would force plaintiffs to put their money where their mouths are: they would drop unlikely defendants faster and do a better job identifying defendants. It’d increase the cost of enforcement, but not by that much. Innocent parties shouldn’t be out of pocket.

West Coast in Georgia: A Microcosm of What Can Go Wrong

Remember the West Coast cases that I blogged about way back before I knew it involved porn? The cases were mostly drummed out of Washington D.C. on grounds that the anonymous defendants weren’t very likely to be subject to the jurisdiction of Washington D.C. The question that remained was whether West Coast would re-file the cases in more geographically relevant courts.

The answer so far is “Sort of.” West Coast filed some mass-defendant john-doe cases in Louisiana, Texas, Missouri, presumably based on some IP-based sense that the anonymous defendants might possibly perhaps reside in those states and judicial districts. Presumably West Coast never found out the identities of these defendants via the proceedings in Washington, D.C. Those cases appear to be moving forward satisfactorily for West Coast, since the courts have so far all granted West Coast’s ex parte motions for expedited discovery. There are some motions to quash and (more important) motions to sever that have been filed by some of the anonymous defendants.

In Georgia, West Coast started suing known defendants by name*, usually several at a time, which ran into the same joinder problems we discussed earlier. Some of the defendants appear to have paid up and settled. When the courts started severing the cases, however, West Coast started to dismiss defendants voluntarily without prejudice (i.e., so they could be sued again) and apparently without settlement.

One of the defendants, however, was angry enough not to accept the voluntary dismissal. She asked the court to condition the dismissal on payment of her legal fees. According to this defendant, she was incorrectly identified by her former ISP, and told West Coast’s lawyers so. She used to live at the physical address associated with the IP address, and she used to be a subscriber of the ISP, but that was many years ago. Apparently, the ISP never updated its records.

On top of that, she apparently got confused by the waiver of service and thought that it meant she didn’t need to formally answer the complaint. Almost as soon as it could, West Coast moved for a default judgment, which was a very aggressive thing to do, especially when one is in actual correspondence with the defendant. That forced the defendant to move to set aside the default, which incurred legal fees, which probably made the defendant a little cranky.

The court did not quite grant the relief she requested, but it did the next best thing (which wasn’t good enough for her, but there’s no pleasing some people). It told West Coast that, if it did sue the defendant again, it would have to pay the legal fees she had previously incurred. Practically speaking, the dismissal was now with prejudice (it’s a little hard to miss the judge’s message there).

As is typical in these cases, West Coast would not even admit to the possibility that a mistake could have been made. It suggested, without really any basis, that the defendant might possibly maybe have knowingly let others perform illegal downloads with her subscription—i.e., contributory infringement, a theory not present in West Coast’s complaint.

The defendant’s counsel was also pretty aggressive, and the judge was pretty clearly annoyed by that. But he must nevertheless bought the defendant’s story, because the easy thing to do would have been simply to grant plaintiff’s motion to dismiss the case. Instead he conditioned the dismissal in a way that make re-filing pretty unlikely. Despite the defendant’s whinging, I’d call that about as good a victory as a defendant is going to get under the circumstances.

Thanks for reading!

Last time, I said that the real action in these BitTorrent cases (including the one we’re discussing, In Re BitTorrent Adult Film) is “joinder,” where multiple parties are placed on the same side of the “V” in a court case—in the BitTorrent cases, sometimes hundreds, thousands or even tens of thousands of parties are placed on the defendants’ side of the “V.” A plaintiff can try to “join” as many defendants as it wants, but courts have the power to split the defendants off into their own cases, a process known as “severance.”

It’s a relatively dull topic*, but it’s proving pivotal in the BitTorrent cases. Cases in which the defendants are severed are almost never re-filed.** At first, this might seem strange. The cases are not dismissed permanently. The plaintiffs just need to re-file against the defendants as separate, individual cases. And pay the $350 filing fee for each case.

* Which is fine with me because I’m a HUGE civil procedure nerd.

** Based on my own observations and anecdotal evidence. I’m not sure if anyone has been tracking all of these cases.

All for 10,000, 10,000 for All!

Other than the $350 filing fee, the difference between one case against ten defendants and ten cases against one defendant each might sound technical and trivial. And, normally, that’d be a fair assessment. But the BitTorrent cases are unusual in a number of ways, most notably the sheer number of defendants. Where you have 1000’s of defendants, those $350 fees—normally trivial compared to attorney’s fees—start to add up.

More important, there is something about the economics of the BitTorrent cases that makes severance an insurmountable obstacle. As we’ll discuss, the big advantage of joinder is efficiency. Everyone in the case must move together at the same pace. Deadlines are the same, experts are treated the same way, the judge is the same, and so forth. When the cases are severed, you will have different timetables, different ways of handling things like experts, and different judges with different predilections and practices. Even just ten parallel cases would require a certain amount of logistical muscle to keep everything straight.* This is where a large firm will show its advantages because large firms have the personnel necessary to do that.

* Technology can help with that, of course, but even it has limits.

But most of the firms representing the plaintiffs in the BitTorrent cases are (like my firm) small shops. It is presumed that the firms are working on a contingency basis (i.e., they get a cut of proceeds in lieu of legal fees). They could, of course, recruit temporary workers to help with the logistics, but presumably the margins on each settlement are too thin for that to work.

The filing fees shouldn’t pose a barrier to the firms, because under a contingency arrangement, the client, not the lawyer, must pay things like filing fees.* So, the filing fees shouldn’t be coming out of the lawyers’ pockets. But even this might upset the economics. The clients had not budgeted this kind of upfront expense, and they may need to reconsider.

* The reason for this is a bit obscure. Ethically, lawyers may risk their own labor—i.e., their own legal fees—but out-of-pocket “costs,” like filing fees, are not a result of the lawyer’s labor. If the lawyer pays it for the client (and is not promptly reimbursed), it becomes an “advance” or a loan, and lawyers are not permitted to loan their clients money, on theory that sophisticated lawyers will be unable to resist the temptation to take advantage of their unsophisticated clients. No, seriously, that’s the reason.

This is not to say (as many have) that the BitTorrent cases are going away in districts that have been severing the cases. The lawyers and their clients might simply be recalibrating their contingency agreements. The clients might need to increase the cut they’re giving the lawyers, or lay out some upfront money to cover the additional costs of severed cases (plus the filing fees). For their part, the lawyers will need to spend some time thinking how to manage these cases.

Snug the Join(d)er, Getting to the Bottom of Severance

Given the consequences of severance, on what basis may courts sever a case? The bottom line is that courts have tremendous discretion to keep a BitTorrent case joined together, or to sever them.

Under most jurisdictions’ rules of civil procedure, you can usually sue multiple defendants at the same time. For example, if three people conspired to defraud you, you could sue all three defendants together. Or, if a defective axel shaft caused your car to crash, you could sue the seller of the car, the manufacturer of the car and the manufacturer of the axel shaft all at once, if you so choose. You don’t have to. This is called “permissive joinder.”*

* Joinder is not a substitute for jurisdiction. If you want to sue two defendants in Tennessee, but Tennessee doesn’t have jurisdiction over one of them, then you can’t join that party—not because of any problem with joinder, per se, but because that defendant has no business being in that court in the first place.

The idea behind permissive joinder is efficiency.* It’s just more efficient to have all the defendants in the same case, assuming the defendants are sufficiently connected to the case and to each other. And that’s the rub: when are the defendants sufficiently connected? The rules of civil procedure aren’t really that much help:

* Another reason is to avoid inconsistent judgments.

Persons … may be joined in one action as defendants if: (A) any right to relief is asserted against them … with respect to or arising out of the same transaction, occurrence, or series of transaction or occurrences; and (B) any question of law or fact common to all defendants will arise in the action.

Well, that certainly cleared that up! Generally speaking, though, courts tend to interpret these requirements broadly, so as to encourage joinder. Most famously, in Mosely v. General Motors, ten employees sued for employment discrimination. All they had in common was (1) their race, and (2) their employer. Yet, the court of appeals held that they could join together as plaintiffs. Further, even if joinder is not appropriate, courts have the discretion to consolidate similar cases for pre-trial procedures, then hold separate trials for the different defendants (again, with an eye toward efficiency).

Having said all that, courts have tremendous power to control their dockets, and the rules of civil procedure gives them broad rights to “add or drop a party” from a case, so long as the terms are “just.” Ordinarily, this power is supposed to mirror the rules for permissive joinder, but courts have additional powers to manage their dockets—especially where the defendants’ legal strategies are so different from each other that courts, and especially juries, will become confused, and the efficiencies will be lost.

One more factor to take into consideration: a trial court’s decision to sever a case is almost impossible to appeal.* Why? First, you don’t have a right to appeal until there is a final judgment. Anything short of that, and you’ve got an “interlocutory appeal,” which appellate courts hear only if they want to. And they usually don’t.** Second, in theory, a plaintiff whose case has been severed isn’t really prejudiced all that much. The plaintiff doesn’t lose any rights, just some efficiency. Without any real threat to justice, the chances of an appellate court taking an interlocutory appeal on the issue is virtually nil.*** This means that, practically speaking, trial courts have almost unfettered discretion.

* A decision not to sever a case has a slightly better chance, with some appellate courts cracking down on abuse of misjoinder, especially in patent cases.

** If appellate courts heard appeals of every interlocutory order that a party was unhappy with, it’d never have time for anything else.

*** When I was a junior associate, I wrote a brief seeking to sever my client from a multi-defendant patent case. I thought for sure I was going to win because, while I saw several appellate decisions finding misjoinder of defendants in patent cases, I found none finding appropriate joinder. The judge ended up severing the case, then sua sponte consolidating them for pre-trial procedure right back. In retrospect, I shouldn’t have been so surprised. The reason I didn’t find any contrary appellate-level decisions is that appealing an order severing a case almost never happens.

This is all to say that courts have a wide range of options when confronted with BitTorrent cases:

• They can simply accept the plaintiff’s joinder of the defendants, on grounds that participation in the same BitTorrent “swarm” constitutes a single “transaction or occurrence.”
• They can sever the defendants, but then bundle the various cases for pre-trial procedures, which has the same practical effect as joinder, except at the trial stage.
• They can sever the defendants, on grounds that (1) there are too many defendants, (2) the defendant’s situations are too different, and (3) the plaintiffs are avoiding paying filing fees.

By and large, in BitTorrent cases, courts have chosen the one of the first two options, often without specifying which one (because the practical effects are the same). As several commentators have observed, however, more and more courts, including the In re Adult Film case, are severing their BitTorrent cases.

The Case for and Against Severance

The first question we have to ask is whether the various defendants were involved in the “same transaction or occurrence” or series thereof. They certainly have certain thing allegedly in common: they’re all accused of downloading the same film. But that’s not enough. If you were involved in two entirely separate automobile accidents, you couldn’t join the cases just because it involved the same car.

But the plaintiffs allege on other point of commonality. They allege that the defendants participated in the same BitTorrent “swarm.” The way BitTorrent works, members of a BitTorrent network who have a copy of the requested work each contribute a small piece of the whole work, so as to spread the burden evenly across the network.* Thus, the argument runs, each participant in a swarm is contributing to copyright infringement, and each is participating in a single occurrence of copyright infringement.

* The BitTorrent system has to keep track of which member is contributing which bit of the overall work. This is why it’s so easy to find out the IP addresses of the participants in a swarm. It will come as absolutely no surprise to you if I tell you that there are new protocols that do a better job of hiding this information.

The Magistrate rejected this argument—though many other courts have bought it—because the uploading process is automated. To the court, joinder is appropriate only if the participants consciously participated in the uploading process.*

* I’m not sure I buy the Magistrate’s reasoning here. If you’re part of a BitTorrent network, and you leave the BitTorrent software “on,” you can hardly say you were surprised that your computer was part of a swarm with respect to files you marked for participation. I don’t see how automation changes that.

Perhaps more important, the Magistrate noticed that the dates of the various defendants’ alleged participation in the “swarm” can be pretty far apart—apparently too far apart to have participated in the same swarm. This raises a more fundamental question: how do we know when a given upload is part of a given swarm? The hash values are the same, but that just identifies the target file, and it will be the same regardless of the swarm. The fact that one computer’s participation with respect to a given hash value happens to be close in time to another computer’s participation with respect to the same hash value doesn’t necessarily mean they’re participating in the same swarm. If the file is popular, there could be multiple swarms going on at the same time. I should think that disentangling the various swarms would be a messy business.*

* Perhaps the plaintiffs mean to argue that, not only are members of a given swarm participating in the same “transaction or occurrence,” but anyone who has participated with respect to the same hash value is participating in the same “transaction or occurrence” on the theory that a file with a given hash value could be traced to a single parent file, and that swarms tend to build on one another with respect to the same hash value. That might be taking things a bit too far.

The argument that really seems to persuade the Magistrate is that the defendants are too diverse for efficient joinder. Here, the Magistrate may use his broad discretion under Rule 21. The Magistrate noted that each of the anonymous defendants had emphasized a different legal defense. Some would rely on a lack of venue or personal jurisdiction, others will simply deny that they did it, but for a variety of reasons: religious convictions, lack of technological savvy, differences in WiFi equipment, the nature of other household members and guests, and so forth.  The Magistrate concluded that whatever judicial efficiencies there were in joining the defendants were outweighed by the judicial inefficiencies of accounting for the defendants’ diversity.*

* The Magistrate also simply doubted that a case with so many defendants could be practically carried out. But I’ve seen courts manage large cases successfully before.

Finally, the Magistrate didn’t like the ratio of the number of defendants to the number of filing fees (though he didn’t quite put it that way). It costs $350 to file a case in federal court. It doesn’t matter how big or complex the cases are; the fee’s the same. The amount is meant to defray (only a tiny bit!) the costs of running the judicial system (a kind of use fee), and also to make sure that plaintiffs are serious about the cases they file.

The filing fee, thus, touches on the two things about BitTorrent cases that courts dislike: the judicial bother, and the gnawing suspicion that the plaintiffs aren’t serious about litigating their claims. It should not come a surprise, then, that filing fees play a predominant, if not decisive, role in those decisions severing BitTorrent cases.

I think that’s enough about joinder and severance. Dull legal doctrine makes a big splash! I might have some bonus coverage later, since I’ve followed some of the progeny of the West Coast cases I blogged about previously, and I thought I’d report on what I found out.

Thanks for reading!

* The blog title is a reference to this Order of the Stick comic. (It’s safe for work, so long as you don’t read it out loud.)

Last time we surveyed the forces that lead to this recent extraordinary magistrate’s opinion. It was handed down May 1, but already it’s become notorious for its almost gleeful taking down of the four porn-industry rights-holding plaintiffs. The key is to read the snerk-inducing footnotes. Highlights include these gems:

Footnote 7, in which the concept of “moral high ground” is discussed:

Plaintiff K-Beech’s rambling motion papers often lapse into the farcical. In its papers, counsel for K-Beech equate its difficulties with alleged piracy of its adult films with those faced by the producers of the Harry Potter books, Beatles songs and Microsoft software, and compare its efforts to collect from alleged infringers of its rights to the efforts of the FBI to combat child pornography. In an ironic turn, the purveyors of such works as Gang Bang Virgins, explain how its efforts in this matter will help empower parents to prevent minors from watching “movies that are not age appropriate” by ensuring that viewers must pay for plaintiffs products, and thereby effectively notify parents of such activity because “many parents would surely notice if they showed up on billing statements.” It is difficult to accord the plaintiff, which features “Teen” pornography on its website, the moral high-ground in this regard.

(Citations omitted.) Burn! Maybe the plaintiffs shouldn’t have been so defensive. Why not just say, “Our works are protected by copyright, same as the Harry Potter novels, Beatles songs and Microsoft Word. Our rights in our works should be accorded the same dignity as those works.”?

Footnote 8, in which the Magistrate questions whether pornography may be accorded copyright protection. Actually, he says the issue is “unsettled” in the Second Circuit and other circuits, which I suppose it technically true. And, once upon a time, courts actually used assume that obscene works were ineligible for copyright protection. That changed in 1979*, when the Fifth Circuit (the one that covers Texas, Louisiana and Mississippi!) held in Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852 (5th Cir. 1979) (the notorious Behind the Green Door case) thoroughly dismantled the concept of an obscenity defense.** In Devils Films, Inc. v. Nectar Video, 29 F. Supp. 2d 174 (S.D.N.Y. 1998), a judge did refuse to preliminarily enjoin the infringing distribution of the plaintiff’s pornographic films, and he did say (sua sponte and in dicta, as far as I can tell) that he thought the plaintiff’s films were illegal, but the court was clear that it wasn’t deciding that obscenity was a defense to copyright infringement. Rather, he refused to expend judicial resources lifting a finger to help what he regarded as an illegal enterprise. That decision was not appealed.

* It had to be in the 70’s, didn’t it? To quote swinging-bachelor Steve Dallas, “By God, we have got to get Carter back in the White House!”

** Technically, the defense was brought under the equitable rubric of “unclean hands.” No, I didn’t just make that up.

Footnote 9: The court did a little digging and discovered that the principal of one of the plaintiffs has a colorful criminal history:

As K-Beech put its reputation into issue, it is worth noting that the owner of K-Beech Inc. (and the apparent inspiration for the K-Beech mark) is Kevin Beechum. See “Porn studios raided to ensure adult-only casts,” 1/12/07, LA Times at 1. It appears that this is the same Kevin Beechum who testified in federal prosecutions about his experience vandalizing retail adult video stores to help extort protection payments from their owners. See U.S. v. Feinberg, 89 F.3d 333, 335 (7th Cir. 1996); U.S. v. Sturman, 49 F.3d 1275, 1278 (7th Cir. 1995). In those cases, Beechum described how he hired associates to use hammers and baseball bats to inflict $10,000 in damage on a Phoenix adult shop, and negotiated over a “few more jobs” in Cleveland. Other evidence established that, following Beechum’s introduction, these same associates, on behalf of the extortionists, planned to plant remote control bombs at eight stores in Chicago in furtherance of the scheme, but that plan failed when, after successfully attacking one store, a bomb accidentally went off, killing one of the co-conspirators.

The thing to bear in mind here is that the court wasn’t addressing a copyright claim but a hastily thrown-together claim for trademark infringement (because the plaintiff, incredibly, hadn’t registered the copyright in the work and was scrambling to come up with a different claim). Now, it’s true that the trademark claim was pretty lame, but these are two different kinds of “reputation” being discussed. Personal (bad) reputation isn’t the same thing as brand “reputation.” The plaintiff mixed those up, and the Magistrate pounced.

Schadenfreude Isn’t Policy

Well, it’s fun to read the footnotes, but they don’t really serve as the basis for the Magistrate’s harsh opinion. Specifically, the Magistrate (1) placed severe limitations on the plaintiff’s ability to identify the defendants, and (2) severed all but one of the anonymous defendants from the case. We’ll look at the severance ruling next time.

With respect to the limitations on discovery, the Magistrate ordered the following procedure:

• As to the one remaining defendant in each case, the plaintiff may serve a subpoena to the ISP seeking only the name, address and MAC address for the subscriber associated with IP address in question. The magistrate specifically forbade seeking the telephone number or email address of the subscriber because (1) they aren’t necessary to serve process, and (2) they’ll just be used to harass the subscriber.
• The ISP was then ordered either (1) to send a copy of the subpoena (and the order) to the subscriber, or (2), if the subscriber can’t be identified “to a reasonable degree of technical certainty,” to tell the plaintiff so. In the latter case, the ISP would presumably be released from the subpoena. The ISP and the subscriber then have a certain period of time to object to the subpoena.
• If there is no objection or the objection is overruled, the ISP will comply with the subpoena, but instead of giving the information to the plaintiff, it is to give the information to the court, under seal, with no copy to the plaintiff. The court will reveal the information to the plaintiff at a subsequent status conference. And the plaintiff is forbidden from using the information in any way except to serve process on the putative defendant.

Technically, the magistrate granted the motion to expedite discovery, but practically, the limitations eviscerated the settlement-forcing power of the discovery. The subscriber’s contact information can be used only to serve the summons and complaint on the subscriber. The rights holders can’t first give the subscriber a chance to settle before being publicly “outed” as a porn consumer.

How did the Magistrate decide that these restrictions were necessary? Structurally, the Magistrate followed the five-factor test in Sony Music, which is still the decision of choice when dealing with anonymous defendants accused of copyright infringement. Thematically, however, the Magistrate’s decision boils down to two things: (1) Wi-Fi changes everything (or, at least, changes things enough), and (2) the plaintiffs aren’t serious about litigating their claims.

Wi-Fi Screws Everything Up

The Magistrate creates what I think is a bit of a fiction. Once upon a time, IP addresses (when combined with the exact time of the download) were reliable identifiers of anonymous defendants. But Wi-Fi changes all that. With the widespread adoption of Wi-Fi by consumers, we can no longer rely on IP addresses any more. Since most people don’t secure their Wi-Fi networks, you just don’t even know if someone in the household performed the download, let alone which household member (or guest) did it.

This strikes me as a bit of revisionist history. For one thing, IP addresses have always been unreliable identifiers. It’s just they’re the best identifiers we have. Plaintiffs often have to make educated guesses about whom to sue, and they bear the burden of proving that, more likely than not, they’ve identified the correct defendant.

While unsecured Wi-Fi networks allow strangers to steal bandwidth, they don’t introduce that much more uncertainty, in real terms, than ordinary routers—or even direct connections—so long as they are more than one member of the household, and everyone has access to the family computer. If, say, four people had access to the family computer*, and none admits to downloading the movie, can it truly be said that one of the potential defendants is more likely than not the culprit, assuming no other evidence?

* Five, if you include the cat.

Still, the popularity of household Wi-Fi networks does change the game. The mere possibility that a complete stranger to the lawsuit—someone who cannot be identified, no matter how hard you try—I think is causing courts to reassess their assumptions about the reliability of IP addresses. Before, we could narrow the potential defendants to the household, known guests of the household, friends, boyfriends, girlfriends, and so forth. It seemed at least theoretically possible that we could account for everyone and find enough evidence to point the finger at the correct one. When they all said they didn’t do it, you could feel confident in knowing that one of them was lying. Now, there’s a small but non-trivial chance that none of the likely suspects did it.*

*  Note, by the way, that the Plaintiffs argued that, if the subscribers can’t be shown to have performed the download, they should be found liable for negligence for leaving their networks unsecured. The Magistrate laughs this off, and rightly so. It’s a lot different from, say, a supermarket’s duty to guard against crime in its parking lots. Still, in a few years, this idea will start to sound less ridiculous.

Your Bluff: I Just Called It

The killer fact in this case was that one of the defendants reached out to the rights holder’s “Negotiator” and offered “unfettered access” to the defendant’s computer, records or anything else that might exculpate him or her. The Negotiator refused but only reiterated the demand for settlement money. This really sets the Magistrate off. For the Magistrate, this cements his suspicion that the rights holders aren’t really interested in using the courts for their intended purpose—to resolve lawsuits—but as a protection racket.

To be fair, recall that rights holders can’t go after the conduits of illegal downloading because they’re protected by the DMCA safe harbors. If they are to enforce their rights, they must be enforced against the actual end users. But to do that in any meaningful way, one must sue quite a number of them. So it shouldn’t come as that much of a surprise that the plaintiffs may be ill-prepared to actually investigate their own claims when given the chance.

But maybe they should have been prepared. All jurisdictions will punish a lawyer, and sometimes a client, for signing a “pleading” (such as a complaint, or, more pertinently, an amended complaint) without an adequate legal and factual basis.* Ordinarily, a lawyer is expected to conduct a reasonable investigation into the facts before signing off on a complaint. Often, of course, certain facts are completely hidden from the investigating lawyer, and courts don’t expect lawyers to do the impossible. Proving such facts is what discovery is for.

* In most jurisdictions, this is known as “Rule 11.”

In the BitTorrent cases, there’s only so much the plaintiffs can do to investigate the identities of the defendants, so the complaint is fine. But what happened here was that a defendant gave the plaintiff a chance to conduct that reasonable investigation before signing an amended complaint.* If the plaintiff doesn’t take the defendant up on the offer, can the plaintiff’s lawyer sign the amended complaint naming the defendant?

* To be clear, they never got to this point.

Is There a Balance to Get Right?

It seems to me that the Magistrate is actively trying to discourage mass-defendant BitTorrent cases. The procedure he orders is so cumbersome, and such a burden on judicial resources, that it’s not very likely to be adopted elsewhere. It’s clear he finds them distasteful, but that’s not a good basis for raising the difficulty level to the point where it’s no longer worthwhile to bring a lawsuit.

If the Magistrate were protecting the First Amendment right to free speech, that’d be something. The Magistrate did follow Sony Music, which is a case about balancing the right of anonymous expression—even one as “thin” as one’s selection of a movie or song—against copyright. But anonymous expression isn’t what’s at issue here. If that were the case, the argument would be, “I have a right to have my entertainment choices remain anonymous, even from the copyright holders in the works I choose” (and argument that went down in flames in Sony Music). Here, the argument is: “I didn’t do it, and you can’t prove I did.”

There are procedures for dismissing meritless claims* and for punishing those who bring them. Where the Constitutional right of free speech is at issue, we will require an early showing of liability, and we will sometimes say that the right of free speech is strong enough to overcome the right to seek judicial redress. But the right of free speech isn’t at issue here.

* What if courts made rights holders pay the attorney’s fees of those who were wrongfully identified and named as a defendant? There’s support for that in the Copyright Act. It would just be part of the cost of doing business for the rights holder, and it would make the victim whole, while encouraging the rights holder to investigate better and to dismiss defendants as early as possible to minimize costs.

So what interest is strong enough to justify the Magistrate’s discovery limitations? Freedom from harassing and/or embarrassing lawsuits? Conservation of judicial resources? Just plain embarrassment? Judges have a great deal of leeway in how they manage their dockets. The rules of civil procedure permit courts to limit discovery to avoid, among other things, embarrassment and harassment. Those are pretty important interests and pretty potent powers, but they don’t quite rise to the level of protecting Constitutional rights. And what about the rights holders? Don’t they have a right to have their grievances heard in court?

To the extent the Magistrate was trying to spare potentially innocent parties from public ridicule and embarrassment, the better to address that would be to let the defendants proceed anonymously. True, there is a presumption against anonymous parties in lawsuits because we’re distrustful of secrecy in court proceedings—with good reason—but isn’t there enough a showing under the circumstances?

Perhaps the Magistrate’s order can be justified on grounds that the plaintiffs have shown themselves insufficiently serious about their lawsuits. Courts probably do have a reasonable expectation that plaintiffs initiate lawsuits with the intent of vindicating their rights. Unlike most rights, the right to redress of grievances does put a significant burden on public resources—i.e., the court system—and no right, not even the right of free speech, is completely unfettered. Courts are free to place some barriers to entry to their systems. Where the burden being placed on the system is great, perhaps courts should be permitted to heighten those barriers.

If that’s the basis for the Magistrate’s limiting of discovery, then the holding is a narrow one. It’s going to be immediately influential—indeed, it already has been influential—because there are so many cases like this pending. But once that’s run its course, the narrowness of its holding will become evident. It’s not going to be be very often that a plaintiff will all but admit that they’re not serious about the huge lawsuit it just filed.

Lawsuits can serve business interests—indeed, business would be seriously hindered if there were no reliable court system—but they must not become a business model in and of themselves.* The difference might sound semantic, but to the courts, it’s important that everyone believe that they’re there for the justice. Even patent-holding companies (“trolls”) get this. It’s only a matter of time before copyright holders catch on. They’re just going to have to invest more money and thought into how they go about it.

* I’d argue that foolishly implemented statutory-damages schemes rather encourages this because it suggests you can make a profit above and beyond the harm you actually suffered.

Next Time: Severance

Next time, we’ll drill down on where the real action is: the decision to sever the defendants from the case.

Thanks for reading!

Last summer, I started to blog about mass-defendant bittorrent cases pending in Washington, D.C., some of which involved over 10,000 anonymous defendants. Since the plaintiffs didn’t know who the defendants were, but they did know to IP address to which a bittorrent was sent, they would sue the defendants as “John Doe,” then ask the court for permission to send subpoenas to the defendants’ internet service providers. The subpoenas would ask for the contact information of the subscriber who was assigned that particular IP address at that particular time.* In theory, the subscriber would be your defendant, or at least someone who knew the real defendant (e.g., a family member).

* Since most consumers are dynamically assigned an IP address by their ISP for each internet session, and that IP address will likely change from session to session, you need to know not only the IP address but also the exact time the IP address was being used.

Recall that the first hurdle that the plaintiff must clear is a request for early discovery. Normally, discovery in federal court can’t start until there’s been a conference among the parties’ lawyers, which is a bit of a Catch-22 if you don’t know who the defendants are. At this point, you see, the defendants have no idea they’ve been sued, so they can’t pipe up at this point and oppose the plaintiff’s motion. Besides, the motion seemed ministerial in nature, not substantive. Without any opposition, courts would grant the motion without question.

Wait a Minute….

But even then, there was a trend against such rubber-stamping. Courts started to realize that they were being used as clearinghouses to find out the identities of potential defendants. The chances that all 10,000 defendants actually resided in the jurisdiction, and were, therefore, subject to being haled into that court, were pretty small (infinitesimally small in the case of Washington, D.C.), and this raised a due-process problem. Judges started to question the ratio of defendants (and work for the court’s staff) to the filing fees (just one $350 fee for all 10,000 defendants) and wondering if this was a great use of scarce judicial resources. Judges started to wonder if there was another side to the story that they weren’t hearing. One court even appointed a kind of guardian ad litem to argue on behalf of the anonymous (and still ignorant) defendants).

Then, there was a growing understanding that IP addresses aren’t all that reliable a means of identifying wrongdoers. As I mentioned in my previous posts, all kinds of things can go wrong. The plaintiff’s IP or time information may be incorrect; the ISP may make a mistake retrieving the information; the ISP’s subscriber records would be out-dated or otherwise mistaken. These mistakes my not happen all that frequently, but when there are literally 10,000s of defendants, they’re going to happen a lot.

On top of that, once you’ve  correctly identified the subscriber, you haven’t necessarily identified the defendant. The subscriber is just the one paying the ISP bill. He or she may not be the one who actually downloaded the content. And paying the bill doesn’t make one secondarily liable because (1) the payor doesn’t necessarily benefit financially from the download, and (2) the payor isn’t necessarily aware that the internet service is being used for downloading that particular work.* The actual infringer could be a family member, guest, a neighbor** or even someone sitting outside in a car sucking down your unsecured Wi-Fi signal.***

* A lot of rights holders appear to assume that there is a rebuttable presumption that the subscriber is also the downloader. I don’t see how any of the burden of proof shifts to the defendant.

** It never occurred to me that I needed to protect my personal household Wi-Fi signal, until one day, several years ago, I noticed a strange playlist on iTunes. It belonged to a new neighbor (the house next door is rented to university students, so there’s some turn-over), who unwittingly let her iPod be shared on our network (while not so unwittingly latching onto our internet service!). Her taste in music wasn’t so bad for a freshman. I had been wondering why our service seemed so slow!

*** Or even a secured Wi-Fi signal. For $90, you can get a device that will hack into most secured Wi-Fi signals. There are defenses against this—usually some form of VPN—but they’re pretty elaborate for a consumer.

The Piranha Brothers’ Other Other Operation

Finally, a new realization started to grow in the minds of the judges. They weren’t just clearinghouses; they were tools in a kind of protection racket. Most (but not all) of the cases involved pornographic movies.*

* A fact I didn’t know when I first blogged about the West Coast case, which involves one of the more notoriously titled pornographic features. If I had known, I surely would have punned a lot more.

The way it worked was that, using the court’s subpoena power, the copyright owner would find out the contact information of the subscriber associated with the IP address. Then they would send a letter offering to settle the case for a few thousand dollars—far less than the cost of defending oneself. The letter would mention, as though in passing, that the next step in the legal process would be to identify the subscriber as a defendant in the case publicly. Most recipients will connect the dots: they’re going to be identified as a consumer of pornography. The beauty of the scheme is that the defendants do not need to be accurately identified for it to work. Shame would be a sufficient motivator.

There is nothing really wrong about this. Settling cases is something courts generally approve of, and usually it doesn’t matter whether the case was settled before or after the defendant was identified. Settled is settled. Where you run into trouble is if you sue but aren’t really serious about it. But again, the rights holders are stuck. They can’t settle until they sue, so they have to sue, even if they hope to settle. Even so, if you’re suing to force a settlement, you still need to prepare as though for a real lawsuit.*

* True, you can always voluntarily dismiss your lawsuit with impunity before the defendant answers your complaint, but after that, you need either the court’s or defendant’s permission. In the usual course of things, courts and defendants are only too happy to let you dismiss, but not always. I’ll discuss below one instance where the plaintiff found itself with a sticky situation.

These growing realizations came together recently in a Magistrate’s Report & Recommendation* consolidating four pornography Bittorrent cases in the Eastern District of New York (basically Long Island). Faced with a typical motion for expedited discovery, the magistrate recommended (1) that all of the defendants be dismissed (with a right to re-file) except the “John Doe No. 1” in each case; and (2) as to that one remaining defendant, the plaintiffs could proceed with sending the subpoena to the ISP, but under heavy restrictions.**

* Magistrates are not full judges under the federal system, but judges often refer specific issues to them. The magistrate’s ruling does not, at first, have the force of a judicial order. Instead, it’s just a recommendation to the referring judge about what order should be issued. The parties get 14 days to object to the recommendation, which can lead to another round of briefing. Judges, however, tend to accept magistrates’ recommendations, whether objected to or not.

** In addition, the magistrate recommended that all of the defendants in one of the cases be dismissed because the plaintiff couldn’t prove it owned the copyright in the pornographic film in question. This case can be refiled once the plaintiff obtains the registration for that copyright.

Next time, we’ll examine how the Magistrate reached these rulings, and his rather extreme skepticism of what motivates certain rights holders.

Thanks for reading!

As in the past, members of the Copyright Office will discuss the doings and business of the Copyright Office, provide an update on registration procedures and regulations, and review the year in copyright legislation and litigation. Our luncheon speaker will be Judge Gil Merritt, Senior Judge of the Sixth Circuit. Our afternoon panel will be on developing new business models for the music industry in a post-file-sharing era. Further details may be downloaded here.

Be sure to register soon (here)!

Oh, and Rick is one of the producers.

Last time, I laid out the context for the Second Circuit’s decision in the Viacom v. YouTube case–i.e., the state and open issues of the law of the DMCA safe harbors. This time, I’ll get into what the Second Circuit actually said, pointing out where the Second Circuit agrees with, and diverges from, the Ninth Circuit’s reasoning in Shelter Capital v. UMG (the “Veoh case”).

Knowledge Requirement Is Limited to Specific Knowledge

The Second Circuit agrees with the Ninth Circuit that only knowledge of specific acts of infringement may defeat the Knowledge Requirement, whether under the actual knowledge or “red-flag” prongs.

The Second Circuit goes a bit further and describes “red-flag” knowledge as “objective” knowledge, as opposed to subjective knowledge. I.e., a reasonable person would have had knowledge (without conducting an investigation!) regardless of his or her actual knowledge. If that’s the case, the scope for red-flag knowledge must be very narrow indeed, since a person with so much awareness would almost always have enough facts to constitute actual (subjective) knowledge.

As it happens, the Second Circuit found instances that arguably show actual knowledge, in the form of emails from YouTube executives that at least suggested they knew that specific files were likely infringing. E.g., “[T]he CNN space shuttle clip, I like. [W]e can remove it once we’re bigger and better known, but for now that clip is fine.” The court did not say that the emails proved that the executives had actual knowledge, only that there was enough doubt that a jury should be the one to figure it out. This accounts for some of the remand. But the scope of the remand is very limited: only for the “handful” of files actually mentioned in those emails.

Every Time I Think of Infringement, I Go Blind

Then the Second Circuit throws a curve ball, asking the trial court to examine the issue of “willful blindness.” The court acknowledges that the DMCA relieves operators of any obligation to investigate but concludes that willful blindness isn’t the same thing as monitoring or investigating. It’s more like “looking the other way” when you know or strongly suspect that if you looked, you’d see something you wish you hadn’t seen.

How is this different from actual knowledge or red-flag knowledge? Wouldn’t you need to have those types of knowledge before you even triggered willful blindness? The knowledge threshold must be somehow lower for willful blindness, so long as it is combined with some sort of “conscious avoidance.”

A better formulation might be the Seventh Circuit’s in In re Aimster: “knowing or strongly suspecting that [one] is involved in shady dealings [and] tak[ing] steps to make sure he does not acquire full or exact knowledge of the nature and extent of those dealings.” The Seventh Circuit cites as examples criminal enterprises which were designed by the defendant to shield the defendant from actually know what’s going on, i.e., implementing a system that the designer knows is going to result in illegal activity but which is specifically designed to insulate the designer from any actual knowledge of the illegal activity.

In any case, the application must still be quite limited in light of (1) the anti-investigation provision of the DMCA and (2) the prohibition against end-runs around the notice-and-takedown procedures. Willful blindness shouldn’t apply simply because there are so many “red flags” that the operator should have investigated because that would implicate the anti-investigation provision. In addition, the “strong suspicion” must be derived from somewhere other than the rights holder themselves, since they are stuck with the notice-and-takedown regime.

The only example I can think of would be someone like Fung, from Columbia Pictures v. Fung. In that case, the court found that Fung had “red-flag” knowledge because there was so much obviously copyrighted material on his sites that, to avoid knowledge of infringing activity, he would have had to “engage[] in an ostrich-like refusal to discover the extent to which their systems were being used to infringe copyright.” Perhaps Fung would have been better analyzed under the willful blindness standard? Fung was all but asking his users to upload infringing content, but he made sure there no way to prove that he had direct knowledge of the infringement. It’s a bit like musing out loud in a room full of hit men that you so wished someone dead that you’d gladly reward the someone’s killer with $1 million, then pretending surprise when the someone winds up murdered shortly thereafter.

Anyway, we’ll see what the trial court does with this legal football, and then what the Second Circuit does with it when it gets punted back up to it.

I Know Control When I See It, and it’s Not Vicarious

The Second Circuit agrees with the Ninth Circuit that the Financial-Benefit Requirement is not coextensive with the common-law doctrine of vicarious liability.

However, the Second Circuit holds that “right and ability to control” means neither the ability to stop uploads nor the ability to stop specific instances of infringement. In rejecting the latter interpretation, the Second Circuit directly disagrees with the Ninth Circuit.

At a very abstract level, the Second Circuit’s reasoning seems sounder than the Ninth Circuit’s. Under the Ninth Circuit’s reasoning, you need to import the Knowledge Requirement into the Financial-Benefit Requirement, but if you do that, there’s no point in having a Financial-Benefit Requirement. At the same time, both courts agree that the mere ability to prevent uploads isn’t sufficient to defeat the Financial-Benefit Requirement, since that would take the very types of websites Congress sought to protect right out of DMCA safe harbor.

But the Second Circuit isn’t itself very certain about “right and ability to control” means. The only hint it provides is that, in cases where “right and ability to control” have have been found, the providers exercised “substantial influence on the activities of its users.” But it doesn’t provide much else for the district court to go on during remand.

It does cite a (single) district court decision–out of the Ninth Circuit, no less–as the only example of a defendant found to have exercised the requisite “right and ability to control.”* In that case, Perfect 10 v. Cybernet Ventures, a purveyor of nudie pictures sued an “age verification service” (i.e., it tells porn sites whether a given user is old enough to use the site).** Cybernet was not, however, paid for that service by its porn affiliates. Instead, it made money by collecting subscription money from users, who were then given the right to peruse certain sites in Cybernet’s network of porn sites (presumably giving the affiliates a cut). Cybernet was thus financially dependent on the quality of the porn sites–the better the porn site, the more users will subscribe. Cybernet made sure that the porn sites met certain requirements relating to formatting and content, and told its affiliates that it would monitor compliance with these requirements. The district court, in granting a preliminary injunction, found that Cybernet exercised enough control over the affiliate sites to fail the Financial-Benefit Requirement, when coupled with the obvious direct financial benefit.

* It also suggested that the Supreme Court’s Grokster decision might also present a situation where the operator exercised sufficient “right and ability to control.” But I’m not really clear why. I’ve heard it suggested that Grokster-level inducement (which, remember, was based on a lot of bad facts) is so inconsistent with the DMCA safe harbor that the safe-harbor shouldn’t be available to such providers. But Grokster itself sound more like someone who was willfully blind than someone with “substantial influence” on its users.

** The Second Circuit describes Cybernet’s control as having “instituted a monitoring program by which user website received ‘detailed instructions regard[ing] issues of layout, appearance, and content’.” Obviously, there was a lot more to it than that. Worse, the Second Circuit quoted from the wrong part of the opinion! It quoted from the discussion of Cybernet’s liability for vicarious liability, rather than from the discussion of “right and ability to control.” That’s the jurisprudential equivalent of a Freudian slip!

It’s a little bit difficult to import Cybernet Ventures into the context of YouTube and other providers of user-generated content. Reading Cybernet Ventures, one gets the sense that it’s pretty close to the floor of what would constitute “right and ability to control.” If so, the “right and ability to control” will be construed fairly narrowly. It appears to require that the operator substantially participate in the shaping and selecting of content, not merely influencing the content. For the sake of consumers of online content, it is hoped that website operators will still have the right and ability to exclude content based on subject-matter or quality. I.e., operators will be able to locate and delete content that operator finds disgusting, sacrilegious or boring, or content that is too grainy or otherwise technically deficient. Otherwise, YouTube and similar sites would become pretty horrible to use!

In the end, the Second Circuit punts the whole issue of “right and ability to control” back to the trial court for further development of the record, but without giving the poor trial court* much guidance about how to apply those facts (or even what facts should be developed). Again, we’ll see what the trial court does with it, and then what the Second Circuit does when the issue is punted back.

* I’d feel worse, but honestly, the trial court’s summary-judgment order and opinion wasn’t all that great. 

Miscellaneous Issues

Finally, the Second Circuit agrees with the Ninth Circuit’s broad reading of the threshold requirement for § 512(c) safe-harbor protection: “by reason of storage at the direction of a user.” Nothing exciting there.* However, there is one activity that the Second Circuit decided probably didn’t come in under the § 512(c) safe harbor: the third-party syndication of content selected by YouTube. However, it appears that none of the content of which the rights holders complained was part of the syndication scheme, so no harm, no foul.

* I criticized UMG for spending so much time on this issue in the Veoh case, but I’m not as critical here. This is because, in Veoh, there was already Ninth Circuit authority directly on point. The chances of overturning that authority was remote. By contrast, there was no authority on the issue in the Second Circuit, so the arguments had a better shot. I still think they were complete long-shots, though, but Viacom must have thought the reward was worth the risk.

Like the rights holders in the Veoh case, the rights holders in YouTube didn’t press the Repeat-Infringer Requirement. However, some (but not all) of the plaintiffs made what seems to me a pretty silly argument.* You see, YouTube lets certain rights holders have special access to internal tools that would allow rights holders to identify infringing content (and remove it, too). Everyone else has to use YouTube’s publicly-available search feature. This is actually a pretty common arrangement. It is basically argued this arrangement was discriminatory, and that unless everyone has access to those internal tools, YouTube failed to implement a repeat-infringer policy.

* I note that Viacom, the most sophisticated of the plaintiffs, didn’t sign on to this argument.

How in the world would this implement the Repeat-Infringer Requirement? Well, there are actually two prongs to the Repeat-Infringer Requirement. The first, of course, is to implement a reasonable repeat-infringer policy. The second is to “accommodate[] and … not interfere with standard technical measures.” This second prong has been interpreted to mean that an operator can’t prevent you from searching the site for acts of infringement.

In any event, the rights holders apparently didn’t bother to explain how the internal tools are “standard technical measures” and rejects the argument. I’ll add that over in the Ninth Circuit, this provision is interpreted to require only that the rights holder may access and search the operator’s system for infringing content.

Conclusion

As far as I know, there aren’t any further DMCA safe-harbor issues pending before any appellate courts, so we might need to wait for the Second Circuit to re-visit YouTube. If YouTube settles before then, we might be left with something of a circuit split, with rights holders flocking to New York (and away from California) to bring their copyright actions. There is a remote, but not negligible, possibility that YouTube will appeal the decision to the Supreme Court based on the circuit split.

Thanks for reading!

Well, if you were hoping that the DMCA safe-harbor law would clear up with the Second Circuit’s long-awaited opinion in Viacom v. YouTube–that we’d get to the point where folks would know the contours of the safe harbor without having to consult with a lawyer–then last Thursday was, indeed, as Prof. Goldman put it, a “bummer.” There were things to criticize in last December’s Ninth-Circuit decision in Shelter Capital v. UMG (better known as the “Veoh case”), and certainly rights-holders were unhappy with it, but at least you knew where things stood. The basic lesson from Veoh was: comply with the DMCA notice-and-takedown regime, watch out for notices of infringement by non-rights holders, and things’ll probably be OK.

But YouTube muddies the waters–at least, for a while. That’s not really meant as a criticism. Simplicity and “bright line rules” are nice because it saves business folks and consumers money (fewer legal fees) and worry. But an appellate court’s job is, in this case, to interpret a statute. Sometimes the best interpretation is also a complex or “fuzzy” one. True, lawyers are the main beneficiaries, but appellate courts don’t care about that. They’re just trying to get it right.

The Basics of Safe Harbors Under the DMCA

I picked a pretty good time to start blogging about the DMCA safe harbors back in August.* Back then, I was just trying to introduce the concept, through the case against Grooveshark that was brought here in Nashville, which I did in two posts. I explained that there were four major types of safe harbors under the DMCA (five if you count a minor one), and the most important one is found at Section 512(c) of the Copyright Act. Under that provision, an operator of a website (or other computer system) that permits (even encourages) users to upload content is not liable for claims of copyright infringement relating to that content (the actual language is “by reason of the storage at the direction of a user”), if four things are true:

1. The operator has an implements a policy repeat infringers (the “Repeat-Infringer Requirement”);
2. The operator is genuinely unaware that the content is infringing, either through actual knowledge or “red-flag” knowledge (the “Knowledge Requirement”);
3. The operator does not benefit financially and directly from the infringement, to the extent the operator can control the activity leading to the infringement (the “Financial-Benefit Requirement”); and
4. The operator expeditiously removes content subject to a proper “DMCA take-down notice” (the “Takedown Requirement”).

* Only, this blog isn’t really about the DMCA, at least, not exclusively. But the DMCA safe-harbor provisions have come to dominate the blog a bit because (1) they’re complex, important and frequently misunderstood (so I wanted to make sure everyone understood them), and (2) there have been now two major appellate decisions on the contours of the most important DMCA safe harbor.

Unfortunately, even though the DMCA is now about 12 years old, there’s lots we don’t know about these four requirements. For example:

1. Does the one providing the DMCA take-down notice have to conduct a fair-use analysis before delivering the notice to the operator’s DMCA agent?
2. What constitutes a legally adequate repeat-infringer policy? What’s an “infringer”? How many times is too many? What constitutes an act of infringement? Does the nature of the underlying work matter? And what about fair use?
3. Is any generalized knowledge by the operator of infringing activity on the website defeat the protection, or must there be knowledge of specific acts of infringement?*
4. Given that there’s no duty to investigate one’s own website for infringing activity, what does it take to achieve “red-flag” knowledge?
5. Is the Financial-Benefit Requirement just a codification of vicarious liability**?
6. What does it mean to have “the right and ability to control” infringing activity? Does it mean merely have the ability to block uploads (which almost all websites can do), or to stop specific acts of infringement (which would tend to import the Knowledge Requirement into the Financial-Benefit Requirement)?***
7. Is the Section 512(c) safe harbor limited to just the act of storing material, or does it extend to acts involving the access of the stored material, or perhaps even further?*

* I’ll admit I snuck these ones in. I didn’t bring these up in the Grooveshark posts because they never seemed that controversial. As it turns out, they weren’t.

** Vicarious liability is a judge-made form of secondary copyright liability–i.e., you’re not the actual direct infringer, but you should held liable all the same–in which you gain a direct financial benefit from the infringing activity and you had the right and ability to control the infringing activity, even if you did not know the activity was infringing. The classic example is a dance-hall operator who make money when a band plays copyrighted works without authorization. The idea is that the money the dance-hall operator made really belongs to the copyright holders. The language of the Direct-Benefit Requirement is almost exactly the same as the most common formulation of the elements of vicarious copyright liability.

*** I snuck this one in, too. I don’t have an excuse for not bringing it up in the Grooveshark posts.

The Ninth Circuit Tries to Simplify Things

So, last December, the Ninth Circuit handed down its opinion in Veoh, directly addressing issues nos. 3, 5, 6 and 7.* Specifically, the court held:

• Generalized knowledge is never enough to defeat the Knowledge Requirement, either under the “actual knowledge” or “red-flag” prongs. For example, the court disregarded an admission by Veoh’s CEO that he knew that people were using Veoh for infringing purposes.
• The Financial-Benefit Requirement is not coextensive with vicarious liability (otherwise the requirement would gut the safe harbor, since most website operators are probably liable for vicarious liability).
• The ability to stop user uploads is not enough to defeat the Financial-Benefit Requirement (i.e., it doesn’t constitute “the right and ability to control [infringing] activity”). Instead, the operator must have the ability to ferret out and stop specific instances of infringement, which essentially imports the Knowledge Requirement into the Financial-Benefit Requirement.

* The rights holders chose to go for a home run and spent most of their appellate brief’s argument pushing for a narrow interpretation of “by reason of storage,” at the expense of attacking the Repeat-Infringer Requirement.

For the Second Circuit, Simplicity Isn’t Necessarily a Virtue

Now the Second Circuit has weighed in with its much-anticipated decision in Viacom v. YouTube. Previously, the trial court in that case had dismissed the rights holders’ lawsuit in its entirety on grounds that YouTube was completely protected by the DMCA safe harbor. On appeal, the Second Circuit issued a complex opinion, affirming parts of the trial court’s dismissal, flat-out reversing others, and punting still others for further development and analysis (which I’m sure has the trial judge doing cartwheels).

Sorting out the Second Circuit’s actual holding is a bit complicated–unless, of course, you were just to skip to the end of the opinion, where the court lays it all out pretty neatly:

To summarize, we hold that:

(1)  The District Court correctly held that 17 U.S.C. § 512(c)(1)(A) requires knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement;

(2)  However, the June 23, 2010 order granting summary judgment to YouTube is VACATED [i.e., wiped out] because a reasonable jury could conclude that YouTube had knowledge or awareness under § 512(c)(1)(A) at least with respect to a handful of specific clips; the cause is REMANDED [i.e., sent back] for the District Court [i.e., the trial court] to determine whether YouTube had knowledge or awareness of any specific instances of infringement corresponding to the clips-in-suit;

(3)  The willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under § 512(c)(1)(A); the cause is REMANDED for the District Court to consider the application of the willful blindness doctrine in the first instance;

(4)  The District Court erred by requiring “item-specific” knowledge of infringement in its interpretation of the “right and ability to control” infringing activity under 17 U.S.C. § 512(c)(1)(B), and the judgment is REVERSED insofar as it rests on that erroneous construction of the statute; the cause is REMANDED for further fact-finding by the District Court on the issues of control and financial benefit;

(5)  The District Court correctly held that three of the challenged YouTube software functions—replication, playback, and the related videos feature—occur “by reason of the storage at the direction of a user” within the meaning of 17 U.S.C. § 512(c)(1), and the judgment is AFFIRMED insofar as it so held; the cause is REMANDED for further fact-finding regarding a fourth software function, involving the syndication of YouTube videos to third parties.

On remand [i.e., once the trial court gets the case back], the District Court shall allow the parties to brief the following issues, with a view to permitting renewed motions for summary judgment as soon as practicable:

(A)  Whether, on the current record, YouTube had knowledge or awareness of any specific infringements (including any clips-in-suit not expressly noted in this opinion);

(B)  Whether, on the current record, YouTube willfully blinded itself to specific infringements;

(C)  Whether YouTube had the “right and ability to control” infringing activity within the meaning of § 512(c)(1)(B); and

(D)  Whether any clips-in-suit were syndicated to a third party and, if so, whether such syndication occurred “by reason of the storage at the direction of the user” within the meaning of § 512(c)(1), so that YouTube may claim the protection of the § 512(c) safe harbor.

We leave to the sound discretion of the District Court the question of whether some additional, guided discovery is appropriate in order to resolve “(C)” (“[w]hether YouTube had ‘the right and ability to control’ infringing activity”), and “(D)” (“[w]hether any clips-in-suit were syndicated to a third party”). As noted above, for purposes of this case, the record with respect to “(A)” (“[w]hether . . . YouTube had knowledge or awareness of any specific infringements”) and “(B)” (“[w]hether . . . YouTube willfully blinded itself to specific infringements”) is now complete.

You might be able to see why I think the muddying of the waters might be temporary. The Second Circuit is punting a lot of issues back to the trial court and is explicitly hoping to get the issues back on summary judgment*.

* It’s a bit unlikely that the it’ll get issue (A) back on summary judgment. That seems too fact-intensive for summary judgment.

OK, that sets us up for diving into the Second Circuit’s reasoning and figuring out where it agrees with, and where it diverges from, the Ninth Circuit’s reasoning in Veoh. We’ll do that next time.

Thanks for reading!

*We’re seeing if part of my presentation can be good for dual credit as well.

Last time, we took stock of the recent kerfuffle about Pinterest, copyright and Pinterest’s Terms of Use (“TOU”), and we even looked at those horrifying, normal TOU. In this post, I want to step back and answer two basic questions: Should Pinterest users really worry about being sued for copyright infringement? And is there really something to all this fuss?

I’ll preface the rest of what I’m going to say by emphasizing that, although I’m a lawyer in this field (i.e., copyright and the internet), I’m not giving you legal advice here. A lot of this is reasoned speculation, but I could turn out to be wrong, and I don’t know your specific legal situation and speak to it. OK?

Is Someone Really Going to Sue Nice Pinterest Users?

How much should you worry if you’re using Pinterest? I suspect you don’t have that much to worry about. Unlike Napster, Pinterest isn’t threatening an entire livelihood here. Flickr has already done all the damage the internet is going to do to professional photographers, in a perfectly legal manner, by (essentially) crowdsourcing cheap photographs and cutting the bottom out of professional photographers’ bread-and-butter. I know everyone has in the back of their minds the RIAA’s campaign against file-sharers. But, as misguided as that was, the RIAA was under heavy provocation: a whole industry and way of doing business was a stake. Pinterest is nothing like that kind of threat.

Besides, if we learned anything from the RIAA’s campaign, it’s that it did more harm than good. On the one hand, it educated people about the continued viability of copyright law. On the other hand, it made enemies of an entire class of consumers, and disgusted everyone else. And it had no demonstrable effect on illegal file sharing and made content producers look like mustache-twirling villains.

Could you imagine what would happen if photographers and graphic designers started suing Pinterest users? The RIAA at least could paint its targets as thieves (at least, when they weren’t targeting obviously innocent people, like technologically illiterate grandmothers). Pinterest users, by all account, look a lot like the rest of America. It’s a lot easier to demonize college students and single mothers than it is to demonize soccer moms. What happens when it gets out that “Sharon,” “Emily” or “Ted” from, say, Overland Park, Kansas, or Sugarland, Texas, has received a demand letter from a photographers’ organization?

More important, if a photographer or graphic designer really wants nice Pinterest users to stop pinning her work*, it’s a lot easier to send Pinterest a DMCA take-down notice than it is to enjoin (or even send demand letters to) dozens of those nice Pinterest users.** If that photographer or graphic designer thinks she’ll recover damages from those nice Pinterest users, she’s delusional. Nice Pinterest users are said to be more educated than average, which means they might have some money, but not that kind of money. Also, such educated people might hire lawyers, and it’s possible, just possible, that those lawyers won’t be stupid.

* Also, Pinterest has been developing a “no pin” tag that should make it impossible to “pin” the affected image file. We’ll see how well that works and how much that is adopted.

** For the same reason, you don’t have to worry too much about having to indemnify and defend Pinterest. The DMCA safe harbor ought to be enough to defend Pinterest. And Pinterest knows you don’t really have the money. And Pinterest probably has no desire to alienate its customers by demanding (and suing to receive) indemnification.

So What’s All the Fuss?

So why all the fuss? The fuss is a new class of internet users becoming acquainted with the bizarro nature of the internet. What was legal in the “real world” is illegal on the internet.* And not trivially illegal either. The statutory damages are huge, way out of proportion to the wrong or the harm. And you’re not doing it in private, where nobody can see you, or where you can destroy the evidence. The internet shows all** and remembers all.

* We can call this Rick’s Bizarro Rule of the Internet. Only I’m sure someone has come with it before me.

** Unless you’re taking extreme precautions, but in a social network, what would be the point?

In the case of Pinterest, the real world activity is scrapbooking. Scrapbooking, for goodness’ sake! A wholesome, quiet and social* hobby. Scrapbooking is also legal. If you were to cut images out of a magazine for use in a scrapbooking project, and show the completed project to your scrapbooking friends at a scrapbooking party, that’s perfectly legal.** Besides, who’s ever going to find out about it?

* Honestly, I think I know one person who scrapbooks, so I’m not much of an expert. For all I know, it’s really a despicable, violent and cruel hobby, like fantasy football or playing Monopoly.

** No, it’s not a derivative work. Stop it. 

In the bizarro world of the internet, scrapbooking is copyright infringement. Using images from the internet analogue to magazines (i.e., pretty much any website)–that’s copyright infringement.

Worse, Pinterest inadvertently ends up looking like it’s setting a trap for the unwary. There is a perceived inconsistency between the services Pinterest offers and its TOU. The TOU force you to represent that you are properly authorized to pin the image in question. But Pinterest invites you pin things you found on the internet–and you often don’t have that authority regarding those images. So if you do what Pinterest appear to want you to do, you have to infringe copyright.

Welcome to the Internet, Nice Pinterest Users!

The arch and snarky response to this fuss is: Welcome to the internet! The internet is a great way of spreading content around. Some of the available content is the copyright equivalent of “open source”: the author doesn’t mind–in fact, actively loves it–when the content is reproduced, displayed and performed. Most of it isn’t. Of that, a lot of it is owned by people who don’t care if it’s shared; some of it is owned by people who care but are reasonable about getting credited and/or paid; some of it is owned by people who overreach their bargaining position to make money; and some of it is owned by people who care but are too big, disorganized or arrogant to get licenses from; and some of it owned by hyper-vigilant parental units who won’t let ANYTHING happen to their precious beloved content (and woe unto you if you look cross-eyed at their children!).

There is, alas, something of an direct relationship between how desirability and professionalism of content and the vigilance of the copyright owner. People who make really good, professional content are usually trying to make a living at it, and to do so, they need to enforce their copyrights.* **

* The over-reaching and hyper-vigilant ones are exceptions. By nature, they over-value their content.

** I’m going dissent a little bit from my own opinion here. For what I guess is a minority of internet users (and this might be generational), myself included, what makes the internet worthwhile is the user-generated content. We would never visit a pirate site to download content, not even if we were Game of Thrones nerds who were frustrated by the inability to buy Game of Thrones legally. We love watching home movies of their cute kittens being cute, mashups of 300 and Popeye the Sailor (or whatever–as far as I know, there’s no such thing–that’d be awful), commercial pitches of weird things getting blended, dramatic prairie dogs, etc. etc. etc. It’s not that creativity has been democratized–it’s always been there. It’s that we now all have access to millions of little (and big) points of creativity, and a built-in means of creaming off the best of it. And it’s all free, and all legal (well, assuming a rational application of fair-use law).

Some things, of course, are safe to “pin.” As I’ve just said, a lot people don’t care or are happy to share, so they’re not going to sue you. More sophisticated types might distribute their work for free via a kind of open license like Creative Commons, which spells out what you can and can’t do with the work. I’ve noticed more and more “Pin It” buttons on third-party sites. Assuming the button is authorized by the copyright holder, that sure looks like an implied license to, at least, “pin” the work. And then there’s stuff that already in the public domain (which as the Copyright Librarian points out, isn’t the same thing as “I found it on the web”).

Some Small Hope

There is cause for hope. As this guy points out, making a new segment of the population aware of the bizarro world of the internet stands a reasonable chance of leading to reforms that mollify the bizarreness. For one thing, lawmakers are lot more likely to listen to the problems of soccer moms than college students with experimental facial hair. Right now, the battle has been between large content-owners and the upcoming class of new consumers. What if those nice Pinterest users, and their friends, and their spouses, take sides? Might that be enough to shift the debate?

Maybe, just maybe, we’ll have some sensible (and minor) copyright reform. Or maybe someone will hit upon an intuitive technological solution to the bedeviling problem of (1) instant permissions (so we can quickly get authorization to use content), and (2) robust attribution (so we can find out who the copyright holder actually is).

Ah, well, this’ll probably just blow over after everyone realizes there’s nothing to fear.

Thanks for reading!

So, here I was all ready to write a post about how everyone should just stop freaking out about Pinterest’s terms of use (“TOU”), when someone tweeted this excellent piece from the Copyright Librarian (updated here) that basically makes all the points I was going to make. And lots of other people have been making all kinds of other points about Pinterest, copyright and terms of use. Is that going to stop me from writing about Pinterest? Of course not!

The Pinterest kerfuffle started a couple of weeks ago with several articles about a lawyer–not a copyright lawyer, but a good, solid lawyer–who (1) is a photographer and (2) actually read Pinterest’s TOU. In tears (a perfectly natural reaction from reading any TOU), she took down her Pinterest account. This generated a good deal of interest across the Internet, including from Pinterest’s CEO–and, alas, a good deal of legal misinformation.

Nipping it in the Bud

We’ll focus on the article in Business Insider article that “broke” the story (as opposed to the original blog post). What happened was that the lawyer/photographer posted a blog entry about how she came to the conclusion that she should stop using Pinterest. She isn’t a copyright lawyer, but she knows how to read a contract, and what she found in Pinterest’s TOU horrified her. Her post wasn’t meant to be a copyright analysis, or even a full legal analysis, only that she’d read enough that her risk-adverse lawyer brain* said, “You’ve got to get out of this.”

* I think there’s actual research out there showing that lawyers are, by nature, far more risk adverse than normal. We’re insane in some other ways, too.

The Business Insider article appears to have taken the lawyer-photographer’s blog post, summarized it (as though she had interviewed the lawyer-photographer) in a way that introduced all kinds of legal errors. Let’s first correct those mistakes, so we know where we are.

The biggest mistake is a failure to acknowledge or mention that thing, you know, where you’re protected against claims of copyright infringement* if all you did was provide a system for users to upload their own content. What do you call it again? Oh, right. The DMCA safe harbor (well, one of them anyway). In the lawyer-photographer’s case, this is understandable. She wasn’t interested in Pinterest’s liability: she was worried about her own liability, and the DMCA safe harbor doesn’t help with that–at least, not directly. As we’ll see next time, it’ll make a huge practical difference.

* Er, civil only… 

There’s at least one commentator who has visited the issue. I disagree*, however, with his assessment that Pinterest’s TOU lacks a repeat-infringer policy. I think it’s sufficient for Pinterest to include in its TOU and “Copyright Policy” that it will “in appropriate circumstances and at its discretion” to terminate accounts of repeat infringers. True, some sites have more details, such as those with “three strikes” policies, but this is probably enough.

* Conceivably, Pinterest’s policies were updated since this article–in which case, Pinterest ought to send the guy a fee.

Other mistakes from the article:

• That Facebook can get in trouble for copyright violation, but Pinterest can’t. What the journalist should have written is: “Why Facebook catches all kinds of flack from photographers (but of course has never been found liable), but Pinterest hasn’t yet.” The answer that is easy: Facebook has been around a lot longer and is a lot bigger than Pinterest.
• That fair use is somehow limited to criticizing, commenting on, reporting on, teaching about the work in question, or for research purposes. No, that’s not true at all. Could you imagine if that were the case? No Betamax decision, no possibility of space/format shifting, no personal copies for personal use, no aggregation of snippets, no thumbnails on Google, and so forth. The journalist limited her fair-use analysis to Section 107, which misses about 90% of the law. Even then, she misread the statute, missing the crucial “such as” just before the list of purposes, making clear that criticism, commentary, etc., are just illustrations of some of the uses to which fair use may be put.
• That there’s some question about whether thumbnails are fair use. If that were the case, why hasn’t anyone sued Google, which stores full copies of image files and then displays reduced versions in its search results? Oh wait, someone did, the high-end nudie website Perfect10. You can read the opinion here, but here’s the relevant holding: Google’s copying of and thumbnail display of Perfect10’s images were fair uses of those images.
• Pinterest is the equivalent of Napster “as an enabler of illegal activity.” That’s a bit rich. Isn’t there a huge difference between, essentially selling copies of ripped music files, and people sharing images they like? Although I’ve cautioned against equating copyright infringement with theft, doesn’t Napster seem a lot more like theft than Pinterest?

There’s another huge difference between Napster and Pintest: Napster wasn’t eligible for DMCA protection; Pinterest is. Napster didn’t even try to come in under the two most logical safe harbors–section 512(c) covering information uploaded by users, and section 512(d) covering information services–because it didn’t come close to qualifying: it didn’t respond to takedown notices, it had actual notice of infringing activity but did nothing, and I doubt very much it had a real repeat-infringer policy.* Instead, it tried to come in under section 512(a) covering transitory digital network communications. Napster failed because, well, computer files in question could hardly be called “transitory.”

* Since the repeat-infringer policy is a requirement of all four DMCA safe harbors, that failure should have doomed its Section 512(a) argument as well.

Pinterest’s Normal, Horrifying Terms of Use

There is, however, one thing that rings completely true, though: “pinning” other people’s work without permission or license is copyright infringement, the only question being whether it’s also a fair use. This is because “pinning” actually involves making a copy of the image file onto Pinterest’s servers.* It is direct infringement by you, because you’re the one doing the “pinning,” and it’s indirect infringement by Pinterest because it’s making your infringement possible. The difference between you and Pinterest is that Pinterest can avail itself of the DMCA safe harbor, and you can’t.

* Couldn’t Pinterest have just linked to the image file? Legally, that would solve the reproduction problem for the user, though there’d still be a public display problem for Pinterest. Practically, it’d be too slow and spotty to be much good. Every time you called up Pinterest, you’d be drawing image files from dozens of different servers with different response times and capabilities, in different parts of the world, etc. The Pinterest page would look pretty ugly, and not all of the images would load correctly. Better to make your own copy and populate a bunch of content servers so the images spring up nice, neat and fast.

But you know that, right? And if you do, then nothing in Pinterest’s TOU should really surprise–or horrify–you:

• You represent and warrant that you are authorized to license or sublicense (as applicable) to Pinterest the image file that you’re “pinning” and that your (and by extension Pinterest’s) use of the image file won’t infringe on anyone else’s rights. With DMCA safe-harbor protection available to Pinterest, perhaps these representations aren’t strictly necessary. But they’re also kind of a no-brainer. Pinterest can point to them and say, “See, we discourage copyright infringement.” More important, it helps Pinterest look to you for indemnification if it ever gets into trouble.
• You agree not to use Pinterest to violate the law, including copyright law. Almost every website’s terms of use have a provision like this. The main function is to give Pinterest an excuse to kick you off the system if you do things that make Pinterest look bad.
• You agree to defend and indemnify Pinterest if it’s sued as a result of some violation of the TOU that you did, including copyright infringement. Again, pretty much every website TOU has this provision. In terms of copyright infringement, it’s half* redundant. If your direct infringement caused liability to Pinterest, Pinterest would always have the option of suing you separately to recover the judgment it had to pay. Which only seems fair, right? Still, it’s always better to put these sorts of things in writing.**

* I say “half” because Pinterest can force you to pay its defense costs (i.e., legal fees), too.

** Because now you know (if you actually read the TOU). And knowing is half the battle. GI Joe.

• You license (or sublicense) the content you “pin” to Pinterest so Pinterest can do all manner of things, including transfer to license/sublicense. I’ll admit that this one is kind of broad. I’d be really annoyed if Pinterest transferred the license/sublicense to someone I hated. Then again, it’s hard to predict what Pinterest might need to do with the content in the future. While we can probably rely on Pinterest to limit its use of the content to those necessary to effect its current business model and logical extensions thereof, what if Pinterest falls on hard times and starts looking at these licenses/sublicense as an asset?

Next time we’ll discuss how much you should be worrying about using Pinterest.

Thanks for reading!