Professional Documents
Culture Documents
j u dgmen t ,whi ch wer ef i l ed un ders eal and i na p ubl i c ,bu tr edac t e df or m( DE 255,DE
275,DE 276,DE 28 0,DE 3O1,DE 31 6,DE 31 8,DE 3 22) .I nc onn e c t i on wi t ht h i s
( DE 443, DE 4 44, DE 500,DE 501,DE 50 2, DE 50 3, DE 5 0 4,DE 505,DE 507,DE 509, DE 51 01 DE 51 31 DE 51 4, DE 51 5T DE 51 61 DE 51 71 DE 52 3) . 1 Fi n al l y,t h e Coud per mi t t ed t h e El ec t r oni c Fr on t i erFoun da t i on t of i l ea b r i e fa sa mi c us c u r i ae ( DE 480 ) .
The Coud addr esses aI Ir el at ed f i l i ngs i nt hi s Or der . To t he ext ent t hat t hi s Or der di scusses i n f or mat i on consi der ed by t he padi es t o be busi ness secr et s, i t wi l l be r edact ed i n a publ i c ver si on oft hi s deci si on.
As evi nced by t he vol ume of t he br i ef i ng and t he pr oc eedi ng di scussi on,t he padi es do notagr ee on m uch,t her e ar e m any f act s asser t ed t o be r el evant ,and t he Coud has been ask ed t o wei gh i n on num er ous uns et t l ed I egali ssues.
1
1 -
BACKG ROUND
Thi s case conc er ns t he ac t i ons ofan of f shor et echnol ogy com pany t hatpr ovi des
onl i ne f i l es t or age ser vi ces,Def endantHot f i l e Cor p. ,and one ofi t sf ounder s,Def endant
Ant on Ti t o v( c ol l ec t i v el y,l i Hot f i l e' 'or l ' Def en dan t s ' ' ) . Pl ai nt i f f s ar ef i v e ma j or medi a
s t u di osand en t er t ai nmen tc ompan i es ( c ol l e c t i v el y, t h ed d st u di os ' )t h a th ol dc o py r i ght s on
var i ous adi s t i c w or ks: Di sney Ent er pr i s es, I nc. , Twent i et h Cent ur y Fox Fi l m
Cor por at i on, Uni ver salCi t y St udi os Pr oduc t i ons LLLP,Col um bi a Pi c t ur es l ndus t r i es,
I n c. ,and W ar nerBr o s.En t edai n men tI n c.( ' W ar n er ' ' ) . Th e gr av amen oft h e St u di o s'
cl ai m i st hat Hot f i l e' s user s have abused i t s syst em by shar i ng l i censed m at er i al s bel ongi ng t ot he St udi os and t hatHot f i l e and Ti t ov ar eI i abl e as a r esul t .
Con gr es sf i f t een y ear s ago i nt h e Di gi t al Mi l l enn i um Cop yr i g h tAc t( ' ' DMCA' ' ) ,1 7I J. S. C. 1 201,e ls eq. ' , t ha tHo t f i l ei s( ori sn o t )I i ab l ef ors ec on dar yc op yr i gh ti n f r i ng emen tat
c ommon I a w; t ha tTi t o vi s( ori sn o t )per s onal l yl i a bl ef orHo t f i l e ' sa c t i vi t i es asone ofi t s
cor por at e of f i cer s and f ounder s' ,and t hatW ar neri s notl i abl ef ori t sel fabusi ng a s yst em t hatenabl ed i tt or em ove wor ks f r om Hoii l e' ss ys t em . Af t erconsi der i ng t he ext ensi ve f act ualr ecor d and appl yi ng t he r el evantI aw ,t he Coud concl udes t hat Def endant s have
ac t i ons o fhi sc o mpan y,s uc ht ha the wi l lha v et os har ei n wha t ev er j u dg men tHo t f i l ei s
deem ed t o ow e;and t hatHot f i l e m ay pr oceed on a count er cl ai m i tf i l ed agai nstW ar ner
r el at i ng t o not i ces of i nf r i ngem ent . Thi s act i on wi l lpr oceed t ot r i alon aI Iunr esol ved
i ssues ofI i abi l i t y as wel las f ora det er mi nat i on oft he m easur e ofdam ages. A. Hot f i l e' s Syst em
Hot f i l e,w hi ch began i t s oper at i ons on Febr uar y 19,2009,i s whati s known as an
onl i ne ' ' s t or age I ocker . ' ' The c om pany oper at es an l nt er net websi t e t hat al l ows
r egi st er ed user st ot ake el ect r oni cf i l es ofany t ype t hatar e st or ed on t hei rcom put er s or
ot her accessi bl e I ocat i ons and t r ansf er t hem t o Hot f i l e' s el ec t r oni c st or age sys t em
t hr ough an upl oadi ng pr ocess. As a r esul t ,a copy oft hatf i l et hen exi s t s on Hot f i l e' s
l ocat i on such as ' ' ht t p: / / ho;i l e. com/ dl / 1 4052520/ 7a3c8f 8/ JDownI oader % 20O. 8. 821.
zi p. ht ml . ' 'As can be seen,t he I i nk gener al l y gi ves som e i ndi cat i on oft he f i l e nam e,and t hus,i t s possi bl e cont ent . By ent er i ng t hatl i nk i nt ot he addr ess barofany I nt er netweb
br owser on any com put er ,t he userm ay r et r i eve and downl oad hi sf i l e. Hot f i l e keeps
t r ack oft he dat e, t i m e ofuse,and cedai n useri nf or m at i on associ at ed wi t ht he f i I e. 2
Thi s case r evol ves ar ound em er gi ng t echnol ogi es,whi ch r equi r es t he Coud t o gi ve an over vi ew of t he r el evant concept s. The padi es have pr ovi ded m or e com pr ehensi ve i nf or m at i on and m or e sophi st i cat ed anal yses,w hi ch ar e on f i l e
W hi l e an i ndi vi dual ' s actofupl oadi ng a f i l ei s ost ensi bl yi nnocuous - and i ndeed,
ot hernet wor k s pr ovi de si mi l arsods ofser vi ces - s ever alofHot f i l e' s at t r i but es f aci l i t at e
r epl i cat et he f i l e.
Second,because t he f i l ei s notsecur e,i ti s accessi bl et o anyone wi t h an I nt er net
connect i on. I ti si m podant t o not et hat Hot f i l e pr ovi des no i ndex or sear ch f eat ur e,
whi ch m eans t hatanyone t r yi ng t o access a f i l e m ustknow i t s exactI ocat i on orURL -
f i l eI i n k s( and t hu sf i l es )t hr ou gh an af f i l i a t e pr o gr am , wh i c h pa ys i ndi v i du al st on a vi ga t e
pr ospect i ve dow nl oader st of i l eI ocat i ons. The i ncent i ves i ncr ease wi t ht he si ze oft he
mi gh tp os s es s( e. g. , i fi ti s en t edai nmen tme di aver su su t i l i t yc ompu t ers o f t war e ori fi ti s c r ea t e db yt he us erorc r ea t e db ys omeon e eI s e ) . 3l n pr ac t i c e,Ho t f i l e' s af f i l i a t es h av e
cr eat ed t hei rown websi t es t hatcat al ogue f i l es f ound on Hot f i l e,pr om ot et hei rf i l es,or al l ow t he publ i ct o sear ch f or f i l es. I n addi t i on, upl oadi ng user s can t hem sel ves br oadcast t he downl oad I i nks,such as by em ai l i ng t hem t o peopl et hey know or by
The amount s pai d perf i l e - no mor et han $0. 015 - ar e smal l ,buti n aggr egat e
have r esul t ed i nt he paym ent of m i l l i ons of dol l ar st o af f i l i at es. Pr i ort o 2012, Hot f i l e al so pai d websi t e owner saf i ve per centcom m i ssi on based on t he number of user s who pur chas ed pr em i um subscr i pt i ons t o Hot f i l e and had been r ef er r ed by such websi t es.
4
advedi si ng t hem t hr ough var i ous channel s. Thi s has t ur ned Hot f i l ei nt o not onl ya
st or age si t e,butal so a f i l e di st r i but i on net wor k.
Fi nal l y,because Hot f i l e pr ot ect s user s'pr i vacy,i t has ef f ect i vel yr ef r ai ned f r om i nt er f er i ng i n any w ay wi t h how i t s mem ber s use t he ser vi c e. I nt he nor m alcour se ofi t s
busi ness, f or exam pl e, Hot f i l e does not r evi ew w hat i t s user s ar e upl oadi ng, downl oadi ng orpr om ot i ng. I ndeed,as di scussed bel ow ,one ofHot f i l e' s m ai n def enses i nt hi s act i on i st hat i ti s unawar e of t he nat ur e oft he cont ent avai l abl e and has no
publ i c and anyone can upl oad ordownl oad f orf r ee,payi ng ni ne dol l ar s perm ont hf or
S ' pr em i um ' 'st at us per mi t s upl oader st os t or et hei rf i l es f or a I onger per i od' ,ot her wi se, f i l es ar e aut om at i cal l y del et ed ever yt hr ee mont hs. Mor eover ,pr em i um user s who seek
t o downl oad f i l es benef i tf r om easi eracc ess,f ast erdow nl oad speeds,and t he abi l i t yt o
downl oad f i l es f r equent l y' ,t hey woul d ot her wi se be r est r i ct ed t o one downl oad ever y
t hi dy m i nut es. Hot f i l e cal cul at es t hat useract i vi t y dr i ves pr em i um subscr i pt i ons whi l e
r ewar di ng user sf or gi vi ng away access t o f i l es t hey possess. For i ns t ance, i ti s
undi sput ed t hatHoii l e' s af f i l i at e pr ogr am pr om ot es t he use ofHot f i l e and l eads user st o
conved t o pr em i um st at us.
By any m easur e, Hot f i l e' s m odel has been ef f ect i ve at encour agi ng user
padi ci pat i on and dr i vi ng gr ow t h am ong dow nl oadi ng user s,upl oadi ng user s and a' Ki l i at e
m em ber s. For i nst ance,accor di ng t o Hot f i l e' sf i gur es, 123 m i l l i on f i l es avai l abl e on
( Ti t ov Deci .! (3 6( DE 39 61) . ) Thi shaswor k eda si gni f i c antf i nanc i albene f i tt oHot f i l e
and i t sf ounder s.
B.
As al l uded t o abo ve,t hese f eat ur es - t he eas e of r epl i cat i on and di ss em i nat i on
of any t ype off i l e,t he I ack of over si ght r egar di ng cont ent ,and t he scal e of Hot f i l e' s
upl oadi ng and downl oadi ng user st o engage i n di gi t alpi r acy,com pl et ewi t h a syst em of
S Yst em s w i t h si mi l arcapabi l i t i es have f aced car ef ulscr ut i ny. Fori nst ance,i nt he l at e 1990s and ear l y 200Os, copyr i ght owner s br ought num er ous successf ul chal l enges t o peer t opeer f i l e net wor ks!w hi ch coor di nat ed t he t r ansm i ssi on of medi a st or ed on user s'com put er s di r ect l yt o ot heruser s,i m posi ng l i abi l i t y on t he net wor k oper at or sf or t he conduct of t hei r user s. See, e. g. , M et r oGol dwyn-
Ma yerSt udi o s;I nc.v.Gr oks t en Lt d. j5 45U. S.913 ( 2005) ' , A&M Rec or ds tI nc .v . Na ps l ec l nc. ,239 F, 3d 1004 ( 9t h Ci r .2001 ) .Ar , i st aRecor d s LLC B .Li me Gr ou p LLC, 78 4 F. Supp, 2d 398 ( S. D. N. Y. 2011 )( ' L/ me Gr o& p' ' ) . The s ys t em
chal l enged mos tr ecen t l y M egaupl oad Li mi t ed, shu t t er ed i t ss er vi c ei n ear l y ! 2012 and i sf aci n g pot ent l alc r i mi naland c i vi ll i abi l i t yi nt he Uni t ed St at es . See Ben Si s ar i o, 7 Cha r ged as F. B. I . Cl os es a Top Fi l esha r i ng Si t e, N. Y.Ti mes, Jan. 19,2012,at B1. W hi l et he par t i es have f ound i t conveni ent t o com par e Hot f i l et ot h ese sy s t em s,t he Cot f r tpr edi c at es i t s deci si on on t he f ac t s and l a w pr esent ed by t hi sr ecor d.
f i nanci ali ncent i ves t hat f ost er si nf r i ngem ent . They assed t hat i ti s Hot f i l e' si nf r i ngi ng
uses,notI egi t i m at e userac t i vi t y,t hatdr i ves t he com pany' s busi ness. The St udi os br i ng
case i s a st at i st i cal anal ysi s conduc t ed by Dr . Ri char d W at er m an bas ed on cl assi f i cat i ons pr ovi ded by t hei r pr of f er ed copyr i ght exped, M r 5 The .Scot tA.Zebr ak. r epod concl udes t hat 90. 2% of t he dai l y downl oads on Hot f i l e ar e dow nl oads of ' ' i nf r i ngi ng' ' or ' ' hi ghl y i nf r i ngi ng' ' cont ent and t hat onl y 5. 3% of dow nl oads ar e
who k no wi ngl yc on t r i bu t et oi n f r i n gemen t( b u t mean t o pr o t ec ti n no c en tac t or s who ar e enga ge di n ben ef i c i al ap pl i c a t i on so ft ech nol og y ) , aI i t i gan tmus tpoi n tt o
evi dence ofknow n i nf r i ngementpadi cul art o wor ks t hatt hey ow n. Fori nst ance,
pr i m ar i l yl aw f ulpur pos e,as di s cus sed b el ow. Fudher , t hey c ont end t hat Hot f i l ek nows about r am pant i n f r i ngem en to f wor k s owned by t he St udi os and ot h er s,t hat Ho t f i i e f ai l ed t or em ov ei n f r i ngi n g m at er i alordi sabl et he ac count so fuser s who upl oaded s uch
Noo t h erPi a i n t i f f sa p p e a r t oh a v ed o n es o.
8
I i kel i hood t hatt her e was a zer o per cent i nf r i ngem entr at ei n ot herm ont hs pr i ort ot hi s
t hat ,at l eas tt o som e degr ee,i nf r i ngem ent has occur r ed t hr ough i t s syst em and t he
avai l abi l i t y of i nf r i ngi ng f i l es dr i ves conver si ons
pai d pr em i um account s.
Nonet hel ess,t ot he ext entt hati nf r i ngem entdi dt r anspi r e on i t s syst em ,Hot f i l e cl ai m st o
i nf r i nger s,t hat go beyond t he m ost r udi m ent ar yf oi l st o such act i vi t i es. l nt hi s way, Hot f i l e advances t he cl ai mt hati ti s a sm al l ,f or ei gn com pany t hathas done ever y t hi ng possi bl et oi nvest i gat ei t s user s'backgr ounds,i m pl em ent count er m easur es t o def eat
The padi es hav e di am et r i cal l y di f f er entvi ews ofHot f i l e' s ai m s and have devot ed m uch space t o debat i ng whet herHot f i l e setoutt os er v e al egi t i mat e pur pose. Hot f i l e
ackno wl edges t hat at i t si ncep t i on,i tmo del ed i t s el fa f t er Rapi dshar e,anot h er onl i ne s t or age I ock erw ebs i t e. Not abl y,copyr i gh thol der s ev en t ual l y cl ai m ed t ha t Rapi dshar e w as us ed f ori n f r i ngem entan d br oughtsui ta gai ns ti ti n June 201 0t os hutt he net wor k dow n. Hot f i l e was awar eo f Rapi dshar e' s pr obl em s. Af t ert he Rapi dshar eI a ws ui twas f i l ed,on e of Ho t f i l e' sc of ounder s, ,sentan em ai lt o Ti t ov no t i ng an
i ncr eas ei nt r af f i conHot f i l e' ss y st em andr emar ki ng,u l wl hatan une xpec t edgi f t we ha ve f r om Rapi ds har e: ) The badt hi ng i st hatt heycl eanup t h ei ri magewhi l e we bec ol me
t he f i agshi pofnonl i cens ed c on t en t . '( Yeh Decl .Ex.53 ( DE 28858 ( f i l ed unders eal ; DE 3241 1) . ) On e mont hI at er , s pect l l a t ed t hatone r eas on t h at' ' ourpr ost s
i ncr eas ed so r api dl y' 'was t ha t' ' Hol l y wood h as c l ose d 34 l ar ge websi t es f or i l l egal
movi es and t hatc oul d have r edi r ec t ed user st o us. ' '( Yeh Dec l .Ex. 49 ( DE 2885 4( f i l ed
t hat Hot f i l e encour aged dow nl oadi ng act i vi t y - by del et i ng f i i es t hatar e notf r equent l y dow nl oaded and by payi ng m em ber s onl yf ordownl oadi ng act i vi t y - m eans t hatHot f i l e
be pr ot ec t ed and whi ch Hot f i l e user s m ay orm ay nothave had per mi ssi on t o shar e,can be a si ngl el ar ge f i l e,orS d di vi ded i nt o sever al ,sm al l ercom put erf i l es i n or dert of aci l i t at e
he c om pany' si nt el l ect ual pr opedy pol i cy, one of t hem Hot f i l e engi neer s di scussi ng t
s t at ed t hat' d whati s pr ot ect i ng us I egal l yi st he f actt hatwe don' tknow whati s up t her e on oursi t e. I fwe know ,t hen we ar e suscept i bl et oI awsui t s. And now accor di ng t ot he
I P pol i c y,1 0d ay sa f t era r ep od,we pr et en d we don ' tk no w. ' '( Yeh Dec l .Ex.5 4( DE
copyr i ght hol der s cl ai mi ng t hatt hei rr i ght st o padi cul arwor ks wer e bei ng i nf r i nged yet f ai l ed t ot ar gett he associ at ed user s,f ai l ed t or em ove ot heri dent i calcopi es oft he wor ks
11
Wi t hr egar dt o Hot f i l e' s af f i l i at e pr ogr am ,t he St udi os cont end t hat because of ' s f aci al l y pi r at e' 'af f i l i at e si t es I i ke d l copym ovi e. net ' '- a websi t et hat ,f r om scr eenshot s,
appar ent l y di spl ayed popul ar m ovi es' pr om ot i onal m at er i al s and m ay have been em bedded W i t h Hot f i l e downl oad l i nks - Hot f i l e shoul d have under s t ood t he avai l abi l i t y
ofc op yr i gh t e dc ont ent .( Yeh Dec l .Ex.3 5( DE 32 43) . )l nf a c t ,Ho t f i l e ha ds e v er al r u n i ns wi t h af f i l i at es r egar di ng pi r acy. l n one i nt er naldi scussi on,f orexam pl e,an em pl oy ee
nam ed ' ' Andr ei 'r eached outt o Ti t ov aboutan af f i l i at e si t e cal l ed d t pl anet suzy' 't hatwas
' ' convedi ng wel l ' ' but had som ehow st r ai ned i t s r el at i onshi p wi t h Hot f i l e. Ti t ov
r esponded t hat d i t m us t not appear i n any way t hat we pay f or advedi si ng on a
owner s can geta com m i ssi on equalt of i ve per c entofaI Ipr em i um account st hey sel l ,so
t hos et h i r d p adi es sh oul dl ' l p j o s ti nt e r es t i ng down l oa dl i nk s' 'i n or der t o' ear n bi g
mone y. ' '( Yeh Dec l . Ex.57 ( DE 32 411 )( empha si s ad ded l . ) Ot h eri ns t r uc t i on st o afi l i a t e ss u gges tup l o adi n gl ' f i l es onl yi fy ou i n t en l dlt o pr omo t et h em . ' '( Yeh Decl .Ex.
ound t he t i m e of Hot f i l e' sf oundi ng,som eone a/i l i at ed wi t h 59 ( DE 32411) . ) And,ar
12
and i t s upl oadi ng and downl oadi ng user s. One userseeki ng t echni calassi s t ance,f or
i ns t ance,s t at ed t hatt l i m a pr em i um usern i mt r yi ng t o downl oad f r om t he bel ow I i nk bu t af t er cl i cki ng downl oad but t on,page not f ound appear s ht t p: / / ho#i I e. c om / dI / 8651708/
c a d2aa3 / Des pi c ab I e. Me. 201 0. 720 p. BRRi p . XVi D. AC3 FL AW L3 SS. p ad6r ar . h t mI . ' '( Yeh Decl .Ex .5 4( DE 288 31 ( f i l ed un ders eal l ;DE 32 411 ) . ) Someone a tHot f i l e app ar en t l y
r esponded w i t h downl oad i nst r uct i ons. The St udi os cont end t hatt he f i l e name i dent i f i ed
above shoul d have al eded Hot f i l et ot he f act t hat a user was at t em pt i ng t o i l l egal l y
dow nl oad a podi on of t he popul arm ovi e Des pi cabl e M e. Beyond t hi s exam pl e,t he evi dence show s t hatwhenever Hot f i l e was cont ac t ed by user s,t he t i t l e oft he f i l eI ast
accessed by t hatuserwas r eveal ed.
I n anot herdocum ent ,a Hot f i l e usercom pl ai ned t hathe was unabl et o expod f i l es t hathad been upl oaded f r om Hot f i l et o ot herser vi ces because t hose ser vi ces ' i wr ot e me
13
f r om ourSyst em outand t hati s nota pr obl em t hatwe need t o gi ve m uch consi der at i on. ' '
Si mi l ar l y,one podi on ofHot f i l e' s websi t e al l owed user st ot estw het hera Hot f i l e
I i nk was oper at i onal . Accor di ng t o a scr een shot , Hot f i l e pr ovi ded t he i nst r uct i onal
exam pl e of t ' hdp: / / hot f i l e. com / / dl / l8zg87/ czd67b8/ pcD. Dol l Dom i nat i on. zoog. r ar . h t ml . ' '
t hatot hercopyr i ght ed wor ks wer e used i n ot hert ut or i al si l l us t r at i ng Hot f i l e' sf unc t i ons.
Hot f i l e ar gues t hateven i ft he f i l e cont ai ned what t he St udi os assed i t cont ai ned,t hi s
padi cul ar band aut hor i zes cedai n wor ks f or onl i ne di st r i but i on, as one coud has
r ecogni zed. See UM G Recor di ngs,I nc.v . Veoh Net wor ks,I nc. ,620 F.Supp.2d 1081
As expl ai ned m or ef ul l y bel ow,Sect i on 512 oft he DM CA conf er si m m uni t y' ' f r om aI Imonet ar yr el i ef ' 'on I nt er netser vi ce pr ovi der st hatm eetc edai n cr i t er i a wi t hr egar dt o st or i ng i nf r i ngi ng m at er i aland m aki ng i t accessi bl e. Pr i nci pal l y, wi t hr espect t ot he
1 4
pol i c y, r easonabl yi m pl em ent ed,f or t er mi nat i ng r epeat i nf r i nger s' ,t hat i ti s a qual i f i ed ser vi ce pr ovi der ,t ' hat i t has pr oper l yr egi st er ed a DMCA agent ,t ' hat i t does not have
ac t ualor' ' r ed f l ag' ' knowl edge oft he i nf r i ngi ng nat ur e off i l es st or ed on i t s syst em ;t hati t
alchar ac t er i st i cs of t he net wor k,does not r equi r e st at ut e does notf ocus on t he gener
af f i r m at i ve ac t i on t o pol i ce cont ent ,and does not pr ecl ude a gr antofi m m uni t y even i f
t he oper at or knew or shoul d have known of i nf r i ngem ent gener al l y. The padi es'
m ot i ons i nt hi s case conc er ni n pad whet herHot f i l e has m ett hose r equi r em ent s and,as
ar esul t ,whet herHot f i l e becam e el i gi bl ef orsaf e har borpr ot ect i on atany poi nt . 1. I nf r i ngem entNot i ces and Hot f i l e' s RepeatI nf r i ngerPol i cy
Undert he DM CA,l nt er netser vi ce pr ovi der s m us tr easonabl yi m pl emen ta pol i cy desi gned t ot er mi nat e user si dent i f i ed as r epeat i nf r i nger s. To t hat end, si nce M ay
2010,Hot f i l e has pr ovi ded i t s user s wi t h not i ce ofa r epeati nf r i ngem entpol i cy t hr ough
t he t er ms ofs er v i c e pr ov i ded on i t s webs i t e. ( Yeh.Decl .Ex.1 ( Ti t o v Dep. )at279: 1 4 ( DE 32 42) . ) Th at p ol i c ys t at es t ha t Ho t f i l e' d di sc o nt i nu el s ls er v i c et ou s er s who
r epeat edl y m ake such cont entavai l abl e orot her wi se vi ol at e Hot Fi l e' s Ter m s ofSer vi ce.
Pl ease do notabuse t he Hot Fi l e ser vi ce by usi ng i tt o di st r i but e mat er i al st o whi ch you
Thi s i ncl udes wi t hout r est r i ct i on pat ent ed m at er i al s, copyr i ght l aws, t r adem ar ks,
3251 7 )( di s cu s s i n gd at a pr oduc ed by Ho t f i l el . ) Bot hs i des a gr ee t h a tt ho s en ot i c es c or r es pon dt oa ppr o xi mat el y ei gh tmi l l i on un i qu ef i l e s. ( / d . ;Ti t o v De cl .! 126 ( DE 3 9 6-
Hot f i l e acknowl edges t hat i t made no connect i on bet ween i nf r i ngem ent not i ces and ac t s of i nf r i ngement . Hot f i l e expl ai ns t hat i t di d not t r ack t he not i ces and di d not
ba s ei t s po l i c y on h o w man yn ot i c e s wer ea s s oc i a t e d wi t hc edai n us er s( s uc h as by ' ' f l aggi ng' ' t hem) .( Yeh.Dec l .Ex.1 ( Ti t ov Dep. )a t28 3: 24 28 5: 1 5( DE 32 42) . ) Ti t ov
The DM CA set s outa not i ce pr ot ocolunderwhi ch copyr i ghthol der s can not i f y an
ag en tr e sp ons i bl ef or t h es er v i c eo f cl ai med i n f r i n ge men t . See 1 7 U. S. C.j 51 2( c ) ( 3) 'Hend , r i c k s on k ' .e8a y,I nc . ,1 65 F.Su pp.2d 1 0 82, 1 0 89 ( C. D.Cal . 2001 ) . Th es t a t u t e al s o al l o ws s er v i c ep r o vi der st oc h al l eng ei n f r i n gemen t
desi gnat i ons t hr ough a count er not i f i cat i on pr ocess. 16
sai d as m uch at hi s deposi t i on, acknowl edgi ng t hat w hen Hot f i l er ecei ved a DM CA not i ce ofi nf r i ngem ent ,i tdi d notr ec or d whi ch useri tcor r esponded t o:
Q.
Pr i ort ot he f i l i ng oft hi s Compl ai nt ,when Hot f i l er ec ei ved a DM CA not i c e f r om a copyr i ghtowner ,di d Hot f i l e at t em ptt oi dent i f yt he userwho had upl oaded t he of f endi ng f i l e?
Idon' t bel i eve t hat woul d be t he case m ost of t he t i me. Butagai n, on di scr et i on,em pl oyees coul di nvest i gat ef udher .
Q.
....Absenta r equest ,a speci f i cr eques tby a copyr i ghtowner ,pr i ort ot he f i l i ng oft hi s act i on,di d Hot f i l e have a pr act i ce of i dent i f yi ng t he userw ho had upl oaded f i l es i den t i f i ed as i n f r i ngi ng on DM CA not i ces?
( Ye h.Dec l .Ex .1 ( Ti t ov Dep. )a t281 : 1 0 28 2: 1 5( DE 3 242 ) . ) W hi l e Ho t f i l e di d no tt r a ck s u ch n o t i c es, Ti t o v,a st h e de si gn at e dc or p or a t e Rul e 30( b ) ( 6)r epr es en t a t i v er eg ar di n g
Hot f i l e' s el ect r oni cal l y st or ed i nf or m at i on, t es t i f i ed t hatHot f i l e knows t he useri dent i t yf or
ever y upl oad and t hati twoul d have been a l s t r i vi alt ask' 't o ext r actuser i dent i t i es f r om
i n f r i n gemen tno t i c es. ( Yeh Dec l .Ex .2 ( Ti t o v ESIDep. )a t51 : 235 2: 4( DE 288 4( f i l ed
17
u nders eal l ;DE 3 242) . )I ns um,pr i ort ot hi s ac t i on, wh et h era us erwa st h e su b j ec tof
one not i ce or300 not i ces,Hot f i l e act ed no di f f er ent l yi nt er ms ofi nvest i gat i ng possi bl e i nf r i ngem ent . I nst ead,i ni t s br i ef s,Holi l e cr edi t s a syst em of' s manualr evi ew' 'and d ' di scr et i on' ' f or t he t er mi nat i on of 43 user s. However ,t he St udi os'evi dence demonst r at es t hat Hot f i l e was m ot i vat ed not by pol i cy, but by t he t hr eat of I i t i gat i on. Of t hose 43 t er mi nat i ons,33 wer e due t o a cour t ' st em por ar yr est r ai ni ng or deri ssued i n connec t i on
wi t hI i t i gat i on i n i t i a t ed b y a por n ogr aph yp r o du c erc al l e d' i Li b edy Medi ax ' '( Yeh.Decl .
DMCA n o t i c es an dt hr eat eni n gt o hol d Hot f i l eI i abl ef ord ' a hu ge I os st o my c ompan y ' ' l . )
Thus, w hi l e Hot f i l e cl ai m st o have ac t ed t o' ' t er mi nat e,and st op paym ent st o account s of user s wi t h num er ous com pl ai nt s at cont ent owner s' r eques t , ' 'i t has f ai l ed t ( ) ci t e evi dence t o suppod t he pr oposi t i on, expl ai nt he condi t i ons t hat l ed i tt o t ar get or t er mi nat e user s, or r ebut t he St udi os' account of user t er mi nat i on onl y by I i t i gat i on.
18
t hathad accum ul at ed t wo d t st r i kes, ' 'based on DM CA not i ces;t he pol i cy was di scussed
i ni n t er nalemai l s. ( &e e Li ebni t z Ex.29 ( DE 3 4631 )atHF0 283 5779 ( ' $ l fus er ' sf i l es
wer er epoded t wo t i m es as copyr i ght abu s e we del et eu s erac c ou nt . ' ' l v ) Ho t f i l ea l s o
i ces of i nf r i ngement t hat i t r epoded t o copyr i ght hol der st hat i t ac t ed upon t he not he user si t del et ed had i n f act r ecei ved, but v et t ed t hem m anual l yt o ensur e t hat t
mor et h an 300 no t i c e s. ( Fos t erDec l . 1 1 1 1 4252 & Ex.D.( DE 28 6( f i l e du n ders eal l ;DE
19
Hot f i l e.( Yeh.Decl .Ex.100 ( DE 28811 2( f i l ed underseal l ,DE 324' 1 6) . ) The St u di os'
ex per t cal cul a t ed t ha tt hi s par t i cul ar u s er had upl oa ded near l y 30 t hou sand f i l es t o
Hot f i l e and r ecei ved but had al so
f or med a di scr eetgr oup ofpr obl emat i cu ser s. W hi l et hose wh o wer et he sub j ec tof
m or et han t hr ee i nf r i ngem ent not i ces m ade up I ess t han one per centof al Iof Ho l e' s
t hr ee per cent have been r em oved by copyr i ght hol der s under Hot f i l e' s Speci al Ri ght shol der Account pr ogr am ' ,t hat t he m ost popul ar downl oads ar e not copyr i ght ed' , and t hat 56 per cent of t he f i l es upl oaded have never been downl oaded. Fur t her , because Hot f i l e m ade si gni f i cant changes t oi t s syst em af t er t hi sl awsui t w as f i l ed, i ncl udi ng i m pl em ent i ng a t hr eest r i kes pol i cy and var i ous f i nger pr i nt i ng t echnol ogi es t o seek out i nf r i ngi ng cont ent , addi t i onal di scr epan ci es ar e at t r i bu t abl et ot h et i m e per i od anal y zed, Su ppor t ed by po s t Com pl ai nt dat a, Hot f i l e asseds i t has been m or e pr oact i ve i ni dent i f yi ng and r em ovi ng i nf r i ngi ng f i l es and user s.
20
onl y on t oi aldownl oadi ng act i vi t y. Fori nst anc e,Hot f i l e ar gu es t h atonl yf our per c en to ff i l es ev er upl oaded ha ve been t h e sub j ectofa DMCA not i ce' ,t ha t
t he St udi os showed t ha tt hei rf i l es acc ount ed f orone per centoft h ef i l es on Ho t f i l e,or 945, 611 f i l es. W i t hr egar dt o do w nl oads,ho wever , t en per centoff i l es downl oade df r om
i ne f f ect i ve ( what everi t s pol i cy mi gh thav e been) ,Hot f i l e adopt ed a ' r ev amp ed r epeat
i nf r i nger pol i cy' 'i m m edi at el y af t er t hi sI i t i gat i on began. The new pol i cy f ocuses on ' ' t hr ee st r i kes' '- t er mi nat i ng and banni ng user s who r ecei ve t hr ee DM CA not i ces of
i nf r i ngement ,each ofwbi c h countasa ' s t r i k e. ' '( l d. ) Thi sr evampedpol i c yI ed di r edl y
t ot he t er mi nat i on of444 ofi t s 500 hi ghest pai d af f i l i at es,al t hough t housands ofsm al l er
t er mi n at e d 22, 447 u s er swi t hi nmont h soft hef i l i n g oft h e Compl ai nt .( Ti t ovDec l .:1 13 4,
37 ( DE 3 421( f i l ed un ders eal l , 'DE 3961) . ) Hot f i l e ci t est hi s evi denc ei ns upp or to fi t s
ar gum entt hat i ti s now DM CA com pl i ant ,whi l et he St udi os t l se t he evi dence t o show how r am pant and unchecked user act i vi t y had been. And Hot f i i e poi nt s out t hat t he
num berofuser sr em oved i s,i nr el at i ve t er m s,a sm al lnum ber .
21
2.
DM CA AgentRegi st r at i on
Anot herr equi r em entofDM CA pr ot ect i on i st hata r egi st er ed agentbe desi gnat ed t o r ecei ve i nf r i ngem ent not i ces. At I east as f ar back as Apr i l 24, 2009, Hot f i l e mai nt ai ned an em ai laddr ess post ed on i t s websi t ef ort he publ i ct or epod i l l egi t i m at e or
.W hen a Pr op er DMCA n ot i f i c a t i on i s
r ecei ved by Desi gnat ed Agent ,orwhen hot f i l e. com becom es awar et hatcopyr i ght s ar e i nf r i nged,i twi l lr em ove ordi sabl e acc ess t oi nf r i ngi ng m at er i al s as soon as possi bl e. ' '
( Ti t o v De cl .1 11 5( DE 321 1 ) . ) Ho t f i l ef o r mal l yr egi s t er ed a DMCA agen twi t ht h e Cop yr i gh tOf f i c ei n Dec emb er2009,a f a c tt ha ti su ndi s pu t ed. ( Ti t ov Dec l .! !1 6( DE 321 1 ) . ) Th er ea f t er ,i n Ma y 201 0,i tp os t ed a p ol i c y ex pr e s sl yi n c or por a t i n gt he DMCA,
i nf or mi ng user s of i t s r epeat i nf r i nger pol i cy and t he cont ac ti nf or m at i on f or i t s
des i gn a t ed agen t .( Gu pt a De cl .Ex. 6( W ar nerI n t er r og.Res ps . )( DE 2 754( f i l ed u nd er s eal l ;DE 320 7) . )I ti sf u dherun di sp u t ed t h a tt h ea gen ta ddr e s s pr ov i ded b y Ho t f i l e
was a postof f i ce box,whi ch t he St udi os cont end f ai l st o com pl y wi t ht he st at ut e. 3. Ot herI nf r i ngem entCount er m easur es
l n addi t i on t ot ar get i ng r epeat i nf r i nger s'account s,Hot f i l e m akes m uch ofot her
count er m easur es i thas puti nt o pl ace,l ar gel y af t ert hi sl i t i gat i on began. Fori nst ance, Ti t ov st at ed t hatHot f i l e' s cur r entpr act i ce i st or em ove i ndi vi dualf i l es wi t hi n 48 hour s of
22
t he St udi os - i n whi ch Hot f i l e saved ser ver space by mai nt ai ni ng onl y one copy of
i dent i calf i l es upl oaded by di f f er ent user s. For m er l y,when Hot f i l er ecei ved a cl ai m of
i nf r i ngem ent ,i tdi sabl ed any of f endi ng I i nk s butdi d notac t ual l yr em ove t he f i l ef r om t he
ser ver ,t hus I eavi ng i taccessi bl ef ordow nl oad wi t h a di f f er entI i nk. And f i nal l y,Hot f i l ei s em pl oyi ng ot her vi deo and audi o f i l t er i ng t echnol ogy t hat i dent i f i es f i l es wi t h char act er i st i cs m at chi ng cont ent r egi st er ed by copyr i ght owner s, whi ch Hot f i l et hen
bl ock s. I ti s uncl earw hat i m pactt hese t echnol ogi es have had i n bl ocki ng access t o
t hem ;and ( 2)t he l ow per cent age off i l es cur r ent l yi dent i f i ed and bl ocked ( i nt he r ange of
t wo t of our per cent i nF eb r uar y2 01 2)demon s t r a t es t h atHot f i l ei s no l on gerus e dt o
The St udi os'I astcl ai mi s agai ns tTi t ov i ndi vi dual l y because ofhi s padi ci pat i on i n, and abi l i t yt o benef i tf r om , t he i nf r i ngi ng act i vi t y pr esent on Hot f i l e' s net wor k. l n ai nt st at es t hat Ti t ov adopt ed an i nf r i ngement padi cul ar , par agr aph 45 of t he Com pl
r el i ant busi ness m odel ,desi ' gned t he af or emen t i oned af f i l i at e pr ogr am t hat pr omot es
anned t echnol ogi cal f eat ur es t hat bot h i nf r i ngem ent and pai d i nf r i ngi ng user s; pl
f r ust r at ed copyr i ghtenf or c ementand f ai l ed t o pr eventi nf r i ngem entby user s;m anaged
Hot f i l e' s oper at i ons;and oper at ed r el at ed busi nesses t o evade l i abi l i t y. W hi l e Hot f i l e m ak es m uch of t he f act t hat t he St udi os have been unabl et o pr ove up aI Iof t hese
24
al l egat i ons, i ti s m or e si gni f i cant t hat sever alof t hem ar e act ual l y suppoded by t he
evi dence pr oduced i n di scover y.
orw hat
ex ac t l yt h e com pany was f or m ed t o do.i ti s un di s put ed t ha t Ti t ov pe/or m ed so f t war e pr ogr am i ng,sear ch engi ne opt i mi za t i on and s er v eradm i ni st r a t i on f ort he com pany. At
som e poi nt , devi sed t he i dea f or an onl i ne fi l e host i ng com pany based on a
pr o vi ded t h e
t ec hni c al expedi se andpr i orwebhos t i ngexper i enc e' ,hej oi nedt hem i nf oundi ng Hot t i l e
i n Fal l2008. Hot f i l e acknowl edges t hatt he ' ' r esear ched t he com pet i t i on i nt hi s
space t o l ear n about t he f unct i onal i t i es of ot her ser vi ces' ' and agr eed on Holi l e' s busi ness m odel . They t hen st af f ed t he com pany al m ost ent i r el y wi t h
empl oy ees,who cont i nue t o wor kf orHot f i i e. ( Yeh.Dec l .Ex.1 ( Ti t ov Dep. )a t1 05: 5 7
r esponsi bl ef or i m pj em ent i ng busi ness i deas and f unct i ons. For i nst ance,t he padi es
agr ee t hatTi t ov wr ot et he sour c ec ode t ha tr uns Hot f i l e' s websi t e. ( Yeh.Decl .Ex.1
( Ti t ov Dep. )at497: 37( DE 2882( f i l ed underseal l ;DE 3242)( ack nowl edgi ngwr i t i n g bet ween 50 an d 70 per cen toft he sour ce c ode l ,Yeh Decl ' .Ex ,88 ( Ti t ov Dec I . )at! (6
25
ov er seesaspec t soft hei rwor kf orHot f i l e.( J d.at13 2: 8 20 OI ' m nots ur et hatIdoi nf ac t
super vi se t hem bu t ... t ot h e ex t en tt hey need s om e gui dance and under s t andi ng o ft he
t echni calpar t s of...oursyst em ,yes we do comm uni cat e,and - yes,Iw oul d say t hatI
Hol ej oi n t l yand,whi l et he gov er nanc e pr oc edur es h ave no tal way sbeenf or mal ,t hey
agr ee on ma j ordeci si ons such as t h ei mpl ement at i on of Hot f i l e' sa ml i at e pr ogr am. ( Yeh.Dec l .Ex.1 ( Fi t ov Dep. )at5 97: 11598: 22 ( DE 324)( s t at i ng t ha ti ' ma j ori ss ues ' '
wer e pu tt o a vot e butwer e notoppos edl . ) Addi t i onal l y,Ti t ov ackno wl edged t ha the
r ecei ved power of at t or ney t o act on behal f of t he cor por at i on ' ' as a m anager of t he
com pany when g such)ac t s ar e aut hor i z ed by ot hershar ehol der s. ' '( Yeh.Decl .Ex.1
uni l at er al deci si ons r egar di ng i m por t ant aspect s of Hot hl e' s busi ness or oper at i ons. Ti t ov asser t st hathe was nott he or i gi nat orofcer t ai n concept s;f ori nst ance,he cr edi t s wi t h m aki ng t he deci si on t oi m pl em entt he af f i l i at e pr ogr am . And Ti t ov deni es
i nvol vem ent i n ot her aspect s cr uci al t o Hot f i l e' s busi ness, such as sol i ci t i ng new i nvest or s,sel ect i ng cont r act or s ordevi si ng adver t i si ng st r at egi es. The evi dence al so shows t hat ,i n Oc t ober2009,Ti t ov f or m ed a com pany cal l ed Lem ur i a Com m uni cat i ons I nc. ja Fl or i da cor por at i on t hat Hot f i l e uses t o per f or m web
host i ng.so f t war e m ai n t enance and devel opm en t . Ti t o v, acc or di ng t ot he De f endant s,i s
' ' t he sol e ow ner ,m anager ,and di r ect or ' 'of Lem ur i a. ' o Lem ur i a, i nt ur n,cont r act s wi t h
( Yeh.Dec l ,Ex.1 ( Ti t ov Dep. )a t38: 740: 1 0,106: 210 7: 1 4( DE 2881( f i l ed unders eal l , '
DE 3242) , )
Bey ond exam i ni n g Ti t ov' s ov er al lr esponsi bi l i t i e s at Hot f i l e,t he St udi os p oi n tt o
sever alspeci f i c w ays t hat Ti t ov i sI i nked t ot he i nf r i ngem entat i ssue. W i t hr espect t o t he af f i l i at e pr ogr am ,whi ch t he St udi os bel i eve pr omot es i nf r i ngem ent ,i ti s undi sput ed t hat Ti t ov pr ovi ded i nput on t echnol ogi calf easi bi l i t y. M or eover , Hot f i l e has f ai l ed t o
acc oun topen ed ( i n)myname. ' ' ) . ) Ti t ovaj s os t at dt ha thewasawar eoft hemast erf i l e
pol i cy,acknow l edgi ng t hati tper mi t t ed user st o cont i nue t o access suspect ed f i l es even
1 0
Lem ur i a was f or m ed one m ont h af t erHot f i l e' s pr evi ous l nt er net ser vi oe pr ovi der i nf or m ed t he com pan yt hat i t had r ec ei ved a l ar ge num b er of i n f r i ngem ent com pl ai n t sf r om c opy r i ght hol der s and t wo m ont hs af t er a cop yr i ght hol der
ser ved a subpoena on t ha tl n t er n ets er v i c e pr ov i der .( Yeh.Decl .Ex .1 ( Ti t ov Dep. ) at 119: 13121( DE 2882( f i l ed un der s eal l ; DE 3242) . ) Th e St udi os
cont end t hat Lem ur i a was f or m ed t o pr event t he consequences ofa t hi r dpar t y I nt er net ser vi ce pr ovi dercut t i ng of fHot f i l e' s ser vi ce and t hat Lem ur i a act s as a f r ontf orHot f i l e' s com m er ci alact i vi t y, Hot f i l e deni es t hese al i egat i ons.
27
whi l ei n di v i du all i nk s wer e di s ab l e d. ( Yeh.Dec l .Ex .1 ( Ti t ov Dep. )a t60 2: 1 660 4: 1 3 ( DE 3 242) . ) Si mi l ar l y,gi v en t h atHo t f i l e was go v er ne dj oi n t l y,Ti t ov di dn ot r ec al l
opposi ng Hot f i l e' s key pol i ci es, such as how i tt r eat ed r epeat i nf r i nger s or how i t
copyr i ght i nf r i ngem ent cl ai ms i s not ext ensi ve, he acknow l edged i ns t r uc t i ng Hot f i l e
empl o y ees t ob an a u s erand t o$ ' ( b) e mor es t r i c ti ns t oppi ng t hes e da y s, ' ' a f t erHo t f i l e
was su ed b ya c omp any c al l e d Per f ec t1 0. ( Yeh.Dec l .Ex.1 ( Ti t o v Dep. )at31 7: 1 5321 : 1 0( DE 288 2( f i l ed un ders eal l ;DE 3 242 ) . ) Ti t o v wa s al s or es pon s i bl ef orhi r i n g
Hot f i l e' s DM CA agent ,but he cl ai ms t hat ot her s ar e r esponsi bl e f or r espondi ng t o
had $ ' a good f ai t h bel i ef t hat us e of t hi s m at er i al i s not aut hor i zed by t he copyr i ght ow ner ,t he copyr i ght ow ner ' s agent , or t he I aw. ' ' Si nce Apr i l 2009, W ar ner has
padi ci pat ed i n Hot f i l e' s SRA pr ogr am ,i n whi ch t he padi es agr ee t hatdel et i ons have t he sam e l egalef f ectas t akedown not i c es.
mi st akes wer e m ade,t hey w er e notm ade knowi ngl y and ar e nott he t ype ofegr egi ous vi ol at i ons cont em pl at ed by t he st at ut e' ,t hatt her e wer ef ew r esul t i ng dam ages t o Hot f i l e;
and t hat Ho t f i l e' s m ot i v ei n pur sui ng t he cl ai m i st o dem onst r a t eh ow di f f i cul ti tc an be f oranyone t oi dent i f y and pr ev enti n f r i ng emen t ,whi ch hel ps Hot f i l ei l l us t r at ei t s def ens e t ot he m ai ni n f r i ngem en tc l ai ms.
W ar ner ' s Revi ew Pr ocess
Many of Hot f i l e' s cont ent i ons concer nt he suf f i ci ency of t he r evi ew pr ocess W ar ner i m pl em ent ed t oi dent i f y and not i ce par t i cul arf i l es. As expl ai ned by W ar ner ' s
head of an t i pi r ac y op er at i ons, Da vi d Kapl an, W ar ner de vot es t he ef f ods o f em pl oy ees t o onl i ne ant i pi r acy enf or c em en t , hi r es t hi r dpady vendor s,an d, not abl y,
( l d.! ( 8. )
29
Foreach I i nk det er mi ned t o cont ai ni nf r i ngi ng cont ent ,W ar nersends i nf r i ngem entnot i ces.
2. Pr eval ence and Know l edge of Er r or s
appl i es t he syst em onl yt o si t es i t bel i eves t o be devot ed t oi nf r i ngi ng cont ent ,t akes
car ei n uses em pl oyees t ot ai l or sear ch t er m s, 1r evi ews i t s
'
even i ft hatr esul t si nf eweri nf r i ngi ng f i l es bei ng i dent i f i edvi n or dert o avoi d er r or sy ' 'and
On t he ot herhan d,W ar nerr eadi l y adm i t st ha tm i s t ak es do oc cur , an d Hot f i l e ha s i den t i sed char ac t er i st i c st hat m ay be r esp on si bl ef orengen der i ng t hose m i s t ak es. For exam pl e, W ar n er ' ss t af fdi d notdo w nl oad orr evi ew any Ho t f i l e cont entb ef or e mar ki ng i t
30
sent 400, 000 t ak edown not i c es t o Ho t f i l e pr i or t ot hi sI a wsui tw i t hout r ec ei vi n g any count er not i c es f r om Hot f i l e ori t s us er s, sugges t i n gt ha tt he m i s t ak es wer en otapp ar ent
orsi gni f i can tenou gh t o cont es t .( See Kapl an Dec l .: 11 4( DE 3016) . ) Mor eov er ,
accor di ng t o W ar ner ,t he f act t hat onl y 89O er r oneous f i l es have been i dent i f i ed by
count er cl ai m ar ei nf ac to w ned by W ar ner . Ano t her271 o ft h ef i l es undi sput edl y bel ong
t o an ent i t y,El ect r oni c Ads,I nc. ,t hatgave W ar nerper mi ssi on - al bei t ent l y af t er , appar
t hef ac t-t or equ es tr emoval oft hef i l es .( SeeHopki nsDecl .$9( DE 301 7)( El ect r oni c
1 1 W ar nerc ont en ds t hati tw oul d noth ave been ' pr ac t i c abl ef orW ar n ert o do w nl oad f i l es pr i or t oi s sui n g a no t i f i c at i on o fi nf r i ngem ent ' becaus e of t h e com put i n g
5l es i nt he count er cl ai m wer er evi ewed by a W ar nervendorcal l ed Leakl D ! w hi ch
.
r es our ces r equ i r ed. ( Kapl an Dec l .! J1 7( DE 301 6) . ) Addi t i onal l y ,some oft h e
( / d.$20. )
sentt ak edown not i ces ' 'on i t s behal g. ) An di ti s al s o undi sput ed t ha to ft h e 890 f i l es
I i s t ed,24 ar e dupl i cat i ve. Thi sf udhersupp ods t he vi ew t h atW ar ner ' s ac t ual er r orr at e,
i n gener aland w i t hr espectt oi t s sear ch ofHot f i l e' s websi t ei n par t i cul ar ,i s sm al l .
I nr es pons e,Hot f i l e poi nt st o ot h erevi denc et h atW ar ner ' s er r orr a t e m ay act ual l y be hi gher ,t h e m osti m podan tb ei ng an i nt er n al di s cus si on b et ween W ar n erem pl oyees i n August2011.
Thus, dr awi ng i nf er ences i nf avorofHot f i l e,W ar nerem pl oyees m i ghthave know n of an er r oir at e as
hi gh a
count er cl ai m.
W ar ner ' s sear ch pr act i ces m i ght have been. For exam pl e,
Hot f i l e cl ai mst hat en m asse del et i on was W ar ner ' st ypi cal
pr act i ce and ext ends beyond t hi s exam pl e.
I n addi t i on,Hot f i l e has al so pr of f er ed evi dence of an i l l i ci t m ot i ve on W al ner ' s par t . Forexam pl e,W ar ner l i ber al l yr em oved what i s by aI Ii ndi cat i ons a popui araI 3 d i nnocuous f r ee sof t w ar e pr ogr am m ent i oned att he out setoft hi s deci si on,JDowni oader ,
w hi ch was cr eat ed by a com pany cal l ed ' Appwor k G m bH' 'and w hi ch W ar nerdoes not
( Thompson Decl .Ex, 4( Kapl anDep. )at225: 1 3226: 1 2( DE 3041( f i l ed und erseal l ;DE 3545) . )
W ar ner ' s ef f or t st o pol i ce wer e at t i m es over zeal ous and over r eachi ng. l nt he
As di scussed above,W ar ner t ook I i ber t i es i nr em ovi ng cont ent owned by Ot her copyr i ght hol der s, SUCh as El ect r oni c Ads, onl y obt ai ni ng per mi ssi on t o do so l at er i n an ' ' ant i pi r acy
par t ner shi p. ' 'l nt he mai n summar yj udgmentbr i ef i ng,t he St u di os s how t hatt he mos t
popul ar cont ent on Hot f i l ei s act ual l y sof t war et hati si l l egalt o di st r i but e butt hat does
nOt i ncl ude t he St udi os'wor ks. A nd, i ni t s m ot i on,W ar ner poi nt s out t hat Hot f i l ei s
unabl et or ec overf ort h ev as tma j or i t yoft he f i l esW ar nerwr ongf ul l yr emo ved. Thes e
f act s dem onst r at e t hat W ar ner ' s goal s m ay have been br oader t han pr event i ng
Assum i ng W ar ner ' s act i ons wer e unaut hor i zed,W ar ner cont ends t hat Hot f i l ei s
34
Hot f i l e i m pl em ent ed i t st hr eest r i kes pol i cy i n Febr uar y 2011 di d not r esul ti n user t er mi nat i on,si nce t hose useo neveraccum ul at ed m or et han t hr ee st r i kes. Addi t i onal l y,
53 f i l es wer e post ed by us er s wh o woui d have a ccu m ul a t ed t hr ee or m or es t r i k es wi t hout c oun t i ng t he f i p es f r om t he c oun t er cl ai m , al t hough Hoii l e ques t i on s whe t her
som e of t hose not i f i cat i ons wer e DM cAcom pl i ant . And f i nal l y, ni ne r em ai ni ng f i l es cor r espond t o si x user s,none ofwhom was a subscr i bi ng mem ber . These f act s ar e not
f i l es - i ft hey di d no t bel ong t o W ar ner- ' hi ghl yI i k el y ' 'i nf r i nged o t her s'c op yr i ght s an d
had no busi ness bei ng on Hot f i l e' s syst em . Thi s por t i on of Dr .Zebr ak' st est i m ony i s
chal l enged b y Hot f i l e,whi ch poi n t s outt hatt he ex per tackno wl edged he di dn otc on t ac t
t hos eo wn er st of i nd outwh et herdi s t r i but i on on Hot f i l e was t r ul y unaut hor i zed. ( Zebr ak Decl .l i1 6( DE 201 1) ,Thompson Dec * l .Ex.3 2( Zebr akDep. )at319: 322 ( DE 35433) . )
I ti s wel l est abl i shed t hata l ack ofaut hor i zat i on i sr egui r ed t o pr ove a cl ai m ofcopyr i ght
i nf r i ngemen t . See Mor l ey Mus i c Co.v .Ca f e Cont hl nc. ,777 F.Supp.1579,1 582 ( S. D.
ButHot f i l e' s m ai n assedi on i st hatW ar ner ' sf ocus w r ongl y assum es t hat Hot f i l e' s
I ost r evenue coul d onl y have com e f r om t er mi nat ed user s'subscr i pt i on f ees. I nst ead,
Hot f i l e poi nt s outt hati t s busi ness m odeli s dr i ven by t he avai l abi l i t y ofcont ent ,w hi ah
W ar ner ' s ac t i ons hav ei nt er f er ed wi t h. Hot f i l e has pr ovi ded evi denc et hatt he f i l es i nt h e
coun t er cl ai m , even e xcl udi ng t h e f i l es i den t i f i ed as i n f r i ngi ng b y Dr . Zebr ak , wer e dow nl oaded 278, 319 t i m es and ear ned Hot f i l e i n pr em i u m subs cr i pt i ons f r om 51
35
da ys. I ti s uncl earwh et hert hef i l esdel e t edwer e everr epl ac ed. ( Fo st erRepl y Decl . f ! 3
r angef r om
( f i l ed unders eal l ;DE 35435) ,Yeh.Decl ' .Ex.1 ( Ly nde Dep. )at28 2: 5 25( DE 301 10) . )
He opi nes on a var i et y of w ays i n whi ch Hot f i l e coul d have been har med, i ncl udi ng
summ ar yj udgmen ti s appr opr i at e i f ,a f t er di sco ver y, ' t h e pl eadi n gs, deposi t i ons,
answer st oi nt er r ogat or i es,asi davi t s and adm i ssi ons on f i l e,t oget herwi t ht he af f i davi t s,
show t hatt her ei s no genui ne i ssue as t o any m at er i alf actand t hatt he m ovi ng par t yi s
ent i t l ed t o aj udgmentas ama t t erofI a w. ' ' Cel ot ex Cor p.v .Cat r el t 477 U. S.31 7,322
' An i ssue of f act i s' m at er i al 'i f , under t he ( 1 986) ( quot i ng Fed. R.Ci v. P. 5 6( c) ) .'
36
appl i cabl e subst ant i v el aw,i tm i ghtaf f ectt he out come oft he case. ' ' Hi ckson Cor p.v .N.
R.Ci v.P.56( c ) ) . Thu s ,' ' l i q ft he non mo v an t.. .f ai l st oa ddu c e ev i den c e wh i c h woul d
The padi es agr ee t hatt he pr operst adi ng poi ntf ort he Coud' s anal ysi si s whet her
Hot f i l ei s ent i t l ed t o DM CA pr ot ec t i on,gi ven i t s abi l i t yt o absol ve Hot f i l e of I i abi l i t yf or
37
s ec on dar yc op yr i gh ti n f r i n gemen t . Se e1 7 U. S. C.j 51 2 ( c ) ( 1 )( s t at i n gt h ati ft h es a f e har b orr equi r emen t s ar e met , ' ' E a )s er v i c ep r o vi dersh al l n otbe I i abl ef ormon e t ar yr el i ef ,
p r o vi der . ' ' l ,S.Rep.No.1 ' 0 51 9 0( 1 99 8)a t6 4,r epr i n t ed i n1 99 8 U. S. C. C. A. N.a t63 9 ( s t a t i n gt ha tt he s a f e har bor' ' pr o t ec t l s )qu al i f y i n gs er vi c ep r ov i der sf r om l i abi l i t yf oral l
mone t ar yr el i e ff ordi r e c t , vi c ar i ou s an dc on t r i bu t or yi n f r i n gemen t ' 'as wel las i n j u nc t i v e r el i eg. As r ec oun t e di n det a i li n Vi a c om,Con gr e s s en ac t ed t h e DMCA i n1 99 8t o
pr ovi de I i abi l i t y saf e har bor sf or ser vi ce pr ovi der st hat oper at e or cont r ol net wor k s t hr ough whi ch user ss t or e copyr i ght ed di gi t alwor ks i ft hose pr ovi der s m eet cedai n
i nf r i ngem en tt hatt ook pl ace af t ert he f i l i ng oft he Com pl ai nton Febr uar y 18,2011. Gener al l y,t he advances of t he l nt er net and di gi t alt echnol ogy m ake possi bl e r epl i cat i on and di ssem i nat i on of cr eat i ve wor ks on an ast oni shi ng scal e. S.Rep.No.
di s t r i bu t ed wor l dwi de v i dual l yi n s t an t an eou s l y ' ' ) .I nt h a tr e gar d,t h e DMCA wa s mean t
t of ost ert he gr ow t h oft he I nt er netw hi l e pr ot ec t i ng t he r i ght s of copyr i ght hol der s and encour agi ng I nt er net ent i t i es' ef f ods t o of f er val uabl e onl i ne ser vi ces, whi ch on occasi on m i ghtbe i nf r i ngi ng undercopyr i ghtl aw . I d. ;Real net wor ks,I nc.B.D VD Copy
Cont r olAs s' n,641 F. Su pp.2d 913,9 43 ( N. D.Cal .2003 )( ' t Th e DMCA r epr es en t s
38
Congr ess'at t em ptata bal ance t o pr eser v e owner shi pr i ght s pr ot ect i on f orcom pani es and adi s t s i nt he f ace of t he m oder n r eal i t y of a di gi t alwor i d wi t h an i ncr easi ngl y
t echnol ogi cal l ysavvy popul at i on. ' ' ) . As Hot f i l er ecogni zed ator alar gument ,wi t houtt he
i m m uni t y conf er r ed by t he DM CA saf e har bor pr ovi si ons, I nt er net busi nesses coul d
Ca pi t alPar t ner s LLC,71 8 F. 3 d1 00 6( 9t h Ci r .201 3 )( ' con gr es s made a c on si der ed pol i c ydet er mi na t i on t h a tt h e' DMCA n o t i f i c a t i on pr oc edu r es ( wou l d)p l a c et h e bu r d en o f
pol i ci ng copyr i ght i nf r i ngement - i dent i f yi ng t he pot ent i al l y i nf r i ngi ng m at er i al and adequat el y document i ng i nf r i ngem ent - squar el y on t he owner s of t he copyr i ght . ' ' '
39
modi f i c a t i on t ot he c on t en to ft h e ma t er i al a ss en torr e c ei v ed. ' ' ) .Th et er m' ' s t or ag e' ' h as
al so been br oadl yi nt er pr et ed t oi ncl ude di spl ayi ng or di ssem i nat i ng cont ent t hat i s
upl oaded t ot he syst em ' s ser ver s at t he di r ect i on of user s, w hi ch cover s Hot f i l e' s
s t at ut or yI anguage and concl udi ng t hat Congr ess i nt ended a br oad appl i cat i on by
i ncl udi ng t he phr ase l d by r eason of , 'such t hatt he pr ot ect ed i nf r i ngi ng conduc tneed not
be l i mi t e dt o an ac tofs t or ag e) .
Sect i on 512 pr ovi des t hata pr el i mi nar y condi t i on f orel i gi bi l i t yi st hatt he ser vi c e
Copyr i ght Of f i ce and t ot he publ i ct hr ough i t s ser vi c e' ,( 2) t h es er v i c e pr ov i der a c t s expedi t i ousl yt ol ' r em ove,ordi sabl e access t o' 'i nf r i ngi ng m at er i ali tact ual l y knows ofor
of whi ch i t shoul d be awar e f r om ' f ac t s or ci r cum st ances' 'showi ng t hat ' i n f r i ngi ng
40
ac t i v i t yi s app ar en t i ' ' ( 3)t h e pr o vi derha s no ac t ualorr ed f l ag kn o wl e dge ofi n f r i n gi n g ac t i v i t y;an d( 4)t h ep r ov i derr ec ei v es n of i n an ci alben e f i tf r om i n f r i n gi n g ac t i v i t y .l d .j 51 2( c ) ( 1 ) .W hi l ec as el a w ha s de v el op ed i no t herpad s oft he c oun t r y , c on s t r u i n gt he s e
pr ovi si ons i s an i ssue off i r sti m pr essi on i nt hi s Ci r cui t . 1. RepeatI nf r i ngerPol i cy
The I i mi t at i ons on I i abi l i t y est abl i shed by t hi s sect i on shal l appl yt oa ser vi ce pr ovi der onl y i ft he ser vi ce pr ovi der . . has adopt ed and r easonabl yi m pl em ent ed,and i nf or m s subscr i ber s an d acc ounthol der so f t he ser vi ce pr ovi der ' ss yst em ornet wor k of ,a pol i c yt hat pr ovi des f ort he t er mi nat i on i n appr opr i at e ci r cumst ances of subscr i ber s and account hol der s of t he ser vi ce pr ovi der ' s s yst em or net wor k who ar e r epeat i nf r i nger s.
r epeat edl y orbl at ant l yi nf r i nge copyr i ght ' '- a st andar dt hatt hi s Coud appl i es. CCBi I I ,
ar e bl at ant i n f r i nger st hat I nt er net ser vi ce pr ovi der s ar e obl i gat ed t o ban f r om t hei r
websi t es. ' 'Capi t olRecor ds,I nc.B.Mp3t unes,LLC,821 F.Supp.2d 627,637 ( S. D. N. Y.
201 1 ) .
I n assessi ng t he r easonabl eness ofa def endant ' s ef f ods,addi t i onalgui dance on
whatconst i t ut es an appr opr i at e pol i cy can be ascedai ned i nt he Act ' sI egi sl at i ve hi st or y. For i ns t ance,pol i ci es shoul d be consi der ed i nI i ghtof Congr ess' si nt ent i on t hat l s t hose
who r epeat edl y orf l agr ant l y abuse t hei raccess t ot he I nt er nett hr ough di sr espectf ort he i nt el l ect ualpr oper t yr i ght s ofot her s shoul d know t hatt her ei sa r eal i st i ct hr eatofl osi ng t hat access. ' ' UM G Recor di ngs, I nc. v. Veoh Net wor ks; I nc. ,665 F.Supp.2d 1099,
I nc .v ' .Cyb er net Ve nt u r es ,I nc . ,21 3 F.Sup p.2 d1 1 46,11 7 8( C. D.Cal .200 2) . Yet
consonantwi t h ot herpr ovi si ons oft he DM CA,couds shoul d notconst r ue pol i ci es so as
t o i m pose ali r m at i ve act i on on t he pad of t he ser vi ce pr ovi der t o m oni t or f or
t er mi nat i ng user s. Sever alconsi der at i ons,t aken t oget her ,I ead t he Coud t o agr ee.
I ni t i al l y, a r easonabl e pol i cy m ust be capabl e of t r acki ng i n f r i nger s. Revi ewi ng t he
h ol di n g so f El l i so nt t Ro ber t s on,357 F. 3d 1 0 72 ( 9 t h Ci r .2 00 4) an dI nr e Ai ms t er
Co pyr i ghtL i t i gat i o n,33 4 F. 3d 6 43 ( 7 t h Ci r .2003 ) ,c er l .d eni ed,5 40 U. S.1 1 07 ( 20 04) , t he c oud i n CCBi I Iann oun c ed a s t an dar df orSec t i on 51 2( i )i n whi ch a s er v i c e pr o vi d er
m ust m ai nt ai n a vehi cl et or ecei v e not i ces ofpot ent i ali nf r i ngem ent ,desi gn i t s syst em so as t o be abl et o ascedai nt he i dent i t y oft he user sr esponsi bl ef ort hose f i l es,and m ak e som e ef f od t o r ecor d i nf r i ngi ng us er s
.
t hr eshol df unct i ons,ser vi ce pr ovi der s ar e unabl et o car r y out any sod of r easonabl e
( di s t i ngui sh i n g A&M Rec o r ds ,I nc .v ' .Na ps t er jI n c. ,No.C99051 83 MHP,200 0 W L 5731 3 6( N. D.Cal .Ma y1 2,2000 ) ,wh i c hf oun dt h a tf ai l ur et ob l oc ku s er s'
I nt er net Pr ot ocol addr ess es cr eat ed a quest i on w het her t he pol i c y was
ofuseri nf or m at i on m ade i t' ' i m possi bl et o ascedai n whi ch user s ar et r ansf er r i ng whi ch f i l es. ' 'I d.at659. The coud r ul ed t hatt he pr econdi t i on t o saf e har borwas notm eteven t hough t he pl ai nt i f f s had f ai l ed t oi dent i f y1 ' a si ngl er epeati nf r i ngerw hose acces s shoul d be t er mi nat ed. ' 'I d. I nt hi s case,w hi l et he st at ut e does notr equi r e Hot f i l et o m ai n t ai n a per f ec tpol i cy
adm i t t ed,and Hot f i l e does not ser i ousl y di sput e,t hat t he cor por at i on had no way t o keep t r ack of i nf r i ngi ng user s based on i nf r i ngement not i ces. Hot f i l e' s sol e m et hod f or
t er mi nat i ng i t s user s was i t sd ' di scr et i on, 'w hi ch i tevi dent l yf ai l ed t o exer ci se' ,i t had no
t echnol ogy t o r ecor d not i ces and no pr ocedur e f or deal i ng w i t h not i f i cat i on. Consequent l y,i ti s nott oo har sh an ass essmentt o concl ude t hatwhen Hot f i l er ecei ved
such not i ces,i t was Hot f i l e' s pr act i ce t oi gnor et hem r at hert han actt ot er mi nat et he
user st hey wer e associ at ed wi t h.Thi s del i ber at e di sr egar di s si gni f i cant .
The dat a di scussed above - bot ht he num ber of user s who r ecei ved m ul t i pl e
not i ces of i nf r i ngement and t he num ber of user s who wer et er mi nat ed af t er Hot f i l e i m pl em ent ed a st r onger pol i c y - show t hat Hot f i l ef ai l ed t o ac t when conf r ont ed wi t h i nf r i ngi ng conduct 1 3 Thus, despi t er ecei vi ng overei ght m i l l i on not i ces f or f i ve m i l l i on . user s, Hot f i l e onl yt er mi nat ed 43 user s bef or et he com m encem ent of t hi s act i on,f or
r easons t hat had no appar ent r el at i on t ot he not i ces Hot f i l er ecei ved. M os tgl ar i ngl y, t her e wer e 61 user s who had accum ul at ed m or et han 300 not i ces each. As r ecount ed
1 3
Hot f i l e cl ai mst h a ti t' ' ha dn ok n o wl e dge t h a tt h ef i l el s l i n s ui twer ei n f r i ngi ng a par f f r om no t i f i c a t i on s Ho t f i l e( mi gh t )ha v er ec ei v ed f r om t h e St u di o sr e gar di ng t he s e a l l e ged i n f r i n gemen t s. ' '( Ti t ovDec l . ! 1 6. ( DE 3 21 1 )( emph as i sa dded l . )
44
above,t hose user s wer e padi cul ar l y pr ol i f i c,dr i vi ng t r af f i ct o Hot f i l e' s websi t e,r ecei vi ng m oney t hr ough Hot f i l e' s af f i l i at e pr ogr am ,and gener at i ng si gni f i cantr evenue f orHot f i l e by encour agi ng user st o conved t o pr em i um subscr i pt i ons, I nr esponse,Hot f i l e cont ends t hatt he DM CA does notm andat e act i on based on i nf r i ngem ent not i ces. On t hi s poi nt ,t her ei s some di sagr eemen t as t o w het her such not i ces equat et o know l edge ofa user ' s ac t uali nf r i ngem ent v l 4 See, gener a/ / y,4128 M ;
knowl edge on a ser vi ce pr ovi der :' ' Al t hough t her e m ay be i ns t ances i n whi ch t wo or
mor e DM CA com pl i antnot i ces m ake a ser vi ce pr ovi deraw ar e ofa user ' s bl at ant ,r epeat i nf r i ngem ent ,t he not i ces al one do not m ak e t he user ' s act i vi t y bl at ant , or even concl usi vel y det er mi ne t hatt he useri s an i nf r i nger . ' '351 F.Supp.2d at 1105 & n. 9;see
al so M p3t unes,LLC,821 F.Supp.2d at637. Yet a subsequent ci r cui tcoud deci si on i n CCBi I Isuggest s a di f f er ent appr oach on t hi si ssue
.
i ci ent not i ces of i nf r i ngem ent - i n That coud hel d t hat s t at ut or i l y def
padi cul ar ,t hose l acki ng a decl ar at i on f r om t he copyr i ghthol derdet ai l i ng owner shi p and t he m at er i al ' si n f r i ngi ng nat ur e - wer e an i nsuf f i ci ent basi sf or t er mi nat i ng a user . CCBi I I ,488 F. 3d at1113. Att he sam e t i m e,however ,i thel dt hatt he di st r i ctcoud er r ed
i nf ai l i ng t o consi derw het herdef endant s'cont i nued ser vi ces f orwebsi t es t hatwer et he
1 4
couds agr e et h atSec t i on 51 2( i )r equ i r e st er mi na t i n gk nown r ep ea ti n f r i ng er s. See CC Bi l l ,48 8 F. 3 da t1 11 3( ' A pol i c yi su nr e as ona bl e onl yi ft h es er vi c e pr ov i derf ai l ed t or es pon d when i th ad k no wl e dge o ft h ei n f r i ng emen t . ' ' l ;El l i s on,
357 F. 3d at1080.
45
const i t ut ed an unr easonabl e pol i cy. I d. Thus, t he deci si on suggest st hat pr oper
doe sn o tmee tt he s t an dar do fr el i a bi l i t y an dv er i f i abi l i t yr eq ui r ed by( CC Bi l l ji n or dert o j u s t i f yt er mi n a t i ng a us er ' s ac c oun t n l ;Fl av a Wo r k s ,I nc .v .Gunf e r ,No.1 0C651 7,2011
W L 32053 99,a t* 1 0( N. D.1 1 1 .J ul y 27,2 01 1 ) , r e v' d on ot herg r ound s, 689 F. 3d 75 4( 7t h Ci r .201 2) ( d ' I ti st r u et ha ts er v i c ep r o vi der s ar en o tr e qui r ed t o pol i c et h ei rs i t e sf or
i nf r i ngem ent ,butt hey ar er equi r ed t oi nves t i gat e and r espond t o not i c es ofi nf r i ngem ent
-
46
i nf r i ngem entati ssue and t he def endant ' s ef f or t st o st op r epeati nf r i nger si n det er mi ni ng t he r easonabl eness oft he pol i cy' si m pl ement at i on. I n Cor bi s Cor p. ,f or i ns t ance,t he
def endant had cancel l ed m i l l i ons ofof f endi ng m er chantI i st i ngs,w ar ned such vendor s t hat l t r epeat ed vi ol at i ons of t he r ul es may r esul ti n d per m anent suspensi on, ' ' and
al l egat i ons of copyr i ght i nf r i ngem entand t hus,' ' pr oper l yi m pl em ent ed a pr ocedur ef or addr essi ng copyr i ght com pl ai nt s and enf or ci ng vi ol at i ons of i t s pol i ci es. ' 'I d.at 1103. Mor eover ,t he pl ai nt i f fwas unabl et o show t hatt he def endantS ' coul d have used anot her , m or e ef f ect i ve and r easonabl e' ' m et hod f or pr event i ng t er mi nat ed user sf r om r eaccessi ng t he ser vi ce. I d. at 110304. Fi nal l y, addr essi ng t he l ' appr opr i at e
ci r cum st ances' 'I anguage oft he st at ut e,t he cour tconcl uded t hatt her e was i nsuf f i ci ent
evi dence t hat t he def endant had know l edge of bl at ant i nf r i ngem ent - such as user
st at em ent s aboutt he pi r at ed nat ur e ofa pr oduct ,chatr oom di scussi ons r egar di ng us e
oft he ser vi ce f or i nf r i ngi ng pur poses,orchar act er i st i cs ofl i st i ngs t hatwoul d gi ve away
t hei ri nf r i ngi ng nat ur e-t hat woul d have r equi r ed i tt ot er mi nat e user access. I d.at
110405. Thus,t he def endantwas ent i t l ed t o saf e har borpr ot ec t i on. By cont r ast ,t he di st r i ct coud i nI nr e Ai m st er conf r ont ed a pol i cy si mi l art ot he
one at i ssue her et hat war ned user s not t o pos ti nf r i ngi ng cont ent and pr om i sed t o
t er mi nat e user s who r epeat edl y vi ol at ed copyr i ghtl aw. The coud di scount ed t he pol i cy
as an l l absol ut e mi r age' 'af t erevi dence showed t hatt he def endant s obst r uct ed ways of
det er mi ni ng whi ch user s wer et r ansf er r i ng i nf r i ngi ng f i l es and, i n pr act i ce, f ai l ed t o
nat ur ej ' 'i ti s com pel l ed t o act . Cyber netVent ur es,I nc. ,213 F.Supp.2d at1176 ( ci t i ng
copyr i ght hol der s- i ndi cat ed t o Hot f i l et hat a subst ant i al num ber of bl at ant r epeat
i nf r i nger s m ade t he syst em a condui tf or i nf r i ngi ng act i vi t y. Yet Hoii l e di d not acton
Ve nt u r es ;I nc . , 21 3 F. Su pp. 2d at11 76 ( ' t l sl ec t i on 51 2( i )i sf oc u s ed on i nf r i n gi n g us er s,wher eas 51 2( c )i sf ocu s e d pr i mar i l y on t he i n f r i ngi ng ma t er i ali t s el f . ' ' ) . Mor ep adi cu l ar l y,whi l e Sec t i on 51 2( c )r equ i r e ss er v i c e pr o vi der st or emo ve i n f r i n gi n g mat er i al , Sec t i on 51 2( i )t a r ge t st h es ou r c e oft h ati n f r i n gemen t . See i d . ( ' ' Maki ngt he ent r ance i nt ot he saf e har bort oo wi de woul d al l ow ser vi ce pr ovi der s
act i ng i n com pl i ci t y wi t h i nf r i nger st o appr oach copyr i ght i nf r i ngem ent on an i m age by i m age basi s wi t hout ever t ar get i ng t he sour ce of t hese i m ages. ' '
( c i t a t i on o mi t t e dl ) .
48
t hat t he sm al l num ber of r em oval st hat di d occur wer ef or any r eason ot her t han
t hr eat ened I i t i gat i on orby coud or der .l ndeed,i t has been unabl et o poi ntt o a si ngl e
speci f i c us erwho was t er mi na t ed pur suan tt oi t s pol i cy ofm anualr evi e w an d exer c i se
of ' di scr et i on. ' ' Docum ent s and st at i st i cs i ndi cat et hat t her e was never any r eal i st i c
com pany ' si ndi f f er en ce t oi n f r i n gem ent n ot i ces . I ns um ,r egar dl ess o f of f i c i alpol i ci es f or bi ddi n g i n f r i ngem ent , Hot f i l e di d no ts i gni f i can t l y addr ess t h e pr obl em of r epea t
i n f r i n ger s.Thi sr ender s Hot f i l e' s pol i c yl egal l yi nsu f f i ci en tunderSec t i on 512( i ) .
Bef or eI eavi ng t h ei s su est he Cour tb r i e f l y addr es s es t wo ot herpoi n t s made by
Hot f i l e. Fi r st , Hot f i l e cont ends t hat t he St udi os shoul d be equi t abl y est opped f r om asser t i ng a DM CA chal l enge because of t he par t i es' pr evi ous cooper at i on on i nf r i ngem ent i ssues. l n par t i cul ar ,t hey asser tt hat W ar ner ' s par t i ci pat i on i n Hofi l e' s
appl yt o ot h erac t i ons ati aw. Al t h ough t he par t i es hav en otci t ed au t hor i t y di s cu ssi ng a
49
i n t en de d' ,( 3)t h e de f en dan t( i s !i gnor an toft h et r u ef a c t s ;an d( 4)t h e de f en dan t( r el i es j on t h e pl ai nt i f f ' sc on du c tt oi t si n j ur y . ' ' Car s o nv .Dy neg y,I n c. ,34 4 F. 3d 4 46, 453 ( 5 t h Ci r .2003) ( c ol l ec t i ng au t hor i t y ) . Her e, a l t h ou gh Ho t f i l e ha s po i n t ed t o an i s ol at ed
di scussi on t hat m ay be usef ul i n a cr ossexam i nat i on at t r i al ,t her e ar e no f ac t st o
sust ai n a concl usi on t hatt he St udi os have acqui esced t o Hot f i l e' s conduc t . The St udi os
appeart o have pr ot ect ed t he r i ght st ot hei rcont ent ,and t her ei s no suggest i on t hatt hey
k n ew an d appr ov ed o ft h e ex t en to fHo t f i l e' sa c t i ons ( ori na c t i on) . Sec on d,Ho t f i l eh as mo v ed f orpadi alsu mmar yj u dgmen ton t he ap pl i c abi l i t yo f
t he DM CA t o conductt hatoccur r ed af t ert hi sI i t i gat i on was i ni t i at ed. As suppod,Hot f i l e pr ovi des evi dence of a cont i nuum of i ncr eased com pl i ance, such as appl yi ng new f i nger pr i nt i ng and hashi ng t echnol ogy,gi vi ng copyr i ghtow ner s access t o Hot f i l e' s SRA pr ogr am , and i m pl ement i ng ot her I d power f ul count er m easur es, ' spanni ng f r om t he sum m erof2009 t hr ough Hot f i l e' sr et ool i ng ofi t s af f i l i at e pr ogr am i n Febr uar y 201 2,a
hi s evi dence shows t hat Hot f i l e t ook year af t er t hi s I i t i gat i on began. Some of t
m eani ngf ul ,r ecentst eps t o com bat i nf r i ngem ent . For exam pl e, i ti s undi sput ed t hat
i s mi ndf ul t hat t he DM CA does not speci f y t he char act er i st i cs of a r easonabl y i m pl em ent ed pol i cy,i ti s unawar e of any si t uat i on i n whi ch a t hr eest r i k es pol i c' y has
been f ound t o be i nef f ect i ve. See,e. g. , Vi acom I nt ' lI nc.v.YouTube,I nc. ,718 F.Supp.
50
t he pr ot ect i ons oft he DM CA and w het hert he Coud shoul dt r ustHot f i l e nott or eved t o t hei r of f endi ng conduc t ,w het ' her t he Coud can det er mi ne t he exac t poi nt at whi ch Hot f i l ei m pl em ent ed a DM cAcom pl i antpol i cy and,i fso,whet hert he Coud shoul d use t he dat e of t echni calcom pl i ance as t he poi nt of ent r yt o saf e har bor or whet her t he
pr opermeasur e shoul d be when Hot f i l e ceased t o be a hot bed f ori nf r i ngement( si nce
Havi ng concl uded t hata necessar y pr ec ondi t i on t o DMCA saf e har borel i gi bi l i t yar easonabl yi m pl em ent ed r epeat i nf r i nger pol i cy - i sI acki ng as a m at t erof I aw,t he
Coud concl udes t hat Hot f i l e' s DM CA def ense f ai l s. Nevedhel ess, t he Cour t of f er s
obser vat i ons and concl usi ons aboutt wo oft he r em ai ni ng DM CA r equi r ement s.
51
a.
DM CA Agent
Copy r i gh tOf f i c e,s ub s t an t i al l yt h ef ol l o wi ng i n f or ma t i on :( A)t h en ame,a ddr e s s,ph one numb er ,an d el ec t r oni c mai la ddr es so ft h e agen t . ' '1 7 U. S. C.j 51 2( c ) ( 2) . Pert h e exp r es st er ms o ft he s t a t u t e, ' t l o j nl ys ub s t an t i al c ompl i an c e wi t ht h e enu mer a t e d r e qu i r emen t si sr equi r ed b y su bs e c t i on 51 2( c ) ( 2) ,as i s al s ot he c as e wi t hs ub s ec t i on
( c ) ( 3) . ' ' Per f ec t1 0,I nc .L ' .Amaz on. c om,I nc . ,No.CV 0547 53 AHM ( SHx) ,20 09 W L
1 33 43 64, at* 8( C. D. Cal . May 1 2, 2009 )( c i t i n g H. R.Rep.No.1 0 5 551 ( 1 1 )( 1 99 8) ) . The
l egi sl at i ve hi st or yf ort he pr ovi si on i ncl udes t he f ol l owi ng com m i t t ee s t at em ent ,whi ch
expl ai ns t hatdeci si on:
mi sspel l i ng a nam e,suppl yi ng an out dat ed ar ea code i ft he phone num ber i s accom pani ed by an accur at e addr ess,orsuppl yi ng an out dat ed name i f accom pani ed by an em ai laddr ess t hatr emai ns val i df ort he successorof
52
Her e,t he r ecor d shows t hatHot f i l e had a l ' r epod abuse' 'f or m on i t s websi t e and pr ovi ded an em ai l addr ess w her e user s coul d r epod i nf r i ngi ng cont ent . I t di d not
r egi st er a DM CA agen tw i t ht he Copyr i ght Of f i ce unt i lDecem ber2009. ,di d noti dent i f y
an agenton i t s websi t e unt i lM ay 2010. ,and,t o dat e,has notpr ovi ded a pr operm ai l i ng
addr es sf ori t sr egi s t er ed ag en ti n s o f ar as i tI i s t sonl yap os to f f i c e bo x. See 3 7 C. F. R. j 201 . 38( c )( no t i n gt ha tt h es ubmi s si on o fan agen td esi gn at i on mu s tbeart h ec a p t i on
' t l nt er i m Desi gnat i on of Agent t o Rec ei ve Not i f i cat i on of Cl ai m ed I nf r i ngement ' 'and
i ncl ude, am ong ot her t hi ngs, a S s f ul l addr ess' 'and not a t d pos t of f i c e box or si mi l ar
desi gnat i on ...exceptwher ei ti st he onl y addr ess t hatcan be used i nt hatgeogr aphi c
at* 7( ' ' The phr ase d subst ant i al l y aI It he f ol l owi ng i nf or mat i on'modi f i es t he ensui ng t he
subpar agr aphs t hat l i st t ypes of cont ac ti nf or mat i on . ..i t cannot excuse a f ai l ur et o
j 51 2( c ) ( 1 ) ( A) ( i ) . Th es a f eh ar boral s or equ i r e st h att h e de f end an tn oth a ve k n o wl e dge ' ' off a c t s orc i r c ums t anc es f r o m wh i c ht h ei n f r i n gi ng ac t i v i t yi s ap par en t . ' '1 7 U. S. C.j 51 2( c ) ( 1 ) ( A) ( i i ) . As on e c ou r ti n t er pr e t i n gt he s t a t u t ee xpl ai n ed, ' l t l h e DMCA' S
pr ot ect i on of an i nnocent ser vi ce pr ovi der di sappear s at t he m om ent t he ser vi c e pr ovi derl oses i t si nnocence,i . e. ,att he mom enti tbecom es awar et hata t hi r d pady i s usi ng i t s syst em t oi nf r i nge. ' ' ALS Scan,I nc. ,239 F. 3d at625. These pr ovi si ons oft he
DM CA ar e desi gned t o ' ' deny saf e har bor pr ot ect i on t o I nt er net ser vi ce pr ovi der s oper at i ng or l i nki ng t o pi r at e si t es whose i l l egal pur pose i s obvi ous t oar easonabl e
per son. ' ' Mp3t unes,LLC,821 F.Supp.2d at 64344 ( ci t i ng S. Rep.No. 105190
( 1 998) ) .
squal i f i cat i on. Fi r st , Nevedhel ess, t her e ar e t wo i m podant I i mi t at i ons on di
sec t i on d l r equi r es knowl edge orawar eness ofspeci f i ci nf r i ngi ng ac t i vi t y. ' ' Vi acom I nt h
expedi t i ous r em ovali s possi bl e onl yi ft he ser vi ce pr ovi der knows w i t h padi cul ar i t y
anal y si ssh oul dn otI o s e si gh tof t h ef oc uson s p ec i f i c i t y.I d. a t35 ( ' ' ( W) i l l f uI I bl i ndn es s()
m ay be appl i ed,i n appr opr i at e ci r cum s t ances,t o demons t r at e know l edge orawar eness
d t as i m posi ng a dut yt o m ake f udheri nqui r i es i nt ot speci f i c and i dent i f i abl e'i nst anc es of
55
hi ghl i ght ed by t he f act t hat Hot f i l e' s busi ness i ncr eased as som e of t hose syst em s became i nact i ve. As f udhersuppod,t he St udi os ci t e docum ent s cont ai ni ng pur poded
adm i ssi ons t hatHoii l ei sd l t he f l agshi p ofnonl i censed cont ent . ' '
l nr esponse,Hot f i l e st at es t hat i t pr ovi des a vehi cl ef or t he di st r i but i on off i l es wi t ht he aut hor i zat i on oft he cont entow nerand t hatt he pr i m ar y pur poses of i t s syst em
ar e per sonal s t or age, ' ' space shi f t i ng' ' and di s t r i but i on of nonpr ot ect ed m at er i al s. I ndeed, Hot f i l e has shown t hatone of t he St udi os used Hot f i l et o di st r i but ei t s own t s net wor ki s act ual l y used f or cont ent . And Hot f i l e poi nt st os t at i st i cs showi ng t hat i
t hose pur poses,obser vi ng t hat most f i l es have never been downl oaded ( i . e, ,most
upl oad ed f i l es h av e no tbe en r et r i ev e db y an o t h erus e r l ,t ' ha tt h e mo s tpo pul ar I i nk s cur r en t l y av ai l abl e ar ef orn on i n f r i n gi n gc on t en t( s uc ha s op ens our c es o f t war e )t ha ti s
meantt o be f r eel y copi ed and shar ed' ,t hatt her ei s no s ear ch f eat ur et hatal l ows user s
Consi der i ng al Iof t he evi denc e,t he Coud cannot say - and does not need t o
det er mi ne - whi ch Hot f i l e i s bef or e i t . The t est i m ony,docum en t s and evi dence of
56
oft hei ract i vi t y) ,Hot f i l e mi ghtbe deemed t o have possessed r ed f l ag knowl edge. See
meett he r ed f l agt es tbecause i tspeci f i ed padi cul ari nf r i ngi ng mat er i al ' ' ) .l ndeed,based
ur y mi gh tev en de t er mi ne t h atHot f i l e sh oul d on t he evi dence puton by t he padi es,a j ha ve un der s t ood t h a tpadi cu l arma t er i alwa si n f r i ng i ng ( ora tI ea s ts houl dh a ve I ook e d i nt o whe t heri n f r i n gemen t was o cc u r r i n g)when i tb ec ame a war eo ft h eI i nkn ame.
Act i v ewea rofFI a. ,I nc . , 931 F. 2 d1 47 4,1 476 ( 1 1 t h Ci r .1 991 ) .Thu s, ast o ac t ual ( ) rr ed
f l ag knowl edge of i nf r i ngem ent ,t he Coud concl udes t hat a genui ne i ssue of m at er i al
f ac te xi s t s ,a nd t hi si s s uewoul dh av et ob er e s ol v e db y aj u r yat t r i al .
B.
bor ,t he Coud m ust s t i l ldet er mi ne Wi t hout t he benef i t of t he DM CA saf e har whet herHot f i l ei sI i abl ef ort he copyr i ghtvi ol at i ons com m i t t ed by i t s user s. The DMCA
does notsuppl antcom m on I aw pr i nci pl es ofl i abi l i t y,and a f i ndi ng t hatsuch a pr ot ect i on
i s unavai l abl e does not necessar i l y m ean t hatl i abi l i t yf ori nf r i ngem enton t he sys t em i s
57
DMCA s af e har b or s an dc an ,i ns ome c i r cu ms t anc es, p r ec l u de t h ei r app l i c a t i on. ' ' l , '
r el i efav ai l abl e agai n s ts er v i c e pr ov i der st h atf al l wi t hi nt he se s a f eh ar bor s . ' ' l ;c f kFl av a W or k s ,/ nc . ,68 9 F. 3d a t758 ( ' 1 ( A)non i n f r i n gerd oes n' tn ee d as a f eh ar bor . ' ' ) .
Couds have st r uggl ed w i t h def i ni ng t he I i abi l i t y ofI nt er net based com pani es t hat
pr ovi de t he t echnol ogi calmechani sm t of ost er ,or at l eas t enabl e,ot her st oi nf r i nge.
Thi s conf usi on and uncedai nt y pr ompt ed i n pad t he enact m entoft he DM CA. See,e. g. ,
Son y Cor p. o f Am .
( ' ' son y / Bet ama x' ' j( not i n gt h at t t t he l i ne s be t ween di r ec ti n f r i n gemen t ,c on t r i b u t or y i n f r i ng emen t , an d v i car i ous I i a bi l i t y ar e n ot c l ear l y dr a wn' '( quo t i n g di s t r i c tc ou d dec i s i onl l ;Fl av a W or ks ,I nc. ,689 F. 3d a t76 O( l d Th e onl y di s t i n c t i on sr el ev an tt ot hi s
case ar e bet ween di r ect i nf r i ngem ent ...and cont r i but or yi nf r i ngem ent ,and bet ween
58
vi car i ous i nf r i ngem ent . ' ' M et r oGol dwynM ayer St udi os,I nc.v.Gr okst e6 Lt d. ,545 U. S.
91 3,929 3 0( 200 5)( c i t a t i on om i t t edl ;Per f ec t1 0 ,I nc .v .Ama z on. c om,I nc. ,508 F. 3 d 11 46,11 71 n. 11 ( 9 t h Ci r .2007 )( s l l cj op y r i gh thol der sc ann o t pr ot ec tt hei rr i ght si na
m eani ngf ul way unl ess t hey can hol d pr ovi der s of such ser vi c es or pr oduct s
The Supr eme Cour t ' s sem i nal2005 d ec i si on i n Gr o k s t e r obs er v ed t h at ' s l ol n e i nf r i nges cont r i but or i l y by i nt ent i onal l yi nduci ng orencour agi ng di r ec ti nf r i ngement , ' 545
( 2)t he de f en dan td t i ndu c es, c au s es, orma t er i al l yc on t r i bu t e st oI t ha t li n f r i ngi ng c on duc t . ' Na ps t en I nc . ,239 F. 3 d at1 020 ( i n t er n al quo t at i on and ci t at i on s omi t t ed) . To ' ' e s t ab f i s h
i nducement I i abi l i t y, i ti s cr uci al t o est abl i sh t hat t he di st r i but or s com m uni cat ed an
59
i n duc i n g mes s ag et ot hei r...u s er s . ' ' ' Vi s aI nt ' lSe m. As s' n, 49 4 F. 3 da t801 ( i n t er n al qu ot at i on omi t t ed) .
Thus,t o es t abl i sh t hi s der i vat i ve I i abi l i t y,a pl ai nt i f fm ustf i r stmake a pr i ma f aci e case of di r ect i nf r i ngem ent by a t hi r d pady,w hi ch i s done by pr ovi ng ow ner shi p of a padi cul arwor k and evi dence ofunaut hor i zed copyi ng. Napst en I nc. ,239 F. 3d at 1013
60
a.
I nt hi sr egar d,couds have hel dt hateven t hough an ent i t y m er el y di s t r i but es a devi ce t hat causes i nf r i ngement ,i t m ay nonet hel ess be I i abl ef or i nduc ement i ft he
t heor i es based on i m put i ng i nt ent ,such as by knowi ng ofspeci f i c act s ofi nf r i ngement and f ai l i ng t o ac t orby pr ovi di ng ' m at er i alsuppod' 't ot hose w ho com m i ti nf r i ngem ent .
As di scuss ed bel ow ,t her ei s di sagr eement as t ot he par amet er s of t hese doc t r i nes,
w het hert hey cont i nue t o appl y,and what def enses may be appl i cabl et o count ert he
del et er i ous ef f ec tt hey m ay have on i nnovat i on and t he benef i t s oft echnol ogy.
The deci si on i n Gr oksf er i l l ust r at es whatunquest i onabl y suf f i ces t o show act ual
i nt ent . Ther e, a gr oup of copyr i ght hol der s consi st i ng of r ecor di ng com pani es, songwr i t er s and m usi c publ i sher s sued com pani es t hat di s t r i but ed sof t war e pr oduct s enabl i ng peer t opeerf i l e shar i ng among user s. 545 U. S.at919. The def endant s di d notm ai nt ai n copi es off i l es on t hei rser ver s,di d not know whi ch f i l es t hei r user s wer e t r ansm i t t i ng,and di d notef f ect i vel y cont r oluser behavi or .I d.at920 & n. 1,922. But evi dence showed t hat' d t he pr obabl e scope ofcopyr i ghti nf r i ngementi ss t agger i ng' 'and
61
t hatt he def endant s wer e awar e oft he nat ur e oft he i nf r i ngem ent .I d.at923. Si mi l art o
t he f ac t s oft hi s case,an exped com m i ssi oned by one oft he pl ai nt i f f s concl uded t hat90 per cent of t he f i l es on one of t he s yst ems wer ei nf r i ngi ng, al t hough t he def endant s r ai sed m et hodol ogi cal chal l enges, sugges t ed t hat t he sof t war e had si gni f i cant
noni nf r i ngi ng uses,and pr ovi ded ot her' d anec dot aland s t at i st i calevi dence' ' t o show t hat
f i l es m i ghtnothave been copyr i ghtpr ot ect ed. I d.at92223. Fi nal l y,em ai l sf r om user s ' ' wi t h quest i ons about pl ayi ng copyr i ght ed m ovi es t hey had downl oaded' ' and not i f i cat i ons f r om one of t he pl ai nt i f f s about t he i nf r i ngi ng nat ur e of cedai n f i l es
dem ons t r at ed t he def endant s'knowl edge oft he f actofi nf r i ngement .I d.at923. The Coud w entbeyond know l edge of i nf r i ngem ent ,however ,t o addr ess ac t ual
62
dem and i nt o dol l ar s' ' 1 6 Fi nal l y, t he Coud f ound t hatcom pani es f ai l ed t o devel op t ool s )
.
Af t er di scussi ng t he pl ai nt i f f s'pr i ma f aci e cas e of I i abi l i t yf or i nducement and vi car i ous I i abi l i t y,whi ch f al lundert he um br el l a ofsec ondar yI i abi l i t y,t he Gr okst erCour t consi der ed def enses. I n padi cul ar ,i tdi scussed i t s hol di ng i n Sony/ Bet am ax,w hi ch t he coud of appeal s had appl i ed i n af f i r mi ng t he di s t r i c tc oud' s gr ant of sum mar y
j udgmen t . 1 7 Th a td ec i s i on appl i e dt he ' ' s t apl e adi c l eo fc ommer c e do c t r i n e' ' an d c on cl u de dt h atan ac t ordi s t r i bu t i n gac o m mer c i alpr o duc t( s uc h as a vi deo r ec or di n g de vi c e) i sn ot I i abl ef or a c t so fi n f r i n gemen t ,e v en i fi tk n ows o f ac t u al or l i k el y
i nf r i ngem ent , unl ess t he pr oduct i s i ncapabl e of subst ant i al noni nf r i ngi ng uses.
Cabl e / Home Comm ' n Co r p.v . Net wo r k Pr od s. ,I nc . , 9O 2 F. 2d 8 29, 845 ( 1l ' t h Ci r . 1 990 )( s l con t r i bu t or yi n f r i n gemen twi l ln otbe f oun di ft he p r odu c ti n qu es t i on i s
capabl e of' subst ant i alnoni nf r i ngi ng uses, 't he det er mi nat i ve i ssue i n Sony,and
cl ar i f i e di nt ha tc as e as wi d eu s ef f or I egi t i mat e, un ob j ec t i on abl e pu r p os es. ' ' ' ( qu o t i n g So ny / 8el ama x, 46 4 U. S. a t442 ) ) .
63
ar e necessar i l yi nf r i ngi ng. I d.at933. l n ot herwor ds,t he Sony/ Bet am ax r ul e doe' s not barI i abi l i t y wher e a pl ai nt i f fpl eads an i nduc em entt heor y ofsecondar yI i abi l i t y pr em i sed
on ac t ualevi dence of i nt ent .I d.at 933 ( ' ' Sony bar r ed secondar yI i abi l i t y based on
pr esum i ng ori m put i ng i nt entt oc ause i nf r i ngementsol el yf r om t he desi gn ordi s t r i but i on
ofa pr oduc tcapabl e ofsubst ant i all awf ulus e,whi ch t he di st r i but orknows i si nf actused
f ori nf r i ngement ....Because Sony di d notdi spl ace ot hert heor i es ofsecondar yI i abi l i t y,
and b ec aus e we f i n db el ow t h a ti t was er r or t o gr a n ts u m mar yj ud gmen tt ot h e c ompani esonMGM' Si ndu c emen tcl ai m, we do n o tr ev i si tSon yf ur t her . ' ' ) . Th e Gr o k st e rCoud c onc l ude dt h a t' ' on e who di s t r i bu t es a de vi c e wi t ht h e ob j ec t
of pr om ot i ng i t s use t o i nf r i nge copyr i ght , as show n by cl ear expr essi on or ot her af f i r m at i ve st eps t aken t o f ost er i nf r i ngem ent ,i s l i abl e f or t he r esul t i ng act s of i nf r i ngem ent by t hi r d padi es, ' 'and, i nt hat i nst ance, t he st apl e adi cl e of com m er ce doct r i ne does not act as an af f i r m at i v e def ense. l d. at 93637. A showi ng of i nt ent r equi r es evi dence of act i ve s t eps t ak en t o ent i ce or per suade anot hert oi nf r i nge and cannot be es t abl i shed f r om d s m er e knowl edge of i nf r i ngi ng pot ent i al j ' 'l l ac t uali nf r i ngi ng
t eps t o pr event i nf r i ngem ent , ' 'or d ' or di nar y ac t s uses, ' '' ' af ai l ur et ot ak e af f i r m at i ve s
i nci dentt o pr oductdi st r i but i on,such as of f er i ng cust om er st echni calsuppod orpr oduct
pr em i sed on ' ' pur posef ul cul pabl e expr essi on and conduct . ' 'I d.at937. ,
Based on t he evi denc e pr esent ed,t he Coud i n Gr oksf er f ound an ' ' unl aw f ul
64
The Coud pr edi cat ed i t s concl usi on on t he f act st hat t he def endant sl ear ned of t he i nf r i ngi ng nat ur e of use when pr ovi di ng t echni calassi st ance' he busi ness com pet ed , t wi t h anot hersyst em whose user s wer e know n t o have i nf r i nged' he busi ness m odel , t was dr i ven by t he avai l abi l i t y of unl i c ensed cont ent ' he def endant st ook no , and t
m eani ngf ulst eps t o pr eventi nf r i ngem ent . l 8/ J. at941. b.
Devel opi ng gui dance f or som e of Gr okst er ' s unanswer ed quest i ons, a m or e r ecent case f r om t he Sout her n Di st r i c t of New Yor kr evi ewed t he f i l e shar i ng ser vi c e
Li m eW i r e and addr essed how t he l egal t heor i es of i nduc ement of i nf r i ngem ent ,
cont r i but or yi nf r i ngem ent ,com m on I aw i nf r i ngem entand unf ai rcom pet i t i on f i tt oget her .
Li m e Gr oup,784 F.Supp. 2d at 409. The ser vi c e at i ssue em pl oyed peer t opeer t echnol ogy t hr ough whi ch sof t war e cr eat ed by t he def endant st ook an i nvent or y off i l es
on user s'com put er s and al l owed ot her st o sear ch f orand downl oad t hem di r ec t l y. I d. at 410411. The sam e exped engaged by t he St udi os i nt hi s case, Dr .W at er m an, concl uded t hat 98. 8 per cent of t he f i l es dow nl oaded t hr ough Li meW i r e wer e not
aut hor i zed f orf r ee di s t r i but i on and t hat43. 6 per centoft hose f i l es wer e owned by t he
pl ai nt i ls i n t he ac t i on. I d. at 412. The coud det er mi ned t hat t her e was suf f i ci ent
' ' Kno wl e dge o fl n f r i ng emen t i ' ' an d( 4)t h ef ac tt h at t h ed ef end ant s pr ov i d ed t e ch nol ogi c al
as s i s t anc e wi t hf i l es t ha t' pl ai n l yr el a t el d)t o una u t hor i z ed sh ar i n go fdi gi t alr ec or di ngs . ' '
I d.at42628.
Mor eov er ,I i k e t he net wor ki n Gr okst er ,t he def endant s devel oped busi ness st r at egi es t ot ar get user s of shut t er ed net wor ks;t hei r advedi sem ent si nt i m at ed i l l egal
uses;and t hei rr evenue r el i ed on t he popul ar i t y of cont entt hat was i ndi r ect l yt i ed t o
i nf r i ngement .I d.at42729. Ot herat t r i but es oft he Li meW i r e sof t war e suggest ed t hati t ogr am notonl y enabl ed sear ches,but was desi gned wi t hi nf r i ngem enti n mi nd. The pr
i ght ed r ecor di ngs t o user s; t he def endant s even al so suggest ed popul ar and copyr
t est ed i t sf unct i onal i t y usi ng pr ot ect ed t i t l es. I d.at428. Mor eover , t he def endant sf ai l ed
t oi m pl em ent any sod of t echni calbar r i er ordesi gn choi ce t o di mi ni sh i nf r i ngem ent , '
i nst ead,w hi l e exi st i ng t echnol ogy coul d have been appl i ed t o i nf r i ngi ng wor k s,t hat
openi ng a st or et o gui de user st oI i censed c ont ent ./ d. Thi s evi dence was su#i ci entt o
show t he sam e ki nd ofunm i st akeabl ei nt entas exi st ed i n Gr okst er .
66
i nf r i ngem entt heor y ofI i abi l i t y,t he coud f ound t hatt he evi dence was suf f i ci entt o show t he def endant s'knowl edge ofand m at er i alcont r i but i on t o subst ant i ali nf r i ngi ng ad i vi t y. I d. at 434. However , appl yi ng t he Sony / Bet am ax r ul e, t he coud f ound t her e was i nsuf f i ci ent evi denc e t hat t he Li m eW i r e ser vi c e was i ncapabl e of subst an t i al
noni nf r i ngi ng uses. I d. The coud obser v ed t hat ,whi l et he Li m eW i r e ser vi ce was used
' over whel mi ngl y f or i nf r i ngem ent ' at t he t i me of t he deci si on, t he def er l dant s dem onst r at ed subst ant i al noni nf r i ngi ng uses t hat exi st ed or wer e I i k el yt o devel op,
1 9
The deci si on r easoned t hat Gr oksf er answer ed t he quest i on of i nducement l i abi l i t y but f ai l ed t o det er mi ne l d whet her t he Ni nt h Ci r cui t had been cor r ec ti n
al s of a c es I i abi l i t yi fs he ac t swi t ht h e ob j ec to fp r omo t i n gi nf r i n gemen tbyot h er s . ' ' ( f oo t no t e om i t t e dl ) . Ot h er de ci s i on s ha v es u gge s t e dt h a tt wo c a t egor i es o f cont r i but or y i nf r i ngement l i abi l i t y exi s t- ' ' act i vel y encour agi ng ( or i nduci ng i n f r i n gemen tt hr ough s p eci f i ca c t s or()di s t r i bu t i n g a pr o duc tdi s t r i bu t ee su s e
t o i nf r i nge copyr i ght s, i f t he pr oduc t i s not capabl e of l subst ant i al ' or d com mer ci al l y si gni f i cant 'noni nf r i ngi ng uses' '- and t hatSony / Bet am ax ser ves as a def ense wher e t he I at t er i s asseded. Am azon. com , I nc. ,508 F. 3d at 11 70
i ncl udi ng di st r i but i on ofnonpr ot ect ed wor ks. I d. Thus,undert he Li m e Gr oup anal ysi s,
t he Sony / Bet am ax r ul e m ay s t i l lbe r ai s ed as a t heor y of def ense w her et he i nt entt o i nf r i nge or i nduce i nf r i ngem ent i s notexpl i ci t ,butr at heri si m put ed f r om a def endant ' s
but have not al ways addr essed t he appl i cabi l i t y of t he Sony / Bet am ax def ense under
pr ovi ded t he ' ' suppod ser vi ces' 'f or i nf r i ngem ent ,i ncl udi ng ' ' t he pr ovi si on of space, ut i l i t i es, par ki ng, advedi si ng, pl um bi ng, and cust om er s, ' such t hat t he s wap m eet oper at or s coul d be hel dI i abl e. I d. at 263. Ex t endi ng t hat t heor y of I i abi l i t yt ot he
I nt er netcont ext ,t he di st r i c tcoud i n Napsl erf ound t he sear ch and di r ect or yf eat ur es of t he m usi c shar i ng pr ogr am t o be l d an I nt er net s wap m eet . ' A&M Recor ds ;I nc.
st r uct ur e oft he syst em ,buti nappl i cabl et oi ns t ances w her et he def endanthas i dent i f i ed
speci f i ci nf or m at i on r egar di ng i nf r i ngi ng ac t i vi t y. Napsf er ,239 F. 3d at 102022. W hi l e
t he coud concl uded t hat t he def endant s wer e al so I i abl e under a Fonov i sa mat er i al
cont r i but i on t heor y,i tdi d notaddr ess whet hert he Sony / Bet am ax def ense appl i es under
t hatt heor y. I d.at 1022.
68
l nI nr e Ai ms t e r , ' ' l i l n s t ea do fpar k i n gs pac es, ad v edi s emen t s ,an dp l umbi ng, ' ' t h e
def endant s' pr ovi ded t he sof t w ar e and t he suppod ser vi ces necessar yf or i ndi vi dual
an ongoi ng r el at i onshi p wi t ht he di r ec ti nf r i nger ,as oppos ed t o m er el y pr ovi di ng t he m eans t o com m i ti nf r i ngem enti n a si ngl e poi nt of sal et r ansact i on,I i ke sel l i ng a VCR 2 0 M or eover an ar gum entaggr essi vel y pur sued by t he St udi os i nt hi s case. he Ai ms t er ,t
t echnol ogy per mi t t ed m ass di st r i but i on of i nf r i ngi ng cont ent r at hert han ' pr i vat e,hom e use copyi nga ' 'I d. at 653. Rat her t han f ocusi ng sol el y on t he f eat ur es of t he t s t apl e
ar t i cl e of com m er ce doct r i ne,t he deci si on m ade a di st i nct i on t hat woul d be echoed t hr ee year sI at er i n Gr okst er : t her e was bot h aI ack ofevi dence t hatt he t echnol ogy
had l egi t i m at e pur poses and si gni f i cantevi denc et hatt he def endanti nt ended t of ost er i nf r i ngem ent .I d.at65264.
C.
Know l edge ofI nf r i ngi ng Cont ent and Fai l ur et o Rem ove
Fi nal l y, t he Ni nt h Ci r cui t ' s deci si on i n Per f ect1O,I nc.v.Am azon. com ,I nc.shows
t hatt he Gr okst erdeci si on does notf or ecl ose ot hercom mon I aw pr i nci pl es of i m put i ng
i nt ent .I n padi cul ar ,a pr ovi derm ay f ace I i abi l i t y w her ei tknows ofpadi cul ar i ns t ances of i nf r i ngem ent - r at her t han si m pl yt hat t he sys t em i s capabl e of i nf r i ngement or
gener al l y peq mi t s som e I evelof i n f r i ngem ent- and f ai l st o ac tt or em ove i t . Ther e,a
The padi es di sagr eed, however , as t o whet her Googl ef ost er ed i nf r i ngem ent
t hr ough speci f i c act s under Gr oksl er . Al t hough t her e was no suggest i on t hat Googl e
act ual l y i nduc ed copyr i ght i nf r i ngem ent ,t he Ni nt h Ci r cui t appl i ed com m on I aw t od
pr i nci pl es off aul t based I i abi l i t yt or eason t hat' ' an ac t orm ay be cont r i but or i l y i abl ef or i nt ent i onal l y encour agi ng di r ecti nf r i ngem enti ft he act orknowi ngl yt akes st eps t hat ar e subs t ant i al l y cer t ai nt or esul ti n di r ecti nf r i ngem ent . ' 'I d.at117071 & n. 11. I tal so r el i ed on i t s p eGr okst erdeci si on i n Napsf er ,w hi ch hel dt hat' i fa com pu t ersyst em oper at or l ear ns ofspeci f i ci n f r i ngi ng m at er i alon hi s syst em and f ai l st o pur ge such m at er i alf r om
t he syst em , t he oper at or knows of and cont r i but es t o di r ect i nf r i ngem ent ' ' under a
m at er i alcont r i but i on t heor y. I d.at 1171. The coud was per suaded by t he r easoni ng t hat sec ondar yi nf r i ngem ent shoul d be avai l abl et o pr ovi de a pr act i calm echani sm f or
70
pr event i ng di r ect i nf r i ngem ent . I d.at 1172. Because t he di st r i ct coud had appl i ed a
def endantwi l lbe l i abl ef oract ual l y expr essi ng an i nt ent i on t of os t eri nf r i ngem ent .I ft hat
i nt ent i s expr ess or can ot her wi se be sai dt o be ' unm i s t ak eabl e, 't he Sony / Bet am ax def ense w i l lnotappl y and t he def endantwi l lbe l i abl ef oraI Iact s ofdi r ec ti nf r i ngement
2 1
On r eman d,t he di s t r i c tc ou dr e j ec t e dt he p l ai n t i f f ' sr eque s tf or a pr e l i mi n ar y i nj unct i on because t he pl ai nt i f ff ai l ed t o show t hat i ndi vi dual not i c es of
i nf r i ngem entt hathad el i ci t ed no r esponse wer e adequat et o conf erknowl edge of i nf r i ngem enton Googl e. Per f ect 10,I nc.v .Googl e, I nc. ,No.CV 049484 A HM
o t h err e qui r emen t sf ora p r el i mi nar yi n j u nc t i on. I d.at* 1 4. The dec i s i on was a f f i r med, 653 F. 3 d 97 6( 9t h Ci r .2O11 ) , an dc edi or ar i wa s deni e db yt h e Su pr eme Coud,1 3 2 S. Ct .1 71 3( Mar . 5, 201 2 ) .
71
f ound based on a m at er i alcont r i but i on t heor yi ni nst ances wher e a def endantdi d not expr ess an i nt ent i on t of ost er i nf r i ngem entbut pr ovi ded t he m eans f or i nf r i ngem ent or di st r i but ed a comm er ci alpr oduc tt hat was subsequent l y used t oi nf r i nge. Undert hat
t heor y,t he Sony/ Bet am ax r ul e pr ovi des a back st op t oI i abi l i t y,i m m uni zi ng a def endant
who dem onst r at es t hat noni nf r i ngi ng uses oft he syst em ar e subst ant i al . The St udi os have r ai sed cl ai ms and pr esent ed f ac t sr el at ed t o each oft hese t heor i es ofI i abi l i t y.
doom ed ot her net wor ks 2 he Coud concl udes t hat t he ext ent of 2 M os t not abl y, t
.
i nf r i ngem ent by Hot f i l e' s user s was st agger i ng,as was t he case i n Gr okst er . Ont hi s poi nt ,Hot f i l e quest i ons t he W at er m an st udy and i t sf i ndi ng ofa r espect i ve 90. 2% and
5. 3% r at e of i nf r i ngem ent and noni nf r i ngem ent based on an exam i nat i on off i l es t hat
had been downl oaded. The Coud agr ees t hatt he st udy assum ed an i nf r i ngi ng pur pose and t hatan exam i nat i on ofupl oaded f i l es - i ncl udi ng t hose t hatwer e nevershar ed or downl oaded - woul dI i kel y have shown a I ower i nf r i ngem entr at e and ai t er nat i ve uses
2 2
The St udi os cont end t hat Hot f i l ei s si mi l art o ot heri n f r i ngi ng net wor ks,such as Gr oks t er ,Fung,St r eam cas t ,Usenet . com ,and Li m eW i r e.
72
occur r ed on Hot f i l e' s syst em . Forexam pl e,t he r ecor dr ef l ect saI ar ge num berofDM CA
not i ces r ecei ved by Hot f i l e - ei ght m i l l i on i n t ot al . As i s expl ai ned i n t he Coud' s
t o W ar nerhave been cl ai med t o be i ncor r ect and noni n f r i ngi ng,suggest i ng t he sam e
m ay be t r ue oft he ot herset s of not i ces Hot f i l er ecei ved f r om t he St udi os. M or eover ,
whi l et he Coud cannotdeduce t hat ever yf i l e post ed by a r epeat i nf r i nger i s act ual l y
Com pl ai nt pol i cy changes, whi ch Hot f i l e asseds wer e ef f ect i ve i n com bat t i ng i nf r i ngem entand r esul t ed i nt he t er mi nat i on ofaf f i l i at es and user s,del et i on off i l es,and
a subs t ant i al dr op i nr evenue.
The Cour t can al so concl ude t hat Hot f i l e became aw ar e of t he gener alf ac t of i nf r i ngem ent- al t hough possi bl y noti t s scal e - atl eastwhen i tr ecei ved DM CA not i c es t hr ough i t s agent and when i t was sued ort hr eat ened wi t h sui t by copyr i ght hol der s.
Docum ent s pr oduced i n di scover y suggestt hatHot f i l e was awar ei twas becom i ng ' ' t he
f l agshi p ofnonl i censed cont ent i ' ' t hati fi thad exam i ned t he f i l es on i t s syst em ,i twoul d
have known of t he i nf r i ngi ng act i vi t y' , and t hat i t was doi ng busi ness wi t ht hose i t
suspect ed wer ei nf r i nger sI i ke t he af f i l i at e Pl anet suzy. Hot f i l e pr ovi ded t he m eans of
73
i nf r i ngement ,i ' t cr eat ed and cur r ent l y m ai nt ai ns t he Ho/i l e websi t e, whi ch Hoii l e' s
m em ber s ac t ual l y use t oi nf r i nge. User s even s t or et he i nf r i ngi ng cont enton Hot f i l e' s own ser ver s, i n cont r ast t o decent r al i zed peer t opeer net wor ks, i n w hi ch t he i nf or m at i on r esi des on user s'com put er s. Fi nal l y,t her e i s som e evi dence suggest i ve of a del i ber at e desi gn t of aci l i t at e
ar gue i n br i ef i ng,' ' si m pl y unpr ecedent ed. ' Hot f i l e al so pr ovi des t echni calassi st anc et o
t hose w ho i nf r i nge,b0t h by ans wer i ng speci f i c ques t i ons f r om user s abou tdownl oadi ng m edi a and by pr ovi di ng t ut or i al st hatr ef er ence copyr i ght ed wor k s. And,despi t e havi ng
t he mean st oi mpl emen tc oun t er p i r ac yt ec hn ol ogi es and t ot ar g et i n f r i n gemel n t( a s demon s t r a t ed b y Ho t f i l e' s ac t i on si mmedi a t el ya f t ert h e Comp l ai n twa sf i l e d) ,Hot f i l e di d
not t ake any m eani ngf ulact i on t o cudai li nf r i ngem ent . M or eover ,i t di d not have an ef f ec t i ve pol i cy t ot er mi nat e bl at ant ,r epeati nf r i ngem ent ,whi ch const i t ut ed a subst ant i al am ount of t he t ot al i nf r i ngemen t , unt i l Febr uar y 2O11. Based on t he t ot al i t y of t he evi dence,t he Coud concl udes t hat Hot f i l e was success f uli nI ar ge pad because i tdi d
74
dshar e,act ual l y w as a pi r at e net wor k nor show n nei t her t hat Hot f i l e' si nspi r at i on,Rapi st o sat i sf y a known sour ce of dem and f or t hat Hot f i l et ar get ed Rapi dshar e' s user he si t uat i on i n cases f i ndi ng I i abi l i t yf or net wor ks copyr i ght i nf r i ngem ent , as was t
em ai l ,
Hot f i l e appar en t l y vi ewed t he mi gr at i on o fRapi dshar e us er s as a u bad t hi n g. '( Yeh Dec l .Ex.53 ( DE 288 58 ( f i l ed unders eal l ;DE 3241 1) . ) Mor eov er ,Hot f i l e di d not
pr om o t e an y ofi t sf i l es orenabl e a 5l e sear c hf unc t i on,bu ti ns t ead r el i ed on t hi r dpar t y
t akedown syst em and,overt i m e,i m pl em ent ed t echnoi ogy t o com bati nf r i ngi ng user s. Hot f i l e' s gener al know l edge of i nf r i ngem ent ,even i fr am pant ,i si nsuf f i ci ent by i t sel ft o suppod I i abi l i t y. The St udi os have notpr of f er ed an expr ess st at em entby Hot t i l e i ndi cat i ng i t s i nt ent i on t o f ost er copyr i ght i nf r i ngem ent ,t hat i s. cl ear l y voi ci ng an
pos t ed t he St udi os' copyr i ght ed c ont ent ) . Unl i k e Li me Gr ou p, t her e wer e no
i ons i der at i ons ( and r ej ect i ons )o f coun t er pi r ac y so f t war e, i n t er nalc ommuni c at i ons
acknowl edgi ng t h ei l l egalnat ar eo fsp ec i f i c net wor k ac t i v i t y ,orpr opo sal st ol egi t i mi ze
useract i vi t y. Unl i ke Gr okst er ,t he i nt entt oi nf r i nge i s not' ' unm i st akeabl e' 'such t hati t
can be sai dt o be cent r alt ot he busi ness modeland i ngr ai ned i nt he pl at f or m' s desi gn. I ndeed,Hot f i l e has,atI east ,a pl ausi bl e al t er nat i ve desi gn m odeli nt he f or m ofper sonal
dat as t or age.2 3 Al t hough som e evi dence shows t hat Hot f i l e mi ght have been on not i ce t hat
speci f i c act s ofi nf r i ngem entwer e af oot ,t he evi dence does notdem ons t r at et hatHot f i l e knew f orcedai nt hatt he uses wer ei l l egalort hatHot f i l ei nduced t he i nf r i ngi ng use. For exam pl e,t he St udi os assed t hat user s put Hot f i l e on not i ce t hatt hey wer e pur chasi ng pr em i um account sS l speci f i cal l yt o downl oad copyr i ght ed wor ks. ' ' But t he docum ent suppodi ng t hi s assedi on i s an em ai lf r om a pr ospect i ve usert o a Hot f i l e em ai l addr ess
s t at i n gt h at h e' d wi s hl ed jt o si gn up t o Ho t f i l et o do wn l oad' 'ei g htl d Eboo k s ' 'o f ol der no v el si n cl u di ng Di c k en s' s A Ch r i s t mas Ca r ol .( Yeh Dec l .Ex .66 ( DE 3 241 2 ) . )l ti s
pl ausi bl et hata ser vi ce pr ovi der ,f or ei gn ordom es t i c,m i ghtbel i eve t hata wor kf r om a
u s er st h e yk ne w wer es eek i n gt o do wn l oa d( i n f r i n gi n g)c on t en t , 's u ch a sb y an s wer i ng us erqu es t i on swh en t h el i nk ' s URL was ap par entt o Ho t f i l e.( Ho t f i l ec oul ds ee t h e URL
pat h oft he I astf i l e downl oaded i n ever y com m uni cat i on ) But Hot f i l e poi nt s out t hati t
.
had no way of knowi ng w het hert he user I acked per mi ssi on t o shar et he f i l e,whet her
2 3
Based on dat a,Dr . Boyl e concl uded t hat t her e wer e subst ant i al noni nf r i ngi ng uses i nt he f or m ofopen sour ce sof t war e and m ovi e shar i ng,f ai ruse downi oads, st or age,and m onet i zi ng wor ks ow ned by cr eat or st hr ough t he af f i l i at e pr ogr am .
76
t he f i l e cont ai ned whatt he t i t l ei ndi cat ed,orwhet hert he wor k was ac t ual l y pr ot ect ed by copyr i ght . I ndeed,t he evi dence shows t hat when user si ndi cat ed t o Hot f i l et hatt hey wer e accessi ng padi cul arcont ent ,t hey di d not hi ng t oc oncl usi vel yi nf or m Hot f i l e oft he
Hot f i l e equat ed popul arcont entwi t h pr ot ec t ed cont ent . Thus,w i t hr espectt o each exam pl er ai sed by t he St udi os,a num berofquest i ons
Hot f i l e know t hatt he wor ks ar e cur r ent l y pr ot ec t ed by copyr i ght ? Di d Hot f i l e know w hen
i nducem entand cont r i but or yi nf r i ngem entl i abi l i t y. And whi l e Hot f i l e m ay hav e a di f f i cul t
t i me ex pl ai ni n gi t s' ' i nn oc enc e' 't oaj u r y , 2 4t he g en ui n ei s s ue sO fma t er i alf ac tmus tb e r es ol v ed b ya j u r yatt r i al .
2. Vi car i ous I i abi l i t y The St udi os nex t assed t hat Hot f i l e i s vi car i ousl yI i abl e f or t he ac t i ons of i t s user s. I n cont r astt o cont r i but or yI i abi l i t y,whi ch f ocuses on t he def endant ' s act i ons i n
enabl i ng i nf r i ngem ent ,' ' vi car i ous l i abi l i t yi s based on t he def endant ' sf ai l ur et o cause a
padi cul ari nf r i ngi ng f i l es and f ai l ed t o barf udheraccess. Hot f i l e wi l lal so have t o expl ai n how ,i n each oft hese i ns t ances,i twas unawar e oft he of f endi ng nat ur e of t he act i vi t y, di d not i nt end t o cont r i but et oi t ,and coul d not ut i l i ze exi s t i ng t echnol ogy t o pr event i nf r i ngem ent . Fi nal l y, t o t he ext ent t hat t he St udi os pr em i se I i abi l i t y on t he f ac tt hatHoii l e pr ovi ded t he m echani sm f ori nf r i ngem ent , Hot f i l e has suggest ed Sony / 8ef am axt ype noni nf r i ngi ng uses f ort he syst em ,and t her ei s a quest i on ofwhet hert hose uses ar ed s subs t ant i al . ' '
2 5
Al t hough a def endant ' sI ack ofknowl edge m ay notaf f ec tl i abi l i t yi nt hi s cont ext ,i t does have i m pl i cat i ons f or t he m easur e of damages avai l abl e under t he
Copy r i gh tAc t . Se e1 7 U. S. C. j 50 4( c ) ( 2)( pr o vi di n gt ha ts t a t u t or ydama ges ma y r ange f r om $750 t o $30, 000 per vi ol at i on, but cappi ng wi l l f ul vi ol at i ons at $15 0, 0 00 p ervi ol a t i on l ; se ea l s o EMI Apr i lMu s i c ,I nc.v .W h i t e, 61 8 F. Sup p. 2d 497,507 ( E. D.Va.2009 )( c i t i n g Ne l s on sa l a bes ,I n c.? .Mor ni ngs i d e Dev . ,LLC, 28 4 F. 3 d5 05, 51 7( 4 t h Ci r . 200 2) ) .
78
' di r ec tf i nanci albenef i t 'f r om Hot il e cont ends t hat t he St udi os cannot show a '
st hr ough subscr i pt i ons and i nf r i ngem ent because Hot f i l e char ges a f i xed r at et o user does notpr of i ti ncr em ent al l yf r om i nf r i ngement . Hot f i l e' s ar gum ent r es t s on an ear l y
ser vi ce. I d. at 1 36566. Those wor ks wer e aut om at i cal l y copi ed t ot he def endant ' s com put erby t he ser vi ce and t her eby m ade avai l abl et o user s who pai dt he def endanta f i xed subscr i pt i on f ee. I d. at 1 36568. The coud concl uded t hat t he pl ai nt i f f s wer e unl i k el yt o pr evai lon t hei rvi car i ous l i abi l i t y cl ai m because t he l i nk bet ween i nf r i ngem ent and r evenue was notsuf f i ci ent l y est abl i shed. I d.at137677. Not abl y, however rt he Net com coud di d not r ul et hat a f i xed f ee coul d never pr ovi de a di r ectbenef i tbasi sf orvi car i ous l i abi l i t y. I nst ead,t he cour tobser ved t hatt he
79
i abi l i t y wher et he f i nanci albenef i twas By cont r ast ,ot hercouds have per mi t t ed l
even m or e at t enuat ed t han her e. I n Ar i st a Recor ds LLC v.Usenet . com , I nc. ,633 F.
avai l abl e on t hei rser vi ce. ' 'I d.at 157. Li kewi se,i nt he Ni nt h Ci r cui t ' s Napst erdeci si on,
egi st r at i ons - due t ot he i ncr easi ng qual i t y an i ncr ease i n user base - i . e. ,m or e user r
hat t he def endant sf i nanci al l y benef i t t ed f r om and quant i t y of avai l abl e m usi c m eant t i nf r i ngem ent such t hat t hey wer e I i abl e. 239 F. 3 da t1 0 23 ( quo t i n gl o wer c oud
d eci s i on ) .
The Napst er case posi t st hat onl y a causalr el at i onshi p bet ween i nf r i ngem ent and pr of i tm ustbe est abl i shed I l r egar dl ess ofhow subst ant i alt he benef i ti si n pr opodi on
t o a def endant ' s over al lpr of i t s. ' ' El l i son v,Rober t son,357 F, 3d 1072,1079 ( 9t h Ci r .
i nf r i ngem ent m ay be. ' ' Cr ai g A.Gr ossm an,Fr om Sony t o Gr okst er ,t he Fai l ur e oft he
Copyr i ghtDoct r i nes ofCont r i but or yI nf r i ngem entand Vi car i ous Li abi l i t yt o Resol v et he
> ar bet ween Cont ent and Dest r uct i ve Technol ogi es, 53 Buf f . L. Rev. 1 41, 23031
( 2005) .
80
The Cour t has al r eady concl uded t hat ques t i ons r em ai nr egar di ng whet hert he f i nanci albenef i t Hot f i l er ecei ved and t he desi gn of i t s busi ness m odelar e su f f i ci entt o i m put ei nt ent t oi nduce copyr i ght i nf r i ngem entatt hi s st age Butt he vi car i ous I i abi l i t y
.
st andar dr equi r es nei t hert hata def endanthave knowl edge oft he ac t s of i nf r i ngem ent nort hat t he def endant r ecei ve subst ant i alf i nanci albenef i tf r om i nf r i ngem ent Hot f i l e
.
concedes t hati nf r i ngem entdi d occuron i t ss yst em and, whi l ei tar gues t hati t s suppor t f ori nf r i ngementw oul d not have made busi ness sense, i tacknowl edges t hati nf r i ngi ng f i l es dr ove som e am ountofsal es t o Hot f i l e,as show n by t he Zebr ak cl assi f i cat i ons and W at er m an cal cul at i ons. The i nf r i ngement sal es connec t i on i s al so i ndi cat ed by t he
i m pl ement ed i t st hr eest r i kes pol i cy and t echnol ogi est of er r etouti nf r i nger s. ( See,e. g. ,
As f ort he second pr ong - t he r i ghtt o cont r oluserconduc tand f ai l ur et o do so Hot f i l e cont ends t hatt her ei sat r i abl ei ssue because Hot f i l e' s cont ent neut r alappr oach
m eantt hatHot f i l e coul d notdet er mi ne whi ch f i l es wer ei nf r i ngi ng,t her eby depr i vi ng i tof
t he abi l i t yt o cont r olt he i nf r i ngem ent . However ,a r eadi ng oft he comm on I aw st andar d suggest s t hat couds have vi ewed t hi s el ement expansi vel y, f i ndi ng t hat ser vi ce
pr ovi der s have t he capaci t yt o cont r olt he act i vi t i es of t hei r user s si m pl y by vi due of
pr ovi di ng t he m eans t o com m i tdi r ec ti n f r i ngem ent . See,e. g. ,Ger shwi n Publ ' g Cor p.v.
er ser ver s t hat st or ed and t r ansm i t t ed user or i gi nat ed cont ent ; m ai nt ai ned com put
cont ent ;possessed t he abi l i t yt of i l t erorbj oc k cont ent ,i ncl udi ng i nf r i ngi ng cont ent ;and l d att i m es,exer ci sed t hei rr i ghtand abi l i t yt or es t r i c t ,suspend,ort er mi nat e subscr i ber s, ' ' such as by suspendi ng account s ofspam m er s,l i mi t i ng t he act i vi t y oft hose who used a di spr opodi onat e am ount of r esour ces, and r est r i ct i ng dow nl oads of por nogr aphi c m at er i al .I d.at131,157. And i nt he swap m eetcase,al bei ta nonl nt er netcont ext , t he si t e oper at or coul d be hel d vi car i ousl yI i abl e because i tf ' pat r of l ed t he pr em i ses, ' '
2 6
har bort hose who d s r ecei ve a f i nanci albenef i tdi r ec t l y at t r i but abl et ot he i nf r i ngi ng act i vi t y,i n a case i n w hi ch t he ser vi ce pr ovi derhas t he r i ghtand abi l i t yt o cont r ol
t he com m on I aw vi car i ous I i abi l i t ys t andar d,couds have r ead i ti nt he cont extof ot herpodi ons oft he DM CA t o notf or ecl ose pr ot ec t i on f orser vi ce pr ovi der st hat
Thi s not onl y dem onst r at es t he br eadt h of each pr ong of t he com m on I aw doc t r i ne,butal so i ndi cat es t hatt he DM CA pr ecedentHot f i l er el i es on i ni t s br i ef i si nappl i cabl et ot he di scussi on her e. See Capi t olRecor ds,I nc. v.Mp3t unes,
pr o v i der ' s we bs i t e' ' ) . Vi a c om, 6 76 F. 3d a t3 8 ( qu o t a t i on omi t t edl ; UMG Rec o r di ngs ,I nc .v .She / l erCa pi t al Par t ner sL LC, 71 8 F. 3 d1 00 6( 9t h Ci r .201 3 ) .
' ' cont r ol l ed t he acc ess of cus t om er st ot he swap m eet ar ea, ' 'and ' I had t he r i ght t o
t er mi nat e vendor sf orany r eason w hat soeverand t hr ough t hathad t he abi l i t yt oc ont r ol t he act i vi t i es ofvendor s on t he pr em i ses. ' ' Fonov i sa,76 F. 3d at262.
Beyond t he r i ghtt o excl ude,t he abi l i t yt o cont r olm ust be r ealand pr ac t i cal .I n
Per f ect 1 0 v. Am azon. com , I nc. ,f or i nst anc e, G oogl e al l owed user st o sear ch f or
1174. The coud st at ed t hatt he al l eged of f enderm us thave ' d bot ha I egalr i ghtt o st op or
I i mi tt he di r ect l yi nf r i ngi ng conduc t ,as wel las t he pr act i calabi l i t yt o do so. ' 'I d.at 1175.
Thus,Googl e was notvi car i ousl yl i abl e because i tcoul d notcont r olt he act i vi t i es oft he
subscr i ber s w ho al l egedl y shar ed access t o pl ai nt i f f s'pr ot ect ed wor ks. 71O F 3d at
107172. Even t hough t he i n f r i ngem ent occur r ed overt he ser vi ce net wor k st hat t he
def endant sr an,t he def endant s had no way ofsuper vi si ng useract i vi t y ori m pl em ent i ng a syst em t o pr eventi nf r i ngem ent .
The anal ysi s her e,based on pr ecedent ,i s st r ai ght f or war d. Hot f i l e cont r ol st he
m eans of i nf r i ngem entby am ong ot hert hi ngs m andat i ng user r egi st r at i on and hos t i ng
t he i nf r i ngi ng m at er i al s on i t s own ser v er s. CL Am azon. com , I nc. ,508 F. 3d at 1174
m ai nt ai ns t hati thas exer ci sed t hatcont r oli n pol i ci ng cont ent . Hot f i l e has al so adopt ed t echnol ogy t hat i t cl ai ms i s ef f ect i ve i nf i l t er i ng and t ar get i ng i nf r i ngi ng wor ks. These act i ons, w hi ch benef i tHot f i l ei n an assessm entofdi r ectI i abi l i t y,bel i e Hot f i l e' s ar gument t hati tI acks cont r olbecause i thas no s ear ch f unct i on and no way t oi dent i f y orr emove ti s al so cl eart hat pr i ort ot he f i l i ng oft he Com pl ai nt ,Hot f i l ef ai l ed t o i nf r i ngi ng f i l es. l
pr oper l y exer ci se i t s cont r oli nl i ghtoft he num berofuser s w ho wer e bl at ant l yi nf r i ngi ng
and t he est i m at es oft he St udi os'expeds r egar di ng t he pr eval enc e ofpr ot ec t ed cont ent di ngl y,on t hi sr ecor d,t he St udi os have m ade a case f or avai l abl ef ordownl oad. Accor
hi si ndi vi dualcapaci t y,seeki ng t o ext end any dam ages t hat m ay be awar ded agai nst
i nf r i ngement . ' ' Babbi tEl ecs. ,I nc.v.Dynascan Cor p. ,38 F. 3d 1161,1184 ( 11t h Ci r .
As so c. T el . Di r e c t o r y
i nf r i ngem ent occur r ed was l i abl e under t heor i es of di r ect and secondar yl i abi l i t yf or
84
i ndi vi dualhad on t h e deci si on t o commi ti n f r i ngemen tand l ook s bey on dt he cor por at e
omi t t ed) .
i abi l i t yt heor yi f he i s Al t er nat i vel y, a pef s on m ay be I i abl e un der a vi car i ous l nf r i ngi ng act i vi t y and benef i t sf r om i t , even i f he i s r esponsi bl ef or super vi si ng t he i ' i gnor ant oft he i nf r i ngem ent . ' ' Sout her n BeI I ,75 6 F. 2d at81 1( c i t a t i ons omi t t edl ;see
al so Ger shwi n Pub' g Co. , 443F. 2dat11 62 CForexampi e,aper s onwho h aspr omot ed ori nduc edt he i nf r i ngi ngact so ft he per f or merh as b eenhel dj oi nt l yan d sev er al l yI i abl e
as a t vi car i ous' i nf r i n ger , even t hough he has no ac t u al k no wl edge t ha t copy r i ght
monopol yi sbei ngi mpai r ed. ' ' )Asc ouf t sh aver ec ogni zed,
por at e of f i cerm ay be hel d vi car i ousl yl i abl e undert he Copyr i ghtAct A cor
wh e n ;( 1 )t h eo f f i c e rp e r s o n a l l yp a r t i c i q a t e di nt h ea c t u al i n f r i n g eme n t , ' or
( 2)t he of f i c erder i v ed f i nanc i albenef l tf r om t he i n f r i ngi ng act i vi t i e s as ei t her a ma j or sh ar ehol der i nt h e cor por at i on,or t hr ough some ot h er
m eans such as r ecei vi ng a per cent age of t be r evenues f r om t he ad i vi t y
gi vi ng r i s et ot he i nf r i n gement ' : or( 3)t he of f i ceru sed t h ec or por at i on as an i ns t r umentt o car r y outa del l ber at ei n f r i ngemen tofcopy r i ght , .or( 4)t he
of f i c erwas t he dom i nanti n f l u enc ei nt he c om or at i on,and det er mi n ed t he
com bi nat i on oft he above cr i t er i a.
Mat vi n Mus i c Co.k ' .8HC Lt d.P' s hi p,830 F.Supp.651,65455 ( D.Mas s.1 993)
( summar i zi ng c as eI aw)( quot at i on omi t t ed) .
Def endant s at t em pt t o mi ni mi ze Ti t ov' sr ol e,ar gui ng t hat he i s an ' ' engi neer , ' ' t ' t echnol ogi st, ' '' ' em pl oyee, ' or ' ' account ant v ' 'r at her t han a key of f i cer ,i nvol ved onl yi n
' d r out i ne' 'adm i ni s t r at i ve m at t er s;t hathe di d no t pr ov i de t h es t ar bup capi t alor c onc ei v e of t he i dea f orHo fi l e' , t hathe hol ds no s way overHot f i l e ei t heratt h et opl ev elorwi t h
r espectt oi t s dayt oday oper at i ons' ,and t hat '
com pani es t hat m anuf act ur ed t he def ect i ve pr oduct . / d. at 17273. Mor eover ,t he pr esi dent expr essed ' ' som e r eser vat i ons concer ni ng t he uni t ' s saf et y' ' dur i ng i t s devel opm ent - possi bl yt ouchi ng on t he nat ur e of t he def ect - and ' ' aut hor i zed t he pr oduct i on of a sl ngl e pr ot ot ype uni t . ' ' / d. at 173. Never t hel ess, t he di st r i ct coud char act er i zed hi si nvol vem ent i nt he devel opment and m anuf act ur i ng pr ocesses as
' t per i pher al ' and ci t ed hi sl ack of awar eness t hatt he pr oductwas puti nt o pr oduct i on.
I d.a t1 74. I na f f i r mi ng,t he Fi f t h Ci r cui tr eas oned t hat' ' g i l fE t h e pr esj dent )can be hel d
per sonal l yl i abl ei nt hi s case,any cor por at e of f i cerwho f ai l st o m ai nt ai n an al m ostt ot al
i gnor ance of t he pr oduct st he cor por at i on pr odt l ces m ay be per sonal l yI i abl ei nt he eventa def ect i ve pr oducti s pr oduced. ' 'l d.
2 7
Th e st u di os expl ai nt ha tt hey hav en ot br ou ght sui t agai ns tt hes e shar ehol der s because Hot f i l e pr of f er ed Ti t ov as i t s publ i cf ace and t he St udi os onl yr ecent l y di scover ed t hese shar ehol der s'i dent i t i es.
86
However ,aut hor i t yi nvol vi ng copyr i ght i nf r i ngem enti s notas st r i ngenti n hol di ng
r el evant cor por at e pr i nci pal sI i abl e. For exam pl e, i n Quar t et M usi c 7. Ki ssi m m ee
i nconsi st entwi t haI i censi ng agr eem ent .I d.at 1101. I ssui ng a deci si on af t era bench
For ei gn I mpor t ed Pr ods. & Publ ' g, I nc. v.Gr upo I ndus.Hot el er o, S. A. ,No.0722066
87
not a s t ock hol der or of f i c er but gav et he i m pr ess i on t hat he was a pr i nci pal i nt he
bu si nes sv en t ur el ;Pi c kwi c k Mus i c Cor p.v .Rec or d Pr ods . ,I nc . ,292 F.Supp.39,41
( S, D, N. Y.1 968)( f i ndi ngI i abi l i t yf ort hr eedef endant swhof or med a nd r anacor por at i on,
al t hough t hey had di f f er ent r esponsi bi l i t i es f or r ecor di ng, edi t i ng, and sel l i ng an
f unc t i ons f ) ,' Cor por a t e of f i cer s ha ve been h el dI i abl ef or t he c opyr i gh ti nf r i ngement
com m i t t ed by t hei rcor por at e ent i t yi n a var i et y ofsi t uat i ons. ' Bl endi ngwel lM usi c,I nc.b ' ,
Moor Law,I nc . ,61 2 F.Supp.474, 482 ( D.Del .1985)( p ar ent h et i cal l yci t i ngexampl es) .
By cont r ast ,Def endant s poi ntt o no pr ecedent suggest i ng t hata m ul t i t ude of cul pabl e act or s - and t hus,t he l ack ofa si ngl e' i cent r alf i gur e' '- i s det er mi nat i ve ofl i abi l i t y. M or eover , Def endant s'cont ent i on t hat t he padi cul ar f act s of t hi s case m ake i t i ncom par abl et o any ot heri s unper suasi ve,si nce t he hal l m ar ks ofpadi ci pat i on,cont r ol , and benef i tar e undeni abl y pr esenther e. Fi r st ,Ti t ov i s a hi ghr anki ng,cent r alf i gur e at Hot f i l e. He owns a st ake i nt he com pany near l y as I ar ge as i t s ot her
and r uns i ti n equalpar t ;
was i ndi s pen sabl ei nt he compan y' sf or mat i on,cr uci alt ot he
devel opm ent of i t s busi ness m odel , and cont i nues t o be i nvol ved i n i t s busi ness
88
st r at egy. Ti t ov acknow l edges possessi ng powerofat t or ney f ort he com pany and act i ng
as i t s m anagerw hen aut hor i zed.
I n addi t i on, Ti t ov has per sonal l yh ad a hand i n ev er y as pec to ft he conduc t under pi nni ng t he St udi os't heor i es of l i abi l i t yi nt hi s cas e. For ex am pl e,a tt he out se t ,
Ti t ov wr ot et he pr ogr am m i ng code t hat r uns t he Hot f i l ei nt er f ace and enabl es di r ect
i nf r i nger st o upl oad and downl oad pr ot ec t ed wor ks. M or er ecent l y, h e under t ook a m anagem entr ol ei n whi c h he over sees c ont r ac t or s wor ki n gf orHot f i l e an d padi ci p at es i n m ai nt ai ni ng Hot f i l e' ss t or age and del i ver yt echnol ogy. Ti t ov al so has a si gni f i c ant i mp ac ti n hi s wor kf or Hot f i l e' sr el at ed en t i t i es. He i st h e sol e owner , m anager and
di r ect orof Lem ur i a,whi ch owns and m ai nt ai ns t he ser ver s on w hi ch t he i nf r i ngi ng f i l es
w ben t hat net wor k was sued f or i nf r i ngem ent . He al so expr essed t he concer nt hat
Ho t f i l e w oul d b ec om e t h e ' ' f l agsh i p' 'f or n onl i c ens ed c on t ent an d was a par t yt o
comm uni cat i ons cl ai mi ng t hat cer t ai nf i l es wer ei nf r i ngi ng. Si gni f i cant l y,Ti t ov appear s
on near l y ev er y docum en tt hatt he Couf t cons i der e di n det er mi ni n gl i abi l i t y. Ti t ov al so pu ti n pl ace Hot f i l e' s DM CA agent , who r ecei v ed m i l l i ons ofi nf r i ngem en tnot i ces. Thus,
whi l et he Cour tac knowl edges t hatTi t ov may noth av e gone s of ar as t o per sonal l y
89
engage i n act s ofdi r ec ti nf r i ngem ent ,and t hatany one of hi sf unct i ons m i ghtnotgi ve r i se t oI i abi l i t y on i t s own,t he t ot al i t y oft he ci r cum s t ances suppods I i abi l i t y. I n cont r ast
t o ot her c ases, hi sr ol e j s not per i pher al , hi sf unct i on i s not t hat of m er el y a si l ent
90
pady wai ves such a def ense by appear i ng gener al l y and I i t i gat i ng t he m er i t s ofa cl ai m, as Ti t ov has done her e. See, e. g. ,I ns. Cor p. of I r el and; Lt d. v. Com pagni e des
p er s onaI j ur i s di c t i onl . z 8 Af t ers t u mbl i n gu pon a per s on alj ur i s di c t i on ch al l eng e bur i ed deep i nt h es ummar yj u d gmen t br i e f i n g,t h e Coud f i n ds n oi ndi c a t i on t ha t Ti t ov i s
2 8 I n Ger ber v Ri o r dan,649 F. 3d 51 4( 6t h Ci r .2011 ) ,f or e x ampl e,a pr os e
.
j u r i s di c t i on i sI a t erf ou nd I ac k i n g' ' - wai v e a per son al j u r i s di c t i on d ef ens e. I d.a t 519 ( ci t at i ons and quot at i on om i t t ed) . W hi l e some oft hose ac t i ons mi ghthave i n di c at e dt h a tt he pady di dn o ts ub mi tt ot h ec ou d' sj u r i s di c t i on or t h at t h e
def endantsoughtm er el yt o pos t pone t he case,t he f i l i ng ofa gener al appear ance
' const i t ut ed avol unt ar yacc ept ance oft he di st r i ctcoud' sj ur i sdi ct i on. ' '
91
avoi di ng a def ense oft he sui ton t he m er i t s. To t he cont r ar y,i n asser t i ng def enses,
f i l i ng m ot i ons r el at ed t ot he r ecor d,and per sonal l y at t endi ng or alar gum ent ,Ti t ov has
D.
Not i ces ofi nf r i ngem entar e a pr om i nentf eat ur e oft he DM CA. The st at ut e spel l s outsi x
el em ent sf ora not i ce t o be ef f ect i ve,speci f i es r equi r em ent st he s er vi ce pr ovi derm ust m eetso t hati tm ay pr oper l yr ecei ve not i ce,r equi r es ser vi c e pr ovi der st o ac ton r ecei pt
of not i ces such as by r em ovi ng i nf r i ngi ng user s'cont ent ,and pr ovi des a pr ocedur ef or
chal l engi ng copyr i ght ow ner s' desi gnat i ons. Pr ovi di ng t he I egal basi sf or Hot f i l e' s
cl ai m s of i nf r i ngem ent . Accor di ng t ot he st at ut e' sI egi sl at i ve hi st or y, t he subsec t i on ' ' est abl i shes a r i ght of act i on agai nst any per son who knowi ngl y mi sr epr esent st hat
m at er i aloract i vi t yi si nf r i ngi ng' 'and ' ' i si nt ended t o det erknowi ngl yf al se al l egat i ons t o ser vi ce pr ovi der si nr ecogni t i on t hat such m i sr epr esent at i ons ar e det r i m ent alt or i ght s
su r r oun di ng en f or c emen to fSec t i on 51 2( 9, whi c hi s no twel lun der s t ood. See Gr ound
Zer o Mus eu m W or k s ho p? .Wi l s on,81 3 F.Sup p.2d 6 78,70 4( D.Md.2 011 )( ' d Th er ei s no ta gr e atde alo fc a s el a wi n t er pr et i n g( Sec t i on 51 2( 9) . ' ' ) ,UMG Rec * o r di n gs ,/ k 7 c .
Au gus t o, 558 F. Su pp. 2d 1 05 5,1 0 65 ( C. D. Cal . 20 08) , af f ' d on ot he rgr ou nds , 628 F. 3 d
one cannot know i ngl y mi sr epr esentwhat one does not under st and t o be f al se. See
93
( r eas onabl eness !s t andar d) . I ndeed,mi s t ak es,ev enl unr eas onabl e' ' mi s t ak es,donot nec es sar i l yc al l f orI i abi l i t y, sol ongast heyar ehon es t l ybel i ev ed./ d.( ci t i ng 1 7 U. S. C. j
51 2( 9) .
But Hot s l e ask s whet her cer t ai n' ' egr egi ous ' 'a t t r i bu t es ofW ar ner ' s sy st em t ha t
wa s maki ng mi sr epr esent at i ons. ' ' ) ,wi t h Cabel l ,201 0W L996007,a t* 4( ' e l Nl egl i gence i s
no tt he s t an dar df orI i abi l i t y un ders ec t i on 51 2( 9. ' ' ( ci t a t i onomi t t edl ) ,a nd Augus t o,5 58
F.Supp.2d a t1 065 ( hol di ng t hatal l egat i onst hatt he coun t er cl ai mde f endant' shoul d
have known bet t erdo no tcr eat e a genui ne i s sue o fmat er i alf ac t o ) . Hot f i l e al so ask s
2 9
e ci t ed mos to f t en i nt hi sar ea,t he own erofa webs i t e l n R os s i ch i st he cas 1 whi di r ect or y sued a m ovi e st udi ot r ade associ at i on t hatf ol l owed t he DM CA' S nct i ce endi ng t hat any r easonabl ei nvest i gat i on of hi s and t akedown pr ocedur es, cont hati tdi d notI i nk t oi nf r i ngi ng cont ent .I d.at1003. websi t e woul d have r eveal ed t
Cons i der i ng Sec t i on 512( 9' s ex pr ess I angu age and i nt er pr et i ve cas el aw deal i ng
wi t h a wi de var i et y of si mi l ar l yw or ded st at ut es,t he Ni n t h Ci r c ui t hel dt hat t he
st at ut eempl o ysanobj ec t i v es t andar d and r ul ed agai ns tt he pl ai n t i f f ./ d.at1 00405( s t at i ngt ha tt h es t at u t epr ot ec t s' ' pot ent i al vi ol at or sf r om s ubj ec t i vel yi mpr oper ac t i ons b y c opyr i ght owner s' ' ) . l ns t ead o f su bj ec t i v e kno wl edge o f
noni nf r i ngem en t , one of t he ass oci at i on' s m em ber s not i f i ed i t of possi bl e
i nf r i n gement s on t he sub j ec twebsi t e an dt he webs i t ei t s el fsugges l ed t o us er s t hatpr ot ec t ed movi es c oul d be down l oaded byj oi ni ng. / J. The cl earI ess onof Ross ii st ha t' ' asa pr er equi si t et oI i abi l i t yundersec t i on 512( 9,a d ef endantmus t
have act ualknowl edge t hati ti s m aki ng a m i sr epr esent at i on off act . ' ' Cabel lk ' .
Zi mmer man,No.09Ci v.10134( CM) , 2010W L996007,a t* 4( S. D. N. Y.Mar .1 2, 2010)( ci t at i on somi t t ed) .
94
whet her
Some c ouds hav ec i t ed Sec t i on 51 2( c)t o sugg es tI i abi l i t ywh er e a par t ydi d not
devel op a ' i good f ai t h' 'or' ' su mci en t 'b asi st ob el i eve i nf r i ngementbef or e submi t t i ng a
( hol di ng,i nt he cont exto fa Sect i on 51 2( 9 cl ai m,t hatt he def endant' ' was r equi r ed t o
show t hati thad a suf f i ci entbasi st of or mt he r equi r ed good f ai t h bel i eft hatt he pl ai nt i f f s'
t akedown r equi r ement s undert he DMCAI ;butsee Al J g&x 9 / o,558 F.Supp.2d at1 065 ( ' ' con gr ess i nc l uded an ex pr ess l yI i mi t ed c aus eo fac t i on f or i mpr operi n f r i ngen n en t
not i f i cat i ons, i m posi ng l i abi l i t y onl yi f a copyr i ght owner ' s not i f i cat i on i s a knowi ng
mi sr epr es en t a t i on. '( quo t at i on an dc i t at i ons omi t t edl l . 3 o On e coud,i n as er i es off our
deci si ons, w ent so f ar as t o hol d t hat pr i or t o subm i t t i ng a t akedown not i ce, t he copyr i ghthol derm ustconsi dernot onl y whet hert he m at er i alact ual y bel ongs t oi t ,but w het her t he use of t he m at er i all acks an obvi ousl yI awf ulpur pose l i ke f ai r use. See
Le nz 7.Uni v er salMus i c Com . ,5 72 F.Supp.2d 115O ( N. D.Cal .2008) ( ' ' Lel 7 zJ ' )
( deny i n g mot i on t o di smi ss l ;Lenz v.Uni v er s alMus i c Cor p. ,No.C073 783 JFI I RS) ,
2008 W L 4790669 ( N. D.Cal .Oc t .28, 200 8)( ' Le? 7 z/ / ' ' )( den yi ng mot i on f ori nt er l oc ut or y
appeal l ;Lenz v .Uni ver s alMusi c Co@. ,No.C073783 JF,2010W L 702 46 6( N. D.Cal .
3 0 Ros s ii t sel f not ed t he f ac tt ha tt he def endan ti nt hat c as e had not ac t ual l y do w nl oaded t he f i l es,bu twenton t o descr i be ot hercom pel l i ng f ac t st hatI ed t he def endantt o bel i eve t hati nf r i ngem entofi t s wor ks was occur r i ng.
95
Feb.25,2010)L u Lenz #/ ' ' )( gr ant i n g pl ai nt i f fsmot i onf orpar t i alsummar yj u dgmen ton
a f f i r ma t i v e def en ses l ;Lenz v.Uni v er salMus i c Cor p. ,No.5: 07c vO3783JF,2013 W L
271 673 ( N. D. Cal . Jan. 2 4, 2013) ( M l e nz I V' )( deny i ng mo t i ons f or su mmar y j udgmen t l . 3 l
Thus, i fW ar nerh ad s om e s i mi l art ype o fdut y, i tm i ghtf i nd i t s el fvul ner abl et o sui t bec aus e i t s pr en ot i c e r evi ew M or eo ver , even i fi t s met hodol ogy
w er er el i abl e,W ar ner was concer ned wi t h det er mi ni ng whet her i t owned t he wor ks
r a t hert han w het hert he use oft he wor k si nf r i nged on i t s cop yr i ght st o suppor ta pr oper
51 2( c)cl ai m. See So ny m et ama x, 464 U. S. at433( ' l Al nyone ... who mak esaf ai rus e oft he wor ki s notan i n f r i ngeroft he c opyr i gh twi t hr es pectt o su ch us e. ' ) ;Amar et t o
31
ephani eL en z,a usero ft he l n t er n etvi deo hos t i ng si t e You Tub e, i nt hat case, St upl oaded a vi deo o f herf am i l y danc i ng t o as on g per f or m ed by t he m u si c adi s t Pr i nc e,w hi ch t ur ned ou tt o be wi l dl y popuf ar am ong vi e wer s. Lenz 1 , 57, 2 F. Supp.2d at 1162. The ow nerof t he song,Uni ver salM usi c Cor por at i on,sent a t akedow n not i ce t ot he ser vi ce pr ovi der ,whi ch not i f i ed M s.Lenz t hat hervi deo had been r em ov ed b ec ause of a cl ai m o fcop yr i ghti n f r i ngem en t ,I d. Di sc over y r eveal ed t hatUni ver salhad an em pl oyee who was t asked wi t h usi ng YouTube' s syst em t o sear ch f ort i t l es ow ned or adm i ni st er ed by Uni ver sal . Lenz I V'2013 W L 271673,at *1. He st at ed t hat he i ssued a t akedown not i ce whenever he coul dr ecogni ze a one second orI ongerpor t i on ofa Pr i nce song i n any vi deo.as occur r ed i nt he vi deo at i ssue. I d.at* 5. Hi s boss st at ed t hatUni ver salseeks t o r em ove songs ' ' when a wr i t er i s upset or r eguest st hat padi cul ar vi deos be r em oved f r om Youl ube, 'pr om pt i ng Uni ver salt o conducta r evi ew . I d.
bl i nded i tt o kno wl edge of her f ai ru se, bu t not t hat Uni ver s al sub j ec t i v el y
nat ur eo ff ai ru se was sel f evi dent .I d.at* 67( ci t i ng Vi ac om,676 F. 3d at3 4) . Li k ewi se,Uni v er s alc oul dn otdemons t r at et he absence ofsub j ect i v ei nt ent ./ J.
at*8.
96
Ranch Br eedabl es,LLC v.Oz i mal s ,I nc. ,79O F.Supp.2d 1 024,10 29 ( N. D.Cal .2011 )
( not i ng t hata Sec t i on 512( 9 pl ai nt i f fc ancont es tt h e val i di t yofa t ak edown no t i f i c at i on
ev en wher e a val i dc opyr i ght ex i s t s) . And, W ar ner ' sr el i anc e on t echnol og yt o
acc ompl i sh t he t as k mi ghtpr e ven ti tf r om f or mi ng any bel i efatal l ,as t he ami cus cudae ar gues h er e an d a si mi l ar gr oup as s er t ed i n Ross t ' ' c om put er sc ondt l c t i ng aut om at ed s ear ches cannotf or m a bel i efc onsi s t en twi t ht he I an guage oft he DM CA,because t hey
cann otdi s t i ngui sh b et ween i n f r i ngi n gc ont entan d con t entt hatmer el yc on t ai ns wor ds
t hat suggest i nf r i ngem ent . ' ' Rossi , 391 F. 3d at 1005 n. 7. The Cot l r t ! however ,i s
unawar e of an y deci si on t o da t et hat ac t ual l y addr es sed t he need f or hum an r evi e w, an dt he st at ut e does not spec i f y ho w bel i e f of i n f r i ngem ent m ay be f or m ed or what
know l edge m ay be char geabl et ot he not i f yi ng ent i t y. Ul t i m at el y,w hi l et hese ar e engagi ng quest i ons sur r oundi ng W ar ner ' s know l edge' ,
i t sr es pons i bi l i t yt oi nves t i gat e' , whet heri tha d a goo df ai t h bel i e fi ni n f r i ngem enti n ea ch
i nst ance' ,and whose bur den i ti st o show orr ef ut e what- al Ii ssues off i r sti m pr essi on i n
t hi s Ci r c ui t- t her e i s su f f i ci en t ev i denc e
i nt ent i onal l yt ar et ed f i l es i tk new i thad no r i ghtt or emov e. Thi s pr ecl udes s um mar y
j udgmen ti ni t sf av or . Spec i f i c al l y,Hot f i l eh as pr o vi ded t he ex ampl e ofJDownl oader ,
W hi ch W ar ner di d not m anage ' '
t akedow n r i ght s beyond wor ks t ha ti to w ns. And W ar nerhas noto t her wi s e ar gu ed t ha t i t had t h er i gh tt or em ove t hos ef i l es,onl yt ha ti t s mi s t akes shoul d be ex cu sed. The
necessar i l y di f f i cul tt o measur e wi t h pr eci si on and has I ed t o m uch di sagr eem ent
b et ween t h ep adi es an dt h ei rex p ed s. Not wi t hs t an di n gt hi s di f f i c ul t y,t h ef ac tofi n j ur y has b een s ho wn ,an d Ho t f i l e' se xp ed c an pr ov i de t h ej ur y wi t han on s p ec ul at i v e ba si s
t o assess dam ages. Addi t i onal l y,Lenz I I Iconcl uded t hatt he subsec t i on pr ovi des f or dam ages beyond act ualdam ages, even i ft hey ar e notsubs t ant i al .I d.at* 710. C) nt hi s
basi s,t he Coud concl udes t hatW ar neri s unabl et o est abl i sh t he absence ofa genui ne
( 1 )
pr o t ec t i on ( DE 275,DE 31 8 ) , De f en dan t An t onTi t ov ' s mo t i onf ors ummar y j u dgmen ton per s on alI i ab i l i t y( DE 27 6,DE 31 6 ) ,an d W ar n er ' s mo t i on f or
s ummar yj u dgmen ta st o Hot f i l e' sc oun t er cl ai m ( DE 255, DE 301 )a r e
DEN I ED .
98
( 2)
( 2 )
wi t h Pl ai nt i f f s 's ummar yj udgmen tbr i ef i ng;and t os t r i k ec er t ai nexhi bi t si n conn ec t i on wi t h Pl ai n t i f f s'opposi t i on t o Mr .Ti t ov' s summar yj udgment
mot i on ( DE 371 ) ,ar e DENI ED AS MOOT. Si mi l ar l y,Pl ai n t i f f s'mot i on t o
st r i k e por t i ons oft he decj ar a t i ons ofDr . Andr ew Cr om ady,Dr .Boyl e,and
( 4) W ar ner ' s mot i ont o us e an ex hi bi tf r om Mr .Ti t ov' s deposi t i on att r i al( DE 241,DE 297)i s GRANTED,and Pl ai n t i f f s 'Ob j ec t i onst o Ju dge Tur nof f ' s
Repod and Rec ommendat i on ( DE DE 370) ar e OVERRULED.
( 5 )
The padi es shal lcon f erand pr o vi de t ot he Coud pr opos ed r dac t i ons t o t hi s Or derwi t hi nf our t een ( 14)days o ft h e da t e oft hi s Or der ,so t ha tt h e
Cour tcan i ssue a publ i c ver si on oft hi s deci si on.
day of August ,
L 99
M .W I LLI AM S