BitTorrent Websites Contributorily Liable for Copyright Infringement Without DMCA Safe Harbor Protection: Ninth Circuit | Practical Law

BitTorrent Websites Contributorily Liable for Copyright Infringement Without DMCA Safe Harbor Protection: Ninth Circuit | Practical Law

In Columbia Pictures Industries v. Fung, the US Court of Appeals for the Ninth Circuit affirmed the district court's grant of summary judgment to Columbia Pictures and other plaintiff film studios based on a record of undisputed evidence that Fung's BitTorrent file-sharing websites contributorily infringed the studios' copyrights by inducing third parties to download the studios' works. The Ninth Circuit also affirmed the summary dismissal of Fung's DMCA safe harbor defenses and remanded the case for the district court's issuance of a modified permanent injunction prohibiting Fung from further inducing the infringement of the plaintiff studios' copyrighted works.

BitTorrent Websites Contributorily Liable for Copyright Infringement Without DMCA Safe Harbor Protection: Ninth Circuit

by PLC Intellectual Property & Technology
Published on 25 Mar 2013 • USA (National/Federal)
In Columbia Pictures Industries v. Fung, the US Court of Appeals for the Ninth Circuit affirmed the district court's grant of summary judgment to Columbia Pictures and other plaintiff film studios based on a record of undisputed evidence that Fung's BitTorrent file-sharing websites contributorily infringed the studios' copyrights by inducing third parties to download the studios' works. The Ninth Circuit also affirmed the summary dismissal of Fung's DMCA safe harbor defenses and remanded the case for the district court's issuance of a modified permanent injunction prohibiting Fung from further inducing the infringement of the plaintiff studios' copyrighted works.

Key Litigated Issues

The key litigated issues in Columbia Pictures Industries, Inc. v. Fung were whether:
  • The district court erred in finding Fung liable for contributory copyright infringement on an inducement theory under Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.
  • The district court erred in concluding that none of the DMCA safe harbors applied to Fung.
  • The district court's permanent injunction was too vague under Federal Rule of Civil Procedure 65(d) or unduly burdensome.

Background

The plaintiffs, Columbia Pictures and other film studios, own the copyrights to movies and television shows. The defendant, Gary Fung and his company operate websites that host torrent files using BitTorrent, a P2P file sharing protocol. BitTorrent breaks up files into smaller pieces, allowing internet users to download different pieces simultaneously from different peers, speeding up the downloading process for exchanging large content files. When a user wants to share a copy of a file, the user creates the very small file, the torrent. The torrent file is small because it lacks any of the content of the actual work that the torrent user seeks to share. The user makes the torrent file available for others by uploading it to one or more websites, called torrent sites. The torrent sites then collect, organize, index and host the torrent files, allowing users to browse in and search the collections.
The torrent site search results then provide the torrent file for the user to download. Once the user downloads the torrent file and opens it with his BitTorrent program, the program reads the torrent file, obtains the address of a BitTorrent file tracker, and contacts the tracker. The BitTorrent program then informs the tracker that it is looking for the movie or other content associated with the downloaded torrent file and asks if there are any peers online that have the movie available for download ("publishers"). The tracker will communicate the address of the publishers to the user’s BitTorrent program. The user’s BitTorrent program will then contact the publishers’ computers directly and begin downloading the pieces of the requested movie, TV program or other content.
Fung's torrent sites have two primary methods for acquiring torrent files:
  • Soliciting the files for uploading by users.
  • Using automated bots, crawlers or spiders that mine other torrent sites to collect torrent files.
Three of Fung's websites at issue in this case are isohunt.com (isoHunt), torrentbox.com (Torrentobx) and podtropolis.com (Podtropolis).
IsoHunt, considered Fung's flagship site, does more than merely collecting and organizing torrent files. Each time a torrent file is added to isoHunt, the website automatically modifies its hosted torrent files to add additional backup trackers. This makes the torrent files less dependent on individual trackers and more reliable than when they were originally uploaded. IsoHunt also has a forum for users to post comments and inquiries, among other things, concerning how to locate and download popular copyrighted films.
Columbia sued Fung for vicarious and contributory copyright infringement of its copyrighted works that were being located and shared with the use of Fung's the torrent sites. The US District Court of the Central District of California held that:
  • Fung was liable for contributory infringement for inducing others to infringe the plaintiffs' copyrighted works.
  • None of the DMCA safe harbors were applicable to Fung.
The district court also entered a permanent injunction prohibiting Fung from "knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs' Copyrighted Works, including without limitation by engaging in" certain specified activities. After the injunction was entered, Columbia served Fung with a list of over 23,000 titles of purportedly copyrighted works. Fung appealed.

Outcome

In its March 21, 2013 decision, the US Court of Appeals for the Ninth Circuit:
  • Affirmed the district court's grant of summary judgment to Columbia and the other plaintiff studios finding Fung contributorily liable for copyright infringement under the inducement theory the Supreme Court developed in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. (Grokster III) .
  • Affirmed, but on different grounds, the district court's grant of summary judgment to the plaintiffs finding that Fung did not meet his burden for establishing the statutory requirements for the DMCA safe harbor provisions of 17 U.S.C. Sections 512(a), (c) and (d).
  • Modified the scope of the district court's permanent injunction.

Copyright Infringement Inducement Liability

The Ninth Circuit found that Columbia successfully carried its burden of proving Fung's liability for inducing others to infringe Columbia's copyrights. Under Grokster III, the four elements for secondary copyright infringement liability under an inducement theory are:
  • The distribution of a device or product.
  • Acts of infringement.
  • An object of promoting the device's or product's use to infringe copyright.
  • Causation of acts of infringement.
The Ninth Circuit found all four elements were established under the facts because:
  • The the Supreme Court's reasoning in Grokster III and Ninth Circuit decisions following in its wake make clear that the first element, distribution of a device or product, is also satisfied by a showing that the accused infringer, like Fung, provided services to induce third-party infringement.
  • Internet users' uploading and downloading the plaintiff studios' copyrighted material violated the plaintiffs' exclusive rights of distribution and reproduction, establishing the second element of acts of direct infringement.
  • Fung promoted its torrent sites to infringe copyright by the following "clear expressions" of its object to facilitate third-party file sharers' infringement:
    • actively encouraging the uploading of torrent files of copyrighted content;
    • posting messages to the isoHunt forum requesting that users upload torrents for specific copyrighted films;
    • providing links to torrent files for copyrighted movies, urging users to download them;
    • responding affirmatively to requests for help in locating and playing copyrighted materials;
    • shunning filtering tools and other mechanisms to diminish infringing activity; and
    • generating revenue almost exclusively by selling advertising space on his websites based on the high level of site traffic and click throughs drawn by the sites' featuring of torrent access to copyrighted materials.
  • Under Grokster III, proof that Fung provided an infringement-enabling service that resulted in acts of infringement is sufficient to establish the required element of causation.
Because the district court's permanent injunction was the only relief at issue before it, the Ninth Circuit saw no need to decide the extent to which Fung could be held liable for contributory infringement damages. The court, therefore, left these causation and damage calculation issues for the district court to consider.

DMCA Safe Harbors

The Ninth Circuit affirmed the lower court's grant of summary judgment dismissing Fung's affirmative defenses under three of the DMCA's safe harbor provisions. The district court ruled that inducement liability is inherently incompatible with protection under the DMCA safe harbors. The Ninth Circuit rejected this argument, pointing out that a service provider liable for inducement is not precluded per se from seeking DMCA safe harbor protection and that inducement liability and DMCA safe harbors present two independent inquiries.
However, the court ruled that Fung had failed to meet his burden of establishing that he satisfied the statutory requirements for his three asserted DMCA safe harbor defenses:

Transitory Digital Network Communications, 17 U.S.C. Section 512(a)

The district court found the Section 512(a) safe harbor did not apply to Fung because infringing material did not pass through or reside on Fung's system. The Ninth Circuit also found this safe harbor inapplicable, but disagreed with the district court's reasoning. The Ninth Circuit ruled that Fung's trackers did not fit the definition of "service provider" for this safe harbor, which requires that the trackers merely provide connections for digital online communications "between or among points specified by a user" (emphasis in original). The court reasoned that, because Fung's trackers, not their users, select the internet locations from which copyrighted materials will be transmitted, these trackers are not service providers, and the Section 512(a) safe harbor does not, therefore, apply.

Information Residing on Systems or Networks at Direction of Users, 17 U.S.C. Section 512(c)

The Ninth Circuit also disagreed with the district court's reasoning that the Section 512(c) safe harbor was inapplicable because the infringing material does not actually reside on Fung's servers. Instead, the Ninth Circuit reasoned that this safe harbor was inapplicable because:
  • Fung had at least "red flag" knowledge of a broad range of infringing activity independent of any actual infringement notice, making him ineligible under Section 512(c)(1)(A)(ii) as evidenced by the facts that he:
    • actively encouraged the infringement by urging users to upload and download particular copyrighted works;
    • provided assistance to users seeking to watch copyrighted works and helping users burn copyrighted material on DVDs;
    • could not have been unaware that the currently popular materials involved were both copyrighted and unlicensed; and
    • did not dispute that he personally used his isoHunt website to download infringing material.
  • Fung was ineligible for a Section 512(c)(1)(B) safe harbor defense because he:
    • received a financial benefit that is directly attributable to the infringing activity, as shown by his receipt of website advertising revenues directly based on and derived from user traffic on his websites, which encouraged and facilitated unauthorized downloading of copyrighted materials; and
    • had the right and ability to control this infringing activity by exercising substantial influence over his users' file-sharing practices, including through the capacity of his websites and trackers to locate, index and facilitate searches for infringing material and terminate user access.

Innocent Use of Information Location Tools, 17 U.S.C. Section 512(d)

The Ninth Circuit ruled that Fung was also ineligible for the Section 512(d) safe harbor provision for the same reasons as it expressed in its analysis of Section 512(c) because Fung:
  • Was broadly aware of facts or circumstances from which infringing activity was apparent.
  • Received a direct financial benefit from the infringing activity and had the right and ability to control that activity.

Permanent Injunction

On appeal, Fung sought to vacate the district court's permanent injunction, arguing that it was:
The Ninth Circuit agreed with Fung, reversing and modifying in part the district court's permanent injunction. The court ruled that, among other vague or loosely defined terms, the injunction's prohibitions against using "Infringement-Related Terms" in webpage metadata and providing access to "well-known infringing source sites," were too imprecise to provide Rule 65(d)-compliant notice. The court also struck, as unduly burdensome, certain other terms of the injunction that could be interpreted as barring Fung from employment in any technology company, however innocent, if that company's services could be used by others to infringe any copyrights.

Practical Implications

This case is notable for its application of the Grokster III inducement theory to hold hosts of another P2P file sharing technology, BitTorrent, liable for contributory copyright infringement. It also suggests that, in the Ninth Circuit, it may still be possible for a defendant who is otherwise liable under the inducement theory to seek protection under the DMCA's safe harbors.

Court Documents