In another major victory for content owners over file sharers, the Central District of California found the owner and operator of a “torrent” file-sharing service liable for inducing copyright infringement in Columbia Pictures Indus., Inc. v. Fung, et al., 2009 U.S. Dist. LEXIS 122661 (C.D. Cal. Dec. 21, 2009). The Fung case reflects the continued evolution of peer-to-peer file-sharing technology since the Napster service was found to be infringing nearly a decade ago. Napster maintained a centralized index of song titles available for sharing and matched a user seeking a particular song directly with a user who had a copy of it. The Grokster, KazAa and Gnutella services did not maintain a centralized index of song titles, but upon request would search users’ computers for a copy of a particular song title and then match the requester with the user who had a copy of it.
In contrast, a torrent user visits a website to find “torrent files” relating to content the user wants to find. The torrent file does not contain the actual content the user is looking for; instead, it contains metadata which allows the torrent software to find and retrieve content from individual users’ computers. When a user selects a particular torrent file for download, the torrent software then identifies multiple locations where the content resides, and downloads pieces of it from all of those locations simultaneously. This approach allows for much faster and more efficient downloading of files and lessens the bandwidth strain on participating systems.
Fung operated a number of torrent websites which provided users with the torrent files necessary to find and share copyrighted content. Under the standards enunciated by the U.S. Supreme Court in Grokster, the court found Fung liable for inducement of copyright infringement.
Secondary Liability for Foreign-Based Activity
Because the Copyright Act has no extraterritorial effect, and the servers that Fung used to maintain his websites were located in Canada, the court addressed as a threshold matter whether the Copyright Act could reach Fung’s conduct. A contributory infringer may be liable for actions occurring abroad which knowingly cause direct infringement within the United States. Accordingly, Fung’s liability hinged first on evidence that users located in the United States used his websites to transmit or retrieve copyrighted content. Though Fung argued that the plaintiffs needed to show that U.S.-based users both transmitted (uploaded) and received (downloaded) copyrighted content, the court found that either act, standing alone, could constitute the necessary direct infringement, since transmission violates the copyright owner’s distribution right and retrieval violates the copyright owner’s reproduction right.
The court found that the plaintiffs submitted “abundant evidence of infringement” using Fung’s websites. Plaintiffs’ expert conducted a statistical study showing that more than 95% of files available through the websites were either copyrighted or highly likely to be copyrighted. Plaintiffs also introduced evidence of direct infringement within the United States by tying together data reflecting the IP addresses and geographical locations of users with downloads of torrent files and sharing of corresponding copyrighted content. The court concluded that this evidence “conclusively establishes that individuals located in the United States have used Fung’s sites to download copies of copyrighted works.”
The court then analyzed Fung’s conduct against the Grokster inducement standard: one who “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Under this standard, “mere knowledge” of infringing acts is not enough, nor are “ordinary acts incident to production or distribution.” Instead, liability is predicated on “purposeful, culpable expression and conduct.”
The court found that “evidence of Defendants’ intent to induce infringement is overwhelming and beyond reasonable dispute.” Fung conveyed a pro-piracy message to users by categorizing torrent files into browseable groups like “Top Searches,” “Top 20 Movies,” “Top 20 TV Shows,” and “Box Office Movies”; posting statements such as, “if you are curious, download this,” with a link to a torrent file for the then-recent film “Lord of the Rings: Return of the King”; and making repeated public statements acknowledging that his activities were illegal, such as, “they accuse us for [sic] thieves, and they r [sic] right. Only we r [sic] ‘stealing’ from the lechers (them) and not the originators (artists).”
Moreover, Fung, as well as various moderators of his sites, actively promoted infringement by providing users with technical assistance in downloading and viewing copyrighted works. Though Fung argued that the First Amendment protected this verbal conduct, the court held that under Grokster, his statements themselves were not illegal; rather, they were probative of an intent to infringe, and supported a finding of secondary liability.
Finally, Fung’s sites implemented a number of technical features designed to foster infringement, such as allowing users to locate and upload torrent files and automating the collection of torrent files from other sites which were well-known to contain infringing content.
As in the Napster and Grokstercases, Fung’s business model depended on “massive infringing use.” His websites generated revenue almost exclusively by selling advertising space. Revenue depended on users visiting the sites and viewing the advertising. Fung admitted that the availability of popular works drove visitors to his sites. He also solicited advertising based on the availability of such works, stating, for example, that his sites would “make a great partner, since TV and movies are at the top of the most frequently searched by our visitors.”
DMCA Defense Incompatible With Finding of Inducement
The court rejected an attempt by Fung to find refuge in the DMCA’s safe harbor provisions. The DMCA shields a service provider from liability for users’ infringement if the provider is unaware of the facts and circumstances from which infringing activity is apparent. If the provider has actual knowledge of infringement, the DMCA does not apply. “Willful ignorance” will likewise strip a provider of the safe harbor; thus, if the provider becomes aware of a “red flag” from which infringement is apparent, the provider may not invoke the DMCA.
Here, Fung plainly knew that his websites made copyrighted content available; Fung himself downloaded such material. Even though his own downloads occurred abroad, beyond the reach of the Copyright Act, he knew that U.S.-based users could access the same copyrighted content on his websites. Evidence produced by Defendants showed that approximately 25% of users were located in the United States, and at one point in time, U.S.-based users accessed Defendants’ websites 50 million times in a single month. Combined with the other evidence of infringing conduct and Fung’s state of mind, Fung could not avail himself of the DMCA. Indeed, the court held that inducement liability and the DMCA safe harbor are “inherently contradictory,” because inducement liability is based on bad-faith conduct “aimed at promoting infringement,” whereas the DMCA is based on good-faith conduct “aimed at operating a legitimate internet business.”Print This Post
On December 7, 2009, the District of Massachusetts issued a remarkable written opinion elaborating upon its earlier ruling that individual file sharing did not constitute fair use in Sony BMG Music Entm’t v. Tenenbaum, 2009 U.S. Dist. LEXIS 112845. The case stemmed from Boston University graduate student Joel Tenenbaum’s file-sharing activities, which spanned several years and multiple file-sharing services.
The opinion stands out in a number of respects, but most starkly for (1) its eagerness to find any basis to rule in Tenenbaum’s favor and (2) its scathing assessment of defense counsel’s performance. The court was “deeply concerned by the rash of file-sharing lawsuits, the imbalance of resources between the parties, and the upheaval of norms of behavior brought on by the internet,” and did “everything in its power to permit Tenenbaum to make his best case for fair use.” Courts don’t usually go to such lengths to advance one party’s interests, at least not where the party is represented by counsel. Here, Tenenbaum was represented both by a private law firm and by a Harvard Law School professor – a team presumably capable of advancing his interests without an assist from the judge. But this opinion conjures up the image of a judge itching to vault over the bench to argue Tenenbaum’s case for him:
“[T]he court was prepared to consider a more expansive fair use argument than other courts have credited . . . For example, file sharing for the purposes of sampling music prior to purchase or space-shifting to store purchased music more efficiently might offer a compelling case for fair use. Likewise, a defendant who used the new file-sharing networks in the technological interregnum before digital media could be purchased legally, but who later shifted to paid outlets, might also be able to rely on the defense.”
Tenenbaum made none of these arguments, however, and the court deplored – in unusually harsh and explicit terms – his counsel’s performance in the case. Among a litany of other transgressions, the court chastised counsel for litigating the fair use defense “as an afterthought, and literally on the eve of trial,” and characterized the defense as “truly chaotic” and based on “perfunctory” papers. Indeed, Tenenbaum’s papers opposing summary judgment on fair use were structured skeletally, resembling an outline more than a substantive brief; cited only sparsely to the record and to caselaw; addressed the four traditional fair use factors in cursory fashion while emphasizing arguments drawn from unrelated legal doctrines; and invoked generalized incantations of “fairness” more reminiscent of the playground than the courtroom.
Possibly the most interesting insight into Tenenbaum’s defense, however, comes from his own attorney’s legal blog. Following Tenenbaum’s loss at trial, and public criticism of his fair use defense, his attorney, Harvard Law School professor Charles Nesson, solicited feedback in the blogosphere on what alternative defenses commentators felt might have prevailed. In response to one commentator’s list of potentially successful arguments, Mr. Nesson wrote, “these defenses do not join the fundamental issues. this [sic] trial was not an exercise in getting joel off the hook.” The notion that counsel’s job could consist primarily of anything other than exonerating his client should boggle any practicing litigator’s mind. Presumably, Tenenbaum – now saddled with a $675,000 verdict – might wish that his counsel had been more concerned with getting him “off the hook” than with transporting the fair use doctrine to a galaxy far, far away.
Fair Use Analysis
Despite its apparent desire to find in Tenenbaum’s favor, the court correctly noted that the fair use “analysis is not some open-ended referendum on ‘fairness,’ as [Tenenbaum] would have it, but an effort to measure the purpose and effects of a particular use against the incentives for literary and artistic creation that drive copyright protections.” Consistent with mainstream fair use jurisprudence, the court examined each of the four statutory factors and concluded that each one weighed against a finding of fair use. But the court’s overt predisposition in Tenenbaum’s favor unmistakably influenced its reasoning.
For instance, the court refused to “label” Tenenbaum’s conduct as commercial because “there is a meaningful difference between personal file sharing and a business strategy that exploits copyrighted works for profit.” In this respect, the court disagreed with the Ninth Circuit, which found in the Napster case that file sharing was commercial because “repeated and exploitative unauthorized copies were made to save the expense of purchasing authorized copies.” A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9thCir. 2001). In contrast, the court felt that Tenenbaum’s conduct fell “somewhere in the middle” of a spectrum of commerciality ranging from “pure, large-scale profit-seeking to uses that advance important public goals. . .”
Similarly, in its treatment of the portion of each copyrighted work infringed, the court urged that if Tenenbaum had “just sampled individual songs as a prelude to purchasing the full albums on which those songs appeared[,] [t]hat could well present a compelling argument for fair use.” Tenenbaum admitted, however, that his purpose in downloading songs was not to sample them in anticipation of later purchases, which the court ultimately acknowledged. The disappointment that results when the facts do not support a cherished theory of the case is familiar to many a litigator.
After finding that each of the four traditional fair use factors weighed against a finding of fair use, the court then addressed the creative and unusual “non-statutory factors” that Tenenbaum advanced. These included that: (1) the copyright owners assumed the risk of infringement by releasing their works in an environment where file sharing was rampant; (2) the copyright owners aggressively marketed their works while failing to protect them in any meaningful way, essentially creating an attractive nuisance; (3) Tenenbaum was forced to engage in file sharing because only entire albums, not individual songs, were available for legal purchase; (4) it is unfair for parents and universities to bear the costs of policing the file-sharing activity of children and students; and (5) the “injustice of the action” weighed in favor of fair use.
The court properly rejected each of these arguments, though it viewed some of them with a degree of approval. For instance, because the Supreme Court has suggested that the unavailability of a work for purchase through normal channels is a proper fair use consideration, the court felt that Tenenbaum was “on firmer ground” in arguing that his conduct was excused because he could only legally buy entire CDs rather than individual songs. Nonetheless, by August 2004, when Tenenbaum’s file sharing was detected by the plaintiffs, “a commercial market for digital music had fully materialized,” making the “unavailability of paid digital music  simply not relevant.”
The opinion concluded by reiterating that the court was “very, very concerned that there is a deep potential for injustice in the Copyright Act as it is currently written. It urges – no implores – Congress to amend the statute to reflect the realities of file sharing.”
This opinion – and the verdict that followed it – should strike fear into the hearts of file sharers everywhere. It is the second staggering jury verdict against an individual file sharer, following the nearly $2 million verdict in Capitol Records v. Thomas-Rasset. Nonetheless, at least one piece of anecdotal evidence suggests that file sharers are not so easily deterred: overheard in the ticket line at a movie theatre over the holidays, one youth commenting to another, “We can just download it illegally online!”