Copyright

On July 14, 2020, the Court of Appeals for the District of Columbia Circuit issued a reversal of one of the most head-scratching decisions to come down in a long time, namely, that porn filmmakers, Strike 3 Holdings LLC, had no ability to discover the identity of who was downloading their films. The reason? Because it's porn, that's why.[ref]Is Pornography Not Protected by Copyright?[/ref] The District Court's dismissal hinged primarily on two factors. Firstly, that "Strike 3's need for the subpoenaed information was outweighed by the ‘potentially-noninfringing defendant's right to be anonymous'—a privacy interest the court found especially weighty given the ‘particularly prurient pornography' at issue."[ref]Strike Three Holdings, LLC v. Doe 2020 WL 3967836 Court of Appeals for the District of Columbia 2020 at 2[/ref] In sum, because this was pornography, and "particularly prurient pornography" at that, the anonymous Defendant had somehow acquired legal rights not available to someone else who was merely downloading copies of "The Avengers." The second prong of the District Court's reasoning was that in essence Strike 3 was a "copyright troll" who deserved no relief. "The court characterized Strike 3 as a ‘copyright troll' that has ‘flood[ed]' district courts around the country with thousands of lawsuits ‘smacking of extortion,' and declared that it would not indulge Strike 3's ‘feigned desire for legal process' by ‘oversee[ing] a high-tech shakedown.'"[ref]Id.[/ref] Contained in a footnote was another reason: that pornography was not protected by copyright. I wrote a blog post at the time about this contention.[ref]Is Pornography Not Protected by Copyright?[/ref] Remember that this is not a motion to dismiss, but a motion to issue a subpoena. But by ruling that no subpoena would be issued, the Judge, then on its own motion, dismissed the case without prejudice. At the time, I wrote that this would prevent an appeal. Obviously, I was incorrect. At least in the D.C. Circuit, a dismissal of a case without prejudice is still treated as a final order and is appealable. For this error, my apologies. Yet, consider the strange footing of the resulting appeal. Since there was no named Defendant, who had also been dismissed from the case, the Court of Appeals appointed a "friend of the Court" to represent Doe's interest.[ref]Strike Three Holdings, LLC v. Doe at 3[/ref] For its part, the Court of Appeals sidesteps the obscenity issue. It simply rules that since the District Court had ruled that Strike 3 held a valid copyright, this made the obscenity issue moot.[ref]Id. at footnote 4[/ref] As to the issue of whether Doe's privacy interest outweighed Strike 3's interest in protecting its copyrights, the Court of Appeals held the following:[ref]Id. at 4-5[/ref]

• The district court reasoning that Strike 3's ability to defend its copyright turned on the content of its films is "not supported by the relevant legal standards."
• "The mere fact that a defendant may be embarrassed to have his name connected to pornographic websites is not a proper basis on which to diminish a copyright holder's otherwise enforceable property rights."
• "Basic copyright principles establish that a plaintiff's ability to defend its copyrights cannot turn on a court's subjective view of the copyrighted material. The fundamental premise of copyright law is that the owner of a valid copyright has a protectable property interest in its creative works."
• "[T]he content of a copyrighted work is per se irrelevant to a Rule 26(d)(1) motion seeking discovery to identify an anonymous infringer. The protections afforded by copyright law do not turn on a copyright holder's popularity or perceived respectability."

Next up is the question of whether the District Court's finding that Strike 3 was a "copyright troll" was another bar to its request for relief, particularly where the Court went outside the record in the case to gather such information. The Court of Appeals has no trouble finding this was improper as well, indeed an "abuse of discretion." While "district courts may properly take judicial notice of proceedings and filings in other courts... [t]he factual record did not support the negative inferences drawn."[ref]Id. at 8[/ref] "A court cannot, however, reasonably infer that a plaintiff lacks a legitimate motive in pursuing discovery based solely on the plaintiff's litigation volume and case history. Where, as here, a plaintiff alleges that it is the victim of copyright infringement on a massive scale, the mere fact that it has filed a significant number of lawsuits is not a valid basis on which to impute an improper purpose. Nor is the fact that many such lawsuits settle or are dismissed at an early stage necessarily suggestive of improper intent."[ref]Id.[/ref] "While the district court did not explicitly refer to Strike 3's litigation conduct when analyzing the Rule 26(d)(1) motion, the court's perception of Strike 3's motives appears to have colored its analysis. Indeed, the court took pains to emphasize that a different result might obtain in a case involving an ‘honest copyright holder,' (citation omitted) and derided Strike 3's ‘feigned desire for legal process' in summarizing its holding."[ref]Id.[/ref] Much is often made of the fact that lawsuits by porn studios do not got to trial, either by reason of default judgement, settlement, or dismissal. But there are good reasons why this trend is not as suspect as it may seem on first blush. Firstly, and most importantly, discovery may indicate that the Defendant is not the infringer, such as the infringement took place when the Defendant was out of the country. This case warrants being  voluntarily dismissed. Next up is where the facts make it doubtful that Plaintiff can prove Defendant was the infringer, such as the case of Cobbler Nevada, LLC v. Gonzales,[ref]901 F.3d 1142 (9th Cir. 2018)[/ref] where "the IP address was registered to an individual who operated an adult foster care home where numerous residents and visitors had access to the same Internet service and IP address."[ref]Strike Three Holdings, LLC v. Doe at 6[/ref] A dismissal would seem logical under those circumstances as well. Lastly, given the reluctance of certain court to award more than the minimum statutory damages of $750, the Plaintiff may decide that the costs of pursuing the litigation to trial outweigh the amount of recovery it can expect. A dismissal would also seem logical under those circumstances. But, for a Court to dismiss a case based upon the notion that a downloader of pornography somehow has a superior expectation of privacy than a "run of the mill" downloader? Not logical. And now, not the law.

In a significant ruling, the Fourth District Court of Appeals has ruled that a Russian internet pirate must defend a lawsuit in Virginia brought by 12 U.S. record companies.[ref]UMG Recordings, et al v. Kurbanov, 2020 WL 3476993, Fourth District Court of Appeals, 2020.[/ref] At issue here are various websites that [the Defendant] operates that offer users a "‘stream-ripping' service through which audio tracks may be extracted from videos available on various platforms (e.g., YouTube) and converted into a downloadable format (e.g., mp3). A large portion, perhaps a majority, of the streams ripped using the Websites is alleged to derive unlawfully from YouTube videos."[ref]Id. at 1[/ref] This makes them very popular. Defendant's sites "are two of the most popular stream-ripping websites in the world and are among the most popular websites of any kind on the Internet. According to [the Defendant's] own data, between October 2017 and September 2018, the Websites attracted well over 300 million visitors from over 200 distinct countries around the world."[ref]Id. at 2[/ref] But the Defendant argued that even though between October 2017 and September 2018, "more than half a million unique visitors [from Virginia] went to the Websites, totaling nearly 1.5 million visits,"[ref]Id. at 6[/ref] this was not enough for him to have to defend the lawsuit in the United States. He contended: "[A]ll of the work that [Defendant] Kurbanov has performed on the Websites has been performed in Russia, and he has never performed any work on the Websites from within the United States. He also operates the Websites entirely from Russia. He has never had employees anywhere in the United States or owned or leased real estate anywhere here. Neither has he held a bank account or paid taxes in the United States. Kurbanov has never been to Virginia or anywhere else in the United States and…does not currently have a visa to visit, has never applied for, or has never obtained a visa to visit the United States."[ref]Id. at 2[/ref] Based upon these factors, the District Court ruled that Kurbanov did not have sufficient minimum contacts with the United States for it to exercise personal jurisdiction over him, and dismissed the case. Many pirate sites operate in a similar manner. They know that U.S. Copyright law does not have any extra-territorial effect. By setting themselves up in a foreign country, they attempt to insulate themselves from the ability for U.S. companies to drag them into court in the U.S. At the same time, they make their websites attractive to U.S. residents, accept plenty of traffic from them, and sell advertising directed at U.S. residents. The record companies appealed, and a unanimous panel reversed. The Court found " there are more than sufficient facts raised to conclude that Kurbanov has purposefully availed himself of the privilege of conducting business in Virginia and thus had a ‘fair warning' that his forum-related activities could ‘subject [him] to [Virginia's] jurisdiction.'"[ref]Id. at 6[/ref] First and foremost in my mind, is that Kurbanov registered with the U.S. Copyright Office an agent designated to receive DMCA notices, a step necessary to qualify for "safe harbor" defenses to copyright infringement in the United States.[ref]Id. at 7[/ref] Having invoked the protections of U.S. law, how can the argument be made that the website, and its operator, are exempt from U.S. law, and unreachable for the purposes of personal jurisdiction? The Court then ticks off a bunch of contacts the Defendant had, not only with the State of Virginia, but the United States as a whole.[ref]Id. at 2[/ref]

• Until just before the commencement of the lawsuit, the websites were hosted by Amazon Web Services, a U.S. company, which utilizes servers physically located in Virginia.
• The website domain suffixes were administered by two companies in Virginia.
• The website domain names were registered with GoDaddy.com, a U.S. Company.

But, in particular, it is the advertising revenue derived from the website that provides the most important contact. Kurbanov contends that all of the advertising is handled by third party contractors, of which he has no control.[ref]Id. at 6[/ref] The Court in turn rules that this is not the point. Kurbanov collected all kinds of data about the persons visiting his site, including their location data. The TOS clearly states "that visitors' IP addresses, countries of origin, and other non-personal information may be collected ‘to provide targeted advertising.'"[ref]Id. at 2[/ref] The Court holds: "Here, the visitors' acts of accessing the Websites (and downloading the generated files) are themselves commercial relationships because Kurbanov has made a calculated business choice not to directly charge visitors in order to lure them to his Websites. Kurbanov then requires visitors to agree to certain contractual terms, giving him the authority to collect, among other information, their IP addresses and country of origin. Far from being indifferent to geography, any advertising displayed on the Websites is directed towards specific jurisdictions like Virginia. Kurbanov ultimately profits from visitors by selling directed advertising space and data collected to third-party brokers, thus purposefully availing himself of the privilege of conducting business within Virginia."[ref]Id. at 6[/ref] And finally, Indeed, this is not a situation where a defendant merely made a website that happens to be accessible in Virginia. (citation omitted) Rather, Kurbanov actively facilitated the alleged music piracy through a complex web involving Virginia visitors, advertising brokers, advertisers, and location-based advertising. From Virginia visitors, he collected personal data as they visited the Websites. To the advertising brokers, he sold the collected data and advertising spaces on the Websites. For end advertisers, he enabled location-based advertising in order to pique visitors' interest and solicit repeated visits. And through this intricate network, Kurbanov directly profited from a substantial audience of Virginia visitors and cannot now disentangle himself from a web woven by him and forms the basis of Appellants' claims. Thus, we find these facts to adequately establish an "affiliation between [Virginia] and the underlying controversy."[ref]Id. at 7[/ref] This last point is extremely important. Most piracy websites make their living from advertising. The "free stuff," gleefully pilfered from others, is the candy dangled in front of the consumer to sign up. To rule that this is not a significant contact, indeed a "doing business" contact, would have made the piracy situation worse than it already is. Now, will Kurbanov actually show up and defend? Maybe, maybe not. Surely, as long as he sits in Russia, any judgement the Plaintiffs receive might not be enforced with much enthusiasm by the Russian courts. Get an order seizing the domain names? Block the domains? He'd probably just move them to a new location. But with a money judgement, the possibility exists the record companies could then garnish the ad revenue generated in the U.S. to pay off the judgement. Hitting the pirates in the pocketbook? Now that's a strategy that just might work.