1. Copyright Infringement and Anti-Piracy Protecting Your Client’s Intellectual Property FALA Winter 2009 – New Orleans Clyde DeWitt and Gill Sperlein

2. State of the Problem A comprehensive 2005 study found that the U.S. major motion picture studios lost $6.1 billion to piracy in 2005. A comprehensive 2005 study found that the U.S. major motion picture studios lost $6.1 billion to piracy in 2005. One analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year. One analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year. A recent survey showed that 90% of music downloads are pirated. A recent survey showed that 90% of music downloads are pirated. Percentage of piracy of adult material is likely to be higher then in the music and movie industries because of the inability or reluctance of many consumers to make legitimate purchases of adult movies. Percentage of piracy of adult material is likely to be higher then in the music and movie industries because of the inability or reluctance of many consumers to make legitimate purchases of adult movies.

5. Review of Copyright Law Basics Copyrights - The owner of copyright has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

6. Review of Copyright Law Basics Direct Infringement – The elements of direct copyright infringement are: 1) ownership of the copyright right; and 2) a violation of one of the rights exclusive to the copyright holder

7. Review of Copyright Law Basics Contributory Infringement – One is liable for contributory infringement when: 1) with knowledge of the infringing activity, 2) he induces, causes or materially contributes to the infringing conduct of another. Contributory Infringement includes a scienter element because it is akin to aiding and abetting.

8. Review of Copyright Law Basics Inducement – Set forth in the Grokster case. Many viewed inducement as a new theory, but it really is just one of the forms contributory infringement can take.

9. Review of Copyright Law Basics Vicarious Infringement - A defendant is vicariously liable if it: 1) has the right and ability to supervise the infringing activity; and 2) also has a direct financial interest in such activities. Vicarious Infringement is based on respondent superior and thus neither negligence nor knowledge is required.

10. Review of Copyright Law Basics Perfect 10 v. Amazon and Perfect 10 v. Google which were joined on appeal. Perfect 10 v. Amazon Inc., 487 F.3d 701 (9 th Cir. 2007). Perfect 10 sought to hold Google liable for linking to infringing material on other websites. The Ninth Circuit, upholding the District Court’s ruling, stated that Google did not have the practical ability to police third party websites’ infringing conduct. This is the first time the word practical was added.

11. Review of Copyright Law Basics Confusion – the courts (and many lawyers) often conflate the elements of vicarious and contributory infringement, finding defendants not liable for vicarious infringement because they either: 1) do not have knowledge of the infringement; or 2) because they have taken good faith efforts to reduce infringement. However, neither is applicable to vicarious infringement, the purpose of which is to internalize the cost of infringement with the entity that is benefiting from the infringing activity.

12. Anatomy of a Pirate

13. Anatomy of a Pirate Where is infringement taking place? Hard Product Video Stores Video store owners ripping DVDs and selling them. Printers and duplicators If your client has DVD authoring performed in Taiwan, you can bet their movies are being pirated right at the plant. Advise your clients to have duplicating done as close to home as they can. They should work only with reputable manufactures and visit the plant and ensure safeguards are in place. E-Bay and adult auction websites. Look for sellers who have multiple copies of a title and who offer prices that are unreasonably low.

14. Anatomy of a Pirate Where is infringement taking place? On Line Peer to Peer (P2P) – Napster. (no Longer in use) Material resides on the computers of the users. The content files do not go to a centralized server or website. Users download software that allows them to locate the files on the computers connected via the Internet. Napster had a centralized data base on servers Napster maintained to help users locate files on other users’ computers. The Ninth Circuit ruled that Napster was secondarily liable for the infringing activity because they could control the piracy by controlling the centralized index server. Napster. (no Longer in use) Material resides on the computers of the users. The content files do not go to a centralized server or website. Users download software that allows them to locate the files on the computers connected via the Internet. Napster had a centralized data base on servers Napster maintained to help users locate files on other users’ computers. The Ninth Circuit ruled that Napster was secondarily liable for the infringing activity because they could control the piracy by controlling the centralized index server.

15. Anatomy of a Pirate Where is infringement taking place? Peer to Peer (P2P) – 2nd generation – Grokster and others Software allows users to search the computers of other users. The 9th Circuit ruled that because there was no centralized database or index, defendants could not control the infringing activity and there was no liability. However, the Supreme Court remanded saying there could still be secondary liability if defendants induced infringement.

16. Anatomy of a Pirate Where is infringement taking place? Peer to Peer (P2P) – Bit Torrent sites Used for large files. May be responsible for up to 35% of all traffic on the Internet. To share a file or group of files, a peer first creates a small file called a "torrent" (e.g. MyFile.torrent). This file contains metadata about the files to be shared and about the tracker, the computer that coordinates the file distribution. Peers that want to download the file must first obtain a torrent file for it, and connect to the specified tracker, which tells them from which other peers to download the pieces of the file. It is possible to obtain the IP addresses of all current, and possibly previous, participants in a swarm from the tracker.

17. Gaytorrent.ru

18. Gaytorrent.ru

19. Anatomy of a Pirate Where is infringement taking place? User Generated Content Sites (UMGs) Most of us refer to these as tube sites. Users upload content to the website. The content resides on the servers of the tube site. The tube sites generally earn revenue from advertising or by sending traffic to affiliate sites. Some UMG sites charge a membership to view material. Many of the first generation adult tube sites have changed their business model so they no longer accept content from anyone who wants to post it. Instead they obtain content from partners and operate the sites like the old thumbnail gallery posts or movie gallery posts.

20. http://iworldnet.org/

21. http://iworldnet.org/browse.... members

22. http://iworldnet.org/video/all/10/1

23. http://iworldnet.org/video/gallery/Rough-Prison-sex

24. Anatomy of a Pirate Where is infringement taking place? One Click Hosting – Rapidshare, File Factory and others. Users store content on massive servers. They are given a specific url/link to locate the content on the servers. Thus there is a centralized repository for the content, but no centralized index. To view the content you must have the link to locate the content. After loading the content to the One Click Hosting company’s servers, the infringers distribute the links through blogs, use groups or other on line locations. Usually the content is stored in full resolution and full length. Anyone with the link can download the content. The hosting company earns revenue by charging a monthly fee that enables users to download unlimited amounts of content.

25. http://www.rapidshare.com/

26. http://www.rapidshare.com/

27. http://www.rapidshare.com/

28. http://rs463l3.rapidshare.com/cgi-bin/upload.cgi?rsuploadid=362873680269642109

29. rs463l3.rapidshare.com/cgi-bin/upload.cgi?rsuploadid=362873680269642109

30. Anatomy of a Pirate Where is infringement taking place? Blogs Used to post links to unauthorized copies of content residing on One Click Hosting sites. Occasionally used for other forms of distribution. Some allow flash streaming. Most also allow imbedded clips, so if material is hosted on another User Generated Content site it can play on the blog. Many of the popular gay adult blogs are hosted on blogspot.com which is owned by Goggle.

31. http://municheee.blogspot.com/

32. http://municheee.blogspot.com/2008/10/full-vodeos-road-to-redneck-hollow.html

33. http://municheee.blogspot.com/2008/10/full-vodeos-road-to-redneck-hollow.html

34. http://rapidshare.com/files/130173639/RedH.part1.rar

35. http://rs92.rapidshare.com/files/130173639/RedH.part1.rar

36. http://rs92.rapidshare.com/files/130173639/RedH.part1.rar

37. Anatomy of a Pirate Where is infringement taking place? Social Networking Sites – Ning.com and others Similar to Facebook, but formed around a specific type of adult content. Often photos are posted. Members of the network usually have capability to upload content that is converted to flash streaming clips. Often members simply embed links to tube sites, so even though a clip may be on X-tube, it seems to play from the social network site. Also people post links to material stored on One Click Hosting sites. The largest of the social network platforms, Ning, ceased allowing adult because advertisers would not purchase ads on the adult oriented social networks and because they were receiving so many take down notices for the adult sites.

38. ellentv.ning.com - main

39. Ellentv.ning.com - members

40. Ellentv.ning.com/profile/AnonymousSurfer

41. ellentv.ning.com/video

42. ellentv.ning.com/video/elizabeth-playing-golf-2008

43. Anatomy of a Pirate Where is infringement taking place? Password exchanging Can happen in a number of different environments. To combat this, your website- operating clients should limit or monitor the amount of data each paid member can access. One member using an enormous amount of bandwidth may indicate he distributed his password to others.

44. State of the Law Digital Millennium Copyright Act (DMCA) 17 U.S.C. §512. The DMCA was enacted in order to give Internet service providers some protection from liability for infringement occurring on their networks. Service providers (the definition for which is very broad) must conform to certain requirements. The DMCA offers protection in four main areas: Transitory digital network communications Transitory digital network communications System caching System caching Information residing on systems or networks at direction of users (Likely the most relevant to you and your clients) Information residing on systems or networks at direction of users (Likely the most relevant to you and your clients) Information location tools Information location tools

45. State of the Law Broadly, the ISP must comply with the following requirements in order to be eligible for immunity from liability for material residing on its networks at the direction of a user: 1) The ISP must implement a plan for dealing with repeat infringers and must inform its subscribers of the plan; 2) The ISP must not interfere with "standard technical measures" taken by copyright holders to identify or protect their content; The ISP must register an agent for receiving copyright complaints with the Copyright Office; 3) The ISP must not have knowledge of the infringing activity or upon obtaining knowledge or receiving notice of infringement it must act expeditiously to remove, or disable access to, the material; and 4) The ISP must not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity

46. State of the Law DMCA – Notice and Take Down Procedures 512(c)(3) Elements of notification. (A) To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following: (i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. (ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site. (iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material. (iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted. (v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law. (vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. (A) To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following: (i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. (ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site. (iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material. (iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted. (v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law. (vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

47. State of the Law A&M Records v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) Napster operated a system in which the content resided on the individual computers of its users. In order to locate files a centralized indexing service resided on Napster’s servers. The trial court granted the Music Industries’ preliminary injunction based on contributory and vicarious infringement. The Ninth circuit affirmed

48. State of the Law MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913 The defendants modified the Napster model so that there was no centralized index. The software searched the users’ computers for desired titles. Thus, defendants could not know of the infringement and could not control it. The 9th Circuit found no liability, but the Supreme Court interpreted the case differently and remanded to determine if the defendants had induced infringement. “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, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device's lawful uses.” “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, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device's lawful uses.”

49. State of the Law Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. N.Y. 2008). This is not an Internet case, thus the provisions of the DMCA did not apply. CSC Holdings made a remote DVR device that allowed users to record television shows on a remote device and play them back later. In overturning the trial court’s order granting plaintiff’s summary judgment motion, the 2nd circuit relied heavily on ideas the Supreme Court set out in the Sony Betamax case. The court basically ruled that one cannot be liable for infringement simply for making a machine that is capable of being used for infringing activity. This is probably a correct ruling. In discussing whether or not CSC could be held directly liable, the 2nd Circuit wrote, “[i]n determining who actually "makes" a copy, a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.” The district court in the Io Group case which I will discuss next seized on that sentence. Indeed, after a year of waiting, the Io Group decision came down within a week of the Cartoon Network ruling. The problem is that the discussion from which this quote was lifted was about the volition required in order for a finding of direct infringement. In the Io Group, ruling Magistrate Judge Lloyd relied on the quote to support an unrelated analysis. The district court in the Io Group case which I will discuss next seized on that sentence. Indeed, after a year of waiting, the Io Group decision came down within a week of the Cartoon Network ruling. The problem is that the discussion from which this quote was lifted was about the volition required in order for a finding of direct infringement. In the Io Group, ruling Magistrate Judge Lloyd relied on the quote to support an unrelated analysis.

50. State of the Law Io Group, Inc. v. Veoh Networks, Inc., 2007 U.S. Dist. LEXIS 31639 (N.D. Cal. Apr. 13, 2007). I brought suit against Veoh, a user generated content site, on behalf of Titan Media. Our theory was that Veoh lost any DMCA protection because it gained a financial benefit and while it had the right and ability to control the infringing activity. The court ruled that the infringing activity occurred when the user uploaded the content to the site and that Veoh had no way to control what individuals uploaded. The Court failed to understand that infringing activity (further reproduction, distribution and public display) did not only happen when the content was copied and uploaded, but also after the content was uploaded. The court also conflated contributory infringement (which requires knowledge of the infringing activity) and vicarious infringement which does not. The court placed a great deal of emphasis on measures Veoh claimed to put in place to prevent infringement. This Court and some other courts who have looked at contributory infringement claims (the DMCA provision relating to this came from contributory liability theories) fail to understand the purpose of the theory. Contributory infringement is akin to respondent superior. The idea is that when you profit from an activity, and you have the ability to reduce risks, you must exercise that ability. Titan Media did not appeal because the same issues are now being litigated in the UMG and Viacom cases by more well financed plaintiffs.

51. State of the Law UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 U.S. Dist. LEXIS 104980 (C.D. Cal. Dec. 29, 2008). Universal Music Group has also brought suit against Veoh. UMG brought a partial motion for summary judgment focusing on one narrow issue. They argued that since the DMCA only offers safe harbor “for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider” and since the infringement at issue was caused by actions other then storing (e.g. copying, distributing) then the DMCA did not protect Veoh. The judge rejected the argument, saying that such activities were contemplated by the DMCA and it would be impossible to engage in storage without also engaging in other activities such as reproduction and distributing.

52. State of the Law Capitol Records, Inc. v. Thomas, 579 F. Supp. 2d 1210 (D. Minn. 2008). The Court held that under 8th Circuit law, making available on a P2P site without evidence of someone else downloading is not distribution under the Copyright Act and thus not actionable. A new trial ordered base on a faulty jury instruction. It was not clear whether or not the jury found unauthorized reproduction had also occurred. Defendant also challenged the statutory damage award as unconstitutional but that issue was not reached.

53. Anti Piracy 101 What can you do for you client Remind your clients to register their works! They must register their works in order to be eligible for statutory damages and attorney fees. Actual damages can be very difficult to prove in a copyright infringement case.

54. Anti Piracy 101 What can you do for you client Explain the notice and take down procedures of the DMCA. Empower your client to take action on their own by sending take down notices. This will do nothing to stop the infringement, but it will get the infringing material down as soon as possible. If your clients might eventually bring suit against the infringers or against a third party for secondary liability, make sure they preserve evidence before the content is taken down. Print out pages with the url and time/date stamps.

55. Anti Piracy 101 What can you do for you client Consider litigation as a deterrence. Many pirating locations have a list of studios that they warn against posting. Try to get on those lists by making some noise.

56. Bigdickclub.tv

57. Gaytorrents.ru

58. Anti Piracy 101 What can you do for you client DMCA subpoenas. 15 U.S.C.512(h) The DMCA has a special provision whereby you can subpoena service providers for information about infringers without first filing suit. This is not available for P2P infringement. The material must be residing on a website and therefore subject to a DMCA take down notice. If the material is infringed in a true P-2-P context, you will have to file a John Doe lawsuit first, before you can engage in a discovery.

59. Anti Piracy 101 What can you do for you client Pre-Litigation Settlement offers This technique can be used in a number of situations including P2P. The music and film industry lawyers have adapted this method to a large degree. The idea is that you request the service provider forward a settlement offer to the direct infringer with a warning that if they do not accept, you will take steps to identify them and bring suit against them. In order to work the settlement figure must be low enough that it makes more sense to pay the low settlement fee then to risk litigation. In the United States you need to be willing to follow through and sue at least some of the non-settling infringers.

60. Anti Piracy 101 What can you do for you client John Doe suits against direct infringers. When you file the complaint you must file a motion to take early discovery. This will allow you to obtain the ip address of the account used to access the Internet by the infringer. You can then subpoena the ISP for the subscriber information. At this point it is a good idea to do some additional investigation before substituting the name of the account holder so that you do not wind up with some of the embarrassing cases the RIAA had where they sued grandmothers, etc. It’s also a good time to again discuss settlement.

61. Anti Piracy 101 What can you do for you client If there is reason to believe a third party can be held accountable under secondary liability theories, consider filing suit, baring in mind that this area of the law is in a state of flux. We will know more as the Viacom v. Youtube and UMG v. Veoh cases progress.