Wednesday, December 23, 2009

Court grants summary judgment for studios in Gary Fung/IsoHunt case; no DMCA safe harbor for inducement

In a major legal victory for copyright owners, a federal judge in Los Angeles has granted summary judgment for the movie studios in their suit against Gary Fung, owner of IsoHunt and several other popular BitTorrent index sites. Judge Stephen Wilson cited extensive, unrebutted evidence that Fung, a resident of Canada, had knowledge of the rampant infringement facilitated by his sites, and in fact encouraged it.
Columbia v. Fung Summary Judgment Order

The court found Fung and his company liable under the inducement standard articulated by the Supreme Court in MGM v. Grokster (also presided over by Judge Wilson), finding that "evidence of Defendants' intent to induce infringement is overwhelming and beyond reasonable dispute." Such evidence included a "Box Office Movies" feature of the site; Fung's provision of "a link to a torrent file for the recent film Lord of the Rings: Return of the King on the Isohunt site" along with the statement "if you are curious, download this"; use of the word "warez" as a metatag; and pro-piracy statements 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)" and "Morally, I’m a Christian. 'Thou shalt not steal.' But to me, even copyright infringement when it occurs may not necessarily be stealing." Such statements, said the court, "provide probative evidence regarding Fung’s intent in creating the Defendant websites to aid others infringement." The court also cataloged extensive evidence that the site and its admins assisted users in copyright infringement, and implemented technical features that promote infringement. Lastly, the court noted that about 95% of works "shared" using Fung's sites were infringing, and that the defendants' "ostrich-like refusal to discover the extent to which its system was being used to infringe copyright is merely another piece of evidence” of Defendants’ purposeful, culpable conduct in inducing third party infringement. See In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003)."

Judge Wilson also soundly rejected Fung's DMCA safe harbor defense, and in the course broke some new ground. As far as I am aware, this is the first case to find that a DMCA safe harbor was unavailable because the defendants had "red flag" knowledge of its users' infringement. See 17 U.S.C. § 512(d)(1)(B) (no safe harbor where defendant is "aware of facts or circumstances from which infringing activity is apparent."). Explained the court:
There is a variety of other evidence of Defendants’ willful ignorance to ongoing infringement. Defendants designed their website to include lists such as "Top Searches," "Top 20 Movies," "Top 20 TV Shows," and "Box Office Movies," and Defendants designed these lists to automatically update to reflect user activities. These lists included numerous copyrighted works. (SUF ¶¶ 8-12, 47-55.) See Grokster V, 454 F. Supp. 2d at 992 ("it is common knowledge that most popular music and movies are copyrighted"). Thus, unless Defendants somehow refused to look at their own webpages, they invariably would have been known that (1) infringing material was likely to be available and (2) most of Defendants’ users were searching for and downloading infringing material.
But perhaps the most significant ruling in the opinion was the court's holding that the DMCA's safe harbors are simply not available where inducement has been established:
[I]nducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory. Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business. Here, as discussed supra, Defendants are liable for inducement. There is no safe harbor for such conduct.
As far as I'm aware, this is the first time a court has squarely ruled that there is no DMCA safe harbor from an inducement claim; as I noted, the court in the UMG v. Veoh case skirted this issue.

Next up: the remedy phase, where the court will consider damages and an injunction.

Lead attorney for the plaintiffs is Steve Fabrizio of Jenner & Block, who also won the TorrentSpy and cases. Ira Rothken, who came out on the losing end of the similar TorrentSpy case, represents Fung and Isohunt Web Technologies, Inc.

Disclosure: I worked on this case for plaintiff Twentieth Century Fox Film Corp. while previously employed there. My current employer, NBC Universal, Inc., is the parent of plaintiff Universal City Studios LLLP, though I have not worked on the case while at NBCU.


  1. Ben,

    Your timely insights on these important decisions are, as always, much appreciated.

    James Gannon

  2. Good summary.
    I am not about to argue the court's decsion, it looks like they considered all the issues and came to a fair conclusion.

    There is another story as well. And that is the reason his site was popular. In the absence of any alternatives, the online community has no other options except to gravitate to sites like this. Shutting them down might sound like a good idea, but until there are viable and legitimate alternatives these sites will just continue to proliferate.

    This is a social problem as well as a legal one. From a social perspective, there is a percieved need that isn't being filled. If alternate channels do become available, the online community will use it. Apple and iTunes proved it.

  3. “there is a perceived need that isn't being filled”

    I’d have to respectfully disagree with that today. While that was once very true--and Gertner acknowledged this in Tenenbaum--the current selection of online and legal, digital merch is broad and grows everyday. The only “perceived need” that remains unfulfilled is free.

    Digital industry is now faced with a reality that the long 10 year period of meticulous, incremental legal sorting helped facilitate a free-for-all consciousness now imprinted on our digital natives, as Nesson likes to call them.

    When fans of digital product bring value for value, i.e. their time, attention or money as in all commerce, then “perceived need” can and will be addressed in increasingly innovative ways. But a robust marketplace for digital product is a two way street requiring a purchase. The legal process and this judgment helps summarily identify those who just want to use technology, anonymity and facile ethics to take something intended for sale......for nothing.

  4. This is the ruling that the porn industry has been praying for.

  5. San I am:

    Except that nothing is ever sold apart from the hard material that the copyrighted work is recorded on. You are 'licensed' not 'sold' a copyrighted work for the purpose of viewing. The EULA/TOS will almost always say something tantamount to that.

    The only sale that is occurring is that of the distribution media and in the case of digital distribution, the only sale that can be presumed to exist is for the bandwidth required for the distribution.

    Copyright and merchant law are two separate entities, and while they do interact they retain their distinction.

    It is - to me at least - dishonest to claim theft/piracy/stealing for copyright law infringement, it is a clear misrepresentation. It has never been established that copyright infringement translates to theft, loss of commercial value, or lost sales. The suggestion that in the absence of free alternatives infringements becomes sales is equally unproven - and unprovable.

    Ironically, this crack down on copyright infringement - which has no proven harm - is creating/contributing to the growth of an organised criminal underworld just as prohibition did.


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