Copyright Law Blog: Exclusive Rights

Category Archives: DMCA

E.D. Cal. finds 512(f) “knowing misrepresentation” in contradictions in copyright registration application

Shourin Sen - 16 November 2010 – 9:00 am

Filed under Architectural Design, DMCA, Useful Article

Design Furnishings, Inc. v. Zen Path LLC, 2:10-02765 WBS GGH (E.D. Cal. Oct. 20, 2010)

Design Furnishings and Zen Path sold wicker furniture from the same manufacturer on eBay. Zen Path, the defendant, sent a cease and desist to Design Furnishings, the declaratory judgment plaintiff, stating that Design Furnishings’ sale of the furniture infringed Zen Path’s exclusive rights granted under the Copyright and Patent Acts, and that the photos Design Furnishings used to market the furniture on Ebay infringed Zen Path’s copyrights. Design Furnishings stopped using the photos, but continued to sell the furniture.

Zen Path then allegedly sent a series of sixty-three takedown notices to Ebay, claiming that the sale of the furniture infringed its exclusive rights. Zen Path also filed copyright registration applications for four different furniture collections. Zen Path filed the registrations as “sculpture/3-D artwork, Ornamental Design” and attached pictures of the furniture. (A picture of one of the deposits is below.)

Design Furnishings filed an action in state court, which was later removed to federal court, which included claims for (1) misrepresentation of intellectual property infringement in violation of 17 U.S.C. § 512(f) of the Digital Millennium Copyright Act (“DMCA”), (2) tortious interference with a contract, (3) tortious interference with prospective economic advantage, (4) a violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200-17210, and (5) declaratory and injunctive relief.

Knowing misrepresentation

17 U.S.C. 512(f) of the DMCA provides, inter alia, that any person who knowingly materially misrepresents that “material or [an] activity is infringing,” “shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer.” The Court noted, citing Rossi v. Motion Picture Ass’n of Am ., Inc., 391 F.3d 1000, 1005 (9th Cir. 2004), that “Liability does not extend to when “an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake. Rather, there must be a demonstration of some actual knowledge of misrepresentation on the part of the copyright owner.”

The Court, nonetheless, granted Design Furnishings’ motion for a temporary restraining order that barred Zen Path from issuing additional DMCA takedown notices. The Court found that it could draw an inference of “knowing misrepresentation” from contradictions in the defendant’s copyright registration applications:

Here, defendant’s applications for copyright protection claimed the works were sculptures or 3-D artwork or ornamental designs, indicating that defendant knew the limits of copyright protection. The pictures of the furniture, though, suggest that defendant impermissibly sought protection of the “industrial design” of the furniture. Moreover, the internal contradiction in the applications raises a strong inference that defendant subjectively knew it did not have a copyright infringement claim when it notified eBay. Accordingly, the court finds that plaintiff has a likelihood of success on the merits.

NPR targets same-sex marriage campaign with a cease-and-desist and take down

Shourin Sen - 21 October 2009 – 9:00 am

Filed under DMCA, News

The Portland Press Herald brings word of a brewing copyright dispute. National Public Radio has sent a cease-and-desist to Stand for Marriage Maine over the groups use of NPR content in one of its television adds. NPR, apparently, also sent a takedown notice to Youtube and Hotdaddy.

NPR asserts that Marriage in Maine’s commercial infringes a story “Massachsuetts Schools Grapple with Including Gay & Lesbian Relationships in Sex Education,” from its program All Things Considered. Says NPR’s senior vice president for marketing, communications, and external relations:

NPR did not license use of this story or its content, and would certainly not have licensed or permitted it if we had been asked . . .NPR is a highly respected news organization and does not allow its content to be used by political or advocacy groups. Such use is harmful to the integrity and independence of NPR. NPR does allow – even encourage — personal, non-commercial use of our content, so long as it is not modified, and not used in a manner that suggests NPR promotes or endorses a cause, idea, Web site, product or service. The use made by Stand for Marriage Maine violated all of these terms.

UMG’s remaining arguments for why Veoh is not entitled to safe harbor under the DMCA rejected

Shourin Sen - 15 September 2009 – 9:00 am

Filed under DMCA

UMG Recordings, Inc., et al. v. Veoh Networks Inc., et al., CV 07-5744 AHM (AJWx) (C.D. Cal. 2009)

We’ve discussed UMG Recordings v. Veoh three times over the past year or so. In early January, Judge Matz of the Central District of California denied UMG’s motion for partial summary judgment finding Veoh was shielded from liability by the DMCA’s safe harbor provisions while executing four particular software functions. In February, the Court dismissed with leave to amend UMG’s secondary infringement claims against Veoh’s investors. In May, the Court again addressed the issue of secondary liability claims against Veoh investors, this time dismissing the claims with prejudice. We return once again.

On Friday, the Court addressed UMG’s remaining arguments for why Veoh was not entitled to safe harbor under the DMCA:

A defendant qualifies for safe harbor under section 512(c) of the Copyright Act if it is a “service provider” that meets the requirements set forth in sections 512(c) and 512(i). UMG does not dispute that Veoh is a “service provider” pursuant to section 512(k)(1)(B). It contends that there are genuine issues of material fact as to (1) whether Veoh expeditiously removed infringing material when it acquired actual knowledge of such material or awareness of facts from which infringing activity was apparent; (2) whether Veoh had the right and ability to control allegedly infringing activity from which it received a direct financial benefit; and (3) whether Veoh adopted and reasonably implemented a policy of terminating repeat infringers[.]

On whether Veoh expeditiously removed infringing material when it aquired actual knowledge or awareness

In light of the principles articulated in CCBill that the burden is on the copyright holder to provide notice of allegedly infringing material, and that it takes willful ignorance of readily apparent infringement to find a “red flag,” Veoh has provided substantial evidence that it fulfilled the requirements of section 512(c)(1)(A). UMG has provided no material evidence to the contrary.

On whether Veoh had the right and ability to control allegedly infringing activity from which it received a direct financial benefit

A service provider may seek the section 512(c) safe harbor only if it “does 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.” 17 U.S.C. § 512(c)(1)(B). The parties’ dispute over this requirement boils down to another mixed question of fact and law: did Veoh have the “right and ability to control” the allegedly infringing activity given that (a) the allegedly infringing material resided on Veoh’s system; (b) Veoh had the ability to remove such material; (c) Veoh could have implemented, and did implement, filtering systems; and (d) Veoh could have searched for potentially infringing content? The text of the statute and the case law on this element of the safe harbor compel the Court to conclude that Veoh did not have the requisite “right
and ability to control.”

On whether Veoh adopted and reasonably implemented a policy of terminating repeat infringers

A service provider is eligible for safe harbor only if it “has adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.” 17 U.S.C. § 512(i) (emphasis added). UMG contends that Veoh’s policy is inadequate because it does not automatically terminate users who upload videos that are blocked by the Audible Magic filter. As discussed below, this argument is unpersuasive because however beneficial the Audible Magic technology is in helping to identify infringing material, it does not meet the standard of reliability and verifiability required by the Ninth Circuit in order to justify terminating a user’s account.

The Court granted Veoh summary judgment finding that it was entitled to safe harbor under 17 U.S.C. 512(c).

zbw5mcgder

RealNetworks preliminarily enjoined from distributing RealDVD software

Shourin Sen - 13 August 2009 – 10:00 pm

Filed under DMCA, License v. Contract, Preliminary Injunction

RealNetworks, Inc. v. DVD Copy Control Association, Inc., 08-04548 MHP (N.D. Cal. 2009)

The story

RealNetworks distributed the software RealDVD which, among other things, would play a DVD and store a copy of it to a hard drive to be played at a later time. RealNetworks obtained a license to use CSS, the industry standard DRM encryption technology, at the not inconsequential price of $30k. When RealDVD saved a DVD to a users hard drive, it saved the content along with CSS and its own proprietary DRM. The protection measures were set to limit the playback of ripped DVDs to five hard drives. RealNetworks also required an end-user agreement that made users verify that they would only rip copies of DVDs that they owned, not rented, and that they would limit their use of the saved copies to personal use.

Breach of the licensing agreement

The CSS licensing agreement required that “video content or keys initially encrypted using CSS not be carried on a user accessible bus.” RealNetworks argued that it was not in breach of the provision because its own DRM limited access to CSS and content saved on a user hard drive. The Court disagreed, noting that Real’s own layer of protection was “inconsequential” for interpreting the licensing agreement. The Court also found that RealNetworks had breached its covenant of good faith and fair dealing.

DMCA Violation under 17 U.S.C. 1201(a)

Section 1201(a) provides that “[n]o person shall . . . offer to the public . . . any technology . . . that (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access” to a work protected under copyright. RealNetworks argued that since CSS has been cracked, it did not “effectively” control access for purposes of the Section. The Court rejected the argument, citing 321 Studios v. Metro Goldwyn Mayer Studios, Inc., 307 F. Supp.2d 1085, 1095 (N.D. Cal. 2004) (Illston, J.) for the proposition that that CSS technology still effectively controls access to DVD content for the “ordinary customer.”

Fair Use

RealNetworks argued that it could not be held liable for a DMCA violation because the user copying made possible by its technology was shielded from liability as a non-infringing fair use. In making this argument, RealNetworks relied on 17 U.S.C. 1201(c) which states, in part, that nothing in the DMCA should be read to “limit defenses to copyright infringement, including fair-use.” The Court rejected this argument finding that “[f]air use is not a defense to trafficking in products used to circumvent effective technological measures that prevent unauthorized access to, or unauthorized copying of, a copyrighted work under sections 1201(a) or (b).” The Court noted that fair use only “enters into the picture in the context of the act of circumvention itself.”

The standard for a preliminary injunction

The Court applied the Ninth Circuit’s pre-Ebay v. MercExchange, pre-Winter v. Nat’l Res. Def. Concil, pre-American Trucking Ass’ns Inc. v. City of Los. Angeles test for obtaining injunction relief, stating that a preliminary injunction is available to “a party who demonstrates either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised and the balance of hardships tips in its favor.” On page 40 of the 58 page decision, however, outside of the section in which the Court outlined the standard it applied for determining whether to grant a preliminary injunction, the Court stated the following:

The court is nonetheless mindful that it “must consider the public interest as a factor in balancing the hardships when the public interest may be affected.” Caribbean Marine Servs. Co., Inc. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988). Whether the public interest would best be served by continuing to enjoin Real from making its products available to consumers, and protect the Studios’ rights at the expense of the consumers’ rights, to engage in legal downstream use of the Studios’ copyrighted material is an excellent question. It is also one the court does not and will not reach, because the statutory structure of the DMCA leaves no room for ambiguity. By making it a DMCA violation to distribute products that enable consumers to override copyright owner preferences against unauthorized copying, Congress determined that the public interest is best served by outlawing such products. “Policy considerations cannot override our interpretation of the text and structure of [a statute], except to the extent that they may help to show that adherence to the text and structure would lead to a result so bizarre that Congress could not have intended it.” Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164, 188 (1994).

This interesting passage would seem to place the Court’s decision almost directly in opposition with eBay v. MercExchange and Winter v. Nat’l Res. Def. Council. The remedies provision of the DMCA, similarly to the remedies provision of the Patent Act and the Copyright Act’s infringement section, state that a court “may” grant temporary and permanent injunctions to prevent a transgression of the statute. See 17 U.S.C. 1203(b)(1); 17 U.S.C. 502(a); 35 U.S.C. 283. The Supreme Court in eBay v. MercExchange noted that courts can not automatically award injunctive relief under this operative language in the Copyright Act’s infringement section and the Patent Act. (“Like the Patent Act, the Copyright Act provides that courts “may” grant injunctive relief “on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U. S. C. §502(a). And as in our decision today, this Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.”)

The Court in RealNetworks further presumed irreperable harm upon finding that DVD Copy Control was likely to succeed upon the merits of the case. This would seem to be at odds with the Supreme Court’s pronouncement in Winter v. Nat’l Res. Def. Council that a plaintiff is required to “demonstrate that irreparable injury is likely in the absence of an injunction.”

A9 wins summary judgment motion on contributory infringement claim; entitled to DMCA 512(c) safe harbor

Shourin Sen - 18 May 2009 – 9:00 am

Filed under DMCA, Secondary Liability

Perfect 10, Inc. v. Amazon.com, Inc., 2009 WL 1334364 (C.D. Cal. 2009)

This past Tuesday, Judge A. Howard Matz released an order in Perfect 10, Inc. v. Amazon.com, an ancillary to the blockbuster copyright case Perfect 10 v. Google. Judge Matz is in a horse race with Judge Batts of the S.D.N.Y. for the title of most prolific judge on copyright issues over the past few months, which is great on both fronts for anybody who like well-articulated copyright decisions. The Court earlier granted summary judgment in favor of defendant A9 on claims for direct and vicarious copyright infringement. At issue in this order was the final remaining claim for contributory copyright infringement.

A9, a wholly owned subsidiary of Amazon, sought a summary determination that it was entitled to the § 512(c) safe harbor provisions of the DMCA due to the fact that Perfect 10 sent infringement notices in A9′s search results to Amazon, not itself. Perfect 10, in response, argued two grounds: first that A9 had actual knowledge of the infringement from court papers filed during litigation; and second, that A9 should be equitably estopped from seeking safe harbor. The court rejected the arguments and granted summary judgment in favor of A9 on the remaining claim.

Actual knowledge

Perfect 10 argued that the court papers it sent to A9 during litigation conferred actual knowledge of infringement:

Perfect 10 contended that A9 is not entitled to the safe harbor because it did in fact receive Perfect 10′s DMCA notices, and therefore had actual knowledge of infringement. An ISP is not entitled to the § 512(c) safe harbor if it has “actual knowledge that the material or an activity using the material on the system or network is infringing.” 17 U.S.C. § 512(c)(1)(A)(i) (emphasis added). The ISP must know that “specific infringing material is available using its system,” Amazon.com, 508 F.3d at 1172 (emphasis in original).

The Court wasn’t buying:

They are legally irrelevant. The absurd result otherwise would be that the complaint or any other pleading that contains sufficient identification of the alleged infringement could count as a DMCA notification.

Equitable estoppel

Perfect 10 made five core arguments in regards to equitable estoppel. First, Perfect 10 contended that Amazon instructed copyright owners to send DMCA notices regarding its affiliates directly to Amazon in the Conditions of Use posted on its site. The Court disagreed finding that neither Amazon’s Conditions of Use or filings with the Copyright Office included A9 among it affiliates.

Second, Perfect 10 argued that Amazon held itself out as an authorized agent for A9 because Amazon’s counsel responded to notices sent from Perfect 10, apparently on behalf of both Amazon and A9. The Court found that the fact that A9′s counsel was cc’d on a letter was insufficient to support the conclusion that Amazon was acting on its behalf, especially since A9 designated its own copyright agent on its site and in filings with the Copyright Office.

Perfect 10′s third and fourth estoppel arguments centered on Amazon’s actions, not A9′s. Perfect 10 contended that Amazon was the proper recipient because the infringing activity took place on its website, because the A9 search box was included on Amazon.com. The Court found that since A9 designated its own copyright agent, Amazon wasn’t the proper recipient, a fact that Perfect 10 was aware of as evidenced by the fact that Perfect 10 brought suit against A9 as well as Amazon.

Fourth, Perfect 10 argued that Amazon was obligated to notify A9 of the alleged infringements because it owns and hosts the site/corporation. The Court disagreed finding no precedent for the requirement that one ISP must pass along notices to another, because of ownership or hosting. The Court noted that even if Amazon’s representations were misleading it wouldn’t mean that A9 failed to comply with the DMCA’s requirements for designating a copyright agent or that a third party could ignore the designation:

Perfect 10 cites no authority that would require one ISP, by virtue of its ownership or hosting of another ISP, to pass along a DMCA notice, where the two ISPs are distinct corporate entities and, more importantly, have each properly designated its own copyright agent. That Amazon’s representations may have been misleading does not mean A9 failed to comply with the DMCA’s requirements for designating a copyright agent or that [Perfect 10] could ignore A9′s designation. See 17 U.S.C. § 512(c)(3)(A) (“To be effective …, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider …”) (emphasis added).

Finally, Perfect 10 argued that A9 failed to satisfy the DMCA’s requirements for the designation of a copyright agent to receive notifications of infringement. Subsection 512(c)(2) requires a service provider to designate a copyright agent “by making available through its service, including on its website in a location accessible to the public, and by providing to the Copyright Office, substantially the following information: the name, address, phone number, and electronic mail address of the agent. [emphasis added]” Perfect 10 argued that A9 failed to meet the requirements because the name of the agent on its Copyright Office filing was outdated. The Court rejected the veracity of the factual assertion, but noted that even if it was true, it was not of consequence:

In any event, these are precisely the sort of technical departures from the listed requirements that Congress believed were inconsequential. There is no genuine dispute that the Copyright Office designation was valid and accurate and enabled anyone who saw it to contact A9′s designated agent, through mail, fax, telephone, or the online complaint form. Hence, A9′s Copyright Office listing substantially complies with § 512(c)(2).

Copyright registration and the DMCA: Revisiting Facebook v. Power Ventures

Shourin Sen - 17 May 2009 – 11:41 am

Filed under DMCA

I thought it’d be worthwhile do revisit the DMCA portion of the order in Facebook v. Power Ventures that we discussed a couple of days ago. There is a lot going on in the DMCA analysis that, upon further reflection, deserves more discussion. To review, Facebook brought suit against Power Ventures for offering a website that would ask a user for her Facebook login. Power Ventures would then scrape the user’s content from Facebook, allegedly along with some of Facebook’s content, and redisplay it on Power Ventures’ site.

Our last discussion of the order addressed the difference between copyright infringement and a claim for copyright infringement under the Copyright Act. 17 U.S.C. 102 extends protection to original works that are fixed in a tangible medium. An author, however, cannot bring a claim for copyright infringement until she registers her copyright. And her infringement claim is only as broad as her registration.

To use the present case as an example, Facebook operates a large site that is constantly being amended. Power Ventures may have infringed a great deal of content on Facebook’s website, but if it wasn’t covered under the registration upon which Facebook based its claim, Power Ventures cannot be found liable. Facebook is, of course, able to file a new registration for the updated site and bring a new claim, but it wouldn’t have a full set of remedies available. To receive statutory damages, an author must register her copyright before infringement occurs, or within the first three months of publication.

The DMCA:

Now does the same thing hold true for a DMCA violation? Must an author register a work underlying a DMCA violation before it can bring a claim? The answer appears to me to be no. 17 U.S.C. 1201 (”Circumvention of copyright protection systems”) states as follows: “(1) (A) No person shall circumvent a technological measure that effectively controls access to a work protected under this title . . .” The language of Section 1201 tracks the language of 17 U.S.C. 102, which as noted above, extends copyright protection to “original works of authorship fixed in any tangible medium of expression.” The registration provision of the Copyright Act, 17 U.S.C. 411, also only explicitly applies to “action[s] for infringement,” not violations of the DMCA.

What should we take away from this? DMCA claims can be, and often are, more broad than the copyright infringement claims that are pleaded in the same complaint. Facebook’s infringement claim only extends as far as its registration, which if the registration’s title “Facebook homepage” is any indication, only encompass the site’s homepage. Facebook’s DMCA claim can encompass all of the material of sufficient originality on Facebook’s website.

User Generated Content

As best as I can tell, the Court found that Power Ventures was potentially liable for a DMCA violation in regards to both user content and Facebook’s content; that Power Ventures would be liable for a DMCA violation if Facebook could prove that the company offered a tool to circumvent a technological measure to reach user content. If this was indeed the holding there are some clarifications in order. The Court cited Chamberlien Group, Inc. v. Skylink Techs, Inc. for the prima facia test for a DMCA violation:

The elements necessary to state a claim under the DMCA are (1) ownership of a valid copyright; (2) circumvention of a technological measure designed to protect the copyrighted material; (3) unauthorized access by third parties; (4) infringement because of the circumvention; and (5) the circumvention was achieved through software that the defendant either (i) designed or produced primarily for circumvention; (ii) made available despite only limited commercial significance other than circumvention; or (iii) marketed for use in circumvention of the controlling technological measure. See Chamberlain Group, Inc. v. Skylink Techs, Inc., 381 F.3d
1178, 1203 (Fed. Cir. 2004).

Facebook’s terms of use were explicit that a user only granted Facebook a non-exclusive license, and did not assign a copyright in her work to the site. Provided that you accept the test from Chamberlien for liability under the DMCA, Facebook’s claim of a violation for circumvention of a technology measure to reach user content can’t stand. Facebook didn’t possess “ownership of a valid copyright” in the user content and does not satisfy the first prong of the Chamberlien test.

EMI files suit against music search engine SeeqPod and music-on-demand site Favtape

Shourin Sen - 26 February 2009 – 8:45 am

Filed under DMCA

EMi filed suit against music search engine SeeqPod and music-on-demand site Favtape this past Friday in the S.D.N.Y. SeeqPod is a search engine that indexes and finds third-party websites that host music and video content. SeeqPod allows a user to play music from their search engine using an Adobe Flash interface without having to individually visit the third-party sites from which they stream content. This lawsuit follows a similar suit filed by Warner Music Group roughly one year.

EMI brought claims for direct, contributory and vicarious copyright infringement, and inducement of copyright infringement. EMI also alleged that SeeqPod and Favtape violated New York unfair competition law by commercially exploiting their pre-1972 recordings.

While EMI didn’t file claims against investors in SeeqPod and Favtape, the complaint contained the following language:

SeeqPod has been able to attract millions of dollars of financial support from various “angel” investors. Upon information and belief, each of these corporations have also contributed to, facilitated and profited from the infringing conduct of SeeqPod, the other SeeqPod defendants, and SeeqPod users. Plaintiff reserved the right to add as defendants SeeqPod’s investors once the full extent of their contribution to, and facilitation of, the infringing conduct described herein is know.

EMI may be waiting to see whether UMG Recordings, Inc. refiles claims against Veoh’s investors in an amended compliant, and if they do, the outcome of those claims, before they decide whether to file suit against SeeqPod’s investors.

Capitol Records, L.L.C. et al v. Seeqpod, Inc. et al, 09 cv 01584 LTS (S.D.N.Y. Feb 20, 2009).

MDY and its president found liable for DMCA violations for Glider World of Warcraft application; permanent injunction granted but not entered

Shourin Sen - 3 February 2009 – 3:25 am

Filed under DMCA

MDY Industries, LLC v. Blizzard Entertainment, Inc. et al, CV-06-2555-PHX-DGC (D. A.Z. January 28, 2009) (order)

(h/t to Timothy B. Lee at Ars Technica for picking up this order before it was available through Westlaw.) Blizzard Entertainment, Inc. and Vivendi Games, Inc. owned and distributed World of Warcraft, a game where users controlled characters within a virtual universe, performed quests and interacted with other players. Glider was an application, produced by MDY Industries, LLC, that played World of Warcraft on behalf of gamers, allowing them to advance while they were away from their computers. According to the Court, “Glider upset[] th[e competitive] balance [of World of Warcraft] by enabling some payers to advance more quickly, diminishing the game experience for other players.”

The building blocks of World of Warcraft, such as monsters, trees and individual sounds, remained saved on a users hard drive and could be loaded into RAM without signing onto Blizzard’s servers. But to view the individual and collective elements in the choreographed context of the World of Warcraft, a user had to log onto a Blizzard server. Blizzard used an application, called Warden, to detect and lock down users who used applications, such as MDY’s, to play Warcraft.

Blizzard’s Section 1201(a)(2) Claim

Section 1201(a)(2) provides that no person shall “traffic in any technology” that “is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title[.]”

MDY apparently made two arguments: First, that the choreographed context, provided by Blizzard when gamers were logged in, wasn’t copyrightable because it wasn’t fixed in a tangible medium and, secondly, the choreographed context was controlled by users of the game, arguably creating a joint work. The court tersely rejected both of these arguments citing to, among other cases, Atari Games Corp. v. Oman, 888 F.2d 878, 884-85 (D.C. Cir. 1989).

Blizzard’s Section 17 U.S.C. 1201(b)(1) Claim

Section 1201(b)(1) is similar to section 1201(a)(2), except that, instead of applying to protective measures that control “access,” it applies to “a technological measure that effectively protects a right of a copyright owner.”

The Court concluded that MDY violated section 1201(b)(1): Warden constituted a “technological measure” to the extent it prevents a user from copying the dynamic elements Warcraft as it is being played; MDY’s Glider application circumvented Warden; and the Glider application was knowingly marketed by MDY for use in circumventing Warden.

Personal liability of corporate officers for copyright infringement

The Court found that the president of MDY was personally liable for the vicarious infringement, contributory infringement, and DMCA violations because he (1) profited directly from the infringement and (2) had a right and ability to supervise the direct infringer, even though he may have initially lacked knowledge of the infringement.

Presumption of harm and the granting of a permanent injunction

Blizzard argued that courts assume irreparable harm when evaluating whether to grant a permanent injunction under 17 U.S.C. 502(a). The Court rejected this argument and, citing to eBay, inc. v. MercExchange, L.L.C., found that Blizzard must satisfy the traditional four-part test to obtain a permanent injunction. The Court granted a permanent injunction finding that all four requirements were satisfied: [1] irreparable injury (Blizzard received 500,000 customer complaints regarding bots in World of Warcraft); [2] remedies at law (Blizzard’s damages to goodwill could not be calculated with certainty); [3] balance of hardships (loss of profits merits little equitable consideration); and [4] public interest (Congress has determined that the public interest is served by enforcing intellectual property rights.)

The Court, however, demurred from entering the permanent injunction until the parties had the opportunity to brief whether the injunction should be stayed pending appeal to the Ninth Circuit.

Documents:

MDY Industries, LLC v. Blizzard Entertainment, Inc. et al, CV-06-2555-PHX-DGC (D. A.Z. January 28, 2009) (order)

Counsel:

MDY Industries, LLC: Venable Campillo Logan & Meaney PC (Phoenix, AZ)
Blizzard Entertainment, Inc: Sonnenschein, Nath & Rosenthal LLP (Washington, D.C., Phoenix, AZ)

C.D. Cal. holds DMCA’s 512(c) “by reason of storage” language shields Veoh.com

Shourin Sen - 5 January 2009 – 10:58 pm

Filed under DMCA

UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D.Cal. December 29, 2008) (order denying UMG’s motion for partial summary judgment) (A. Howard Matz, j.)

Veoh Networks, Inc. runs a site, veoh.com, that allows users to share videos. UMG brought suit alleging direct, contributory, and vicarious copyright infringement, and for inducement of copyright infringement. Veoh asserted, as an affirmative defense, that their actions were shielded under the DMCA’s safe harbor provisions. In this motion, UMG sought partial summary judgment, asking the Central District Court of California to find that Veoh is not entitled to the safe harbor provisions codified in 17 U.S.C. 512(c). 17 U.S.C. 512 states, in part, that a service provider shall not be liable for “infringement of copyright by reason of the storage at the direction of a user of of material that resides on a system or network controlled or operated by or for the service provider”; provided that the service provider:

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does 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; and

(C) upon notification of claimed infringement as described . . . responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

UMG argued that four of Veoh’s software functions were neither “storage” nor undertaken “at the direction of a user”; and thus, didn’t qualify to be shielded from liability under 512(C):

automatically creating “Flash-formatted” copies of video files uploaded by users;
automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
allowing users to access uploaded videos via “streaming”;
allowing users to access uploaded videos by downloading whole video files.

The Court denied UMG’s motion for partial summary judgement, finding that the four software functions fall within the DMCA’s safe harbor provision, “because all of the[ functions] are narrowly directed toward providing access to material stored at the direction of users.”

(1.) Flash-Formatted Copies: In regards to the first software function, flash-formatting copies, Judge Matz found that the question was already settled by previous case law. The Court cited Lo Group, Inc. v. Veoh Networks, Inc. No. C06-03926 HRL, 2008 WL 4065872 (N.D. Cal Aug. 27, 2008) for the holding that flash-formatting copies were shielded by the safe harbor provision.

(2., 3. and 4.) Chunks, Streaming, and whole video files: UMG argued that § 512(c) didn’t apply because Veoh’s activities didn’t constitute “storage,” and weren’t undertaken “at the direction of a user.”

Veoh agreed that some of the software functions at issue didn’t constitute “storage,” but forwarded that it wasn’t excluded from the safe harbor provisions on two grounds. First, Veoh argued that the “by reason of the storage” language in 512(c) is “broad causal language that is clearly meant to cover more than mere electronic storage lockers.” Veoh forwarded that 512(c) doesn’t require that the infringing conduct constitute storage in and of itself. Instead, under the provision, the infringing conduct must only occur as a result of the storage.

Secondly, Veoh argued that the language in 512(c) “presupposes that the service provider will be providing access to the user’s material.”

Judge Matz found UMG’s interpretation of § 512(c), that the safe harbor applied “only to operational features that provide or constitute storage-and nothing more,” was overly restrictive and not consistent with the plain wording of the statute or Congressional intent:

Common sense and widespread usage establish that “by reason of” means “as a result of” or “something that can be attributed to ….“ So understood, when copyrighted content is displayed or distributed on Veoh it is “as a result of” or “attributable to” the fact that users uploaded the content to Veoh’s servers to be accessed by other means. If providing access could trigger liability without the possibility of DMCA immunity, service providers would be greatly deterred from performing their basic, vital and salutary function-namely, providing access to information and material for the public.

Counsel: