Columbia Pictures Industries, Inc. v. Fung

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Columbia Pictures, Inc. v. Fung
Seal of the United States Courts, Ninth Judicial Circuit.svg
Court United States Court of Appeals for the Ninth Circuit
Full case nameColumbia Pictures Industries, Inc. v. Fung
DecidedMarch 21, 2013
Court membership
Judge(s) sitting Harry Pregerson, Raymond C. Fisher and Marsha Berzon
Keywords
contributory copyright infringement, Safe Harbor, DMCA

Columbia Pictures Industries, Inc. v. Fung 710 F.3d 1020 No. 10-55946, was a United States Court of Appeals for the Ninth Circuit case in which seven film studios including Columbia Pictures Industries, Inc., Disney and Twentieth Century Fox sued Gary Fung, the owner of isoHunt Web Technologies, Inc., for contributory infringement of their copyrighted works. The panel affirmed in part and vacated in part the decision of United States District Court for the Central District of California that the services and websites offered by isoHunt Web Technologies allowed third parties to download infringing copies of Columbia's works. Ultimately, Fung had "red flag knowledge" of the infringing activity on his systems, and therefore IsoHunt was held ineligible for the Digital Millennium Copyright Act § 512(c) safe harbor. [1] [2]

Contents

Background and case history

Columbia Pictures Industries, Inc., a part of Sony Pictures Entertainment, is one of the leading production companies and distribution studios in the world. Gary Fung, is the owner of torrent websites, including isoHunt, a bit torrent search engine, Torrentbox, Podtropolis and ed2k-it. This case, was originally filed in the Southern District of New York, and transferred, on Fung's motion, to the Central District of California. [1]

The district court ruled that Fung had committed copyright infringement by allowing inducement of Columbia's copyrighted material over the Bit Torrent peer-to-peer network. The court also held that Fung was not entitled to protection from damages liability under any of the safe harbor provisions of the Digital Millennium Copyright Act, 17 U.S.C. § 512(a). Furthermore, the court entered a permanent injunction that prohibited Fung from engaging in any activity that would infringe Columbia's copyrighted works. [1]

Fung appealed, contesting the district court's ruling of copyright infringement as well as his ineligibility for safe harbor protection under the DMCA. Citing violations to his right of free speech, Fung argued that the injunction was 'punitive and unduly vague'. [2]

Discussion

The circuit court reviewed two aspects of the district court's decisions about the liability determination and the scope of the injunction.

Liability

The 'Inducement' theory on which the district court's holding was based upon referred to the Supreme Court's case of Grokster III, which delved into the application of copyright law to file sharing over P2P networks. Grokster III stated that the inducement rule had four elements: [2]

(1) The distribution of a device or product: Fung argued that because he had not developed the Bit Torrent programs or protocols, there was no new 'device' on which the plaintiff could predicate its theory of liability under the inducement rule. The court rejected Fung's argument, writing: "Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a 'device.' As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the [alleged infringement.]" This element of inducement liability, the court held, requires only that defendant engaged in a process leading to the unauthorized reproduction of a plaintiff's copyrighted expression, and there was no question that Fung had done at least that much.

(2) Acts of infringement: Columbia successfully proved copyright infringement on the basis of inducement theory by providing evidence of actual infringement by users of Fung's services. Columbia showed that the process of uploading violated their exclusive right to distribution, and that downloading the copyrighted material violated their right to reproduction.

(3) An object of promoting its use to infringe copyright: This requirement for induced liability was that device or service be distributed with the "object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement." The clear expressions and steps provided explanations to prove an improper object. isoHunt featured a list of "Box Office Movies," which corresponded to the highest-grossing movies playing in the US theaters. Fung posted several messages, encouraging isoHunt users to upload torrent files of copyrighted materials that could be then available for download. A distributor's communication to the users through messages was important to prove inducement liability.

(4) Causation: Fung argued that the plaintiffs could not demonstrate all of the allegedly infringing downloads by third parties could be traced to services provided by isoHunt. Columbia maintained that a less stringent causal link should suffice, at least at the preliminary-injunction stage of the case. The court accepted Columbia's argument, finding the disputed causal links to be relevant to damages (to be determined later in the proceedings) rather than liability. The court added: "We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation requirement is that the product or service at issue was used to infringe the plaintiff’s copyrights. The possible reach of liability is enormous, particularly in the digital age." The court went on to identify many considerations that might undermine a copyright plaintiff's causation claims, though such considerations did not appear relevant to Fung's defense.

DMCA Safe Harbor Analysis

Fung sought protection under three of the DMCA's safe harbor provisions, 17 U.S.C(a), (c), (d). The district court had rejected protection under DMCA 512(a) since the provision only applied to "transitory" networks, which was not applicable because isoHunt never actually touched any of the copyrighted content. However, the circuit court rejected this ruling stating that:

The district court should not have rejected this safe harbor on the ground that it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), held that the § 512(a) safe harbor does not require that the service provider transmit or route infringing material, explaining that "[t]here is no requirement in the statute that the communications must themselves be infringing, and we see no reason to import such as a requirement." [2]

However, the court still rejected safe harbors for isoHunt because the trackers used by Fung generated information used for further infringing. Therefore, the websites were protected as service providers, but not as trackers. The district court had rejected the § 512(c) safe harbor for Fung for the same reason it had rejected the protection for the § 512(a) safe harbor. However, the circuit court maintained that the § 512(c) safe harbor covered not only the storage of the infringing content, but also the infringing activities that use the content on the system or network. Fung was denied eligibility for the § 512(c) safe harbor since the provision was only available if the service provider did not have knowledge that the content used on the system was infringing or was not aware of the facts or circumstances from which the infringing activity was apparent. The court maintained that Fung had "red flag knowledge" of the infringing activity on his systems and was thus ineligible for the § 512(c) safe harbor. The court also argued that the advertising on the site constituted a financial benefit from the infringing activity. Fung promoted advertising by attracting the site visitors who wished to engage in the infringing activity. Thus, a solid connection between the infringing activity and the revenue generation was established, and Fung was declared ineligible for protection under the § 512 (c)(1)(b) safe harbor. [2] [3] [4]

Scope of Injunction

The court ruled that the injunction was vague because the injunction imposed the expectation that Fung remove all the "infringement-related terms" from the metadata and the webpages. The court also held that the certain provisions in the injunctions prevented Fung from working in any technology company whose services could be used to infringe copyrighted content even if those companies aren't liable for copyright infringement. By preventing Fung from seeking legitimate employment, the court held that the provisions in the injunction were too burdensome. [2] [3]

Court's decision

The circuit court affirmed the district court's grant of summary judgment to Columbia, ruling that Fung was liable for inducing copyright infringement. The court also affirmed summary judgment to Columbia in dismissing Fung's claims of being eligible for protection under the DMCA safe harbor provisions. However, the grounds of judgment differed from those of the district court. [1] [2]

The circuit, however, accepted Fung's appeal of the injunction being too vague and burdensome and modified the permanent injunction. [3]

In the end, costs of $110 million in damages were imposed on to Fung. [2] [5]

Significance and Impact

Columbia v. Fung was one of the few cases since Grokster where a court applied an "inducement" theory of copyright, rather than one of contributory or vicarious infringement. [3] [6] Furthermore, at the time, this case was also the only known case in which a service provider was disqualified from DMCA safe harbor provisions due to having enough "red flag knowledge" of infringing activity. Evidence of this red flag knowledge included Fung's own active encouragement of infringing activity (listing top 20 grossing movies, inviting users to upload a torrent file of these movies, etc.) and his own personal use of isoHunt to download infringing material. [3] [6]

Fung demonstrated that the Supreme Court's Grokster ruling was one that would come to be taken seriously as precedent. As such, any file-sharing website that has no filtering or moderating mechanism for copyrighted material while financially benefiting in any way (even with an ad-revenue model) will likely be liable for inducing copyright infringement upon litigation. [4] [7]

A further implication to be taken from Fung is that courts will find any file-sharing technology to be legally indistinguishable regardless of their technical specifications, e.g. whether servers are hosted centrally or peer-to-peer. Courts may furthermore assume that all P2P file-sharing will engage in copyright infringement. In the context of Fung, Grokster, and other related cases, this shifts the analysis of a service provider's liability of copyright infringement to the "front-end" of file-sharing technology, i.e. how the user interface assists the user in infringing activities. In Fung, this was a central factor in determining Fung's liability for inducing copyright infringement (e.g. providing a list top 20 grossing movies). [7]

Criticisms

The circuit court's decision has been criticized for going above and beyond the original ruling of Grokster by the Supreme Court when it ruled that "inducement liability is not limited...to those who distribute a device". By doing so, the court effectively disregards the first requirement (distribution of a device or product for infringement) in the four factors of inducement liability and expands copyright infringement to not only distributing a device or product but also a service that can be used to engage in infringing activity. [3]

The circuit court has also been criticized for its lack of discussion on holding Fung liable on grounds of sufficient "red flag knowledge", when it has been the first major case to deem someone to have had "reasonable red flag knowledge". Most cases have required specific knowledge of infringing files, usually through a valid DMCA takedown notice, but 'Fung' departs from this and instead cites Fung's supposedly infringement-encouraging behavior, such as providing a list of the top 20 grossing movies that have still been in release, as evidence that "he must have known it was infringing". A website operator that utilizes a user interface feature that organizes user activity but that may also come to "highlight infringing activity" (e.g. a "Top Downloaded" list that happens to consist of copyrighted content) can potentially be inferred to fall under copyright inducement liability [3] [4]

Fung also introduced a new "loose causation" theory, on which DMCA safe harbor disqualification can be based on lack of evidence of substantial cause for third-party infringements. Are infringements caused by a search engine tool such as isoHunt, or are the infringements on top search lists a mere reflection of existing market demand? [8]

In linking the advertising revenue stream with infringement activity, the court has been criticized for making an erroneous connection. Ad revenue is proportionate to any usage of the site, whether infringing or not. By deeming that this ad revenue was Fung's deriving a direct financial benefit from infringing activity, it potentially implies that any site that has advertisement and some sort of infringement will invalidate DMCA safe harbor for any service provider that hosts advertising. [3]

More generally speaking, Grokster and its related cases, including Fung, have been criticized for its stifling of innovation and competition by increasing the threat of litigation for file-sharing technology. As Harvard Law Professor Lawrence Lessig put it:

By making it a process that goes through the courts, you've just increased the legal uncertainty around innovation substantially and created great opportunities to defeat legitimate competition. You've shifted an enormous amount of power to those who oppose new types of competitive technologies. Even if in the end, you as the innovator are right, you still spent your money on lawyers instead of on marketing or a new technology.

In Congress, we might have a lot of argument about what the statute should look like. But that would be a process that would resolve this intensely political issue politically. Instead, Justice Souter engages in common-law lawmaking, which is basically judges making up the law they want to apply to this particular case. And not just Supreme Court judges -- what they've done is invite a wide range of common-law lawmaking by judges around the country trying to work out the details of what this intent standard really is. [5] [9]

As a result, Lessig argues, innovation will only be "channeled in ways the copyright owners can agree to, or channeled in ways that avoids any kind of possibility of this litigation". [9]

See also

Related Research Articles

Grokster Ltd. was a privately owned software company based in Nevis, West Indies that created the Grokster peer-to-peer file-sharing client in 2001 that used the FastTrack protocol. Grokster Ltd. was rendered extinct in late 2005 by the United States Supreme Court's decision in MGM Studios, Inc. v. Grokster, Ltd. The court ruled against Grokster's peer-to-peer file sharing program for computers running the Microsoft Windows operating system, effectively forcing the company to cease operations.

MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), is a United States Supreme Court decision in which the Court ruled unanimously that the defendants, peer-to-peer file sharing companies Grokster and Streamcast, could be held liable for inducing copyright infringement by users of their file sharing software. The plaintiffs were a consortium of 28 entertainment companies, led by Metro-Goldwyn-Mayer studios.

<i>A&M Records, Inc. v. Napster, Inc.</i> US legal case

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 was a landmark intellectual property case in which the United States Court of Appeals for the Ninth Circuit affirmed the a district court ruling that the defendant, peer-to-peer file sharing service Napster, could be held liable for contributory infringement and vicarious infringement of copyright. This was the first major case to address the application of copyright laws to peer-to-peer file sharing.

<i>In re Aimster Copyright Litigation</i>

In re Aimster Copyright Litigation, 334 F.3d 643, was a case in which the United States Court of Appeals for the Seventh Circuit addressed copyright infringement claims brought against Aimster, concluding that a preliminary injunction against the file-sharing service was appropriate because the copyright owners were likely to prevail on their claims of contributory infringement, and that the services could have non-infringing users was insufficient reason to reverse the district court's decision. The appellate court also noted that the defendant could have limited the quantity of the infringements if it had eliminated an encryption system feature, and if it had monitored the use of its systems. This made it so that the defense did not fall within the safe harbor of 17 U.S.C. § 512(i). and could not be used as an excuse to not know about the infringement. In addition, the court decided that the harm done to the plaintiff was irreparable and outweighed any harm to the defendant created by the injunction.

Secondary liability, or indirect infringement, arises when a party materially contributes to, facilitates, induces, or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary liability rules for trademarks and patents, but for matters relating to copyright, this has solely been a product of case law developments. In other words, courts, rather than Congress, have been the primary developers of theories and policies concerning secondary liability.

isoHunt Torrent index site closed 2013

isoHunt was an online torrent files index and repository, where visitors could browse, search, download or upload torrents of various digital content of mostly entertainment nature. The website was taken down in October 2013 as a result of a legal action from the MPAA; by the end of October 2013 however, two sites with content presumably mirrored from isohunt.com were reported in media. One of them – isohunt.to – became a de facto replacement of the original site. It is not associated in any way with the old staff or owners of the site, and is to be understood as a separate continuation.

The inducement rule is a test a United States court can use to determine whether liability for copyright infringement committed by third parties could be assigned to the distributor of the device used to commit infringement.

<span class="mw-page-title-main">Online Copyright Infringement Liability Limitation Act</span> 1998 U.S. federal law

The Online Copyright Infringement Liability Limitation Act (OCILLA) is United States federal law that creates a conditional 'safe harbor' for online service providers (OSP) by shielding them for their own acts of direct copyright infringement as well as shielding them from potential secondary liability for the infringing acts of others. OCILLA was passed as a part of the 1998 Digital Millennium Copyright Act (DMCA) and is sometimes referred to as the "Safe Harbor" provision or as "DMCA 512" because it added Section 512 to Title 17 of the United States Code. By exempting Internet intermediaries from copyright infringement liability provided they follow certain rules, OCILLA attempts to strike a balance between the competing interests of copyright owners and digital users.

<span class="mw-page-title-main">Digital Millennium Copyright Act</span> United States copyright law

The Digital Millennium Copyright Act (DMCA) is a 1998 United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to copyrighted works. It also criminalizes the act of circumventing an access control, whether or not there is actual infringement of copyright itself. In addition, the DMCA heightens the penalties for copyright infringement on the Internet. Passed on October 12, 1998, by a unanimous vote in the United States Senate and signed into law by President Bill Clinton on October 28, 1998, the DMCA amended Title 17 of the United States Code to extend the reach of copyright, while limiting the liability of the providers of online services for copyright infringement by their users.

Perfect 10, Inc. v. Visa Int'l Serv. Ass'n is a court case in which the pornography magazine Perfect 10 filed a complaint against Visa and MasterCard for copyright infringement and trademark infringement.

<i>Religious Technology Center v. Netcom On-Line Communication Services, Inc.</i>

Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361, is a U.S. district court case about whether the operator of a computer bulletin board service ("BBS") and Internet access provider that allows that BBS to reach the Internet should be liable for copyright infringement committed by a subscriber of the BBS. The plaintiff Religious Technology Center ("RTC") argued that defendant Netcom was directly, contributorily, and vicariously liable for copyright infringement. Netcom moved for summary judgment, disputing RTC's claims and raising a First Amendment argument and a fair use defense. The district court of the Northern District of California concluded that RTC's claims of direct and vicarious infringement failed, but genuine issues of fact precluded summary judgment on contributory liability and fair use.

<i>Perfect 10, Inc. v. CCBill, LLC</i>

Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, is a U.S. court case between a publisher of an adult entertainment magazine and the webhosting, connectivity, and payment service companies. The plaintiff Perfect 10 asserted that defendants CCBill and CWIE violated copyright, trademark, and state law violation of right of publicity laws, unfair competition, false and misleading advertising by providing services to websites that posted images stolen from Perfect 10's magazine and website. Defendants sought to invoke statutory safe harbor exemptions from copyright infringement liability under the Digital Millennium Copyright Act, 17 U.S.C. § 512, and from liability for state law unfair competition, false advertising claims and right of publicity based on Section 230 of the Communications Decency Act, 47 U.S.C. § 230(c)(1).

<i>CoStar Group, Inc. v. LoopNet, Inc.</i>

CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, is a United States Court of Appeals for the Fourth Circuit decision about whether LoopNet should be held directly liable for CoStar Group’s copyrighted photographs posted by LoopNet’s subscribers on LoopNet’s website. The majority of the court ruled that since LoopNet was an Internet service provider ("ISP") that automatically and passively stored material at the direction of users, LoopNet did not copy the material in violation of the Copyright Act. The majority of the court also held that the screening process by a LoopNet employee before the images were stored and displayed did not alter the passivity of LoopNet. Justice Gregory dissented, stating that LoopNet had engaged in active, volitional conduct because of its screening process.

<span class="mw-page-title-main">Hotfile</span> File hosting website

Hotfile was a one-click file hosting website founded by Hotfile Corp in 2006 in Panama City, Panama. On December 4, 2013, Hotfile ceased all operations, the same day as signing a $4 million settlement with the Motion Picture Association of America (MPAA); the settlement had previously been misreported as $80 million.

<i>Viacom International Inc. v. YouTube, Inc.</i> U.S. District Court case

Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19, was a United States Court of Appeals for the Second Circuit decision regarding liability for copyright infringement committed by the users of an online video hosting platform.

<i>Arista Records LLC v. Lime Group LLC</i>

Arista Records LLC v. Lime Group LLC, 715 F. Supp. 2d 481, is a United States district court case in which the Southern District of New York held that Lime Group LLC, the defendant, induced copyright infringement with its peer-to-peer file sharing software, LimeWire. The court issued a permanent injunction to shut it down. The lawsuit is a part of a larger campaign against piracy by the Recording Industry Association of America (RIAA).

<i>Flava Works Inc. v. Gunter</i> 2012 US decision on copyright infringement

Flava Works, Inc v. Gunter, 689 F.3d 754, is a decision by the United States Seventh Circuit Court of Appeals, authored by Judge Richard Posner, which held that Marques Gunter, the sole proprietor of the site myVidster.com, a social bookmarking website that enables its users to share videos posted elsewhere online through embedded frames, was not liable for its users' sharing and embedding of copyrighted videos. The court of appeals reversed the decision of the United States District Court for the Northern District of Illinois, which had granted a preliminary injunction against myVidster, citing sufficient knowledge of infringement on Gunter's part, while denying safe harbor defense under the Digital Millennium Copyright Act (DMCA). The Court held that Gunter was not directly liable because the copyrighted content was not stored on myVidster's servers, and was not contributorily liable because there was no evidence that conduct by myVidster increased the amount of infringement.

<i>UMG Recordings, Inc. v. Shelter Capital Partners LLC</i> United States Court of Appeals for the Ninth Circuit case

UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 No. 09-55902, was a United States Court of Appeals for the Ninth Circuit case in which UMG sued video-sharing website Veoh, alleging that Veoh committed copyright infringement by hosting user-uploaded videos copyrighted by UMG. The Ninth Circuit upheld the decision of the United States District Court for the Central District of California that Veoh is protected under the Digital Millennium Copyright Act's safe harbor provisions. It was established that service providers are "entitled to broad protection against copyright infringement liability so long as they diligently remove infringing material upon notice of infringement".

<i>Wolk v. Kodak Imaging Network, Inc.</i>

Wolk v. Kodak Imaging Network, Inc., 840 F. Supp. 2d 724, was a United States district court case in which the visual artist Sheila Wolk brought suit against Kodak Imaging Network, Inc., Eastman Kodak Company, and Photobucket.com, Inc. for copyright infringement. Users uploaded Wolk's work to Photobucket, a user-generated content provider, which had a revenue sharing agreement with Kodak that permitted users to use Kodak Gallery to commercially print (photofinish) images from Photobucket's site—including unauthorized copies of Wolk's artwork.

Contributory copyright infringement is a way of imposing secondary liability for infringement of a copyright. It is a means by which a person may be held liable for copyright infringement even though he or she did not directly engage in the infringing activity. In the United States, the Copyright Act does not itself impose liability for contributory infringement expressly. It is one of the two forms of secondary liability apart from vicarious liability. Contributory infringement is understood to be a form of infringement in which a person is not directly violating a copyright but, induces or authorises another person to directly infringe the copyright.

References

  1. 1 2 3 4 "Columbia Pictures Industries, Inc. V. Fung". Google Inc. Retrieved October 1, 2013.
  2. 1 2 3 4 5 6 7 8 "Columbia Pictures Industries, Inc. V. Fung". Google Inc. Retrieved October 1, 2013.
  3. 1 2 3 4 5 6 7 8 "IsoHunt Still Guilty Of Contributory Infringement". 21 March 2013. Retrieved November 16, 2013.
  4. 1 2 3 Eric Goldman (30 December 2009). "Torrent Sites Induce Infringement and Lose DMCA Safe Harbor–Columbia v. Fung". Copyright Alliance. Retrieved November 16, 2013.
  5. 1 2 "IsoHunt to Shut Down following $110 Million Settlement With Film Studios". Harvard Law Review. Archived from the original on November 7, 2013. Retrieved November 12, 2013.
  6. 1 2 Rick Sanders (29 March 2013). "You're No Fung Anymore: There Really Is Such Thing as Red Flag Knowledge in Copyright Law". Aaron Sanders PLLC. Retrieved November 16, 2013.
  7. 1 2 Simon N. Pulman. "Columbia Pictures Industries v. Fung: IsoHunt Found Liable for Contributory Infringement". Copyright Alliance. Retrieved November 16, 2013.
  8. ↑ "isoHunt's SCOTUS Petition for Writ of Certiorari". Scribd / isoHunt. Retrieved October 16, 2013.
  9. 1 2 "Ten Years of Chilled Innovation". Bloomberg Businessweek. Retrieved November 12, 2013.
  10. Bro, Sarah (May 8, 2013). "No "Safe Harbor" For BitTorrent Website Operator". mondaq. Retrieved September 28, 2013.
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