Divided Infringement

August 21, 2013

Judgment of $151,425 Granted Against Defendant Who Failed to Answer Allegations of Illegal Downloading of Pornography

Indianapolis, Indiana — The Southern District of Indiana has granted a motion for default judgment by CP Productions, Inc. (“CP”) of Arizona, which had sued Gerald L. Glover, III (“Glover”) of Indianapolis, Indiana alleging infringement of the copyrighted work “GH Hustlers — Maryjane’s Second Visit” which has been registered by the U.S. Copyright Office.

CP produces adult-entertainment content. Copyright lawyers for CP filed suit in the Southern District of Indiana alleging that Glover and his joint tortfeasors, without Plaintiff’s authorization or license, downloaded CP’s copyrighted work via the Internet. Specifically, it was alleged that they had, knowingly and illegally, reproduced and distributed CP’s copyrighted creative work, and materially contributed to the infringing conduct of others by acting in concert via the BitTorrent file-sharing protocol. CP also alleged that Glover was a serial infringer of copyrights in adult content stating that agents for CP had observed him infringing on multiple copyrighted works involving adult content.

In the complaint, CP’s attorneys listed counts of copyright infringement, civil conspiracy and contributory infringement. CP sought statutory damages of $150,000 under the Copyright Act, 17 U.S.C. § 504 for Glover’s alleged willful infringement of CP’s copyright. CP also asked the court for attorneys’ fees and costs of $1,425 under 17 U.S.C. § 505, for a total judgment of $151,425. Glover did not respond to the complaint.

Because he had failed to plead or otherwise defend in this action, despite having been properly served with a summons and a complaint, Judge Jane Magnus-Stinson ordered an entry of default against Glover for $151,425, the full amount requested.

Practice Tip: When a defendant fails to appear to address assertions of wrongdoing made by a plaintiff, the court takes as true all of the plaintiff’s well-pled allegations. On Friday, we blogged about a default-judgment case wherein the defendant was ordered by the court to pay $20,000 for illegally downloading copyrighted material. As the Glover case shows, however, damages for illegally downloading copyrighted material can be much higher.

August 16, 2013

Default Judgment of $20,000 Granted in Copyright Infringement Case Involving BitTorrent

By Overhauser Law Offices, LLC

Indianapolis, Indiana —The Southern District of Indiana has granted a default judgment to Malibu Media, LLC of Los Angeles, California in its lawsuit against Robert Johnson of Indianapolis, Indiana for copyright infringement of the work “Pretty Back Door Baby.”

In its complaint, Malibu Media alleged that Johnson and others directly and contributorily infringed its copyrighted work when they downloaded and disseminated without authorization, all or a portion of a movie owned by Malibu Media entitled “Pretty Back Door Baby” using BitTorrent, a peer-to-peer file sharing protocol. The initial complaint was served upon eleven defendants but was later severed. Discussed in this opinion are the allegations, findings and judgments against Johnson only.

Malibu Media served Johnson with a summons and complaint on March 8, 2013. Johnson did not respond. On April 12, 2013, default was entered as to Johnson by Southern District of Indiana Judge William T. Lawrence. By virtue of this entry of default, it was established as a factual matter that Johnson had uploaded and downloaded all or a portion of the copyrighted work without authorization, and had also enabled countless unknown others to obtain the work in the process.

In the current default-judgment opinion, the court addressed requests by Malibu Media for an injunction, for damages, for attorney’s fees and for costs.

The injunction sought asked the court to prohibit Johnson “from directly, contributorily or indirectly infringing [Malibu Media’s] rights under federal or state law in the Work, including, without limitation, by using the internet, BitTorrent or any other online media distribution system to reproduce (e.g., download) or distribute the Works, or to make the Work available for distribution to the public, except pursuant to a lawful license or with the express authority of [Malibu Media].” The court held that such an injunction was simply a mandate that Johnson follow copyright laws and that the injunction was therefore unnecessary.

The court also denied Malibu Media’s request for attorneys’ fees and costs, noting that the fees submitted seemed to reflect legal work done not only in the furtherance of the lawsuit against Johnson, but also seemed to pertain to other related lawsuits involving the previously joined defendants. As a result of these ambiguities, the court denied Malibu Media’s request for costs and attorney’s fees but indicated that it would be willing to entertain such motions upon the entry of final judgment as to all defendants in related cases.

Finally, Malibu Media sought statutory damages in the amount of $20,000. The court cited “Congress’s recognition of the ‘disturbing trend’ of internet piracy” and found that amount to be just under the circumstances.

Practice Tip:

Deciding to simply ignore a complaint, as Robert Johnson apparently did, can be a costly error. Failing to present the defendant’s version of the facts and arguments results in the court considering only the plaintiff’s side of the story. Here, because the defendant chose to leave the complaint unanswered, the well-pled allegations of the plaintiff relating to liability were taken as true.

After the entry of default judgment, the court then conducted an inquiry to ascertain the amount of damages with “reasonable certainty.” Again, in such circumstances, it serves a defendant well to plead his case — to present the court with reasons that the plaintiff should not get 100% of what he requests.

Under 17 U.S.C. § 504(c)(1), a copyright owner may elect actual or statutory damages. Statutory damages range from a sum not less than $750 to not more than $30,000. The determination of the exact amount is left to the discretion of the court. In this case, Malibu Media asked the court for $20,000 and the court, having no arguments from the defendant to suggest that this was excessive, granted the entire amount.

Overhauser Law Offices, the publisher of this website, has represented several hundred persons and businesses regarding copyright infringement and similar matters.

July 5, 2013

Indiana Court Orders BitTorrent Defendants Severed

By Overhauser Law Offices, LLC

Ft. Wayne, Indiana — The Northern District of Indiana has directed Malibu Media, LLC of Los Angeles, California to file separate amended complaints against each defendant in its lawsuit for copyright infringement.

The case, initially filed in July 2012 against 14 Doe defendants, had only four defendants remaining. In December 2012, the court had denied the motions to sever and declined to exercise its own discretion to sever the Doe defendants.

The court, in a recent opinion issued by Magistrate Judge Roger Cosbey, moved sua sponte to reconsider the issue. It held that, while permitting joinder earlier had promoted judicial economy and facilitated the discovery process, the case had reached the point where continued joinder would instead create judicial inefficiency due to the different factual issues and legal defenses in each defendant’s case. Does No. 5, 9 and 12 were severed, leaving Doe No. 6 as the only defendant remaining in the current suit.

The practical effect of severance of previously joined claims is the creation of one or more new actions. The court directed Malibu Media to file a separate amended complaint for each of the severed Does.

Practice Tip:

It has been estimated that over 200,000 users of various peer-to-peer file-sharing protocols, usually users of BitTorrent, have been sued for copyright infringement. Instead of a thorough investigation, followed by a lawsuit, these plaintiffs — usually holders of a copyright to a work of adult entertainment — gather the IP addresses of many potential/presumed infringers and then sue tens, hundreds or even thousands of defendants in a single suit. The plaintiffs then extract settlements from the defendants, who are motivated to settle to avoid the embarrassment of being associated with pornography and the expense of litigation, even if they may not have infringed the work.

The problem has become sufficiently widespread that it has garnered attention from mainstream press (see, e.g., here). Different approaches to the growing problem of copyright trolls have been taken. In some cases, defendants have filed suit, alleging fraud and extortion.

The problem has also caused considerable strain on the federal judiciary, leading one judge to deny joinder as serving no legitimate purpose in such cases once IPSs have been put on notice to preserve identifying information for particular IP addresses and to opine that it is “difficult to even imagine the extraordinary amount of time federal judges have spent on these cases.” Many other courts have also denied joinder, often on the theory that, while doing so does not solve the problem it, at least, makes pursuing such abusive litigation much less profitable.

Some courts have exercised their discretion to allow Doe defendants to proceed under a pseudonym, at least during the discovery phase of a suit.

May 8, 2013

Malibu Media Sues Twenty-Eight Additional “John Doe” Defendants for Copyright Infringement

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Malibu Media, LLC of Los Angeles, Calif. has sued twenty-eight “John Does” for copyright infringement in separate complaints filed in the Northern District of Indiana and Southern District of Indiana.

Copyright lawyer Paul Nicoletti is again in federal court on behalf of Malibu Media. The company has filed twenty-eight similar lawsuits claiming copyright infringement. The “John Doe” defendants allegedly used the BitTorrent file-sharing protocol to illegally download, copy and distribute elements of various works of Malibu Media’s copyrighted material.

We have previously blogged about Malibu Media here and here. We have also blogged about some of the other copyright-infringement litigation filed by Paul Nicoletti here.

Malibu Media seeks a permanent injunction against infringing activities; an order by the court to remove infringing materials from all computers of each defendant; an award of statutory damages of $150,000 per infringed work and reasonable attorneys’ fees and costs.

Practice Tip: The actions of companies such as Patrick Collins and Malibu Media have been called “extortionate” and, in at least one case, a class action suit has been filed against these “trolls.” The issue of “trolls” has also caught the attention of at least one U.S. lawmaker. Senator Charles Schumer has proposed legislation wherein the U.S. Patent and Trademark Office would review patent infringement suits before they could be filed in court. Of course, such legislation is not directly relevant to actions sounding in copyright, such as the multiplicity of lawsuits filed by Malibu Media. It may, however, sound a warning bell that tolerance of the questionable activities of intellectual-property trolls of all varieties is wearing thin.

March 5, 2013

Court Refuses to Quash or Modify Subpoena Designed to Identify Alleged Infringer of Copyrighted Movie

By Overhauser Law Offices, LLC

Indianapolis, IN – The Southern District of Indiana ruled in favor of Plaintiff Patrick Collins, Inc. by denying the motion of pro se Defendant John Doe No. 7 to quash or modify Plaintiff’s subpoena.

In a lawsuit originally styled “Patrick Collins, Inc. v. John Does 1 – 13,” Patrick Collins, Inc. of Canoga Park, California (“Patrick Collins”), alleged direct and contributory infringement by 13 then-unidentified individuals including John Doe No. 7. The suit was filed by copyright attorney Paul Nicoletti.

By motion, Dustin Hillman (“Hillman”), identifying himself only as “John Doe 7,” asked the court to quash or modify the subpoena seeking to compel his internet service provider to provide his real name to the Plaintiff, stating that “such actions violate right to privacy and the disclosure of such matters may result in wrongful or unjust incrimination.”

Hillman attached for the court’s review an article which concluded that a common approach for identifying users infringing copyright law using BitTorrent (via the Internet) was not conclusive. He then asked the court to require Plaintiff to provide further information about its methods of identifying defendants and proof of the reliability of those methods. “Hardly a day goes by,” said Hillman, “that the news does not contain a story where a computer system containing highly confidential data has been hacked, spoofed and infected by malware.” He asked for the subpoena to be quashed or modified on these grounds.

The court was not persuaded. It discussed those situations under FRCP 45(c)(3)(A) where a court must quash or modify a subpoena and then those situations under FRCP 45(c)(3)(B) where a court may quash or modify a subpoena. Citing the Malibu Media litigation, a similar matter which we blogged about here, the court then noted that the burden of establishing the grounds to quash a subpoena is borne by the party seeking to quash it. Hillman, it said, had made an argument denying liability based on the possibility that his IP address may have been used by someone else. Such an objection was an argument on the merits of the case and was “irrelevant and premature” in the discovery phase of the litigation.

Hillman also asked the court to require the Plaintiff to disclose its “shake down methods” of collection, how much it had collected from alleged copyright infringers, the percentage of cases settled without trial and the total costs incurred by the Plaintiff. The court was not moved by this request, either, stating that no evidence of abusive settlement tactics had been presented to the court.

Hillman’s identity was deemed “relevant information that is reasonably calculated to lead to the discovery of admissible evidence” and Hillman’s motion to quash or modify the subpoena was denied.

Practice Tip: Patrick Collins, Inc. has filed quite a few suits, including another case naming over 1,000 John Doe defendants. The company has been called a “copyright troll” on more than one occasion. The actions of companies such as Patrick Collins and Malibu Media have been called “extortionate” and, in at least one case, a class action suit has been filed against these “trolls.”

February 14, 2011

Appeals Court Overturns Southern District Court of Indiana Decision in Centillion v. Qwest Communications

By Overhauser Law Offices, LLC

Washington, D.C. — The Court of Appeals for the Federal Circuit recently overturned a patent infringement decision by the Southern District of Indiana. Attorneys for Centillion Data Systems, of Indianapolis, Indiana, brought a patent infringement lawsuit against Qwest Communications, a Denver, Colorado company. Centillion, which has merged with CTI Group, owns U.S. Patent Number 5,287,270, a system for collecting, processing, and delivering information from a service provider, such as a telephone company. According to Centillion’s patent attorneys, several of Qwest Communication’s billing systems infringe upon Centillion’s patent. Qwest’s systems performed backend tracking automatically, but also allowed customers to download an application to their home computers to track their usage “on-demand.” Patent attorneys for Qwest argue that it did not infringe upon the patent because home users, not Qwest, performed some of the functions of the patented system.

Judge Tinder of the Southern District of Indiana heard the case and granted summary judgment in favor of Qwest. Centillion appealed to the Court of Appeals for the Federal Circuit, which reversed the decision below. The Court of Appeals examined the definition of “use” in § 271(a) of the patent infringement statute and held “that to “use” a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.” The court found that it does not matter that “the user did not have physical control over the relays, the user made them work for their patented purpose, and thus “used” every element of the system by putting every element collectively into service.” The court sent the case back to the district court to resolve the disputed factual issues.

Practice Note: This type of situation is sometimes referred to as joint or divided infringement. In this case, for example, it seemed that Qwest invited its customers to infringe Centillion’s patent. This case illustrates the importance of carefully drafting patent infringement claims when joint infringement may be an issue.