Copyright Infringement

January 8, 2014

Court Strikes Four Affirmative Defenses of BitTorrent Defendant

Fort Wayne, Indiana – District Magistrate Judge Roger B. Cosbey struck four affirmative defenses asserted by anonymous Defendant John Doe in Plaintiff Malibu Media’s lawsuit in the Northern District of Indiana for copyright infringement.

Plaintiff Malibu Media, LLC, filed a copyright infringement action against Defendant John Doe. Defendant answered with ten affirmative defenses. Malibu Media sought to strike four of those defenses–laches, unclean hands, waiver, and estoppel; failure to mitigate damages; failure to join an indispensable party; and implied license, consent, and acquiescence.

Plaintiff first moved to strike Defendant’s second affirmative defense–that “Plaintiff’s claims are barred by the equitable doctrines of laches, unclean hands, waiver and estoppel”–as a bare conclusory allegation unsupported by any factual basis. The court ordered that defense stricken, stating “[m]erely stringing together a long list of legal defenses…does not do the job of apprising opposing counsel and this Court of the predicate for the claimed defense–which is after all the goal of notice pleading.”

Plaintiff next moved to strike Defendant’s fifth affirmative defense–that Plaintiff did not mitigate its damages. Malibu Media argued that this defense was improper because it had elected to pursue only statutory, rather than actual, damages. The court agreed that a copyright plaintiff’s exclusive pursuit of statutory damages invalidates a failure-to-mitigate defense and struck this affirmative defense.

The court also struck Defendant’s seventh affirmative defense, in which Defendant argued that Plaintiff had failed to join an indispensable party. Defendant asserted that he had not engaged in any infringing activity and Plaintiff has not joined those who had. The court held that Defendant’s assertion that he had not engaged in any improper activity was not an affirmative defense but rather a mere denial of liability. It further held that Defendant was incorrect in asserting that joinder was necessary, holding that the court would be able to adjudicate the matter and “accord complete relief to Plaintiff regardless of whether any other allegedly infringing members were joined in the action.

Finally, Plaintiff asked that Defendant’s eighth affirmative defense as be struck as conclusory. Defendant had asserted that “Plaintiff’s claims are barred by Plaintiff’s implied license, consent, and acquiescence to Defendant because Plaintiff authorized use via Bit Torrent [sic].” The court held that Defendant’s Answer foreclosed the possibility of an implied license defense, as Defendant had denied downloading the copyrighted work. As such, Defendant could not also argue that he had downloaded the copyrighted work with a license.

Practice Tip #1: Generally speaking, motions to strike portions of pleadings are disfavored as they consume scarce judicial resources and may be used for dilatory purposes. Such motions will generally be denied unless the portion of the pleading at issue is prejudicial. When faced with a motion to strike affirmative defenses under Rule 12(f), Indiana federal courts apply a three-part test: (1) whether the matter is properly pled as an affirmative defense; (2) whether the affirmative defense complies with Federal Rules of Civil Procedure 8 and 9; and (3) whether the affirmative defense can withstand a Rule 12(b)(6) challenge. An affirmative defense that fails to meet any of these standards must be stricken.

Practice Tip #2: Defendant did not file a response to Malibu Media’s motion to strike Defendant’s affirmative defenses. For that reason alone, the court could have ruled on the motion summarily under the Northern District’s Local Rule 7-1(d)(4).

Practice Tip #3: Even under the liberal notice pleading standards of the Federal Rules, an affirmative defense must include either direct or inferential allegations as to all elements of the defense asserted. Bare bones conclusory allegations are insufficient. Moreover, laches, waiver, estoppel, and unclean hands are equitable defenses that must be pled with the specific elements required to establish the defense.

Practice Tip #4: An implied license, which Defendant argued as an affirmative defense, arises when (1) a person (the licensee) requests the creation of a work, (2) the creator (the licensor) makes that particular work and delivers it to the licensee who requested it, and (3) the licensor intends that the licensee-requestor copy and distribute his work.

Practice Tip #5: This opinion demonstrates one of the pitfalls of pleading in the alternative. Defendant appears to have tried to argue that he didn’t download the copyrighted material but that, if he had, it was with an implied license from Plaintiff. The court was not persuaded, however, as Defendant’s Answer had denied downloading the copyrighted material with BitTorrent. As a result, Defendant was not permitted to argue also that he downloaded the copyrighted material using BitTorrent but that he had an implied license to do so.

A well-known example of such alternative pleading was demonstrated by Richard Haynes: “Say you sue me because you say my dog bit you. Well, now this is my defense: My dog doesn’t bite. And second, in the alternative, my dog was tied up that night. And third, I don’t believe you really got bit. And fourth, I don’t have a dog.”

December 12, 2013

Redwall Sues ESG for Copyright Infringement

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Redwall Live Corp. (“Redwall”) has sued ESG Security, Inc. (“ESG”) in the Southern District of Indiana alleging copyright infringement, breach of contract and unjust enrichment. Both parties are located in Indianapolis, Indiana. The design at issue in this lawsuit has been registered by the U.S. Copyright Office under Registration No. VA 1-874-872.

Redwall is a consulting and design services firm engaged in the business of strategic branding and advertising. Its services include, but are not limited to, developing a clear message and a unique visual image as well as developing brand value for its clients.

Redwall states that it was engaged by ESG to reinvent ESG’s brand. As part of the design plan, Redwall indicates that it created a new logo design for ESG (the “Design”) to be utilized on ESG’s business cards, letterhead, brochures, and on ESG’s website. Redwall asserts that the agreement relating to the creation of the Design required that ESG’s business cards and letterhead be printed by Redwall and provided to ESG upon request.

In May 2013, Redwall registered the Design with the United States Copyright Office. A Certificate of Copyright Registration issued by the Register of Copyrights under Registration No. VA 1-874-872.

Redwall asserts that, despite its performance in full, ESG has failed to pay to Redwall the remaining balance for the work completed. It also claims that ESG has used and continues to use Redwall’s copyrighted Design on a variety of items including, but not limited to, its website and traffic barricades.

Copyright lawyers for Redwall filed a complaint against ESG asserting the following:

• Count I: Copyright Infringement
• Count II: Breach of Contract
• Count III: Unjust Enrichment

Redwall asks the court for findings that ESG committed copyright infringement, breached its contractual obligations to pay for services rendered and were unjustly enriched by such actions; temporary and permanent injunctions against using the Design; damages; impoundment of items containing the copyrighted Design; and attorneys’ fees and costs.

Practice Tip: Commissioning someone to create a copyrightable work does not necessarily mean the copyrights in the resulting work are owned by the commissioning party. The commissioning party will only own the work if it is a “work made for hire” under the Copyright Act. A “work made for hire” is usually limited to situations in which there is either an employer-employee relationship or where the work is a contribution to a “collective work.” Absent these circumstances, the commissioning party will own the work only if it is expressly assigned to it by the party preparing the work. A commissioning party should usually have a written agreement stating that the party preparing the work assigns its copyrights to the commissioning party.

December 11, 2013

Project Management Academy Sues Former Instructor for Misappropriation of Trade Secrets

By Overhauser Law Offices, LLC

Indianapolis, Indiana – eCity Market, Inc. d/b/a Project Management Academy (“PMA”) of Lafayette, Indiana has sued Vaughn Scott Burch (“Burch”) and Graywood Consulting Group, Inc. d/b/a Graywood Training Solutions of Leesburg, Virginia (collectively, “Graywood”) alleging infringement of its Project Management Professional examination and certification training. This suit was initially filed in Delaware County Circuit Court No. 4 but was removed to the Southern District of Indiana.

PMA offers preparation courses for the Project Management Institute’s Project Management Professional (“PMP”) examination and certification process. PMA states that Burch was one of its most-trusted PMP course instructors in the Washington, D.C. area and that, in connection with that position, PMA provided him with access to its proprietary manner of conducting its PMP-examination preparation courses. Moreover, PMA claims that it commissioned Burch and Graywood, Burch’s company, to draft and prepare as a “work for hire” certain training modules that would be for PMA’s exclusive use.

PMA alleges that Burch and Graywood are now teaching PMP courses that are in direct competition with PMA. It also contends that Defendants have stolen PMA’s confidential, proprietary and copyrighted materials to further their own course offerings. PMA further indicates that Defendants are violating the non-competition covenants by reproducing PMA’s copyrighted materials and are passing them off as their own. Finally, PMA contends that Defendants are attempting to engage in unfair competition with PMA by publishing student testimonials as if they were from Defendants’ students when, PMA states, the testimonials were actually given by the students of PMA.

An intellectual property lawyer for PMA filed a complaint alleging the following:

• Count I – Breach of Contract
• Count II – Breach of Duty of Loyalty
• Count III – Misappropriation of Trade Secrets
• Count IV – Theft/Conversion
• Count V – Tortious Interference with Prospective Business Relationship and Advantage
• Count VI – Lanham Act Violations
• Count VII – Unfair Competition

PMA asks for preliminary and permanent injunctions; an order requiring the return of all PMA materials; judgment in favor of PMA on the seven counts listed; damages, including treble and punitive damages; attorney’s fees and costs; and interest.

Practice Tip: There has also been a growing trend, perhaps fueled in part by states’ difficulties in paying increasing unemployment benefits, to limit via legislation the enforceability of non-compete agreements. Indiana considers non-compete agreements to be in restraint of trade and, thus, construes them narrowly. Among the states that have considered such limitations are Maryland, New Jersey, Minnesota, Massachusetts and Virginia. However, even in those cases where a non-compete agreement is found to be unenforceable, such a finding will not prevent a party from suing to protect its other rights, such as the intellectual property rights granted under copyright law.

December 10, 2013

BMI Sues Roadhouse Bar & Grill and Its Owner for Copyright Infringement

By Overhauser Law Offices, LLC

Hammond, Indiana – Broadcast Music, Inc. of New York, New York (“BMI”), along with the owners of the copyrights to various musical compositions, have filed a copyright infringement lawsuit in the Northern District of Indiana alleging that Stamper Properties, Inc. d/b/a Roadhouse Bar & Grill and R. Bruce Stamper of Valparaiso, Indiana infringed multiple copyrighted works which have been registered by the U.S. Copyright Office.

BMI is a “performing rights society” under 17 U.S.C. § 101 that operates on a non-profit-making basis and licenses the right to publicly perform copyrighted musical compositions on behalf of the copyright owners. The other Plaintiffs in this action own the copyrights to the ten compositions at issue in this lawsuit.

Stamper Properties is an Indiana corporation that operates Roadhouse Bar & Grill, an establishment which is asserted to publicly perform musical compositions and/or cause musical compositions to be publicly performed. BMI contends that Mr. Stamper has the right and ability to supervise the activities of Stamper Properties and that he has a direct financial interest in the company and the restaurant.

BMI and the other Plaintiffs, via this suit filed by a copyright lawyer, have asserted willful infringement of the ten copyrights-in-suit. They further claim that Defendants’ entire course of conduct, including the ongoing unauthorized public performances of the copyrighted works, has caused and is continuing to cause the Plaintiffs great and incalculable damage. They have asked the court for an injunction against further infringement. Plaintiffs also seek statutory damages pursuant to 17 U.S.C. §504(c) and costs, including reasonable attorneys’ fees.

Practice Tip:

Copyright protection is automatic upon creation of an original work, but registration of the copyright is required in order to bring an infringement suit.

The Copyright Act empowers a plaintiff to elect to receive an award of statutory damages between $750 and $30,000 per infringement in lieu of an award representing the plaintiffs’ actual damages and/or the defendants’ profits. In a case where the copyright owner proves that infringement was committed willfully, the court may increase the award of statutory damages to as much as $150,000 per infringed work. A finding of willful infringement will also support an award of attorney’s fees.

Furthermore, not only is the performer liable for infringement, but so is anyone who sponsors the performance. A corporate officer will be found jointly and severally liable with his corporation for copyright infringement if he (1) had the right and ability to supervise the infringing activity, and (2) has a direct financial interest in such activities.

November 6, 2013

Silver Streak Industries Sues Squire Boone Caverns for Copyright Infringement

By Overhauser Law Offices, LLC

New Albany, Indiana – Silver Streak Industries, LLC of Tempe, Arizona (“Silver Streak”) has filed a copyright infringement lawsuit in the Southern District of Indiana alleging that Squire Boone Caverns, Inc. of Floyd County, Indiana (“Squire Boone”) infringed the copyrighted work Ore Car display and game card which has been registered by the U.S. Copyright Office.

Silver Streak’s Ore Car display and game card (the “Work”), a whimsical representation of a mining ore car used to display polished stones and an accompanying brochure that lists the type of stones displayed, was copyrighted in 1995. Retail consumers may select stones for purchase. They are able to keep track of each type of stone collected with the brochure. Silver Streak generates revenue through the sales of copies of the Work to third parties retail establishments, such as travel centers, and through re-supply of the polished stones displayed with the Work.

Silver Streak alleges that, within the nine-month period prior to the filing of this action for copyright infringement, Squire Boone deliberately and willfully infringed Silver Streak’s copyright in the Work by producing an “Ore Car and Tumbled Stone” product, which it claims infringes the copyrighted Ore Car display.

Intellectual property attorneys for Silver Streak contend that Squire Boone offered its purportedly infringing product to one of Silver Streak’s existing customers at a retail-merchandise trade show in early 2013 at a deeply discounted price. It also asserts that Squire Boone has made at least one sale of the Ore Car to Six Flags, a potential customer of Silver Streak.

In its complaint, Silver Streak lists two causes of action:

• Count I: Copyright Infringement
• Count II: Tortious Interference with Contract

Silver Streak asks the court to impound and destroy all copies of the allegedly infringing work;
enjoin Squire Boone from further infringement; enjoin Squire Boone from unlawfully interfering with existing or prospective contracts between Silver Streak and its customers; order an accounting of profits and other damages that resulted from copyright infringement or interference with contract and prospective advantage; award to Silver Streak actual damages and profits under 17 U.S.C. § 504(a)(1) and § 504(b), or in the alternative, statutory damages for copyright infringement pursuant to 17 U.S.C. § 504 (a)(2) and § 504(c); award punitive damages; and award to Silver Streak its costs and expenses, including reasonable attorney’s fees.

Practice Tip: The Copyright Act empowers a plaintiff to elect to receive an award of statutory damages between $750 and $30,000 per infringement in lieu of an award representing the plaintiff’s actual damages and/or the defendant’s profits. In a case where the copyright owner proves that infringement was committed willfully (as was asserted here), the court may increase the award of statutory damages to as much as $150,000 per infringed work. A finding of willful infringement will also support an award of attorney’s fees.

October 25, 2013

Patrick Collins Twice Requests to Dismiss Lund; Lund Dismissed; Court Denies Patrick Collins’ Request to Reinstate

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Magistrate Judge Mark J. Dinsmore of the Southern District of Indiana has recommended that Plaintiff Patrick Collins, Inc.’s request to void the judgment entered as a result of Plaintiff’s two earlier requests for voluntary dismissal of Defendant Derrick Lund be denied.

[Full Disclosure – Overhauser Law Offices, the publisher of Indiana Intellectual Property Law News, represented the successful defendant in this case.]

Attorney Paul Nicoletti, copyright counsel for Plaintiff Patrick Collins, filed a complaint in June 2012 against thirteen “John Doe” Defendants identified only by their Internet Protocol addresses. Patrick Collins claimed that the Defendants had infringed upon its copyrighted films by downloading them using BitTorrent, a peer-to-peer file-sharing service. Defendant Derrick Lund was identified following a subpoena to his internet service provider.

Initially, Lund filed neither an answer nor any other pleading. Consequently, a default judgment was granted against him. What followed was a series of requests to the court by counsel for Patrick Collins that was characterized by the court as a “complicated procedural history.” On the day following the default judgment against Lund, Nicoletti filed a notice of voluntary dismissal against Lund, seeking to dismiss him with prejudice. On that same day, Nicoletti also filed an unopposed motion making the same request: to vacate the default judgment against Lund and to dismiss him with prejudice. Judge Pratt granted Patrick Collins’ motion the next day.

One day following Judge Pratt’s order, Patrick Collins filed a motion to withdraw the voluntary dismissal. The court granted this motion and reinstated Lund as an active Defendant. Lund filed a motion for reconsideration on Lund’s reinstatement. The court granted Lund’s motion and vacated its reinstatement order, finding that Lund had not been properly served.

In this current opinion, the court again considered Patrick Collins’ motion to withdraw its voluntary dismissal, asking “whether Plaintiff can just ‘withdraw’ this notice of dismissal.” The court answered, “[s]imply, the answer is no, as the dismissal [constituted] a final judgment.” Once the Plaintiff filed a notice of dismissal, “the case is closed and the plaintiff may not unilaterally withdraw or amend the notice.”

In its latest request to the court, Patrick Collins had neither cited Rule 60(b) of the Federal Rules of Civil Procedure nor given reasons under this Rule that the judgment should be subject to vacatur. Instead, Plaintiff had simply argued that “the parties had not reached a settlement agreement and therefore the dismissal with prejudice was unintentional.”

Nonetheless, the court sua sponte considered whether the final judgment should be set aside under Rule 60(b). Again, the court was not inclined to grant the Plaintiff’s plea to void an order that the Plaintiff itself had requested. While Rule 60(b) permits the Plaintiff to ask the court to vacate a dismissal, relief from a final judgment is an extraordinary measure and may only be granted in the exceptional circumstances.

Rule 60(b) permits a court to relive a party from a final judgment, order or proceeding for the following reasons:

1) mistake, inadvertence, surprise, or excusable neglect;
2) newly discovered evidence;
3) fraud, misrepresentation, or misconduct by an opposing party;
4) the judgment is void;
5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
6) any other reason that justifies relief.

The court noted that “Plaintiff twice filed requests with the Court – each filing being hours apart – to not only dismiss the action against Lund, but to dismiss it with prejudice. These filings show an unequivocal intent to dismiss Lund with prejudice.” Magistrate Judge Dinsmore concluded that Patrick Collins had not demonstrated “how its argument amounts to mistake, inadvertence, surprise, or excusable neglect” and recommended that Judge Pratt deny Plaintiff’s motion to withdraw voluntary dismissal.

Practice Tip #1: This case highlights the distinction between a dismissal “with prejudice” and “without prejudice.” The opinion focuses on whether Plaintiff Patrick Collins, Inc. could obtain “relief” from its own dismissal. Why would a litigant need “relief” from a court order granting its own motion? Because the dismissal was “with prejudice,” meaning that Patrick Collins was not allowed to simply file a second suit asserting the same claim. Because the dismissal was “with prejudice,” the defendant may be a considered a “prevailing party,” even though a judgment was never entered in either party’s favor. Nonetheless, because the Copyright Act allows a “prevailing party” to recover its attorney’s fees, the defendant can recover them.

Practice Tip #2: Patrick Collins, Inc. is represented by Paul Nicoletti, one of the country’s most notorious “copyright troll” attorneys. In addition to filing suits on behalf of Patrick Collins, Inc., he has also sued hundreds of defendants on behalf of copyright trolls Malibu Media, LLC and TCYK, LLC. (Search for these company names on this site to find articles about those other suits, or visit www.fightcopyrighttrolls.comor www.dietrolldie.com.)

October 24, 2013

BMI Asserts Copyright Infringement Against Blu

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Broadcast Music, Inc. of New York, New York (“BMI”) has filed a copyright infringement lawsuit in the Southern District of Indiana alleging that SC Entertainment, LLC d/b/a Blu and Shawn Cannon (“Cannon”), both of Indianapolis, Indiana, infringed the copyrighted works LAST NIGHT A D.J. SAVED MY LIFE, SHOW ME LOVE, and I’LL BE AROUND which have been registered by the U.S. Copyright Office. Five other Plaintiffs,Comart Music, EMI Virgin Songs, Inc. dba EMI Longitude Music, EMI Blackwood Music, Inc, Song A Tron Music, and Warner-Tamerlane Publishing Corporation, are also listed in the complaint.

Broadcast Music, Inc. (“BMI”) is a “performing rights society” under 17 U.S.C. § 101 that operates on a non-profit-making basis and licenses the right to publicly perform copyrighted musical works on behalf of the copyright owners of these works. The other Plaintiffs in this action are the copyright owners of the three compositions at issue in this lawsuit.
SC Entertainment is an Indiana limited liability company that operates Blu, an establishment which is asserted to publicly perform musical compositions and/or cause musical compositions to be publicly performed.

BMI asserts that Cannon is a member of SC Entertainment and that he has primary responsibility for the operation and management of the company and of Blu. Cannon also allegedly has the right and ability to supervise the activities of SC Entertainment and a direct financial interest in the company and in Blu.

BMI and the other Plaintiffs, via copyright counsel, have asserted willful copyright infringement of the three copyrights-in-suit in their complaint. They further claim that the Defendants’ entire course of conduct, including the ongoing unauthorized public performances of the copyrighted works, has caused and is continuing to cause the Plaintiffs great and incalculable damage.

Practice Tip:

The Copyright Act empowers a plaintiff to elect to receive an award of statutory damages between $750 and $30,000 per infringement in lieu of an award representing the plaintiffs’ actual damages and/or the defendants’ profits. In a case where the copyright owner proves that infringement was committed willfully, the court may increase the award of statutory damages to as much as $150,000 per infringed work. A finding of willful infringement will also support an award of attorney’s fees.

Furthermore, not only is the performer liable for infringement, but so is anyone who sponsors the performance. A corporate officer will be found jointly and severally liable with his corporation for copyright infringement if he (1) had the right and ability to supervise the infringing activity, and (2) has a direct financial interest in such activities.

October 18, 2013

Aiuppy Sues Jeepers Dollhouse Miniatures for Infringing Copyrighted Photos

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Laurance B. Aiuppy of Park County, Montana (“Aiuppy”) has sued Ufnowski Enterprises, LLC of Morgantown, Indiana (“Ufnowski”) d/b/a “Jeepers Dollhouse Miniatures” in the Southern District of Indiana alleging infringement of a copyrighted photograph or photographs which have been registered by the U.S. Copyright Office.

Plaintiff Aiuppy (also referred to in the complaint as “Plaintiff Auippy”) provides entertainment-related photojournalism goods and services featuring celebrities, which it licenses to online and print publications.

Defendant Ufnowski, which offers miniatures, dollhouses, and related accessories, is asserted to own and operate the website http://www.jeepersminiatures.com and to have copied, modified and displayed Aiuppy’s photograph or photographs on the Jeepers Dollhouse Miniatures website without Aiuppy’s permission. It is further contended that this conduct was knowing and in violation of U.S. copyright laws. The complaint also asserts that Ufnowski received a financial benefit directly attributable to the alleged infringement(s), and claims that as a result of the display of the photographs, the website had increased traffic and, in turn, realized an increase in their advertising revenues and/or merchandise sales.

The complaint, filed by the intellectual property counsel for Aiuppy, states the following claims:

· First Count: Direct Copyright Infringement, 17 U.S.C. § 501 et seq.

· Second Count: Contributory Copyright Infringement

· Third Count: Vicarious Copyright Infringement

· Fourth Count: Inducement of Copyright Infringement

· Fifth Count: Injunction Pursuant to 17 U.S.C. § 502

· Sixth Count: Attorney Fees and Costs Pursuant to 17 U.S.C. § 505

Aiuppy asks for a judgment that Ufnowski has infringed directly, contributorily and/or vicariously; for a judgment that Ufnowski has induced others to violate Aiuppy’s copyrighted photographs(s); for statutory damages against Ufnowski of $150,000 per infringement, or actual damages and Ufnowski’s profits; for a permanent injunction pursuant to 17 U.S.C. § 502; and for attorneys’ fees and costs.

Practice Tip: As part of its complaint, Aiuppy has asserted that Ufnowski had “red flag” knowledge under 17 U.S.C. §512(c)(1)(A)(i) (sic) of the alleged infringements and yet failed to remove the allegedly infringing photographs. The “red flag” provision, codified as 17 U.S.C. §512(c)(1)(A)(ii), is part of the Digital Millennium Copyright Act (“DMCA”).

Title II of the DMCA, separately titled the “Online Copyright Infringement Liability Limitation Act” (“OCILLA”), was designed to clarify the liability faced by service providers who transmit potentially infringing material over their networks.

But rather than embarking upon a wholesale clarification of various copyright doctrines, Congress elected to leave current law in its evolving state and, instead, to create a series of “safe harbors” for certain common activities of service providers. To that end, under 17 U.S.C. § 512(a)-(d), OCILLA established a series of four “safe harbors” that allow qualifying service providers to limit their liability for claims of copyright infringement based on (a) transitory digital network communications, (b) system caching, (c) information residing on systems or networks at [the] direction of users, and (d) information location tools.

To qualify for protection under any of the safe harbors, a party must meet a set of threshold criteria. First, the party must in fact be a “service provider,” defined, in pertinent part, as “a provider of online services or network access, or the operator of facilities therefor.” 17 U.S.C. § 512(k)(1)(B). A party that qualifies as a service provider must also satisfy certain “conditions of eligibility,” including the adoption and reasonable implementation of a “repeat infringer” policy that “provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network.” Id. § 512(i)(1)(A). In addition, a qualifying service provider must accommodate “standard technical measures” that are “used by copyright owners to identify or protect copyrighted works.” Id. § 512(i)(1)(B), (i)(2).

Beyond the threshold criteria, a service provider must satisfy the requirements of a particular safe harbor. In this case, the safe harbor presumably at issue is § 512(c), which covers infringement claims that arise “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.” The § 512(c) safe harbor will apply only if 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 in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

It is in § 512(c)(1)(A)(ii) that the so-called “red flag” knowledge exception to the safe harbor provision for service providers is found.

As the safe harbor acts as an affirmative defense, and the “red flag” knowledge, in turn, is available to defeat that defense, it is interesting that this seems to have been included in the complaint as part of the prima facie case against Ufnowski. Moreover, it will be interesting to see what use Plaintiff’s copyright attorney makes of this assertion, given that Ufnowski appears from the complaint to be a merchant of dollhouse miniatures, not an Internet service provider.

October 17, 2013

Another Fourteen Anonymous Defendants Accused of Infringing Robert Redford Movie

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Copyright lawyer Paul Nicoletti has sued fourteen additional Doe Defendants, all allegedly located in Indiana, in the Southern District of Indiana on behalf of TCYK, LLC of Los Angeles, California (“TCYK”) alleging infringement of the copyrighted movie “The Company You Keep,” which has been registered by the U.S. Copyright Office. The movie stars Robert Redford, Susan Sarandon, Shia LaBeouf, Anna Kendrick, Julie Christie and Nick Nolte. It was directed by Robert Redford.

TCYK alleges that the infringing transfer and copying of this movie, which was released on DVD on August 13, 2013, was accomplished by Defendants using BitTorrent, a peer-to-peer file-sharing protocol. Specifically, the Doe Defendants are accused of deliberately participating in a peer-to-peer “swarm,” and illegally reproducing and/or distributing portions of the movie in digital form with other Defendants. TCYK indicates in its complaint that it used geolocation technology to determine that the Doe Defendants were located in Indiana.

The complaint lists a single count: copyright infringement. The intellectual property attorney for Plaintiff TCYK asks the court for permanent injunctions prohibiting infringement of Plaintiff’s movie by all Doe Defendants; the destruction of all copies of infringing works in any Defendant’s control; judgment that Defendants have willfully infringed Plaintiff’s copyrighted work; judgment that Defendants have otherwise injured the business reputation and business of Plaintiffs; for actual damages or statutory damages; and for attorneys’ fees and litigation expenses.

Practice Tip:

Under 17 U.S.C. § 504(c)(1), a copyright owner may elect actual or statutory damages. Statutory damages range from a sum of not less than $750 to not more than $30,000 per infringed work. The determination of the exact amount is left to the discretion of the court.

If a defendant fails to appear, the court will take as true all of the plaintiff’s well-pled allegations. That typically leads to a default judgment against the defendant. There is a significant disparity in the dollar amounts awarded in default judgments against defendants in copyright infringement cases involving BitTorrent. In two separate cases, Judge William T. Lawrence recently ordered two defendants who failed to appear to pay $20,000 in statutory damages for copyright infringement that was deemed to have been admitted by the defendants’ failure to defend against the allegations. See here and here. However, in a similar case, Judge Jane Magnus-Stinson ordered an entry of default judgment against a defendant for $151,425. Judge Sarah Evans Barker has issued several default judgments for $36,000 plus attorneys’ fees against BitTorrent defendants who failed to appear.

October 11, 2013

Copyright Infringement Using BitTorrent Asserted, Judgment of $38,645 Granted Against Defendant Who Failed to Appear

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Judge Sarah Evans Barker of the Southern District of Indiana has entered a default judgment for copyright infringement in favor of Malibu Media, LLC of Los Angeles, California. The copyrighted works at issue had been registered by the U.S. Copyright Office.

In June 2012, copyright attorney Paul Nicoletti filed another copyright infringement lawsuit in the Southern District of Indiana on behalf of serial plaintiff Malibu Media. The lawsuit listed multiple defendants, including William Meeks Sr. of Decatur, Indiana. In its complaint, Malibu Media alleged that Meeks had infringed 16 copyrighted works. Specifically, Malibu Media contended that Meeks and others directly and contributorily infringed its copyrighted works when they downloaded and disseminated all or a portion of the works using BitTorrent, a peer-to-peer file-sharing protocol. The initial complaint was served upon 23 defendants. Discussed in this opinion are the allegations, findings and judgments against Meeks only.

Judge Barker held that, as a result of his failure to defend against Malibu Media’s assertions, Meeks was deemed to have admitted to willful copyright infringement. Judge Barker also held that, without an injunction, Meeks’ use of the BitTorrent protocol would continue to cause Malibu Media irreparable injury, stating that there existed a “threat of continued violations” of Malibu Media’s exclusive rights to reproduce, distribute, perform and display the 16 copyrighted works.

The court entered a permanent injunction against Meeks after finding that such an injunction promoted creativity and individual effort and was therefore in the public interest. Meeks was also ordered to pay to Malibu Media $36,000.00 in statutory damages, as authorized under 17 U.S.C. § 504(c)(1), and $2,645.00 for attorneys’ fees and costs, as authorized under 17 U.S.C. § 505, for a total of $38,645.00. He was further ordered to pay post-judgment interest accruing under 28 U.S.C. § 1961 as of the date of the default judgment until the date of its satisfaction. Finally, Meeks was ordered to destroy all copies of Malibu Media’s works that he had downloaded onto any computer hard drive without proper authorization, including all copies that he had in his possession, custody or control.

Practice Tip #1:

Under 17 U.S.C. § 504(c)(1), a copyright owner may elect actual or statutory damages. Statutory damages range from a sum of not less than $750 to not more than $30,000 per infringed work. The determination of the exact amount is left to the discretion of the court.

There is a significant disparity in the dollar amount awarded in default judgments against defendants in copyright infringement cases involving BitTorrent. In two separate cases, Judge William T. Lawrence recently ordered two defendants who failed to appear to pay $20,000 in statutory damages for copyright infringement that was deemed to have been admitted by the defendants’ failure to defend against the allegations. See here and here. However, in a similar case, Judge Jane Magnus-Stinson ordered an entry of default judgment against a defendant for $151,425. Judge Barker has issued several prior default judgments in this case, each for $36,000 plus attorneys’ fees.

Practice Tip #2:

Deciding to simply ignore a complaint, as William Meeks Sr. 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.

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