Arista Records LLC et al v. Lime Wire LLC et al

Filing 176

MEMORANDUM OF LAW in Opposition re: 140 MOTION to Strike Plaintiffs' Exhibits (Settlement Related and Pre-August 2003 Objections). ("Plaintiffs' Memorandum Of Law In Opposition To Defendants' Settlement Related And Pre-August 2003 Objections To Plaintiffs' Exhibits To Their Motion For Partial Summary Judgment And Defendants' Motion To Strike Plaintiffs' Exhibits"). Document filed by Capitol Records, Inc., Elektra Entertainment Group, Inc., Interscope Records, Laface Records LLC, Motown Record Company, L.P., Arista Records LLC, Priority Records LLC, Sony BMG Music Entertainment, UMG Recordings, Inc., Virgin Records America, Inc., Warner Bros. Records Inc., Atlantic Recording Corporation, BMG Music. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Forrest, Katherine)

UNITED SOUTHERN STATES DISTRICT OF COURT NEW YORK DISTRICT ARISTA RECORDING LLC; ATLANTIC CAPITOL MUSIC; RECORDS, INC.; ELEKTRA ENTERTAINMENT GROUP INC.; INTERSCOPE LAFACE RECORDS RECORD RECORDS; LLC; MOTOWN PRIORITY RECORDS SONY BMG MUSIC COMPANY, L.P.; LLC; UMG ENTERTAINMENT; RECORDINGS, INC.; VIRGIN RECORDS AMERICA, INC.; and WARNER BROS. RECORDS INC., RECORDS CORPORATION; BMG 06 Civ. 5936 (GEL) Plaintiffs, Vo ECF CASE LIME WIRE LLC; LIME GROUP WIRE LLC; MARK GORTON; LIMITED GREG and BILDSON; PARTNERSHIP, M.J.G. LIME FAMILY Defendants. PLAINTIFFS' SETTLEMENT EXHIBITS AND MEMORANDUM RELATED TO THEIR AND OF LAW IN OPPOSITION 2003 OBJECTIONS SUMMARY PLAINTIFFS' TO DEFENDANTS' TO PLAINTIFFS' PRE-AUGUST FOR TO MOTION MOTION PARTIAL STRIKE JUDGMENT EXHIBITS DEFENDANTS' Katherine Teena-Ann Joanne B. Forrest V. Sankoorikal M. Gentile SWAINE Avenue 10019 & MOORE LLP CRAVATH, 825 New Eighth York, NY (212) 474-1000 LLC; Attorneys for Plaintiffs Arista Records Atlantic BMG Music; Recording Corporation; Capitol Records LLC," Elektra Entertainment Group Inc.; Interscope Records; LaFace Records LLC; Motown Records Record Company, L.P.; BMG Music Priority November LLC; UMG Sony and Entertainment; Recordings, Inc.; Warner Bros. Virgin 7, 2008 Records Records America, Inc. Inc.; TABLE OF CONTENTS 1 3 Preliminary Argument I° Statement .......................................................................................................... ............................................................................................................................. EVIDENCE NOT A° THAT PRE-DATES ................................................................................................. AUGUST 4, 2003 AND GROKSTER IS 3 PRECLUDED Defendants' Now Seek the to Waived Exclude of Their Objections by Using the Evidence They 3 ................................................................................... B° Neither Limitations, Nor the "ContinuingInfringement Doctrine", Nor the Chevron Exception to the Principal of on Statute Retroactivity Admissibility that Are Rules of Evidence ....................................................................... and Thus Have No Bearing 4 of Evidence the C° Evidence Because Such Pre-dates Grokster Decision and Claim is Admissible Even for If It Does Grokster Evidence Applies Retroactively is Relevant to Not, 7 Plaintiffs' Contributory Infringement II. RULE 408 DOES ................................................................................................. NOT RENDER THE PROFFERED EVIDENCE 11 INADMISSIBLE No Rule 408 ................................................................................................... Does it Does Not Not Bar Admission of the Evidence "Conduct or in Exhibit Made A in .............. Because Constitute Statements R. Evid. Compromise Negotiations" ° Pursuant Seek to to Fed. 408(a)(2) 12 Evidence Because Kind Other Defendants It Has To Exclude Do with Is Admissible of Nothing Negotiations Any 12 ................................................................................................ ° Evidence that Defendants It Relates Efforts to to Seek to Exclude not Is Admissible Negotiations, B° The and Defendants Because or Business, with Settlement, Law ..................... to Comply 408 In the 14 Have to Waived the Any Rule Same Facts Continuing Invoke Objection By Invoking Support of Their Own 22 25 Claims Conclusion ........................................................................................................ ......................................................................................................................... Table of Authorities Page(s) Cases Allen-Myland, vacated Am. Dream Jan. Am. Soc on Inc. other v. Corp., 693 F. Supp. 262 (E.D. Pa. 1988), grounds, 33 F.3d 194 (3d Cir. 1994) ................................................ Int 'l Bus. Mach. 22 Enter., Inc. v. Trump, No. 95 Civ. 0625, 1997 WL 3275 (S.D.N.Y. 6 3, 1997) ................................................................................................................... & Publishers 'y of Composers, Authors 912 F.2d 563 (2d Cir. 1990) Inc., Inc. v. v. Showtime/The Movie Channel, 24 ................................................................................ Big 0 Tire Dealers, Cir. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th 16 1977) v. ..................................................................................................................... Blu-J, Inc. Kemper v. C.P.A. Group, 916 F.2d 47 637 (1 lth Cir. Cir. 1990) ....................................... ................................ 20 Capobianco Chevron Oil City of New v. York, 422 F.3d 97 Cir. (2d 2005) 4, 22 3, 8, 9 6 Co. Huson, 404 U.S. 140 F.3d 433 (1971) 1998) ........................................................... Cooper Deere Ditto v. Parsky, v. (2d ................................................................... & Co. IntTHarvester 510 F.3d Co., 710 F.2d 1070 1551 (Fed. ............................................................... Cir. 1983) ................................ 16 8 v. McCurdy, v. (9th 936 Cir. F.2d 2007) 1131 Eisenberg Gero v. Univ. of NewMexieo, 535 F. (10th Cir. 1991) ................................. 22 6 8 22 8 5 8 The Seven-Up Co., Supp. 509 W.D. 55 212 (E.D.N.Y. 86 1982) .......................................... Harper In re v. Virginia Dep "t of Taxation, 333 B.R. 261 U.S. Pa. (1993) ................................................. Groggel, Co. v. (Bankr. 222 U.S. 2005) ....................................................... Kalem Harper Bros., (1911) (2d Cir. .................................................................. Kregos Margo v. Associated Press, 3 F.3d 55 656 Cir. 1993) ....................................................... v. Weiss, 213 F.3d v. (2d 2000) ........................................................................ Mendelovitz Adolph Coors Co., 693 F.2d v. 570 (5th Cir. 1982) ...................................... 16 Metro-Goldwyn-Mayer 2004) Metro-Goldwyn-Mayer Studios, Inc. Grokster, Ltd., 380 F.3d 1154 (9th Cir. 17 ............................................................................................................................ Studios, Inc. v. Grokster, ii Ltd., 543 U.S. 1032 (2004) ................. 18 Metro-Goldwyn-Mayer Cal. Studios, lnc. v. Grokster, Ltd., 454 F. Supp. 2d 966 (C.D. 7, 8 2006) ................................................................................................................... Metro-Goldwyn-Mayer RamadaDev. Co. Prods. lnt v. Studios, lnc. v. Grokster, 1097 Ltd., 545 U.S. Cir. Unit Cir. B 913 (2005) ........... passim 20, 21 12 Rauch, 644 F.2d v. (5th 1234 1981) ............................ Raybestos Rondor Co. 'l Younger, 54 F.3d (7th 1995) ....................................... Music Cal. v. TVT Records LLC, No. CV 05-2909, 2006 WL 5105272 12 (C.D. S. R Sadhu Aug. 21, 2006) H.W. ............................................................................................ 'y. Co. v. Vaughn, Trust 577 359 F.2d 424 (5th Cir. 1966) ................................................ 22 Commc Singh Hamdad 503 F. Supp. 2d lnc. v. v. Ajit Newspaper Adver., Mktg. (E.D.N.Y. 2007) ........................................................................... and "ns, lnc., 5 SirSpeedy, L &P Graphics, lnc., 957 F.2d 1033 464 (2d U.S. Cir. 417 1992) (1984) ......................... 5, 6 9 5 16 16 Sony Corp. of Am. Stone Union Union United United Universal A.L.R. Watson v. v. Universal 1043 City Studios, lnc., (2d Cir. ............................ Williams, 970 F.2d Carbide Carbide States States 1992) ................................................................. Corp. Corp. v. v. MontellN. Montell 509 365 N. F.2d F. V., 28 F. Supp. 2d 833 (S.D.N.Y. 1998) K, 944 F. Supp. 1119 (S.D.N.Y. 1996) 793 .................... v. ..................... Ashdown, Saneaux, Australia 2005 R.R. (5th 2d 493 Cir. 1975) ................................................. 5, 6 ........................................ v. Supp. v. (S.D.N.Y. License 2005) 6 Music 1 Pty. Ltd. WL Sharman Holdings Ltd. (2005) 220 18 (Austl.), lsland 2119310 .......................................................................... v. Long v. Co., 500 F. Supp. 2d 266 (S.D.N.Y. 2007) 381 F. ....................... 4, 22 ...................... Wechsler HuntHealth Sys., Ltd., Supp. 2d 135 (S.D.N.Y. 2003) 12 Statutes Fed. & Rules 408 R. Evid. ....................................................................................................... passim °°° 111 Other Jack Authorities B. Weinstein and Margaret A. Berger, Weinstein's Federal Evidence (2d ed. 24 1986) ............................................................................................................................ iv Plaintiffs Arista Records LLC, Atlantic Entertainment Recording Corporation, Group Inc., Interscope BMG Music, Capitol Records, LaFace Records Inc., Elektra Record Records, LLC, Motown Company, L.P., Priority Records Records LLC, Sony Inc., and of Law in BMG Music Entertainment, Records Inc. UMG Recordings, Inc., Virgin submit America, Memorandum Warner Bros. (collectively, "plaintiffs") Settlement Related and this Opposition Plaintiffs' Motion to to Defendants' Pre-August 2003 Objections and Defendants' to Exhibits to Their Motion for Partial Summary Judgment reasons Strike Plaintiffs' and their Exhibits. motion For the that follow, defendants' objections should be overruled denied. Preliminary In addition to Statement of law in their two memoranda opposition submitted to plaintiffs' three single motion for partial 1 summary These judgment, motions defendants have separate of "evidentiary" documents and the two motions. challenge pages the admissibility testimony three of dozens defendants themselves produced, of 2 of their own witnesses reports of plaintiffs' expert witnesses. All motions are meritless. 1 Defendant's Ph.D Exhibits and other two motions are Defendants' from Motion the to Exclude Plaintiffs' of Ellis Proffered Expert Summary Judgment and Richard and P. Evidence Horowitz, Plaintiffs' Waterman, to Ph.D., and Defendants' to Depositions and Reports Objections to for Partial and Deposition Excerpts Motion Strike Their Motion Exhibits Summary Judgment 2 Defendants' 56.1 Plaintiffs' Deposition Excerpts. to Plaintiffs' B. to Statement was supported by Volumes 2008 I to VII the Declaration of Katherine Forrest, dated defendants' Volumes July 18, two were oppositions supported by September 26, 2008 56.1 56.1 to VIII ("Forrest 7/18/08 Decl."). Plaintiffs' facts thereto, Statements, as well as the additional X to the Declaration B. Forrest, dated of Katherine Plaintiffs two statement, their included memorandum motions. thereto; the of law Documents ("Forrest Decl."). oppositions to defendants supporting exhibits; both 9/26/08 in support of their cited motion herein hereby incorporate s here facts their 56.1 and their additional and their Forrest and in declarations; (or excerpts) opposition to defendants ("Ex. __") are consecutively to numbered in Defendants' defendants objections plaintiffs' on this motion fall into two categories. First, they pre-date August 4, object plus decision to object to 83 of exhibits on the grounds and that 2003, the beginning of the applicable limitations of the exhibits to which period, also 84 exhibits (all defendants the object as to pre-August 4, June 2003 one additional exhibit) because they pre-date lnc. Supreme Court's 27, 2005 913 in Metro- Goldwyn-Mayer Studios, objections these are v. Grokster, Ltd., 545 U.S. (2005) ("Grokster"). waived any These both waived and groundless. Defendants of their motions have objections and in their on grounds because to in support for summary cite to judgment and opposition 2003 and plaintiffs' motion, documents. defendants themselves rely on pre-August 4, exhibits pre-Grokster exhibits (See infra § I.A.) Even were In some cases, defendants' are the very to which they object. (1) nor they of not waived, however, these nor objections are groundless because neither the statute limitations, to the the "continuing infringement doctrine" retroactivity evidence is a the Chevron not exception provide has a principal of rule of evidence and, thus, do basis for excluding effect that (see infra § I.B); and (2) the Grokster decision retroactive (see infra § i.c). Second, defendants admission of 33 object of which to certain deposition testimony excerpts produced to and the documents, in most were plaintiffs over a year ago, and marked as exhibits depositions without objection by defendants, on the grounds Volumes I-X referenced above, or XI to XII to the Declaration of Katherine B. Forrest, ("Forrest 11/7/08 Decl."), submitted herewith. Excerpts from Tr. __"), reports of the parties' experts (" deposition testimony (" Report ") and Declarations Decl. __") cited herein are (" arranged alphabetically by the November dated 7, 2008 witness Exhibits or expert's last name and are contained in Volume XI and Volume XIII of the to the Forrest 11/7/08 Declaration. that they are settlement related. In fact, these documents relate to contemplated sale of Lime business negotiations and transactions with non-parties involving subscribers of LimeWire the possible Wire LLC, the conversion into paying software users engaged in infringement reduce or of digital music files, and the implementation of music files. a filtering capability As to prevent the exchange of such unlicensed Rule of Evidence 408 explained below, of this Federal ("Rule 408") not does not bar admission or evidence, in as defendants argue, because it does constitute "conduct statements made compromise negotiations", defendants themselves have waived Fed. R. Evid. 408(a)(2) (see infra § II.A); inter but even if it did, their objections by, alia, using this evidence affirmatively (see infra § II.B). Argument I. EVIDENCE NOT THAT PRE-DATES AUGUST 4, 2003 AND GROKSTER IS PRECLUDED Defendants claim that evidence pre-dating August 4, be excluded as 2003 and the Supreme statute Court's decision in Grokster should beyond the applicable have of limitations and Grokster's to the prospective application. First, they now defendants waived their objections evidence evidence defense. or seek to exclude by affirmatively using no that very same in their Second, defendants to provide authority in Chevron Oil applying Co. v. statutes of limitations the exception evidence. retroactivity described do not Huson, 404 U.S. 97 (1971), to Third, defendants to meet the elements required A. to invoke Chevron's exception Their retroactivity. by Using the Evidence Defendants' Now Seek to Waived Exclude. to Obieetions They Defendants object 84 of plaintiffs' exhibits, listed a on Exhibit B to defendants' memorandum ("Exhibit B"), copy 3 of which is attached hereto, both on the grounds decision. that they are dated before August 4, both 2003 and before the June 27, 2005 motion Grokster But defendants' 3 own exhibits in opposition motions to plaintiffs' for 4 partial also summary judgment and in support of their the Grokster own for summary judgment pre-date August 4, are 2003 and decision. Indeed, 18 of defendants' with these motions. 5 exhibits the exact same exhibits to which they on now object Thus, party cannot defendants' objection the admission to these exhibits both grounds on are waived since a object to of evidence that it invokes its own behalf. See, e.g., any Capobianco objections Watson v. v. City of New York, 422 F.3d of the 47, 55 (2d Cir. 2005) ("defendants waived to the admissibility reports by offering them themselves"); see also LonglslandR.R. were Co., 500 F. Supp. 2d 266, 269 n.5 (S.D.N.Y. 2007). waived, as Even if their objections B. not shown below, defendants' the to objections are meritless. Neither the Statute Nor Doctrine", Admissibility With Nor Limitations· the Chevron Exception Rules of Evidence of "Continuing-Infringement the Principal Have No of Retroactivity Are and Thus Bearing on of Evidence. to respect the documents dated prior to August 4, 2003, defendants years, all evidence dated argue that because applicable limitations period is three 1, 2, 3-5, 7, 9-14, 15, 16, 18, 19, 20, 21, 23-25, 29-31, 33, 34-36, 47, 59-62, (all pre-date August 4, 2003 and Grokster); ld. Exs. 37, 9-14, 16-18, 21-31, 32, 34-42, 50-56, 58-62, 64, 67, 73, 75, 78-79 (which pre-date Exs. 1, 2, 15, 19, 20, 32 and Grokster). Although it is not obvious from the face ofDefs.' 64 of which 3 See Baker 9/26/08 Defs. Exs. they ¶¶ 15-21.) 47 that 4 are pre-2003 and pre-Grokster, they plainly are. (See Forrest 11/7/08 Decl. See Baker 7/18/08 and Grokster); 5 Id. Exs. Baker Pls. 1, 27, 29, 30-31 (all of which pre-date August 4, 2003 1-4, 8-10, 16, 18-23, 25, 27-32 (which pre-date Grokster). Defs. Exs. 9/26/08 Exs. Compare 59, 60, 61, 209, 207, 208, 236, respectively. 62 with 1, 2, 4, 5, 6, 14, 18, 23, 24, 29, 33, 34, 35, 58, 52, 3, 95, 68, 97, 76, 37, 251,195, 233,222, 221,243, 21, Defs. Exs. 4 more than three years before the filing because of the lawsuit is "irrelevant". (See Defs.' not Br. at 5- 8.) That specious argument not fails statutes of limitations are evidentiary commencement rules-- i.e., they "do[] of the limitations operate to bar the that use of a document that predates the period but is relevant to events during the period". 1992); ef United Sir Speedy, v. Inc. v. L&P Graphics, Inc., 509 F.2d 957 F.2d 1033, 1038 (2d Cir. States Ashdown, not a 793,798 (5th Cir. 1975) ("[t]he it "has no statute of limitations is a defense..., rule of evidence"; The accordingly, bearing on the admissibility make of evidence")). reference "continuing-infringement Br. at doctrine" to which 6 defendants make (see Defs.' 7-8) similarly even has no application. to the Rather than attempt to argue contrary to -- that statutes of limitations evidence or the "continuing infringement try to doctrine" apply exclude background exhibits -- defendants 2003 to convince the Court that plaintiffs outside offer pre-dating statute August 4, establish a claim based which upon activity is not of the applicable do not of limitations (see Defs.' Br. at 6-7), simply the true. Plaintiffs seek to recover for conduct offer that occurred dated prior prior to to applicable to limitations period. Rather, of plaintiffs evidence August 4, 2003 show the evolution admissibility bar by "continuing-infringement doctrine" to copyright cases to precludes plaintiffs' use ofpre-August 4, 2003 evidence intent. (See Defs.' Br. at 7-8.) The Second Circuit's prove rejection of the for infringement that begins "continuing-infringement doctrine", which permits recovery the limitations before into it, means that "[r]ecovery is allowed period but continues only for those within three years of suit". acts Stone v. Williams, 970 F.2d 1043, occurring 1049 (2d Cir. 1992) (emphasis added); accord Sadhu Singh Hamdad Trust v. Ajit and Commc 503 F. Supp. 2d 577, 585 (E.D.N.Y. 'ns, Inc., Newspaper Adver., Mktg. Press, 3 F.3d 656, 662 (2d Cir. 1993). Like the 2007); see also Kregos v. Associated of limitation it was intended the doctrine its absence statutes to expand, neither nor in any way to the admissibility of evidence. relates a 6 Defendants spuriously equate Second Circuit's contending that the limitation recovery refusal to apply the with an defendants' encouragement is consistent business and and the basis for and development the of defendants' LimeWire intent, software. 7 knowledge Second of infringement using view, which may not recover Such use with 8 the Circuit's defendants do not dispute (see occurred Defs.' Br. at 7 n.2.), that "although plaintiffs of such for conduct be admissible that prior on to the limitations motives period, evidence which acts conduct may to shed light the with within the limitations 957 F.2d at period were performed". Cooper, the 140 F.3d at 441 (citing Sir Speedy, Inc., object 1038). Accordingly, because to evidence to which defendants intent to is provided establish the evolution of defendants' state of mind and induce copyright infiingement recover, has as -- and not to prove infringing believe -- acts for which plaintiffs seek to defendants would have this Court the three-year limitations Similarly, period with no application. to respect documents dated prior to the Supreme Court's of the decision in Grokster, defendants nowhere explain how the general principles of evidence only authority discussing the exclusion is, therefore, that any commercial inapposite. In Gero, plaintiff, an artist, unable to produce evidence within the applicable limitations produced by defendants, a soda company, period had affidavits of witnesses who claimed to have infringed his work, sought to introduce viewed a commercial work outside the applicable statute of infringing plaintiff's limitations. See Gero v. The Seven-Up Co., 535 F. Supp. 212, 214-17 (E.D.N.Y. 1982). The Gero court refused those affidavits, which to consider plaintiff proffered as support for a claim based of the statute on activity outside of limitations. Id. at 217 n.3. 8 7 Defendants' Although defendants to the context contend that the relevance and to ofpre-limitations claims, there and claims the period is no evidence rule of is limited of Second employment Circuit have discrimination of logic or law courts that limits its "relevance" Indeed, relevant. in the or employment (and elsewhere) adjudicating also treated evidence claims discrimination. unrelated to as employment discrimination Sir fiduciary duty); F.2d WL 365 Cooper v. Parsky, 140 Speedy, lnc., 957 F.2d at 798 (criminal fraud); Am. Dream Enter., lnc. v. Trump, No. 95 3275, at "1-2 (S.D.N.Y. Jan. 3, 1997) (breach of contract); United F. Supp. 2d 493,505 (S.D.N.Y. 2005) (criminal conspiracy). See, e.g., period F.3d 433,440-41 (2d Cir. 1998) (breach of at 1038 (breach of contract); Ashdown, 509 Civ. States outside limitations 0625, 1997 v. Saneaux, retroactive application Even of judicial decisions Court would impact those of evidentiary Grokster should not considerations. if this agreed with defendants' view that have retroactive application, defendants with the relief before that cite no authority as that would enable the Court to provide conduct them sought -- to exclude irrelevant all evidence relating to occurring decision. Defendants' the failure to provide authority applying of statutes of limitations or Chevron's exception moot to the principle evidence retroactivity to evidence renders those arguments C. and plaintiffs' that admitted. Evidence Grokster Evidence Pre-dates the Grokster and Decision Even Claim is Admissible Because Such Applies Retroactively to If It Does for Not· is Relevant Plaintiffs' Contributory Infringement. On remand, the district 913 court applied summary the Supreme on Court's ruling theory of in Grokster, inducement Court's 545 U.S. (2005) based and granted evidence judgment the of copyright See upon that, necessarily, pre-dated the Supreme lne. v. decision. generally Metro-Goldwyn-Mayer Studios, 454 F. Grokster, so, Ltd. ("Grokster (Remand)"), court Supp. 2d 966 (C.D. it to Cal. 2006). its June In doing the district noted that the Supreme ld. Court intended apply the 27, 2005 Court had ruling hinted to the remaining defendants, summary at 992 (observing for that "Supreme that judgment should Court that be granted Plaintiffs"). Despite decision to be this clear indication by and to the Supreme the very it intended its Grokster applied retroactively, that that decision should defendants to in that case, defendants at here contend not be applied them. (See Defs.' Br. 8-10.) give do any reason Defendants from the Grokster defendants. do not that they should be treated differently that a Nor they dispute the well-established principle federal court's ruling to "must be given full retroactive effect in all cases still open on direct review and as all events, regardless Margo v. of whether such events predate or postdate [the] announcement of the rule". Weiss, 213 F.3d 509 U.S. 55, 60 (2d Cir. 2000) (quoting Harper v. Virginia Dep 't of Taxation, the 86, 97 (1993)) (emphasis added). intentions in Grokster and argue Instead, defendants to simply ignore that Grokster Court's (contrary those intentions) established a new theory Oil of secondary liability v. precluding its retroactive application at under Chevron Co. Huson, 404 U.S. Chevron test 97 (1971). (See where to Defs.' Br. 9-10.) Defendants are wrong. whether The only applies be the Supreme Court "reserve[s] Harper, 509 the question at 97. 9 its holding happen that should applied the parties before as it". U.S. That did not in Grokster. Instead, had described "hinted" above, the district as court on remand believed the Supreme Supp. Court actually to its preferred analysis result. Grokster (Remand), 454 F. 2d at 992. Accordingly, Even Chevron's is inapplicable. defendants cannot were Chevron applicable, established a establish its requirements: application Grokster; 404 U.S. (1) that Grokster new rule of law; (2) that retrospective of the rule established in of the decision and will retard the purpose will and effect (3) that retroactive application produce substantial inequity. Chevron, at 106-07. First, Grokster did not create a "new" theory is a of inducement. As the Supreme Court recognized 545 U.S. in Grokster, inducement principle "recognized Harper Bros., 222 U.S. in every part of the law". at 935 (quotingKalem Co. v. 55, 62- 9 In v. Ditto light of Harper, the continuing validity McCurdy, 510 F.3d 1070, 1077 n.5 (9th of Chevron Cir. 2007) open (stating that is an question. Chevron See was 63 (1911)). an Neither is inducement a new basis for secondary infringement liability. a In fact, it is law", 1° element of contributory infringement, for theory "well established in the which was the basis plaintiffs' Court claims in the most recent secondary copyright v. infringement case the Supreme 417 has decided, See Sony Corp. of Am. 545 U.S. at 930-34. Universal City court Studios, lnc., 464 U.S. established a (1984). Grokster, In Sony the from the rule that "limits imputing culpable distributed intent as a matter of law characteristics established that or uses of a product". beyond uses, a Id. at 934. The Grokster decision "where evidence be put to goes product's characteristics and shows statements or or the knowledge to that it may infringing actions directed promoting infringement, Sony's staple-article rule will not preclude liability". Id. at 935. Whatever Chevron. A decision novelty Grokster did introduce of law is far below the high bar set in becomes a new principle "either by overruling an clear past precedent impression The on which litigants resolution may was have relied.., not or by deciding issue of first whose clearly foreshadowed". Chevron, 404 U.S. an at 106. Grokster decision neither overruled Sony, nor decided issue of first impression, rules of but, instead, merely fault-based 545 U.S. clarified that an expansive reading common of Sony to "foreclose liability at 934-35. derived from the law" was inappropriate. that Grokster's Grokster, Moreover, defendants' argument impact was not "discredited 10 by" and "effectively even overruled should to in Harper"). have as prospective application, which, object as pre-Grokster also element of plaintiffs' claim for contributory infringement (see support the inducement Pls. 7/18/08 SOF ¶¶ 539-40), which, as shown above, certainly was not created by Grokster. Accordingly, the evidence must not be excluded. shown Accordingly, if Grokster only here, it should not, the exhibits which defendants foreshadowed is belied by -- the fact that as early as 2004, they themselves Grokster, Circuit's of the -- Lime Wire LLC, Gorton and Bildson wrote, remand in advance of anticipated in that case. effect of the Supreme infra at Court's reversal or of the Ninth decision (See 17-19.) Second, defendants argue that, because the rule's copyright purpose inducement requires for intent, retroactive application not contravenes by creating liability parties the who could have intended to infringe secondarily, thus, effectively eliminating at intent requirement. of the intent (See Defs.' Br. 9-10.) However, nothing prior under to in Grokster impacted 8-9.) intact, and the nature requirement Grokster is as it existed Sony. (See supra at Culpable intent under culpable intent Sony, leaving the rule precluding evasion of liability the for inducing infringement. to In contrast, failure apply Grokster retroactively of would shield defendants from liability under an unintended reading Sony, whereby even courts would apply Sony's staple-article was rule to limit or preclude liability -- where intent to infringe Wire firmly established. denial of Under such a reading a reading defendants for urge -- Lime LLC's knowledge of the utilization of LimeWire copyright infringement it from and the purported non-infringing face of massive uses of LimeWire would immunize liability and even in the evidence showing (LW) statements and actions promoting see encouraging SOF infringement. ¶¶ 140-529.) (See Pls. 9/26/08 Add'l SOF ¶¶ 1-49; also Pls. 7/18/08 Third, defendants' argument the facts. that retroactive application is would be substantially unfair is belied by have Defendants' contention premised rule existed upon the assumption that they would acted differently had the Grokster earlier. 10 Yet, since Grokster came down and defendants filter became aware, at a minimum, of their obligation still have to implement an effective (see Gorton 9/26/08 Decl. 7 36), defendants behavior to not implemented with such a filter or substantially argument THE shifted their in any way II. comply RULE Grokster.11 Thus, DOES NOT their is without merit. 408 RENDER PROFFERED EVIDENCE INADMISSIBLE Defendants claim that Rule 408 renders certain evidence that they 33 exhibits and produced inadmissible. deposition testimony memorandum that Rule 408, however, seek to does not bar admission of the defendants a exclude, listed in Exhibit is attached A to defendants' ("Exhibit A"), the copy of which seek hereto. either First, Rule has 408 does not apply with because evidence of any to defendants or to exclude plainly nothing with to do negotiations unrelated kind relates to contemplated business transactions non- parties 408 the settlement of litigation. (See infra § II.A.) Second, because even if Rule somehow applies, the same it has been waived defendants have themselves relied on and utilized facts. (See infra § II.B.) copyright 9/26/08 Decl. 7¶ 37-38; see also Bildson 9/10/08 Decl. ¶ 15-17.) (See Gorton acknowledges as much, but conveniently blames plaintiffs' unwillingness to provide a list of copyrighted works to Lime Wire LLC. (See Gorton 9/26/08 Decl. 77 37is misleading. Even if plaintiffs had provided Lime Wire LLC with excuse 38.) Gorton's a list of copyrighted works, a filter relying solely on the hashes derived from that list not nor 11 Lime Wire LLC currently does have, has it ever had, an effective filter. Gorton would hashes. not be effective Pls. a because SOF identical audio files may On the other have an infinite Gorton number could of have hand, 7¶ 478-480.) truly effective filter even without plaintiffs' list of copyrighted songs by of the third-party filtering companies with whom he negotiated (see infra at limited infringement by adopting the strategies he proposed to third parties in the "conversion code", "auto upgrade" or "forced plans", i.e., "time-bombed upgrade". (See infra at 15 n.14, 21-22.) (See implemented engaging one 19, 21-22), or 7/18/08 11 Ao Rule Because 408 Does it Does Not Not Bar Admission of the "Conduct Evidence or in Exhibit Made A in Constitute Statements R. Evid. in Compromise Under Rule Negotiations" 408, "conduct admissible.., or Pursuant statements to Fed. 408(a)(2). negotiations made compromise regarding [a] of, or claim" are "not when offered to prove liability for, invalidity whether to amount of a claim". See Fed. R. Evid. 408(a)-(a)(2). considers In determining exclude evidence under the rule, the Court v. the circumstances of the conduct or statements. See Wechsler HuntHealth Sys., Ltd., 381 F. Supp. 2d 135, 151 (S.D.N.Y. and the existence of a 2003) ("Both the timing of the offer the disputed claim are relevant to determination.") (citations omitted). The party seeking the to exclude evidence under Rule 408 must make a "substantial showing" Prods. that evidence was part of an attempt to settle the dispute. See, Music e.g., lnt'l Raybestos v. Co. v. Younger, 54 F.3d 1234, 1241 (7th Cir. 1995); Rondor WL TVTRecords LLC, No. CV 05-2909, have made no 2006 5105272, at *11 (C.D. 12 Cal. Aug. 21, 2006). Defendants 1. Evidence It Has Several such "substantial To Exclude showing". Defendants Seek Do with and Is Admissible of Because Nothing to Negotiations Any Kind. in defendants' of the documents deposition excerpts negotiations. listed Exhibit A are, on their face, not related to settlement (See Exhibit A at Exhibits 41, 42, 43, 44, 285, 325, and Cho and Gribble First, three of the documents on testimony.) A are Exhibit public have articles or blogs that mention Lime Wire LLC. Obviously, such public documents absolutely nothing to do not even Notably, defendants try and explain the basis for their objection as to exhibits, choosing instead to lump all of them together. (See, e.g., Defs.' Br. particular at 1-5 and Exhibit can A.) Plaintiffs only guess as to the basis for defendants' objection to a particular exhibit. 12 12 do with settlement discussions nor any attempt to settle a dispute. (See Exhibits 42, 43, 44.) Second, Exhibit discomfort with Lime Wire 285 is a dratt letter from Jesse Rubenfeld expressing decision. his LLC's lack of compliance letter with with the Grokster Rubenfeld's testimony its contents is that he wrote this his attorney, but instead Tr. of sending His it, discussed letter relates with Mark Gorton, his boss. at (Rubenfeld 52:2-63:13.) to filtering (see infra argue that it was 19-22), not settlement. Indeed, defendants do not even attempt to written for settlement purposes. with Third, Exhibit which 325 is an e-mail chain Mashboxx, a non-party, Mark in Greg Bildson, to even on behalf of Lime Wire LLC, tells MashBoxx -- that Gorton is reluctant begin not discussions with them hardly the a negotiation. with whom Moreover, it Lime Wire LLC does include a Mashboxx among parties alleges 325 it was negotiating "conduct or and developed "plan". (Defs.' in settlement 41 is Br. at 4.) Nothing in Exhibit contains statements made negotiations". chain between Mark Gorton and an Fourth, individual the at Time Exhibit an e-mail Warner -- a non-party a that Lime Wire LLC also did not include among parties with which it developed to "plan". (Defs.' Wire LLC Br. at 4.) In Exhibit for a name 41, Gorton of someone simply AOL relates his intention sell Lime and asks at with whom he can speak. we are Gorton claims that this sale "is going of to be a huge opportunity" users and that "[i]f able to convert a couple percent This our [LimeWire] to a subscription service, that would be huge. - deal could This be worth is a $50,000,000 not a $400,000,000 negotiation. a year in revenue " .... (Id.) document sales pitch, settlement 13 Fifth, relates to the deposition testimony and of Stephen same Cho to which defendants object placing downloads of defendants' uploads in the folder, (Cho Tr. 80:20-81:7), and Gribble, Tr. to the testimony object, own expert witness, SIMPP Steven which defendants also relates to LimeWire's settings (Gribble Neither the Cho 201:6-22; Gribble 203:13-20) relate and LimeWire updates (id. to at 299:25-301:7). nor testimony in any way settlement. 2. Other Because to Evidence It Relates to that to Defendants Seek not to Exclude Is Admissible Business, with Lime the Wire Settlement, Negotiations, or Efforts Comply and Law. LLC understood that decision As shown below, Gorton a favorable Wire LLC. to the copyright-holder plaintiffs at in Grokster was a game-changer for Lime (See infra Grokster, 15, 17-19.) Consequently, the day the Supreme Court issued its decision in defendants service began negotiating provider, not a deal with iMesh, would a legitimate Lime Wire licensed LLC. music subscription has sworn in which iMesh subsume Wire Gorton that he did believe at that time he or Lime LLC would be sued for into copyright infringement. conversations with other Over time, defendants music conversations with iMesh evolved licensed providers, including Napster, Wire LLC RealNetworks and iTunes. At the same time, Lime began talks with entities offering effective Gorton viewed as filtering services, including SNOCap, Audible necessary exhibits to Magic and Magix, that comply which with the law as set out in Grokster. The to defendants now object were created as part of those business negotiations. They show, among other things, knowledge that LimeWire's 14 entire userbase was engaged in copyright infringement, A, Pls. Exs. for 13 and an understanding as to how to stop the infringement. the evidence on (See Exhibit motion 56-62, 151,265-278.) summary Now, faced demonstrates with plaintiffs' intent partial judgment that conclusively defendants' evidence to induce copyright infringement, is inadmissible defendants protest 408 because that relating of the to these business dated negotiations under Rule many months exhibits are after plaintiffs' "cease and desist" letter, 4.) a sent several after business negotiations what began.14(See in Defs.' Br. at However, settlement but is relevant determining during whether document was relates to negotiations is not the point in time which the document created, the motivation for the document's creation. As shown below, it was defendants' from the belief that and understanding that of the change in the legal environment resulting -- Grokster decision led them to the business negotiations at issue not plaintiffs' 13 Gorton to believed music that users legitimate converting even purchasers would "a mean couple percent" revenues of LimeWire's infringing $400 million. between $50 to (See Ex. 41 .) object to most of the deposition testimony surrounding Instead, they object to small snippets of testimony that simply are not made in or statements protected by Rule 408 because they do not reveal "conduct defendants Catillaz in which she compromise negotiations". First, object to testimony Plans with either simply testifies that no one ever told her that the proposed Conversion RealNetworks or Napster not feasible. were (See Exhibit A; Catillaz Tr. 259:9-12; 259:21-260:2 (see Pls. Ex. Vol. VI)) Similarly, defendants object to Catillaz's testimony that no one told her that "forced upgrade" or "auto upgrade" concepts were ever not feasible. (ld. at 285:22-286:3,288:6-288:22.) Second, defendants object to Catillaz's in which she says only that it was Mark Gorton's idea to reeducate LimeWire testimony users (id. at 267:22-268:21) and that Gorton coined the term "hardcore pirates" to describe of LimeWire a large segment These users. at 323:19-323:21.) (ld. objections have nothing to do with settlement and everything to do with protecting Mark Gorton. Third, defendants object to only one portion of Jesse Rubenfeld's testimony (see Exhibit Tr. 332:11-333:17 A; Rubenfeld (see Pls. Ex. Vol. VII)) in which he testifies that he recalls work relating to the "value of a converted LimeWire for sound user doing recordings". None of this testimony falls under Rule 408. these 14 Oddly, defendants do not documents. 15 "cease and desist letters". A change in the legal made environment that makes litigation "conduct or more likely statements does not make all business decisions in light of that change Corp. v. v. made in compromise negotiations". (S.D.N.Y. 1998) (see Union Union Carbide Montell N. V., 28 F. Supp. 2d 833,841 1130 Carbide Corp. See also MontellN. V., 944 F. v. Supp. 1119, Harvester (S.D.N.Y. 1996) for underlying facts). 1551, 1556-57 while Deere & Co. Int'l Co., 710 F.2d was (Fed. were Cir. 1983) (fact that patent in license with third party negotiated inadmissible parties locked dispute over the patent does v. not render license evidence of settlement negotiations); a Mendelovitz Adolph Coors Co., 693 F.2d 570, 580 (5th Cir. 1982) (finding letter between litigating parties not not to be part of settlement or negotiations, claim in this since "on its face, [the letter] does defendants Br. at offer an to compromise settle any action"). As even concede, also Deere "actual dispute" 710 F.2d is required 1556 for Rule 408 to apply. (See could Defs.' 2.) time See & Co., at (noting no dispute lnc. v. be identified at the of the 1973 offer); accord Big 0 Tire Dealers, Cir. Goodyear Tire & Rubber Co., 561 F.2d had 1365, 1373 not (10th 1977) (affirming to admission of evidence where "discussions cut-off crystallized the point of threatened litigation, business a clear point"). Lime Wire LLC That months after such negotiations started, did not received a "cease and desist" letter from the RIAA transform documents created as part of business settlement negotiations negotiations". into 15 documents that were "only created in order to be part of the (Defs.' Br. at 4.) Defendants cannot claim that 15 Indeed, the "cease to and desist" letter did not demand that defendants sell their business from iMesh and Pls. or anyone else, but merely that they "immediately cease-and-desist the SOF enabling see inducing 7/18/08 301, also infringement of ¶ 535.) Gorton's 16 RIAA decision member to sound sell was recordings". thus one (Ex. of two business negotiations prompted by Grokster as were for settlement purposes and protected by 408 shown by the following brief chronology. year after the LimeWire software In October 2001, just an a launched, copyright in connection holders began the action for contributory file and vicarious copyright infringement with distribution See Grokster of the P2P sharing applications Grokster, F. Morpheus court and Kazaa. (Remand), in favor of the 454 Supp. 2d at 970-71. The district granted v. summary judgment P2Ps, Metro-Goldwyn-Mayer Studios, Circuit lnc. Grokster, Ltd., 259 F. Supp. 2d 1029 (C.D. Cal. 2003), and the Ninth Studios, lnc. Lime Wire v. affirmed. Metro-Goldwyn-Mayer In its 2004 Grokster, Ltd., 380 F.3d discussed the Grokster 1154 (9th -- Cir. 2004). Marketing Plan, Circuit -- LLC case then pending stating, look to before the Ninth in its "Political and legal environment" section, should inter alia, "in the event that it is decided that Grokster is liable, LimeWire issues or developing technology 16 that is far from any possible copyright argument of non-neutrality". (Ex. 97 at LW DE 1172924-25.) (in which case the sale negotiation cannot negotiation) recognition that no viable business existed has no substantial inducing copyright infringement i.e., that LimeWire a things: business decision be considered in the absence a settlement or a of -- non_infringing use. That, 16 of course, Wire LLC is also true. Lime was also keenly aware of another of Australia file Sharman Networks to Ltd. in the Federal of the Kazaa Court P2P respect "LimeWire its distribution 2004 Marketing Plan", defendants pending at the time against copyright infringement with sharing application. In fact, in its stated that "[t]he significance of this case for suit Australia, LimeWire found liable, because with no offices in As a company against Kazaa] is unclear. be free from copyright fraud prosecution even if Kazaa is might [the Music Industry Piracy Investigations, an intellectual property rights enforcement organization in Australia] had to physically search Kazaa's computers for electronic evidence. of the trial and public support for Nonetheless, the outcome Australia lawsuit Kazaa [the should that "the be accordingly." found in Australia monitored monitored, and LimeWire's presence 97 at LW DE 1172925-26.) In 2005, the Federal Court of Australia (Ex. predominant use of Kazaa was for the sharing of copyright-infringing 17 The Supreme Court agreed to hear the matter. Metro-Goldwyn-Mayer February 21, 2005, LLC's then Chief before the Studios, lnc. v. Grokster, issued Ltd., 543 U.S. in 1032 (2004). Lime On Supreme Officer Court its decision Grokster, Wire Technology court and Chief Operations Officer, Greg Bildson, upheld 99 the wrote that the district in California, software". have "has right of software companies also Ex. to create and sell our [LimeWire] "It]he courts (Ex. our (emphasis added); rights be a see 320.) He also wrote that affirmed to produce and sell this [LimeWire] software. Supreme that Court in the If there is any Grokster change.., case". it would negative ruling by the pending such a (Ex. 316) (emphasis added). Bildson added if there was ruling to "we [Lime Wire] will have . plenty in our of lead time to make changes existing to our services customers. there would be value trying quoted to to transition users [to a different that product or service]". (ld.) Supreme company Court Gorton was in the New York Times as saying "'[i]fthe LimeWire the says it is illegal produce this [P2P file-sharing] software, will cease to exist'". (Ex. 201.) States On June that 27, 2005, the United the P2P file Supreme Court unanimously be held ruled the companies distributing a sharing applications its use could liable for distributing "inducement after this device with the object of promoting U.S. 913 for In copyright infringement (the an doctrine"). Gorton Grokster, stated 545 (2005) had email written three days in decision, that the decision "put the LimeWire an business flux". (Ex. 323.) On the same day, Bildson wrote in email to Download.corn, "[w]e material" and found Sharman Networks sound Ltd. liable for copyright infringement Music 2005 Australia WL of v. plaintiffs' (record companies) recordings Sharman License Holdings Ltd. (2005) 220 A.L.R. Universal 1 Pty. Ltd. (Austl.), 2119310. 18 are in the process at CNET of deciding And what to do with the future of the LimeWire product". (Ex. 33 00039.) "I have the law. Gorton has stated: always run Lime Despite the fact Wire that LLC to be in full the effectiveness compliance of copyright with filtering in a P2P client is subject to much debate, when the Supreme Court [in Grokster] specifically stated that a P2P that tried to reduce company infringement by implementing a filter could not be liable for copyright infringement, copyright had Lime Wire LLC build a copyright filter." (Gorton 9/26/08 Decl. I ¶ 36.) Marco of iMesh Talmon approached to Gorton on June 27, 2005 -- the very 1/31/08 day Decl. of Grokster decision -- with a plan purchase Lime Wire LLC. (See Gorton ¶ 3.) Marco of testified that when he first approached version". Gorton, he explained "the (Marco Tr. 226:2-21 iMesh. idea specifically light has of converting Lime Lime Wire to a filtered .) In Gorton Grokster, that as Wire LLC began negotiations -- with Notably, decision Mark swom of June "I did 30, 2005 not three days after Lime Wire the Grokster and Marco's approach to him -- believe that or I would be sued for copyright testified infringement". that iMesh and (Gorton Lime 7/17/08 Decl. ¶ 7 (emphasis added).) Indeed, Marco on Wire LLC "had and off discussions for about a year" up until around "summer of '06" that (Marco Tr. 227:4-19), and that during this time, Gorton he did not specifically stated "believe that that he [would] get that iMesh sued" (id. at 228:18-229:2). as a Gorton's contention he believed was acting "proxy" Gorton did for the RIAA (see Gorton 1/31/08 Decl. ¶ 3) 17 is thus irrelevant, because since 17 Marco has testified that neither the record and Lime labels Wire nor the RIAA assisted in any way in iMesh's that, aside the RIAA negotiations with Gorton from meetings informing nor the RIAA involved the record labels were (Marco Tr. 233:17-234:5), and that negotiations were progressing, neither in the negotiations with Lime Wire LLC. LLC 19 not believe he would be sued, he could via iMesh. not possibly if Gorton's have been negotiating that iMesh any an sort of settlement with the RIAA Even belief was agent acting for the RIAA is there were correct (but see supra to at 19 & n. 17), defendants do not contend, iTunes or nor a shred of evidence support, talks LLC. were that RealNetworks, Napster anything but and any a other business Never entity deal involved in these independent entities negotiating with Lime Wire 18 was litigation anticipated they tried to do a between defendants and any of the non-parties transactions with whom deal. The evidence of the contemplated made in cannot therefore Rule 408. be considered "conduct or statements compromise Rauch, 644 637 negotiations" F.2d 1097 under Defendants and reliance on Ramada Dev. Co. v. (5th Cir. Unit B 1981) merit, Blu-J, Inc. neither case v. Kemper C.P.A. Group, 916 F.2d (1 lth 3.) the Cir. 1990), documents as a is without as provides evaluative such support. (Defs' by the Br. at 2- The excluded in those cases were reports used settlement. For parties in to dispute centerpiece to determine the appropriate commissioned example, to prepare Blu-J, lnc., an independent accountant was by both parties process. an independent 641-42. evaluative report designed to facilitate the settlement 926 F.2d at Similarly, in Ramada Development Company, an architect prepared a report (ld.) iMesh Marco and 18 did testify that at one point there was a meeting at which Lime Wire LLC, the RIAA were all present. to which (ld. at 233:9-16.) Several Warner of the exhibits defendants object were, Time Mashboxx defendants' versions which or were thinking of (Ex. 41); Napster (Ex. 265); RealNetworks of (Ex. 325). Others are Conversion Proposals, or pieces or summaries Conversion Plans (Exs. 56, 57, 58, 59, 60, 151,265, 266, 274, 277) or pieces of the Digital Sales Growth Plan (Exs. 61, 62, 273,275, 276, 278), sent to various were third-parties with whom defendants negotiating or were negotiating. face, directed (Exs. 267, 268, 269); and on their to 20 outlining "arguable 644 F.2d the construction defects in the motel in order to "identify", for terms both parties, defects that could then be discussed in monetary in the negotiations". at 1106-07. In contrast, many documents are that defendants seek to exclude here (e- mails, term sheets, proposed agreements) with business are communications aimed at pursuing agreed partnerships upon non-parties. to These nor documents were not independent evaluations to by both parties the dispute, they a centerpiece settlement negotiations between the plaintiffs under and defendants. Defendants therefore provide with no authority supporting unrelated to exclusion Rule 408 of business negotiations non-parties settlement with those non-parties. The challenged Tr. evidence related to filtering (see (see Ex. Vol. Exhibit A at Exs. 286, 289-292 and Bildson 152:16-21, 161:16-162:20 VI)) in is also admissible. Lime Although filtering provider SNOCap first Wire LLC made no contacted defendants for September 2004, works attempts 2005 to develop filtering decision. copyrighted 281 prior that to the Supreme has Court's June Grokster (Ex. and (Bildson stating it" and that "LimeWire considered filtering as an option or in the past enables rejected of any "LimeWire will not support anything that implies filtering 286.) kind"); above see also Rohrs Tr. 142:14-143:11 (see to Ex. Vol. VII); Wire see Ex. As shown (see supra at 18-19), comply according with Gorton, Lime 19 LLC finally undertook to filter specifically LLC's to Grokster. (Gorton 9/26/08 Decl. ¶ 36.) Thus, Lime Wire post-Grokster 19 The very fact that Gorton believed that Lime Wire LLC had his understanding that the business post-Grokster demonstrates for it is copyrighted works that the "filters" meant to are copyright infringement, A "filtering solution" is meaningless without a copyright infringement problem. implement a filter depended upon illegal to catch. 21 filtering attempts but an were, according Wire LLC to to defendants themselves, the law. not part of settlement talks, effort by Lime comply with B. The and Defendants Have to Waived the Any Rule Same Facts 408 In Continuing Invoke Objection By Invokin· Support of Their Own Claims. A party cannot object to the admission of evidence that it invokes on its own behalf. See, e.g., of the Capobianco, 422 F.3d at 55 ("defendants see waived any objections to the admissibility 2d at 269 reports by offering them basic themselves"); also Watson, 500 F. Rule 408: when Supp. a n.5. That principle would of fair adjudication applies the rule's exclusion to party proffers evidence made in that fall within of"conduct and statements compromise negotiations", they v. waive any objection 936 F.2d to its admission by the other side. See, e.g., Eisenberg waived Univ. of New Mexico, to 1131, 1134 (10th Cir. 1991) ("Ms. Torres of the affidavit any claim 20 Rule 408 protection by her own submission to the court.") Throughout now this litigation, own defendants 21 have invoked the very brief on evidence they seek to exclude -- on their behalf. In their January 2008 copyright 1966) (waiving predecessor to Rule 408); Allen-Myland, Inc. v. Int'l Bus. Maeh. Corp., 693 F. Supp. 262, 284 n.51 (E.D. Pa. 1988), vacated on other grounds, 33 F.3d 194 (3d Cir. 1994); In re Groggel, 333 B.R. 261,297 (Bankr. W.D. Pa. 2005). v. 2o See also S. R 'y. Co. H.W. Vaughn, 359 F.2d 424, 424-25 (5th Cir. common law 21 Defendants their way write into their motion as if the documents but the fact on Exhibit A somehow plaintiffs' possession, defendants gave were majority of the documents produced over a year ago, although some were produced even earlier. (See Forrest 11/7/08 Decl. ¶ 24.) Notably, defendants exercised their right to recall those documents never under the protective order agreed to by the parties and entered the Court on March by 8, 2007, despite that on that right and recalled other documents. multiple occasions, defendants exercised (ld. Even when plaintiffs marked these documents exhibits at numerous as ¶ 25.) depositions and over over never again, defendants objected. (ld. ¶ 26.) is that them to found just most of plaintiffs. The 22 misuse, defendants iMesh and its laid out in detail evidence of Lime Wire LLC's negotiations such as with attempts to enter into transactions with third parties as RealNetworks and iMesh, the latter with of which defendants attempted 2008 to cast having an "incestuous relationship" Porter & plaintiffs. (See January 31, to Letter Brief from Charles Letter Baker, Hedges LLP, Decl. at the Court at 11, 14-18 ("Copyright Misuse Brief'); attached to Gorton 1/31/08 7¶ 3-14.) 2006 In his January 31, 2008 that iMesh sent to declaration, the RIAA Gorton his declaration a January 17, that letter laying out a settlement proposal (See Gorton Now, includes plans related to filtering and "converting" LimeWire users. 1/31/08 Decl., Ex. F.) on summary that judgrnent, lacked the defendants rely induce on the same facts -- in detail -- to demonstrate they intent to infringement and, and in order to comply with Grokster, user developed copyright filtering techniques base to plans Mem. to convert their copyright-infringing 30-32.) exclude. In his paying Gorton customers. (See to use LW 9/26/08 at 3, 5, 13, seek to latest declaration, 9/26/08 continues the evidence defendants in his section (See Gorton Wire's Decl. 7¶ 38-42, 45-61.) and For example, tiffed, "Lime Attempts to Reach out Engage the Recording Industry", Gorton referenced Ex. 60 several exhibits and to which defendants his object, including with iMesh Ex. 276 (id. at ¶ 55) the and (id. at ¶ 57), Plans" described at negotiations his (id. at 77 46-54), at "Conversion (id. ¶7 45, 54, 58), "gradual Digital Sales Growth plan (id. users 7¶ 55, 56, an 58-60), and his plans for the conversion" of LimeWire through 23 "educational campaign" (id. 22 at ¶¶ 45, 55, 56, 59) and "graduated filtering" (id. evidence defendants seek to at ¶¶ 45, 55, 58, 59, 60). This is the same exclude. Defendants cannot on the on one hand submit evidence to support their position evidence. that they are not liable and the other, prevent have waived plaintiffs any from using that that same (See also infra § I.A.) Defendants protection Rule 408 might have provided. 22 That defendants about rely for the most part upon and conversion Mark Gorton's -- filtering plans does not negate the waiver of deposition testimony proffered by plaintiffs Rule 408. A contrary rule would the party with personal knowledge of settlement permit facts while denying the other party the negotiations to rely upon settlement-related to do the same, the bilateral of the waiver. See Fed. R. nature opportunity nullifying Evid. 408 advisory committee's note (2006) ("the protections of Rule 408 cannot be waived declarations of facts of settlement unilaterally"). Using negotiations implicates the policy concerns and testimony underlying Rule 408 just as much as using documents those facts. to demonstrate See Am. Soe 'y of Composers, Authors & Publishers v. Showtime/The Movie Channel, Inc., 912 F.2d 563,581 (2d Cir. 1990) ("Rule 408 is based the policy of aiding the compromise and settlement of disputes.") (quoting 2 Jack B. upon Weinstein and Margaret A. Berger, Weinstein "s Federal Evidence § 408.02 at 408-4 (2d ed. 1986)); see also Fed. R. Evid. 408 advisory committee's note (1972) ("A more consistently impressive ground [for exclusion] is promotion of the public policy favoring of disputes."). the compromise and settlement rather exhibits and -- declaration defendants' self-serving, rambling than on the specific 24 Conclusion For the foregoing denied. reasons, defendants' objections should be overruled and their motion to strike Dated: November 7, 2008 Respectfully submitted, CRAVATH, SWAINE & MOORE LLP, by ·v._____ · "·. Katherine Teena-Ann Joanne B. Forrest V. Sankoorikal M. Gentile Worldwide 825 Plaza Eighth New Avenue York, NY 10019-7475 (212) 474-1000 (212) 474-3700 (fax) kforrest@cravath.corn tsankoor@cravath.com j gentile@cravath, com Attorneys for Plaintiffs Of Counsel: Karyn Temple Recording Industry 1025 F Association 10th of America Floor Street, NW, DC Washington, 20004 (202) 775-0101 (fax) (202) 775-7253 ktemple@riaa.com 25