Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. et al

Filing 257

Memorandum in Opposition re 256 MOTION for Permanent Injunction and Memorandum DEFENDANTS' OPPOSITION TO VUITTON'S MOTION FOR A PERMANENT INJUNCTION filed byAkanoc Solutions, Inc., Steven Chen, Managed Solutions Group, Inc.. (Lowe, James) (Filed on 1/4/2010)

Download PDF
Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. et al Doc. 257 Case5:07-cv-03952-JW Document257 Filed01/04/10 Page1 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GAUNTLETT & ASSOCIATES David A. Gauntlett (SBN 96399) James A. Lowe (SBN 214383) Preston K. Ascherin (SBN 260361) 18400 Von Karman, Suite 300 Irvine, California 92612 Telephone: (949) 553-1010 Facsimile: (949) 553-2050 jal@gauntlettlaw.com pka@gauntlettlaw.com Attorneys for Defendants Akanoc Solutions, Inc., Managed Solutions Group, Inc. and Steve Chen UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION LOUIS VUITTON MALLETIER, S.A., Plaintiff, vs. AKANOC SOLUTIONS, INC., et al., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: C 07-3952 JW (HRL) DEFENDANTS' OPPOSITION TO VUITTON'S MOTION FOR A PERMANENT INJUNCTION Date: January 25, 2010 Time: 9:00 a.m. Ctrm.: 8, 4th Floor 166755.8-10562-002-1/4/2010 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Dockets.Justia.com Case5:07-cv-03952-JW Document257 Filed01/04/10 Page2 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 166755.8-10562-002-1/4/2010 TABLE OF CONTENTS Page I. II. VUITTON HAS NO RIGHT TO THIS IMPOSSIBLE AND ILLEGAL INJUNCTION.......................................................................................................................... 1 TECHNICAL IMPOSSIBILITY TO COMPLY WITH PROPOSED INJUNCTION.......................................................................................................................... 1 A. B. Vuitton Seeks Broad Injunction Outside An ISP's Capability to Comply ............ 1 Internet Design Does Not Allow Controls Imagined By Vuitton ............................ 2 1. 2. 3. 4. C. Internet Transmitted Data Packets Display Only Destination IP Address ............................................................................................................. 2 ISP Routers Only Use IP Addresses and Receive No Other Information ...................................................................................................... 3 ISPs Have No Knowledge of Contents of Data Stored or Transmitted...................................................................................................... 3 "Parental Control" Techniques Cannot Block Incoming Communication ............................................................................................... 4 Injunction Requires Non-Existent Technological Abilities ..................................... 5 1. 2. 3. "Domain Name Filtering" By ISP Is Impossible .......................................... 5 Content Filtering By ISP Is Not Feasible ...................................................... 6 ISP Filtering For Images of Protected Marks Is Impossible....................... 6 D. Vuitton's Discovery Search Illustrates Practical Impossibility .............................. 7 1. 2. Content on a Server Need Not Contain Any Reference to the Website ............................................................................................................. 7 Internet Data Is Transmitted in Fragmented Packets ................................. 8 E. III. Defendants Cannot "Accomplish a Permanent Stop" to Infringing Activity ......................................................................................................................... 9 VUITTON HAS NOT PROVEN RIGHT TO ANY INJUNCTION ................................ 10 A. Vuitton Does Not Satisfy Any of the Four eBay Requirements ............................ 10 1. Vuitton Has Not Suffered and Does Not Face Irreparable Harm ............ 11 a. b. No Evidence of Actual Past Harm or Future Harm ...................... 11 Possibility of Future Irreparable Harm Improperly Assumed ............................................................................................. 13 i OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page3 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 V. C. D. IV. B. 2. 3. Legal Remedies (Statutory Damages) Are Adequate................................. 13 The Balance of Hardships Weighs Heavily in Favor of Defendants......... 14 a. b. Vuitton Impermissibly Shifts Burden of Policing to Defendants.......................................................................................... 14 No Practical or Legal Means Exists to Meet Vuitton's Demands ............................................................................................. 15 4. An Injunction is Against the Public Interest .............................................. 16 Vuitton's Laundry List of "Abundant Evidence" Is Irrelevant to eBay.............. 18 IF VUITTON WERE ENTITLED TO AN INJUNCTION, IT IS NOT THIS ONE ........................................................................................................................................ 18 A. B. The Injunction is Vague and Overbroad in Violation of FRCP 65 ...................... 18 The Injunction is Unconstitutionally Vague and Overbroad................................ 21 1. 2. The Injunction Is Unconstitutionally Vague For Lack of Scienter .......... 21 The Injunction Is Unconstitutionally Overbroad For Lack of Scienter........................................................................................................... 22 Compliance with the Injunction Would Be a Criminal Offense ........................... 23 The Proposed Injunction Violates the Restrictions of the DMCA........................ 24 CONCLUSION...................................................................................................................... 25 166755.8-10562-002-1/4/2010 ii OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page4 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 166755.8-10562-002-1/4/2010 TABLE OF AUTHORITIES Page(s) FEDERAL CASES A&M Records v. Napster, Inc., 284 F.3d 1091 (9th Cir. 2002)....................................................................................................... 16 Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062 (9th Cir. 2006)....................................................................................................... 17 Berry v. Funk, 146 F.3d 1003 (D.C. Cir. 1998) .................................................................................................... 24 Childress v. Taylor, 798 F. Supp. 981 (S.D.N.Y. 1992) ................................................................................................ 21 eBay Inc. v. MercExchange, 547 U.S. 388 (2006) ............................................................................................................ 1, 10, 18 Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149 (9th Cir. 1963)......................................................................................................... 17 Goldie's Bookstore, Inc. v. Sup. Ct., 739 F.2d 466 (9th Cir. 1984)................................................................................................... 12, 14 Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423 (1974) ...................................................................................................................... 19 Hard Rock Cafe Licensing Corp. v. Concession Services, Inc. 955 F.2d 1143 (7th Cir. 1992)....................................................................................................... 15 Int'l Union, United Mine Workers of America v. Bagwell, 512 U.S. 821 (1994) ...................................................................................................................... 21 Klein v. San Diego County, 463 F.3d 1029 (9th Cir. 2006)....................................................................................................... 22 Konop v. Hawaiian Airlines, Inc., 302 F.3d 868 (9th Cir. (Cal.) 2002)............................................................................................... 24 Lockheed Martin v. Network Solutions 985 F. Supp. 949 (C.D. Cal. 1997)................................................................................................ 14 Los Angeles News Service v. Reuters Television Intern., Ltd., 149 F.3d 987 (9th Cir. (Cal.) 1998)............................................................................................... 14 MDT Corp. v. New York Stock Exch., 858 F. Supp. 1028 (C.D.Cal.1994)................................................................................................ 15 Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) ...................................................................................................................... 16 iii OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page5 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197 (C.D. Cal. 2007)....................................................................... 10, 13, 16, 21 Mulcahy v. Cheetah Learning LLC, 386 F.3d 849 (8th Cir.2004).......................................................................................................... 21 Price v. City of Stockton, 390 F.3d 1105 (9th Cir.2004)........................................................................................................ 22 Qualitex Co. v. Jacobson Products, Co., Inc., 514 U.S. 159 (1995) ...................................................................................................................... 17 Regal Knitwear v. N.L.R.B., 324 U.S. 9 (1945) .......................................................................................................................... 20 Rodde v. Bonta, 357 F.3d 988 (9th Cir. 2004)......................................................................................................... 13 Rosen v. Cascade Intl, Inc., 21 F.3d 1520 (11th Cir. 1994)....................................................................................................... 14 Sanders v. Air Line Pilots Assoc., 473 F.2d 244 (2nd Cir. 1972) ........................................................................................................ 19 Save Our Sonoran, Inc. v. Flowers, 408 F.3d 1113 (9th Cir. 2005)....................................................................................................... 13 Schmidt v. Lessard, 414 U.S. 473 (1974) ...................................................................................................................... 19 Tiffany (NJ) Inc. v. Ebay, Inc., 576 F. Supp. 2d 463 (S.D.N.Y. 2008) ........................................................................................... 15 U.S. v. Alaw, 327 F.3d 1217 (D.C. Cir. 2003) .................................................................................................... 22 Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982) ...................................................................................................................... 10 STATE CASES People v. Freitas, 102 Cal. Rptr. 3d 51 (Cal. App. 2009) .......................................................................................... 21 DOCKETED Cuviello v. City of Oakland, No. C-06-5517, 2009 WL 734676 (N.D.Cal. March 19, 2009) .................................................... 20 Echostar Satellite Corp. v. NDS Group, No. SACV 03-950, 2008 WL 5116513 (C.D.Cal. December 4, 2008)......................................... 20 166755.8-10562-002-1/4/2010 iv OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page6 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Microsoft Corp. v. Evans, No. 1:06-cv-01745, 2007 WL 3034661 (E.D. Cal. Oct. 17, 2007) ............................................... 22 FEDERAL RULES AND STATUTES 15 U.S.C. § 1117(c)............................................................................................................................. 21 17 U.S.C. § 512(c)(2) ...................................................................................................................... 1, 24 17 U.S.C. § 512(j)(1)(A) ..................................................................................................................... 25 18 U.S.C. § 2510-2522.................................................................................................................... 1, 23 18 U.S.C. § 2510(12) .......................................................................................................................... 24 18 U.S.C. § 2511(a)............................................................................................................................. 24 18 U.S.C. § 2511(2)(a)(i) .................................................................................................................... 24 18 U.S.C. §§ 2701. .......................................................................................................................... 1, 23 F.R.Civ.P 65 ............................................................................................................................ 18, 19, 21 F.R.Civ.P 65(d) ................................................................................................................... 1, 18, 19, 20 F.R.Civ.P. 65(d)(1)(C) ........................................................................................................................ 19 CONGRESSIONAL RECORDS H.R. REP. 104-556, at 3 (1996), reprinted in 1996 U.S.C.C.A.N. 1074, 1076 ................................... 13 S. REP. NO. 104-177, at 2 (1995) ........................................................................................................ 21 S. REP. 99-541, at 14 (1986) .............................................................................................................. 24 166755.8-10562-002-1/4/2010 v OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page7 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. Defendants Managed Solutions Group, Inc., Akanoc Solutions, Inc. and Steve Chen hereby oppose plaintiff Louis Vuitton Malletier's motion for a permanent injunction based on the arguments made here and as made previously [Docket No. 191] I. VUITTON HAS NO RIGHT TO THIS IMPOSSIBLE AND ILLEGAL INJUNCTION Vuitton's motion for injunction reveals a fundamental misunderstanding of the technology, the law and the nature of the business at issue in this case. It is technically impossible for the Defendants to comply with the injunction requirements and Vuitton has shown no way to accomplish what it wants. Vuitton has not proven the requirements of eBay Inc., v. MercExchange, 547 U.S. 388, 391 (2006) necessary to justify any injunction. The terms of Vuitton's proposed injunction also violate F.R.Civ.P 65(d) and are unconstitutionally vague and overbroad. Compliance with the terms of the proposed injunction amount to a crime under the Wiretap Act, 18 U.S.C. § 2510-2522, and the Stored Communications Act, 18 U.S.C. §§ 2701 et seq. The proposed injunction also violates the injunction restrictions of the Digital Millennium Copyright Act, 17 U.S.C. § 512(c)(2). The Defendants already do everything they can to prevent and end infringement abuses. The proposed injunction is impossible, impractical and illegal and should be denied entirely. TECHNICAL IMPOSSIBILITY TO COMPLY WITH PROPOSED INJUNCTION A. Vuitton Seeks Broad Injunction Outside An ISP's Capability to Comply Vuitton's proposed injunction would prohibit the Defendants from "hosting websites that are engaged in the manufacture, import, advertisement, offer for sale, sale, or distribution of Unauthorized Products." Unauthorized Products are broadly defined as "any unauthorized product which features any of the Louis Vuitton Properties, copies of the Louis Vuitton Properties, or confusingly similar reproductions of the Louis Vuitton Properties." Those Louis Vuitton Properties are then broadly defined as "Louis Vuitton Copyrights" and "Louis Vuitton Trademarks" that are further defined as fourteen graphic images and three word marks. [Docket No. 188, 2:1-21]. Even disregarding the vagueness and overbreadth of such an order, the requested injunction would require the Defendants in the conduct of their Internet hosting business to electronically: (1) identify "unauthorized products," (2) that "feature" "copies" or "confusingly similar reproductions" of (3) certain words and fourteen separate graphic images, (4) used by anyone who advertises, sells, offers 166755.8-10562-002-1/4/2010 1 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page8 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to sell, or distributes the products on websites, and (5) then prevent the websites' "hosting." Vuitton has not shown how this can be done. Vuitton's demand is technologically impossible, even if it were otherwise entitled to an injunction (and it is not), and despite Vuitton's blithe assertion in its motion. (Docket No. 256, pp. 9:1-3 and 16:14) No Internet Service Provider to Defendants' knowledge and no government agency have ever accomplished what Vuitton demands. Vuitton has not shown that any such injunction has ever been issued. Vuitton's expert witness at trial, Michael Wilson, never testified to any available technology. The proposal is akin to ordering the Post Office not to allow its facilities to be used by anyone offering to sell Vuitton handbags. It is Vuitton's burden to identify and explain what the Defendants should be required to do or prohibited from doing and explain how it should be done. Imaginary ways for the Defendants to protect Vuitton from third-party counterfeiters or shrill demands cannot be enforced by a court. If Vuitton's imaginary technology existed, the governments of the world could stop all objectionable Internet traffic including child pornography, spam, gambling, and political dissent. China would long ago have been able to prevent Internet traffic critical of the Communist Party. Iran would be able to stop organizing of political opponents. Iran has failed. Even China's massive and draconian Internet censorship efforts (unimpeded by free speech or wiretap laws) fail to stop either discussions of Tiananmen Square or the sale of counterfeit merchandise. Vuitton requests an impossible injunction. B. Internet Design Does Not Allow Controls Imagined By Vuitton 1. Internet Transmitted Data Packets Display Only Destination IP Address The Internet's technical design makes impossible the filtering that Vuitton imagines. Internet data is transmitted broken up into "packets" of digital data. Packets ordinarily have no identification on the "outside" except a destination address (a series of numbers). So it is usually not possible to identify information transmitted to or from a particular website by inspecting the available information transmitted with each packet. (Exh "1617"1 213:23-215:2; 220:2-222:8) It is also important to remember that a "website" is merely a collection of pages of information stored potentially in multiple servers around the Internet (Exh "1616" 109:1-111:4; 149:4-150:11) End 1 Exh "1617," attached to Lowe Decl. are excerpts of the certified trial transcript in this case, Vol. 3, August 20, 2009, testimony of plaintiff's expert witness Michael Wilson. 2 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW 166755.8-10562-002-1/4/2010 Case5:07-cv-03952-JW Document257 Filed01/04/10 Page9 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 users see a "website" that is a collection of data a creator labels with a domain name. A domain name is routinely issued by one of many domain name registrars; it can be changed quickly. (Exh "1616" 103:12-105:15; 145:11-146:13) Each domain name uses an Internet Protocol (IP) address allowing the routing of data on the Internet through the use of Domain Name Servers. (Id. 97:1499:3) And domain names can easily and quickly change IP addresses. (Id. 150:12-21) Data packets do not announce identification of a website or the packet's contents. Packets, including data from a "website" do not have the domain name or "website name" on the packet. Packets of data to be stored on a server used by a website (potentially including pictures of infringing products) do not have to contain the name of the website where the data will be stored. So it is not useful to scan or even open and inspect a data packet to identify the "website" to which it relates. (Id. 141:25-143:25) Consequently, it is pointless to scan Internet transmissions in an effort block transmissions about a particular "website" or domain name. 2. ISP Routers Only Use IP Addresses and Receive No Other Information The only information available to an Internet router is an Internet Protocol (IP) address. A router just directs packets to an address, like the Post Office does. So unless some "website" or domain name is tied to a specific IP address based on external information, there is no way to identify it for routing or blocking. (Id. 97:7-100:23) An additional problem is that many domain names may use the same IP address. (Exh "1617" 216:25-217:15) So blocking an IP address from being transmitted through an ISP's system is likely to block many domain names and websites (hundreds or thousands), both legitimate ones and abusive ones. (Id. 222:9-223:3) This is equivalent to stopping all mail delivery to an apartment building because it is suspected that one person in the building is conducting some unauthorized business. (Id. 226:16-227:5) 3. ISPs Have No Knowledge of Contents of Data Stored or Transmitted An ISP has no knowledge of the contents customers place on its servers (Exh "1616" 150:22-151:10) any more than a self-storage company knows what its customers put into storage units. An ISP cannot access information on servers rented to customers who have root or administrative access control (Id. 114:10-117:15). Even with access, there is no way to identify the contents of its servers except by doing the complex and time consuming searches that Vuitton's 166755.8-10562-002-1/4/2010 3 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page10 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 experts did for discovery. Wilson confirmed that would be necessary for Defendants to learn what websites were using its 1,500 servers and 40,000 IP addresses. Without customer permission for inspection, a court order would probably be necessary. (Exh "1617" 249:13-250:321). The undisputed trial evidence established that the Defendants have no technical ability to identify or filter out any Internet traffic based on the names or contents of websites. The only way the Defendants can find out about a website allegedly infringing Vuitton's trademarks or copyrights is for Vuitton to discover that information by searching for and investigating Internet sellers and then report it to the Defendants. This is why IP owners including Vuitton must police their own marks and works by constantly searching the Internet and its more than 100,000,000 domain names for evidence of infringement. (Exh "1616" 145:11-146:13) Then they can notify ISPs like the Defendants after they have determined what IP address that domain name is using at the time. 4. "Parental Control" Techniques Cannot Block Incoming Communication The ability of a company or a parent to prevent a specific computer from accessing a specific site is entirely unrelated to an ISP seeking to prevent the transmission of infringing content. A program installed on a particular computer can prevent outgoing communication to a specific listed website by blocking communication addressed to a specific IP address or searching for a particular keyword (Id. 130:21-132:2). This is fundamentally different from trying to keep content from an abusive website from being sent to the computer. It is difficult to prevent even spam from being sent to a computer. While it may be possible to block communication from a specific IP address, an abusive Internet user can disguise or fake a different address, change addresses, send data from a different computer that has been infected with a "botnet" and in many other ways evade controls. An ISP cannot use the "parental control" model to stop infringers from transmitting infringing data through their lines or from storing content on its servers any more than a telephone company could. If AT&T knows someone with a phone number on another network is selling counterfeit handbags, it is a simple matter for AT&T to block its own users' calls to that external phone number. AT&T, however, cannot prevent its own customers from merely discussing counterfeit handbags or from receiving calls from phone numbers that are unknown to be infringer's numbers. Likewise, a network's router can refuse to pass on DNS requests for a domain name 166755.8-10562-002-1/4/2010 4 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page11 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 known to sell counterfeit handbags, but it is quite another matter for an Internet hosting company to identify content on their servers associated with domains selling counterfeit handbags. C. Injunction Requires Non-Existent Technological Abilities 1. "Domain Name Filtering" By ISP Is Impossible Vuitton incorrectly claims that Defendants expert testified "that domain name filtering is an available and reasonable technology to prevent repeat infringement at the same domain." Vuitton's Motion at 5:1-3. Vuitton only cites inadmissible, unidentified and unauthenticated "trial" transcripts that do not identify the witness.2 Vuitton has no evidence of that proposition. But the fact is that Defendants don't receive requests to access any website by name. So there is nothing to "filter." In reality, user requests for access to websites hosted on an ISP's servers do not come to the ISP as a request to access a named domain but only as a request to access an IP address. This is an IP address provided to the end user in the moment by the Internet's Domain Name Service (DNS) resolvers that translates a request to go to a named domain into a series of numbers that the DNS "looks up" to provide the Internet Protocol address with routing directions to the server assigned to that address. Independent registrars and domain name resolvers inform a user's computer that a desired domain (e.g., "knockoffVuitton.com") is at that moment using a particular IP address (e.g., 74.125.1.1) associated with a particular server. Exh "1616" 97:17-100:23; 102:5-8; 103:12-104:3) So the Defendants do not receive requests to access a particular website or domain name and are never given the domain name or any reference to a website. Instead, ISPs only receive requests to access an IP address. Once at that address, the domain name owner's software re-directs the request. Because the Defendants are not registrars, they have no control over domain names. Because they merely resell in bulk services to connect to the Internet, they do not know what domain names are associated with a particular IP address until and unless a complaint is made about an abusive website allegedly using one of its forty thousand assigned IP addresses. All association between the server's content and a particular domain happens between a DNS and an end user's web browsing software; not between Defendants and end users. Defendants cannot "filter" communications by 2 See Defendants' Evidentiary Objections to Coombs Declaration and unauthenticated exhibits. 5 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW 166755.8-10562-002-1/4/2010 Case5:07-cv-03952-JW Document257 Filed01/04/10 Page12 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 domain name because they receive no domain name to filter. 2. Content Filtering By ISP Is Not Feasible The undisputed evidence is that preventing website abuse (including infringement of trademarks or copyrights) is virtually impossible. It is difficult for an Internet Service Provider to remedy abuse, even if the ISP has received specific information about a website using a particular IP address. (Exh "1616"3 121:5-125:9; 126:4-127:10) Defense expert Richard Gralnik testified that it is not feasible for an Internet Service Provider to do the content filtering that Vuitton demands. (Id. 144:23-25). Gralnik testified without contradiction to the technical and practical impossibility of an ISP doing content filtering. While it might be theoretically possible to search Internet transmissions for simple words, doing so is not practical because the word "Vuitton" for example would be contained within packets of data that go through the Defendants' servers and communications cables. A single message is broken up into multiple packets and transmitted before reassembly as a file. 3. ISP Filtering For Images of Protected Marks Is Impossible Searching for images of products that might include a Vuitton graphic design is simply impossible. The binary data representing a picture of a handbag, for example, would likely be split up into 20 or 30 data packets and would be transmitted using a variety of Internet protocols. (Id. pp. 140:6-143:7) But even if one could assemble and internally inspect the contents of all the packets transmitted through the Defendants' systems, it would impossible to electronically identify a picture as being of an "Unauthorized Product" because the only way to electronically identify such a picture is by using a "checksum" (obtained by determining the numeric value of each pixel on each image and calculating all such pixel values into a single number using a complex algorithm) and then comparing that checksum with the known checksum value of a specific image. But the comparison must be exact, made between a specific individual picture and the checksum of that picture previously provided to the ISP; any variation in the picture (such a cropping it) would produce a new "checksum" and the comparison would fail. Partial images cannot be compared, only a complete 3 Exh "1616," attached to Declaration of James Lowe in Opposition to Motion for Injunction ("Lowe Decl.") are excerpts of the certified trial transcript in this case, Vols 8 & 9, August 25, 2009, testimony of defense expert witness Richard Grelnik. 6 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW 166755.8-10562-002-1/4/2010 Case5:07-cv-03952-JW Document257 Filed01/04/10 Page13 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 numeric computer file that represents the image. (Id. pp. 138:9-139:12; 140:4-143:25) Obviously the Defendants do not have and cannot obtain in advance copies of every possible photograph of every possible counterfeit Vuitton product together with the checksums of each. Since photographs and graphics are transmitted and stored only as numbers, not as physical pictures, filtering pictures transmitted over the Internet (such as a picture of a handbag bearing one of Vuitton's fourteen graphic designs) is impossible. (Id. 132:6-133:2) Pictures are converted into an image format such as JPEG or GIF and then each line of the image is further converted into binary, ASCII, or hexadecimal numbers that require a complex mathematical formula used by a computer program on an end user's machine for reassembly into something a human can recognize as a picture. Each time a picture is converted into a numeric form it is ultimately translated into zeros and ones then broken up into packets. These binary numbers are unrecognizable by the transmission, routing or storage equipment. Numbers "representing" a picture are stored on a server hard drive at an even lower level as magnetic-charged spaces that the computer reads as ones or zeros. No images of any kind are stored or imprinted anywhere on a server hard drive. (Id. 135, 9-24). The low level information is only later converted into JPEG or GIF number sets by specialized programs after it is downloaded by an end user to his or her computer. Then yet another program controlling the users computer monitor turns those numbers into a series of pixels that are electronically painted on the user's screen, for the first time becoming a humanly recognizable picture. (Id. pp. 135:25-138:8) So it is not possible to use any electronic or logical filter to know that the stream of numbers includes anything resembling a Vuitton trademark or copyright as Gralnik explained. (Id. 131-143) Trial Exhs "1546" and "1547" (attached to Lowe Decl.) illustrate how the same picture of a purse from Louis Vuitton's website looked entirely different as a set of numbers because one used the JPEG format and the other used the GIF format. This demonstrated that it is technically impossibility of identifying any image transmitted over the Internet to or through the Defendants' equipment. D. Vuitton's Discovery Search Illustrates Practical Impossibility 1. Content on a Server Need Not Contain Any Reference to the Website Website content uploaded by customers or customers' customers to Defendants' servers need not contain any reference to any domain name. Indeed, website content can lie dormant on a server 166755.8-10562-002-1/4/2010 7 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page14 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 without any domain name associated with it. (Exh "1616" 150:22-152:12). Vuitton's expert, Michael Wilson, testified about the website bigworldshoes.com and Vuitton's court ordered server search to locate information related to it. Although Mr. Wilson had an exact copy of the server on which the website data was discovered, it took him "ten or twenty" hours using numerous software programs, that were not on the servers, just to rebuild the site as it would have appeared to the public when it was active. (Exh "1617" 245:4-248:24; 259:23-260:2). Before rebuilding the site, the website data stored on the server were "just a lot of files" that not even a web host can identify just by looking at them. Id. at 248:12-24 and 249:23-250:7. After rebuilding the site, Mr. Wilson was able to "see what it looked like to the outside world." Id. at 262:21-23. Without this step, he would not have been able to identify the "Louis Vuitton part of the bigworldshoes.com web site," which "had two easy-to-spot characteristics": (1) the URL for the page with Vuitton type merchandise contained "pcid=16" and (2) the pictures of Vuitton products were all stored in a folder called "thy." Id. at 241:5-242:2; see also Exh "1559" (a traffic log for the Vuitton part of bigworldshoes.com testified about by Mr. Wilson (Exh "1617" 238:16-242:2) identifying the URL for the Vuitton page only as "/product_list.aspx?pcid=16" and picture URL pictures as, for example, "/pics/qmfncybdyxrlz29yawvz/ufvsu0u=/thy=/2008127182750768.jpg"). Critically, neither of these "easy-to-spot" characteristics reveal anything about the website's domain name or the actual content of the referenced files. A review of the server files would not reveal that they had anything to do with Vuitton products, counterfeit or otherwise. Only an elaborate and expensive forensic examination of the server hard drive found and identified those files. The file characteristics that were so "informative" were only "easy-to-spot" after a laborious effort by a forensic expert, looking for a single pre-identified website. Only this expert effort finally allowed him to view the server contents in a browser on a different computer and visually identify the Vuitton images. This effort is beyond the technical or practical ability of an ISP operator. 2. Internet Data Is Transmitted in Fragmented Packets Independently precluding the filtering imagined by Vuitton is the fragmented nature of Internet traffic. When a website operator uploads content to a server, that content does not arrive in any particular sequential order. Instead, the files comprising a websites contents are fragmented into 166755.8-10562-002-1/4/2010 8 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page15 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 multiple "packets" (Exh "1616" 140:16-143:25) making any electronic filtering impossible. The packets are then distributed from the source computer to the host server out of order and via different routes. Id. 98:15-99:20, 100:15-23. The myriad Internet routing devices determine this route by whichever path is most efficient at that particular instant. Id. at 98:15-99:20, 100:15-23 and 140:8143:25. Once all of the packets arrive they are re-assembled. This is analogous to separately mailing pieces of a thousand piece jigsaw puzzle from Los Angeles to New York using many different couriers at different times: some ship by UPS and FedEx on Monday, others go by USPS and DHL on Tuesday, etc. Although the puzzle can be put back together in New York after its thousand pieces arrive, the recipient cannot know what the puzzle depicts just by looking at the pieces as they come in sequentially. Vuitton wrongly assume that Defendants know what a whole puzzle looks like. The only theoretical way to identify the puzzle would be to hold all of the pieces at the post office ­here, at the router--then reassemble and examine the puzzle before sending it on. (Exh "1617" 221:17-222:4) Although this might be technically possible with a single file, to do so with every file transmitted to Defendants servers would not be "possible without slowing the network down to the point where almost no data would get through at all." (Exh "1616" 143:9-25). E. Defendants Cannot "Accomplish a Permanent Stop" to Infringing Activity Vuitton demands that Defendants "accomplish a permanent stop to the complained of infringing activity." (Vuitton's Motion at 4:1-2) This would require, at the very least, permanently disabling identified domains or websites so they can never appear again ­ even on other ISPs' servers. Vuitton ignores the fact that Defendants are not registrars and so have no control over domain names. (Exh "1616" 104:4-105:25) Some large ISPs, like GoDaddy.com, also happen to be registrars so they have some control over the use of the domain names they rent out. They may also offer web hosting services. (Id. 106:1-108:7) As a registrar, if GoDaddy decides a lessee is abusing its domain, it can theoretically "evict" the lessee from the domain. (Id. 152:24-154:14) If the content for that domain is also hosted on their servers, they can disable the associated IP address so the lessee cannot simply link it to a new domain through a DNS. Of course, even this does not prevent that party from immediately re-establishing the same content under a different domain, whether on GoDaddy's, Defendants' or a third party's servers. It merely prevents their continued abuse of that 166755.8-10562-002-1/4/2010 9 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page16 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 domain name. But Defendants are not registrars. They have no control over any domain other than the domain for their own business website. Thus, it is impossible for Defendants to permanently ­ or even temporarily ­ shut down any domain they do not own.4 Vuitton is asking the impossible. III. VUITTON HAS NOT PROVEN RIGHT TO ANY INJUNCTION A. Vuitton Does Not Satisfy Any of the Four eBay Requirements Vuitton must satisfy a four-part test to be entitled to a permanent injunction but it has not done so. In eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006), the Supreme Court held that a mere finding of infringement (there, of a patent) does not automatically entitle the owner of an intellectual property right to receive an injunction.5 Like any other plaintiff, an IP owner must satisfy a four-part test to invoke a federal court's equitable powers. Vuitton must prove: (1) irreparable injury; (2) the remedies available at law are inadequate to compensate for that injury; (3) the balance of hardships favors issuance of an injunction; and (4) the public interest would not be disserved by a permanent injunction. Id. at 391. Vuitton's evidence is inadequate. Grokster, quoted the admonishment in Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982) that "[a]n injunction should issue only where the intervention of a court of equity `is essential in order effectually to protect property rights against injuries otherwise irremediable.' "6 The inherent impossibility of anyone permanently disabling a domain or its underlying website was the very premise of the 2008 film "Untraceable." In that film, even the FBI could not disable "killwithme.com" despite repeatedly disabling the domain's IP addresses. Although the movie "may be fiction, [] it's based on fact." FBI Expert Says Cyber Crime in `Untraceable' Isn't Far-Fetched, THE NEW CRIMINOLOGIST, 2/11/2008, http://www.newcriminologist.com/article.asp?nid=2029. Former FBI cyber-crime specialist E.J. Hilbert and consultant on the film, said the "movie is as technically correct as it can be while still being entertaining" and the "only area . . .fudge[d] is the [faster] time frame." Id. 5 The eBay standard applies in both copyright and Lanham Act trademark cases. MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197 (C.D. Cal. 2007) (copyright); Reno Air Racing Ass'n., Inc. v. McCord. 452 F.3d 1126, 1137-38 (9th Cir. 2006) (Lanham Act trademark). 6 MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d at 1208 ("As recently confirmed by the Supreme Court [in eBay], Plaintiffs must meet their burden with respect to the traditional fourpart test. ... Further, the Supreme Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed." Internal quotes and citations omitted). 4 166755.8-10562-002-1/4/2010 10 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page17 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Vuitton Has Not Suffered and Does Not Face Irreparable Harm a. No Evidence of Actual Past Harm or Future Harm At trial, Vuitton provided no evidence of any actual harm, let alone irreparable harm, due to websites listed in its first amended complaint, a fact this Court has acknowledged.7 Despite Vuitton's lamentations about Defendants' customers' customers permitting use of services by alleged counterfeiters, Defendants' proffered evidence that Louis Vuitton sales have dramatically increased during the period of alleged infringement. 8 Since Vuitton showed no damages over the past several years, it is unreasonably speculative to assert future irreparable harm. Although Vuitton relies on Grokster for the proposition that "in run-of-the-mill copyright litigation, [irreparable harm] should not be difficult to establish," Vuitton does not establish that this case involves "run-of-the-mill" copyright infringement. (Vuitton's Motion at 7:8-10) Unlike in Grokster Defendants do not operate a file-sharing network expressly created to encourage the duplication of copyrighted music ad infinitum. Here Vuitton's motion at 7:22-8:6 claims the "irreparable harm" consists of: (i) Impairment of the exclusivity that allegedly accounts for part of the Vuitton's premium pricing, (ii) Impairment of Vuitton's strict control over production, distribution, and marketing of its products, and (iii) The fostering of an international scheme to conceal the identity of counterfeiters and to enable offshore sellers to benefit from ready access to United States consumers. Even if these constituted harm, Vuitton failed to prove its assertions. Ability to Charge Premium Prices: Vuitton offered no evidence that its ability to charge a premium for its products has been impaired ­ by Defendants' secondary customers or anyone else. Vuitton's unauthenticated transcript excerpts fail to even identify a witness. But even that alleged ("[T]his is not a case where Vuitton has claimed actual damages, but they are asking for statutory damages. It is fair . . . for a defendant to argue that statutory damages should not be disproportionate to actual damages." Exh "1618" (trial transcript from 8/25) at 218:9-14.) 8 [Document Nos. 197-1 (Declaration of James Lowe, attaching financial statements re Vuitton) and 197-2 (financial statements)] The proffered financial statements show Louis Vuitton quarter by quarter "double-digit organic revenue growth," "strong momentum continued" and "excellent performance in Europe, U.S. and Asia, especially China. In the latest quarterly report (Quarter 1, 2009) LVMH reports "good momentum in fashion and leather goods" in Asia, in the U.S. and in Europe. "Louis Vuitton: Double digit revenue growth. All regions showing positive revenue growth in Euros. Continued strong momentum in Europe and Asia." This positive revenue growth occurred during the worst global recession in memory. Vuitton objected to this evidence. 166755.8-10562-002-1/4/2010 7 11 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page18 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 testimony admits that purchasers of cheap replicas are not likely to buy genuine products in the first place. (Vuitton's Ex. A at 166:1-2). Vuitton has not shown any lost customers or lost sales or any need to lower prices for any reason. Vuitton's purported witness claimed some of its customers are "genuinely disgusted when they see a cheap imitations [sic] . . . all over the place." (Id. at 166:2-7) Vuitton does not explain how its customers' disgust over what they know are "cheap imitations" harms Vuitton and its genuine products. But even "los[t] goodwill and `untold' customers," is speculative injury that "does not constitute irreparable injury" as a matter of law. Bookstore, Inc. v. Sup. Ct., 739 F.2d 466, 472 (9th Cir. 1984). Ability to Exclude Replicas from Market: Vuitton has not proved how the marketing Vuitton "replicas" has caused real harm. If their sale is so widespread, it may be that this is good advertising for the real thing because Vuitton's sales have remarkably increased during a world-wide recession. But even if replicas did cause actual harm, Vuitton does not show how Defendants' conduct contributes to that harm so as to justify equitable relief or how an injunction could prevent any of that harm; the Defendants neither make or sell or induce the sale of any replicas. Obviously foreign counterfeiters will not be deterred even if the Defendants were forced out of business. International Scheme Benefiting Offshore Sellers: Vuitton cites no evidence about its vaguely referenced "international scheme." This appears to be the product of a Parisian imagination. No evidence shows any global conspiracy causing irreparable harm that this Court can remedy. As briefed in Defendants' Rule 50(a) Motions [Docket Nos. 209, 210, 244 & 245] regarding the extraterritorial nature of the alleged infringements, offshore sellers' mere access to U.S. consumers does not to implicate U.S. law. This legal principle is not negated by Vuitton's unsupported assertion that "Defendants have enabled countless counterfeiters, most if not all based out of the United States, to carry out their illegal activities." (Vuitton's Motion at 8:15-17). Vuitton thus concedes that the counterfeiting activity it wants stopped is outside the U.S. But, contrary to its wishes, such activity is not a violation of U.S. law and is therefore not an "illegal activity" that can justify a U.S. court issuing an injunction. Vuitton must go to China, or perhaps to Congress, for protection from the harm it imagines. But this Court cannot grant the relief it seeks by enjoining anything done in America. Because there is no evidence of any direct infringement in the United States the Court 166755.8-10562-002-1/4/2010 Goldie's 12 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page19 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 cannot enjoin the Defendants from contributing to it. U.S. law cannot not controlled the activity. b. Possibility of Future Irreparable Harm Improperly Assumed Even more speculative and unreasonable is Vuitton's assumption that potential future, and necessarily unknowable conduct will result in irreparable harm. Vuitton cannot rely on past infringement to support its claim of irreparable harm. The Grokster court noted that after eBay "there can be no presumption of irreparable harm in the permanent injunction context," even if a plaintiff is successful on the merits. Grokster, 518 F. Supp. 2d at 1211. "Irreparable harm cannot be established solely on the fact of past infringement. Additionally, it must also be true that the mere likelihood of future infringement by a defendant does not by itself allow for an inference of irreparable harm. ... [T]he onus is on Plaintiffs to explain why future infringements ... would cause irreparable harm. It cannot be presumed." Id. at 1214-1215 (emphasis added). Vuitton has not even attempted to meet its burden. Vuitton's proposed solution ­ making it the sole arbiter of identifying future infringements ­ is improper. Just because Vuitton sends a complaint about a website does not establish direct infringement, let alone Defendants' contributory infringement and irreparable injury. (Vuitton's Ex. G, "Proposed Injunction" at 3:12-4:2) Speculation about future direct infringement by unknown parties (and irreparable injury) cannot be assumed simply because a website uses one of Defendants' servers. Id. at 2:14-21. Vuitton cannot identify yet to be created websites. Vuitton also wrongly assumes that if a particular domain sold infringing goods in the past it must always in the future be presumed to be selling infringing goods. This ignores possible changes in merchandise, website content, or even site ownership. 2. Legal Remedies (Statutory Damages) Are Adequate Vuitton cannot show that money damages, including available statutory damages, would not adequately compensate it for future infringement. This is not a case of environmental damage or human suffering. See, e.g., Save Our Sonoran, Inc. v. Flowers, 408 F.3d 1113, 1120, 1124 (9th Cir. 2005) (environmental); Rodde v. Bonta, 357 F.3d 988, 999 (9th Cir. 2004) (human suffering). Nor does it involve "serious health and safety hazards" posed by counterfeit baby food or nuclear reactor parts. H.R. REP. 104-556, at 3 (1996), reprinted in 1996 U.S.C.C.A.N. 1074, 1076. Vuitton sells fancy handbags. The potential harm posed by future counterfeit Vuitton purses is purely financial. 166755.8-10562-002-1/4/2010 13 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page20 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 But "[m]ere financial injury . . . will not constitute irreparable harm if adequate compensatory relief will be available in the course of litigation." Goldie's Bookstore, 739 F.2d at 471. Vuitton concedes "damage to valuable intellectual properties is difficult to measure (and a significant part of the rationale for statutory damages in the first place)." (Motion at 8:18-19) Statutory damages are available for copyright and trademark infringement. Statutory damages are intended to compensate for actual injury that is difficult to quantify. Adequate compensatory relief for financial injury will always be available to compensate Vuitton. Los Angeles News Service v. Reuters Television Intern., Ltd., 149 F.3d 987, 996 (9th Cir. (Cal.) 1998) ("awards of statutory damages serve both compensatory and punitive purposes") (emphasis added);9 Rosen v. Cascade Intl, Inc., 21 F.3d 1520, 1527 & n.14 (11th Cir. 1994) ("It is axiomatic that equitable relief is only available where there is no adequate remedy at law; cases in which the remedy sought is the recovery of money damages do not fall within the jurisdiction of equity. . . There is no indication in this case that a legal remedy would not be sufficient to vindicate the shareholders' rights since they seek the payment of damages under federal statutes . . .") (emphasis added). Vuitton confuses irreparable harm with merely difficult-to-quantify harm10 that statutory damages cover. Vuitton offers four sentences, and no evidence, to satisfy its burden of proving the inadequacy of legal remedies. Discussing "compensation" makes no sense without actual harm. 3. The Balance of Hardships Weighs Heavily in Favor of Defendants a. Vuitton Impermissibly Shifts Burden of Policing to Defendants Vuitton seeks an unprecedented injunction to shift its burden of policing its intellectual properties to Defendants. Vuitton's proposed injunction charges Defendants with "accomplish[ing] a permanent stop to the complained of infringing activity." (Vuitton's Motion at 4:1-2) But every court considering the issue has held a copyright or trademark owner is responsible for identifying infringement and sending notices to an Internet businesses. Lockheed Martin v. Network Solutions STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS 141 Cong. Rec. S12079-03, S12085) ("The option to elect statutory damages in counterfeit cases ensures that trademark owners are adequately compensated...") (emphasis added) 10 "[T]he evidence identified additional forms of irreparable harm, admittedly not readily quantifiable. . . " (Vuitton's Motion at 7:20-21) 166755.8-10562-002-1/4/2010 9 14 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page21 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 985 F. Supp. 949, 966 (C.D. Cal. 1997) (a domain registrar has "no affirmative duty to police the Internet in search of potentially infringing uses of domain names."); Tiffany (NJ) Inc. v. Ebay, Inc., 576 F. Supp. 2d 463, 518 (S.D.N.Y. 2008) ("[R]ights holders bear the principal responsibility to police their trademarks."); MDT Corp. v. New York Stock Exch., 858 F. Supp. 1028, 1034 (C.D.Cal.1994) ("The owner of a trade name must do its own police work."); Hard Rock Cafe Licensing Corp. v. Concession Services, Inc. 955 F.2d 1143, 1149 (7th Cir. 1992) (defendants are not required "to be more dutiful guardians of [trademark plaintiffs'] commercial interests"). It is not the responsibility of any registrar, web host, or ISP to police its servers for infringing material. As other courts have recognized, it is far less burdensome for Vuitton and other rights holders, to police their own intellectual property on the Internet and give DMCA-complaint notices of infringement. Even if Defendants were best situated for some reason to police Vuitton's intellectual property (and Vuitton has not so shown), it is not the Defendants' legal responsibility. Tiffany, Inc. at 518 ("[E]ven if it were true that eBay is best situated to staunch the tide of trademark infringement to which Tiffany and countless other rights owners are subjected, that is not the law.") b. No Practical or Legal Means Exists to Meet Vuitton's Demands Vuitton ignores the fact that there is no lawful or practical way for Defendants to monitor information transmitted through or stored on the servers they rent to resellers. With 40,000 IP addresses accessing 1,500 Internet servers constantly, there is no possible or practical means to wiretap communications or monitor content in such a way that can prevent or identify every appearance of a copyrighted work or a trademark associated with the Defendants' services. In any case, such monitoring would be a criminal offense. Even if Defendants wanted to comply with the injunction, they cannot physically or lawfully do so. This will necessarily lead to unintentional violation of an injunction and the annihilation of Defendants' business. Vuitton's Proposed Injunction is Defendants' ruin, despite all possible efforts to comply with an injunction order. Of course Vuitton makes no bones about the fact that its unprecedented and impossible injunction will force Defendants out of business, apparently to discourage other web hosts from leasing servers to Chinese resellers. Vuitton brazenly argues that if Defendants cannot do the impossible, they must simply go out of business. (Vuitton's Motion at 9:11-19) Vuitton relies on 166755.8-10562-002-1/4/2010 15 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page22 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A&M Records v. Napster, Inc., 284 F.3d 1091 (9th Cir. 2002). But Napster did not hold that parties must accomplish the impossible, else discontinue service. In fact, the decision rested on the explicit finding that "more could be done to maximize the effectiveness of [a] new [audio fingerprint] filtering mechanism" that was already in place to filter out specifically identified copyrighted works. Id. at 1098. This case is nothing like Napster. Unlike Napster's audio recognition software, Vuitton has not identified specific means to preemptively filter out "infringing" content. Also, identifying "infringing" content in the form of insignias on random products is quite a different matter from identifying songs. An infringing website can take any number of forms while songs are fixed and recognizable to a business that is established to allow the trading of music. Napster's entire business purpose was to challenge the copyright laws and it was used almost exclusively for infringing purposes.11 Defendants here are in the legitimate and important business of providing Internet services. Occasional third-party infringement does not justify an injunction. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 938 (2005) ("Grokster and StreamCast, unlike the manufacturer and distributor in Sony, acted with a purpose to cause copyright violations by use of software suitable for illegal use.") The balance of hardships militates against an injunction. 4. An Injunction is Against the Public Interest Public interest consideration weighs heavily against Vuitton. Provision of Internet hosting services is not only legitimate, it is necessary to the modern economy. Even if there are some abuses of the technology, Internet hosting and web hosting services provide substantial non-infringing uses that are critical to American business and to the American consumer. Anything that reduces the wide availability of those services harms the public, even if some particular vendor is legitimately helped. Because it will not be technically possible for the Defendants or other ISP's to comply with the injunction; Vuitton has not attempted to establish how it is technically possible to comply with its injunction. This will lead to a reduction in Internet services to the public (especially for American companies doing business with Asia) because other ISPs will be threatened with similar injunctions Grokster, 518 F. Supp. 2d at 1216 ("StreamCast's entire business was built around the fundamental premise that Morpheus would be utilized to infringe copyrights, including those owned by Plaintiffs.") 166755.8-10562-002-1/4/2010 11 16 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page23 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 by Vuitton and others like it. It will not be reasonable for American companies in the Internet hosting business (and the many American companies who supply them goods and services) to continue providing modern Internet communications because of the fear of draconian sanctions being sought against them, regardless of the falsity of allegations of contributory infringement. The public will suffer. The American technology business sector will suffer. Lessened competition will cause prices to increase. American and other companies will tend to go off-shore and harm America. Meanwhile, the public interest is only slightly served, if at all, by providing unreasonable protection from competition to wealthy owners of trademarks and copyrights, while lessening the duty of those companies to police their marks and rights. Vuitton likely wants to put these Defendants out of business in order to use them as object lessons when threatening other ISPa. The injunction would serve as dangerous new precedent against other, similarly situated businesses. This would reduce competition. Reduced competition is undeniably against the public interest, as evidenced by countless state and federal laws designed to promote and protect competition. Vuitton points to no counterbalancing public benefit. This is not surprising. IP laws are not meant to protect the owners of intellectual properties. Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 156 (9th Cir. 1963).12 Intellectual property laws are meant to protect consumers from confusion as to the source of goods. Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062, 1067 (9th Cir. 2006) ("The principal role of trademark law is to ensure that consumers are able to identify the source of goods. [Qualitex Co. v. Jacobson Products, Co., Inc., 514 U.S. 159, 164 (1995).]") Intellectual property laws are not, as Vuitton's implies, modern versions of the sumptuary laws of yore, meant to protect wealthy aristocrats from suffering cheaper versions of luxury goods seen in the hands of the great unwashed. Even the most credulous consumer could not be confused as to whether a $100 handbag advertised a Chinese website as a "replica" is an authentic Vuitton product. Vuitton's injunction cannot serve the public interest. Vuitton has not established, as it must, all four requirements injunctive relief. "The law is not made for the protection of experts, but for the public- that vast multitude which includes the ignorant, the unthinking and the credulous, who, in making purchases, do not stop to analyze, but are governed by appearance and general impressions." (Internal citations omitted). 166755.8-10562-002-1/4/2010 12 17 OPP. TO MOTION FOR PERMANENT INJUNCTION ­ C 07-3952 JW Case5:07-cv-03952-JW Document257 Filed01/04/10 Page24 of 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. Vuitton's Laundry List of "Abundant Evidence" Is Irrelevant to eBay Ignoring the required eBay factors, Vuitton instead offers a laundry list of irrelevant purported facts that it claims necessitate an injunction. (Vuitton's Motion at 3:12-5:10) Its "abundant evidence" consists solely of unidentified and unauthenticated trial transcripts about irrelevancies. The eBay requirements are not established by evidence that: Defendants treated a request for documents regarding a particular site as notice that Vuitton believed the site was engaged in infringement. (Motion at 3:13-15); A reseller had customers with websites on multiple IP addresses. (Id. at 4:7-9); An unidentified part-time employee had heard of Microsoft and eBay so referred complaints from them to Defendant Steve Chen. (Id. at 4:12-14); Defendants disconnected servers that were used for SPAM. (Id. at 4:15-16); Defendants rarely charged resellers a $25 reconnection fee. (Id. at 4:17); A complaint to Soft Layer was "usually enough to solve [a] problem." (Id. at 4:2427); or It is reasonable for an ISP to respond to abuse complaints in a week. (Id. at 5:4-6). Other assertions are not only irrelevant to Vuitton's eBay burden, but misleading: Vuitton suggests that because documents say lovernike.com was unplugged more than once, Defendants are liars. Id. at 4:3-5. But that website was unplugged more than once because Defendants chased it down at a different IP address. Exh "616" at p.14. Vuitton asserts Defendants' expert testified that domain name filtering can exclude sites with particular names from servers. (Id. at 5:1-3) The purported testimony, at most, only suggests Defendants' employees can be barred from certain sites. Vuitton's rambling list is irrelevant, is based on unauthenticated testimony, and mischaracterizes that purported testimony. This list is no substitute for proving each eBay factors. IV. IF VUITTON WERE ENTITLED TO AN INJUNCTION, IT IS NOT THIS ONE A. The Injunction is Vague and Overbroad in Violat

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?