Disney Enterprises, Inc. et al v. Hotfile Corp. et al

Filing 400

RESPONSE in Opposition re 318 MOTION for Partial Summary Judgment PUBLICLY FILED VERSION >PLAINTIFFS' MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT HOTFILE CORPORATION'S MOTION FOR PARTIL SUMMARY JUDGMENT BASED ON DIGITAL MILLENIUM COPYRIGHT ACT (AND ATTACHED DECLARATION OF JENNIFER V. YEH IN OPPOSITION TO HOTFILE CORP.'S MPSJ AND TITOV'S MSJ) (PUBLIC REDACTED VERSION) filed by Columbia Pictures Industries, Inc., Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios Productions LLLP, Warner Bros. Entertainment Inc.. (Attachments: # 1 Exhibit Exhibits 125-129 to Declaration of Jennifer Yeh, # 2 Exhibit Exhibits 130-134 to Declaration of Jennifer Yeh, # 3 Exhibit Exhibits 135-139 to Declaration of Jennifer Yeh, # 4 Exhibit 140 to J. Yeh Declaration, # 5 Exhibit 141 to J. Yeh Declaration, # 6 Exhibit 142 to J. Yeh Declaration, # 7 Exhibit 143 to J. Yeh Declaration, # 8 Exhibit 144 to J. Yeh Declaration, # 9 Exhibit 145 to J. Yeh Declaration, # 10 Exhibit 146 to J. Yeh Declaration, # 11 Exhibit 147 to J. Yeh Declaration, # 12 Exhibit 148 to J. Yeh Declaration, # 13 Exhibit 149 to J. Yeh Declaration, # 14 Exhibit 150 to J. Yeh Declaration)(Stetson, Karen)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-CIV-20427-WILLIAMS/TURNOFF
DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM CORPORATION,
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES, INC., and
WARNER BROS. ENTERTAINMENT INC.,
Plaintiffs,
v.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10.
Defendants.

/

HOTFILE CORP.,
Counterclaimant,
v.
WARNER BROS. ENTERTAINMENT INC.,
Counterdefendant.
/
PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT
HOTFILE CORPORATION’S MOTION FOR PARTIAL SUMMARY JUDGMENT
BASED ON THE DIGITAL MILLENNIUM COPYRIGHT ACT SAFE HARBOR

[CONFIDENTIAL]
[FILED UNDER SEAL PURSUANT TO PROTECTIVE ORDER]

TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... ii
CITATION LEGEND .................................................................................................................... iv
PRELIMINARY STATEMENT .....................................................................................................1
ARGUMENT ...................................................................................................................................2
I.

HOTFILE SEEKS AN IMPROPER ADVISORY OPINION. ............................................3

II.

HOTFILE CANNOT SEEK PARTIAL SUMMARY JUDGMENT BY
SPLITTING UP PLAINTIFFS’ CLAIMS TEMPORALLY. ..............................................6

III.

HOTFILE IS LIABLE FOR THE POST-COMPLAINT INFRINGEMENTS IT
INDUCED BY ITS PRE-COMPLAINT CONDUCT. ........................................................8

i

TABLE OF AUTHORITIES
CASES
In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003) ................................................11
ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619 (4th Cir. 2001) ...............................11
Chastain v. AT&T, 558 F.3d 1177 (10th Cir. 2009) ........................................................................3
CIVIX-DDI, L.L.C. v. Cellco Partnership, 387 F. Supp. 2d 869 (N.D. Ill. 2005) .......................4, 6
Columbia Pictures Industries, Inc. v. Fung, No. CV 06-5578 SVW, 2010 U.S. Dist.
LEXIS 91169 (C.D. Cal. May 20, 2010) ...............................................................................8, 9
Columbia Pictures Industries, Inc. v. Fung, No. CV 06-5578 SVW, 2009 WL 6355911
(C.D. Cal. Dec. 21, 2009) ........................................................................................................11
DF&R Corp. v. American International Pacific Industries Corp., 830 F. Supp. 500 (D.
Minn. 1993)................................................................................................................................6
Eagle Comtronics, Inc. v. John Mezzalingua Associates, Inc., 198 F.R.D. 351 (N.D.N.Y.
2000) ......................................................................................................................................5, 6
Fox v. Good Samaritan L.P., 801 F. Supp. 2d 883 (N.D. Cal. 2010), aff’d, No. 10-15989,
2012 WL 345894 (9th Cir. Feb. 3, 2012) ..................................................................................3
Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354 (Fed. Cir. 2006)............................8
Howe v. Baker, 796 F.2d 1355 (11th Cir. 1986) ..............................................................................3
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197 (C.D. Cal.
2007) .............................................................................................................................. 8, 10-11
Newman-Green, Inc. v. Alfonzo-Larrain R., 612 F. Supp. 1434 (N.D. Ill. 1985) ...........................7
Ortiz v. Lopez, 688 F. Supp. 2d 1072 (E.D. Cal. 2010) ...................................................................3
Rasmussen v. City of New York, 766 F. Supp. 2d 399 (E.D.N.Y. 2011) .........................................7
SEC v. Liberty Capital Group, Inc., 75 F. Supp. 2d 1160 (W.D. Wash. 1999) ...............................7
St. Paul Mercury Ins. Co. v. FDIC, 2010 U.S. Dist. LEXIS 30930 (S.D. Fla. Mar. 30,
2010) ..........................................................................................................................................3
Zimmer Technology, Inc. v. Howmedica Osteonics Corp., 476 F. Supp. 2d 1024 (N.D.
Ind. 2007) ...................................................................................................................................6

ii

OTHER AUTHORITIES
11 James Wm. Moore, Moore’s Federal Practice § 56.05[1][a] (3d ed. Supp. 2011) ................ 3-4
10B Charles Alan Wright et al., Federal Practice & Procedure § 2736 (3d ed. 1998) ..................7

iii

CITATION LEGEND
1.

“Compl.” shall refer to plaintiffs’ Complaint, filed Feb. 8, 2011 (Dkt. #1).

2.

“Foster Decl.” shall refer to the declaration of Dr. Ian Foster, dated and filed

February 17, 2012, in support of Plaintiffs’ Motion for Summary Judgment Against Defendants
Hotfile Corp. and Anton Titov, available publicly at Docket No. 325-17.
3.

“HF Mot.” shall refer to defendant Hotfile Corporation’s Motion and

Memorandum of Law for Partial Summary Judgment Based on the Digital Millennium
Copyright Act Safe Harbor, dated February 17, 2012, available publicly at Docket No. 318.
4.

“HF SUF” shall refer to specific paragraph numbers of defendant Hotfile

Corporation’s Statement of Undisputed Material Facts in Support of its Motion and
Memorandum of Law for Partial Summary Judgment Based on the Digital Millennium
Copyright Act Safe Harbor, dated February 17, 2012available publicly at Docket No. 319.
5.

“Opp. SUF” shall refer to specific paragraph numbers of uncontroverted facts in

Plaintiffs’ Counterstatement of Material Facts in Opposition to Hotfile’s Motion for Partial
Summary Judgment Based on the Digital Millennium Copyright Act Safe Harbor.
6.

“Pls. Mot.” shall refer to Plaintiffs’ Motion for Summary Judgment Against

Defendants Hotfile Corp. and Anton Titov, dated February 17, 2012, available publicly at
Docket No. 322.
7.

“PSUF” shall refer to specific paragraph numbers of uncontroverted facts in

Plaintiffs’ Statement of Uncontroverted Facts submitted in support of Plaintiffs’ Motion for
Summary Judgment Against Defendants Hotfile Corp. and Anton Titov, dated February 17,
2012, available publicly at Docket No. 323.
8.

“Wold Decl.” shall refer to the declaration of Dr. Erling Wold, dated February 15,

2012, and filed on February 17, 2012 in support of Plaintiffs’ Motion for Summary Judgment
Against Defendants Hotfile Corp. and Anton Titov, available at Docket No. 270-6.
9.

“Yeh Ex. __,” shall refer to exhibits attached to the Declaration of Jennifer V.

Yeh in Support of Plaintiffs’ Motion for Summary Judgment Against Defendants Hotfile Corp.
and Anton Titov, dated February 16, 2012, as well as the Declaration of Jennifer V. Yeh in
Support of Plaintiffs’ Opposition to Defendants’ Motions for Summary Judgment, filed herewith.
For the convenience of the Court, the exhibits attached to the Yeh Declarations have been
consecutively numbered, with Exhibits attached to the Yeh Declaration filed today continuing
iv

from the numbering in the previous set of exhibits. Where appropriate, citations to such exhibits
may also include pinpoint citations to the page number(s), and paragraph or line numbers,
internal to the cited document. In some instances where individual Yeh Declaration exhibits
were not paginated, page numbers have been added manually for ease of the Court’s reference.
The parentheticals indicate the nature of the item cited – e.g., deposition transcripts (“dep.”) – or
documents produced in discovery by various parties. Thus, by way of illustration, “Yeh Ex. 1
(Titov dep.) at 200:1-10” would refer to the deposition of defendant Anton Titov, which could be
found in Exhibit 1 to the Yeh Declaration, at page 200 of the transcript pages, at lines 1 through
10. And, “Yeh Ex. 110 at 2” would refer to Exhibit 110 to the Yeh Declaration, and specifically
the page of that Exhibit found at page 2 of the numbered Exhibit pages.

v

PRELIMINARY STATEMENT
Plaintiffs’ motion for summary judgment demonstrates why Hotfile is liable for copyright
infringement and ineligible for DMCA safe harbor as a result of the unlawful conduct described
in the complaint. Recognizing it does not have a viable defense as to that conduct, Hotfile, in its
cross-motion, does not address the complaint allegations at all. Rather, Hotfile claims to have
“reformed” and asks the Court for an improper advisory opinion that, in its allegedly new
incarnation, it is immune from liability under copyright law. Hotfile’s motion is procedurally
improper and a misuse of Rule 56.
Hotfile seeks partial summary judgment on operational changes Hotfile claims to have
made after plaintiffs brought suit and, in many cases, only within the past few weeks, after
discovery closed. In doing so, Hotfile describes a service that is considerably different from the
one plaintiffs sued – a service that, according to Hotfile: (i) has a robust repeat infringer policy
that systematically terminates repeat infringers; (ii) no longer pays Hotfile Affiliates to upload
copyright infringing content; and (iii) incorporates industry leading copyright filtering
technology to mitigate infringement on its system. In short, instead of addressing the merits of
plaintiffs’ complaint, Hotfile asks the Court to rule on conduct not raised in the pleadings or
litigated by the parties, based on a version of the Hotfile service that did not exist when the
complaint was filed and that was not the subject of discovery.
Hotfile’s motion for summary judgment is improper for numerous reasons, any one of
which requires that it be denied.
First, Hotfile seeks an impermissible advisory opinion on alleged post-complaint
changes, most of which were made within the past few weeks, after the close of discovery. It is
black letter law that the Court cannot decide – much less grant summary judgment on – issues
not raised in the pleadings or litigated in the case.
Second, Hotfile is not be permitted under Rule 56 to carve up plaintiffs’ claims into
multiple time periods with different facts for purposes of assessing liability. While Rule 56
permits a party to seek partial summary judgment on distinct elements of a claim, it does not
permit a party to go fact-by-fact, or week-by-week, seeking partial summary judgment in a
piecemeal fashion.
Third, beyond these procedural defects, Hotfile’s motion must fail because Hotfile
remains secondarily liable for infringement it induced through the conduct alleged in the
1

complaint, even if the resulting acts of direct infringement occurred post-complaint. Hotfile
seeks to present itself as “reformed” based on post-complaint modifications to its system and
business model. However, as courts considering similar claims of “reform” have observed, an
infringer such as Hotfile cannot simply claim that it has “turned off” its purposeful inducement
of infringement and thereby absolve itself of responsibility for subsequent infringements.
Hotfile remains liable for those infringements.
Hotfile’s motion for summary judgment is not just meritless, it is improper. Hotfile is not
entitled to judgment, on summary judgment or at trial, on claims not at issue in this case.
Hotfile’s motion should be denied.
ARGUMENT
Plaintiffs brought this action only after they sent notice after notice to Hotfile over the
course of two years, identifying well over a million individual files as infringing, to no effect.
The volume of infringing files on Hotfile grew so fast that no copyright owner could ever hope
to fully mitigate the infringement by identifying individual files and taking them down through
notices. Hotfile knows that, which is why Hotfile responds to takedown notices and provides
“SRA” accounts: doing so allows Hotfile to claim (falsely) that it is cooperating with copyright
holders, without having any meaningful effect on piracy. Indeed, Hotfile’s practice of only
taking down files one by one, while actively incentivizing users to upload infringing files en
masse, effectively challenged copyright holders to try to empty the ocean with a teaspoon while
Hotfile continually filled it with a fire hose.
The rampant, uncontrolled infringement on Hotfile was not a coincidence or a result of
happenstance. Hotfile intended it. Thus, as alleged in the complaint, plaintiffs sued Hotfile
because it:
o

Overtly induced infringement through an Affiliate program that rewarded users for
uploading copyright infringing content, Compl. ¶¶ 28-34;

o

Knew that it was a notorious haven for copyright infringement, used for infringement and
little else, Compl. ¶¶ 37, 44;

o

Adopted a business model that depended on and profited from rampant copyright
infringement, Compl. ¶¶ 24-27;

o

Refused to take action against even its most blatant repeat infringers, Compl. ¶ 42;

2

o

Eschewed using readily available technology to mitigate infringement, Compl. ¶¶ 39, 41;
and

o

Limited its “response” to this massive copyright infringement to removing files one by
one, only when specifically identified by a copyright owner, Compl. ¶ 38.

Those were the allegations raised in the complaint and litigated by the parties.
Hotfile’s motion for partial summary judgment expressly disavows consideration of the
actual claims in suit. Instead, Hotfile seeks summary judgment on alleged post-complaint
changes that were neither raised by the pleadings nor litigated by the parties – and most of
which, by Hotfile’s own account, took place within the past few weeks.1
I.

HOTFILE SEEKS AN IMPROPER ADVISORY OPINION.
It is black letter law that courts cannot render an advisory opinion on issues not placed in

dispute in the litigation. See Howe v. Baker, 796 F.2d 1355, 1360-61 (11th Cir. 1986) (“A court
‘[has] no power to issue advisory opinions’”) (quoting North Carolina v. Rice, 404 U.S. 244, 246
(1971) (bracket in original)); Chastain v. AT&T, 558 F.3d 1177, 1184 (10th Cir. 2009) (court
may not issue advisory opinion to assess a “claim that has not been made”); St. Paul Mercury
Ins. Co. v. FDIC, Case No. 08-21192-Civ-GARBER, 2010 U.S. Dist. LEXIS 30930, 26-27 (S.D.
Fla. Mar. 30, 2010) (“the Court declines to issue an advisory opinion” as to “claims [that] are not
at issue in this litigation”).
Any post-complaint changes by Hotfile plainly were not raised in plaintiffs’ complaint or
litigated in the case. As courts have routinely made clear, “[t]he issues on summary judgment
are framed by the complaint. Indeed, the issues in the complaint guide the parties during
discovery and put the defendant on notice of what evidence is necessary to defend against the
allegations.” Ortiz v. Lopez, 688 F. Supp. 2d 1072, 1082 (E.D. Cal. 2010); see also Fox v. Good
Samaritan L.P., 801 F. Supp. 2d 883, 896 (N.D. Cal. 2010) (“While a summary judgment motion
does go beyond the pleadings in the sense that it tests the sufficiency of the evidence to support
the allegations of the complaint, those allegations still serve to frame – and limit – the issues”),
aff’d, No. 10-15989, 2012 WL 345894 (9th Cir. Feb. 3, 2012). “By framing the dispute, the
In its motion, Hotfile makes various assertions about its pre-complaint conduct that are
unsupported and mischaracterize the evidence, but which are not material to Hotfile’s motion on
its post-complaint conduct. E.g., HF Mot. at 3-8. As relevant, plaintiffs will address Hotfile’s
assertions in plaintiffs’ motion for summary judgment.
1

3

pleadings affect the availability of summary judgment.” 11 James Wm. Moore et al., Moore’s
Federal Practices § 56.05[1][a] (3d ed. Supp. 2011). Therefore, Hotfile cannot seek summary
judgment on issues related to its post-complaint conduct, as a party “is not entitled to summary
judgment on claims that are not part of th[e] dispute.” CIVIX-DDI, L.L.C. v. Cellco P'ship, 387
F. Supp. 2d 869, 881 (N.D. Ill. 2005).
Plaintiffs sued Hotfile based on its system and business model as they existed precomplaint. The complaint does not address whether Hotfile is or would be liable based on the
system and business model that Hotfile claims to have implemented post-litigation, and which
apparently continues to change. Those alleged post-complaint changes simply present a different
set of issues than those raised in the pleadings.2 Thus, for instance:
1.

Hotfile claims to have made recent – and significant – changes to its “repeat

infringer” practices even beyond the “three strikes” policy Hotfile claims to have adopted on
February 18, 2011. Hotfile now claims that a year later, in February 2012, it eliminated its
website Affiliate program altogether (presumably so it can argue that it no longer has an
obligation to terminate repeat infringing Affiliate websites). HF SUF 28. Hotfile also claims to
have “eliminated the ability of [unregistered] users to anonymously upload files.” Id. It also
claims to have instituted some form of escalating punishment pursuant to which a first time
offender must attend an online “copyright school.” Id. Hotfile asserts these as “material facts”
that support its motion. Id. Yet, none of these alleged new policies was in place in February
2011. Even accepting Hotfile at its word, none existed until a year later, in February 2012. Id.
None was raised by the pleadings or contemplated in the complaint. None was subject to
discovery – and, indeed, each of these changes was allegedly made well after discovery closed.
2.

Hotfile further claims that in February 2012 it revamped the rewards system for

its uploader Affiliate Program. According to Hotfile, instead of paying uploaders based on how
many times their files are downloaded, now Hotfile “counts credits only based on premium

Hotfile’s “voluntary” reforms within the past few weeks have nothing to do with a desire to
mitigate copyright infringement. They are no doubt a reaction to the Megaupload indictment. In
recent weeks, many download hubs similar to Megaupload and Hotfile have shut down entirely,
stopped allowing downloads by anyone other than the account holder, or otherwise tried to
distance themselves from Megaupload to avoid criminal prosecution. Yeh Ex. 145 (collecting
media reports). Hotfile is no different.
2

4

conversions (not download counts).” HF SUF 28. Facially, this revised Affiliate program still
encourages users to upload “popular” content. Just like the old rewards program, the new
program incentivizes Affiliates to upload the most popular content so as to attract as many users
as possible to Hotfile, since more users mean more conversions to premium accounts.
Regardless, this allegedly new version of the Affiliate Program, which Hotfile cites as a material
fact supporting its motion, id., was not raised in the pleadings or contemplated in the complaint,
and was not subject to discovery. By Hotfile’s account, it was adopted only a few weeks ago.
3.

Hotfile also now claims to have implemented Vobile digital fingerprinting

technology as the basis of a copyright filter to prevent uploads of infringing files. However,
according to Hotfile, it did not incorporate Vobile’s vCloud9 until February 2012, after the close
of discovery, following the limited adoption of another Vobile product in late summer 2011. HF
SUF 25, 27. Plaintiffs have not had any ability to discover how, or even whether, Hotfile has
implemented its alleged new copyright filter. Moreover,

Hotfile easily could ensure that substantial numbers
of infringing files bypass the filter or otherwise “leak” through – all while touting, as it does
here, that it has adopted sophisticated copyright filtering. Without discovery, the Court and
plaintiffs have no way to evaluate Hotfile’s untested claims.3
In the patent context, where this situation arises more frequently, courts routinely reject
defendants’ efforts to seek summary judgment on post-complaint modifications to an allegedly
infringing device. See, e.g., Eagle Comtronics, Inc. v. John Mezzalingua Assocs., Inc., 198
F.R.D. 351 (N.D.N.Y. 2000) (summary judgment on whether product re-designed after
Hotfile’s current DMCA motion is reminiscent of the DMCA motion that Hotfile repeatedly
sought leave to bring at the outset of the case, before any discovery. The Court properly rejected
Hotfile’s earlier attempts to present its DMCA defense on an undeveloped and sanitized record.
And, indeed, discovery has demonstrated the unreliability of Hotfile’s untested assertions. For
example, in Hotfile’s first substantive filing in this case, before any discovery, Titov filed a
sworn declaration attesting that “Hotfile terminates the accounts of users who have repeatedly
uploaded files that are or are asserted to be protected by copyright.” Yeh Ex. 9 (Feb. 27, 2011
Titov Decl.) ¶ 13. Only through arduous discovery did the true – and very different – facts come
to light. Pls. Mot. at 10-12; PSUF 2-5. There is no reason to believe that Hotfile’s current
claims that it has “reformed” its practices post-complaint (and post-discovery) are any different.
3

5

complaint was infringing denied as improper advisory opinion); DF&R Corp. v. American Int’l
Pacific Industries Corp., 830 F. Supp. 500, 502 (D. Minn. 1993) ( “a declaration that
[defendant’s] proposed alternative design . . . does not infringe” rejected as impermissible
advisory opinion); see also CIVIX-DDI, 387 F. Supp. 2d at 881 (rejecting defendant’s attempt to
move for summary judgment of noninfringement for non-asserted patent infringement claims);
Zimmer Tech., Inc. v. Howmedica Osteonics Corp., 476 F. Supp. 2d 1024, 1037 (N.D. Ind. 2007)
(denying plaintiff’s summary judgment motion because defendant “never asserted those
invalidity arguments” and such a ruling would be “an improper advisory opinion”).
In Eagle Comtronics, for example, the defendant sought summary judgment on whether a
product redesigned after the complaint was infringing. In denying the motion, the Court
observed that:
[b]ecause defendant redesigned its [product] after the institution of this action, the
amended complaint does not, nor could it, challenge the design of the new
[product]. For this reason, the question of whether the redesigned filter infringes
upon the . . . patent has not been placed before this court, and so there is no actual
case or controversy regarding this specific filter. Absent th[is] essential
requirement, defendant’s motion for partial summary judgment is actually a
request for an advisory opinion.
Eagle Comtronics, 198 F.R.D. at 354.
The advisory opinion Hotfile seeks is no different from the one sought by the Eagle
Comtronics defendant. At best, Hotfile’s arguments about post-complaint conduct are directed at
the scope of injunctive relief, and are premature. For the same reasons as in Eagle Comtronics
and the cases cited above, Hotfile’s motion should be denied.
II.

HOTFILE CANNOT SEEK PARTIAL SUMMARY JUDGMENT BY SPLITTING
UP PLAINTIFFS’ CLAIMS TEMPORALLY.
Hotfile’s motion should be rejected for an independent reason: Hotfile has not brought a

proper motion under Rule 56. Courts have squarely rejected motions for partial summary
judgment under Rule 56(a) that merely seek piecemeal adjudication of specific facts. But that is
precisely what Hotfile is doing here. Hotfile seeks a ruling on liability covering a period of one
year – a year in which Hotfile admits many material facts changed even from the beginning of
the year (February 2011) to the end of the year (February 2012), with most changes having
occurred within just the past few weeks. See supra 4-5; HF SUF 21-23, 25-28. Hotfile’s attempt
to “carve up” plaintiffs’ claims to seek piecemeal adjudication in this manner fundamentally
misuses the Rule 56 summary judgment procedures.
6

Courts permit partial summary judgment motions on entire elements or issues of a claim
under Rule 56(a). See 10B Charles Alan Wright et al., Federal Practice and Procedure § 2736
(3d ed. 1998) (court may consider issue of liability separately on partial summary judgment).
However, courts reject summary judgment motions seeking piecemeal consideration of facts that
underlie a claim as inefficient and contrary to the purpose of Rule 56. See SEC v. Liberty
Capital Group, Inc., 75 F. Supp. 2d 1160, 1164 (W.D. Wash. 1999) (denying motion based on
“piecemeal division” of facts); Rasmussen v. City of New York, 766 F. Supp. 2d 399, 404
(E.D.N.Y. 2011) (Rule 56(a) “does not permit elimination of particular facts from the jury’s
consideration”).
The amendments to Rule 56 in December 2010, while clarifying the availability of partial
summary judgment, do not begin to sanction Hotfile’s carving up of issues by fact and time:
“Although [the amended] Rule 56 allows a party to seek summary judgment on part of a claim,
the reference to ‘part’ is best understood as relating to either the entirety of liability, or damages,
or at least a discrete element of damages.” Rasmussen, 766 F. Supp. 2d at 404. Thus, courts
“do[] not permit the piecemealing of a single claim . . . simply by dividing it into different time
periods.” Newman-Green, Inc. v. Alfonzo-Larrain R., 612 F. Supp. 1434, 1439 (N.D. Ill. 1985)
(emphasis added).
Hotfile does not seek summary judgment on an entire element or issue of plaintiffs’ claim
or its defense, but rather a ruling as to whether it is entitled to DMCA safe harbor for a period of
a single year, and based on a variety of factual changes occurring at different times over the
course of that single year. Hotfile apparently would have the Court assess Hotfile’s compliance
with each DMCA requirement as the material facts changed over time: e.g., Hotfile’s initial
implementation of a “three-strikes” policy and belated termination of some repeat infringing
users starting in February 2011, HF SUF 21-23, Titov Ex. 35 at 293; Hotfile’s preliminary
experimentation with some Vobile technology in the summer of 2011, HF SUF 25; followed by
Hotfile’s claimed fuller implementation of filtering a half a year later, HF SUF 26-27; Hotfile’s
claimed further modifications to its “repeat infringer” policy in February 2012, HF SUF 28; and
Hotfile’s claimed overhaul of its Affiliate Programs in February 2012, HF SUF 28. Hotfile,
moreover, asks the Court to adjudicate the impact of these changes in a vacuum, without
considering Hotfile’s pre-complaint inducement of infringement, and without the benefit of a
discovery record to test Hotfile’s bare assertions.
7

Hotfile’s motion is procedurally improper and should be denied.
III.

HOTFILE IS LIABLE FOR THE POST-COMPLAINT INFRINGEMENTS IT
INDUCED BY ITS PRE-COMPLAINT CONDUCT.
Even if Hotfile’s motion were procedurally proper (and it is not), Hotfile’s motion should

be denied because Hotfile remains liable for infringements it induced by its conduct prior to
February 18, 2011, even if the acts of direct infringement occurred after the complaint was filed.
As explained in plaintiffs’ motion for summary judgment, in the period prior to the complaint,
defendants induced a massive amount of infringement by their users. Pls. Mot. at 29-32; PSUF
16. Defendants spent two years building Hotfile as a destination to download infringing content,
and continued doing so even after plaintiffs brought suit. Hotfile cannot claim DMCA safe
harbor for its inducement of those post-complaint infringements, even if, as it claims, it changed
some of its inducing practices.
Courts that have considered this issue have made clear that past acts can induce
infringement going forward. As the district court held on remand in Grokster:
For a party to be liable for inducement, distribution may begin prior to any
promotion of infringement, distribution and promotion can occur at the same
time, and most critically, distribution can follow past promotion. This highlighted
portion of the above sentence is crucial. As a matter of common sense, a
successful inducer will sometimes have no need to repeat the infringing message
ad infinitum. This is especially likely to be the case where the product in question
is overwhelmingly used for infringing purposes, and requires little or no
specialized training to operate. At a certain point, the inducer can simply
continue to distribute the product without any additional active encouragement,
recognizing that the marketplace will respond in turn. Thus, once the market has
internalized the inducer’s promotion of infringement, the resulting infringements
should be attributable to that defendant even though he/she no longer chooses to
actively promote that message.
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1233-34 (C.D. Cal.
2007) (emphasis in original); see also Columbia Pictures Indus., Inc. v. Fung, No. CV 06-5578
SVW (JCx), 2010 U.S. Dist. LEXIS 91169, at *11 (C.D. Cal. May 20, 2010) ( “Defendants
operated their websites as popular destinations for copyright infringement and etched their niche
in the market for infringement” and therefore future infringements would follow past acts of
inducement); Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1362-63 (Fed. Cir.
2006).

8

In this case, defendants operated Hotfile as a popular destination for copyright
infringement and “etched [their] niche in the market for infringement.” Fung, 2010 U.S. Dist.
LEXIS 91169, at *11. For instance:
o

Hotfile actively encouraged its users to upload and promote copyrighted content, paying
its Affiliates greater amounts based on the number of downloads of a file. Pls. Mot. at 57; PSUF 16(a)(ii)-(iv). Hotfile now speaks of users providing “access to their files to coworkers, friends and family.” HF Mot. at 3. But in truth Hotfile’s business is based on,
and Hotfile actively promoted, the mass distribution of files – i.e., downloads by the
thousands. PSUF 16(a)(iii) & Yeh Ex. 60 at 1.

o

Hotfile was used overwhelmingly for infringement – over 90% of downloads from
Hotfile were of infringing content. PSUF 10(a)(i).

o

Hotfile did not terminate even the most blatant repeat copyright infringers, though
of
Hotfile users had ten, 25 or even 100 or more infringement “strikes” from copyright
owner notices, and yet Hotfile permitted them to continue infringing. Pls. Mot. at 11-12;
PSUF 5(a).4

o

Hotfile repeatedly provided technical assistance to users seeking to download
copyrighted content. Pls. Mot. at 13; PSUF 9(c).

o

Hotfile had full knowledge of the infringement permeating its site but permitted it to
continue. Pls. Mot. at 13-15; PSUF 9 & 10. Indeed, Hotfile acknowledged

Hotfile claims to have learned “for the first time” from reading the complaint in 2011 that its
failure to implement a repeat infringer policy was problematic. HF Mot. at 8. That is simply
disingenuous. In 2009, another copyright owner, Liberty Media, sued Hotfile and argued
strenuously that Hotfile was not properly terminating repeat infringers. See Yeh Ex. 146 at 2324. Hotfile did nothing to “reform” its practices then. Moreover, if Hotfile did not fully
understand that it needed a meaningful repeat infringer policy,
4

9

o

Hotfile built its business on the availability of infringing content to attract users so that it
could try to sell those users “premium” accounts. That is the only way Hotfile makes
money. PSUF 16(e) & 20.5

o

Piracy was so fundamental to Hotfile’s business model that Hotfile did not even
investigate using readily available “digital fingerprinting” technology to mitigate the
infringement. PSUF 16(j). This technology was available and widely used from the day
Hotfile launched. PSUF 16(j)(i); Foster Decl. ¶¶16-18; Yeh Ex. 130 (Wang dep.) at
15:17-25; Wold Decl. ¶¶ 26-27.
These incontrovertible facts are set forth in greater detail in plaintiffs’ motion for

summary judgment (Docket #322), which is incorporated herein. They establish that Hotfile
created a haven for infringing conduct. By the time plaintiffs filed the complaint, Hotfile was
one of the top 100 websites in the world; it had attracted a massive user base of infringing
uploaders and millions of users to download that infringing content. PSUF 10(a); Yeh Ex. 85.
Defendants’ change in their repeat infringer policy in February 2011 may have removed some
infringing uploaders, but it could not wholesale change the message that Hotfile was a
destination for infringing content.6 As in Grokster, the overwhelming use of the site was
infringing. Supra 9; Grokster, 518 F. Supp. 2d at 1234. As in Grokster, Hotfile “remains

Hotfile presents a statistic to the effect that its users convert to “premium” subscriptions at
greater “rates” when downloading noninfringing files than infringing files. HF Mot. at 16.
Hotfile cites this to suggest that it had no incentive to encourage infringement. Even if Hotfile’s
statistic is correct, its conclusion does not follow. Infringing files represent over 90% of what
users download from Hotfile. PSUF 10(a)(i). The number of infringing files so dwarfs the
number of noninfringing files that Hotfile of course would have a powerful incentive to
encourage users to upload infringing files even if the rate of conversion was higher for
noninfringing files. Hotfile could not sustain a business with noninfringing files. For proof, the
Court need look no further

5

There is also ample evidence that, even post-complaint, it was business as usual for Hotfile.
For example, Hotfile continued to pay a website Affiliate

6

Hotfile continued to provide technical assistance to users
seeking blatantly copyrighted content. Yeh Ex. 28 at 16 (e.g., in May 2011, Hotfile provided
technical assistance to a users seeking to download The Howard Stern Show). And, Hotfile user
communications continued to identify countless specific infringing files. Yeh Ex. 144.
10

inexorably linked to its historical efforts to promote infringement. The bell simply cannot be
unrung.” 518 F Supp. 2d at 1235. And, as in Grokster, “[t]here is no difference between these
[post-complaint] infringements and those that are consummated while the defendant is still
engaging in the active promotion of infringement.” Id. at 1234.
As plaintiffs explained in their motion for summary judgment, Hotfile is not entitled to
DMCA safe harbor for infringements that it induced under the Grokster standard. Pls. Mot. at
27-29. The DMCA’s safe harbor protections are strictly limited to “innocent” service providers
who have done what they reasonable can to prevent copyright infringement on their systems.
ALS Scan, Inc. v. RemarQ Cmtys., Inc., 239 F.3d 619, 625 (4th Cir. 2001); In re Aimster
Copyright Litigation, 334 F.3d 643, 655 (7th Cir. 2003). “[I]nducement liability and the
[DMCA] safe harbors are inherently contradictory.” Columbia Pictures Industries, Inc. v. Fung,
No. CV 06-5578 SVW, 2009 WL 6355911, at *18 (C.D. Cal. Dec. 21, 2009); see also Pls. Mot.
at 27-29.
As a result, even if Hotfile’s motion were procedurally proper – which it is not – the
Court could not grant Hotfile sweeping immunity for infringements after February 18, 2011.
Because Hotfile continued to attract users to download infringing content even post-complaint,
based on its purposeful conduct pre-complaint, Hotfile is liable for later infringement tied to its
past inducing activities.
CONCLUSION
Hotfile’s motion for partial summary judgment should be denied.

11

Dated: March 7, 2012

Respectfully submitted,
By: __________________
Karen L. Stetson
GRAY-ROBINSON, P.A.
1221 Brickell Avenue
16th Floor
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]

MOTION PICTURE ASSOCIATION
OF AMERICA, INC.
Karen R. Thorland (Pro Hac Vice)
15301 Ventura Blvd.
Building E
Sherman Oaks, CA 91403
Phone: [phone]
Fax: [phone]

JENNER & BLOCK LLP
Steven B. Fabrizio (Pro Hac Vice)
Duane C. Pozza (Pro Hac Vice)
Luke C. Platzer (Pro Hac Vice)
1099 New York Ave., N.W.
Suite 900
Washington, DC 20001
Facsimile: [phone]
Attorneys for Plaintiffs

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 7th Day of March, 2012, I served the following
documents on all counsel of record on the attached service list via their email address(es)
pursuant to the parties’ service agreement:
Plaintiffs’ Memorandum of Law in Opposition to Defendant Hotfile Corporation’s
Motion for Partial Summary Judgment Based on the Digital Millennium Copyright
Act Safe Harbor
By: ___________________
Karen L. Stetson

SERVICE LIST
Disney Enterprises, Inc., et al. v. Hotfile Corp. et al.
CASE NO. 11-CIV-20427-JORDAN
FARELLA BRAUN + MARTEL LLP
Anthony P. Schoenberg
[e-mail]
Roderick M. Thompson
[e-mail]
N. Andrew Leibnitz
[e-mail]
Deepak Gupta
[e-mail]
Janel Thamkul
[e-mail]
235 Montgomery Street
San Francisco, CA 94104
Phone: [phone]
Attorneys for Defendants Hotfile Corp. and
Anton Titov
BOSTON LAW GROUP, PC
Valentin Gurvits
[e-mail]
825 Beacon Street, Suite 20
Newton Centre, MA 02459
Phone: [phone]
Attorneys for Defendants Hotfile Corp. and
Anton Titov

RASCO KLOCK
Janet T. Munn
[e-mail]
283 Catalonia Ave., Suite 200
Coral Gables, FL 33134
Phone: [phone]
Fax: [phone]
Attorney for Defendants Hotfile Corp. and
Anton Titov

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-CIV-20427-WILLIAMS/TURNOFF
DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM CORPORATION,
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES, INC., and
WARNER BROS. ENTERTAINMENT INC.,
Plaintiffs,
v.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10.
Defendants.

/

HOTFILE CORP.,
Counterclaimant,
v.
WARNER BROS. ENTERTAINMENT INC.,
Counterdefendant.

/

DECLARATION OF JENNIFER V. YEH IN SUPPORT OF PLAINTIFFS’
OPPOSITION TO DEFENDANT ANTON TITOV’S MOTION FOR SUMMARY
JUDGMENT AND TO DEFENDANT HOTFILE CORP.’S MOTION FOR PARTIAL
SUMMARY JUDGMENT BASED ON THE DIGITAL MILLENNIUM COPYRIGHT
ACT SAFE HARBOR
[CONFIDENTIAL]
[FILED UNDER SEAL PURSUANT TO PROTECTIVE ORDER]

I, Jennifer V. Yeh, declare as follows:
1.

I am an attorney at the law firm of Jenner & Block LLP, and counsel to the plaintiffs

Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios
Productions LLLP, Columbia Pictures Industries, Inc., and Warner Bros. Entertainment Inc. The
statements made in this declaration are based on my personal knowledge including on
information provided to me by colleagues or other personnel working under my supervision on
this case. If called to testify, I would testify as follows:
2.
of

Attached hereto as Exhibit 120 is a true and correct copy of excerpts of the deposition
taken on December 8, 2011 in the above-captioned case.

3.
of

Attached hereto as Exhibit 121 is a true and correct copy of excerpts of the deposition
taken on December 7, 2011 in the above-captioned case.

4.

Attached hereto as Exhibit 122 is a true and correct copy of excerpts of the deposition

of Lance Griffin, taken on December 22, 2011 in the above-captioned case.
5.

Attached hereto as Exhibit 123 is a true and correct copy of excerpts of the deposition

of Braxton Perkins, taken on December 16, 2011 in the above-captioned case.
6.

Attached hereto as Exhibit 124 is a true and correct copy of excerpts of the deposition

of Vicki Solmon, taken on December 9, 2011 in the above-captioned case.
7.

Attached hereto as Exhibit 125 is a true and correct copy of excerpts of the deposition

of Betsy Zedek, taken on December 13, 2011 in the above-captioned case.
8.

Attached hereto as Exhibit 126 is a true and correct copy of excerpts of the deposition

of Michael Bentkover, taken on December 13, 2011 in the above-captioned case.
9.

Attached hereto as Exhibit 127 is a true and correct copy of excerpts of the deposition

of David Kaplan, taken on December 13, 2011 in the above-captioned case.
10.

Attached hereto as Exhibit 128 is a true and correct copy of excerpts of the deposition

of defendant Anton Titov, in his personal capacity and as Fed. R. Civ. P. 30(b)(6) representative
of defendant Hotfile Corp., taken from Dec. 5 to Dec. 8, 2011 in the above-captioned case.
11.

Attached hereto as Exhibit 129 is a true and correct copy of excerpts of the ESI

deposition of defendant Anton Titov, as Fed. R. Civ. P. 30(b)(6) representative of defendant
Hotfile Corp., taken on Nov. 17, 2011 in the above-captioned case.
12.

Attached hereto as Exhibit 130 is a true and correct copy of excerpts of the deposition

of Yangbin Wang, taken on December 22, 2011 in the above-captioned case.

13.

Attached hereto as Exhibit 131 is a true and correct copy of an email from Roderick

Thompson to Steven Fabrizio, dated December 31, 2011.
14.

Attached hereto as Exhibit 132 is a true and correct copy of a document produced by

defendants bearing bates label HF02855193.
15.

Attached hereto as Exhibit 133 is the verification signature page of Defendants’

Supplemental Reponses to Interrogatories Nos. 6 and 9, served in the above-captioned case on
September 12, 2011.
16.

Attached hereto as Exhibit 134 is a true and correct copy of a document produced by

defendants bearing bates label HF02855182.
17.

Attached hereto as Exhibit 135 are true and correct copies of Exhibits 5-6 to the

deposition of
18.

Attached hereto as Exhibit 136 are true and correct copies of Exhibits 7-8 to the

deposition of
19.

taken on December 7, 2011 in the above-captioned case.
taken on December 7, 2011 in the above-captioned case.

Attached hereto as Exhibit 137 is a true and correct copy of excerpts of the Transcript

of Status Conference Hearing Before the Honorable William C. Turnoff, United States
Magistrate Judge that took place in the above-captioned case on January 13, 2012.
20.

Attached hereto as Exhibit 138 is a true and correct copy of a document produced by

defendants bearing bates label HF02868393.
21.

Attached hereto as Exhibit 139 is a true and correct copy of the Joint Motion and

Memorandum of Law of the Parties For Voluntary Dismissal of Second and Third Counts of
Hotfile’s First Amended Counterclaim and For Amendment of First Count, filed in the abovecaptioned case on September 22, 2011 (Dkt. # 151).
22.

Attached hereto as Exhibit 140 is Plaintiffs’ Second Supplemental Response to

Defendant Hotfile Corp.’s Interrogatory No. 1, served in the above-captioned case on October 3,
2011, with the exhibits omitted.
23.

Attached hereto as Exhibit 141 are true and correct copies of excerpts of takedown

notices to Hotfile produced by Plaintiffs in the above-captioned case bearing bates labels as
indicated on the documents.
24.

Attached hereto as Exhibit 142 are true and correct copies of documents produced by

Defendants in the above-captioned case bearing bates labels as indicated on the documents.

2

25.

Attached hereto as Exhibit 143 is a true and correct copy of Exhibit 158 to the

deposition of defendant Anton Titov, in his personal capacity and as Fed. R. Civ. P. 30(b)(6)
representative of defendant Hotfile Corp., taken from Dec. 5 to Dec. 8, 2011 in the abovecaptioned case.
26.

Pursuant to Rule 1006 of the Federal Rules of Evidence, attached hereto as Exhibit

144 is a chart summarizing user communications sent to Hotfile after February 18, 2011, where
the “lastdl” field in the user communication matches the title of a copyrighted work owned by
plaintiffs. Persons under my supervision reviewed user communications produced by
Defendants to identify communications where the “lastdl” entry corresponded with a copyrighted
work owned by plaintiffs. The bates number of the user communication produced by defendants,
the URL listed in the “lastdl” field, the date of the communication, and the corresponding title of
plaintiffs’ copyrighted work has been summarized in Exhibit 144.
27.

Attached hereto as Exhibit 145 are true and correct copies of news articles regarding

the reaction of download hubs to the Megaupload indictment, printed on March 5, 2012 by
personnel acting at my direction from the indicated URLs.
28.

Attached hereto as Exhibit 146 is a true and correct copy of the Corrected Reply Brief

to Opposition to Motion for Preliminary Injunction, filed by Liberty Media in Liberty Media
Holdings, L.L.C. v. Hotfile.com, et al., No. 3:09-CV-2396-D (N.D. Tex.), on February 10, 2010
(Dkt. # 47).
29.

Attached hereto as Exhibit 147 is a true and correct copy of a document produced by

plaintiff Disney Enterprises, Inc. bearing bates label DISNEY000288.
30.

Attached hereto as Exhibit 148 is a true and correct copy of a document produced by

plaintiff Disney Enterprises, Inc. bearing bates label DISNEY000234.
31.

Attached hereto as Exhibit 149 is a true and correct copy of a document produced by

plaintiff Twentieth Century Fox Film Corporation bearing bates label FOX003228.
32.

Attached hereto as Exhibit 150 is a true and correct copy of a document produced by

plaintiff Warner Bros. Entertainment Inc. bearing bates label WARNER000001.
33.

The files identified in Plaintiffs’ Supplemental Response to Interrogatory No. 1

(attached as Yeh Ex. 119 to my previous declaration) do not purport to be all plaintiffs’ works
that have been infringed through the Hotfile Website. Upon receiving the Courts’ Order on
Defendants’ Motion to Compel (Dkt. # 147), plaintiffs had a very limited period of time to
3

analyze Hotfie's data which had only recently been produced - to identify instances of
plaintiffs' copyrighted works on the Hotfile Website. Moreover, plaintiffs did not have access to

all of Hotfle' s content files for review at that time. Thus, the files identified in Plaintiffs'
the fies containing

Supplemental Response to Interrogatory NO.1 represent only a portion of

plaintiffs' works that were on Hotfile. Additionally, plaintiffs' interrogatory response only
identifies copyrighted works of which the rights are held by one of the plaintiff companies. It

does not include copyrighted works owned by plaintiffs' affliates that are being infringed

34. I understand from Hotfile's Statement of

Undisputed Material Facts in Support of

its

Motion and Memorandum of Law for Partial Summary Judgment Based on the Digital

Millennium Copyright Act Safe Harbor ("HF SUF") that Hotfile claims to have made certain
changes to its system in February 2012, including allegedly adopting the Vobile vCloud9
technology and modifying its Affiliate and repeat infringer policy. See HF SUF 27, 28. Fact

discovery in this case closed on December 23,2011, and plaintiffs have not had the opportunity
to pursue discovery on any of

these changes purportedly made to Hotfile's system in February

2012.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on March 7, 2012.

4