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

Filing 443

Notice of Supplemental Authority by Disney Enterprises, Inc. (Attachments: # 1 Exhibit A)(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’ NOTICE OF SUPPLEMENTAL AUTHORITY

Plaintiffs submit this Notice of Supplemental Authority to bring to the Court’s attention a
recent decision from the Second Circuit, Viacom International, Inc. v. YouTube, Inc., No. 103270 (April 5, 2012) (attached hereto as Exhibit A), which addresses some of the legal issues
raised in the parties’ summary judgment briefing. The Second Circuit decision, in relevant part,
vacated and remanded the Viacom district court decision, 718 F. Supp. 2d 514 (S.D.N.Y. 2010),
relied on by defendants. Defs.’ Opp. to Pls.’ MSJ, Dkt. #394 (“Opp.”), at 14, 17, 20.
In its recent decision, the Second Circuit held that the district court had erred in granting
summary judgment to defendants, the operators of the YouTube website, based on the safe
harbor provisions of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512. The
court remanded the case for further consideration of the facts on a number of grounds that would
preclude YouTube’s entitlement to safe harbor. The record against Hotfile is of course very
different from the record against YouTube. Among online copyright defendants, Hotfile stands
alone in having paid its users to upload infringing content and having refused to implement a
repeat infringer policy, with the predictable result being overwhelming copyright infringement
by Hotfile users. See Pls.’ MSJ, Dkt. #322 (“Mot.”), at 5-10, 19-22; cf. Viacom, 718 F. Supp. at
527-28 (YouTube had a “three strikes” repeat infringer policy and had deployed digital
fingerprinting technology to limit infringement). Although the cases are factually distinct, the
Second Circuit made four broader legal points relevant to plaintiffs’ pending motion for
summary judgment.
First, the Second Circuit held that service providers can obtain knowledge of
infringement that disqualifies them from DMCA safe harbor by being willfully blind to
infringement. Ex. A at 24. A “‘service provider is not … permitted willful blindness. When it
has reason to suspect that the users of its service are infringing a protected mark [or copyright], it
may not shield itself from learning of the particular infringing transactions by looking the other
way.’” Id. at 23 (quoting Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 109 (2d Cir. 2010)).
Specifically, the Second Circuit explained that, while service providers have no freestanding
duty to monitor for infringing material, a service provider can be found willfully blind where it
“was aware of a high probability of the fact in dispute and consciously avoided confirming that
fact.” Id. at 23 (citation omitted). That mirrors the test in Global-Tech Appliances, Inc. v. SEB
S.A., 131 S. Ct. 2060, 2070 (2011), cited by plaintiffs in their summary judgment papers. See
Mot. at 26-27; Pls.’ Reply In Support of MSJ, Dkt. #425 (“Reply”), at 13. In the present case,

the undisputed evidence shows that defendants were at least willfully blind to infringement under
this test. Mot. at 26-27. In these circumstances, as the Second Circuit observed, willful
blindness “may be applied … to demonstrate knowledge or awareness of specific instances of
infringement under the DMCA,” Ex. A at 24, such that a service provider can lose its DMCA
protection even absent evidence that the service provider otherwise had actual or “red flag”
knowledge of the specific infringements.
Second, the Second Circuit emphasized that Grokster inducement liability is based on
“purposeful, culpable expression and conduct,” Ex. A at 28 (quoting Metro-Goldwyn-Mayer
Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 937 (2005)), and reaffirmed that such conduct was
inconsistent with DMCA safe harbor protection, id. Although the Second Circuit discussed
inducement liability in the context of interpreting the DMCA’s “ability to control” provision, 17
U.S.C. § 512(c)(1)(B), which is not at issue in plaintiffs’ summary judgment motion, a
fundamental premise underlying the court’s reasoning is that the DMCA should not be
interpreted to give safe harbor to intentional infringers. Id. Plaintiffs’ summary judgment
motion similarly argues that intentional infringers, e.g., those that act with the object of fostering
infringement “without necessarily – or even frequently – acquiring knowledge of specific
infringing activity,” id., are fundamentally ineligible for DMCA safe harbor. Mot. at 27-29;
Reply at 13 (safe harbor for intentional infringers is incompatible with both the “by reason of”
language of § 512(c)(1) and the “red flag” knowledge prong of § 512(c)(1)(A)(ii)).1
Third, the Second Circuit rejected defendants’ argument, Opp. at 32-33, that the higher
DMCA standard for “ability to control” should apply to common law vicarious infringement as
well. In ruling that the DMCA “requires something more than the ability to remove or block
access to materials posted on a service provider’s website,” Ex. A at 27 (quotations omitted), the
Second Circuit confirmed that “[u]nder the common law vicarious liability standard, [t]he ability
to block infringers’ access to a particular environment for any reason whatsoever is evidence of
the right and ability to supervise.” Ex. A at 26 (internal quotations omitted; emphasis added);
see also Mot. at 34; Reply at 19 (arguing same).

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Plaintiffs have reserved for trial, if necessary, the issue of whether defendants are disqualified
from DMCA safe harbor under §512(c)(1)(B), based on their financial benefit from and ability to
control the infringement on Hotfile.
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Finally, contrary to defendants’ arguments, see Reply at 11-12, the Second Circuit
reaffirmed that service providers can obtain knowledge of infringing activity that disqualifies
them from DMCA safe harbor from sources other than copyright owner takedown notices. Ex.
A at 15, 20-22. Indeed, even in finding that service providers must have knowledge of specific
infringing activity to be disqualified from safe harbor under § 512(c)(1)(A), the Second Circuit
made clear that the test is an objective one: whether from the facts and circumstances known to
the service provider, specific infringing activity would have been apparent to a reasonable
person. See Ex. A at 17-18. The Second Circuit further made clear that the evidence itself need
not refer to specific infringing files, as long as from the evidence specific infringing activity
would have been objectively apparent to a reasonable person. For example, the court cited an
email in which a YouTube founder reported that clips of “well-known” shows, such as Family
Guy and the Daily Show, were available on YouTube. Ex. A at 20. The email itself did not refer
to specific clips or files; rather, the court reasoned that, from the statements made in the email, a
fact finder could conclude that the founder had or should have had awareness of specific
infringing clips. Id. at 21. Likewise, the court pointed to another email showing that a YouTube
employee requested data on the number of searches for “soccer,” “football” and “Premier
League” (which presumably would be likely to identify content owned by the plaintiff Premier
League). Id. at 20. Again, the email cited by the court did not mention specific files, or even
copyrighted works. Id. at 22. From this kind of subjective awareness of facts and circumstances,
according to the Second Circuit, a fact finder could conclude that a service provider objectively
should have known of specific infringing activity. Ex. A at 17 (“the red flag provision turns on
whether the provider was subjectively aware of facts that would have made the specific
infringement ‘objectively’ obvious to a reasonable person”).
In this case, defendants are ineligible for DMCA safe harbor for multiple independent
reasons irrespective of their knowledge, including defendants’ failure to reasonably implement a
repeat infringer policy, their failure to comply with the DMCA’s designated agent provision,
their inducement of infringement, and their willful blindness to the infringement on Hotfile.
Mot. at 18-29; Reply at 9-14. The Court therefore does not need to reach the issue of
defendants’ red flag knowledge. Nevertheless, the record here is replete with uncontroverted
evidence that defendants were aware of facts and circumstances from which specific
infringements would have been objectively apparent to any reasonable person under the Second

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Circuit standard – including countless emails identifying specific infringing works, files and
links. Mot. at 24-26; Reply at 11-12.
Dated: April 11, 2012

Respectfully submitted,
By: /s/ Karen L/ Stetson
Karen L. Stetson
GRAY-ROBINSON, P.A.
Karen L. Stetson
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

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 12th Day of April, 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’ Notice of Supplemental Authority
By: /s/ Karen L/ Stetson
Karen L. Stetson

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SERVICE LIST
Disney Enterprises, Inc., et al. v. Hotfile Corp. et al.
CASE NO. 11-CIV-20427-JORDAN
RASCO KLOCK
Janet T. Munn
[e-mail]
283 Catalonia Ave., Suite 200
Coral Gables, FL 33134
Phone: [phone]
Fax: [phone]

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]

Attorney for Defendants Hotfile Corp. and
Anton Titov

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

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