Disney Enterprises, Inc. et al v. Hotfile Corp. et al
Filing
76
RESPONSE in Opposition re 70 MOTION for Hearing and Memorandum of Law of Defendants Hotfile Corporation and Anton Titov for Special Scheduling Order Regarding the Safe Harbor Protections of the Digital Millenium Copyright Act PLAINTIFFS' RESPONSE TO DEFENDANTS' MOTION FOR SPECIAL SCHEDULING ORDER (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.. (Stetson, Karen)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-20427-JORDAN
DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM CORPORATION,
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES, INC., and
WARNER BROS. ENTERTAINMENT INC.,
Plaintiffs,
vs.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10.
Defendants.
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PLAINTIFFS’ RESPONSE IN OPPOSITION TO DEFENDANTS’ MOTION FOR
SPECIAL SCHEDULING ORDER REGARDING THE SAFE HARBOR
PROTECTIONS OF THE DIGITAL MILLENNIUM COPYRIGHT ACT
In a transparent effort to deny plaintiffs access to discovery that is likely to be
highly incriminating, defendants, in their motion for a special scheduling order, ask the
Court to decide a motion for summary judgment before the Court has any record on
which to base its decision. The Eleventh Circuit has made clear that courts should avoid
resolving a summary judgment motion before the party opposing the motion has an
adequate opportunity for discovery. Defendants’ approach would unfairly prejudice the
plaintiffs by forcing them to respond to defendants’ claimed defense under the Digital
Millennium Copyright Act (“DMCA”) without adequate discovery – indeed, with
virtually no discovery whatsoever. Defendants’ proposal also is certain to result in
wasted and duplicative effort for the Court and the parties, rather than lead to judicial
economy. An “early” DMCA motion, as defendants propose, cannot streamline any
issues in this case, because, based on facts defendants admit, defendants failed to satisfy a
fundamental prerequisite to DMCA eligibility for a substantial period of time at issue in
this litigation.
Defendants’ motion is misguided in several ways. First, the effect of defendants’
proposed early summary judgment motion would be to foreclose plaintiffs from obtaining
necessary discovery on DMCA issues, including discovery that is already pending and
overdue. That in fact appears to be the purpose of defendants’ proposal.1 However,
under bedrock Eleventh Circuit law, a premature summary judgment motion in the
middle of discovery must be denied. The Court should not grant defendants special leave
to make such a motion.
Second, defendants’ suggestion that discovery can be initially “focused” on
DMCA issues, divorced from the underlying copyright issues, makes no sense because
the discovery needed on DMCA issues is substantially the same as (if not more extensive
than) that needed for the underlying copyright liability issues. The discovery plaintiffs
are seeking is equally relevant to both issues. The best course, as discussed below, is to
have summary judgment motions on both liability and the DMCA defense at the same
time.
Third, “early” summary judgment motions on defendants’ DMCA defense would
only result in wasteful and duplicative discovery and motions practice. Defendants are
not eligible for any DMCA defense for the majority of the conduct at issue in this action,
and they do not have a colorable argument to the contrary. Defendants have
acknowledged in interrogatory responses, including in an amended response served after
the filing of the present motion, that they did not comply with the threshold DMCA
requirement of properly designating an agent until May of 2010, some fourteen months
after beginning operation of the Hotfile service. Thus, regardless of the outcome of
1
The necessary discovery is almost exclusively in the hands of defendants and their
cohorts, and defendants are systematically denying or delaying plaintiffs’ access to it.
Although defendants’ documents were due over a month ago, to date, defendants have
produced almost no discovery. Permitting defendants to proceed with an early motion for
summary judgment – in just 35 days – would reward defendants for unreasonably
refusing to produce key discovery, see Plaintiffs’ pending Motion to Compel Discovery,
Dkt. # 72, filed May 31, 2011, and would encourage further intransigence.
2
defendants’ DMCA motion for post-May 2010 conduct, plaintiffs’ copyright
infringement claims would proceed unchanged for all conduct occurring before then.
Finally, the claimed judicial efficiencies will not be realized by defendants’
proposal to hear a summary judgment motion limited to DMCA issues prior to
completion of discovery. However, those efficiencies would be achieved by focusing
initial discovery and summary judgment motions on all liability issues, both plaintiffs’
copyright infringement claims and defendants’ DMCA defense, as plaintiffs have
proposed. See Joint Scheduling Conference Report (Dkt. #54) at 6-8. Plaintiffs have
proposed to permit both parties to move for summary judgment on liability after
appropriate discovery, while deferring discovery on damages-related issues that the
parties agree ultimately may be unnecessary. That would achieve the goal of
streamlining discovery without prejudicing the plaintiffs.
I.
SUMMARY JUDGMENT MOTIONS ON AN INSUFFICIENT RECORD
MUST BE DENIED.
Defendants’ proposal to bring an additional summary judgment motion on their
DMCA defense early in the case should be rejected out of hand, as deciding such a
motion on an incomplete summary judgment record would be inconsistent with Eleventh
Circuit law holding that summary judgment decisions should be deferred until adequate
discovery is taken. The Eleventh Circuit has held that “summary judgment should not be
granted until the party opposing the motion has had an adequate opportunity for
discovery.” Snook v. Trust Co. of Georgia Bank, 859 F.2d 865, 870 (11th Cir. 1988); see,
also, e.g., Jones v. Columbus, 120 F.3d 248, 253 (11th Cir. 1997) (holding that the
district court erred by granting summary judgment without ruling on the opposing party’s
motion to compel discovery); Dean v. Barber, 951 F.2d 1210, 1213 (11th Cir. 1992)
(same). The party opposing summary judgment has “a right to challenge the affidavits
and other factual materials submitted in support of the motion by conducting sufficient
discovery so as to enable him to determine whether he can furnish opposing affidavits.”
Id. at 870. Consequently, “[a] premature decision on summary judgment impermissibly
deprives the plaintiffs of their right to utilize the discovery process to discover the facts
necessary to justify their opposition to the motion.” Vining v. Runyon, 99 F.3d 1056,
1058 (11th Cir. 1996) (citations omitted). For these reasons, ordinarily “summary
judgment is inappropriate when the party opposing the motion has been unable to obtain
3
responses to his discovery requests.” Snook, 859 F.2d at 870; see also Reflectone, Inc. v.
Farrand Optical Co., Inc., 862 F.2d 841, 844 (11th Cir. 1989) (summary judgment may
be postponed even without affidavit from opposing party).
Here, defendants have not produced any meaningful part of the discovery that is
directly relevant and necessary to adjudicate defendants’ DMCA defense. Defendants’
motion glosses over the actual DMCA requirements to obscure this fact. But any
statement of the DMCA issues in dispute reveals the issues on which discovery is needed.
Defendants must satisfy several independent requirements in order to demonstrate that
they are entitled to DMCA safe harbor. Factual development through discovery is
necessary for each of those requirements.
Eligibility for safe harbor is “not presumptive,” ALS Scan, Inc. v. RemarQ Cmtys.,
Inc., 239 F.3d 619, 625 (4th Cir. 2001), but rather is available to only service providers
that can demonstrate they have satisfied each of multiple, independent requirements set
out in the statute. See Tur v. YouTube, Inc., No. CV-064436-FMC-AJWX, 2007 WL
1893635, at *2-3 (C.D. Cal. June 20, 2007). The safe harbor at issue here is DMCA
Section 512(c), also known as the “hosting” or “storage” safe harbor. 17 U.S.C. § 512(c)
(“Section 512(c)”). Section 512(c) potentially provides safe harbor for “infringement of
copyright by reason of the storage at the direction of a user of material that resides on a
system or network controlled or operated by or for the service provider.” Id. Hotfile is
not eligible for safe harbor under Section 512(c) unless it has satisfied the following
independent requirements:
1. DMCA Agent. A service provider is ineligible for safe harbor unless it complies
with the “designated agent” provisions of Section 512(c)(2), by designating a
DMCA agent on its website and through registration with the Copyright Office.
This is a threshold requirement that applies to all safe harbors. 17 U.S.C.
§ 512(c)(2). This eligibility requirement is discussed further in Section III, infra
at 10.
2. Repeat Infringer Policy. A service provider is ineligible for safe harbor unless it
has “reasonably implemented” a policy that provides for the termination of users
who are “repeat infringers.” 17 U.S.C. § 512(i)(1)(A). This also is a threshold
requirement that applies to all safe harbors.
4
3. Actual Knowledge of Infringement. A service provider is ineligible for safe
harbor if it has actual knowledge that material on its system is infringing. 17
U.S.C. § 512(c)(1)(A)(i). In copyright, like all other areas of law, willful
blindness is tantamount to knowledge. Global-Tech Appliances, Inc. et al., v.
SEB S.A., 563 U.S. __ (2011); In re Aimster Copyright Litig., 334 F.3d 643, 650
(7th Cir. 2003); Columbia Pictures Indus., Inc. v. Fung, No. 06-5578 SVW (JCx),
2009 WL 6355911, at *18 (C.D. Cal. Dec. 21, 2009).
4. Knowledge of Facts and Circumstances from which Infringement is Apparent. In
the absence of actual knowledge, a service provider is ineligible for safe harbor if
it is aware of facts and circumstances from which infringement is apparent. 17
U.S.C. § 512(c)(1)(A)(ii). This is sometimes referred to as “red flag” knowledge.
H.R. Rep. 105-551(II) at 57.
5. Financial Benefit from and Right and Ability to Control the Infringement.
Paralleling the standard for vicarious copyright liability, a service provider is
ineligible for safe harbor if it receives a financial benefit from the infringement
while failing to exercise a right and ability to control the infringement. 17 U.S.C.
§ 512(c)(1)(B).
6. Compliance with DMCA Takedown Notices from Copyright Holders. A service
provider is ineligible for safe harbor if it fails to promptly disable access to works
alleged to be infringing in a takedown notice. 17 U.S.C. § 512(c)(1)(C); see also
17 U.S.C. § 512(c)(3)(A)(ii) (“if multiple copyrighted works at a single online site
are covered by a single notification, [only] a representative list of such works”
need be provided).
7. Inducement of Infringement. A service provider that has been found to have
induced infringement under the standard articulated by the Supreme Court in
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937 (2005) –
i.e., a service provider that has acted with the intent to foster infringement – is not
eligible for safe harbor protection. Fung, 2009 WL 6355911, at *18; accord
Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 142 (S.D.N.Y.
2009) (“if Defendants ... encouraged or fostered such infringement, they would be
ineligible for the DMCA’s safe harbor provisions”). As the Fung court found,
5
inducement liability and DMCA safe harbor protection are inherently
incompatible. Fung, 2009 WL 6355911, at *18.2
Discovery is likely to show that defendants fall short on substantially all of these DMCA
safe harbor prerequisites.
Defendants cite no cases in their motion supporting their procedural proposal to
move early for summary judgment on their defense. Defendants argue that other courts
have “recognized the benefit” of considering a safe harbor defense before deciding issues
of liability. Defs.’ Motion at 5. However, in each of the cases cited by defendants,
discovery had concluded, and the plaintiffs themselves brought parallel motions for
summary judgment on the copyright liability issues. See Io Group, Inc. v. Veoh
Networks, Inc., 586 F. Supp. 2d 1132, 1135 (N.D. Cal. 2008); Costar Group. Inc. v.
Loopnet, Inc., 164 F. Supp. 2d 688, 691 (D. Md. 2001); Corbis Corp. v. Amazon.com,
Inc., 351 F.Supp. 2d 1090, 1093 (W.D. Wa. 2004). Those cases proceeded as plaintiffs
have proposed here – with the parties bringing cross-motions on liability and defenses.
While the courts in Veoh and Corbis decided that the DMCA safe harbor applied and
therefore decided the DMCA defense first, they did so only after full discovery. See Tur,
2007 WL 1893635, at *2-3 (denying YouTube’s early motion for summary judgment on
DMCA defense based on need to develop factual record).
Defendants’ reliance, without explanation, on the scheduling order in Quito
Enterprises LLC v. Netflix, Inc., is also misplaced. That order in fact supports plaintiffs’
position. The defense in that case – patent invalidity – was factually independent from
the plaintiffs’ infringement allegations. And the plaintiff there sued eleven unrelated
defendants, such that eleven separate summary judgment motions directed to
infringement might be avoided by an early ruling on the patent’s validity. See Motion for
Special Scheduling Order (Dkt. #133), No. 08-cv-23543 (S.D. Fla.) at 4. Even then, the
Court ordered more than four months of discovery on the single issue of validity. The
2
Cf. Viacom Int’l Inc. v. YouTube Inc., 718 F. Supp. 2d 514 (S.D.N.Y. 2010) (finding a
service provider entitled to safe harbor notwithstanding that a jury could have found that
the service provider liable for inducement of infringement). Both the Fung and YouTube
decisions are currently on appeal in the Ninth and Second Circuits, respectively. Viacom
Int’l Inc. v. YouTube Inc., No. 10-3270 (2d Cir.); Columbia Pictures Indus., Inc. v. Fung,
No. 10-55946 (9th Cir.).
6
exceptional nature of that order illustrates the principle that early summary judgment
motions on a single defense are the rare exception rather than the rule. This case, where
the DMCA defense is closely related to the copyright liability determination, bears no
resemblance to Netflix.
Ultimately, there is no basis for giving priority to defendants’ DMCA defense.
Contrary to defendants’ characterizations, the DMCA is not a one-sided statute that exists
to protect Internet service providers. Quite the opposite. Congress very expressly
intended the DMCA to balance the interests of copyright owners and service providers.
S. Rep. No. 105-190, at 20 (1998). It accomplished this, in part, by creating a series of
“safe harbors” from liability – but making DMCA safe harbor available only to service
providers that can demonstrate that they are completely “innocent” of responsibility for
the copyright infringement occurring on or through their services. ALS Scan, 239 F.3d at
625. Under the DMCA, a service provider demonstrates its innocence by satisfying each
of the multiple requirements outlined above. Plaintiffs are seeking discovery directly
relevant to that determination.3
Defendants’ proposal if adopted would force plaintiffs to respond to defendants’
DMCA motion without any meaningful discovery. All of the discovery necessary to
address the copyright and DMCA issues – e.g., defendants’ intent to foster infringement,
defendants’ knowledge of infringement, defendants’ right and ability to control the
infringement – is in possession of defendants and third parties closely aligned with
defendants. Defendants do not need discovery to file declarations professing to comply
with the DMCA. Plaintiffs, on the other hand, need discovery to rebut those
3
Contrary to defendants’ accusation, plaintiffs are not engaged “a war of attrition against
their much smaller foe.” Defs.’ Mot. at 4. By all observable indicia, defendants have a
larger litigation team than plaintiffs. Moreover, although defendants have refused to
produce any information as to their finances, see Plfs.’ Mot. to Compel, Dkt. # 72, at 20,
documents produced by third-party PayPal show that Hotfile’s Internet service provider
Lemuria Communications – a company that is wholly owned by defendant Titov –
REDACTED REDACTED REDACTED REDACTED. Declaration of Duane C.
Pozza (“Pozza Decl.”) Ex. A. As Lemuria appears to exist only to serve Hotfile, that fact
alone suggests that defendants’ monthly revenues are likely to be a substantial multiple of
that amount, REDACTED REDACTED REDACTED. Hotfile is one of the largest
Internet sites in the world and defendants are litigating with commensurate resources and
aggressiveness.
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declarations.4 For this reason alone, defendants’ motion should be denied. E.g., Snook,
859 F.2d at 870.
II.
DISCOVERY INTO DMCA AND COPYRIGHT INFRINGEMENT ISSUES
OVERLAP ALMOST COMPLETELY.
Defendants’ proposal is also flawed because their suggestion that early discovery
could be “focused” on DMCA issues divorced from liability issues is altogether
unrealistic. Defs.’ Mot. at 3. The legal issues extensively overlap and cannot be
separated. In fact, to the extent discovery relating to the underlying copyright and
DMCA issues do not overlap completely, it is the DMCA issues that require more
extensive discovery.
The substantial overlap between those determinations is demonstrated by the chart
below, which shows the legal issues involved to determine eligibility under the DMCA
and secondary liability under the Copyright Act:
DMCA Legal Issues
Copyright Liability Legal Issues
Designation and registration
No corresponding element (discovery required for
of DMCA agent.
DMCA issues is more extensive than for infringement
claims).
Reasonable implementation
No corresponding element (DMCA discovery is more
of repeat infringer policy.
extensive).
4
Many of the key third parties in the case are corporate affiliates of defendants (Hotfile,
Ltd.); contract employees of defendants (defendant appear to contract out most traditional
employee functions); or user and website “Affiliates” of Hotfile. Defendants are doing
what they can to make it difficult for plaintiffs to obtain discovery from these third
parties. For example, notwithstanding that Hotfile, Ltd. is a wholly-owned subsidiary of
defendant Hotfile Corp. and is engaged, with Hotfile Corp., in operating the Hotfile
website, defendants have refused to produce certain documents about Hotfile, Ltd. and
continue to be evasive about producing others, requiring plaintiffs to use international
process to obtain discovery from Hotfile, Ltd. in Bulgaria. Pozza Decl. ¶ 3. Defendants
will not voluntarily produce any of the people who act as their employees, again
requiring plaintiffs to go through international discovery channels. Id. And, defendants
refuse to produce the names of their very top Affiliates, REDACTED REDACTED
REDACTED, forcing plaintiffs to file a motion to compel. See Plfs.’ Mot. to Compel,
Dkt. # 72, at 14-15.
8
DMCA Legal Issues
Copyright Liability Legal Issues
Actual knowledge of
Contributory copyright infringement contains a parallel
infringement.
knowledge element, requiring proof that defendants had
Red flag knowledge of
actual or constructive knowledge of the infringement on
infringement.
Hotfile. Cable/Home Commc’n Corp. v. Network Prods.,
Inc., 902 F.2d 829, 845 (11th Cir. 1990). Although the
limits of the DMCA’s “red flag” knowledge are
unsettled, red flag knowledge is a somewhat higher
standard than the constructive knowledge required for
contributory copyright infringement. Thus, if anything,
the discovery required for defendants’ DMCA defense
would be more extensive than for plaintiffs’ contributory
infringement claim.
Financial benefit attributable
The articulated standard for vicarious copyright
to infringement.
infringement is nearly identical to the DMCA elements.
Right and ability to control
Grokster, 545 U.S. at 930 (“One infringes … vicariously
infringement.
by profiting from direct infringement while declining to
exercise a right to stop or limit it”). Although this issue
is unsettled, some district courts have held that the “right
and ability to control” element under the DMCA requires
“something more” than what is required under the
common law vicarious infringement standard. E.g.,
Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp.
2d 1146, 1181 (C.D.Cal.2002). Thus, again, if anything,
the discovery required for defendants’ DMCA defense
would be more extensive than for plaintiffs’ vicarious
infringement claim.
Compliance with takedown
Although not strictly an element of contributory
notices.
copyright infringement, Hotfile’s compliance with (or
lack of compliance with) takedown notices would be
9
DMCA Legal Issues
Copyright Liability Legal Issues
equally relevant to plaintiffs’ contributory copyright
infringement claim, as copyright owner notices
demonstrate actionable knowledge on the part of
defendants. E.g., A&M Records, Inc. v. Napster, Inc.,
239 F.3d 1004, 1020 & n.5 (9th Cir. 2001).
Inducement of infringement.
The DMCA and copyright issues are identical in that
Hotfile’s inducement of infringement under Grokster
makes Hotfile ineligible for Section 512(c) safe harbor.
Direct infringement.5
As this chart illustrates, there is no material difference between the discovery that
plaintiffs would need to oppose defendants’ proposed early DMCA motion and the
discovery plaintiffs would need to present a summary judgment motion on the underlying
copyright claims. Defendants’ proposal to divorce the DMCA and copyright issues is
simply not practicable. Thus, the case should proceed to cross-motions on summary
judgment, at the conclusion of discovery, addressing both liability and the DMCA
defense.
III.
DEFENDANTS’ PROPOSAL IS CERTAIN TO RESULT IN WASTEFUL
AND DUPLICATIVE DISCOVERY AND MOTIONS.
Defendants’ motion should be denied for the independent reason that it will not
produce the judicial economy promised by defendants – because it cannot resolve
substantial portions of the case. Based on facts defendants admit, defendants cannot
plausibly claim DMCA safe harbor for substantial periods of time at issue in this action.
5
Proof of direct infringement is the only legal issue relevant to plaintiffs’ copyright
claims that does not materially overlap with the DMCA issues. However, the direct
infringement issue does not require additional discovery, as the databases needed for the
direct infringement analysis are the same databases needed for plaintiffs to conduct
analyses related to inducement and defendants’ financial benefit from infringement (i.e.,
the same discovery is necessary for the DMCA issues). Moreover, as has been done in
multiple prior cases, plaintiffs’ case management plan proposes that summary judgment
on liability be decided based on a small number of direct infringements. All other
instances of direct infringement would be proven in a damages phase, if necessary.
10
Therefore, defendants’ “early” DMCA motion, regardless of how it is decided, cannot
dispose of this action, and cannot materially narrow the issues or discovery that
ultimately will be necessary. Plaintiffs’ copyright claims, and the discovery necessary to
prosecute them, will still need to go forward. Defendants’ proposal would merely result
in two sets of summary judgment motions that are largely duplicative. Inevitably, it also
would result in duplicative discovery as the parties re-depose key witnesses and pursue
further document discovery to obtain additional important evidence that simply could not
be obtained under the unrealistic schedule defendants are proposing.
The DMCA is clear: A service provider is not eligible for any safe harbor unless
and until it complies fully with the DMCA’s “designated agent” provisions found in
Section 512(c)(2). Section 512(c)(2) provides that:
The limitations on liability established in this subsection apply to a
service provider only if the service provider has designated an agent
to receive notifications of claimed infringement …, by making
available through its service, including on its website in a location
accessible to the public, and by providing to the Copyright Office,
substantially the following information:
(A) the name, address, phone number, and electronic mail address
of the agent,
(B) other contact information which the Register of Copyrights may
deem appropriate.
17 U.S.C. § 512(c)(2)(emphasis added). Section 512(c)(2) requires that defendants
designate an agent both by listing the agent on the Hotfile website and by registering that
agent with the Copyright Office.
Defendants began operation of Hotfile in February 2009. However, by their own
admission, defendants did not comply with this provision until after May 2010, more
than 14 months later. Defendants admit they did not register an agent with the Copyright
Office until December 2009. Pozza Ex. D (Defs.’ Amended Supplemental Response to
Interrogatory No. 2). And defendants admit, in an amended response served after their
filing of the present motion, that they did not identify that agent (or post the agent’s name
or contact information) on the Hotfile website until sometime in May 2010. Id.
Defendants act as if these statutory requirements are just technicalities that do not
matter, see Defs.’ Br. at 6, but Congress could not have been more unequivocal. A
service provider is eligible for safe harbor “only if” it complies with Section 512(c)(2).
11
And that was for good reason. That requirement serves the important purpose of
ensuring that a service provider holds out a particular individual who can be contacted at
a particular physical and email address, who is officially responsible for acting as the
service provider’s agent for claims of copyright infringement under the DMCA. The
legislative history is clear that “[t]he designation, provided to the Register of Copyrights
. . . is to contain certain information necessary to communicate with the service provider
concerning allegedly infringing material or activity . . . [and] shall have entries for the
name, address, telephone number and electronic mail address of an agent designated by
service providers.” S. Rep. 105-190, at 45 (1998). The Copyright Office has further
provided by regulation that even a post office box cannot be used unless it is the only
possible address that can be used in the geographic location. 37 C.F.R. § 201.38m
(defendants remain in violation of this regulation even today). This requirement prevents
service providers from operating in the shadows, hiding behind anonymous, ad hoc email
addresses and post office boxes – as Hotfile in fact did – while simultaneously seeking
the DMCA’s statutory protections.
Every court to decide the issue has held that a failure to properly designate a
DMCA agent operates as a complete bar to any DMCA safe harbor. See Louis Vuitton
Malletier, S.A. v. Akanoc Solutions, Inc., No. C 07-03952 JW, 2010 WL 5598337, at *6 *7 (N.D. Cal. March 19, 2010) (failure to register an agent with Copyright Office
precludes defendants from claiming the protection of the safe harbor provision for the
period prior to registering an agent); Perfect 10, Inc. v. Rapidshare A.G., No. 09-CV2596 H (WMC), at 12-13 (S.D. Cal. May 18, 2010) (Dkt. #71) (attached as Pozza Ex. E)
(same); CoStar Group, Inc. v. Loopnet, Inc., 164 F. Supp. 2d 688, 698 n.4 (D. Md. 2001),
aff’d 373 F.3d 544 (4th Cir. 2004) (failure to properly designate an agent precludes
defendants from claiming DMCA safe harbor protection for time period prior to
compliance); cf. Ellison v. Robertson, 357 F.3d 1072, 1080 (9th Cir. 2004) (service
provider’s failure to update its Copyright Office records to provide a current email
address for receipt of DMCA notices precluded summary judgment as to service
provider’s eligibility for DMCA safe harbor during the period of noncompliance).
Indeed, in the Rapidshare decision, the court specifically rejected the defendant’s
argument that merely providing some “notice regarding where to send infringement
12
notifications” was enough to satisfy Section 512(c)(2), and held that registration with the
Copyright Office was strictly required. Id. at 12.6
Defendants’ failure to comply with the DMCA “designated agent” provisions is
not trivial. Nor is the period of time for which defendants cannot claim DMCA safe
harbor. Defendants are undoubtedly responsible for many millions of infringements
during that 14 month period of time. Defendants’ proposal for an “early” DMCA motion,
therefore, will not save the Court or the parties any time, resources or cost. It will,
instead, multiply the effort needed to bring this action to decision.
IV.
PLAINTIFFS’ PROPOSAL TO STREAMLINE DISCOVERY AND CASE
MANAGEMENT IS FAIR TO BOTH SIDES AND WILL PROMOTE
JUDICIAL ECONOMY.
Finally, defendants’ motion ignores the fact that plaintiffs have proposed a case
management plan that would substantially streamline discovery and merits motions
without the blatant unfairness of defendants’ proposal. Plaintiffs have proposed to have
the Court first address issues of liability, encompassing both plaintiffs’ claims of
copyright infringement and defendants’ DMCA defenses, and then (if necessary) address
issues related to damages. Plaintiffs’ proposed plan addresses all of defendants’ stated
concerns about avoiding unnecessary discovery. Although defendants recite the
“substantial opportunity for judicial efficiencies” that allegedly would be achieved by
focusing only on the DMCA issues, Defs.’ Mot. at 6, defendants do not identify any
discovery that could be avoided except the same copyright ownership and damages issues
that, under plaintiffs’ plan, would be deferred until after a liability decision. See Defs.’
Mot. at 4.
Plaintiffs have proposed a plan that has been ordered or approved by several
courts overseeing comparable online infringement cases. It is a plan that is fair to both
6
The only support that defendants have provided for a contrary interpretation of the
Section 512(c)(2) requirements is a citation to an order in YouTube Inc., 718 F. Supp. 2d
at 514. In that case, however, the court never addressed the issue. While plaintiffs in that
case pointed out, in a footnote in a summary judgment brief, that YouTube did not have a
designated agent registered with the Copyright Office for a short period of time when it
first launched, the plaintiffs did not emphasize that time period and defendants did not
respond to the footnote. Accordingly, the court did not address the issue in its decision.
That decision hardly constitutes contrary authority or provides basis for ignoring the plain
language of section 512(c)(2) or the other cases strictly applying its requirements.
13
sides and best promotes judicial economy. Defendants rejected it, not because their plan
makes more sense, but in order to seek a tactical advantage.
In an Internet copyright infringement case such as this – i.e., against the operator
of a service liable for infringement of thousands, or perhaps tens of thousands, of
individual copyrighted works owned by plaintiffs – an inordinate amount of discovery
and judicial resources can be spent on the issue of damages. Such damages-related issues
include providing evidence of copyright ownership, direct infringement, and the amount
of damages for each copyrighted work in suit, thousands of times over. In many cases,
particularly where both sides intend to move for summary judgment on liability (as they
do here), a determination as to liability obviates the need for all of that damages-related
effort. Regardless of which way the court rules on the liability issues, the case usually
resolves itself through entry of judgment or settlement.
It is therefore not a surprise that most courts overseeing cases like this have
approved or ordered a schedule directing that the parties first focus their discovery on
issues related to liability, encompassing both the plaintiffs’ claims of copyright
infringement and the defendants’ DMCA defenses. See, e.g., Columbia Pictures Indus.,
Inc. v. Bunnell, 06-cv-01093 FMC-JCx (C.D. Cal.), Dkt # 117 (attached as Pozza Ex. F);
Columbia Pictures Indus., Inc. v. Fung, No. 06-5578 SVW (JCx) (C.D. Cal.); Arista
Records LLC v. Lime Group LLC, No. 06 CV 5936 (KMW) (S.D.N.Y.); Metro-GoldwynMayer Studios, Inc. v. Grokster, Ltd., No. 03-55894 (C.D. Cal.). In deciding the legal
issues as to a defendant’s liability, it does not matter whether there are 10 or 10,000
copyrighted works in dispute. The liability issues are the same. Thus, courts typically
have decided summary judgment on liability based on a handful of works, and deferred to
a damages proceeding the issues of ownership and infringement of the thousands of
additional works that ultimately might be in suit. To be clear, none of the scheduling
orders in these other cases bifurcated liability and damages in the traditional sense of
anticipating separate trials on liability and damages issues. Rather, since both sides had
indicated an interest in moving for summary judgment on liability issues, the courts
recognized the judicial economy in having the parties focus the initial phase of the case
on discovery and motions directed to liability. Each of these cases was in fact decided on
or before motions for summary judgment. However, if the liability issues had not been
14
resolved on motions for summary judgment, any necessary damages discovery would
have been conducted, and the cases would have proceeded to a single trial on liability and
damages issues together.
That is precisely what plaintiffs have proposed for this case – to have the Court
first address issues of liability, encompassing both plaintiffs’ claims of copyright
infringement and defendants’ DMCA defenses. Since there is no material discovery that
is needed for plaintiffs’ copyright claims that is not also needed for defendants’ DMCA
defense, this would allow both sides to bring cross-motions on all issues that might affect
defendants’ liability. Discovery and motions (or other proceedings) related to damages
would be deferred until after the Court’s ruling on liability issues. See Joint Scheduling
Conference Report (Dkt. #54) at 6-8.
V.
CONCLUSION
For the foregoing reasons, defendants’ motion for a special scheduling order
should be denied. Respectfully, the interests of judicial economy and fairness would be
best served by the Court ordering the case management schedule proposed by plaintiffs in
the Joint Scheduling Conference Report (Dkt. # 54) filed on April 15, 2011.
15
Dated: June 10, 2011
Respectfully submitted,
By: /s/ Karen L. Stetson
Karen L. Stetson
GRAY-ROBINSON, P.A.
1221 Brickell Avenue
16th Floor
Miami, Fl 33131
Telephone: (305) 461-6880
Facsimile: (305) 461-6887
MOTION PICTURE ASSOCIATION
OF AMERICA, INC.
Karen R. Thorland (Pro Hac Vice)
15301 Ventura Blvd.
Building E
Sherman Oaks, CA 91403
Phone: (818) 995-6600
Fax: (818) 285-4403
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
Telephone: (202) 639-6000
Facsimile: (202) 639-6066
Attorneys for Plaintiffs
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 10th Day of June, 2011, I served the following
documents on all counsel of record on the attached service list via their email address(es)
as set forth on the Court’s CM/ECF filing system:
Plaintiffs’ Response in Opposition to Defendants’ Motion for Special
Scheduling Order Regarding the Safe Harbor Protections of the Digital
Millennium Copyright Act
I further certify that I am admitted to the United States Court for the Southern District of
Florida and certify that this certificate of Service was executed on this date at
Washington, D.C.
By: /s/ Karen L. Stetson
Karen L. Stetson
17
SERVICE LIST
Disney Enterprises, Inc., et al. v. Hotfile Corp. et al.
CASE NO. 11-CIV-20427-JORDAN
RASCO KLOCK
Janet T. Munn
jmunn@rascoklock.com
283 Catalonia Ave., Suite 200
Coral Gables, FL 33134
Phone: 305-476-7101
Fax: 305-476-7102
FARELLA BRAUN + MARTEL LLP
Anthony P. Schoenberg
tschoenberg@fbm.com
Roderick M. Thompson
rthompson@fbm.com
N. Andrew Leibnitz
aleibnitz@fbm.com
Deepak Gupta
dgupta@fbm.com
Janel Thamkul
jthamkul@fbm.com
235 Montgomery Street
San Francisco, CA 94104
Phone: 415-954-4400
Attorney for Defendants Hotfile Corp. and
Anton Titov
Attorneys for Defendants Hotfile Corp. and
Anton Titov
BOSTON LAW GROUP, PC
Valentin Gurvits
vgurvits@bostonlawgroup.com
825 Beacon Street, Suite 20
Newton Centre, MA 02459
Phone: 617-928-1804
Attorneys for Defendants Hotfile Corp. and
Anton Titov
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