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Capital Records v Bluebeat (PI Order)

Capital Records v Bluebeat (PI Order)

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Published by: Christopher S. Harrison on Sep 01, 2013
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Initials of Deputy Clerk sr
Case No.
CV 09-8030-JFW (JCx)
Date: November 18, 2009 Title:Capitol Records, LLC, et al.
Bluebeat, Inc., et al.
On November 3, 2009, Plaintiffs Capitol Records, LLC, Caroline Records, Inc., EMIChristian Music Group Inc., Priority Records, LLC, Virgin Records America, Inc., and NaradaProductions, Inc. (“Plaintiffs”) filed an
Ex Parte
Application for Temporary Restraining Order andOrder to Show Cause Re: Preliminary Injunction. On November 4, 2009, Defendants BlueBeat,Inc., Media Rights Technologies, Inc., BaseBeat, Inc., and Hank Risan (“Defendants”) filed theirOpposition. On November 4, 2009, Plaintiffs filed their Reply. On November 5, 2009, the Courtissued a Temporary Restraining Order (“TRO”) and Order to Show Cause Re: PreliminaryInjunction (“OSC). On November 10, 2009, as directed by the Court’s OSC, Defendants filed theirOpposition to the OSC. On November 13, 2009, as directed by the Court’s OSC, Plaintiffs filed aReply. Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Courtfinds that this matter is appropriate for decision without oral argument. The hearing calendared forNovember 20, 2009, is hereby vacated and the matter taken off calendar. After reviewing themoving, opposing, and reply papers, the Court rules as follows:
I.Legal Standard
 To obtain a preliminary injunction a plaintiff must show (1) a likelihood of success on themerits; (2) a likelihood of irreparable harm if the preliminary injunction is not granted; (3) that thebalance of equities tips in his favor; and (4) that an injunction is in the public interest
. Winter v.Natural Res. Def. Council, Inc
., 555 U.S. __ , 129 S. Ct. 365, 374 (2008);
 American Trucking
Case 2:09-cv-08030-JST -JC Document 24 Filed 11/18/09 Page 1 of 8 Page ID #:776
Prior to the Supreme Court’s decision in
, injunctive relief was appropriate under theNinth Circuit’s “sliding scale” test. However, in
, the Supreme Court expressly disapprovedof this sliding scale test because it allowed an injunction to issue based on a “possibility” of irreparable harm. 555 U.S. at __, 129 S. Ct. at 375. Accordingly, in light of 
, the NinthCircuit overruled its sliding scale test, and adopted the standard set forth in
See AmericanTrucking Associations, Inc. v. City of Los Angeles
, 559 F.3d 1046, 1052 (9th Cir. 2009) (“To theextent that our cases have suggested a lesser standard, they are no longer controlling, or evenviable”).
 The Court has elected to issue its findings in narrative form. Any finding of fact thatconstitutes a conclusion of law is also hereby adopted as a conclusion of law, and any conclusionof law that constitutes a finding of fact is also hereby adopted as a finding of fact.Page 2 of 8
Initials of Deputy Clerk sr
 Associations, Inc. v. City of Los Angeles
, 559 F.3d 1046, 1052 (9th Cir. 2009).
 “[A] preliminary injunction is an extraordinary and drastic remedy, one that should not begranted unless the movant, by a clear showing, carries the burden of persuasion.”
Mazurek v. Armstrong
, 520 U.S. 968, 972 (1997) (emphasis in original). However, a preliminary injunction "isnot a preliminary adjudication on the ultimate merits."
Sierra On-Line, Inc. v. Phoenix Software,Inc
., 739 F.2d 1415, 1423 (9th Cir. 1984). [T]he findings of fact and conclusions of law made by acourt granting a preliminary injunction are not binding at trial on the merits.”
Univ. of Texas v.Camenisch
, 451 U.S. 390, 395 (1981);
see also Sierra On-Line
, 739 F.2d at 1423 (explaining thatfor preliminary relief, the court need only find a probability that necessary facts will be established,not that such facts actually exist).
II.Findings of Fact and Conclusions of Law
Plaintiffs are record companies, in the business of producing sound recordings anddistributing, selling, and/or licensing the reproduction, distribution, sale, and performance of theirsound recordings in phonorecords, in audiovisual works, and for streaming and downloading overthe Internet. Plaintiffs’ catalog of sound recordings includes some of the most famous recordingsin the world, including recordings by the Beatles, the Beach Boys, Pink Floyd, Duran Duran,Coldplay, Lenny Kravitz, Radiohead, and Katy Perry.Plaintiffs own or control copyrights to certain sound recordings recorded after February 15,1972, including those identified in Schedule A to the Complaint, which are protected by theCopyright Act, 17 U.S.C. § 102(a)(7) (the “Copyrighted Recordings”). Plaintiffs also own or controlcertain sound recordings recorded prior to February 15, 1972, including those identified inSchedule B to the Complaint, which are protected by state law (the “Pre-1972 Recordings).Although many of Plaintiffs’ Copyrighted Recordings and Pre-1972 Recordings (collectively“Recordings”) are made available for digital download, not all of them are available for digitaldownload. Most notably, the Beatles catalog of recordings, including a recently released box set of “remastered” Beatles recordings, has never been made available for digital download.
Case 2:09-cv-08030-JST -JC Document 24 Filed 11/18/09 Page 2 of 8 Page ID #:777
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Initials of Deputy Clerk sr
Defendants collectively own and operate the Internet website, www.bluebeat.com (theBlueBeat Website”). The BlueBeat Website is a music-based, commercial website that purportsto offer a massive catalog of musical recordings that may be either purchased for permanentdownload or immediately “performed” via an on-demand streaming transmission. One of the majorfeatures of the BlueBeat Website is that it offers its registered members, i.e., anyone who sets up afree, anonymous membership account, the ability to purchase or download any album or individualrecording, at the price of $0.25 per track, which is one fourth the typical retail price for digitaldownloads. The BlueBeat Website also offers its members a feature it refers to as “DirectPlayback,which permits users to select and receive a free “streaming” digital performance of anyrecording or album within the BlueBeat library.Plaintiffs allege that thousands of their Recordings are being made available for downloador streaming on the BlueBeat Website without their authorization, including the remastered Beatlesrecordings, and allege the following claims for relief: (1) direct copyright infringement in violation of the Copyright Act, 17 U.S.C. §§ 106 and 501; (2) violation of California Civil Code § 980(a)(2) andcommon law misappropriation; and (3) statutory and common law unfair competition.
 The Court concludes that Plaintiffs are entitled to a preliminary injunction. Plaintiffs havecarried their burden, and have clearly demonstrated (1) a likelihood of success on the merits; (2) alikelihood of irreparable harm if a preliminary injunction is not granted; (3) that the balance of equities tips in their favor; and (4) that a preliminary injunction is in the public interest
1.Likelihood of success on the merits
Plaintiffs have made a clear showing that they are likely to succeed on the merits, on boththeir claim for copyright infringement and their state law claims.“To establish a successful copyright infringement claim, a plaintiff must show that he or sheowns the copyright and that defendant copied protected elements of the work.”
Cavalier v. RandomHouse, Inc.
, 297 F.3d 815, 822 (9th Cir. 2002) (internal citation omitted) (
citing Shaw v. Lindheim
,919 F.2d 1353, 1356 (9th Cir. 1990)). The requirements for establishing a violation of CaliforniaCivil Code § 980(a)(2), common law misappropriation, and statutory and unfair competition aresimilar.
Cal. Civ. Code § 980(a)(2);
A&M Records, Inc. v. Heilman
, 75 Cal. App. 3d 554, 564(1977) (noting that the duplication of performances owned by plaintiff in order to resell them forprofit “presents a classic example of the unfair business practice of misappropriation of thevaluable efforts of another”). The Court finds that Plaintiffs have demonstrated that they own the copyrights for theCopyrighted Recordings in Schedule A of the Complaint, as they have submitted the registrationcertificates for each of those recordings.
17 U.S.C. § 410(c) (“In any judicial proceedings thecertificate of a registration made before or within five years after first publication of the work shallconstitute prima facie evidence of the validity of the copyright and of the facts stated in thecertificate;
Micro Star v. Formgen Inc.
, 154 F.3d 1107, 1110 (9th Cir. 1998) (“[C]opyrightregistration creates a presumption of ownership.”). They have also demonstrated that they ownthe Pre-1972 Recordings.
McMullan TRO Decl. ¶¶ 11, 12 & Exh. B. Indeed, Defendants do
Case 2:09-cv-08030-JST -JC Document 24 Filed 11/18/09 Page 3 of 8 Page ID #:778

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