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Initials of Deputy Clerk sr

UNITED STATES DISTRICT COURT

PRIORITY SEND

CENTRAL DISTRICT OF CALIFORNIACIVIL MINUTES -- GENERAL

Case No.

CV 09-8030-JFW (JCx)

Date: November 5, 2009Title:Capitol Records, LLC, et al.

-v-

Bluebeat, Inc., et al.

PRESENT:HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGEShannon ReillyCourtroom DeputyNone PresentCourt ReporterATTORNEYS PRESENT FOR PLAINTIFFS:

None

ATTORNEYS PRESENT FOR DEFENDANTS:

None

PROCEEDINGS (IN CHAMBERS):ORDER GRANTING

EX PARTE

APPLICATION OFPLAINTIFFS FOR TEMPORARY RESTRAININGORDER AND ORDER TO SHOW CAUSE RE:PRELIMINARY INJUNCTION [filed 11/3/2009; DocketNo. 3]

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 (“Application”). On November 4, 2009,Defendants BlueBeat, Inc., Media Rights Technologies, Inc., BaseBeat, Inc., and Hank Risan(“Defendants”) filed their Opposition. On November 4, 2009, Plaintiffs filed their Reply. Pursuantto Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds that thismatter is appropriate for decision without oral argument. After considering the moving, opposing,and reply papers and the arguments therein, the Court rules as follows:

I.Factual and Procedural Background

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 the

Case 2:09-cv-08030-JFW-JC Document 13 Filed 11/05/2009 Page 1 of 7

Prior to the Supreme Court’s decision in

Winter

, injunctive relief was appropriate under theNinth Circuit’s “sliding scale” test. However, in

Winter

, the Supreme Court expressly disapprovedof this sliding scale test because it allowed an injunction to issue based on a “possibility” ofirreparable harm. 555 U.S. at __, 129 S. Ct. at 375. Accordingly, in light of

Winter

, the NinthCircuit overruled its sliding scale test, and adopted the standard set forth in

Winter

See American Trucking Associations, Inc. v. City of Los Angeles

, 559 F.3d 1046, 1052 (9th Cir. 2009) (“To thePage 2 of 7

Initials of Deputy Clerk sr

Copyright 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.Defendants collectively own and operate the Internet website, www.bluebeat.com (the“BlueBeat 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 receive a free “streaming” digital performance of any recordingor 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 ofthe 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.Plaintiffs filed their Complaint along with their Application, just four days after they firstlearned of Defendants’ alleged infringement or misappropriation of their Recordings.

II.Legal Standard

The standard for issuing a temporary restraining order (“TRO”) is identical to the standardfor issuing a preliminary injunction.

See Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co.

,887 F. Supp. 1320, 1323 (N.D. Cal. 1995). To obtain a preliminary injunction a plaintiff must show(1) a likelihood of success on the merits; (2) a likelihood of irreparable harm if the preliminaryinjunction is not granted; (3) that the balance of equities tips in his favor; and (4) that an injunctionis in the public interest

. Winter v. Natural Res. Def. Council, Inc

., 555 U.S. __ , 129 S. Ct. 365, 374(2008);

American Trucking Associations, Inc. v. City of Los Angeles

, 559 F.3d 1046, 1052 (9th Cir.2009).

Case 2:09-cv-08030-JFW-JC Document 13 Filed 11/05/2009 Page 2 of 7

extent that our cases have suggested a lesser standard, they are no longer controlling, or evenviable”).Page 3 of 7

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Moreover, “a preliminary injunction is an extraordinary and drastic remedy, one that shouldnot be granted unless the movant, by a clear showing, carries the burden of persuasion.”

Mazurek v. Armstrong

, 520 U.S. 968, 972 (1997). A plaintiff faces an exceedingly high burden whenseeking such relief on an

ex parte

basis.

See Mission Power Engineering Co. v. Continental Cas.Co.

, 883 F. Supp. 488, 492 (C.D. Cal. 1995) (to justify

ex parte

relief, “the evidence must show thatthe moving party's cause will be irreparably prejudiced if the underlying motion is heard accordingto regularly noticed motion procedures”). Indeed, the Ninth Circuit recently reiterated, that “courtshave recognized very few circumstances justifying the issuance of an ex parte TRO.”

Reno Air Racing Ass'n, Inc. v. McCord

, 452 F.3d 1126, 1131 (9th Cir. 2006).

III.Discussion

The Court concludes that Plaintiffs are entitled to injunctive relief. Plaintiffs have carriedtheir burden, and have clearly demonstrated (1) a likelihood of success on the merits; (2) alikelihood of irreparable harm if the injunctive relief is not granted; (3) that the balance of equitiestips in their favor; and (4) that an injunction is in the public interest

A.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. Random House, 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 violation of California CivilCode § 980(a)(2), common law misappropriation, and statutory and unfair competition are similar.

Cf.

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 for profit“presents a classic example of the unfair business practice of misappropriation of the valuableefforts 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.

See

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.

See

McMullan Decl. ¶¶ 11, 12 & Exh. B. Indeed, Defendants do notcontest that Plaintiffs own the copyrights for the Copyrighted Recordings or the Pre-1972Recordings listed in Schedules A and B of the Complaint.