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UNI TED STAiES DI STRI CT COURT
SO UTHERN DI STRI CT O F FLO RI DA Case No.1120427CI VWI LLl AM S DI SNEY ENTERPRI SES,I NC. ,efa/ . ,
Pl ai nt i ls,
VS.

HOTFI LE CORP. ,etaI . , Def endant s.
/

O RDER THI S M ATTER i s bef or e t he Coud on sever alpendi ng m ot i ons f or sum m ar y

j u dgmen t ,whi ch wer ef i l ed un ders eal and i na p ubl i c ,bu tr edac t e df or m( DE 255,DE
275,DE 276,DE 28 0,DE 3O1,DE 31 6,DE 31 8,DE 3 22) .I nc onn e c t i on wi t ht h i s

br i e f i n g, t h ep adi esf i l ed nu mer ous r el a t e d mo t i on st os t r i k e( DE 21 7,DE 241 ,DE . 3 39,
DE 45 2,DE 371,DE 38 7) ,s uppl emen t albr i ef i ng p er mi t t ed b yt h e Coud ( DE 474,DE
475) ,and addi t i onal ,r obustpl eadi ngs on suppl ement alaut hor i t y wi t houtI eave ofCoud

( DE 443, DE 4 44, DE 500,DE 501,DE 50 2, DE 50 3, DE 5 0 4,DE 505,DE 507,DE 509, DE 51 01 DE 51 31 DE 51 4, DE 51 5T DE 51 61 DE 51 71 DE 52 3) . 1 Fi n al l y,t h e Coud per mi t t ed t h e El ec t r oni c Fr on t i erFoun da t i on t of i l ea b r i e fa sa mi c us c u r i ae ( DE 480 ) .
The Coud addr esses aI Ir el at ed f i l i ngs i nt hi s Or der . To t he ext ent t hat t hi s Or der di scusses i n f or mat i on consi der ed by t he padi es t o be busi ness secr et s, i t wi l l be r edact ed i n a publ i c ver si on oft hi s deci si on.

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As evi nced by t he vol ume of t he br i ef i ng and t he pr oc eedi ng di scussi on,t he padi es do notagr ee on m uch,t her e ar e m any f act s asser t ed t o be r el evant ,and t he Coud has been ask ed t o wei gh i n on num er ous uns et t l ed I egali ssues.
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BACKG ROUND

Thi s case conc er ns t he ac t i ons ofan of f shor et echnol ogy com pany t hatpr ovi des

onl i ne f i l es t or age ser vi ces,Def endantHot f i l e Cor p. ,and one ofi t sf ounder s,Def endant

Ant on Ti t o v( c ol l ec t i v el y,l i Hot f i l e' 'or l ' Def en dan t s ' ' ) . Pl ai nt i f f s ar ef i v e ma j or medi a
s t u di osand en t er t ai nmen tc ompan i es ( c ol l e c t i v el y, t h ed d st u di os ' )t h a th ol dc o py r i ght s on
var i ous adi s t i c w or ks: Di sney Ent er pr i s es, I nc. , Twent i et h Cent ur y Fox Fi l m

Cor por at i on, Uni ver salCi t y St udi os Pr oduc t i ons LLLP,Col um bi a Pi c t ur es l ndus t r i es,

I n c. ,and W ar nerBr o s.En t edai n men tI n c.( ' W ar n er ' ' ) . Th e gr av amen oft h e St u di o s'
cl ai m i st hat Hot f i l e' s user s have abused i t s syst em by shar i ng l i censed m at er i al s bel ongi ng t ot he St udi os and t hatHot f i l e and Ti t ov ar eI i abl e as a r esul t .

The p endi ng mo t i o ns f ors umma r yj u dgme n ts ee k an a d j u di c a t i on t ha tHo t f i l e' s
ac t i vi t i es ar e no t( or ar e) en t i t l ed t oas t a t u t or ys a f eh ar bor pr o t ec t i on c r ea t e db y

Con gr es sf i f t een y ear s ago i nt h e Di gi t al Mi l l enn i um Cop yr i g h tAc t( ' ' DMCA' ' ) ,1 7I J. S. C. â1 201,e ls eq. ' , t ha tHo t f i l ei s( ori sn o t )I i ab l ef ors ec on dar yc op yr i gh ti n f r i ng emen tat
c ommon I a w; t ha tTi t o vi s( ori sn o t )per s onal l yl i a bl ef orHo t f i l e ' sa c t i vi t i es asone ofi t s
cor por at e of f i cer s and f ounder s' ,and t hatW ar neri s notl i abl ef ori t sel fabusi ng a s yst em t hatenabl ed i tt or em ove wor ks f r om Hoii l e' ss ys t em . Af t erconsi der i ng t he ext ensi ve f act ualr ecor d and appl yi ng t he r el evantI aw ,t he Coud concl udes t hat Def endant s have

f ai l ed t o m eet cr i t er i a necessar yf or saf e har bor pr ot ec t i on' ,t hat Def endant s ar e
vi car i ousl yl i abl ef ort he act i ons ofHot f i l e' s user s,butt hatquest i ons off actpr ecl ude a det er mi nat i on ofot herf or m s ofsec ondar yl i abi l i t y' ,t hatTi t ov i si ndi vi dual l yl i abl ef ort he

ac t i ons o fhi sc o mpan y,s uc ht ha the wi l lha v et os har ei n wha t ev er j u dg men tHo t f i l ei s
deem ed t o ow e;and t hatHot f i l e m ay pr oceed on a count er cl ai m i tf i l ed agai nstW ar ner

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r el at i ng t o not i ces of i nf r i ngem ent . Thi s act i on wi l lpr oceed t ot r i alon aI Iunr esol ved
i ssues ofI i abi l i t y as wel las f ora det er mi nat i on oft he m easur e ofdam ages. A. Hot f i l e' s Syst em

Hot f i l e,w hi ch began i t s oper at i ons on Febr uar y 19,2009,i s whati s known as an
onl i ne ' ' s t or age I ocker . ' ' The c om pany oper at es an l nt er net websi t e t hat al l ows

r egi st er ed user st ot ake el ect r oni cf i l es ofany t ype t hatar e st or ed on t hei rcom put er s or
ot her accessi bl e I ocat i ons and t r ansf er t hem t o Hot f i l e' s el ec t r oni c st or age sys t em

t hr ough an upl oadi ng pr ocess. As a r esul t ,a copy oft hatf i l et hen exi s t s on Hot f i l e' s

s er v er s.Th e webs i t e pr o vi des a s i mpl ei n t er f ac e be t ween Ho t f i l eu s er s( an dt hei rd at a)

and Hot f i l e' ss t or age n et wor k ,c on nec t i n gt h em wi t hj u s ta f e wc omput ermou s e cl i c k s .
O nce a f i l ei s upl oaded,t he upl oadi ng useraut om at i cal l yr ec ei ves one or mor e uni que URL I i nk s cont ai ni ng t he f i l e nam e and an ext ensi on. So,f orexam pl e,i fa userupl oads a pi ece of sof t war e cal l ed l ' JDownl oader ' '- whi ch i sa r ealpr ogr am whose aut hor s
v ol unt ar i l y upl oaded i tt hr ough Hot f i l e' s websi t e - Hot f i l e woul di s sue t he user a l i nk

l ocat i on such as ' ' ht t p: / / ho;i l e. com/ dl / 1 4052520/ 7a3c8f 8/ JDownI oader % 20O. 8. 821.
zi p. ht ml . ' 'As can be seen,t he I i nk gener al l y gi ves som e i ndi cat i on oft he f i l e nam e,and t hus,i t s possi bl e cont ent . By ent er i ng t hatl i nk i nt ot he addr ess barofany I nt er netweb

br owser on any com put er ,t he userm ay r et r i eve and downl oad hi sf i l e. Hot f i l e keeps
t r ack oft he dat e, t i m e ofuse,and cedai n useri nf or m at i on associ at ed wi t ht he f i I e. 2

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Thi s case r evol ves ar ound em er gi ng t echnol ogi es,whi ch r equi r es t he Coud t o gi ve an over vi ew of t he r el evant concept s. The padi es have pr ovi ded m or e com pr ehensi ve i nf or m at i on and m or e sophi st i cat ed anal yses,w hi ch ar e on f i l e

wi t ht he Coud. ( See ,e. g. ,Fos t erDe cl . ( DE 3 251 7) . )
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W hi l e an i ndi vi dual ' s actofupl oadi ng a f i l ei s ost ensi bl yi nnocuous - and i ndeed,
ot hernet wor k s pr ovi de si mi l arsods ofser vi ces - s ever alofHot f i l e' s at t r i but es f aci l i t at e

u ser s'i nf r i ng emen to fc op yr i gh t s. Fi r s t ,whi l et h eu pl o adi n g pr oc es sp l ac e sj u s ton e
copy oft he f i l e on Hot f i l e' s ser ver s,t hatf i l e can be downl oaded an unl i mi t ed num berof
t i m es. M or eover ,t her e ar e no I i mi t at i ons as t o how som eone can f udher use or

r epl i cat et he f i l e.
Second,because t he f i l ei s notsecur e,i ti s accessi bl et o anyone wi t h an I nt er net

connect i on. I ti si m podant t o not et hat Hot f i l e pr ovi des no i ndex or sear ch f eat ur e,
whi ch m eans t hatanyone t r yi ng t o access a f i l e m ustknow i t s exactI ocat i on orURL -

t he f i l ei s essent i al l y hi dden i n pl ai n si ght . Nevedhel ess,ways exi stf orot heruser st o
I ear n about and gai n access t of i l es. Fori nst ance,Hot f i l e encour ages user st o shar e

f i l eI i n k s( and t hu sf i l es )t hr ou gh an af f i l i a t e pr o gr am , wh i c h pa ys i ndi v i du al st on a vi ga t e
pr ospect i ve dow nl oader st of i l eI ocat i ons. The i ncent i ves i ncr ease wi t ht he si ze oft he

f i l e and t he f r equency ofi t s downl oad butwi t houtr egar dt o ot herchar ac t er i s t i cs t he f i l e

mi gh tp os s es s( e. g. , i fi ti s en t edai nmen tme di aver su su t i l i t yc ompu t ers o f t war e ori fi ti s c r ea t e db yt he us erorc r ea t e db ys omeon e eI s e ) . 3l n pr ac t i c e,Ho t f i l e' s af f i l i a t es h av e
cr eat ed t hei rown websi t es t hatcat al ogue f i l es f ound on Hot f i l e,pr om ot et hei rf i l es,or al l ow t he publ i ct o sear ch f or f i l es. I n addi t i on, upl oadi ng user s can t hem sel ves br oadcast t he downl oad I i nks,such as by em ai l i ng t hem t o peopl et hey know or by

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The amount s pai d perf i l e - no mor et han $0. 015 - ar e smal l ,buti n aggr egat e
have r esul t ed i nt he paym ent of m i l l i ons of dol l ar st o af f i l i at es. Pr i ort o 2012, Hot f i l e al so pai d websi t e owner saf i ve per centcom m i ssi on based on t he number of user s who pur chas ed pr em i um subscr i pt i ons t o Hot f i l e and had been r ef er r ed by such websi t es.
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advedi si ng t hem t hr ough var i ous channel s. Thi s has t ur ned Hot f i l ei nt o not onl ya
st or age si t e,butal so a f i l e di st r i but i on net wor k.

Fi nal l y,because Hot f i l e pr ot ect s user s'pr i vacy,i t has ef f ect i vel yr ef r ai ned f r om i nt er f er i ng i n any w ay wi t h how i t s mem ber s use t he ser vi c e. I nt he nor m alcour se ofi t s
busi ness, f or exam pl e, Hot f i l e does not r evi ew w hat i t s user s ar e upl oadi ng, downl oadi ng orpr om ot i ng. I ndeed,as di scussed bel ow ,one ofHot f i l e' s m ai n def enses i nt hi s act i on i st hat i ti s unawar e of t he nat ur e oft he cont ent avai l abl e and has no

af f i r m at i ve dut yt o m oni t oruserac t i vi t i es.
Hot f i l e has soughtt oi ncr ease t he use of i t s syst em and expand t he r at e off i l e shar i ng because t he cor por at i on der i ves r evenue t hr ough subscr i berf ees t hatuser s pay

t oi t .I ndeed,t hi si s Hot f i l e' s sol e sour ce ofr evenue. W hi l e Hot f i l ei s accessi bl et ot he

publ i c and anyone can upl oad ordownl oad f orf r ee,payi ng ni ne dol l ar s perm ont hf or
S ' pr em i um ' 'st at us per mi t s upl oader st os t or et hei rf i l es f or a I onger per i od' ,ot her wi se, f i l es ar e aut om at i cal l y del et ed ever yt hr ee mont hs. Mor eover ,pr em i um user s who seek

t o downl oad f i l es benef i tf r om easi eracc ess,f ast erdow nl oad speeds,and t he abi l i t yt o
downl oad f i l es f r equent l y' ,t hey woul d ot her wi se be r est r i ct ed t o one downl oad ever y

t hi dy m i nut es. Hot f i l e cal cul at es t hat useract i vi t y dr i ves pr em i um subscr i pt i ons whi l e
r ewar di ng user sf or gi vi ng away access t o f i l es t hey possess. For i ns t ance, i ti s

undi sput ed t hatHoii l e' s af f i l i at e pr ogr am pr om ot es t he use ofHot f i l e and l eads user st o
conved t o pr em i um st at us.

By any m easur e, Hot f i l e' s m odel has been ef f ect i ve at encour agi ng user

padi ci pat i on and dr i vi ng gr ow t h am ong dow nl oadi ng user s,upl oadi ng user s and a' Ki l i at e
m em ber s. For i nst ance,accor di ng t o Hot f i l e' sf i gur es, 123 m i l l i on f i l es avai l abl e on

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Hot f i l e' ss ys t em hav eb een downl oaded 2. 9 bi l l i on t i m es - 1 45 m i l l i on t i m es al one i nt h e
m ont h pr ecedi ng t hi sl awsui t- and have r esul t ed i nt he r egi st r at i on of5. 3 mi l l i on user s.

( Ti t ov Deci .! (3 6( DE 39 61) . ) Thi shaswor k eda si gni f i c antf i nanc i albene f i tt oHot f i l e
and i t sf ounder s.

B.

LegalC l ai m s atI ssue

As al l uded t o abo ve,t hese f eat ur es - t he eas e of r epl i cat i on and di ss em i nat i on
of any t ype off i l e,t he I ack of over si ght r egar di ng cont ent ,and t he scal e of Hot f i l e' s

ac t i vi t y- r ai s e qu es t i ons o fI i abi l i t yf oruser s 'i l l egalac t i vi t i es. 4 I nt hei rCom pl ai n tf i l ed

on Febr uar y 8,2O11 ( DE 1) ,t he St udi os al l ege t hatwhi l e Hot f i l e pr oc l ai ms t o be an
onl i ne per sonal st or age si t e, act ual l y desi gned t o pr ovi de a mechani sm f or

upl oadi ng and downl oadi ng user st o engage i n di gi t alpi r acy,com pl et ewi t h a syst em of

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S Yst em s w i t h si mi l arcapabi l i t i es have f aced car ef ulscr ut i ny. Fori nst ance,i nt he l at e 1990s and ear l y 200Os, copyr i ght owner s br ought num er ous successf ul chal l enges t o peer t opeer f i l e net wor ks!w hi ch coor di nat ed t he t r ansm i ssi on of medi a st or ed on user s'com put er s di r ect l yt o ot heruser s,i m posi ng l i abi l i t y on t he net wor k oper at or sf or t he conduct of t hei r user s. See, e. g. , M et r oGol dwyn-

Ma yerSt udi o s;I nc.v.Gr oks t en Lt d. j5 45U. S.913 ( 2005) ' , A&M Rec or ds tI nc .v . Na ps l ec l nc. ,239 F, 3d 1004 ( 9t h Ci r .2001 ) .Ar , i st aRecor d s LLC B .Li me Gr ou p LLC, 78 4 F. Supp, 2d 398 ( S. D. N. Y. 2011 )( ' L/ me Gr o& p' ' ) . The s ys t em
chal l enged mos tr ecen t l y M egaupl oad Li mi t ed, shu t t er ed i t ss er vi c ei n ear l y ! 2012 and i sf aci n g pot ent l alc r i mi naland c i vi ll i abi l i t yi nt he Uni t ed St at es . See Ben Si s ar i o, 7 Cha r ged as F. B. I . Cl os es a Top Fi l esha r i ng Si t e, N. Y.Ti mes, Jan. 19,2012,at B1. W hi l et he par t i es have f ound i t conveni ent t o com par e Hot f i l et ot h ese sy s t em s,t he Cot f r tpr edi c at es i t s deci si on on t he f ac t s and l a w pr esent ed by t hi sr ecor d.

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f i nanci ali ncent i ves t hat f ost er si nf r i ngem ent . They assed t hat i ti s Hot f i l e' si nf r i ngi ng
uses,notI egi t i m at e userac t i vi t y,t hatdr i ves t he com pany' s busi ness. The St udi os br i ng

a cl ai mf orsecondar yi nf r i ngement( Count1 1 ) ,t . hei rcl ai mf ordi r ecti nf r i ngement( Count1 )

was di s mi s s e db y pr i oror d ero ft h e Coud ( DE 9 4) . To f r ame t he I egali s s ues an dp u t
i nt o cont ext t he evi dence di scussed t hr oughout t hi s deci si on,t he Coud pr ovi des t he f ol l ow i ng sum m ar y oft he padi es'posi t i ons and t hei rk ey evi dence.
Al t hough I ar gel yi r r el evant t oi ssues of I i abi l i t y,t he cor ner st one of t he St udi os'

case i s a st at i st i cal anal ysi s conduc t ed by Dr . Ri char d W at er m an bas ed on cl assi f i cat i ons pr ovi ded by t hei r pr of f er ed copyr i ght exped, M r 5 The .Scot tA.Zebr ak. r epod concl udes t hat 90. 2% of t he dai l y downl oads on Hot f i l e ar e dow nl oads of ' ' i nf r i ngi ng' ' or ' ' hi ghl y i nf r i ngi ng' ' cont ent and t hat onl y 5. 3% of dow nl oads ar e

n on i n f r i n gi n g, wi t ha 1 . 30 / cmar gi no fer r or .( Wa t er man Dec l . j l ! l 22 23 ( DE 32 56) . )Th e
St udi os al so pr ovi de ci r cum st ant i aland anecdot al evi dence t hatHot f i l e does notser ve a

S

As e xpl ai n ed i n mor e de t ai lb el o w,c ou ds ha v es quar el yr e j ec t e dt h e St u di os '
posi t i on t hat gener al i zed evi dence of i nf r i ngement , such as Dr . W at er m an' s st udy,f or ecl oses t he st at ut or y saf e har borpr ot ect i on af f or ded by t he DM CA and necessi t at es a f i ndi ng of I i abi l i t y. Al t hough t he St udi os ci t et o di c t a suppodi ng t he pr oposi t i on t hatt he goal s oft he DM CA ar ei nconsi s t entw i t hr ewar di ng t hose

who k no wi ngl yc on t r i bu t et oi n f r i n gemen t( b u t mean t o pr o t ec ti n no c en tac t or s who ar e enga ge di n ben ef i c i al ap pl i c a t i on so ft ech nol og y ) , aI i t i gan tmus tpoi n tt o
evi dence ofknow n i nf r i ngementpadi cul art o wor ks t hatt hey ow n. Fori nst ance,

i n Vi ac o m I nt jI nc .v .Yo uTu be ,I nc . ,676 F. 3d 1 9( 2d Ci r .201 2) ,t h e Sec on d
Ci r cui tf ound t hat a def endant c oul d not be sai d t o have awar eness of i nf r i ngem ent wher e an i nt er nal sur vey r eveal ed t hat 75 t o 80 per cent of aI I cont ent on t he syst em was i nf r i ngi ng. I d.at 3234. As anot her case r ecent l y sum m ar i zed,' ' knowl edge oft he pr eval ence of i nf r i ngi ng ac t i vi t y,and wel com i ng i t , does not i t sel ff or f ei tt he saf e har bor . To f ofei tt hat ,t he pr ovi der m us t

i nf l uence orpadi ci pat ei nt he i nf r i ngement . ' ' Vi acom I nt jI nc.v.YouTube,/ nc. ,

No.07 Ci v.21 03 ( LL S) ,201 3W L 1 6890 71 ,at* 5( S. D. N. Y.Apr .1 8,201 3) .
Out si de t he scope of t he DMCA,gener alknowl edge of i nf r i ngement i sa f act or suppodi ng secondar yl i abi l i t yf or i nf r i ngem entbut cannotest abl i sh such I i abi l i t y on i t s ow n.

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pr i m ar i l yl aw f ulpur pos e,as di s cus sed b el ow. Fudher , t hey c ont end t hat Hot f i l ek nows about r am pant i n f r i ngem en to f wor k s owned by t he St udi os and ot h er s,t hat Ho t f i i e f ai l ed t or em ov ei n f r i ngi n g m at er i alordi sabl et he ac count so fuser s who upl oaded s uch

mat er i al despi t e ha vi ng r ecei v ed ei ght mi l l i on i nf r i n gemen tn ot i ces f r om cop yr i gh t
hol der s, and t h at Hot f i l e and i t s upl oadi n g us er s h ave pr of i t ed f r om t he i n f r i n gi ng ac t i vi t y. As a r es ul t ,t he St udi os c on t en dt hatHot f i l ei sI i abl e underv ar i ou st heor i es of sec ondar yc op yr i ghti n f r i ngem entand t ha ti tcanno tavai li t s el fofa sa f e har bor c r ea t ed i nf avoro fs er vi c e pr ovi der sb y Congr es st hr ou gh Sec t i on 512 o ft he DM CA . Fori t s par t ,Ho t f i l e podr ays i t s el fas any t hi ng buta pi r a t e net wor k. Ho t f i l e and i t s f ounder s cl ai m t hat t h e cor por at i on' s busi n ess m odeli sn ot unusualf ort he i n dus t r y. An dt hey cont en dt ha tt he sy s t em i s us ed pr edom i n an t l yf ors t or a ge and ot herl egi t i ma t e

us es, such as di st r i bu t i ng nonl i c ens ed s of t war e; M s pac e s hi f t i n gn ( i . e. , enabl i n g

i ndi vi dualus er st o ac cess t h ei r medi at hr ough an ot herdevi c et hey o wn l ' ,and t h e

sh ar i ng o fmedi at hati s ei t hercr eat ed b y user s( su ch as vi deos t o pr omo t e pol i t i c al
change) ,f r eel yI i c ens ed ( oral t oget herno tc opyr i gh t ed) ,ort oo l ar ge t os end by ot h er
m et hods. For ex am pl e, Hot f i l e poi nt st ot he f ac tt ha

Fur t her ,t hr ough i t s expeds, Hot f i l e at t em pt s t o under mi ne t he St udi os'

i nf r i ngem entanal y ses,c on t endi n gt ha tt he W at er m an s t u dy ex am i ned onl y a onem on t h

per i od of dat af r om Januar y 2011 ( l eav i ng t he poss i bi l i t y bu t hugel yi mpr obabl e

6

Noo t h erPi a i n t i f f sa p p e a r t oh a v ed o n es o.
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I i kel i hood t hatt her e was a zer o per cent i nf r i ngem entr at ei n ot herm ont hs pr i ort ot hi s

l a ws ui t ) an di mpr oper l ye xc l u ded en t i r ec a t e gor i es o ff i l es,su c h as t h o s e wi t h adul t
cont ent ,whi ch i s of t en gi ven away wi t ht he c opyr i ghthol der s'per mi ssi on,and publ i c
dom ai n m at er i al ,i ncl udi ng wor k s whose copyr i ght s have expi r ed. Hot f i l e does concede

t hat ,at l eas tt o som e degr ee,i nf r i ngem ent has occur r ed t hr ough i t s syst em and t he
avai l abi l i t y of i nf r i ngi ng f i l es dr i ves conver si ons
pai d pr em i um account s.

Nonet hel ess,t ot he ext entt hati nf r i ngem entdi dt r anspi r e on i t s syst em ,Hot f i l e cl ai m st o

have been unawar e ofi t .
Hot f i l e al so asser t st hatt ot he ext entt hi sI i t i gat i on has hi ghl i ght ed way si tcoul d

bet t erpol i c et h e ac t i vi t yofi t su s er s, i th as d on es o( ev en i fi twas n otr e qu i r ed t o) . Thi s
appear st o be t r ue. Forexam pl e,when al eded by t he St udi os'I awsui tt ot he pr esence
ofi nf r i ngi ng cont ent ,Hot f i l ei m pl em ent ed S ' power f ulcount er m easur es' 'agai nst l nt er net pi r ac y,such as adopt i ng f i l t er i ng t echnol ogi es and t er mi nat i ng l ar ge num ber s ofr epeat

i nf r i nger s,t hat go beyond t he m ost r udi m ent ar yf oi l st o such act i vi t i es. l nt hi s way, Hot f i l e advances t he cl ai mt hati ti s a sm al l ,f or ei gn com pany t hathas done ever y t hi ng possi bl et oi nvest i gat ei t s user s'backgr ounds,i m pl em ent count er m easur es t o def eat

pi r ac y ,an dc ompl y wi t h Uni t e d St a t e sc op y r i gh tI a w( wi t h whi c hi ts ay si twa sn otal wa ys

f ami l i ar ) . Fi n al l y,Hot f i l ea s s eds t h a tt he St u di os h av e an i mpr op ermo t i v ei n br i n gi ng
t hi sI awsui t , cl ai mi ng t hat t hey st ood wi t ness t o, and wer e com pl i ci ti n, t he al l eged
vi ol at i ons i n or dert o dr i ve dam ages and r ecoverposthoc. C. Evi dence ofHot f i l e' sI nt ent

The padi es hav e di am et r i cal l y di f f er entvi ews ofHot f i l e' s ai m s and have devot ed m uch space t o debat i ng whet herHot f i l e setoutt os er v e al egi t i mat e pur pose. Hot f i l e

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ackno wl edges t hat at i t si ncep t i on,i tmo del ed i t s el fa f t er Rapi dshar e,anot h er onl i ne s t or age I ock erw ebs i t e. Not abl y,copyr i gh thol der s ev en t ual l y cl ai m ed t ha t Rapi dshar e w as us ed f ori n f r i ngem entan d br oughtsui ta gai ns ti ti n June 201 0t os hutt he net wor k dow n. Hot f i l e was awar eo f Rapi dshar e' s pr obl em s. Af t ert he Rapi dshar eI a ws ui twas f i l ed,on e of Ho t f i l e' sc of ounder s, ,sentan em ai lt o Ti t ov no t i ng an

i ncr eas ei nt r af f i conHot f i l e' ss y st em andr emar ki ng,u l wl hatan une xpec t edgi f t we ha ve f r om Rapi ds har e: ) The badt hi ng i st hatt heycl eanup t h ei ri magewhi l e we bec ol me

t he f i agshi pofnonl i cens ed c on t en t . '( Yeh Decl .Ex.53 ( DE 28858 ( f i l ed unders eal ; DE 3241 1) . ) On e mont hI at er , s pect l l a t ed t hatone r eas on t h at' ' ourpr ost s

i ncr eas ed so r api dl y' 'was t ha t' ' Hol l y wood h as c l ose d 34 l ar ge websi t es f or i l l egal

movi es and t hatc oul d have r edi r ec t ed user st o us. ' '( Yeh Dec l .Ex. 49 ( DE 2885 4( f i l ed

under s eal l , DE 3 ' 2411 ) . ) Ti t ov r esponde dt ot hatemai lb y speci f i cal l y nami ng
Rapi dshar e. Apad f r om t he gener al i zed st at i st i cs hi ghl i ght ed ear l i er ,t he St udi os have pr ovi ded a past i che ofevi dence r el at ed t o Hot f i i e' s busi ness m odel ,desi gn and use t l nat t hey cont end m akes a ci r cum st ant i alcase t hatHot f i l e under st ood i twas m aki ng i l l egal
cont entavai l abl ef ordi st r i but i on and t aci t l yf ost er i ng such act i vi t y. Fori nst ance,t he f act

t hat Hot f i l e encour aged dow nl oadi ng act i vi t y - by del et i ng f i i es t hatar e notf r equent l y dow nl oaded and by payi ng m em ber s onl yf ordownl oadi ng act i vi t y - m eans t hatHot f i l e

w as i n t ended t o be a di s t r i but i on n et wor k and no t mer el yas t or age f ac i l i t y. As a
cor ol l ar y,t he St udi os cont end t hat Hot f i l e' s af f i l i at e com pensat i on st r uct ur er ewar ded t he shar i ng of I ar ger and popJ/ ar cont ent , whi ch dr ove pr em i um conver si ons and
ear ned r evenue f ort he net wor k.

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On t he ot herhand,Hot f i l e pr esen t s evi dence t hat i tconduct si t s af f ai r swi t hout

r egar dt ot he na t ur eo ft h ec on t en tav ai l abl e on i t ss ys t em ( i . e. , pr o t ec t e db yc op y r i gh tor

o t h er wi s e )oru s era c t i vi t y( e. g. , s t or age,s har i ng,s t r eami n g, et c. ) . Hot f i l e' s ex ped,Dr .
Boyl e,chal l enges t he St udi o' s cl ai m s about t he conver si on r at e. Even t he St udi os'
exped,Dr .l an Fost er ,acknowl edges t hatent edai nm entm edi a,whi ch m ay orm ay not

be pr ot ec t ed and whi ch Hot f i l e user s m ay orm ay nothave had per mi ssi on t o shar e,can be a si ngl el ar ge f i l e,orS d di vi ded i nt o sever al ,sm al l ercom put erf i l es i n or dert of aci l i t at e

t r an s mi s s i onorc op y i n g. '( Fo s t erDecl . ! ! 8( DE 325 1 7) . )
The St udi os al so poi ntt o speci f i c docum ent st or ef ut e Hot f i l e' s cl ai mst hati tdi d
ns t anc e,i n an em ai lbet w een notunder st and whatwas occur r i ng on i t s syst em . For i

he c om pany' si nt el l ect ual pr opedy pol i cy, one of t hem Hot f i l e engi neer s di scussi ng t

s t at ed t hat' d whati s pr ot ect i ng us I egal l yi st he f actt hatwe don' tknow whati s up t her e on oursi t e. I fwe know ,t hen we ar e suscept i bl et oI awsui t s. And now accor di ng t ot he

I P pol i c y,1 0d ay sa f t era r ep od,we pr et en d we don ' tk no w. ' '( Yeh Dec l .Ex.5 4( DE

288 5 9( f i l ed un ders e al l ;DE 3 2411 ) . ) Th e St udi os ar gue t h a t Ho t f i l et ur n ed a bl i n d
ey et oi n f r i n gemen t . Mor eov er ,as pr ev i ou s l y ci t ed,Ho t f i l e ac k no wl e dge d( ora tI eas t ex pr e s se dt h ec onc er n )i nt he Su mmero f2 01 0t h ati twas be c omi n gd ' t h ef l a gsh i po f
nonl i censed cont ent ' 'and capt ur i ng i nf r i ngi ng t r af f i cf r om com pet i ng syst ems. And as
di scussed i n t he DMCA cont ext bel ow , Hot f i l e r ecei ved m i l l i ons of not i ces f r om

copyr i ght hol der s cl ai mi ng t hatt hei rr i ght st o padi cul arwor ks wer e bei ng i nf r i nged yet f ai l ed t ot ar gett he associ at ed user s,f ai l ed t or em ove ot heri dent i calcopi es oft he wor ks

f r om t h es y s t em ( an d onl yr emo v ed o f f en di ng I i n k s an d no tt h eo f f en di ng f i l es ) ,an d di d
noti m pl em entr obustcount er pi r acy t ool s unt i l af t ert hi sl awsui twas f i l ed.

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Wi t hr egar dt o Hot f i l e' s af f i l i at e pr ogr am ,t he St udi os cont end t hat because of ' s f aci al l y pi r at e' 'af f i l i at e si t es I i ke d l copym ovi e. net ' '- a websi t et hat ,f r om scr eenshot s,

appar ent l y di spl ayed popul ar m ovi es' pr om ot i onal m at er i al s and m ay have been em bedded W i t h Hot f i l e downl oad l i nks - Hot f i l e shoul d have under s t ood t he avai l abi l i t y

ofc op yr i gh t e dc ont ent .( Yeh Dec l .Ex.3 5( DE 32 43) . )l nf a c t ,Ho t f i l e ha ds e v er al r u n i ns wi t h af f i l i at es r egar di ng pi r acy. l n one i nt er naldi scussi on,f orexam pl e,an em pl oy ee
nam ed ' ' Andr ei 'r eached outt o Ti t ov aboutan af f i l i at e si t e cal l ed d t pl anet suzy' 't hatwas

' ' convedi ng wel l ' ' but had som ehow st r ai ned i t s r el at i onshi p wi t h Hot f i l e. Ti t ov
r esponded t hat ù d i t m us t not appear i n any way t hat we pay f or advedi si ng on a

p or nogr aphy si t e,wh er e pi r ac y ac t i vi t y pr os per s . ' '( Yeh.Dec l .Ex.10 4( DE 28811 6
l e Hot f i l e sugges t st hat t he docum ent shows i t s ( f i l e du nders e al l ;DE 32 41 7) . ) W hi
nf r i nger s,t he St udi os pr ovi de evi dence t hat ' s Hot f i l e m ost unwi l l i ngness t o dealwi t hi r ecent l y pai dt hi s af f i l i at e dur i ng t he per i od spanni ng Januar y 16,2012 t hr ough Januar y 22,2012 . suggest i ng t hat Hot f i l ei s cont i nui ng t o m ake paym ent st ot hi s websi t e

t oday. '( Fost erDecl . ! !56 ( DE 286 ( f i l ed underseal l ;DE 32517) . )
The St udi os al so poi nt t o ot her Hot f i l e com m uni cat i ons wi t h af f i l i at es. I nst r uct i ons on Hot f i l e' s syst em addr essed t oi t s af f i l i at es st at ed t hat t hi r dpar t y si t e

owner s can geta com m i ssi on equalt of i ve per c entofaI Ipr em i um account st hey sel l ,so

t hos et h i r d p adi es sh oul dl ' l p j o s ti nt e r es t i ng down l oa dl i nk s' 'i n or der t o' ear n bi g
mone y. ' '( Yeh Dec l . Ex.57 ( DE 32 411 )( empha si s ad ded l . ) Ot h eri ns t r uc t i on st o afi l i a t e ss u gges tup l o adi n gl ' f i l es onl yi fy ou i n t en l dlt o pr omo t et h em . ' '( Yeh Decl .Ex.
ound t he t i m e of Hot f i l e' sf oundi ng,som eone a/i l i at ed wi t h 59 ( DE 32411) . ) And,ar

Hot f i l e, An dr e wl an ak o v,s ol i ci t ed a f f i l i a t es b y pos t i n g ona webs i t et ha tl ' l oj urg oali st o

12

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r each peopl e w ho ar ei nt er est ed i nt hi s ki nd ofbusi ness,and t of i nd good upl oader s ...
i l e hos t and spr ead upl oadi ng some st uf f- m p3,vi deos,appl i cat i ons,games on our f t hese I i nks over . ..f or ums wher e downl oad I i nks ar e post ed ( t o game s,ap pl i c a t i on s

and s o on) . ' '( Yeh Dec l .Ex. 60 ( DE 32 41 2 ) . )
Apad f r om af f i l i at es,evi dence ofsi mi l arcom m uni cat i ons exi st s bet ween Hot f i l e

and i t s upl oadi ng and downl oadi ng user s. One userseeki ng t echni calassi s t ance,f or
i ns t ance,s t at ed t hatt l i m a pr em i um usern i mt r yi ng t o downl oad f r om t he bel ow I i nk bu t af t er cl i cki ng downl oad but t on,page not f ound appear s ht t p: / / ho#i I e. c om / dI / 8651708/

c a d2aa3 / Des pi c ab I e. Me. 201 0. 720 p. BRRi p . XVi D. AC3 FL AW L3 SS. p ad6r ar . h t mI . ' '( Yeh Decl .Ex .5 4( DE 288 31 ( f i l ed un ders eal l ;DE 32 411 ) . ) Someone a tHot f i l e app ar en t l y
r esponded w i t h downl oad i nst r uct i ons. The St udi os cont end t hatt he f i l e name i dent i f i ed
above shoul d have al eded Hot f i l et ot he f act t hat a user was at t em pt i ng t o i l l egal l y

dow nl oad a podi on of t he popul arm ovi e Des pi cabl e M e. Beyond t hi s exam pl e,t he evi dence show s t hatwhenever Hot f i l e was cont ac t ed by user s,t he t i t l e oft he f i l eI ast
accessed by t hatuserwas r eveal ed.

I n anot herdocum ent ,a Hot f i l e usercom pl ai ned t hathe was unabl et o expod f i l es t hathad been upl oaded f r om Hot f i l et o ot herser vi ces because t hose ser vi ces ' i wr ot e me

t ha taI Imy f i l es ar e BL ACKLI STED. '( Yeh.Dec l .Ex.1 ( Ti t o v De p. )at71 9: 2 21 .( DE

2883( f i l ed un ders eal l ;DE 3 24 2 ) . ) Someon e atHo t f i l er es pon d ed t h at' ' l s l i n c et he
speci f i c val ue i si dent i calt o a val ue m ar ked i l l egali n oursyst em ,upl oads ar e deni ed.

W e suggest t o cont ac t your host er i nt hi s m at t er . Unf odunat el y,due t o secur i t y and

I e galma t t er s, t h e bl o ck age oft h ev al u ec an no tb eI i f t e d. '( I d .( empha si s ad dedl . ) An d
Ti t ov com m ent ed i n an i nt er nal em ai l t hatd l we gener al l y do notsuppod t r ansf er r i ng f i l es

13

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f r om ourSyst em outand t hati s nota pr obl em t hatwe need t o gi ve m uch consi der at i on. ' '

( I d.at721: 41 0. )l nt hi sr e gar d,Ho t f i l e ar gue st h att he f i l es wer en ont r ans f er r a bl ef or
r easons i ndependent of copyr i ght ' ,t hey wer e essent i al l y bl ank f i l es. But t he St udi os

r e j oi nt ha tt h ei n f er en c et o be dr a wn i st ha tHo t i l eh ad n ot i c et h a tt h e us er ' sf i l eswer e
i nf r i ngi ng because t hey had been bl ock ed by t he ot herser vi ce.

Si mi l ar l y,one podi on ofHot f i l e' s websi t e al l owed user st ot estw het hera Hot f i l e
I i nk was oper at i onal . Accor di ng t o a scr een shot , Hot f i l e pr ovi ded t he i nst r uct i onal

exam pl e of t ' hdp: / / hot f i l e. com / / dl / l8zg87/ czd67b8/ pcD. Dol l Dom i nat i on. zoog. r ar . h t ml . ' '

( Yeh Dec l . Ex . 44 ( DE 3 241 1 ) . ) Th e St u di o sc o n t en dt h at t h eI i n ku s e d as an
i l l ust r at i on cont ai ned an al bum by d l r he Pussycat Dol l s' 'cal l ed ' t Dol IDom i nat i on' 'and

t hatot hercopyr i ght ed wor ks wer e used i n ot hert ut or i al si l l us t r at i ng Hot f i l e' sf unc t i ons.
Hot f i l e ar gues t hateven i ft he f i l e cont ai ned what t he St udi os assed i t cont ai ned,t hi s
padi cul ar band aut hor i zes cedai n wor ks f or onl i ne di st r i but i on, as one coud has

r ecogni zed. See UM G Recor di ngs,I nc.v . Veoh Net wor ks,I nc. ,620 F.Supp.2d 1081

( C. D.Cal . 2008)( c on c l u di n gt h att h ed ef end an tn et wor k di dn oth a v e ac t u al kn o wl e dge
of i nf r i ngi ng m at er i alwher ei t knew t hatwor ks by padi cul ar adi st s wer e avai l abl ef or

do wn l o ad si nc et h eywer e upl oa ded b y adi s t st h ems el v es , su c h asTh e Pu s s y c a tDol l s ) .
D. Addi t i onalFact s Rel evantt o Hot f i l e' s DM CA Def ense

As expl ai ned m or ef ul l y bel ow,Sect i on 512 oft he DM CA conf er si m m uni t y' ' f r om aI Imonet ar yr el i ef ' 'on I nt er netser vi ce pr ovi der st hatm eetc edai n cr i t er i a wi t hr egar dt o st or i ng i nf r i ngi ng m at er i aland m aki ng i t accessi bl e. Pr i nci pal l y, wi t hr espect t ot he

n et wor ka ti ss u eh er e, ar equi r emen tf orel i gi b i l i t yc on t ai n e di n Sec t i on 51 2( i )al on g wi t h
s ev er alo t h err equ i s i t es c on t ai ne di n Sec t i o n 51 2( c )manda t e:t h att h ed ef end an th as a

1 4

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pol i c y, r easonabl yi m pl em ent ed,f or t er mi nat i ng r epeat i nf r i nger s' ,t hat i ti s a qual i f i ed ser vi ce pr ovi der ,t ' hat i t has pr oper l yr egi st er ed a DMCA agent ,t ' hat i t does not have
ac t ualor' ' r ed f l ag' ' knowl edge oft he i nf r i ngi ng nat ur e off i l es st or ed on i t s syst em ;t hati t

t ak es d own f i l est h atar et h es ub j ec to fan i n f r i n gemen tno t i c e' , t h a ti tdoes n o tr e c ei v ea
di r ec tf i nanci al benef i tf r om t he al l eged i nf r i ngi ng act i vi t y; t hat i t does not have t he pr act i calabi l i t yt o cont r ol t he al l eged i nf r i ngem ent s;and t hati taccom m odat es and does echni c alm easur es us ed t o pr ot ect cont en t . Not abl y,t he not i nt er f er e wi t h st andar dt

alchar ac t er i st i cs of t he net wor k,does not r equi r e st at ut e does notf ocus on t he gener
af f i r m at i ve ac t i on t o pol i ce cont ent ,and does not pr ecl ude a gr antofi m m uni t y even i f

t he oper at or knew or shoul d have known of i nf r i ngem ent gener al l y. The padi es'
m ot i ons i nt hi s case conc er ni n pad whet herHot f i l e has m ett hose r equi r em ent s and,as

ar esul t ,whet herHot f i l e becam e el i gi bl ef orsaf e har borpr ot ect i on atany poi nt . 1. I nf r i ngem entNot i ces and Hot f i l e' s RepeatI nf r i ngerPol i cy

Undert he DM CA,l nt er netser vi ce pr ovi der s m us tr easonabl yi m pl emen ta pol i cy desi gned t ot er mi nat e user si dent i f i ed as r epeat i nf r i nger s. To t hat end, si nce M ay

2010,Hot f i l e has pr ovi ded i t s user s wi t h not i ce ofa r epeati nf r i ngem entpol i cy t hr ough

t he t er ms ofs er v i c e pr ov i ded on i t s webs i t e. ( Yeh.Decl .Ex.1 ( Ti t o v Dep. )at279: 1 4 ( DE 32 42) . ) Th at p ol i c ys t at es t ha t Ho t f i l e' d di sc o nt i nu el s ls er v i c et ou s er s who
r epeat edl y m ake such cont entavai l abl e orot her wi se vi ol at e Hot Fi l e' s Ter m s ofSer vi ce.
Pl ease do notabuse t he Hot Fi l e ser vi ce by usi ng i tt o di st r i but e mat er i al st o whi ch you

do n otha v et h er i gh t s. ' '( Ti t ov Dec l .j ! ! r1 7 1 9( DE 321 1 ) . ) Pr i ort ot ha tt i me,Ho t f i l e

h ad war n ed u s er st ha tl ' I s l er v i c es of Hot f i l ec an be u s ed i nI egi t i ma t e ob j ec t i v es.
Tr ansm i ssi on, di st r i but i on,or s t or age of any m at er i al st hat vi ol at eI aws i sf or bi dden.
15

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Thi s i ncl udes wi t hout r est r i ct i on pat ent ed m at er i al s, copyr i ght l aws, t r adem ar ks,

c ommer c i al s ecr et san d ot heri n t el l ec t ual pr op edyr i gh t s. ' '( I d.! r1 2. )l th ad al s op os t ed

an ema i la ddr es s on i t s web si t e - abu s e@ ho t f i l e. c om - t h a tt h e pu bl i cc oul du s et o
al er tHot f i l e ofi nf r i ngem ent . Al t hough t he pol i ci es essent i al l y ask user s nott o engage i n mi sconduct and war nt hatt hey m ay be excl uded f r om usi ng Hot f i l e,t hey ar e not abl y si l entas t o whatcr i t er i a Hot f i l e woul d consi deri nt er mi nat i ng r epeati nf r i nger s and w hat ef f ods i t woul d undedake i n doi ng so. I ti s undi sput ed t hat Hot f i l et er mi nat ed onl y appr oxi m at el y 43 user s up t ot he f i l i ng oft he Com pl ai nt , I ti s cl ear f r om t he r ecor dt hat Hoii l e' sr epeat i nf r i nger pol i cy was not t i ed t o not i ces ofi nf r i ngem enti tr ecei ved f r om copyr i ghtow ner s undert he DM CA. Z By t he t i me t hi s Com pl ai nt was f i l ed,f or i nst ance,t en m i q l i on such not i ces had been s entt ot he

company wi t hr espectt ol i nks t of i l es avai l abl e on i t s syst em. ( Fost erDecl .% 25 ( DE

3251 7 )( di s cu s s i n gd at a pr oduc ed by Ho t f i l el . ) Bot hs i des a gr ee t h a tt ho s en ot i c es c or r es pon dt oa ppr o xi mat el y ei gh tmi l l i on un i qu ef i l e s. ( / d . ;Ti t o v De cl .! 126 ( DE 3 9 6-

Hot f i l e acknowl edges t hat i t made no connect i on bet ween i nf r i ngem ent not i ces and ac t s of i nf r i ngement . Hot f i l e expl ai ns t hat i t di d not t r ack t he not i ces and di d not

ba s ei t s po l i c y on h o w man yn ot i c e s wer ea s s oc i a t e d wi t hc edai n us er s( s uc h as by ' ' f l aggi ng' ' t hem) .( Yeh.Dec l .Ex.1 ( Ti t ov Dep. )a t28 3: 24 28 5: 1 5( DE 32 42) . ) Ti t ov

1

The DM CA set s outa not i ce pr ot ocolunderwhi ch copyr i ghthol der s can not i f y an

ag en tr e sp ons i bl ef or t h es er v i c eo f cl ai med i n f r i n ge men t . See 1 7 U. S. C.j 51 2( c ) ( 3) 'Hend , r i c k s on k ' .e8a y,I nc . ,1 65 F.Su pp.2d 1 0 82, 1 0 89 ( C. D.Cal . 2001 ) . Th es t a t u t e al s o al l o ws s er v i c ep r o vi der st oc h al l eng ei n f r i n gemen t
desi gnat i ons t hr ough a count er not i f i cat i on pr ocess. 16

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sai d as m uch at hi s deposi t i on, acknowl edgi ng t hat w hen Hot f i l er ecei ved a DM CA not i ce ofi nf r i ngem ent ,i tdi d notr ec or d whi ch useri tcor r esponded t o:

Q.

Pr i ort ot he f i l i ng oft hi s Compl ai nt ,when Hot f i l er ec ei ved a DM CA not i c e f r om a copyr i ghtowner ,di d Hot f i l e at t em ptt oi dent i f yt he userwho had upl oaded t he of f endi ng f i l e?

MR. THOMPSON: Ob j ec t i on,o v er br oad.
A.
* * *

Idon' t bel i eve t hat woul d be t he case m ost of t he t i me. Butagai n, on di scr et i on,em pl oyees coul di nvest i gat ef udher .

Q.

....Absenta r equest ,a speci f i cr eques tby a copyr i ghtowner ,pr i ort ot he f i l i ng oft hi s act i on,di d Hot f i l e have a pr act i ce of i dent i f yi ng t he userw ho had upl oaded f i l es i den t i f i ed as i n f r i ngi ng on DM CA not i ces?

MR. THOM PSON: Ob j ec t i on.Ov er br oa d, a s k ed an d ans wer ed.
Iwon' tsay ' ' speci f i cr equest , 'but i fa copyr i ghthol derwoul dr ai se som e ki nd of concer nt hat I- It hi nk can be - can be sum mar i zed,agai n,a di scr et i on,i dent i f i cat i on coul d be m ade.
BY M R.FABRI ZI O: Q. O kay. My quest i on,t hough,i s wi t hout a r equestf r om a copyr i ghtowner , when Hot f i l er ec ei ved a DM CA not i ce,di d Hot f i l e,as a m at t erofpr ac t i ce, i dent i f yt he userwho had upl oaded t he of f endi ng f i l e?

MR. THOMPSON:Ob j ec t i on .As k e d an d an s wer ed.
A.

Idon' tbel i eve so.

( Ye h.Dec l .Ex .1 ( Ti t ov Dep. )a t281 : 1 0 28 2: 1 5( DE 3 242 ) . ) W hi l e Ho t f i l e di d no tt r a ck s u ch n o t i c es, Ti t o v,a st h e de si gn at e dc or p or a t e Rul e 30( b ) ( 6)r epr es en t a t i v er eg ar di n g
Hot f i l e' s el ect r oni cal l y st or ed i nf or m at i on, t es t i f i ed t hatHot f i l e knows t he useri dent i t yf or
ever y upl oad and t hati twoul d have been a l s t r i vi alt ask' 't o ext r actuser i dent i t i es f r om

i n f r i n gemen tno t i c es. ( Yeh Dec l .Ex .2 ( Ti t o v ESIDep. )a t51 : 235 2: 4( DE 288 4( f i l ed

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u nders eal l ;DE 3 242) . )I ns um,pr i ort ot hi s ac t i on, wh et h era us erwa st h e su b j ec tof
one not i ce or300 not i ces,Hot f i l e act ed no di f f er ent l yi nt er ms ofi nvest i gat i ng possi bl e i nf r i ngem ent . I nst ead,i ni t s br i ef s,Holi l e cr edi t s a syst em of' s manualr evi ew' 'and d ' di scr et i on' ' f or t he t er mi nat i on of 43 user s. However ,t he St udi os'evi dence demonst r at es t hat Hot f i l e was m ot i vat ed not by pol i cy, but by t he t hr eat of I i t i gat i on. Of t hose 43 t er mi nat i ons,33 wer e due t o a cour t ' st em por ar yr est r ai ni ng or deri ssued i n connec t i on

wi t hI i t i gat i on i n i t i a t ed b y a por n ogr aph yp r o du c erc al l e d' i Li b edy Medi ax ' '( Yeh.Decl .

Ex.1 ( Ti t o v Dep. )at299: 1 24 ( DE 28 82( f i l e d un d ers eal l ;DE 32 42) . ) Ot h er s wer e
appar ent l yt er mi nat ed when Hot f i l e ori t s af f i l i at ed ent i t i es r ecei ved I i t i gat i on t hr eat sf r om

c opy r i gh t hol der s. ( See , e. g. ,i d . at 3 06: 1 23 07: 1 0 ( ac k no wl edgi n gt h a t Ho t f i l e
t er mi nat ed a user af t era copyr i ghtow nercom pl ai ned of Hot f i l e' sf ai l ur et or espond t o

DMCA n o t i c es an dt hr eat eni n gt o hol d Hot f i l eI i abl ef ord ' a hu ge I os st o my c ompan y ' ' l . )
Thus, w hi l e Hot f i l e cl ai m st o have ac t ed t o' ' t er mi nat e,and st op paym ent st o account s of user s wi t h num er ous com pl ai nt s at cont ent owner s' r eques t , ' 'i t has f ai l ed t ( ) ci t e evi dence t o suppod t he pr oposi t i on, expl ai nt he condi t i ons t hat l ed i tt o t ar get or t er mi nat e user s, or r ebut t he St udi os' account of user t er mi nat i on onl y by I i t i gat i on.

( See Ti t ov Dec l .: 13 4( s t a t i n g onl yt h at ' ' Hot f i l e di dr e vi e w ac c ou n t so fu s er s wi t h
num er ous com pl ai nt s att he r eques t ofcont ent owner s,di d per f or m m anualr evi ews of

t h os e ac c oun t s, di dt er mi na t et h os e ac c oun t s, an d di ds t op pa ymen t s ' ' )( DE 3 42 2( f i l ed
u n derse al l ;DE 39 61 ) . )
Si mi l ar l y, Hot f i l e' s publ i c cl ai m s about i t sr epeat i nf r i nger pol i c y appear t o be un f ounded. Forexam pl e,i tpur poded t o have a pol i cy ofaut om at i cal l yr em ovi ng user s

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t hathad accum ul at ed t wo d t st r i kes, ' 'based on DM CA not i ces;t he pol i cy was di scussed

i ni n t er nalemai l s. ( &e e Li ebni t z Ex.29 ( DE 3 4631 )atHF0 283 5779 ( ' $ l fus er ' sf i l es
wer er epoded t wo t i m es as copyr i ght abu s e we del et eu s erac c ou nt . ' ' l v ) Ho t f i l ea l s o
i ces of i nf r i ngement t hat i t r epoded t o copyr i ght hol der st hat i t ac t ed upon t he not he user si t del et ed had i n f act r ecei ved, but v et t ed t hem m anual l yt o ensur e t hat t

i n f r i n ged. ( / d. ) Li k ewi s e, i n t er n al doc u men t ss ug ges tt h atHo t f i l eh ad a l d s y s t em i np l ac e

t h atf l ag st h eu s er s( wi t h)nu mer ou si n f r i ng i ng ( Compl ai n t s l 'an dt h att h ec or p or a t i on
' man ual l yr evi ewl ed lt h os e ac c oun t s, ' 'del e t ed t h em, and s ei z ed f un ds t h e y ha v e

r ec ei v ed f r om t h ei ra f f i l i at ep r ogr am . ( Yeh.Dec l .Ex .1 ( Ti t o v Dep. )a t28 62 61 8( DE
288 2( f i l ed un ders eal l ; DE 32 42) . )
I n hi s deposi t i on,Ti t ov acknowl edged t hat t hose r epr esent at i ons wer e unt r ue.

( See,e. g. , Yeh.De cl .Ex. 1 ( Ti t o v Dep. )a t 286 : 6289: 4( DE 32 42) . ) l n de ed, h a d
Hot f i l e pai d at t ent i on t ot he DM CA not i ces,i twoul d have known t hatby t he t i m e oft he Com pl ai nt ,24, 790 user s had accum ul at ed m or et han t hr ee not i ces' ,hal f of t hose had m or et han t en not i ces' ,hal f agai n had 25 not i ces' ,1, 21 7 had 100 not i ces' ,and 61 had

mor et h an 300 no t i c e s. ( Fos t erDec l . 1 1 1 1 4252 & Ex.D.( DE 28 6( f i l e du n ders eal l ;DE

325 1 7) . ) Mor eo v er ,doc umen t s pr o duc e di nt h eI i t i ga t i on su pp od t h ec onc l u s i or l t ha t ,
pr i or t ot he f i l i ng of t he Com pl ai nt , Hot f i l e I ack ed any m eani ngf ul pol i cy t o com bat

i n f r i n gemen t . Al t h ough i ti st h es ub j ec to fa mo t i on t os t r i k e on t h e gr ou nd s ofh ear s a y
and aut hent i ci t y, one docum en t pur pods t o show a conver s at i on t hr ead i n whi ch a

Hot f i l eu s ero bs er v esi n an onl i n ef or u mt ha td l l i l fan yo fy ou l r )f i l esar er ep ode db ya r eal
r epr es en t a t i ve ( s ee h t t p: / / h o ii l e. c om/ r ep odabu s e. h t ml ) , t h en t h ef i l e wi l l be del et ed,bu t
your account wi l l not be r em oved,and you wi l lnot be suspended f r om hot f i l e. com . ' '

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( Yeh.Decl .Ex.22 ( DE 288 25 ( 5I ed un ders eal l ;DE 3242) . ) Si mi l ar l y,anot herus er
who oper at ed a si t e wi t h Hot f i l e I i nks, whi ch t he St udi os suggest was ' ' bl at ant l y' ' i nf r i ngi ng, w as suspended but al l egedl y had hi s account r est or ed af t er cont act i ng

Hot f i l e.( Yeh.Decl .Ex.100 ( DE 28811 2( f i l ed underseal l ,DE 324' 1 6) . ) The St u di os'
ex per t cal cul a t ed t ha tt hi s par t i cul ar u s er had upl oa ded near l y 30 t hou sand f i l es t o
Hot f i l e and r ecei ved but had al so

ac cumul at ed9, 25 4t ak edownnot i c es .( Fos t erDecl . : 1 54 ( DE 286 ( f i l ed un ders eal l ;DE
3251 7) . ) To t he ext en tt hatt h ey may be a dm i s si bl e att r i al ,t hese document s gi v e
subst ance t ot he St udi os'asser t i ons.

Li ke t h at us er ,t h e evi dence pr oduc ed sho ws t hatt he su bj ec t s oft he no t i c es

f or med a di scr eetgr oup ofpr obl emat i cu ser s. W hi l et hose wh o wer et he sub j ec tof
m or et han t hr ee i nf r i ngem ent not i ces m ade up I ess t han one per centof al Iof Hoï l e' s

u ser s, 8t hey wer er esponsi bl ef orpos t i ng 50 mi l l i on f i l es ( 15. 6 mi l l i on ofwhi ch wer e

subsequent l yt h e sub j ec t of a t ak edo wn n ot i c e or r emov ed f or i nf r i n gement ) ,
r epr es en t i ng44 per centofaI I f i l eseverupl oadedt o Ho t f i l e.( Fos t erDecl .1 141( DE 286 ( f i l ed un ders eal l ;DE 32517) . ) Thos es ame f i l eswer e downl oaded near l y 1. 5 bi l l i on
8 The f actt hatt hese user s wer ef ew i n num berbuthad a I ar ge aggr egat ei m pact

( padi cul ar l y wi t hr es pec tt o downl oaded f i l es )accoun t sf ort he di sc r epanc i es
bet ween t he padi es'pr of f er ed st at i st i cs,as does t he f actt hatt he St udi os f ocus

t hr ee per cent have been r em oved by copyr i ght hol der s under Hot f i l e' s Speci al Ri ght shol der Account pr ogr am ' ,t hat t he m ost popul ar downl oads ar e not copyr i ght ed' , and t hat 56 per cent of t he f i l es upl oaded have never been downl oaded. Fur t her , because Hot f i l e m ade si gni f i cant changes t oi t s syst em af t er t hi sl awsui t w as f i l ed, i ncl udi ng i m pl em ent i ng a t hr eest r i kes pol i cy and var i ous f i nger pr i nt i ng t echnol ogi es t o seek out i nf r i ngi ng cont ent , addi t i onal di scr epan ci es ar e at t r i bu t abl et ot h et i m e per i od anal y zed, Su ppor t ed by po s t Com pl ai nt dat a, Hot f i l e asseds i t has been m or e pr oact i ve i ni dent i f yi ng and r em ovi ng i nf r i ngi ng f i l es and user s.
20

onl y on t oi aldownl oadi ng act i vi t y. Fori nst anc e,Hot f i l e ar gu es t h atonl yf our per c en to ff i l es ev er upl oaded ha ve been t h e sub j ectofa DMCA not i ce' ,t ha t

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t i mes,r epr es en t i ng r oughl y hal fofaI I downl oadsev erf r om Hot f i l e. ( / d. )

( 1 d. )l r 1t ur n,t he C onv er si on r at e ev i den ce ShOWS t hat
Fl ot f i l e ear ned i ar ge SUI MS f r om neW Pr em i um t l ser s. Si gni f i cant l y,a snapshott aken by

t he St udi os showed t ha tt hei rf i l es acc ount ed f orone per centoft h ef i l es on Ho t f i l e,or 945, 611 f i l es. W i t hr egar dt o do w nl oads,ho wever , t en per centoff i l es downl oade df r om

Hot f i l e( ac cor di n gt ot h e St u di os'dcwnl oad s t udy) wer e owned or c on t r ol l ed by t he
St udi os. W hi l e Hot f i l e' s ef f or t s t o cont r ol i nf r i nger s' act i vi t y appear s t o have been

i ne f f ect i ve ( what everi t s pol i cy mi gh thav e been) ,Hot f i l e adopt ed a ' r ev amp ed r epeat
i nf r i nger pol i cy' 'i m m edi at el y af t er t hi sI i t i gat i on began. The new pol i cy f ocuses on ' ' t hr ee st r i kes' '- t er mi nat i ng and banni ng user s who r ecei ve t hr ee DM CA not i ces of

cl ai med i n f r i ngemen t or Speci al Ri ght shol der Ac coun tr eques t s( di s cu ss ed bel o w) .

( Ti t ovDec l .! 133 ( DE 321 1 ) . ) Hot f i i e no wt r ac k sh ow manyt i mes i tr ec ei v es n ot i c esof

i nf r i ngement ,each ofwbi c h countasa ' s t r i k e. ' '( l d. ) Thi sr evampedpol i c yI ed di r edl y
t ot he t er mi nat i on of444 ofi t s 500 hi ghest pai d af f i l i at es,al t hough t housands ofsm al l er

a fi l i at es wer e not t er mi nat ed. ( Ti t ov Dec l .! ( 30 ( DE 3961 ) . ) Ul t i mat el y, Hot f i l e

t er mi n at e d 22, 447 u s er swi t hi nmont h soft hef i l i n g oft h e Compl ai nt .( Ti t ovDec l .:1 13 4,
37 ( DE 3 421( f i l ed un ders eal l , 'DE 3961) . ) Hot f i l e ci t est hi s evi denc ei ns upp or to fi t s
ar gum entt hat i ti s now DM CA com pl i ant ,whi l et he St udi os t l se t he evi dence t o show how r am pant and unchecked user act i vi t y had been. And Hot f i i e poi nt s out t hat t he
num berofuser sr em oved i s,i nr el at i ve t er m s,a sm al lnum ber .

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2.

DM CA AgentRegi st r at i on

Anot herr equi r em entofDM CA pr ot ect i on i st hata r egi st er ed agentbe desi gnat ed t o r ecei ve i nf r i ngem ent not i ces. At I east as f ar back as Apr i l 24, 2009, Hot f i l e mai nt ai ned an em ai laddr ess post ed on i t s websi t ef ort he publ i ct or epod i l l egi t i m at e or

i l l egalu s erac t i vi t y. Att ha tt i me,t h e webs i t e ex pl ai n ed t ou s er st h a tt l l t l oe x er ci s ey ou r
DM CA r i ght s, your Pr oper DM CA Not i ce m us t be sent t o Desi gnat ed Agent of
hot f i l e. com t o em ai l : abu s e@ ho t f i l e. c om

.W hen a Pr op er DMCA n ot i f i c a t i on i s

r ecei ved by Desi gnat ed Agent ,orwhen hot f i l e. com becom es awar et hatcopyr i ght s ar e i nf r i nged,i twi l lr em ove ordi sabl e acc ess t oi nf r i ngi ng m at er i al s as soon as possi bl e. ' '

( Ti t o v De cl .1 11 5( DE 321 1 ) . ) Ho t f i l ef o r mal l yr egi s t er ed a DMCA agen twi t ht h e Cop yr i gh tOf f i c ei n Dec emb er2009,a f a c tt ha ti su ndi s pu t ed. ( Ti t ov Dec l .! !1 6( DE 321 1 ) . ) Th er ea f t er ,i n Ma y 201 0,i tp os t ed a p ol i c y ex pr e s sl yi n c or por a t i n gt he DMCA,
i nf or mi ng user s of i t s r epeat i nf r i nger pol i cy and t he cont ac ti nf or m at i on f or i t s

des i gn a t ed agen t .( Gu pt a De cl .Ex. 6( W ar nerI n t er r og.Res ps . )( DE 2 754( f i l ed u nd er s eal l ;DE 320 7) . )I ti sf u dherun di sp u t ed t h a tt h ea gen ta ddr e s s pr ov i ded b y Ho t f i l e
was a postof f i ce box,whi ch t he St udi os cont end f ai l st o com pl y wi t ht he st at ut e. 3. Ot herI nf r i ngem entCount er m easur es

l n addi t i on t ot ar get i ng r epeat i nf r i nger s'account s,Hot f i l e m akes m uch ofot her
count er m easur es i thas puti nt o pl ace,l ar gel y af t ert hi sl i t i gat i on began. Fori nst ance, Ti t ov st at ed t hatHot f i l e' s cur r entpr act i ce i st or em ove i ndi vi dualf i l es wi t hi n 48 hour s of

r ec ei vi ng a no t i c e,wh i c hh eb el i ev e s Ho t f i l e do es 9 5% o ft h et i me. ( Ti t ov Dec l .% 1 9
( DE 321 1 ) . ) Th e St u di o s do n o tdi s pu t et h a ts i n c e Febr u ar y201 1,Ho t f i l eh a s adh er ed

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t ot hi s pr act i ce, al t hough t he St udi os have subm i t t ed documen t s suggest i ng t hat i n
som e i ns t ances,Hot f i l emi ghtnothave al ways done so.

l n Au gu s t2009,Ho t f i l ei mpl emen t ed a Sp ec i alRi gh t s hol derAc c ou n t( t d SRA' ' )

pr ogr am a f t er r ec ei vi n g ar equ es tf or a ' ' t a k edo wn t oo l ' 'f r om Pl ai n t i f fW ar n er .( Ti t ov
Dec l . 1 1 20 ( DE 3 21 1 ) . ) .The pr o gr am, whi c hgi v e sr i s et o Ho t f i l e' sc ou n t er c l ai m agai ns t
W ar ner , al l ows t r ust ed cont ent ow ner s w ho at t es tt hat t hey own r i ght st o pr ot ect ed wor ks t o have access t o Hot f i l e' s syst em . Thi si s a m uch qui ck eraj t er nat i ve t han t he user t er mi nat i on pr om pt ed by a DM cAcom pl i ant i n f r i ngem ent not i ce. I ndeed, t he padi es have st i pul at ed t hatnot i f i cat i ons by t he St udi os t hr ough t he SRA pr ogr am have

t he e# ec t of n ot i c es of i nf r i n gemen tf or pur p os e so ft h e DMCA. ( DE 1 51, a t2

( d l W ar n er ' sn ot i f i c at i ons b y means of Ho t f i l e' s SRA a r e( an d ha v et h e ef f ec to f )
no t i f i c a t i o ns ofcl ai med i n f r i ng emen tt o Ho t f i l e' s des i gn a t ed ag en tu nd er 1 7 U. S. C.j

51 2( c) ( 3 ) ( A) ,and ar et her e f or es u b j e c tt o1 7 U. S. C.j 51 24 9. ' ' ) . ) Th r ou gh an i n t er f a c e
pr ovi ded by Hot f i l e,ow ner s ar e per mi t t ed t oi dent i f y and aut om at i cal l yr em ove of f endi ng
I i nks w i t hout any ac t i on by Hot f i l e. Accor di ng t or ecor d evi denc e,at I east one oft he

St udi os,W ar ner ,has padi ci pat ed i nt hi s pr ogr am .
t s net wor k, pr i nci pal l y t hr ough Fi nal l y, Hot f i l e now act i vel y pol i c es f i l es on i

advanced f i l t er i ng t echnol ogy. Vi deo f i nger pr i nt i ng i m pl em ent ed i n Sept em ber2011 i s

c apa bl eo fi den t i f y i n gc opy r i gh t ed c on t en t ,wh i c h Hot f i l ec l ai ms t ot h en bl oc k .( Ti t ov

Decl . ! ( 35 ( DE 321 1 ) . ) Hot f i l e ha s al s ou s ed s o c al l ed ' ' ha s hi n gt ech no 4 og y ' ' ( pos s i b l y
si nc e Au gus t 2009 9 )t or emov ei den t i c alc op i e so ff i l es onc e one i sf ou nd ' t ob e
i nf r i ngi ng. Thi si sa r evi si on oft he I s m ast erf i l e pol i c y' ' - som et hi ng shar pl y cr i t i ci zed by
9 w hi l e Ti t ov st at ed i n hi s decl ar at i on t hat t he t echnol ogy was i m pl ement ed i n August2009,hi s deposi t i on t es t i m ony i s notconsi st entwi t ht hatassedi on.
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t he St udi os - i n whi ch Hot f i l e saved ser ver space by mai nt ai ni ng onl y one copy of
i dent i calf i l es upl oaded by di f f er ent user s. For m er l y,when Hot f i l er ecei ved a cl ai m of

i nf r i ngem ent ,i tdi sabl ed any of f endi ng I i nk s butdi d notac t ual l yr em ove t he f i l ef r om t he
ser ver ,t hus I eavi ng i taccessi bl ef ordow nl oad wi t h a di f f er entI i nk. And f i nal l y,Hot f i l ei s em pl oyi ng ot her vi deo and audi o f i l t er i ng t echnol ogy t hat i dent i f i es f i l es wi t h char act er i st i cs m at chi ng cont ent r egi st er ed by copyr i ght owner s, whi ch Hot f i l et hen
bl ock s. I ti s uncl earw hat i m pactt hese t echnol ogi es have had i n bl ocki ng access t o

l abl e at t he t i me t he Com pl ai nt was f i l ed. But , i nf r i ngi ng f i l es t hatwer e al r eady avai

ac c or di n gt o Ho t f i l e,t he yh av et wo si gni f i c an t ,r emedi alou t c ome s: ( 1 ) Hot f i l e no w
r em oves aI Ii nf r i ngi ng f i l es t ot he ex t ent t hat i t s sophi st i cat ed t echnol ogy can i dent i f y

t hem ;and ( 2)t he l ow per cent age off i l es cur r ent l yi dent i f i ed and bl ocked ( i nt he r ange of
t wo t of our per cent i nF eb r uar y2 01 2)demon s t r a t es t h atHot f i l ei s no l on gerus e dt o

sh ar ei nf r i ngi ng f i l es. ( Se e Gup t a Dec l .Ex. 38 ( DE 3 21 3 9) . )
E. Cor por at e Hi st or y and Ti t ov' sI nvol vem ent

The St udi os'I astcl ai mi s agai ns tTi t ov i ndi vi dual l y because ofhi s padi ci pat i on i n, and abi l i t yt o benef i tf r om , t he i nf r i ngi ng act i vi t y pr esent on Hot f i l e' s net wor k. l n ai nt st at es t hat Ti t ov adopt ed an i nf r i ngement padi cul ar , par agr aph 45 of t he Com pl
r el i ant busi ness m odel ,desi ' gned t he af or emen t i oned af f i l i at e pr ogr am t hat pr omot es

anned t echnol ogi cal f eat ur es t hat bot h i nf r i ngem ent and pai d i nf r i ngi ng user s; pl

f r ust r at ed copyr i ghtenf or c ementand f ai l ed t o pr eventi nf r i ngem entby user s;m anaged
Hot f i l e' s oper at i ons;and oper at ed r el at ed busi nesses t o evade l i abi l i t y. W hi l e Hot f i l e m ak es m uch of t he f act t hat t he St udi os have been unabl et o pr ove up aI Iof t hese

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al l egat i ons, i ti s m or e si gni f i cant t hat sever alof t hem ar e act ual l y suppoded by t he
evi dence pr oduced i n di scover y.

As backgr ound,Hot f i l ei st he successort o a busi ness vent ur e

Al t hough i ti s uncl earhow Ti t ov f i r st becam e i nvol ved w i t h

orw hat

ex ac t l yt h e com pany was f or m ed t o do.i ti s un di s put ed t ha t Ti t ov pe/or m ed so f t war e pr ogr am i ng,sear ch engi ne opt i mi za t i on and s er v eradm i ni st r a t i on f ort he com pany. At
som e poi nt , devi sed t he i dea f or an onl i ne fi l e host i ng com pany based on a

com p et i t or i nt h e m ar k et , Rapi dshar e. Th us,

pr o vi ded t h e

necessar y st adup capi t al f or Hot f i l e Cor p. Ti t ov was appr oached because of hi s

t ec hni c al expedi se andpr i orwebhos t i ngexper i enc e' ,hej oi nedt hem i nf oundi ng Hot t i l e
i n Fal l2008. Hot f i l e acknowl edges t hatt he ' ' r esear ched t he com pet i t i on i nt hi s

space t o l ear n about t he f unct i onal i t i es of ot her ser vi ces' ' and agr eed on Holi l e' s busi ness m odel . They t hen st af f ed t he com pany al m ost ent i r el y wi t h

empl oy ees,who cont i nue t o wor kf orHot f i i e. ( Yeh.Dec l .Ex.1 ( Ti t ov Dep. )a t1 05: 5 7

( DE 2881( f i l edunderseal l ,DE 3 ' 242) . )
The evi dence shows t hatTi t ov' s pr i m ar yr oj e atHot f i l ei s as a t echni calengi neer ,

r esponsi bl ef or i m pj em ent i ng busi ness i deas and f unct i ons. For i nst ance,t he padi es

agr ee t hatTi t ov wr ot et he sour c ec ode t ha tr uns Hot f i l e' s websi t e. ( Yeh.Decl .Ex.1

( Ti t ov Dep. )at497: 37( DE 2882( f i l ed underseal l ;DE 3242)( ack nowl edgi ngwr i t i n g bet ween 50 an d 70 per cen toft he sour ce c ode l ,Yeh Decl ' .Ex ,88 ( Ti t ov Dec I . )at! (6

( DE 28895 ( f i j ed underseal l ; DE 32 41 5)( . ' 1 wr ot et he s our c ec odef orHot f i l e' swebsi t e
wi t ht he assi st ance of one ot her per son. W e desi gned t he sour ce code f r om scr at ch.

25

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M y conser v at i ve es t i m at ei st hat m or et h an 1, 000 h our s hav e been spent dev el opi ng

t he sour c ec ode. ' ' ) . ) Ti t ov al so pr ovi des ' d gui danc en t o

empl oyees and

ov er seesaspec t soft hei rwor kf orHot f i l e.( J d.at13 2: 8 20 OI ' m nots ur et hatIdoi nf ac t
super vi se t hem bu t ... t ot h e ex t en tt hey need s om e gui dance and under s t andi ng o ft he
t echni calpar t s of...oursyst em ,yes we do comm uni cat e,and - yes,Iw oul d say t hatI

ha ve c er t ai naut hor i t yov ert hem. ' ) . )
Th e evi dence dem ons t r a t es t hatTi t o v ac t i v el y par t i ci pa t es i nt h e m anagem en to f
Hot f i l e and i n deci si onm aki ng.

Ti t ov t est i f i ed t hat Hot f i l e'

shar ehol der s manage

Hoïl ej oi n t l yand,whi l et he gov er nanc e pr oc edur es h ave no tal way sbeenf or mal ,t hey

agr ee on ma j ordeci si ons such as t h ei mpl ement at i on of Hot f i l e' sa ml i at e pr ogr am. ( Yeh.Dec l .Ex.1 ( Fi t ov Dep. )at5 97: 11598: 22 ( DE 324)( s t at i ng t ha ti ' ma j ori ss ues ' '
wer e pu tt o a vot e butwer e notoppos edl . ) Addi t i onal l y,Ti t ov ackno wl edged t ha the
r ecei ved power of at t or ney t o act on behal f of t he cor por at i on ' ' as a m anager of t he

com pany when g such)ac t s ar e aut hor i z ed by ot hershar ehol der s. ' '( Yeh.Decl .Ex.1

( Ti t ovDep. )at79. . 2380: 1 . , 82: 51 2( DE2881( f i l ed underseal l ;DE 3242) . )
Nonet hel ess, i ti s undi sput ed t hat Ti t ov does not have t he aut hor i t yt o m ake

uni l at er al deci si ons r egar di ng i m por t ant aspect s of Hot hl e' s busi ness or oper at i ons. Ti t ov asser t st hathe was nott he or i gi nat orofcer t ai n concept s;f ori nst ance,he cr edi t s wi t h m aki ng t he deci si on t oi m pl em entt he af f i l i at e pr ogr am . And Ti t ov deni es

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i nvol vem ent i n ot her aspect s cr uci al t o Hot f i l e' s busi ness, such as sol i ci t i ng new i nvest or s,sel ect i ng cont r act or s ordevi si ng adver t i si ng st r at egi es. The evi dence al so shows t hat ,i n Oc t ober2009,Ti t ov f or m ed a com pany cal l ed Lem ur i a Com m uni cat i ons I nc. ja Fl or i da cor por at i on t hat Hot f i l e uses t o per f or m web

host i ng.so f t war e m ai n t enance and devel opm en t . Ti t o v, acc or di ng t ot he De f endant s,i s
' ' t he sol e ow ner ,m anager ,and di r ect or ' 'of Lem ur i a. ' o Lem ur i a, i nt ur n,cont r act s wi t h

t op er f or m s om e oft h os e ser vi c es and pay sf or m any of Ho t f i l e' s ex pens es.

( Yeh.Dec l ,Ex.1 ( Ti t ov Dep. )a t38: 740: 1 0,106: 210 7: 1 4( DE 2881( f i l ed unders eal l , '
DE 3242) , )
Bey ond exam i ni n g Ti t ov' s ov er al lr esponsi bi l i t i e s at Hot f i l e,t he St udi os p oi n tt o
sever alspeci f i c w ays t hat Ti t ov i sI i nked t ot he i nf r i ngem entat i ssue. W i t hr espect t o t he af f i l i at e pr ogr am ,whi ch t he St udi os bel i eve pr omot es i nf r i ngem ent ,i ti s undi sput ed t hat Ti t ov pr ovi ded i nput on t echnol ogi calf easi bi l i t y. M or eover , Hot f i l e has f ai l ed t o

r ebutt he St udi os'is s èr t i on st h atTi t ov pai d af f i l i at es f r om an acc ounthe opened and
t r ansf er r ed t o Hot f i l e Lt d. ,a com pany t hathandl es m ostofHot f i l e' sf i nances and t hatI ne

manages. ( Ti t ov Repi y Dec l .! !4 ( DE 378 1( f i l ed unders eal l ;Yeh.Decl .Ex.1 ( Ti t ov
Dep. )at602: 91 4( DE 3242)( ? Yes,t her e wer ei ns t and es wher eu ser s wer e pai db y an

acc oun topen ed ( i n)myname. ' ' ) . ) Ti t ovaj s os t at èdt ha thewasawar eoft hemast erf i l e
pol i cy,acknow l edgi ng t hati tper mi t t ed user st o cont i nue t o access suspect ed f i l es even

1 0

Lem ur i a was f or m ed one m ont h af t erHot f i l e' s pr evi ous l nt er net ser vi oe pr ovi der i nf or m ed t he com pan yt hat i t had r ec ei ved a l ar ge num b er of i n f r i ngem ent com pl ai n t sf r om c opy r i ght hol der s and t wo m ont hs af t er a cop yr i ght hol der

ser ved a subpoena on t ha tl n t er n ets er v i c e pr ov i der .( Yeh.Decl .Ex .1 ( Ti t ov Dep. ) at 119: 13121( DE 2882( f i l ed un der s eal l ; DE 3242) . ) Th e St udi os
cont end t hat Lem ur i a was f or m ed t o pr event t he consequences ofa t hi r dpar t y I nt er net ser vi ce pr ovi dercut t i ng of fHot f i l e' s ser vi ce and t hat Lem ur i a act s as a f r ontf orHot f i l e' s com m er ci alact i vi t y, Hot f i l e deni es t hese al i egat i ons.
27

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whi l ei n di v i du all i nk s wer e di s ab l e d. ( Yeh.Dec l .Ex .1 ( Ti t ov Dep. )a t60 2: 1 660 4: 1 3 ( DE 3 242) . ) Si mi l ar l y,gi v en t h atHo t f i l e was go v er ne dj oi n t l y,Ti t ov di dn ot r ec al l
opposi ng Hot f i l e' s key pol i ci es, such as how i tt r eat ed r epeat i nf r i nger s or how i t

endeavor ed t or em ove i nf r i ngi ng f i l es.
Fi nal l y,whi l e evi dence ofTi t ov' s per sonali nvol vem ent i n Hot f i l e' st r eat m ent of

copyr i ght i nf r i ngem ent cl ai ms i s not ext ensi ve, he acknow l edged i ns t r uc t i ng Hot f i l e

empl o y ees t ob an a u s erand t o$ ' ( b) e mor es t r i c ti ns t oppi ng t hes e da y s, ' ' a f t erHo t f i l e

was su ed b ya c omp any c al l e d Per f ec t1 0. ( Yeh.Dec l .Ex.1 ( Ti t o v Dep. )at31 7: 1 5321 : 1 0( DE 288 2( f i l ed un ders eal l ;DE 3 242 ) . ) Ti t o v wa s al s or es pon s i bl ef orhi r i n g
Hot f i l e' s DM CA agent ,but he cl ai ms t hat ot her s ar e r esponsi bl e f or r espondi ng t o

DM CA not i ces and handl i ng t hataspectofHoii l e' s oper at i on.
F. Fact s Rel evantt o Hot f i l e' s Count er cl ai m

er cl ai m Separ a t el y,W ar n ermo ve sf orsu mmar yj u dgmen ton a l7-page count

f i l ed by Hot f i l er el at i ng t o 890 DM CA t akedow n not i ces t hatW ar nersubm i t t ed t o Hot f i l e.

( DE 1 61 4. )I nt h es e no t i c e s,W ar n ert ypi c al l ys t a t ed ' un derpen al t y ofper j u r y ' ' t h ati t
was ' ' t he ow neroraut hor i zed I egalr epr esent at i ve oft he ownerofcopyr i ght s' ' and t hati t

had $ ' a good f ai t h bel i ef t hat us e of t hi s m at er i al i s not aut hor i zed by t he copyr i ght ow ner ,t he copyr i ght ow ner ' s agent , or t he I aw. ' ' Si nce Apr i l 2009, W ar ner has
padi ci pat ed i n Hot f i l e' s SRA pr ogr am ,i n whi ch t he padi es agr ee t hatdel et i ons have t he sam e l egalef f ectas t akedown not i c es.

The count er cl ai m asseds t hatt he wor k s at i ssue wer e mi st ak enl yi dent i f i ed as

i n f r i ngi n g and t h atW ar nerv i ol a t ed 1 7 U. S. C.j 51 24 9b y mak i ng s uc hk no wi n g an d
ma t er i al mi sr epr es en t at i ons an dc aus i n gi n j ur yt o Ho t f i l e. W ar n erc on t en ds t ha t ,whi l e
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mi st akes wer e m ade,t hey w er e notm ade knowi ngl y and ar e nott he t ype ofegr egi ous vi ol at i ons cont em pl at ed by t he st at ut e' ,t hatt her e wer ef ew r esul t i ng dam ages t o Hot f i l e;

and t hat Ho t f i l e' s m ot i v ei n pur sui ng t he cl ai m i st o dem onst r a t eh ow di f f i cul ti tc an be f oranyone t oi dent i f y and pr ev enti n f r i ng emen t ,whi ch hel ps Hot f i l ei l l us t r at ei t s def ens e t ot he m ai ni n f r i ngem en tc l ai ms.
W ar ner ' s Revi ew Pr ocess

Many of Hot f i l e' s cont ent i ons concer nt he suf f i ci ency of t he r evi ew pr ocess W ar ner i m pl em ent ed t oi dent i f y and not i ce par t i cul arf i l es. As expl ai ned by W ar ner ' s

head of an t i pi r ac y op er at i ons, Da vi d Kapl an, W ar ner de vot es t he ef f ods o f em pl oy ees t o onl i ne ant i pi r acy enf or c em en t , hi r es t hi r dpady vendor s,an d, not abl y,

l nt he aut om at ed r evi ew pr ocess,W ar ner ' s em pl oyees f i r stdet er mi ne t hat a sî t e

i s used f orI n t er netpi r ac y. ( Kapl an Decl ,! 16 ( DE 301 6) . )

( l d.! ( 8. )
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Foreach I i nk det er mi ned t o cont ai ni nf r i ngi ng cont ent ,W ar nersends i nf r i ngem entnot i ces.
2. Pr eval ence and Know l edge of Er r or s

Ov er al l , whi l et he evi denc es hows t ha tW ar ner ' ss ys t em has m any c om m endabl e
char act er i st i cs, i t al so r eveal s som e ar eas f or i m pr ovem ent . On one hand,W ar ner

appl i es t he syst em onl yt o si t es i t bel i eves t o be devot ed t oi nf r i ngi ng cont ent ,t akes
car ei n uses em pl oyees t ot ai l or sear ch t er m s, 1r evi ews i t s

pr act i ces on a cont i nuous basi s, conduct s spot checks,

'

( Kapl an Decl .1 1 1 1151 6( DE 301 6) . )
W ar ner cont ends t hat i t' l has desi gned i t ss yst em t o er r on t he si de of consew at i sm ,

even i ft hatr esul t si nf eweri nf r i ngi ng f i l es bei ng i dent i f i edvi n or dert o avoi d er r or sy ' 'and

pr of es ses gr eat con f i denc ei nt he r el i abi l i t y of i t s enf or c ement .( I d. ! ( 6. ) l t al s o
r epeat edl y asseds t hati t s met hodol ogy and syst em f eat ur es ar e com m on i ni t si ndust r y.

On t he ot herhan d,W ar nerr eadi l y adm i t st ha tm i s t ak es do oc cur , an d Hot f i l e ha s i den t i sed char ac t er i st i c st hat m ay be r esp on si bl ef orengen der i ng t hose m i s t ak es. For exam pl e, W ar n er ' ss t af fdi d notdo w nl oad orr evi ew any Ho t f i l e cont entb ef or e mar ki ng i t

30

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f or r emov al .( Thomps on Decl ,Ex.4 ( Kapl an Dep. )at43: 1 244: 1 4( DE 3545) . ) 1 1
I ndeed,i t s sear ch pr ocess

bef or ei s sui ng a t ak edown no t i c e.
de t er mi na t i on whe t hert h er e wer el egalus es
f ort he f i l es.

Th e par t i es ha ve pr of f er ed I i mi t ed s t at i s t i c aland anec dot ale vi denc e abouthow
t hi st r ansl at es t ot he ef f ect i veness ofW ar ner ' s syst em . Fori t s par t ,W ar neraver st hat i t

sent 400, 000 t ak edown not i c es t o Ho t f i l e pr i or t ot hi sI a wsui tw i t hout r ec ei vi n g any count er not i c es f r om Hot f i l e ori t s us er s, sugges t i n gt ha tt he m i s t ak es wer en otapp ar ent

orsi gni f i can tenou gh t o cont es t .( See Kapl an Dec l .: 11 4( DE 3016) . ) Mor eov er ,
accor di ng t o W ar ner ,t he f act t hat onl y 89O er r oneous f i l es have been i dent i f i ed by

Hot i l e af t er i t under t ook t h e m os t sc r upul ous r ev i ew of t hos e t ak edown not i ces
suggest saI ow er r orr at e,wel lunderone per cent ,by a si m pl e cal cul at i on.

W ar nergoes f udher,suggest i ng t hatt he ac t ualnum berofm i st aken not i ces sent

t o Hot f i l e num ber s ar ound 600,not890. Sho wi n gt he di f f i cul t y at t en dan tt oi dent i f yi n g
i nf r i ngi ng cont ent ,t he evi dence shows t hat 19 oft he f i l es chal l enged by Hot f i l ei nt be

count er cl ai m ar ei nf ac to w ned by W ar ner . Ano t her271 o ft h ef i l es undi sput edl y bel ong
t o an ent i t y,El ect r oni c Ads,I nc. ,t hatgave W ar nerper mi ssi on - al bei t ent l y af t er , appar

t hef ac t-t or equ es tr emoval oft hef i l es .( SeeHopki nsDecl .$9( DE 301 7)( El ect r oni c
1 1 W ar nerc ont en ds t hati tw oul d noth ave been ' pr ac t i c abl ef orW ar n ert o do w nl oad f i l es pr i or t oi s sui n g a no t i f i c at i on o fi nf r i ngem ent ' becaus e of t h e com put i n g
5l es i nt he count er cl ai m wer er evi ewed by a W ar nervendorcal l ed Leakl D ! w hi ch
.

r es our ces r equ i r ed. ( Kapl an Dec l .! J1 7( DE 301 6) . ) Addi t i onal l y ,some oft h e

( / d.$20. )

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Ar t s, l nc. ex ecut i ve s t at i n gt ha tt he c om pan yK r et r oact i v el y aut hor i zes W am er hav i ng

sentt ak edown not i ces ' 'on i t s behal g. ) An di ti s al s o undi sput ed t ha to ft h e 890 f i l es
I i s t ed,24 ar e dupl i cat i ve. Thi sf udhersupp ods t he vi ew t h atW ar ner ' s ac t ual er r orr at e,
i n gener aland w i t hr espectt oi t s sear ch ofHot f i l e' s websi t ei n par t i cul ar ,i s sm al l .

I nr es pons e,Hot f i l e poi nt st o ot h erevi denc et h atW ar ner ' s er r orr a t e m ay act ual l y be hi gher ,t h e m osti m podan tb ei ng an i nt er n al di s cus si on b et ween W ar n erem pl oyees i n August2011.

Thus, dr awi ng i nf er ences i nf avorofHot f i l e,W ar nerem pl oyees m i ghthave know n of an er r oir at e as
hi gh a
count er cl ai m.

dur i ng t he t i me t hat i t was i dent i f yi ng t he f i i es i dent i f i ed i nt he

Hot f i l e al so poi nt s t o i nst ances of anecdot al er r or s t o show how unsound

W ar ner ' s sear ch pr act i ces m i ght have been. For exam pl e,

( Thomps on Decl .Ex.4 ( Kapl an Dep. )

at1 6: 1 01 7: 4( DE 3545) . ) W ar neral s o appar en t l y

( Th omps on Decl .EX.5 ( DE 3041t 5l ed under
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seal l ;DE 35 46) . )A s ear chf ort h
( Thompson Decl .Ex.16

( DE 3046( f i l ed unders eal ) ;DE 3541 7) . ) An d

( Th omps on Decl .Ex.18( DE 3046( f i l edun ders eal l ;DE 35 419) . )
M or eover ,W ar ner adm i t st haton I i nki ng si t es,i t

( Thomps on Decl .Ex.4 ( Kapl an Dep, )a t
232: 23 233: 7( DE 30 41( f i l ed un derseal l ;DE 3545 ) . ) Thus,i tdel et ed one oft he
count er cl ai m f i l es because i t

Hot f i l e cl ai mst hat en m asse del et i on was W ar ner ' st ypi cal
pr act i ce and ext ends beyond t hi s exam pl e.

I n addi t i on,Hot f i l e has al so pr of f er ed evi dence of an i l l i ci t m ot i ve on W al ner ' s par t . Forexam pl e,W ar ner l i ber al l yr em oved what i s by aI Ii ndi cat i ons a popui araI 3 d i nnocuous f r ee sof t w ar e pr ogr am m ent i oned att he out setoft hi s deci si on,JDowni oader ,
w hi ch was cr eat ed by a com pany cal l ed ' Appwor k G m bH' 'and w hi ch W ar nerdoes not

ow n or have r i ght st o. l n one i nst ance, W ar ner t ar get ed t he pr ogr am because i t

( Thompson Decl .Ex, 4( Kapl anDep. )at225: 1 3226: 1 2( DE 3041( f i l ed und erseal l ;DE 3545) . )

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W ar ner ' s ef f or t st o pol i ce wer e at t i m es over zeal ous and over r eachi ng. l nt he

cas e of JDownl oader ,i t s ant i pi r ac y exec ut i v e s t at ed t ha t

As di scussed above,W ar ner t ook I i ber t i es i nr em ovi ng cont ent owned by Ot her copyr i ght hol der s, SUCh as El ect r oni c Ads, onl y obt ai ni ng per mi ssi on t o do so l at er i n an ' ' ant i pi r acy

par t ner shi p. ' 'l nt he mai n summar yj udgmentbr i ef i ng,t he St u di os s how t hatt he mos t
popul ar cont ent on Hot f i l ei s act ual l y sof t war et hati si l l egalt o di st r i but e butt hat does

nOt i ncl ude t he St udi os'wor ks. A nd, i ni t s m ot i on,W ar ner poi nt s out t hat Hot f i l ei s

unabl et or ec overf ort h ev as tma j or i t yoft he f i l esW ar nerwr ongf ul l yr emo ved. Thes e
f act s dem onst r at e t hat W ar ner ' s goal s m ay have been br oader t han pr event i ng

i nf r i ngemen to fi t s own wor k si nt h e mannerpr escr i b ed bySect i on 51 2( c) .
Evi dence of Dam ages

Assum i ng W ar ner ' s act i ons wer e unaut hor i zed,W ar ner cont ends t hat Hot f i l ei s

unabl et o s how a c ogni zabl e i n j ur yf r om t he t ak edown not i ces i dent i f i ed i nt he
count er cl ai m . Fi r st ,W ar nerhas est abl i shed t hatmany oft he f i l es di d notcause Hot f i l e

t o wr on gf ul l yt er mi na t e any payi ng us er s. At l east28 o ft he f i l es wer e not i c ed bef or e
Hot f i l ei m pl ement ed a r epeati nf r i ngerpol i cy based on st r i kes,m eani ng t hatHot f i l et ook no act i on w hen i tr ecei ved t hose not i ces. Si mi l ar l y,ni ne f i i es wr ongf ul l y not i ced af t er

34

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Hot f i l e i m pl em ent ed i t st hr eest r i kes pol i cy i n Febr uar y 2011 di d not r esul ti n user t er mi nat i on,si nce t hose useo neveraccum ul at ed m or et han t hr ee st r i kes. Addi t i onal l y,

53 f i l es wer e post ed by us er s wh o woui d have a ccu m ul a t ed t hr ee or m or es t r i k es wi t hout c oun t i ng t he f i p es f r om t he c oun t er cl ai m , al t hough Hoii l e ques t i on s whe t her
som e of t hose not i f i cat i ons wer e DM cAcom pl i ant . And f i nal l y, ni ne r em ai ni ng f i l es cor r espond t o si x user s,none ofwhom was a subscr i bi ng mem ber . These f act s ar e not

ot her wi s esub j ec tt odi s pu t e.
W ar nerhas al so r et ai ned an exper t ,Dr .Zebr ak,who concl uded t hat477 oft he

f i l es - i ft hey di d no t bel ong t o W ar ner- ' hi ghl yI i k el y ' 'i nf r i nged o t her s'c op yr i ght s an d
had no busi ness bei ng on Hot f i l e' s syst em . Thi s por t i on of Dr .Zebr ak' st est i m ony i s

chal l enged b y Hot f i l e,whi ch poi n t s outt hatt he ex per tackno wl edged he di dn otc on t ac t

t hos eo wn er st of i nd outwh et herdi s t r i but i on on Hot f i l e was t r ul y unaut hor i zed. ( Zebr ak Decl .l i1 6( DE 201 1) ,Thompson Dec * l .Ex.3 2( Zebr akDep. )at319: 322 ( DE 35433) . )
I ti s wel l est abl i shed t hata l ack ofaut hor i zat i on i sr egui r ed t o pr ove a cl ai m ofcopyr i ght

i nf r i ngemen t . See Mor l ey Mus i c Co.v .Ca f e Cont hl nc. ,777 F.Supp.1579,1 582 ( S. D.

Fl a.1991 )( ci t at i on so mi t t ed) . Ther ei s no c ompel l i ng evi dence on e wayort he ot h er
est abl i shi ng t hese f i l es'copyr i ghtst at us.

ButHot f i l e' s m ai n assedi on i st hatW ar ner ' sf ocus w r ongl y assum es t hat Hot f i l e' s

I ost r evenue coul d onl y have com e f r om t er mi nat ed user s'subscr i pt i on f ees. I nst ead,
Hot f i l e poi nt s outt hati t s busi ness m odeli s dr i ven by t he avai l abi l i t y ofcont ent ,w hi ah

W ar ner ' s ac t i ons hav ei nt er f er ed wi t h. Hot f i l e has pr ovi ded evi denc et hatt he f i l es i nt h e
coun t er cl ai m , even e xcl udi ng t h e f i l es i den t i f i ed as i n f r i ngi ng b y Dr . Zebr ak , wer e dow nl oaded 278, 319 t i m es and ear ned Hot f i l e i n pr em i u m subs cr i pt i ons f r om 51

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new us erac coun t s. ( Ti t ovDec l .1 5 78( DE 3041 0( f i l ed un derseal l ;DE 3521) . ) Th e
JDownl oader pr ogr am i n par t i cul ar was del et ed ei ght t i m es by W ar ner ,but had been

downl oaded a t ot alof150, 028 t i m es an dr es ul t ed i n 42 pr em i um subs cr i p t i on s,ear ni n g

f orHo t f i l e. ( Ti t ovDec l .I I T 78( DE 3 041 0( 5I ed unders eal l ;DE 3521 ) . ) An d,
W ar ner ' s ow n exped acknowl edged t hat t he f al se not i ces caused one JDownl oader di st r i but ort o be br i ef l y suspended,appar ent l y pr event i ng dow nl oads ofhi sf i l es f ort wo

da ys. I ti s uncl earwh et hert hef i l esdel e t edwer e everr epl ac ed. ( Fo st erRepl y Decl . f ! 3

( DE 3601( f i l ed unders eal l ;DE4099) . )
Hofi l e' s exped, Dr , Mat t hew R, Lynde,est i m at es t hat Hoii l e' st ot aldam ages

r angef r om

.( Thomps on Decl .Ex.34 ( L ynde DecI . )at% 9( DE 3047

( f i l ed unders eal l ;DE 35435) ,Yeh.Decl ' .Ex.1 ( Ly nde Dep. )at28 2: 5 25( DE 301 10) . )
He opi nes on a var i et y of w ays i n whi ch Hot f i l e coul d have been har med, i ncl udi ng

di mi ni shi ng paym ent st o af f i l i at es, decr easi ng i ncent i ve f or user st o pay f or pr em i b l m
access,and har mt o Hot f i l e' s busi ness r eput at i on and goodwi l l . Hi s opi ni on associ at as an obser ved decr ease i nr evenue w i t hi ncr eased use oft akedow ns by W ar ner . I I . DI SCUSSI ON

Th e par t i es have mov ed f orsummar yj udgmenton var i ou s aspec t s oft he c l ai ms
and def enses r ai sed i nt hi sI i t i gat i on. Under Feder al Rul e of Ci vi l Pr ocedur e 56,

summ ar yj udgmen ti s appr opr i at e i f ,a f t er di sco ver y, ' t h e pl eadi n gs, deposi t i ons,
answer st oi nt er r ogat or i es,asi davi t s and adm i ssi ons on f i l e,t oget herwi t ht he af f i davi t s,

show t hatt her ei s no genui ne i ssue as t o any m at er i alf actand t hatt he m ovi ng par t yi s

ent i t l ed t o aj udgmentas ama t t erofI a w. ' ' Cel ot ex Cor p.v .Cat r el t 477 U. S.31 7,322
' An i ssue of f act i s' m at er i al 'i f , under t he ( 1 986) ( quot i ng Fed. R.Ci v. P. 5 6( c) ) .'

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appl i cabl e subst ant i v el aw,i tm i ghtaf f ectt he out come oft he case. ' ' Hi ckson Cor p.v .N.

c i t a t i on s omi t t e d) .' ' An Cr o ss a r m Co. ,l nc . ,3 57 F. 3d 1 256,1 259 60 ( 11 t h Ci r .200 4)(
i ssue off ac ti s' genui ne'i ft he r ecor dt ak en as a whol e coul dI ead a r at i onalt r i eroff ac t

t of i nd f ort h en onmo vi n g pady . 'I d .a t1 2 60 ( ci t at i on s om i t t ed) .S ' Th e mov i n g pady
bear st he i ni t i albur den ofest abl i shi ng t he nonexi st ence ofa t r i abl ef ac ti ssue. ' ' Cont ' l

Ca s.Co.k tW e ndt , 2O 5 F. 3d 1 25 8,1 261( 1 1 t hCi r . 2000 )( ci t i n g Ce / ol e x Cor p. , 477 U. S.

a t31 7) .l nr ul i ng on su mmar yj ud gmen t ,t he ev i den c ea nd r eas o nabl ei n f er en c es ar e
const r ued i nt he l i ghtm ostf avor abl et ot he nonm ovant . Adi c kes g.S. H.Kr ess & Co. ,

3 98 U. S. 1 44, 1 57 ( 1 970 ) 'J , ac k s on v .Bel l sout hT e l ec o mms . ,3 72 F, 3 d1 250,1 280
( 11 t h Ci r . 20 04) .
l ft he m ovant es t abl i shes t he absence of a genui ne i ssue of m at er i alf act ,t he nonm ovi ng pady m ust ' ' go beyond t he pl eadi ngs and by her ow n af f i davi t s or by t he l deposi t i ons,answer st oi nt er r ogat or i es,and adm i ssi ons on f i l e'desi gnat e' speci f i cf act s

s ho wi ng t ha tt h er ei s a genui ne i s s ue f ort r i al v ' ' Ce/ o l e x, 477 U. S. at3 2 4( qu o t i n gF ed.

R.Ci v.P.56( c ) ) . Thu s ,' ' l i q ft he non mo v an t.. .f ai l st oa ddu c e ev i den c e wh i c h woul d

b e su f f i c i ent... t o su ppod aj ur yf i n di n gf ort h e non mov an t , su mmar yj u dgmen tma y be
gr an t ed. ' ' Br oo ks v .Bl u e Cr os s & Bl ue Shi el d ofFI a. ,I nc. ,1 1 6 F. 3d 1 3 64,1 3 70 ( 11 t h Ci r .1 99 7)( c i t at i on omi t t e d) . Ho we v er ,' ' i ff ac t u ali s su es ar e pr es en t ,t h e Cou d mu s t
deny t he m ot i on and pr oceed t ot r i al a ' ' W ar r i or Tombi gbee Tr ans p. Co.v. MN Nan

Fu ng, 695 F. 2 d1 294, 1 296 ( 11 t h Ci r . 1 983 )( ci t at i on s omi t t e d) .
A. DM CA Def ense

The padi es agr ee t hatt he pr operst adi ng poi ntf ort he Coud' s anal ysi si s whet her
Hot f i l ei s ent i t l ed t o DM CA pr ot ec t i on,gi ven i t s abi l i t yt o absol ve Hot f i l e of I i abi l i t yf or

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s ec on dar yc op yr i gh ti n f r i n gemen t . Se e1 7 U. S. C.j 51 2 ( c ) ( 1 )( s t at i n gt h ati ft h es a f e har b orr equi r emen t s ar e met , ' ' E a )s er v i c ep r o vi dersh al l n otbe I i abl ef ormon e t ar yr el i ef ,

or ,ex c ep t as pr o vi de di ns ubs e c t i on ( ) ,f or i n j unc t i v e or o t her e qui t abl er el i ef ,f or
i nf r i ngementofcopyr i ghtby r eason oft he st or age att he di r ect i on ofa userofm at er i al t hat r esi des on a syst em or net wor k cont r ol l ed or oper at ed by or f or t he ser vi ce

p r o vi der . ' ' l ,S.Rep.No.1 ' 0 51 9 0( 1 99 8)a t6 4,r epr i n t ed i n1 99 8 U. S. C. C. A. N.a t63 9 ( s t a t i n gt ha tt he s a f e har bor' ' pr o t ec t l s )qu al i f y i n gs er vi c ep r ov i der sf r om l i abi l i t yf oral l

mone t ar yr el i e ff ordi r e c t , vi c ar i ou s an dc on t r i bu t or yi n f r i n gemen t ' 'as wel las i n j u nc t i v e r el i eg. As r ec oun t e di n det a i li n Vi a c om,Con gr e s s en ac t ed t h e DMCA i n1 99 8t o
pr ovi de I i abi l i t y saf e har bor sf or ser vi ce pr ovi der st hat oper at e or cont r ol net wor k s t hr ough whi ch user ss t or e copyr i ght ed di gi t alwor ks i ft hose pr ovi der s m eet cedai n

sp ec i f i ed c r i t er i a. 676 F. 3 da t 26 27 ( c i t i n g1 7 U. S. C.j 51 2( a) ( d ) an dI egi s l a t i v e
hi s t or y ) . The St u di os c on t end t ha tHo t f i l ei sn o ten t i t l e dt os a f eh ar borpr o t ec t i on as a
m at t er of l aw ,w hi l e Hot f i l e ask sf or a det er mi nat i on t hat i ti s not I i abl ef or ac t s of

i nf r i ngem en tt hatt ook pl ace af t ert he f i l i ng oft he Com pl ai nton Febr uar y 18,2011. Gener al l y,t he advances of t he l nt er net and di gi t alt echnol ogy m ake possi bl e r epl i cat i on and di ssem i nat i on of cr eat i ve wor ks on an ast oni shi ng scal e. S.Rep.No.

1 051 9 0( 1 998 ) at 8 ( n ot i n gd s t he e as e wi t h whi ch di gi t alwo r k sc an be c o pi e d an d

di s t r i bu t ed wor l dwi de v i dual l yi n s t an t an eou s l y ' ' ) .I nt h a tr e gar d,t h e DMCA wa s mean t
t of ost ert he gr ow t h oft he I nt er netw hi l e pr ot ec t i ng t he r i ght s of copyr i ght hol der s and encour agi ng I nt er net ent i t i es' ef f ods t o of f er val uabl e onl i ne ser vi ces, whi ch on occasi on m i ghtbe i nf r i ngi ng undercopyr i ghtl aw . I d. ;Real net wor ks,I nc.B.D VD Copy

Cont r olAs s' n,641 F. Su pp.2d 913,9 43 ( N. D.Cal .2003 )( ' t Th e DMCA r epr es en t s

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Congr ess'at t em ptata bal ance t o pr eser v e owner shi pr i ght s pr ot ect i on f orcom pani es and adi s t s i nt he f ace of t he m oder n r eal i t y of a di gi t alwor i d wi t h an i ncr easi ngl y

t echnol ogi cal l ysavvy popul at i on. ' ' ) . As Hot f i l er ecogni zed ator alar gument ,wi t houtt he
i m m uni t y conf er r ed by t he DM CA saf e har bor pr ovi si ons, I nt er net busi nesses coul d

o t h er wi s e be s ub j ec tt or ui n ous I i abi l i t y un der c ommon I a w pr i nc i pl es o fs ec on dar y
i nf r i ngem ent .

A pady assedi ng DM CA' S saf e har bor as an af f i r m at i ve def ense t o a cl ai m of
r at i ng ent i t l em entt oi t s pr ot ect i ons. copyr i ght i nf r i ngement has t he bur den ofdem onst

See ALS Sc a n ,I nc .v .Remar o Commu ni t i es . ,I nc . ,23 9 F. 3d 61 9,6 25 ( 4t h Ci r .20 01 )
( s t at i ng t hatent i t l ementt oi mmuni t y undert he DMCA i snot' ' pr esumpt i ve' 'butappl i est o

s er v i c e pr o vi der st h atpr o v et h ey meetc edai n cr i t er i a l ;se ea / s o Bl ue Cr o s s & Bl u e

Shi e l do fAl a.v .W e i t z,91 3 F. 2 d1 54 4,1 5 52 ( 11 t h Ci r .1 9 90) ( di s cu s si ng bur den o f
pr oo fast oas t a t u t eo fI i mi t a t i on sde f en s e) .Non et hel es s, i nman yi n s t an c es, t h e DMCA
ser ves t or el i eve ser vi ce pr ovi der s of bur dens t hey m i ght ot her wi se shoul der ,even t r ans f er r i ng t hem t ot he copyr i ght owner . See, e. g. , UM G Recor ds, I nc. Shel t er

Ca pi t alPar t ner s LLC,71 8 F. 3 d1 00 6( 9t h Ci r .201 3 )( ' con gr es s made a c on si der ed pol i c ydet er mi na t i on t h a tt h e' DMCA n o t i f i c a t i on pr oc edu r es ( wou l d)p l a c et h e bu r d en o f
pol i ci ng copyr i ght i nf r i ngement - i dent i f yi ng t he pot ent i al l y i nf r i ngi ng m at er i al and adequat el y document i ng i nf r i ngem ent - squar el y on t he owner s of t he copyr i ght . ' ' '

( quo t i n g Pe r f ec t1 0 ,I n c.v .CCBi I ILLC, 48 8 F. 3d 1 1 02,111 3( 9 t h Ci r .20 07) ) ) .I nt hi s
r egar d,couds have counsel ed t hat t he advant ages of t he DM CA shoul d be vi ewed

capaci ousl y. See Fl av a W or ks v.Gunt er ,689 F. 3d 754,758 ( 7t h Ci r .2012) . Al t hough

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an af f i r m at i ve def ense, t he DM CA has of t en been const r ued i n f avor of ser vi ce
pr ovi der s,r equi r i ng r el at i vel yI i t t l e ef f or tby t hei roper at i ons t o m ai n t ai ni mm uni t y.

Hot f i l e asseds t hat i t qual i f i es f or DM CA pr ot ec t i on as an I nt er net ser vi ce
pr ovi der t hat al l ows i nf or m at i on t or esi de on i t s sys t em at t he di r ec t i on of i t s user s,

wh i c hi s one o ff our s p eci f i e dc at egor i es r ec ogni z e db yt h e Ac t . Se e1 7 U. S. C.j

51 2( c ) ( 1 ) .Th e padi e s do no tdi sp u t et h atHot f i l e qu al i f i esas a s er vi c e pr o vi der . Seei d.
j 51 2( k ) ( 1 ) ( A) ( de f i ni n gat ' s er v i c e pr o vi der 'a s' ' an en t i t yo f f er i ng t he t r an smi s si on,
r out i ng, or pr ovi di ng of connect i ons f or di gi t al onl i ne com m uni cat i ons, bet ween or
am ong poi nt s speci f i ed by a user , of m at er i al of t he user ' s choosi ng, w i t hout

modi f i c a t i on t ot he c on t en to ft h e ma t er i al a ss en torr e c ei v ed. ' ' ) .Th et er m' ' s t or ag e' ' h as
al so been br oadl yi nt er pr et ed t oi ncl ude di spl ayi ng or di ssem i nat i ng cont ent t hat i s
upl oaded t ot he syst em ' s ser ver s at t he di r ect i on of user s, w hi ch cover s Hot f i l e' s

op er a t i on s. See UM G Re c or di ngs ,I nc . ,62O

Supp.2d a t1 08 991 ( c ons t r ui n g

s t at ut or yI anguage and concl udi ng t hat Congr ess i nt ended a br oad appl i cat i on by
i ncl udi ng t he phr ase l d by r eason of , 'such t hatt he pr ot ect ed i nf r i ngi ng conduc tneed not

be l i mi t e dt o an ac tofs t or ag e) .
Sect i on 512 pr ovi des t hata pr el i mi nar y condi t i on f orel i gi bi l i t yi st hatt he ser vi c e

pr ov i d er mai n t ai na p ol i c yt ot er mi n at ed d r ep ea ti n f r i n ger s . ' '1 7 U. S. C.j 51 2( i ) ( 1 ) ( A) .
The padi cul arc at egor y ofser vi ce pr ovi dert hatappl i es t o Hot f i l ei m poses f ouraddi t i onal
r equi r em ent s' .

ot he Uni t ed St at es t he ser vi ce pr ovi der desi gnat es an agent t

Copyr i ght Of f i ce and t ot he publ i ct hr ough i t s ser vi c e' ,( 2) t h es er v i c e pr ov i der a c t s expedi t i ousl yt ol ' r em ove,ordi sabl e access t o' 'i nf r i ngi ng m at er i ali tact ual l y knows ofor
of whi ch i t shoul d be awar e f r om ' f ac t s or ci r cum st ances' 'showi ng t hat ' i n f r i ngi ng

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ac t i v i t yi s app ar en t i ' ' ( 3)t h e pr o vi derha s no ac t ualorr ed f l ag kn o wl e dge ofi n f r i n gi n g ac t i v i t y;an d( 4)t h ep r ov i derr ec ei v es n of i n an ci alben e f i tf r om i n f r i n gi n g ac t i v i t y .l d .j 51 2( c ) ( 1 ) .W hi l ec as el a w ha s de v el op ed i no t herpad s oft he c oun t r y , c on s t r u i n gt he s e
pr ovi si ons i s an i ssue off i r sti m pr essi on i nt hi s Ci r cui t . 1. RepeatI nf r i ngerPol i cy

Th er epe a ti n f r i n gerr equi r emen to fSec t i o n 51 2( i )c al l sf ora pol i c y,r e as on abl y
i m pl em ent ed, t hat pr ovi des f or t he t er mi nat i on of a s er vi ce pr ovi der ' s user s i n
d s appr opr i at e ci r cumst anc es' ' '

The I i mi t at i ons on I i abi l i t y est abl i shed by t hi s sect i on shal l appl yt oa ser vi ce pr ovi der onl y i ft he ser vi ce pr ovi der . . has adopt ed and r easonabl yi m pl em ent ed,and i nf or m s subscr i ber s an d acc ounthol der so f t he ser vi ce pr ovi der ' ss yst em ornet wor k of ,a pol i c yt hat pr ovi des f ort he t er mi nat i on i n appr opr i at e ci r cumst ances of subscr i ber s and account hol der s of t he ser vi ce pr ovi der ' s s yst em or net wor k who ar e r epeat i nf r i nger s.

1 7 U. S. C.j 51 2( i ) ( 1 ) ( A) . Con gr e s s,i n ena c t i n gt h e DMCA,f ai l ed t o el a bor a t e up on
w hati tm eans f ora pol i cy t o be r easonabl yi m pl em ent ed.See Per f ect10,I nc.v.ç ) CBi I I ,

LLC,488 F. 3 d 11 0 2,1 1 09 ( 9 t h Ci r .200 7) . Thu s,i nt he ab s en c e ofex pr es ss t a t u t or y
I anguage,t he Ni nt h Ci r cui t has pr escr i bed t hat d ' an i m pl em ent at i on i sr easonabl ei f , under ' appr opr i at e ci r cum st ances, 't he s er vi ce pr ovi der t er mi nat es user s who

r epeat edl y orbl at ant l yi nf r i nge copyr i ght ' '- a st andar dt hatt hi s Coud appl i es. CCBi I I ,

LLC, 48 8 F. 3d a t11 O9 ( qu ot i ng I egi sl a t i v e hi s t or y ) .
Su cha p ol i c y ma yt ak eav ar i e t y of f or ms .I d. Not abl y, $ ' j 51 2( i )d oes n o tr equi r e
a ser vi ce pr ovi der t o deci de, ex ant e, t he speci f i ct ypes of conduc tt hat wi l l m er i t
r est r i c t i ng access t oi t s ser vi ces. ' ' Cor bi s Cor p.B.Am az on. com ,I nc. ,351 F.Supp.2d

1 090,1 1 01 0 2( W. D. Wa sh. 200 4) , r ev' di n pa r lo n ot hergr ou nd s ,Cos met i cI de as ,I nc.
41

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B ,I Ac/ l nt er at i v ec o r p. ,60 6 F. 3d 61 2( 9 t h Ci r . 201 0) .Fors t or ag eI o c k er sI i k e Ho t f i l e, t h e
f ocus of t he anal ysi si s on upl oadi ng user s: ' ' user s w ho know t hey I ack aut hor i zat i on and nevedhel ess upl oad cont entt ot he I nt er netf ort he wor l dt o exper i ence orcopy .

ar e bl at ant i n f r i nger st hat I nt er net ser vi ce pr ovi der s ar e obl i gat ed t o ban f r om t hei r

websi t es. ' 'Capi t olRecor ds,I nc.B.Mp3t unes,LLC,821 F.Supp.2d 627,637 ( S. D. N. Y.

201 1 ) .
I n assessi ng t he r easonabl eness ofa def endant ' s ef f ods,addi t i onalgui dance on
whatconst i t ut es an appr opr i at e pol i cy can be ascedai ned i nt he Act ' sI egi sl at i ve hi st or y. For i ns t ance,pol i ci es shoul d be consi der ed i nI i ghtof Congr ess' si nt ent i on t hat l s t hose

who r epeat edl y orf l agr ant l y abuse t hei raccess t ot he I nt er nett hr ough di sr espectf ort he i nt el l ect ualpr oper t yr i ght s ofot her s shoul d know t hatt her ei sa r eal i st i ct hr eatofl osi ng t hat access. ' ' UM G Recor di ngs, I nc. v. Veoh Net wor ks; I nc. ,665 F.Supp.2d 1099,

111 8( C. D.Cal .20 09)( quo t i n gl egi s l a t i v e hi s t or y ) . Ser v i c e pr o vi der s gr an t i n g ac c e s st o
t hose user s shoul d al so be gi ven d ' st r ong i nc ent i ves ...t o pr eventt hei rser vi ces f r om becom i ng saf e havens or condui t sf orknown r epeatcopyr i ght i nf r i nger sx ' Pel f ect 10,

I nc .v ' .Cyb er net Ve nt u r es ,I nc . ,21 3 F.Sup p.2 d1 1 46,11 7 8( C. D.Cal .200 2) . Yet
consonantwi t h ot herpr ovi si ons oft he DM CA,couds shoul d notconst r ue pol i ci es so as
t o i m pose ali r m at i ve act i on on t he pad of t he ser vi ce pr ovi der t o m oni t or f or

i n f r i n gemen t . Se e1 7 U. S. C.j 51 2( m) 'Cy , ber netVe nt u r es tl nc. ,21 3 F.Su pp.2d at

1 1 76 ( i n t er pr et i ng l e gi s l a t i v e hi s t or y ) .As Con gr e s ss t at ed:
The Com m i t t ee r ecogni zes t hat t her e ar e di f f er ent degr ees of onl i ne copyr i ght i nf r i ngem ent ,f r om t he i nadvedent and nonc om m er ci al ,t ot he wi l l f uland com m er ci al .I n addi t i on,t he Com m i t t ee does not i nt end t hi s

pr ov i si on t o un der mi n et h e pr i nc i pl e so fn ew s ub s ec t i on ( ( m) ) or t h e kn o wl ed ge s t andar do fn ew s u bs ec t i on ( c )b ys u gges t i n gt hata pr ov i der
m ust i nv est i gat e possi bl e i nf r i ngement s, m oni t or i t s ser vi ce, or m ake 42

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d i mc u l t j ud gment sa st o whet h erc ond uc ti so ri s noti n f r i ngi ng. Ho wev er ,
t hose who r epeat edl y or f l agr ant l y abus e t hei r access t o t he I nt er net t hr ough di sr espect f or t he i nt el l ect ual pr opedy r i ght s of ot her s shoul d know t hatt her ei sar eal i st i ct hr eatofI osi ng t hataccess.

H. R.Rep. No.1 05 551 ( 1 1 )at61 ( 1 9 98 )( em p ha si sadd ed) .
The St udi os i nt hi s act i on do notcont end t hat Hot f i l ef ai l ed t o di ct at e or publ i sh
any pol i cy, but r at her t hat Hot f i l e f ai l ed t o r easonabl y i m pl em ent i t by ac t ual l y

t er mi nat i ng user s. Sever alconsi der at i ons,t aken t oget her ,I ead t he Coud t o agr ee.
I ni t i al l y, a r easonabl e pol i cy m ust be capabl e of t r acki ng i n f r i nger s. Revi ewi ng t he

h ol di n g so f El l i so nt t Ro ber t s on,357 F. 3d 1 0 72 ( 9 t h Ci r .2 00 4) an dI nr e Ai ms t er
Co pyr i ghtL i t i gat i o n,33 4 F. 3d 6 43 ( 7 t h Ci r .2003 ) ,c er l .d eni ed,5 40 U. S.1 1 07 ( 20 04) , t he c oud i n CCBi I Iann oun c ed a s t an dar df orSec t i on 51 2( i )i n whi ch a s er v i c e pr o vi d er
m ust m ai nt ai n a vehi cl et or ecei v e not i ces ofpot ent i ali nf r i ngem ent ,desi gn i t s syst em so as t o be abl et o ascedai nt he i dent i t y oft he user sr esponsi bl ef ort hose f i l es,and m ak e som e ef f od t o r ecor d i nf r i ngi ng us er s
.

1 2 Wi t hout t hose 488 F. 3d at 111 0.

t hr eshol df unct i ons,ser vi ce pr ovi der s ar e unabl et o car r y out any sod of r easonabl e

p ol i c y. Fori ns t anc e,i nI nr e Ai ms t erCo py r i ght Li t i ga t i on, 252 F.Sup p. 2d 63 4( N D.1 1 1 .

200 2) ,t he di s t r i c tc ou dc on cl ud ed t h atwh a t e ver p ol i c yt he de f en dan t s mi gh t ha v e
ost ensi bl y had coul d notbe r easonabl yi mpl ement ed because t he sy st em ' s encr y pt i on 1 2 Thi si s di f f er entf r om a si t uat i on wher e a pl ai nt i f fcl ai ms t hat a ser vi ce pr ovi der m ustI ook f orr epeat i nf r i nger s w ho open acc ount s undernew pseudonyms. CL I o Gr p. ,I nc. v. Veoh Net wor ks, I nc. , 586 F. Supp. 2d 1132, 114445

( di s t i ngui sh i n g A&M Rec o r ds ,I nc .v ' .Na ps t er jI n c. ,No.C99051 83 MHP,200 0 W L 5731 3 6( N. D.Cal .Ma y1 2,2000 ) ,wh i c hf oun dt h a tf ai l ur et ob l oc ku s er s'
I nt er net Pr ot ocol addr ess es cr eat ed a quest i on w het her t he pol i c y was

r eas ona bl e) . I n CCBi I I ,t h er e was no di spu t et h a tt h ed ef en dan ti mpl emen t e da
pol i c y by whi ch i tk epta DM CA I og i ndi cat i ng t he nam e and em ai laddr es s oft he webm ast erf oreach si t et o whi ch i tpr ovi ded ser vi c e.
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ofuseri nf or m at i on m ade i t' ' i m possi bl et o ascedai n whi ch user s ar et r ansf er r i ng whi ch f i l es. ' 'I d.at659. The coud r ul ed t hatt he pr econdi t i on t o saf e har borwas notm eteven t hough t he pl ai nt i f f s had f ai l ed t oi dent i f y1 ' a si ngl er epeati nf r i ngerw hose acces s shoul d be t er mi nat ed. ' 'I d. I nt hi s case,w hi l et he st at ut e does notr equi r e Hot f i l et o m ai n t ai n a per f ec tpol i cy

( orev en an y t hi ng as s t r i n gen tas t h et hr ees t r i k es po l i c yi tev en t ual l yi mpl emen t e d) , i ti s
appar ent t hat Hot f i l e ef f ect i vel y di d not hi ng t ot i e not i ces t o r epeat i nf r i nger s. Ti t ov

adm i t t ed,and Hot f i l e does not ser i ousl y di sput e,t hat t he cor por at i on had no way t o keep t r ack of i nf r i ngi ng user s based on i nf r i ngement not i ces. Hot f i l e' s sol e m et hod f or
t er mi nat i ng i t s user s was i t sd ' di scr et i on, 'w hi ch i tevi dent l yf ai l ed t o exer ci se' ,i t had no

t echnol ogy t o r ecor d not i ces and no pr ocedur e f or deal i ng w i t h not i f i cat i on. Consequent l y,i ti s nott oo har sh an ass essmentt o concl ude t hatwhen Hot f i l er ecei ved
such not i ces,i t was Hot f i l e' s pr act i ce t oi gnor et hem r at hert han actt ot er mi nat et he

user st hey wer e associ at ed wi t h.Thi s del i ber at e di sr egar di s si gni f i cant .
The dat a di scussed above - bot ht he num ber of user s who r ecei ved m ul t i pl e

not i ces of i nf r i ngement and t he num ber of user s who wer et er mi nat ed af t er Hot f i l e i m pl em ent ed a st r onger pol i c y - show t hat Hot f i l ef ai l ed t o ac t when conf r ont ed wi t h i nf r i ngi ng conduct 1 3 Thus, despi t er ecei vi ng overei ght m i l l i on not i ces f or f i ve m i l l i on . user s, Hot f i l e onl yt er mi nat ed 43 user s bef or et he com m encem ent of t hi s act i on,f or
r easons t hat had no appar ent r el at i on t ot he not i ces Hot f i l er ecei ved. M os tgl ar i ngl y, t her e wer e 61 user s who had accum ul at ed m or et han 300 not i ces each. As r ecount ed

1 3

Hot f i l e cl ai mst h a ti t' ' ha dn ok n o wl e dge t h a tt h ef i l el s l i n s ui twer ei n f r i ngi ng a par f f r om no t i f i c a t i on s Ho t f i l e( mi gh t )ha v er ec ei v ed f r om t h e St u di o sr e gar di ng t he s e a l l e ged i n f r i n gemen t s. ' '( Ti t ovDec l . ! 1 6. ( DE 3 21 1 )( emph as i sa dded l . )
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above,t hose user s wer e padi cul ar l y pr ol i f i c,dr i vi ng t r af f i ct o Hot f i l e' s websi t e,r ecei vi ng m oney t hr ough Hot f i l e' s af f i l i at e pr ogr am ,and gener at i ng si gni f i cantr evenue f orHot f i l e by encour agi ng user st o conved t o pr em i um subscr i pt i ons, I nr esponse,Hot f i l e cont ends t hatt he DM CA does notm andat e act i on based on i nf r i ngem ent not i ces. On t hi s poi nt ,t her ei s some di sagr eemen t as t o w het her such not i ces equat et o know l edge ofa user ' s ac t uali nf r i ngem ent v l 4 See, gener a/ / y,4128 M ;

Ni m mer& Ni mmer ,Cop yr i gh tj 1 2B. 1 O( B)( Ma t t h e w Ben derRev.Ed. 201 3 ) . Th ec ou d
i n Cor bi s Cor p. ,f or i nst ance,f ound t hatDMCA not i ces al one ar e notenough t o conf er

knowl edge on a ser vi ce pr ovi der :' ' Al t hough t her e m ay be i ns t ances i n whi ch t wo or
mor e DM CA com pl i antnot i ces m ake a ser vi ce pr ovi deraw ar e ofa user ' s bl at ant ,r epeat i nf r i ngem ent ,t he not i ces al one do not m ak e t he user ' s act i vi t y bl at ant , or even concl usi vel y det er mi ne t hatt he useri s an i nf r i nger . ' '351 F.Supp.2d at 1105 & n. 9;see

al so M p3t unes,LLC,821 F.Supp.2d at637. Yet a subsequent ci r cui tcoud deci si on i n CCBi I Isuggest s a di f f er ent appr oach on t hi si ssue
.

i ci ent not i ces of i nf r i ngem ent - i n That coud hel d t hat s t at ut or i l y def

padi cul ar ,t hose l acki ng a decl ar at i on f r om t he copyr i ghthol derdet ai l i ng owner shi p and t he m at er i al ' si n f r i ngi ng nat ur e - wer e an i nsuf f i ci ent basi sf or t er mi nat i ng a user . CCBi I I ,488 F. 3d at1113. Att he sam e t i m e,however ,i thel dt hatt he di st r i ctcoud er r ed

i nf ai l i ng t o consi derw het herdef endant s'cont i nued ser vi ces f orwebsi t es t hatwer et he

su b j e c to fn on pady n ot i f i c a t i on s( whi c h mi gh th av ec on f or med wi t ht h es t at u t e)

1 4

couds agr e et h atSec t i on 51 2( i )r equ i r e st er mi na t i n gk nown r ep ea ti n f r i ng er s. See CC Bi l l ,48 8 F. 3 da t1 11 3( ' A pol i c yi su nr e as ona bl e onl yi ft h es er vi c e pr ov i derf ai l ed t or es pon d when i th ad k no wl e dge o ft h ei n f r i ng emen t . ' ' l ;El l i s on,
357 F. 3d at1080.
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const i t ut ed an unr easonabl e pol i cy. I d. Thus, t he deci si on suggest st hat pr oper

n ot i f i c at i ons ,whi ch r equ i r e' ( a !s t at emen tt ha tt he c ompl a i ni ng p ar t yh as a goo df ai t h
bel i ef t hat use of t he m at er i ali nt he m anner com pl ai ned of i s not aut hor i zed by t he

c op yr i gh town er , i t sagen t ,or t he I a w, ' ' 1 7 U. S. C. j 51 2( c ) ( 3) ( A) ( v) , c an p r ov i de r equ i s i t e
know l edge t o def endant s. Ot her deci si ons suppor tt hi s r easoni ng. See UM G

Rec o r d i ngs ,I nc. ,665 F.Su pp. 2d a t111 6 1 8( h ol di ng t ha tf i l t er i ng t ec hn ol o gy us ed by
t he def endant t o i dent i f yi nf r i ngi ng m at er i al di d not const i t ut e knowl edge because,

l d h owe verben ef i ci al t he ( f i l t er i ng )t ech nol og yi si nh el pi n gt oi den t i f yi n f r i n gi n g ma t er i al ,i t

doe sn o tmee tt he s t an dar do fr el i a bi l i t y an dv er i f i abi l i t yr eq ui r ed by( CC Bi l l ji n or dert o j u s t i f yt er mi n a t i ng a us er ' s ac c oun t n l ;Fl av a Wo r k s ,I nc .v .Gunf e r ,No.1 0C651 7,2011
W L 32053 99,a t* 1 0( N. D.1 1 1 .J ul y 27,2 01 1 ) , r e v' d on ot herg r ound s, 689 F. 3d 75 4( 7t h Ci r .201 2) ( d ' I ti st r u et ha ts er v i c ep r o vi der s ar en o tr e qui r ed t o pol i c et h ei rs i t e sf or
i nf r i ngem ent ,butt hey ar er equi r ed t oi nves t i gat e and r espond t o not i c es ofi nf r i ngem ent
-

wi t hr es pec tt oc on t en ta nd r epea ti n f r i n ger s. ' ) . As o ne c ou d obs er v ed,CC Bi l l

bor r o wed t he kn o wl edg es t andar df r om Se c t i on 51 2( c ) ( 1 ) ( A) , whi ch r equ i r e sr emo val o f
di ngs,665 F.Supp.2d m at er i alupon not i f i cat i on ofcl ai m ed i nf r i ngemen t . UM G Recor

a t11 1 7. , s ee al s o Co r bi s Cor p. , 351 F. Su pp. 2d a t1 1 O7 ( ' ( T) h e mo s tp o weKu l ev i d en c e

o fa s er vi c e pr ov i d er ' sk no wl edge ( i san)a c t u al no t i c eo fi n f r i n gemen tf r om t h ec op y r i gh t
hol der . ' ' l ;c f kUMG Re c or d i ngs ,I nc . , 201 3W L 1 0 927 93, a t* 1 0( s t at i ng t h a tt he pl a i n t i f f ' s
' ' deci si on t of or go t he DM CA not i ce pr ot ocolst r i pped i toft he m ostpower f ulevi dence of

as er vi c e pr o vi der ' s kn o wl e dge - ac t u al n ot i c eo fi n f r i n gemen t '( qu o t a t i on omi t t e dl ) .
Asi de f r om i nf r i ngem ent not i ces,however ,Hoii l e had no al t er nat i ve m et hod f or

pr event i ng r epeat i nf r i ngem ent by i t s user s. Couds of t en consi der t he degr ee of

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i nf r i ngem entati ssue and t he def endant ' s ef f or t st o st op r epeati nf r i nger si n det er mi ni ng t he r easonabl eness oft he pol i cy' si m pl ement at i on. I n Cor bi s Cor p. ,f or i ns t ance,t he
def endant had cancel l ed m i l l i ons ofof f endi ng m er chantI i st i ngs,w ar ned such vendor s t hat l t r epeat ed vi ol at i ons of t he r ul es may r esul ti n d per m anent suspensi on, ' ' and

ul t i m at el yt er mi nat ed hundr eds of vendor s.351 F.Supp.2d at 110305 & n. 7. Thi s
evi dence was suf f i ci ent t o show t hat t he def endant had m eani ngf ul l y r esponded t o

al l egat i ons of copyr i ght i nf r i ngem entand t hus,' ' pr oper l yi m pl em ent ed a pr ocedur ef or addr essi ng copyr i ght com pl ai nt s and enf or ci ng vi ol at i ons of i t s pol i ci es. ' 'I d.at 1103. Mor eover ,t he pl ai nt i f fwas unabl et o show t hatt he def endantS ' coul d have used anot her , m or e ef f ect i ve and r easonabl e' ' m et hod f or pr event i ng t er mi nat ed user sf r om r eaccessi ng t he ser vi ce. I d. at 110304. Fi nal l y, addr essi ng t he l ' appr opr i at e

ci r cum st ances' 'I anguage oft he st at ut e,t he cour tconcl uded t hatt her e was i nsuf f i ci ent
evi dence t hat t he def endant had know l edge of bl at ant i nf r i ngem ent - such as user

st at em ent s aboutt he pi r at ed nat ur e ofa pr oduct ,chatr oom di scussi ons r egar di ng us e

oft he ser vi ce f or i nf r i ngi ng pur poses,orchar act er i st i cs ofl i st i ngs t hatwoul d gi ve away
t hei ri nf r i ngi ng nat ur e-t hat woul d have r equi r ed i tt ot er mi nat e user access. I d.at

110405. Thus,t he def endantwas ent i t l ed t o saf e har borpr ot ec t i on. By cont r ast ,t he di st r i ct coud i nI nr e Ai m st er conf r ont ed a pol i cy si mi l art ot he
one at i ssue her et hat war ned user s not t o pos ti nf r i ngi ng cont ent and pr om i sed t o

t er mi nat e user s who r epeat edl y vi ol at ed copyr i ghtl aw. The coud di scount ed t he pol i cy

as an l l absol ut e mi r age' 'af t erevi dence showed t hatt he def endant s obst r uct ed ways of
det er mi ni ng whi ch user s wer et r ansf er r i ng i nf r i ngi ng f i l es and, i n pr act i ce, f ai l ed t o

t er mi n at e a si ngl eu s er .I nr e Ai ms t er , 25 2 F.Sup p.2 da t65 859 & n. 1 8( de cl i ni ng s a f e
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har b orp r ot ec t i on on mo t i on f orpr el i mi n ar yi n j un c t i on) . Af f i r mi n gt h e di s t r i c tc oud on
appeal ,t he Sevent h Ci r cui ti ns t r uc t ed t hat a ' ' ser vi ce pr ovi der m ust do what i t can r easonabl y be ask ed t o do t o pr eventt he use ofi t s ser vi c es by d r epeati nf r i nger s. ' ' '/ d.

a t65 5( c i t at i on omi t t ed) .I na s i mi l arv ei n, ot h erc ouds h av eh el dt h atl ù wh er e as er v i c e
pr ovi der i s gi ven suf f i ci ent evi dence t o cr eat e ac t ual knowl edge of bl at ant ,r epeat

i nf r i ngem ent by padi cul ar user s,padi cul ar l yi nf r i ngement of a w i l l f uland c om m er ci al

nat ur ej ' 'i ti s com pel l ed t o act . Cyber netVent ur es,I nc. ,213 F.Supp.2d at1176 ( ci t i ng

l egi s l a t i v eh i s t or y ) . St i l lo t h er sh av e hel dt h a tt her e ar ec i r c ums t anc e si n whi c h
oper at or s m ustgo beyond m er el y post i ng a pol i cy i n a si t e' st er ms ofuse,as Hot f i l e di d.

See Ar i s t a Rec or d s LLC v . Use ne t . c om, I nc . ,63 3 F.Supp.2 d1 2 4, 1 31 ( S. D. N. Y. 20 09 ) . 1 5
i ces of i nf r i ngem ent and com pl ai n t sf r om Her e,t he scal e of ac t i vi t y- t he not

copyr i ght hol der s- i ndi cat ed t o Hot f i l et hat a subst ant i al num ber of bl at ant r epeat

i nf r i nger s m ade t he syst em a condui tf or i nf r i ngi ng act i vi t y. Yet Hoii l e di d not acton

r ecei pt of DM CA not i ces and f ai l ed t o devi s e any ac t ualpol i cy of deal i ng w i t ht hose
thas pr esent ed no evi dence t o show olender s,even i fi tpubl i cl y asseded ot her wi se. l 1 5 The Coud al so not es t hatm ostoft he ' ' r obust ' ' st eps Hot f i l e cl ai mst o hav et aken t o pr eventr epeati nf r i ngem entr el at et oi t s handl i ng ofpadi cul arf i l es and nott hei r user s. Hot f i l e' s SRA pr ogr am i s l egal l y i nsuf f i ci ent because, by i t s pl ai n

I angu age, Sec t i on 51 2( i )r equ i r es us er t er mi na t i on, t her eby t ar g et i ng f u t ur e
i nf r i ngementf r om an i ndi vi dualwho i s deemed I i k el yt or eci di vat e. See Cyber net

Ve nt u r es ;I nc . , 21 3 F. Su pp. 2d at11 76 ( ' t l sl ec t i on 51 2( i )i sf oc u s ed on i nf r i n gi n g us er s,wher eas 51 2( c )i sf ocu s e d pr i mar i l y on t he i n f r i ngi ng ma t er i ali t s el f . ' ' ) . Mor ep adi cu l ar l y,whi l e Sec t i on 51 2( c )r equ i r e ss er v i c e pr o vi der st or emo ve i n f r i n gi n g mat er i al , Sec t i on 51 2( i )t a r ge t st h es ou r c e oft h ati n f r i n gemen t . See i d . ( ' ' Maki ngt he ent r ance i nt ot he saf e har bort oo wi de woul d al l ow ser vi ce pr ovi der s
act i ng i n com pl i ci t y wi t h i nf r i nger st o appr oach copyr i ght i nf r i ngem ent on an i m age by i m age basi s wi t hout ever t ar get i ng t he sour ce of t hese i m ages. ' '

( c i t a t i on o mi t t e dl ) .
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t hat t he sm al l num ber of r em oval st hat di d occur wer ef or any r eason ot her t han

t hr eat ened I i t i gat i on orby coud or der .l ndeed,i t has been unabl et o poi ntt o a si ngl e

speci f i c us erwho was t er mi na t ed pur suan tt oi t s pol i cy ofm anualr evi e w an d exer c i se
of ' di scr et i on. ' ' Docum ent s and st at i st i cs i ndi cat et hat t her e was never any r eal i st i c

t hr eat of t er mi nat i on t o Hot f i l e' s user s, whose act i vi t i es wer e pr ot ect ed by t he

com pany ' si ndi f f er en ce t oi n f r i n gem ent n ot i ces . I ns um ,r egar dl ess o f of f i c i alpol i ci es f or bi ddi n g i n f r i ngem ent , Hot f i l e di d no ts i gni f i can t l y addr ess t h e pr obl em of r epea t

i n f r i n ger s.Thi sr ender s Hot f i l e' s pol i c yl egal l yi nsu f f i ci en tunderSec t i on 512( i ) .
Bef or eI eavi ng t h ei s su est he Cour tb r i e f l y addr es s es t wo ot herpoi n t s made by
Hot f i l e. Fi r st , Hot f i l e cont ends t hat t he St udi os shoul d be equi t abl y est opped f r om asser t i ng a DM CA chal l enge because of t he par t i es' pr evi ous cooper at i on on i nf r i ngem ent i ssues. l n par t i cul ar ,t hey asser tt hat W ar ner ' s par t i ci pat i on i n Hofi l e' s

SRA pr o gr am pr ecl udest h e St udi os 'DMCA ar gumen t( al t hough i tshoul d be no t ed t hat
not ever y St udi o Pl ai nt i f f padi ci pat ed i nt he SRA pr ogr am , )

( Ti t o v Decl .Ex.31 ( DE 275 1 0( f i l ed
under seal l ; DE 321 31; DE 321 32) DE 321 33) . ) That i n di vi dual l a t er t es t i f i ed,
how ever ,t hathe was m er el y' ' bei ng poi i t e' 'and di d notcondone Hosi l e' s ac t i ons. Pr i nci pl es of est oppelappj yt o copyr i ght act i ons i nt he same m anner as t hey

appl yt o ot h erac t i ons ati aw. Al t h ough t he par t i es hav en otci t ed au t hor i t y di s cu ssi ng a

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DMCA d ef en s ei np adi c ul ar ,a c op y r i gh tcl ai mc an b e wai v e di f' . 4 1 )t he p l ai nt i f fI k n ows l
t he f ac t so ft he de f en dan t ' si nf r i ng i ng c on du c t ;( 2)t he pl ai n t i f fI i nt en ds )t ha ti t sc ondu c t
shal lbe act ed on orm us t so ac tt hatt he def endant has a r i ght t o bel i eve t hati ti s so

i n t en de d' ,( 3)t h e de f en dan t( i s !i gnor an toft h et r u ef a c t s ;an d( 4)t h e de f en dan t( r el i es j on t h e pl ai nt i f f ' sc on du c tt oi t si n j ur y . ' ' Car s o nv .Dy neg y,I n c. ,34 4 F. 3d 4 46, 453 ( 5 t h Ci r .2003) ( c ol l ec t i ng au t hor i t y ) . Her e, a l t h ou gh Ho t f i l e ha s po i n t ed t o an i s ol at ed
di scussi on t hat m ay be usef ul i n a cr ossexam i nat i on at t r i al ,t her e ar e no f ac t st o

sust ai n a concl usi on t hatt he St udi os have acqui esced t o Hot f i l e' s conduc t . The St udi os

appeart o have pr ot ect ed t he r i ght st ot hei rcont ent ,and t her ei s no suggest i on t hatt hey

k n ew an d appr ov ed o ft h e ex t en to fHo t f i l e' sa c t i ons ( ori na c t i on) . Sec on d,Ho t f i l eh as mo v ed f orpadi alsu mmar yj u dgmen ton t he ap pl i c abi l i t yo f
t he DM CA t o conductt hatoccur r ed af t ert hi sI i t i gat i on was i ni t i at ed. As suppod,Hot f i l e pr ovi des evi dence of a cont i nuum of i ncr eased com pl i ance, such as appl yi ng new f i nger pr i nt i ng and hashi ng t echnol ogy,gi vi ng copyr i ghtow ner s access t o Hot f i l e' s SRA pr ogr am , and i m pl ement i ng ot her I d power f ul count er m easur es, ' spanni ng f r om t he sum m erof2009 t hr ough Hot f i l e' sr et ool i ng ofi t s af f i l i at e pr ogr am i n Febr uar y 201 2,a

hi s evi dence shows t hat Hot f i l e t ook year af t er t hi s I i t i gat i on began. Some of t
m eani ngf ul ,r ecentst eps t o com bat i nf r i ngem ent . For exam pl e, i ti s undi sput ed t hat

Hot f i l e adopt ed and began t o i m pl em ent a t hr ees t r i kes pol i c y, r esul t i ng i n t he
t er mi nat i on ofover20, 000 ofi t s user s af t ert he st ad oft hi sl i t i gat i on.Al t hough t he Cour t

i s mi ndf ul t hat t he DM CA does not speci f y t he char act er i st i cs of a r easonabl y i m pl em ent ed pol i cy,i ti s unawar e of any si t uat i on i n whi ch a t hr eest r i k es pol i c' y has
been f ound t o be i nef f ect i ve. See,e. g. , Vi acom I nt ' lI nc.v.YouTube,I nc. ,718 F.Supp.

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2 d 51 4,528 29 ( S. D. N. Y.201 0)r ev' di n pa# on o t hergr ou nd s,67 6 F. 3 d1 9( 2d Ci r .
201 2)( di s c us s i n gs t r i k ebas e dp ol i c i e s) .
Thi sr equestt oI i mi tI i abi l i t yr ai s es quest i ons ofw het hera pady can ever r egai n

t he pr ot ect i ons oft he DM CA and w het hert he Coud shoul dt r ustHot f i l e nott or eved t o t hei r of f endi ng conduc t ,w het ' her t he Coud can det er mi ne t he exac t poi nt at whi ch Hot f i l ei m pl em ent ed a DM cAcom pl i antpol i cy and,i fso,whet hert he Coud shoul d use t he dat e of t echni calcom pl i ance as t he poi nt of ent r yt o saf e har bor or whet her t he

pr opermeasur e shoul d be when Hot f i l e ceased t o be a hot bed f ori nf r i ngement( si nce

man y DMCA r equi r emen t s ha v e a pr os p ec t i v e pur p os el ;an d whe t h ert he p ar t i es ha v e
conduct ed a suf f i ci entam ountof di scover yf ort he Coud t o m ake t hese det er mi nat i ons att hi s st age. However ,i nt hei rbr i ef i ng and ata dayl ong or alar gum ent ,t he St udi os m ade cl eart hatt hey have br ought sui t based on Hot f i l e' s syst em and busi ness m odel ' ' as t hey exi st ed pr ecom pl ai nt ' 'and t hatpos t com pl ai ntdam ages ar e nota par toft hi s di sput e. Accor di ngl y, r el yi ng on t hese expr ess r epr esent at i ons and becaus e t he St udi os have not yet m ade any cl ai m c oncer ni ng pos t com pl ai nt damage,t he Coud need notdeci de t hes ei ssues and r ef r ai ns f r om i ssui ng an advi sor y opi ni on on Hot f i l e' s cur r entpr act i ces. 2. Ot herDi squal i f yi ng Fact or s

Havi ng concl uded t hata necessar y pr ec ondi t i on t o DMCA saf e har borel i gi bi l i t yar easonabl yi m pl em ent ed r epeat i nf r i nger pol i cy - i sI acki ng as a m at t erof I aw,t he

Coud concl udes t hat Hot f i l e' s DM CA def ense f ai l s. Nevedhel ess, t he Cour t of f er s
obser vat i ons and concl usi ons aboutt wo oft he r em ai ni ng DM CA r equi r ement s.

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a.

DM CA Agent

Sec t i on 51 2( c) ( 2 )r equi r es t ha ta s er v i c e pr o vi der ' ' des i gna t el ) an agen tt o
r ecei ve not i f i cat i ons ofcl ai m ed i nf r i ngem ent...by maki ng avai l abl et hr ough i t s ser vi ce,

i ncl udi ng on i t s websi t ei na I ocat i on accessi bl et ot he publ i c,and by pr ovi di ng t ot he

Copy r i gh tOf f i c e,s ub s t an t i al l yt h ef ol l o wi ng i n f or ma t i on :( A)t h en ame,a ddr e s s,ph one numb er ,an d el ec t r oni c mai la ddr es so ft h e agen t . ' '1 7 U. S. C.j 51 2( c ) ( 2) . Pert h e exp r es st er ms o ft he s t a t u t e, ' t l o j nl ys ub s t an t i al c ompl i an c e wi t ht h e enu mer a t e d r e qu i r emen t si sr equi r ed b y su bs e c t i on 51 2( c ) ( 2) ,as i s al s ot he c as e wi t hs ub s ec t i on

( c ) ( 3) . ' ' Per f ec t1 0,I nc .L ' .Amaz on. c om,I nc . ,No.CV 0547 53 AHM ( SHx) ,20 09 W L
1 33 43 64, at* 8( C. D. Cal . May 1 2, 2009 )( c i t i n g H. R.Rep.No.1 0 5 551 ( 1 1 )( 1 99 8) ) . The
l egi sl at i ve hi st or yf ort he pr ovi si on i ncl udes t he f ol l owi ng com m i t t ee s t at em ent ,whi ch
expl ai ns t hatdeci si on:

The Com m i t t ee i nt ends t hat t he subst ant i al com pl i ance st andar d i n

su bs ec t i on s( c ) ( 2)an d( c ) ( 3)be appl i ed s ot h att ec hni c aler r or s( su c h as

mi sspel l i ng a nam e,suppl yi ng an out dat ed ar ea code i ft he phone num ber i s accom pani ed by an accur at e addr ess,orsuppl yi ng an out dat ed name i f accom pani ed by an em ai laddr ess t hatr emai ns val i df ort he successorof

t he pr i ordes i gn a t ed ag entorag en to fa c op y r i gh to wn er )do n otdi s qual i f y
ser vi ce pr ovi der s and copyr i ght owner sf r om t he pr ot ect i ons af f or ded

un ders ubs e c t i on ( c ) .Th e Comm i t t e e ex p ec t st h a tt h e par t i e s wi l lc ompl y
wi t h t he f unct i onal r equi r em ent s of t he not i f i cat i on pr ovi si ons -such as pr ov i di ng sum ci ent i nf or m at i on so t hat a des i gnat ed agent or t he compl ai ni ng pafy subm i t t i ng a not i f i cat i on m ay be cont act ed eKcj enf / y-i n or dert o ensur et hatt he not i f i cat i on and t ake down pr ocedur es setf odh i n t hi s subsec t i on oper at e sm oot hl y.

S.Rep.No.1 05 1 90 ( 1 998 )( emph as i sa dd ed) .1 $ To pr ev ai l a tt r i al , t h es er v i c e pr o vi d er
has t he bur den of pr ovi ng t hat i t pr oper l y desi gnat ed a copyr i ght agent and t hat i t
r esponded t o not i f i cat i ons as r equi r ed. ' Per f ect10,I nc. , 2009 W L 1334364,at* 8.

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Her e,t he r ecor d shows t hatHot f i l e had a l ' r epod abuse' 'f or m on i t s websi t e and pr ovi ded an em ai l addr ess w her e user s coul d r epod i nf r i ngi ng cont ent . I t di d not

r egi st er a DM CA agen tw i t ht he Copyr i ght Of f i ce unt i lDecem ber2009. ,di d noti dent i f y
an agenton i t s websi t e unt i lM ay 2010. ,and,t o dat e,has notpr ovi ded a pr operm ai l i ng

addr es sf ori t sr egi s t er ed ag en ti n s o f ar as i tI i s t sonl yap os to f f i c e bo x. See 3 7 C. F. R. j 201 . 38( c )( no t i n gt ha tt h es ubmi s si on o fan agen td esi gn at i on mu s tbeart h ec a p t i on
' t l nt er i m Desi gnat i on of Agent t o Rec ei ve Not i f i cat i on of Cl ai m ed I nf r i ngement ' 'and

i ncl ude, am ong ot her t hi ngs, a S s f ul l addr ess' 'and not a t d pos t of f i c e box or si mi l ar
desi gnat i on ...exceptwher ei ti st he onl y addr ess t hatcan be used i nt hatgeogr aphi c

I oc at i on' ' ) . W hi l et he s t a t u t ef o cu s es on whe t h er s omeone wi t h an i n f r i n gemen t
com pl ai nt woul d be abl et o cont act t he com pany, cour t s have hel dt hat subst ant i al
com pl i ance i nt he DM CA cont ext' ' means subst an t i alcom pl i ance wi t h aI Ii t s cl auses,not

j us tsome o ft h em . ' ' Pe r f ec t1 0 ,I nc .V ' .Ya nd e x N. U. ,No.C 1 201 5 21 W HA,2013 W L
1 8998 51, a t* 3( N. D. Cal .May 7,201 3 )( di s c u s si n g1 7 U. S. C. j 51 2( c ) ( 3) ) . Thu s, ev en
wer e Hot f i l e ot her wi se abl et o avai li t sel foft he DMCA saf e har bor ,t he Cour tconcl udes

t ha ti twoul db ei n el i gi b l e un derSec t i on 51 2( c ) ( 2 )a tl ea s tt h r ou gh May 201 0,t h e . da t e
on w hi ch i tpubl i shed i t s agent ' s cont acti nf or m at i on. See Yandex,2013 W L 1899851,

at* 7( ' ' The phr ase d subst ant i al l y aI It he f ol l owi ng i nf or mat i on'modi f i es t he ensui ng t he
subpar agr aphs t hat l i st t ypes of cont ac ti nf or mat i on . ..i t cannot excuse a f ai l ur et o

pr ovi de t he Copyr i ghtOf f i cewi t h anyi nf or mat i on ataI I . ' ' ) .
b. Act ualorRed Fl ag Know l edge of I nf r i ngem ent

Fi nal l y,muc h oft h e St udi os 'br i e f i n g ad dr es s es Sec t i on 51 2( c ) ( 1 ) ( A) ( i ) ,whi c h
r equi r es t hat a def endant not have ' ' ac t ualknow l edge t hat t he m at er i alor an ac t i vi t y
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usi ng t he m at er i alon t he sy st em ornet wor ki si nf r i ngi ng' ' wi t houtr em ovi ng i t . 17 U. S. C.

j 51 2( c ) ( 1 ) ( A) ( i ) . Th es a f eh ar boral s or equ i r e st h att h e de f end an tn oth a ve k n o wl e dge ' ' off a c t s orc i r c ums t anc es f r o m wh i c ht h ei n f r i n gi ng ac t i v i t yi s ap par en t . ' '1 7 U. S. C.j 51 2( c ) ( 1 ) ( A) ( i i ) . As on e c ou r ti n t er pr e t i n gt he s t a t u t ee xpl ai n ed, ' l t l h e DMCA' S
pr ot ect i on of an i nnocent ser vi ce pr ovi der di sappear s at t he m om ent t he ser vi c e pr ovi derl oses i t si nnocence,i . e. ,att he mom enti tbecom es awar et hata t hi r d pady i s usi ng i t s syst em t oi nf r i nge. ' ' ALS Scan,I nc. ,239 F. 3d at625. These pr ovi si ons oft he

DM CA ar e desi gned t o ' ' deny saf e har bor pr ot ect i on t o I nt er net ser vi ce pr ovi der s oper at i ng or l i nki ng t o pi r at e si t es whose i l l egal pur pose i s obvi ous t oar easonabl e

per son. ' ' Mp3t unes,LLC,821 F.Supp.2d at 64344 ( ci t i ng S. Rep.No. 105190

( 1 998) ) .
squal i f i cat i on. Fi r st , Nevedhel ess, t her e ar e t wo i m podant I i mi t at i ons on di

Sec t i on 51 2( m)sp ec i f i est h a ta s er v i c e pr ov i d erh as n o du t yt o moni t orac t i v i t y oc c ur r i ng
on i t s ser vi ce ort o' ' af f i r m at i vel y seek f act si ndi cat i ng i nf r i ngi ng act i vi t y, ' 'whi ch i nf or ms
he st at u t e el sewher e t he k no wl ed ge anal y s i s. 1 7 U. S. C. j 51 2( m) . Second,because t
em ove ever y pi ece of m at er i ali dent i f i ed as i m pos es t he r equi r em ent t hat pr ovi der sr

i n f r i ngi ng,l s l gl ener ala war en es s ofr a mpan ti n f r i n gemen ti sn o ten ou gh t o di s qu al i f ya
ser vi ce pr ovi derofpr ot ec t i on. ' Mp3t unes,LLC,821 F.Supp.2d at644. I ns t ead,t he

sec t i on d l r equi r es knowl edge orawar eness ofspeci f i ci nf r i ngi ng ac t i vi t y. ' ' Vi acom I nt h

I nc . ,676 F. 3 da t3 032 ( c ol l ec t i ng au t h or i t y )( ' l ( T) h en a t ur eo ft h er emo v alobl i ga t i on
i t sel f cont em pl at es know l edge or awar eness of speci f i ci nf r i ngi ng m at er i al , because

expedi t i ous r em ovali s possi bl e onl yi ft he ser vi ce pr ovi der knows w i t h padi cul ar i t y

whi c hi t ems t or emov e. ' ' l ' ,a c c or d UMG Re c or ds ,I nc . ,201 3 W L 10 92 793, a t* 1 1
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( dec l i ni n gt o ado pt1 1 a br oad c on c ep t i on o ft h ek no wl e dg er equi r emen t ' ' a nd h ol di ng t h at
t he saf e har borr equi r esd l speci f i cknowl edge ofpadi cul ari nf r i ngi ng ac t i vi t y' ' ) .
Al t er nat i vel y, d ' t he r ed f l ag pr ovi si on t ur ns on w het her t he pr ovi der was

su b j ec t i v e l ya war eo ff ac t st h a twoul d ha v e mad et h es pec i f i ci n f r i n gemen t' ob j ec t i v el y'
ob vi ou st oar eas on abl e per s on. ' ' Vi a c om I nt jl nc . ,67 6 F. 3 d at31 ( emph as i s ad ded ) .
Couds have r ecogni zed t hat whi l e wi l l f ulbl i ndness under t he com mon l aw - i . e. ,an i nt ent i onalef f od t o avoi d gui l t y know l edge - can equat et o act ualknowl edge,a DM CA

anal y si ssh oul dn otI o s e si gh tof t h ef oc uson s p ec i f i c i t y.I d. a t35 ( ' ' ( W) i l l f uI I bl i ndn es s()
m ay be appl i ed,i n appr opr i at e ci r cum s t ances,t o demons t r at e know l edge orawar eness

o fsp ec i f i ci n s t an c es o fi n f r i n gemen tun dert h e DMCA. ' ' ) ,T ' i f f a ny ( NJ )I nc .v .eBa yI nc . ,
600 F. 3d 93,1 07,1 0 91 0( 2d Ci r .2 01 0) .l nar ec en td ec i s i on an al y zi n gt h ec omp et i n g
consi der at i ons of t he st at ut e, one coud concl uded t hat a l ackof knowl edge def ense
was a t r i abl ei ssue because sever aldocum ent si nt he r ecor d coul d have been vi ewed

d t as i m posi ng a dut yt o m ake f udheri nqui r i es i nt ot speci f i c and i dent i f i abl e'i nst anc es of

possi bl ei nf r i ngem ent . ' ' Capi t ol Recor ds, I nc.

M p3t unes, LLC, No. 07 Ci v. 9931

( W HP) , 201 3W L 1 9 8722 5, a t* 3( S. D. N. Y. Ma y1 4, 201 3)( c i t a t i onomi t t ed) .
Wi t hr egar dt o Hot f i l e' s act ualknowl edge,t he St udi os'pr oofconsi s t s pr i m ar i l y of ci r cum st an t i alevi dence ofi nf r i ngemen t . The St udi os assed t hatHot f i l e does notser v e a pr i m ar i l yl awf ulpur pose,ci t i ng t he f act st hatHot f i l e pays user s based on downl oads

r at h er t han upl oad s( s ug ges t i ng t ha ti ti sa f i l e sh ar i n g, r a t h er t hans t or a ge, s er v i c e)an d
t ha ta hi gh p er c en t ag eo fdo wn l oade df i l e s ar ei n f r i n gi n g( s ug ge s t i n gi n f r i n gi n gf i l es ar e t h e mos t popul ar an d dr i ve u s er ac t i vi t y ) . Th e St udi os t hu sc on t end t ha t Hot f i l e
r esem bl es ot her peer t opeer f i l e shar i ng net wor ks t hat have been shut dow n,

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hi ghl i ght ed by t he f act t hat Hot f i l e' s busi ness i ncr eased as som e of t hose syst em s became i nact i ve. As f udhersuppod,t he St udi os ci t e docum ent s cont ai ni ng pur poded

adm i ssi ons t hatHoii l ei sd l t he f l agshi p ofnonl i censed cont ent . ' '
l nr esponse,Hot f i l e st at es t hat i t pr ovi des a vehi cl ef or t he di st r i but i on off i l es wi t ht he aut hor i zat i on oft he cont entow nerand t hatt he pr i m ar y pur poses of i t s syst em

ar e per sonal s t or age, ' ' space shi f t i ng' ' and di s t r i but i on of nonpr ot ect ed m at er i al s. I ndeed, Hot f i l e has shown t hatone of t he St udi os used Hot f i l et o di st r i but ei t s own t s net wor ki s act ual l y used f or cont ent . And Hot f i l e poi nt st os t at i st i cs showi ng t hat i
t hose pur poses,obser vi ng t hat most f i l es have never been downl oaded ( i . e, ,most

upl oad ed f i l es h av e no tbe en r et r i ev e db y an o t h erus e r l ,t ' ha tt h e mo s tpo pul ar I i nk s cur r en t l y av ai l abl e ar ef orn on i n f r i n gi n gc on t en t( s uc ha s op ens our c es o f t war e )t ha ti s
meantt o be f r eel y copi ed and shar ed' ,t hatt her ei s no s ear ch f eat ur et hatal l ows user s

t ol oc at ef i l es;an dt h aton l y a smal lper c en t age o ff i l es h av e bee nt he s ub j ec to fa

DMCA no t i c e orSRA a c t i on orha v e be en t h es ub j e c to fi n f r i n gemen t . Ac c or di ng t o
Hot f i l e, i ti s a sm al lbusi ness t r yi ng t o eke ou ta r easonabl e pr of i ti n a pr ohi bi t i vel y
I i t i gi ous wor l d.

Consi der i ng al Iof t he evi denc e,t he Coud cannot say - and does not need t o
det er mi ne - whi ch Hot f i l e i s bef or e i t . The t est i m ony,docum en t s and evi dence of

p ar t i c ul ars ys t em ch ar ac t er i s t i c sc r e at e an i s s u e off ac tf ora j ur y as t o wh et h erHo t f i l e
knew or bl i nded i t sel ft o act uali nf r i ngem ent of padi cul ar wor k s,on a sm al l or I ar ge scal e. The m ast er copy pol i cy as i t exi st ed pr i or t ot hi sl i t i gat i on,f or i nst ance,coul d

m ean t hatHot f i l e was at t uned t ot he i nf r i ngi ng nat ur e off i l es,butm er el y di sabl ed t he
of f endi ng I i nk r at hert han r em ovi ng t he f i l ei t sel f . Because a si gni f i cant num beroft he

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DMCA n ot i c es c onc er ned t h e St u di o s' wor k s, a j ur yc ou l dc onc l u de t ha t Hot f i l e
under st ood t hati twas cont i nui ng t o m ake padi cul ari nf r i ngi ng cont entavai l abl et ot he publ i c ort hat ,att he ver yI east ,i tshoul d have i nvest i gat ed t hose f i l es. Si mi l ar l y,t ot he ext ent t hat com m uni cat i ons wi t h user s shoul d have al eded Hot f i l et ot he i nf r i ngi ng

n at ur e off i l es on i t ss y s t em t h atwer e own ed b yt h e St u di o s( su c h as us er ss eek i ng
t echni calassi st ance who i ndi cat ed t hatt hei rdi f f i cul t i es wer e ow i ng t ot he i l l egalnat ur e

oft hei ract i vi t y) ,Hot f i l e mi ghtbe deemed t o have possessed r ed f l ag knowl edge. See

UM G Rec or d i ngs ,I nc . ,2 01 3W L 1 09 2793,a t* 1 4( s t at i ng t h atha d emai l si d en t i f y i n g
i nf r i ngi ng cont entcom e f r om a syst em ' s user s,r at hert han t he copyr i ghtowner ,' ' i tm i ght

meett he r ed f l agt es tbecause i tspeci f i ed padi cul ari nf r i ngi ng mat er i al ' ' ) .l ndeed,based

ur y mi gh tev en de t er mi ne t h atHot f i l e sh oul d on t he evi dence puton by t he padi es,a j ha ve un der s t ood t h a tpadi cu l arma t er i alwa si n f r i ng i ng ( ora tI ea s ts houl dh a ve I ook e d i nt o whe t heri n f r i n gemen t was o cc u r r i n g)when i tb ec ame a war eo ft h eI i nkn ame.

Bu t' $ ( a) s a gener al r ul e, ap ad y' ss t a t e ofmi n d( su ch a sk no wl e dge ori n t en t )i sa
quest i on off actf ort he f act f i nder ,t o be det er mi ned af t ert r i al . ' ' Chanel ,I nc.v.I t al i an

Act i v ewea rofFI a. ,I nc . , 931 F. 2 d1 47 4,1 476 ( 1 1 t h Ci r .1 991 ) .Thu s, ast o ac t ual ( ) rr ed
f l ag knowl edge of i nf r i ngem ent ,t he Coud concl udes t hat a genui ne i ssue of m at er i al

f ac te xi s t s ,a nd t hi si s s uewoul dh av et ob er e s ol v e db y aj u r yat t r i al .
B.

Li abi l i t yf orI nf r i ngem ent

bor ,t he Coud m ust s t i l ldet er mi ne Wi t hout t he benef i t of t he DM CA saf e har whet herHot f i l ei sI i abl ef ort he copyr i ghtvi ol at i ons com m i t t ed by i t s user s. The DMCA

does notsuppl antcom m on I aw pr i nci pl es ofl i abi l i t y,and a f i ndi ng t hatsuch a pr ot ect i on
i s unavai l abl e does not necessar i l y m ean t hatl i abi l i t yf ori nf r i ngem enton t he sys t em i s

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pr op er . Se e Col u mbi a Pi c t ur es I ndu s. ,I nc .k ' ,Fun g,71 0 F. 3d 1 0 20,1 039 40 ( 9t l n Ci r .

201 3 )( ' ' ( WJ e ar en otcl ai r v oy an ten ou gh t ob e su r et ha tt h er e ar e no i ns t anc es i n whi ch
a def endant ot her wi se I i abl ef or cont r i but or y copyr i ght i nf r i ngement coul d m eet t he
pr er equi si t es f orone orm or e oft he DM CA saf e har bor s. W e t her ef or et hi nk i tbestt o

conduct t he t wo i nqui r i es i ndependent l y - al t hough, as wi l lappear , aspect s of t he
i nduci ng behavi ort hatgi ve r i se t ol i abi l i t y ar er el evantt ot he oper at i on ofsom e oft he

DMCA s af e har b or s an dc an ,i ns ome c i r cu ms t anc es, p r ec l u de t h ei r app l i c a t i on. ' ' l , '

Per f ec t1 0 :I nc .e . Cy be r net Vent u r e s ,I n c. ,21 3 F.Sup p.2 d 11 46, 11 74 ( C. D,Cal .
2002 )( ' ' Thes ed s a f e har b or s 'do n ota f f ec tt h e qu es t i on o ful t i mat eI i abi l i t y un dert h e
var i ous doct r i nes ofdi r ect ,vi car i ous,and cont r i but or yl i abi l i t y ...Rat hert hey I i mi tt he

r el i efav ai l abl e agai n s ts er v i c e pr ov i der st h atf al l wi t hi nt he se s a f eh ar bor s . ' ' l ;c f kFl av a W or k s ,/ nc . ,68 9 F. 3d a t758 ( ' 1 ( A)non i n f r i n gerd oes n' tn ee d as a f eh ar bor . ' ' ) .
Couds have st r uggl ed w i t h def i ni ng t he I i abi l i t y ofI nt er net based com pani es t hat

pr ovi de t he t echnol ogi calmechani sm t of ost er ,or at l eas t enabl e,ot her st oi nf r i nge.
Thi s conf usi on and uncedai nt y pr ompt ed i n pad t he enact m entoft he DM CA. See,e. g. ,

Son y Cor p. o f Am .

Uni v e r s al Ci t y St ud i os , 464 U. S. 41 7, 43 4 n. 1 7( 1 9 84)

( ' ' son y / Bet ama x' ' j( not i n gt h at t t t he l i ne s be t ween di r ec ti n f r i n gemen t ,c on t r i b u t or y i n f r i ng emen t , an d v i car i ous I i a bi l i t y ar e n ot c l ear l y dr a wn' '( quo t i n g di s t r i c tc ou d dec i s i onl l ;Fl av a W or ks ,I nc. ,689 F. 3d a t76 O( l d Th e onl y di s t i n c t i on sr el ev an tt ot hi s
case ar e bet ween di r ect i nf r i ngem ent ...and cont r i but or yi nf r i ngem ent ,and bet ween

cont r i but or yi nf r i ngementand noni nf r i ngement . ' ' ) .
Even so,couds have r ecogni zed t he val ue and r emai ni ng vi abi l i t y of a cl ai m of secondar yl i abi l i t y: ' ' W hen a wi del y shar ed ser vi ce or pr oduct i s used t o com m i t

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i nf r i ngem ent ,i t m ay be i m possi bl et o enf or ce r i ght si nt he pr ot ect ed wor k ef f ec t i vel y
agai nst aI I di r ec ti nf r i nger s, t he onl y pr ac t i cal al t er nat i ve bei ng t o go agai nst t he di s t r i but or of t he copyi ng devi ce f or secondar yI i abi l i t y on a t heor y of cont r i bu t or y or

vi car i ous i nf r i ngem ent . ' ' M et r oGol dwynM ayer St udi os,I nc.v.Gr okst e6 Lt d. ,545 U. S.

91 3,929 3 0( 200 5)( c i t a t i on om i t t edl ;Per f ec t1 0 ,I nc .v .Ama z on. c om,I nc. ,508 F. 3 d 11 46,11 71 n. 11 ( 9 t h Ci r .2007 )( s l l cj op y r i gh thol der sc ann o t pr ot ec tt hei rr i ght si na
m eani ngf ul way unl ess t hey can hol d pr ovi der s of such ser vi c es or pr oduct s

a c cou n t abl ef or t h ei ra c t i on s. ' ) Th es et he or i e so fs ec on dar yl i abi l i t y- c ont r i bu t or y
i nf r i ngem en t ,i nducem entI i abi l i t y and vi car i ous l i abi l i t y - ar e coudcr eat ed and do not
r el y on t he Copyr i ghtActoranot herst at ut e. See Vi acom l nt ' lI nc. ,676 F. 3d at28 n. 5

( ci t i n g Gr ok s t e r ,5 45 U. S. at9 30 31 ) , ' Per f ec t1 0 ,l nc .B .Vi s aI nt ' lSel v. As s' n, 49 4 F. 3d

788,79 5( 9t h Ci r .200 7) ( ' ' con t r i bu t or yc op yr i gh ti n f r i n g emen ti saf or mo fs ec on dar y
l i abi l i t ywi t hr oo t si nt he t odl a wc on c ep t so fen t er pr i s el i abi l i t ya nd i mpu t ed i n t en t . ' ' ) .
1. I nducem entand Cont r i but or yI nf r i ngem ent

The Supr eme Cour t ' s sem i nal2005 d ec i si on i n Gr o k s t e r obs er v ed t h at ' s l ol n e i nf r i nges cont r i but or i l y by i nt ent i onal l yi nduci ng orencour agi ng di r ec ti nf r i ngement , ' 545

U. S.at92 9. d d l cl on t r i b ut or yI i abi l i t yi s ba s ed on t h e de f en dan t ' sf ai l ur et os t op i t so wn
act i ons whi ch f aci l i t at et hi r dpady i nf r i ngem ent . ' ' Am azon. com ,I nc. ,508 F. 3d at 1175.
The t heor y has t wo r equi r em ent s: ( 1 )t he def endantknows ofdi r ec ti nf r i ngement ,and

( 2)t he de f en dan td t i ndu c es, c au s es, orma t er i al l yc on t r i bu t e st oI t ha t li n f r i ngi ng c on duc t . ' Na ps t en I nc . ,239 F. 3 d at1 020 ( i n t er n al quo t at i on and ci t at i on s omi t t ed) . To ' ' e s t ab f i s h
i nducement I i abi l i t y, i ti s cr uci al t o est abl i sh t hat t he di st r i but or s com m uni cat ed an

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i n duc i n g mes s ag et ot hei r...u s er s . ' ' ' Vi s aI nt ' lSe m. As s' n, 49 4 F. 3 da t801 ( i n t er n al qu ot at i on omi t t ed) .
Thus,t o es t abl i sh t hi s der i vat i ve I i abi l i t y,a pl ai nt i f fm ustf i r stmake a pr i ma f aci e case of di r ect i nf r i ngem ent by a t hi r d pady,w hi ch i s done by pr ovi ng ow ner shi p of a padi cul arwor k and evi dence ofunaut hor i zed copyi ng. Napst en I nc. ,239 F. 3d at 1013

n. 2;Si t u at i on Mgmt .Sys . :I nc .B .ASP Co ns ul t i ng LLC,5 6O F. 3 d 53,58 ( 1 s tCi r .200 9)
( quot i ng Fei stPubl bs,I nc.v .Rur alTel .Ser z Co. ,499 U. S.340,361 ( 1991 ) ) .I nt hi s
case,t he padi es do notdi sput et hatt he St udi os own 3, 800 wor ks ati ssue and t hatt hey
have pr oper l yr egi st er ed t hem underSect i on 411 oft he Copyr i ghtAct . Mor eover ,w hi l e Hot f i l et ak es i ssue wi t ht he St udi os'm et hod f orpr ovi ng i nf r i ngem ent ,i tdoes notdi sput e t hatatI eastsome oft he St udi os'wor ks have been i l l egal l y copi ed ordownl oaded usi ng t he Hot f i l e syst em . Thi s has caused t he St udi os t oI ose m oney t hey woul d have ear ned f r om I i censi ng t he cont ent t o user s and because oft he t hr eat of f udherdow nst r eam S ' vi r al ' 'di st r i but i ons. The W at er m an st udy and t he f ac t s of t he count er cl ai m pr ovi de com pet entpr oofi nt hatr egar d' ,any ot herquest i ons m er el y go t ot he I evelofdamages. CL Fung,710 F. 3d at1034. The m or e vexi ng quest i on her e concer ns t he hal l m ar k oft hi st ype of I i abi l i t ywhet heri nt entcan be expr essl y shown ori nf er r ed f r om Hot f i l e' s ac t i ons. The St udi os al l ege t hati nf r i ngem ent i s a nat ur alconsequenc e of Hot f i l e' s busi ness model ;t hatt he
com pany ' ' ac t i vel yf os t er s' 'm assi ve copyr i ghti nf r i ngem entt oi ncr ease i t sr evenue;and t hatdespi t e st or i ng al li nf r i ngi ng cont enton i t s ser ver s,i tf ai l ed t omi t i gat ei n f r i ngem ent .

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a.

Gr okst er t ype I nt ent

I nt hi sr egar d,couds have hel dt hateven t hough an ent i t y m er el y di s t r i but es a devi ce t hat causes i nf r i ngement ,i t m ay nonet hel ess be I i abl ef or i nduc ement i ft he

de f en dan th as ' s t h e ob j ec to fp r omo t i n gi t su s et oi n f r i ng ec op yr i gh t ,a ss h own b yc l ear
expr essi on orot heraf f i r m at i ve st eps t aken t of ost eri nf r i ngem ent . ' ' Gr okst er ,545 U. S.

at 919. Li abi l i t y m ay be i m posed ' ' i ft he ac t or knowi ngl y t ak es st eps t hat ar e

su bs t an t i al l yc edai nt or e sul ti n ()di r ec ti n f r i n gemen t . ' ' Amaz on. c o m:I nc . ,5 08 F, 3 da t
1170. Or ,a def endant can encour age or i nduce i nf r i ngem ent t hr ough cedai n ac t s, ' s such as advedi si ng an i nf r i ngi ng use ori nst r uc t i ng how t o engage i n an i n f r i ngi ng use. ' '

Gr ok s t er ,5 45 U. S.a t 93 6( c i t a t i on s an di n t er n alquo t a t i ons o mi t t ed) .I n addi t i on t o
t hese m et hods ofdi r ect l y pr ovi ng i nt ent ,an ac t orm ay be I i abl e underol dercom mon I aw

t heor i es based on i m put i ng i nt ent ,such as by knowi ng ofspeci f i c act s ofi nf r i ngement and f ai l i ng t o ac t orby pr ovi di ng ' m at er i alsuppod' 't ot hose w ho com m i ti nf r i ngem ent .
As di scuss ed bel ow ,t her ei s di sagr eement as t ot he par amet er s of t hese doc t r i nes,

w het hert hey cont i nue t o appl y,and what def enses may be appl i cabl et o count ert he
del et er i ous ef f ec tt hey m ay have on i nnovat i on and t he benef i t s oft echnol ogy.
The deci si on i n Gr oksf er i l l ust r at es whatunquest i onabl y suf f i ces t o show act ual

i nt ent . Ther e, a gr oup of copyr i ght hol der s consi st i ng of r ecor di ng com pani es, songwr i t er s and m usi c publ i sher s sued com pani es t hat di s t r i but ed sof t war e pr oduct s enabl i ng peer t opeerf i l e shar i ng among user s. 545 U. S.at919. The def endant s di d notm ai nt ai n copi es off i l es on t hei rser ver s,di d not know whi ch f i l es t hei r user s wer e t r ansm i t t i ng,and di d notef f ect i vel y cont r oluser behavi or .I d.at920 & n. 1,922. But evi dence showed t hat' d t he pr obabl e scope ofcopyr i ghti nf r i ngementi ss t agger i ng' 'and

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t hatt he def endant s wer e awar e oft he nat ur e oft he i nf r i ngem ent .I d.at923. Si mi l art o

t he f ac t s oft hi s case,an exped com m i ssi oned by one oft he pl ai nt i f f s concl uded t hat90 per cent of t he f i l es on one of t he s yst ems wer ei nf r i ngi ng, al t hough t he def endant s r ai sed m et hodol ogi cal chal l enges, sugges t ed t hat t he sof t war e had si gni f i cant
noni nf r i ngi ng uses,and pr ovi ded ot her' d anec dot aland s t at i st i calevi dence' ' t o show t hat

f i l es m i ghtnothave been copyr i ghtpr ot ect ed. I d.at92223. Fi nal l y,em ai l sf r om user s ' ' wi t h quest i ons about pl ayi ng copyr i ght ed m ovi es t hey had downl oaded' ' and not i f i cat i ons f r om one of t he pl ai nt i f f s about t he i nf r i ngi ng nat ur e of cedai n f i l es
dem ons t r at ed t he def endant s'knowl edge oft he f actofi nf r i ngement .I d.at923. The Coud w entbeyond know l edge of i nf r i ngem ent ,however ,t o addr ess ac t ual

e vi den c eo fi n t en t .I tc onc l u ded t h a tt h e de f en dan t sl d c l ear l yv oi c ed t h e ob j ec t i v et ha t
r eci pi ent s use i tt o dow nl oad copyr i ght ed wor ks, and each t ook ac t i ve st eps t o encour age i nf r i ngement . ' 'I d.at92324. I n par t i cul ar ,one oft he def endant s desi gned and advedi sed sof t war e t o com pet e wi t h a s ys t em t hat was r ul ed t o have been

i n f r i ngi ng ( Naps t er ) , t h er eb y' ' ai mi n gt os a t i s f ya k n o wn s our c e ofd emand f orc opy r i gh t
i nf r i ngem ent . ' 'I d.at 924,939. Thei r busi ness m odel s wer e cent er ed on adver t i si ng r evenue dr i ven by t he popul ar i t y of cont ent ,whi ch t he coud equat ed w i t hi nf r i ngi ng

c ont en t an d whi ch c on f i r med d l t h a t( de f en dan t s' ) pr i nc i p al o b j e c t was u s eo ft he i r
s of t war et od ownl oad c opy r i ght ed wor k s . ' 'I d.a t9 26 ( d l us er ss e ek i n g Top 40 s on gs, f or
exam pl e,ort he I at estr el ease by M odes t Mouse,ar e cedai nt o be f arm or e num er ous t han t hose s eeki ng a f r ee Decamer on,and Gr okst er and St r eam cast t r ansl at ed t hat

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dem and i nt o dol l ar s' ' 1 6 Fi nal l y, t he Coud f ound t hatcom pani es f ai l ed t o devel op t ool s )
.

' ' t o di mi ni s ht h ei n f r i ngi n ga c t i vi t yl of lu si n gt h ei rs o f t war e, ' 't h er eb yu nd er s c or i n gt hei r
d ' i nt ent i onal f aci l i t at i on oft hei ruser s'i nf r i ngem ent . ' 'I d.at939.

Af t er di scussi ng t he pl ai nt i f f s'pr i ma f aci e cas e of I i abi l i t yf or i nducement and vi car i ous I i abi l i t y,whi ch f al lundert he um br el l a ofsec ondar yI i abi l i t y,t he Gr okst erCour t consi der ed def enses. I n padi cul ar ,i tdi scussed i t s hol di ng i n Sony/ Bet am ax,w hi ch t he coud of appeal s had appl i ed i n af f i r mi ng t he di s t r i c tc oud' s gr ant of sum mar y

j udgmen t . 1 7 Th a td ec i s i on appl i e dt he ' ' s t apl e adi c l eo fc ommer c e do c t r i n e' ' an d c on cl u de dt h atan ac t ordi s t r i bu t i n gac o m mer c i alpr o duc t( s uc h as a vi deo r ec or di n g de vi c e) i sn ot I i abl ef or a c t so fi n f r i n gemen t ,e v en i fi tk n ows o f ac t u al or l i k el y
i nf r i ngem ent , unl ess t he pr oduct i s i ncapabl e of subst ant i al noni nf r i ngi ng uses.

Gr o k st er ,5 45 U. S.a t9323 33 ( di s c us s i n gt h eh ol di n go fSon y / Bet ama x ) . The Cour t
soughtt o bal ance t he har mst hati nf r i ngem enthas on c opyr i ghtowner swi t ht he ef f ec t I i abi l i t y mi ght have i n st i f l i ng com m er ce and i nnovat i on, Thus, i t sugges t ed t hatt he doct r i ne appl i es onl yt o ci r cum s t ances wher e no i nt entt o pr om ot ei nf r i ngi ng uses can
be i m put ed f r om t he desi gn of a di s t r i but ed pr oductand wher et he def endant has not

d l expr es s ed an ob j ec t 'o fb r i n gi ng ab ou ti n f r i n gemen t ,s uc h as b y ad v edi s i n gu s es t ha t
1 6 Thi s was cont r ar yt ot he di st r i ct coud' s concl usi on t hat t he def endant s wer e

en t i t l e dt os u mm a r yj u dgmen tan di t sr eas on i n gt ha tdi s t r i bu t i ng t h e so f t war eS ' di d
not pr ovi de t he di st r i but or s wi t h act ual knowl edge of speci f i c act s of

i n f r i ng emen t . 'I d.a t9 27 ( c i t i n g di s t r i c tc oud dec i s i on ) .
Si mi l art ot he appel l at e coud' s hol di ng,pr i or pr eceden ti nt he El event h Ci r cui t concl uded t hat Sony/ Bet am ax appl i es t o al lf or ms of cont r i but or y I i abi l i t y.

Cabl e / Home Comm ' n Co r p.v . Net wo r k Pr od s. ,I nc . , 9O 2 F. 2d 8 29, 845 ( 1l ' t h Ci r . 1 990 )( s l con t r i bu t or yi n f r i n gemen twi l ln otbe f oun di ft he p r odu c ti n qu es t i on i s
capabl e of' subst ant i alnoni nf r i ngi ng uses, 't he det er mi nat i ve i ssue i n Sony,and

cl ar i f i e di nt ha tc as e as wi d eu s ef f or I egi t i mat e, un ob j ec t i on abl e pu r p os es. ' ' ' ( qu o t i n g So ny / 8el ama x, 46 4 U. S. a t442 ) ) .
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ar e necessar i l yi nf r i ngi ng. I d.at933. l n ot herwor ds,t he Sony/ Bet am ax r ul e doe' s not barI i abi l i t y wher e a pl ai nt i f fpl eads an i nduc em entt heor y ofsecondar yI i abi l i t y pr em i sed

on ac t ualevi dence of i nt ent .I d.at 933 ( ' ' Sony bar r ed secondar yI i abi l i t y based on
pr esum i ng ori m put i ng i nt entt oc ause i nf r i ngementsol el yf r om t he desi gn ordi s t r i but i on

ofa pr oduc tcapabl e ofsubst ant i all awf ulus e,whi ch t he di st r i but orknows i si nf actused
f ori nf r i ngement ....Because Sony di d notdi spl ace ot hert heor i es ofsecondar yI i abi l i t y,

and b ec aus e we f i n db el ow t h a ti t was er r or t o gr a n ts u m mar yj ud gmen tt ot h e c ompani esonMGM' Si ndu c emen tcl ai m, we do n o tr ev i si tSon yf ur t her . ' ' ) . Th e Gr o k st e rCoud c onc l ude dt h a t' ' on e who di s t r i bu t es a de vi c e wi t ht h e ob j ec t
of pr om ot i ng i t s use t o i nf r i nge copyr i ght , as show n by cl ear expr essi on or ot her af f i r m at i ve st eps t aken t o f ost er i nf r i ngem ent ,i s l i abl e f or t he r esul t i ng act s of i nf r i ngem ent by t hi r d padi es, ' 'and, i nt hat i nst ance, t he st apl e adi cl e of com m er ce doct r i ne does not act as an af f i r m at i v e def ense. l d. at 93637. A showi ng of i nt ent r equi r es evi dence of act i ve s t eps t ak en t o ent i ce or per suade anot hert oi nf r i nge and cannot be es t abl i shed f r om d s m er e knowl edge of i nf r i ngi ng pot ent i al j ' 'l l ac t uali nf r i ngi ng

t eps t o pr event i nf r i ngem ent , ' 'or d ' or di nar y ac t s uses, ' '' ' af ai l ur et ot ak e af f i r m at i ve s
i nci dentt o pr oductdi st r i but i on,such as of f er i ng cust om er st echni calsuppod orpr oduct

up da t es. ' '/ d.a t 93 537,939 n. 1 2,9 40 ( s t a t i n gt h att h ef ac tt ha ta bu si n es s mo del

ben e f i t sf r om i n f r i n ge m en tcou l dn o tal one ' j us t i f y an i n f er en c eo fu nl awf uli n t en t ,bu t
nst ead,I i abi l i t y m ustbe v i ewed i nt h ec on t ex to ft h e en t i r er ec or di t si mpod i s cl ear ' ) .I

pr em i sed on ' ' pur posef ul cul pabl e expr essi on and conduct . ' 'I d.at937. ,
Based on t he evi denc e pr esent ed,t he Coud i n Gr oksf er f ound an ' ' unl aw f ul

ob j ec t i ve' 't ha twa sl unmi s t a k eab l e' ' :t h es y s t em wa su s ed pr edomi n at el yt oi n f r i ng e.

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The Coud pr edi cat ed i t s concl usi on on t he f act st hat t he def endant sl ear ned of t he i nf r i ngi ng nat ur e of use when pr ovi di ng t echni calassi st ance' he busi ness com pet ed , t wi t h anot hersyst em whose user s wer e know n t o have i nf r i nged' he busi ness m odel , t was dr i ven by t he avai l abi l i t y of unl i c ensed cont ent ' he def endant st ook no , and t
m eani ngf ulst eps t o pr eventi nf r i ngem ent . l 8/ J. at941. b.

Mat er i alCont r i but i on Li abi l i t y

Devel opi ng gui dance f or som e of Gr okst er ' s unanswer ed quest i ons, a m or e r ecent case f r om t he Sout her n Di st r i c t of New Yor kr evi ewed t he f i l e shar i ng ser vi c e

Li m eW i r e and addr essed how t he l egal t heor i es of i nduc ement of i nf r i ngem ent ,
cont r i but or yi nf r i ngem ent ,com m on I aw i nf r i ngem entand unf ai rcom pet i t i on f i tt oget her .

Li m e Gr oup,784 F.Supp. 2d at 409. The ser vi c e at i ssue em pl oyed peer t opeer t echnol ogy t hr ough whi ch sof t war e cr eat ed by t he def endant st ook an i nvent or y off i l es
on user s'com put er s and al l owed ot her st o sear ch f orand downl oad t hem di r ec t l y. I d. at 410411. The sam e exped engaged by t he St udi os i nt hi s case, Dr .W at er m an, concl uded t hat 98. 8 per cent of t he f i l es dow nl oaded t hr ough Li meW i r e wer e not

aut hor i zed f orf r ee di s t r i but i on and t hat43. 6 per centoft hose f i l es wer e owned by t he
pl ai nt i ls i n t he ac t i on. I d. at 412. The coud det er mi ned t hat t her e was suf f i ci ent

evi dence of di r ec ti nf r i ngem ent by Li m eW i r e user s and t hat t he W at er man r epod
pr ovi ded com pet entpr oofoft he scope oft hati n f r i ngem ent .I d.at42224.

On t he i ssue of Gr oks/ est ype i nducement ,t he coud f ound t hat sum m ar y

j u dgmen ti nf a voro ft h e pl ai n t i f f s was war r ant ed. I d.a t42 6. Ev i denc ec i t ed by t h e
1 8 Ul t i m at el y,

t he pl ai nt i f f s on t he i ssue of I i abi l i t y. Met r oGol dwynM ayer St udi os, I nc.

on r e mand,t he di s t r i c tc oud en t er ed s ummar yj u dgmen ti nf av oro f

Gr ok s t e r iLt d. , 45 4 F. Sup p. 2d 96 6, 99 9( C. D.Cal . 200 6) .
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c oud t o es t abl i sht h e def en da n t s' a war en es sofi n f r i n gemen ti nc l u de d: ( 1 )t h es c op eo f
t he i nf r i ngement , whi ch r eveal ed t hat l d m os t act ual dow nl oads i nvol ve unaut hor i zed

c ont en t i ' ' ( 2)i n t er n al c om mu ni c at i onst h atn o ton l yn ot ed t h atu s er swer e sh ar i n g di gi t a l
r ec or di n gs, bu tal s o ac k no wl edg ed t h a tt he y wer ec op yr i gh t e d( i n cl udi n g a do cu men ti n whi c ht he de f en dan t sc ons i der e dl egi t i mi zi n g and mo ne t i zi ng u s era c t i v i t y l ;( 3 )t he f ac t
t hatt he i nf r i ngi ng nat ur e oft he act i vi t y was com m uni cat ed t o def endant st hr ough user em ai l s and t he com pany m ai nt ai ned adi cl es about i nf r i ngem ent i n a f i l e I abel ed

' ' Kno wl e dge o fl n f r i ng emen t i ' ' an d( 4)t h ef ac tt h at t h ed ef end ant s pr ov i d ed t e ch nol ogi c al
as s i s t anc e wi t hf i l es t ha t' pl ai n l yr el a t el d)t o una u t hor i z ed sh ar i n go fdi gi t alr ec or di ngs . ' '
I d.at42628.

Mor eov er ,I i k e t he net wor ki n Gr okst er ,t he def endant s devel oped busi ness st r at egi es t ot ar get user s of shut t er ed net wor ks;t hei r advedi sem ent si nt i m at ed i l l egal
uses;and t hei rr evenue r el i ed on t he popul ar i t y of cont entt hat was i ndi r ect l yt i ed t o

i nf r i ngement .I d.at42729. Ot herat t r i but es oft he Li meW i r e sof t war e suggest ed t hati t ogr am notonl y enabl ed sear ches,but was desi gned wi t hi nf r i ngem enti n mi nd. The pr
i ght ed r ecor di ngs t o user s; t he def endant s even al so suggest ed popul ar and copyr

t est ed i t sf unct i onal i t y usi ng pr ot ect ed t i t l es. I d.at428. Mor eover , t he def endant sf ai l ed
t oi m pl em ent any sod of t echni calbar r i er ordesi gn choi ce t o di mi ni sh i nf r i ngem ent , '

i nst ead,w hi l e exi st i ng t echnol ogy coul d have been appl i ed t o i nf r i ngi ng wor k s,t hat

f i l t er i n gt ec hn ol ogy wa s di s abl ed by d ef a ul t( an dh ad t ob e en abl ed b yu s er s) ./ d.a t
429430. Fi nal l y,t he def endant s had consi der ed al t er nat i ve busi ness m odel s,i ncl udi ng

openi ng a st or et o gui de user st oI i censed c ont ent ./ d. Thi s evi dence was su#i ci entt o
show t he sam e ki nd ofunm i st akeabl ei nt entas exi st ed i n Gr okst er .

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Buti n addr essi ng ot hercom m on I aw pr i nci pl es ofsecondar yi nf r i ngem ent ,Judge

W ood c on cl ud ed t h a t su mmar yj u dgmen twas i n appr opr i at e. Th e dec i si on ma de a
di st i nct i on bet ween i nducem entl i abi l i t y,whi ch r equi r es Gr okst er L ype evi dence ofi nt ent , and cont r i but or y i nf r i ngem ent I i abi l i t y, w hi ch does not so l ong as a def endant ' s
f er i al . ' '1 9 I d.at 432 cont r i but i on t oi nf r i ngi ng act i vi t i es i sd m at
.

Under t he cont r i but or y

i nf r i ngem entt heor y ofI i abi l i t y,t he coud f ound t hatt he evi dence was suf f i ci entt o show t he def endant s'knowl edge ofand m at er i alcont r i but i on t o subst ant i ali nf r i ngi ng ad i vi t y. I d. at 434. However , appl yi ng t he Sony / Bet am ax r ul e, t he coud f ound t her e was i nsuf f i ci ent evi denc e t hat t he Li m eW i r e ser vi c e was i ncapabl e of subst an t i al
noni nf r i ngi ng uses. I d. The coud obser v ed t hat ,whi l et he Li m eW i r e ser vi ce was used

' over whel mi ngl y f or i nf r i ngem ent ' at t he t i me of t he deci si on, t he def er l dant s dem onst r at ed subst ant i al noni nf r i ngi ng uses t hat exi st ed or wer e I i k el yt o devel op,

1 9

The deci si on r easoned t hat Gr oksf er answer ed t he quest i on of i nducement l i abi l i t y but f ai l ed t o det er mi ne l d whet her t he Ni nt h Ci r cui t had been cor r ec ti n

gr an t i ng s ummar yj u dgmen ton t h ec on t r i bu t or yi n f r i n gemen tc l ai m. 'I d.a t43 3.
The concur r i ng opi ni ons i n Gr okst er debat ed whet her t he noni nf r i ngi ng uses

i den t i f i e d by t h e de f en dan t s wer es u f f i c i en tt o mer i ts ummar yj u dgmen t , bu t
agr eed t hatt he Sony / Bet am ax r ul e cont i nues t o actas a def ense t o cont r i but or y

i n f r i n gemen t .I d.a t 433 ( c i t i n gc on c ur r i n g opi n i on s l ,se ' ea l s o Al f r e d C,Yen,
Tor t s and t he Const r uct i on ofI nducem entand Cont r i but or y Li abi l i t yi n Am azon he Supr em e and Vi s a,3 2 Col u m J. L.& Ads 51 3 ,51 3( 200 9) ( ' t I n( Gr o ks f er l ,t Cour t adop t ed i n t ent i onal i nducemen t as a cause of act i on f or t hi r d pady copyr i ght I i abi l i t y. Bef or e Gr okst er , such I i abi l i t y exi s t ed i n t wo f or m s, cont r i but or yI i abi l i t y and vi car i ous I i abi l i t y Now ,af t er Gr oksf er ,a def endant

al s of a c es I i abi l i t yi fs he ac t swi t ht h e ob j ec to fp r omo t i n gi nf r i n gemen tbyot h er s . ' ' ( f oo t no t e om i t t e dl ) . Ot h er de ci s i on s ha v es u gge s t e dt h a tt wo c a t egor i es o f cont r i but or y i nf r i ngement l i abi l i t y exi s t- ' ' act i vel y encour agi ng ( or i nduci ng i n f r i n gemen tt hr ough s p eci f i ca c t s or()di s t r i bu t i n g a pr o duc tdi s t r i bu t ee su s e
t o i nf r i nge copyr i ght s, i f t he pr oduc t i s not capabl e of l subst ant i al ' or d com mer ci al l y si gni f i cant 'noni nf r i ngi ng uses' '- and t hatSony / Bet am ax ser ves as a def ense wher e t he I at t er i s asseded. Am azon. com , I nc. ,508 F. 3d at 11 70

( qu ot i n g Gr o k st e r , 545 U. S.a t9 42 ( Gi ns bur g, J. ,c on c ur r i n gl ) .
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i ncl udi ng di st r i but i on ofnonpr ot ect ed wor ks. I d. Thus,undert he Li m e Gr oup anal ysi s,
t he Sony / Bet am ax r ul e m ay s t i l lbe r ai s ed as a t heor y of def ense w her et he i nt entt o i nf r i nge or i nduce i nf r i ngem ent i s notexpl i ci t ,butr at heri si m put ed f r om a def endant ' s

m at er i alcont r i but i on t oi nf r i ngem ent .
Sever alot her couds have consi der ed t he m at er i alcont r i but i on t heor y ofl i abi l i t y

but have not al ways addr essed t he appl i cabi l i t y of t he Sony / Bet am ax def ense under

t ha tt heo r y. I n Fo nov i s a ,I nc .v . Che r r y Auc t i o n, I n c. ,7 6 F. 3 d 259 ( 9 t h Ci r .q 99 6) ,
oper at or s of a swap m eet wher e count er f ei t goods wer e sol d wer e deem ed t o have

pr ovi ded t he ' ' suppod ser vi ces' 'f or i nf r i ngem ent ,i ncl udi ng ' ' t he pr ovi si on of space, ut i l i t i es, par ki ng, advedi si ng, pl um bi ng, and cust om er s, ' such t hat t he s wap m eet oper at or s coul d be hel dI i abl e. I d. at 263. Ex t endi ng t hat t heor y of I i abi l i t yt ot he
I nt er netcont ext ,t he di st r i c tcoud i n Napsl erf ound t he sear ch and di r ect or yf eat ur es of t he m usi c shar i ng pr ogr am t o be l d an I nt er net s wap m eet . ' A&M Recor ds ;I nc.

Na ps t en I nc . ,11 4 F.Supp.2 d 89 6,91 9 2 0( N. D.Cal .2000 )( qu o t i n g br i ef i n g) ,a f f ' di n
,al bei ti n a pr epar f& r ev ' di n pa r l ,239 F. 3 d1 0 04,1 02 2( 9 t h Ci r .2001 ) . O n appeal / Bet am ax def ense was Gr okst er deci si on, t he Ni nt h Ci r cui tf ound t hat t he Sony
n whi ch i nt entt o pr om ot ei nf r i ngem entwas i m put ed f r om t he appl i cabl et oi ns t ances i

st r uct ur e oft he syst em ,buti nappl i cabl et oi ns t ances w her et he def endanthas i dent i f i ed
speci f i ci nf or m at i on r egar di ng i nf r i ngi ng ac t i vi t y. Napsf er ,239 F. 3d at 102022. W hi l e

t he coud concl uded t hat t he def endant s wer e al so I i abl e under a Fonov i sa mat er i al
cont r i but i on t heor y,i tdi d notaddr ess whet hert he Sony / Bet am ax def ense appl i es under
t hatt heor y. I d.at 1022.

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l nI nr e Ai ms t e r , ' ' l i l n s t ea do fpar k i n gs pac es, ad v edi s emen t s ,an dp l umbi ng, ' ' t h e
def endant s' pr ovi ded t he sof t w ar e and t he suppod ser vi ces necessar yf or i ndi vi dual

Ai ms t eru s er st oc onn ec twi t h eac ho t her...man agl i n glt o do ev er y t hi ng bu tac t ual l y
st ealt he m usi c of ft he st or e shel fand hand i tt o Ai m st eruser s. ' ' 252 F.Supp.2d at659. The coud di sal l owed t he Sony/ Bet amax def ense,r easoni ng t hatt he onl i ne net wor k had

an ongoi ng r el at i onshi p wi t ht he di r ec ti nf r i nger ,as oppos ed t o m er el y pr ovi di ng t he m eans t o com m i ti nf r i ngem enti n a si ngl e poi nt of sal et r ansact i on,I i ke sel l i ng a VCR 2 0 M or eover an ar gum entaggr essi vel y pur sued by t he St udi os i nt hi s case. he Ai ms t er ,t

t echnol ogy per mi t t ed m ass di st r i but i on of i nf r i ngi ng cont ent r at hert han ' pr i vat e,hom e use copyi nga ' 'I d. at 653. Rat her t han f ocusi ng sol el y on t he f eat ur es of t he t s t apl e
ar t i cl e of com m er ce doct r i ne,t he deci si on m ade a di st i nct i on t hat woul d be echoed t hr ee year sI at er i n Gr okst er : t her e was bot h aI ack ofevi dence t hatt he t echnol ogy

had l egi t i m at e pur poses and si gni f i cantevi denc et hatt he def endanti nt ended t of ost er i nf r i ngem ent .I d.at65264.

Fort he m ost pad,as i n Li m e Gr oup,r ecentdeci si ons have suggest ed t hatt he
Sony / Bet am ax r ul e appl i es w her everm at er i alcont r i but i on i s ati ssue. See,e. g. ,Capi t ol

Re c or ds ,LLC v . ReDi giI nc . ,No. 1 2 Ci v. 95 ( RJ S) , 201 3W L 1 28 61 3 4, at* 1 3( S. D. N. Y.
Mar .30,201 3 )( d Howe v er ,ev en wh er ead ef en dan t ' sc on t r i bu t i on i s mat er i al ,i t may
evade l i abi l i t yi fi t s pr oduct i st capabl e ofsubst ant i alnoni nf r i ngi ng uses. ' ' '( quot i ng

Son y / Bet ama x, 464 U. S. at 442) ) .
2 0 W hi l e ot her couds have used t hi s di st i nc t i on t o decl i ne t o appl y t he Sony/ Bet am ax r ul e,t hi s Coud i ncl udes t he anal ysi s ofan ongoi ng r el at i onshi pi n t he vi car i ous l i abi l i t y cont ext . As expl ai ned bel ow, t hat t heor y of I i abi l i t y exam i nes a def endant ' sr el at i onshi p wi t h,and cont r olover ,di r ect i nf r i nger st o

h ol dt h e de f en dantI i abl e,j u s tas a pr i n c i p almay be I i a bl ef ort h ea c t i ons o fhi s
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C.

Know l edge ofI nf r i ngi ng Cont ent and Fai l ur et o Rem ove

Fi nal l y, t he Ni nt h Ci r cui t ' s deci si on i n Per f ect1O,I nc.v.Am azon. com ,I nc.shows
t hatt he Gr okst erdeci si on does notf or ecl ose ot hercom mon I aw pr i nci pl es of i m put i ng

i nt ent .I n padi cul ar ,a pr ovi derm ay f ace I i abi l i t y w her ei tknows ofpadi cul ar i ns t ances of i nf r i ngem ent - r at her t han si m pl yt hat t he sys t em i s capabl e of i nf r i ngement or

gener al l y peq mi t s som e I evelof i n f r i ngem ent- and f ai l st o ac tt or em ove i t . Ther e,a

c op yr i gh to wn ers ue dt wo c omp ani es, one o fwhi c h( Goo gl e )oper a t ed a s e ar c h en gi n e
t hatper mi t t ed user st o sear ch t he I nt er netf ori m ages and f aci l i t at ed downl oads oft hose i m ages f r om t hi r dpady w ebsi t es by I i nki ng t ot hem . 508 F. 3d at115556. O n t he i ssue of secondar y i nf r i ngem ent ,i t was undi sput ed t hat t he t hi r d padi es di d not have per mi ssi on t o di spl ay pl ai nt i f f ' s i m ages on t hei r websi t es and t hat som e di r ect i nf r i ngem enthad occur r ed. I d.at11 69.

The padi es di sagr eed, however , as t o whet her Googl ef ost er ed i nf r i ngem ent
t hr ough speci f i c act s under Gr oksl er . Al t hough t her e was no suggest i on t hat Googl e
act ual l y i nduc ed copyr i ght i nf r i ngem ent ,t he Ni nt h Ci r cui t appl i ed com m on I aw t od

pr i nci pl es off aul t based I i abi l i t yt or eason t hat' ' an ac t orm ay be cont r i but or i l yç i abl ef or i nt ent i onal l y encour agi ng di r ecti nf r i ngem enti ft he act orknowi ngl yt akes st eps t hat ar e subs t ant i al l y cer t ai nt or esul ti n di r ecti nf r i ngem ent . ' 'I d.at117071 & n. 11. I tal so r el i ed on i t s pç eGr okst erdeci si on i n Napsf er ,w hi ch hel dt hat' ù i fa com pu t ersyst em oper at or l ear ns ofspeci f i ci n f r i ngi ng m at er i alon hi s syst em and f ai l st o pur ge such m at er i alf r om

t he syst em , t he oper at or knows of and cont r i but es t o di r ect i nf r i ngem ent ' ' under a
m at er i alcont r i but i on t heor y. I d.at 1171. The coud was per suaded by t he r easoni ng t hat sec ondar yi nf r i ngem ent shoul d be avai l abl et o pr ovi de a pr act i calm echani sm f or
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pr event i ng di r ect i nf r i ngem ent . I d.at 1172. Because t he di st r i ct coud had appl i ed a

di f f er en ts t an dar d an dt h er e was e vi den c et h atS ' Goo gl es ub s t an t i al l ya s si s t l e d)web s i t es

t o di s t r i bu t e( u s er s ' )i n f r i n gi n gc opi es t o a wo r l d wi d e mar k etan da s si s t l e d)a wor l dwi de
audi ence of user st o access i nf r i ngi ng m at er i al s, ' 'Googl e coul d have been I i abl ei fi t f ai l ed t ot ake si m pl e m easur es t o pr eventdam age t ot he pl ai nt i f f 2 1 . I d.
d.

Appl i cat i on ofPr ecedent

Agai ns tt h i sb ody o fj u r i s pr u den c e, t he Coud s et s ou tt he s t an d ar df or
i nducem entand cont r i but or yi nf r i ngem entl i abi l i t yi tappl i es her e. Fi r st ,w hi l ei tm ay be uncl earw het herGr oksf eri nt r oduced a new cat egor y ofI i abi l i t y based on i nducem entor
ti s evi dent t hat a whet her i t spoke t o pr eexi st i ng not i ons of cont r i but or yl i abi l i t y, i

def endantwi l lbe l i abl ef oract ual l y expr essi ng an i nt ent i on t of os t eri nf r i ngem ent .I ft hat

i nt ent i s expr ess or can ot her wi se be sai dt o be ' unm i s t ak eabl e, 't he Sony / Bet am ax def ense w i l lnotappl y and t he def endantwi l lbe l i abl ef oraI Iact s ofdi r ec ti nf r i ngement

com m i t t ed usi ng i t ss yst em , as was t he case i n Gr oksf er . Si mi l ar l y,as expl ai ned i n
Am azon. com ,wher et r adi t i onalpr i nci pl es per mi ta coud t oi m put ei nt ent- f ori ns t anc e, wher et he def endantknows ofspeci f i ci nf r i ngi ng cont entavai l abl e on i t s syst em yetf ai l s

t or emo v ei t- t h a td ef en dan t may b eI i abl e,b y op er a t i on o fI a w,j u s ta si fhe h ad
ac t ual l yi nt ended t oi nf r i nge under Gr oksl er . Fi nal l y,cont r i but or yi nf r i ngem entm ay be

2 1

On r eman d,t he di s t r i c tc ou dr e j ec t e dt he p l ai n t i f f ' sr eque s tf or a pr e l i mi n ar y i nj unct i on because t he pl ai nt i f ff ai l ed t o show t hat i ndi vi dual not i c es of
i nf r i ngem entt hathad el i ci t ed no r esponse wer e adequat et o conf erknowl edge of i nf r i ngem enton Googl e. Per f ect 10,I nc.v .Googl e, I nc. ,No.CV 049484 A HM

( SHx ) ,201 0W L9 4790 60,at* 67( C. D.Cal .J ul y3 0,201 0 ) . Pl ai n t i f fal s of ai l e d
t o show t hat pr act i cal and si m pl e m easur es t o pr event i nf r i ngem ent wer e avai l abl et o Googl e as a vi abl er em edy. I d.at* 7. Norcoul dt he pl ai nt i : m eett he

o t h err e qui r emen t sf ora p r el i mi nar yi n j u nc t i on. I d.at* 1 4. The dec i s i on was a f f i r med, 653 F. 3 d 97 6( 9t h Ci r .2O11 ) , an dc edi or ar i wa s deni e db yt h e Su pr eme Coud,1 3 2 S. Ct .1 71 3( Mar . 5, 201 2 ) .
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f ound based on a m at er i alcont r i but i on t heor yi ni nst ances wher e a def endantdi d not expr ess an i nt ent i on t of ost er i nf r i ngem entbut pr ovi ded t he m eans f or i nf r i ngem ent or di st r i but ed a comm er ci alpr oduc tt hat was subsequent l y used t oi nf r i nge. Undert hat

t heor y,t he Sony/ Bet am ax r ul e pr ovi des a back st op t oI i abi l i t y,i m m uni zi ng a def endant
who dem onst r at es t hat noni nf r i ngi ng uses oft he syst em ar e subst ant i al . The St udi os have r ai sed cl ai ms and pr esent ed f ac t sr el at ed t o each oft hese t heor i es ofI i abi l i t y.

As a pr el i mi nar y m at t er ,i tshoul d be under st ood t hatal t hough Hot f i l e has m any
uni que char act er i st i cs, i ti s al so t r ue t hat i t shar es m any of t he at t r i but es t hat have

doom ed ot her net wor ks 2 he Coud concl udes t hat t he ext ent of 2 M os t not abl y, t
.

i nf r i ngem ent by Hot f i l e' s user s was st agger i ng,as was t he case i n Gr okst er . Ont hi s poi nt ,Hot f i l e quest i ons t he W at er m an st udy and i t sf i ndi ng ofa r espect i ve 90. 2% and

5. 3% r at e of i nf r i ngem ent and noni nf r i ngem ent based on an exam i nat i on off i l es t hat
had been downl oaded. The Coud agr ees t hatt he st udy assum ed an i nf r i ngi ng pur pose and t hatan exam i nat i on ofupl oaded f i l es - i ncl udi ng t hose t hatwer e nevershar ed or downl oaded - woul dI i kel y have shown a I ower i nf r i ngem entr at e and ai t er nat i ve uses

f orHo t f i l e' ss ys t em ap ar t f r om i n f r i ng emen t( as Ho t f i l e ' se xp ed, Dr . J ames Bo yl e, p oi n t s
out ) .l tmay al so be t r ue,as Hot f i l e ar gues,t hatt he W at er man s t udy exam i ned t oo

s h or to fat i me p er i o d( i . e. , one mon t ho f da t a ) an di mp r op er l y ex c l u ded en t i r e
cat egor i es off i l es t hatw oul d have r esul t ed i n an even I owerr at e,

Despi t e Hot f i l e' s quar r el wi t h t he W at er man r at e and sugges t i on t hat i ti s
som ewhathi gh,i tcannotdi sput et hatan enor m ous am ountofi nf r i ngem enthas act ual l y

2 2

The St udi os cont end t hat Hot f i l ei s si mi l art o ot heri n f r i ngi ng net wor ks,such as Gr oks t er ,Fung,St r eam cas t ,Usenet . com ,and Li m eW i r e.
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occur r ed on Hot f i l e' s syst em . Forexam pl e,t he r ecor dr ef l ect saI ar ge num berofDM CA
not i ces r ecei ved by Hot f i l e - ei ght m i l l i on i n t ot al . As i s expl ai ned i n t he Coud' s

di scussi on oft he coun t er cl ai m ,onl ya r el at i vel y sm al lnumberoft he not i ces pedai ni ng

t o W ar nerhave been cl ai med t o be i ncor r ect and noni n f r i ngi ng,suggest i ng t he sam e
m ay be t r ue oft he ot herset s of not i ces Hot f i l er ecei ved f r om t he St udi os. M or eover ,

whi l et he Coud cannotdeduce t hat ever yf i l e post ed by a r epeat i nf r i nger i s act ual l y

i n f r i n gi n g,t he up l o ads oft ho s e su b j ec tt ot hr ee ormor e no t i c es co ns t i t u t ed 4 4p er c en t
o faI If i l es on Ho t f i l e( an dh al fo fal ld ownl oa ded f i l es )i n Febr uar y 2O11. Att h ev er y
I east , t hi s shows t hata hi gh num berofHot f i l e user sI i kel y engaged i ni nf r i ngem ent- t he

v as tma j or i t yo fHot f i l e' st op a f f i l i a t es, an d wel l o ver20, 00 0o fi t su s er s- an d wer el i k el y
r esponsi bl e f or a subst ant i al am ount of i nf r i ngem ent . I ndeed, t he St udi os have i dent i f i ed over 900, 000 f i l es cont ai ni ng t hei r own wor k st hat wer e avai l abl ef or t he t aki ng. Thes e num ber s ar e consi st en twi t ht he dem ons t r at ed out com e of Hot f i l e' s pos t -

Com pl ai nt pol i cy changes, whi ch Hot f i l e asseds wer e ef f ect i ve i n com bat t i ng i nf r i ngem entand r esul t ed i nt he t er mi nat i on ofaf f i l i at es and user s,del et i on off i l es,and
a subs t ant i al dr op i nr evenue.

The Cour t can al so concl ude t hat Hot f i l e became aw ar e of t he gener alf ac t of i nf r i ngem ent- al t hough possi bl y noti t s scal e - atl eastwhen i tr ecei ved DM CA not i c es t hr ough i t s agent and when i t was sued ort hr eat ened wi t h sui t by copyr i ght hol der s.

Docum ent s pr oduced i n di scover y suggestt hatHot f i l e was awar ei twas becom i ng ' ' t he
f l agshi p ofnonl i censed cont ent i ' ' t hati fi thad exam i ned t he f i l es on i t s syst em ,i twoul d

have known of t he i nf r i ngi ng act i vi t y' , and t hat i t was doi ng busi ness wi t ht hose i t
suspect ed wer ei nf r i nger sI i ke t he af f i l i at e Pl anet suzy. Hot f i l e pr ovi ded t he m eans of

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i nf r i ngement ,i ' t cr eat ed and cur r ent l y m ai nt ai ns t he Ho/i l e websi t e, whi ch Hoii l e' s
m em ber s ac t ual l y use t oi nf r i nge. User s even s t or et he i nf r i ngi ng cont enton Hot f i l e' s own ser ver s, i n cont r ast t o decent r al i zed peer t opeer net wor ks, i n w hi ch t he i nf or m at i on r esi des on user s'com put er s. Fi nal l y,t her e i s som e evi dence suggest i ve of a del i ber at e desi gn t of aci l i t at e

i nf r i ngement . Hot f i l ei s del i ber at el y m odel ed af t er net wor ks t hatwer e subsequent l y

s ub j ec tt o ch al l eng es o fi n f r i n gemen t ;i t si n c en t i v es t r u c t u r er e war d sI ar g e an df r equen t
f i l e downl oads' ,i t pays mem ber st hr ough an af f i l i at e pr ogr am ; and i tr el i es on t he popul ar i t y ofcont en tt o dr i ve gr ow t h,even i m pl or i ng user st o postu i nt er es t i ng' 'I i nks and
m edi af i l es. The f actt hat i t act ual l y pays i nf r i nger sf ort hi s act i vi t yi s,as t he S' t udi os

ar gue i n br i ef i ng,' ' si m pl y unpr ecedent ed. ' Hot f i l e al so pr ovi des t echni calassi st anc et o
t hose w ho i nf r i nge,b0t h by ans wer i ng speci f i c ques t i ons f r om user s abou tdownl oadi ng m edi a and by pr ovi di ng t ut or i al st hatr ef er ence copyr i ght ed wor k s. And,despi t e havi ng

t he mean st oi mpl emen tc oun t er p i r ac yt ec hn ol ogi es and t ot ar g et i n f r i n gemel n t( a s demon s t r a t ed b y Ho t f i l e' s ac t i on si mmedi a t el ya f t ert h e Comp l ai n twa sf i l e d) ,Hot f i l e di d
not t ake any m eani ngf ulact i on t o cudai li nf r i ngem ent . M or eover ,i t di d not have an ef f ec t i ve pol i cy t ot er mi nat e bl at ant ,r epeati nf r i ngem ent ,whi ch const i t ut ed a subst ant i al am ount of t he t ot al i nf r i ngemen t , unt i l Febr uar y 2O11. Based on t he t ot al i t y of t he evi dence,t he Coud concl udes t hat Hot f i l e was success f uli nI ar ge pad because i tdi d

notcont r oli nf r i ngem entact i vi t y on i t s syst em .
Nonet hel ess,t he Coud dr aws di st i nct i ons bet ween t hi s case and t he case I aw

r ec i t ed abo v ei n whi ch c ouds d et er mi n ed t h atj u dgmen ton t h e qu es t i on o fs e c ond ar y
I i abi l i t y was pr oper . Fori nst ance,despi t e an i ncr ease i n usert r af f i c,t he St udi os have

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dshar e,act ual l y w as a pi r at e net wor k nor show n nei t her t hat Hot f i l e' si nspi r at i on,Rapi st o sat i sf y a known sour ce of dem and f or t hat Hot f i l et ar get ed Rapi dshar e' s user he si t uat i on i n cases f i ndi ng I i abi l i t yf or net wor ks copyr i ght i nf r i ngem ent , as was t

n deed, as shown by t h at t em p t i ng t o becom e t he ne xt Naps t er . I

em ai l ,

Hot f i l e appar en t l y vi ewed t he mi gr at i on o fRapi dshar e us er s as a u bad t hi n g. '( Yeh Dec l .Ex.53 ( DE 288 58 ( f i l ed unders eal l ;DE 3241 1) . ) Mor eov er ,Hot f i l e di d not
pr om o t e an y ofi t sf i l es orenabl e a 5l e sear c hf unc t i on,bu ti ns t ead r el i ed on t hi r dpar t y

af f i l i at es t ha t wer e r es pons i bl ef or pr omot i ng ( and es sen t i al l y mak i n g avai l abl e)
i nf r i ngi ng cont ent . AI Ii nf r i ngi ng act i vi t yt hus t ook pl ace bet ween upl oadi ng user s,

downl oadi ng us er s and af f i l i at es ( and not Hot f i l e) . Addi t i on al l y, t he s ys t em has
noni n f r i n gi ng us es i gnor ed i nt h e St u di os'f ocus on downl oadi ng ac t i vi t y,su ch as t he
di st r i but i on of unl i censed m at er i ai s. And Hot f i l e event ual l y devel oped a not i ce and

t akedown syst em and,overt i m e,i m pl em ent ed t echnoi ogy t o com bati nf r i ngi ng user s. Hot f i l e' s gener al know l edge of i nf r i ngem ent ,even i fr am pant ,i si nsuf f i ci ent by i t sel ft o suppod I i abi l i t y. The St udi os have notpr of f er ed an expr ess st at em entby Hot t i l e i ndi cat i ng i t s i nt ent i on t o f ost er copyr i ght i nf r i ngem ent ,t hat i s. cl ear l y voi ci ng an

ob j ec t i v e of en cour agi ng i n f r i ngemen t . No t on e doc um en ts hows a bu si nes s pl an
cont em pl at i ng i nf r i ngi ng uses or an under st andi ng t hat Hot f i l e was act ual l y assi st i ng

us er s( i ndi v i dual l y or as a whol e) t o commi ti n f r i ngemen t . Hot f i l e had no di r ec t
i nvol vement i nt he ac t s of i n f r i ngement ( as woul db et he ca se i fi t s empl oyees had

pos t ed t he St udi os' copyr i ght ed c ont ent ) . Unl i k e Li me Gr ou p, t her e wer e no

i ons i der at i ons ( and r ej ect i ons )o f coun t er pi r ac y so f t war e, i n t er nalc ommuni c at i ons
acknowl edgi ng t h ei l l egalnat ar eo fsp ec i f i c net wor k ac t i v i t y ,orpr opo sal st ol egi t i mi ze

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useract i vi t y. Unl i ke Gr okst er ,t he i nt entt oi nf r i nge i s not' ' unm i st akeabl e' 'such t hati t

can be sai dt o be cent r alt ot he busi ness modeland i ngr ai ned i nt he pl at f or m' s desi gn. I ndeed,Hot f i l e has,atI east ,a pl ausi bl e al t er nat i ve desi gn m odeli nt he f or m ofper sonal
dat as t or age.2 3 Al t hough som e evi dence shows t hat Hot f i l e mi ght have been on not i ce t hat

speci f i c act s ofi nf r i ngem entwer e af oot ,t he evi dence does notdem ons t r at et hatHot f i l e knew f orcedai nt hatt he uses wer ei l l egalort hatHot f i l ei nduced t he i nf r i ngi ng use. For exam pl e,t he St udi os assed t hat user s put Hot f i l e on not i ce t hatt hey wer e pur chasi ng pr em i um account sS l speci f i cal l yt o downl oad copyr i ght ed wor ks. ' ' But t he docum ent suppodi ng t hi s assedi on i s an em ai lf r om a pr ospect i ve usert o a Hot f i l e em ai l addr ess

s t at i n gt h at h e' d wi s hl ed jt o si gn up t o Ho t f i l et o do wn l oad' 'ei g htl d Eboo k s ' 'o f ol der no v el si n cl u di ng Di c k en s' s A Ch r i s t mas Ca r ol .( Yeh Dec l .Ex .66 ( DE 3 241 2 ) . )l ti s
pl ausi bl et hata ser vi ce pr ovi der ,f or ei gn ordom es t i c,m i ghtbel i eve t hata wor kf r om a

1 9t hc en t ur y Engl i s h wr i t eri s no I on gers ub j ec tt oc o py r i ghtpr ot ec t i on. Th e doc u men t
shows no r esponse f r om Hot f i l e endor si ng an i l l egaluse,and not hi ng aboutt he r eques t
suggest st hatt he user ' s downl oads woul d be bl at ant l yi nf r i ngi ng. The St udi os al so al l ege t hat Hot f i l e' d r epeat edl y pr ovi ded t echni calassi st ance t o

u s er st h e yk ne w wer es eek i n gt o do wn l oa d( i n f r i n gi n g)c on t en t , 's u ch a sb y an s wer i ng us erqu es t i on swh en t h el i nk ' s URL was ap par entt o Ho t f i l e.( Ho t f i l ec oul ds ee t h e URL
pat h oft he I astf i l e downl oaded i n ever y com m uni cat i on ) But Hot f i l e poi nt s out t hati t
.

had no way of knowi ng w het hert he user I acked per mi ssi on t o shar et he f i l e,whet her

2 3

Based on dat a,Dr . Boyl e concl uded t hat t her e wer e subst ant i al noni nf r i ngi ng uses i nt he f or m ofopen sour ce sof t war e and m ovi e shar i ng,f ai ruse downi oads, st or age,and m onet i zi ng wor ks ow ned by cr eat or st hr ough t he af f i l i at e pr ogr am .
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t he f i l e cont ai ned whatt he t i t l ei ndi cat ed,orwhet hert he wor k was ac t ual l y pr ot ect ed by copyr i ght . I ndeed,t he evi dence shows t hat when user si ndi cat ed t o Hot f i l et hatt hey wer e accessi ng padi cul arcont ent ,t hey di d not hi ng t oc oncl usi vel yi nf or m Hot f i l e oft he

f ac t of i nf r i ngem ent . W hi l et he St udi os cont end t hat by r ewar di ng di st r i but i on of I ar ge

and po pul ardownl oa ds ( i nc on t r as tt op r omo t i n gs t or ag e) ,Hot f i l ek n ew t h at i twas
encour agi ng t he shar i ng of pr ot ect ed m usi c and m ovi es, no docum ent s show t hat

Hot f i l e equat ed popul arcont entwi t h pr ot ec t ed cont ent . Thus,w i t hr espectt o each exam pl er ai sed by t he St udi os,a num berofquest i ons

r emai nr egar di ng Hot f i l e' si n t en t( ac t ualor i m pu t ed) t of os t er i nf r i n gemen t an dt h e
capaci t yf orand sc ope of noni n f r i ngi ng uses ofHot f i l e' s syst em . Forexam pl e: l Nhen
Hot f i l e suppoded useract i vi t y orcom m uni cat ed wi t h af f i f i at es,di di tknow t hatt he f i l es act ual l y cont ai ned copyr i ght ed m at er i alas t he l i nk names ordi scussi on i ndi cat ed? Di d

Hot f i l e know t hatt he wor ks ar e cur r ent l y pr ot ec t ed by copyr i ght ? Di d Hot f i l e know w hen

u s er sl ac k ed per mi s si on t o down l oa dc edai n wor k s( whi ch woul dn otha v eb een t he
case i ft he wor ks wer e user owned and ' ' spaceshi f t ed, ' 'or i ft he f i l es wer e f r eel y-

I i c ens ed, as t h e mo s t popul ar do wnl oa ds on Ho t f i l ec ur r en t l y ar e) ? Wa s Hot f i l e
desi gned,and i si tpr i m ar i l y used,f ors t or age orf ordi st r i but i on? l ft he I at t er ,di d Hot f i l e i nt end t o pr omot e t he i nf r i ngem ent of copyr i ght ed wor k, or di di t m er el y pr ovi de a

ser vi ce t hat was ul t i m at el y used t o i nf r i nge? Di d Hot il e encour age t he shar i ng of
pr ot ect ed cont ent ,t her eby cr ossi ng t he t hr eshol df r om knowl edge of i nf r i ngement t o f ost er i ng i nf r i ngem ent ? I n sum ,unl i ke ot hercases wher et he evi dence ofi nt enti s m or e com pel l i ng,t he r ecor d her e does not pr ovi de an unequi vocalpi ct ur e. The f act t hat

t hes e qu es t i ons r emai n mak es su mmar yj u dgmen ti n app r opr i at e on t h et he or i es of
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i nducem entand cont r i but or yi nf r i ngem entl i abi l i t y. And whi l e Hot f i l e m ay hav e a di f f i cul t

t i me ex pl ai ni n gi t s' ' i nn oc enc e' 't oaj u r y , 2 4t he g en ui n ei s s ue sO fma t er i alf ac tmus tb e r es ol v ed b ya j u r yatt r i al .
2. Vi car i ous I i abi l i t y The St udi os nex t assed t hat Hot f i l e i s vi car i ousl yI i abl e f or t he ac t i ons of i t s user s. I n cont r astt o cont r i but or yI i abi l i t y,whi ch f ocuses on t he def endant ' s act i ons i n

enabl i ng i nf r i ngem ent ,' ' vi car i ous l i abi l i t yi s based on t he def endant ' sf ai l ur et o cause a

t hi r d pady t o st op i t s di r ect l yi nf r i ngi ng ac t i vi t i es. ' Am azon. com ,I nc. ,508 F. 3d at 11 75

( c i t at i on s om i t t ed) . Vi c ar i ous c op y r i gh tl i ab i l i t y ha s been d es cr i b ed a sa v ar i at i on oft h e
doct r i ne ofr espondeat super i or - a f or m of st r i ct l i abi l i t y pr em i sed on agency. See Fonov i sa, I nc. ,76 F. 3d at262.Thus,t he doc t r i ne does not r equi r e knowl edge of t he

i nf r i ngem entand m ay be appl i ed even w her et he def endanthas act ed i n good f ai t ht o
pr event i t / d2 5 vi car i ous i nf r i ngement has t wo el em ent s,occur r i ng I l when one pr of i t s
. .

f r om di r ecti nf r i ngementwhi l e decl i ni ng t o exer ci se a r i ghtt os t op orl i mi ti t . ' Luvdar t s,

068,1 0 71 ( 9 t h Ci r .2 01 3)( c i t i n g Gr ok s t er ,5 45 LLC B .A T& F M obi l i t y,LLC,710 F. 3d 1
2 4 Fori nst ance, a si n di c a t ed i nt h e DMCA c on t e x t ,Ho t f i l e' s mas t erf i l e pol i c y( whi ch

r emo v ed of f en di n gl i n k s bu tno tt he ac t u alf i l e)ma y mean t h a t Ho t f i l ek n e w of

padi cul ari nf r i ngi ng f i l es and f ai l ed t o barf udheraccess. Hot f i l e wi l lal so have t o expl ai n how ,i n each oft hese i ns t ances,i twas unawar e oft he of f endi ng nat ur e of t he act i vi t y, di d not i nt end t o cont r i but et oi t ,and coul d not ut i l i ze exi s t i ng t echnol ogy t o pr event i nf r i ngem ent . Fi nal l y, t o t he ext ent t hat t he St udi os pr em i se I i abi l i t y on t he f ac tt hatHoii l e pr ovi ded t he m echani sm f ori nf r i ngem ent , Hot f i l e has suggest ed Sony / 8ef am axt ype noni nf r i ngi ng uses f ort he syst em ,and t her ei s a quest i on ofwhet hert hose uses ar ed s subs t ant i al . ' '

2 5

Al t hough a def endant ' sI ack ofknowl edge m ay notaf f ec tl i abi l i t yi nt hi s cont ext ,i t does have i m pl i cat i ons f or t he m easur e of damages avai l abl e under t he

Copy r i gh tAc t . Se e1 7 U. S. C. j 50 4( c ) ( 2)( pr o vi di n gt ha ts t a t u t or ydama ges ma y r ange f r om $750 t o $30, 000 per vi ol at i on, but cappi ng wi l l f ul vi ol at i ons at $15 0, 0 00 p ervi ol a t i on l ; se ea l s o EMI Apr i lMu s i c ,I nc.v .W h i t e, 61 8 F. Sup p. 2d 497,507 ( E. D.Va.2009 )( c i t i n g Ne l s on sa l a bes ,I n c.? .Mor ni ngs i d e Dev . ,LLC, 28 4 F. 3 d5 05, 51 7( 4 t h Ci r . 200 2) ) .
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U. S.at93 0) ,A&M Rec . or d s ,I nc . ,239 F. 3d at1 0 22. Th e det er mi na t i on ofwhe t hera
def endant has t he capaci t yt o hal ti nf r i ngem ent i s det er mi ned by exam i ni ng t he
syst em ' sù ' cur r entar chi t ect ur e. ' Napsf er ,239 F. 3d at1024.

' di r ec tf i nanci albenef i t 'f r om Hot il e cont ends t hat t he St udi os cannot show a '
st hr ough subscr i pt i ons and i nf r i ngem ent because Hot f i l e char ges a f i xed r at et o user does notpr of i ti ncr em ent al l yf r om i nf r i ngement . Hot f i l e' s ar gum ent r es t s on an ear l y

I nt er net case, Rel i gi ous Technol ogy Cent er

Net com OnLi ne Comm uni cat i on

Ser v i c e s ,I nc . ,907 F.Supp.1 361 ( N. D.Cal .1 9 95) ,i n wh i c h a memb ero fa r el i gi ous
or gani zat i on post ed t he pl ai nt i f f s' copyr i ght ed wor ks t o a com put er bul l et i n boar d

ser vi ce. I d. at 1 36566. Those wor ks wer e aut om at i cal l y copi ed t ot he def endant ' s com put erby t he ser vi ce and t her eby m ade avai l abl et o user s who pai dt he def endanta f i xed subscr i pt i on f ee. I d. at 1 36568. The coud concl uded t hat t he pl ai nt i f f s wer e unl i k el yt o pr evai lon t hei rvi car i ous l i abi l i t y cl ai m because t he l i nk bet ween i nf r i ngem ent and r evenue was notsuf f i ci ent l y est abl i shed. I d.at137677. Not abl y, however rt he Net com coud di d not r ul et hat a f i xed f ee coul d never pr ovi de a di r ectbenef i tbasi sf orvi car i ous l i abi l i t y. I nst ead,t he cour tobser ved t hatt he

pl ai n t i f f sf ai l ed t o sh o wt h att h e pol i c ya ti s s ue enh anc ed d l t h ev al ue o f( def end an t ' s )

s er v i c e st os ub sc r i b er s or a t t r ac t l edl n ew s ub s cr i ber s, ' 'i nl i gh to ft h ef a c tt h att h e
def endantwas m er el y an ent i t y pr ovi di ng I nt er netacc ess t o user s. I d.at1377. I ndeed,
t he onl y evi dence ofsuch a I i nk consi s t ed ofa decl ar at i on f r om pl ai nt i f f s' counsel st at i ng

t h att he de f en dan twa sc on c er ne di twoul dI os e bu s i n es si fan i n j un c t i on wer et ob e
gr ant ed on t he i nf r i ngem entcl ai ms.
The coud f ound such evi denc ei nsuli ci entt o

show t he t ype off i nanci al t i er equi r ed. 1 d.

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i abi l i t y wher et he f i nanci albenef i twas By cont r ast ,ot hercouds have per mi t t ed l
even m or e at t enuat ed t han her e. I n Ar i st a Recor ds LLC v.Usenet . com , I nc. ,633 F.

Supp.2d 1 2 4( S. D. N. Y.2009 ) ,t h ec ou dr e j ec t ed an ar gu men tt h atc au s at i on wa s no t
es t abl i s he dS ' bec au s e( t h e de f en dan t s )ar e pai d on a p er v ol u me,no tp er do wnl o ad,
basi s and because i nf r i ngi ng m usi c acc ount sf or l ess t han 1% of t he newsgr oups

avai l abl e on t hei rser vi ce. ' 'I d.at 157. Li kewi se,i nt he Ni nt h Ci r cui t ' s Napst erdeci si on,
egi st r at i ons - due t ot he i ncr easi ng qual i t y an i ncr ease i n user base - i . e. ,m or e user r

hat t he def endant sf i nanci al l y benef i t t ed f r om and quant i t y of avai l abl e m usi c m eant t i nf r i ngem ent such t hat t hey wer e I i abl e. 239 F. 3 da t1 0 23 ( quo t i n gl o wer c oud

d eci s i on ) .
The Napst er case posi t st hat onl y a causalr el at i onshi p bet ween i nf r i ngem ent and pr of i tm ustbe est abl i shed I l r egar dl ess ofhow subst ant i alt he benef i ti si n pr opodi on

t o a def endant ' s over al lpr of i t s. ' ' El l i son v,Rober t son,357 F, 3d 1072,1079 ( 9t h Ci r .

200 4) .I no t h erwor d s,l l t h el a wi sc l eart h att oc on s t i t u t e a di r ec tf i nan c i alb en ef i t , t h e
' dr aw 'ofi nf r i ngem entneed notbe t he pr i m ar y,orev en si gni f i cant ,dr aw - r at her ,i tonl y need be ' a'dr aw. ' ' Usenetcom ,l nc. ,633 F.Supp.2d at157. As one obser v ernot ed

a f t era r e vi ew ofman y oft h es ec as es ,' l a l tpr es en t , t he domi nan tv i e wi st ha tan yf or
pr of i t ent er pr i se coul d be f ound vi car i ousl yI i abl ef or copyr i ght i nf r i ngem ent however r em ot e, unquant i f i abl e, and uni dent i f i abl e t he benef i t r ec ei ves f r om c opyr i ght

i nf r i ngem ent m ay be. ' ' Cr ai g A.Gr ossm an,Fr om Sony t o Gr okst er ,t he Fai l ur e oft he

Copyr i ghtDoct r i nes ofCont r i but or yI nf r i ngem entand Vi car i ous Li abi l i t yt o Resol v et he
> ar bet ween Cont ent and Dest r uct i ve Technol ogi es, 53 Buf f . L. Rev. 1 41, 23031

( 2005) .
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The Cour t has al r eady concl uded t hat ques t i ons r em ai nr egar di ng whet hert he f i nanci albenef i t Hot f i l er ecei ved and t he desi gn of i t s busi ness m odelar e su f f i ci entt o i m put ei nt ent t oi nduce copyr i ght i nf r i ngem entatt hi s st age Butt he vi car i ous I i abi l i t y
.

st andar dr equi r es nei t hert hata def endanthave knowl edge oft he ac t s of i nf r i ngem ent nort hat t he def endant r ecei ve subst ant i alf i nanci albenef i tf r om i nf r i ngem ent Hot f i l e
.

concedes t hati nf r i ngem entdi d occuron i t ss yst em and, whi l ei tar gues t hati t s suppor t f ori nf r i ngementw oul d not have made busi ness sense, i tacknowl edges t hati nf r i ngi ng f i l es dr ove som e am ountofsal es t o Hot f i l e,as show n by t he Zebr ak cl assi f i cat i ons and W at er m an cal cul at i ons. The i nf r i ngement sal es connec t i on i s al so i ndi cat ed by t he

dr am at i c dr op i n Hot f i l e' s i ncome af t er t he Com pl ai nt was f i l ed and af t er Hot f i l e

i m pl ement ed i t st hr eest r i kes pol i cy and t echnol ogi est of er r etouti nf r i nger s. ( See,e. g. ,

Yeh Decl .Ex. 70 ( DE 288 8 2( f i l ed u nd ers eal l ;DE 32 41 3) . ) Ho t f i l e may c on t en dt h at
i nf r i ngem ent was not cent r al t o i t s success, but i ti s undeni abl et hat i tf i nanci al l y

ben ef i t t ed f r om i tb ya t t r ac t i ng s ome u s er s . Th i si s su f f i ci en tt os ub j ec t Hot f i l et o
vi car i ous I i abi l i t y undert he f i r stpr ong oft he anal ysi s.

As f ort he second pr ong - t he r i ghtt o cont r oluserconduc tand f ai l ur et o do so Hot f i l e cont ends t hatt her ei sat r i abl ei ssue because Hot f i l e' s cont ent neut r alappr oach

m eantt hatHot f i l e coul d notdet er mi ne whi ch f i l es wer ei nf r i ngi ng,t her eby depr i vi ng i tof
t he abi l i t yt o cont r olt he i nf r i ngem ent . However ,a r eadi ng oft he comm on I aw st andar d suggest s t hat couds have vi ewed t hi s el ement expansi vel y, f i ndi ng t hat ser vi ce

pr ovi der s have t he capaci t yt o cont r olt he act i vi t i es of t hei r user s si m pl y by vi due of
pr ovi di ng t he m eans t o com m i tdi r ec ti n f r i ngem ent . See,e. g. ,Ger shwi n Publ ' g Cor p.v.

Co l u mbi a Ar t i st s Mgmt . ,I nc . , 443 F. 2d 11 59,11 73 ( 2d Ci r .1 971 ) , . Pol yg r am I nt ' l Pu bl ' g
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I nc .v . Nev ad a gl G,I nc . ,85 5 F. Sup p.1 31 4,1 32 8( D. Mas s .1 99 4)( r e vi ewi n gc as el a w,
quot i ng t he I egi sl at i ve hi s t or y oft he Copyr i ghtAc t ,and concl udi ng t hata def endanthas
S s cont r ol ' 'i ft hey l ' ei t heract i vel y oper at e orsuper vi se t he oper at i on oft he pl ac e wher ei n

t h e per f or manc es o cc u r , orc on t r ol t he c on t en to ft h ei n f r i n gi n g pr ogr amN l . z 6
For exam pl e,i n Usenet . com ,t he def endant s m ai nt ai ned onl i ne bul l et i n boar ds d dow nl oad copyr i ght ed sound r ecor di ngs. f r om whi c hu s er s( wi t ha s ub s cr i p t i on )coul f i ci en t evi dence oft he r i ght t o con t r ol ,t he cour t 633 F.Supp.2d at 130131. As suf not ed t hat t he def endant s had a pol i cy t hat pr ohi bi t ed t he shar i ng of copyr i ght ed

er ser ver s t hat st or ed and t r ansm i t t ed user or i gi nat ed cont ent ; m ai nt ai ned com put
cont ent ;possessed t he abi l i t yt of i l t erorbj oc k cont ent ,i ncl udi ng i nf r i ngi ng cont ent ;and l d att i m es,exer ci sed t hei rr i ghtand abi l i t yt or es t r i c t ,suspend,ort er mi nat e subscr i ber s, ' ' such as by suspendi ng account s ofspam m er s,l i mi t i ng t he act i vi t y oft hose who used a di spr opodi onat e am ount of r esour ces, and r est r i ct i ng dow nl oads of por nogr aphi c m at er i al .I d.at131,157. And i nt he swap m eetcase,al bei ta nonl nt er netcont ext , t he si t e oper at or coul d be hel d vi car i ousl yI i abl e because i tf ' pat r of l ed t he pr em i ses, ' '

2 6

har bort hose who d s r ecei ve a f i nanci albenef i tdi r ec t l y at t r i but abl et ot he i nf r i ngi ng act i vi t y,i n a case i n w hi ch t he ser vi ce pr ovi derhas t he r i ghtand abi l i t yt o cont r ol

r om saf e I ti si mp odan tt on o t et ha tSec t i on 51 2( c ) ( 1 ) ( B)o ft h e DMCA ex c l u desf

su ch ac t i vi t y. ' '1 7 U. S. C.j 51 2( c ) ( 1 ) ( B) . Al t h ou gh p hr a s ed i n a si mi l arway t o

t he com m on I aw vi car i ous I i abi l i t ys t andar d,couds have r ead i ti nt he cont extof ot herpodi ons oft he DM CA t o notf or ecl ose pr ot ec t i on f orser vi ce pr ovi der st hat

woul d be v i c ar i ous l yl i abl ef oru s er s 'i n f r i n gi ng a c t i vi t y( wi t h out' d so met hi n g mor e
t han t he abi l i t yt o r em ove or bl ock access t o m at er i al s pos t ed on a ser vi ce

Thi s not onl y dem onst r at es t he br eadt h of each pr ong of t he com m on I aw doc t r i ne,butal so i ndi cat es t hatt he DM CA pr ecedentHot f i l er el i es on i ni t s br i ef i si nappl i cabl et ot he di scussi on her e. See Capi t olRecor ds,I nc. v.Mp3t unes,

pr o v i der ' s we bs i t e' ' ) . Vi a c om, 6 76 F. 3d a t3 8 ( qu o t a t i on omi t t edl ; UMG Rec o r di ngs ,I nc .v .She / l erCa pi t al Par t ner sL LC, 71 8 F. 3 d1 00 6( 9t h Ci r .201 3 ) .

LLC,No.0 7 Ci v.9931 ( W HP) ,201 3WL 1 987 225,at* 1 0( S. D. N. Y.May 1 4, 201 3) .
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' ' cont r ol l ed t he acc ess of cus t om er st ot he swap m eet ar ea, ' 'and ' I had t he r i ght t o
t er mi nat e vendor sf orany r eason w hat soeverand t hr ough t hathad t he abi l i t yt oc ont r ol t he act i vi t i es ofvendor s on t he pr em i ses. ' ' Fonov i sa,76 F. 3d at262.

Beyond t he r i ghtt o excl ude,t he abi l i t yt o cont r olm ust be r ealand pr ac t i cal .I n
Per f ect 1 0 v. Am azon. com , I nc. ,f or i nst anc e, G oogl e al l owed user st o sear ch f or

i mag es ( i nc l u di n gi n f r i n gi n gi mag es )on o t h er s 'webs i t es,bu tc ou l dn o tp r e ven tt ho s e
websi t es f r om pos t i ng i nf r i ngi ng cont ent and di d not possess i m ager ecogni t i on t echnol ogy t hat coul d pr eci sel y bl ock i t s user s'access t ot hose i m ages. 508 F, 3d at

1174. The coud st at ed t hatt he al l eged of f enderm us thave ' d bot ha I egalr i ghtt o st op or
I i mi tt he di r ect l yi nf r i ngi ng conduc t ,as wel las t he pr act i calabi l i t yt o do so. ' 'I d.at 1175.

Thus,Googl e was notvi car i ousl yl i abl e because i tcoul d notcont r olt he act i vi t i es oft he

di r ec ti n f r i n ger s( al t h ough i tc oul dh av e be en c on t r i bu t or i l yI i abl et ot h ee x t en ti t mat er i al l ya ss i s t e dt h em) .I d. at11 7 475. An di nL uv da r t s ,LLC,t h e Ni n t h Ci r c ui tr ul e d
t hat m obi l e wi r el ess car r i er s coul d not be hel d vi car i ousl yI i abl ef or t he act s of t hei r

subscr i ber s w ho al l egedl y shar ed access t o pl ai nt i f f s'pr ot ect ed wor ks. 71O F 3d at
107172. Even t hough t he i n f r i ngem ent occur r ed overt he ser vi ce net wor k st hat t he

def endant sr an,t he def endant s had no way ofsuper vi si ng useract i vi t y ori m pl em ent i ng a syst em t o pr eventi nf r i ngem ent .
The anal ysi s her e,based on pr ecedent ,i s st r ai ght f or war d. Hot f i l e cont r ol st he

m eans of i nf r i ngem entby am ong ot hert hi ngs m andat i ng user r egi st r at i on and hos t i ng
t he i nf r i ngi ng m at er i al s on i t s own ser v er s. CL Am azon. com , I nc. ,508 F. 3d at 1174

( di s t i n gu i s hi n g Na psf e r ,239 F. 3d a t1 0 232 4) . Mor eov er ,Ho t f i l eh as a s t a t e d pol i c y
t h at per mi t si tt oc on t r olus er ac t i v i t y( an d,as i n Fo nov i s a,t oe xc l u de us er s ) an d
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m ai nt ai ns t hati thas exer ci sed t hatcont r oli n pol i ci ng cont ent . Hot f i l e has al so adopt ed t echnol ogy t hat i t cl ai ms i s ef f ect i ve i nf i l t er i ng and t ar get i ng i nf r i ngi ng wor ks. These act i ons, w hi ch benef i tHot f i l ei n an assessm entofdi r ectI i abi l i t y,bel i e Hot f i l e' s ar gument t hati tI acks cont r olbecause i thas no s ear ch f unct i on and no way t oi dent i f y orr emove ti s al so cl eart hat pr i ort ot he f i l i ng oft he Com pl ai nt ,Hot f i l ef ai l ed t o i nf r i ngi ng f i l es. l

pr oper l y exer ci se i t s cont r oli nl i ghtoft he num berofuser s w ho wer e bl at ant l yi nf r i ngi ng
and t he est i m at es oft he St udi os'expeds r egar di ng t he pr eval enc e ofpr ot ec t ed cont ent di ngl y,on t hi sr ecor d,t he St udi os have m ade a case f or avai l abl ef ordownl oad. Accor

vi c ar i ou sl i abi l i t y ,an d su mmar yj u dgmen ti sen t er ed i nt hei rf a vor .
C. Ant on Ti t ov' sI ndi vi dualLi abi l i t y

I n addi t i on t ot he cor por at e ent i t y,Hot f i l e Cor p. ,t he St udi os have sued Ti t ov i n

hi si ndi vi dualcapaci t y,seeki ng t o ext end any dam ages t hat m ay be awar ded agai nst

Ho ii l e. Ti t ov h as f i l ed a s ep ar a t e mo t i o nf ors ummar yj udg men ton t h ei s s u eo f hi s
l i abi l i t y. I nt hi s Ci r cui t ,' ' a cor por at e of f i c erw ho di r ec t s,cont r ol s,r at i f i es,padi ci pat es i n, or i st he m ovi ng f or ce behi nd t he i n f r i ngi ng ac t i vi t y, i s per sonal l y l i abl ef or such

i nf r i ngement . ' ' Babbi tEl ecs. ,I nc.v.Dynascan Cor p. ,38 F. 3d 1161,1184 ( 11t h Ci r .

1 99 4) ( c i t a t i on omi t t ed l , Sout ' he r n Be l lT el . & Te l . Co.

As so c. T el . Di r e c t o r y

Publ i s her s ,75 6 F. 2d 8 01, 811 ( 11 t h Ci r .1 9 85 ) .W h i l e mu ch o ft hi s pr ec ede ntc on c er ns
cor por at i ons t hat di r ect l y vi ol at e ot her s'copyr i ght s,i ti s equal l y appl i cabl et o ent i t i es

I i abl ef ors ec ond ar yi n f r i n gemen t . See Us e net . c om , 63 3 F.Sup p. 2 da t15 85 9( h ol di ng
t hatdi r ec t orand sol e shar ehol dero f com pani es oper at i ng onl i ne bul l et i n boar ds w her e

i nf r i ngem ent occur r ed was l i abl e under t heor i es of di r ect and secondar yl i abi l i t yf or

c op y r i gh ti n f r i nge men t ) . Th es ec on dar yi n f r i n geme n tt h eor yf o cu s es on t h e ef f ec tt he

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i ndi vi dualhad on t h e deci si on t o commi ti n f r i ngemen tand l ook s bey on dt he cor por at e

f or m an d pr i nc i pl es ofl i mi t ed l i abi l i t y. See Babbi tEl ec s. ,l nc. ,38 F. 3d at1184 ( c i t at i on

omi t t ed) .
i abi l i t yt heor yi f he i s Al t er nat i vel y, a pef s on m ay be I i abl e un der a vi car i ous l nf r i ngi ng act i vi t y and benef i t sf r om i t , even i f he i s r esponsi bl ef or super vi si ng t he i ' i gnor ant oft he i nf r i ngem ent . ' ' Sout her n BeI I ,75 6 F. 2d at81 1( c i t a t i ons omi t t edl ;see

al so Ger shwi n Pub' g Co. , 443F. 2dat11 62 CForexampi e,aper s onwho h aspr omot ed ori nduc edt he i nf r i ngi ngact so ft he per f or merh as b eenhel dj oi nt l yan d sev er al l yI i abl e
as a t vi car i ous' i nf r i n ger , even t hough he has no ac t u al k no wl edge t ha t copy r i ght

monopol yi sbei ngi mpai r ed. ' ' )Asc ouf t sh aver ec ogni zed,
por at e of f i cerm ay be hel d vi car i ousl yl i abl e undert he Copyr i ghtAct A cor

wh e n ;( 1 )t h eo f f i c e rp e r s o n a l l yp a r t i c i q a t e di nt h ea c t u al i n f r i n g eme n t , ' or
( 2)t he of f i c erder i v ed f i nanc i albenef l tf r om t he i n f r i ngi ng act i vi t i e s as ei t her a ma j or sh ar ehol der i nt h e cor por at i on,or t hr ough some ot h er
m eans such as r ecei vi ng a per cent age of t be r evenues f r om t he ad i vi t y

gi vi ng r i s et ot he i nf r i n gement ' : or( 3)t he of f i ceru sed t h ec or por at i on as an i ns t r umentt o car r y outa del l ber at ei n f r i ngemen tofcopy r i ght , .or( 4)t he
of f i c erwas t he dom i nanti n f l u enc ei nt he c om or at i on,and det er mi n ed t he
com bi nat i on oft he above cr i t er i a.

p ol i c i es whi ch r es ul t e di nt he i nf r i ngemen t ,or ( ' 5)on t he basi s ofs ome

Mat vi n Mus i c Co.k ' .8HC Lt d.P' s hi p,830 F.Supp.651,65455 ( D.Mas s.1 993)
( summar i zi ng c as eI aw)( quot at i on omi t t ed) .
Def endant s at t em pt t o mi ni mi ze Ti t ov' sr ol e,ar gui ng t hat he i s an ' ' engi neer , ' ' t ' t echnol ogi st, ' '' ' em pl oyee, ' or ' ' account ant v ' 'r at her t han a key of f i cer ,i nvol ved onl yi n

' d r out i ne' 'adm i ni s t r at i ve m at t er s;t hathe di d no t pr ov i de t h es t ar bup capi t alor c onc ei v e of t he i dea f orHo fi l e' , t hathe hol ds no s way overHot f i l e ei t heratt h et opl ev elorwi t h
r espectt oi t s dayt oday oper at i ons' ,and t hat '

Def en dant s'ar gum en tr es t s bot h on an as ser t i on t hatTi t ov
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di d not have per sonali n vol v em en ti nt he deci si ons gi vi ng r i s et ol i abi l i t y and t ha tt he
gr oup dynam i c and t he pr esence of m or e cul pabl e f i gur es

m ean t ha tTi t ov coul d noth av e had t h er equi si t e degr ee o fc on t r ol ov ert he
com pany' s deci si ons t o war r antI i abi l i t y.

Def en dan t si l l us t r at et hei rar gum en t by ci t i n g M oz i ngo v .Cor r ectM anuf ac t u r i ng

Co r po r at i on,752 F. 2d 168 ( 5t h Ci r .1 98 5) ,whi c hi nvol v ed a pr o duc t sI i abi l i t y cl ai m
agai nst a wor k pl at f or m m anuf act ur erand i t s pr esi dent . Ther e,t he pl ai nt i f fest abl i shed t hat t he pr oduct was def ect i ve at t r i al ,but t he di st r i ct coud di r ect ed a ver di ct on t he i ssue of t he pr esi dent ' s per sonalI i abi l i t y,appl yi ng a M i ssi ssi ppidoct r i ne t hatr equk r es t hatan of f i cer' di r ect l y par t i ci pat es i n oraut hor i zes t he com m i ssi on ofa t or t' 'l d.at171The evi dence showed t hat t he pr esi dent or gani zed and ow ned pr edecessor

com pani es t hat m anuf act ur ed t he def ect i ve pr oduct . / d. at 17273. Mor eover ,t he pr esi dent expr essed ' ' som e r eser vat i ons concer ni ng t he uni t ' s saf et y' ' dur i ng i t s devel opm ent - possi bl yt ouchi ng on t he nat ur e of t he def ect - and ' ' aut hor i zed t he pr oduct i on of a sl ngl e pr ot ot ype uni t . ' ' / d. at 173. Never t hel ess, t he di st r i ct coud char act er i zed hi si nvol vem ent i nt he devel opment and m anuf act ur i ng pr ocesses as
' t per i pher al ' and ci t ed hi sl ack of awar eness t hatt he pr oductwas puti nt o pr oduct i on.

I d.a t1 74. I na f f i r mi ng,t he Fi f t h Ci r cui tr eas oned t hat' ' g i l fE t h e pr esj dent )can be hel d
per sonal l yl i abl ei nt hi s case,any cor por at e of f i cerwho f ai l st o m ai nt ai n an al m ostt ot al

i gnor ance of t he pr oduct st he cor por at i on pr odt l ces m ay be per sonal l yI i abl ei nt he eventa def ect i ve pr oducti s pr oduced. ' 'l d.

2 7

Th e st u di os expl ai nt ha tt hey hav en ot br ou ght sui t agai ns tt hes e shar ehol der s because Hot f i l e pr of f er ed Ti t ov as i t s publ i cf ace and t he St udi os onl yr ecent l y di scover ed t hese shar ehol der s'i dent i t i es.
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However ,aut hor i t yi nvol vi ng copyr i ght i nf r i ngem enti s notas st r i ngenti n hol di ng

r el evant cor por at e pr i nci pal sI i abl e. For exam pl e, i n Quar t et M usi c 7. Ki ssi m m ee

Br oad c as t i ng ,I nc . ,795 F.Su pp.1 1 0O ( M. D.Fl a.1 99 2) ,a gr ou po fmus i c pu bl i s her s
br oughtsui tagai nsta r adi o st at i on and i t s pr esi dentf orbr oadcas t i ng m usi ci n a m anner

i nconsi st entwi t haI i censi ng agr eem ent .I d.at 1101. I ssui ng a deci si on af t era bench

t r i al ,t he c our tj ux t apo s ed t h e El ev en t h Ci r c ui t ' sd ec i s i on i n Sout he r n Bel lan dt wo
di s t r i ctcoud cases,War nerBr ot her sI nc.B.Lobst erPotI nc. ,582 F.Supp.478 ( N. D.

Ohi o1 9 84) , wh i c hi mpo s ed I i abi l i t ya gai n s ta pr es i den twh o ov er s a w ar es t aur ant wh er e
unaut hor i zed per f or m ances ofm usi c wer e hel d,and 8r oadcasfMusi c,I nc.v.Behul ak,

651 F.Sup p. 57, 61 ( M. D.Fl a.1 9 86) , wh i ch, by c on t r as t ,i mmuni z ed a c or p or a t eo f f i c er
who was m er el ya' s si l entpadner ' 'i nt he I ounge wher ei nf r i ngem entoccur r ed. Quar t et
M usi c,795 F.Supp.at110304. The coud concl uded t hatt he pr esi dentwas i i abl ef or copyr i ghti nf r i ngem entnot wi t hst andi ng hi sc or por at er ol e because ofhi s par t i ci pat i on i n t he ac t i vi t i es oft he busi ness and t he conductati ssue;he had been i nvol ved i nl i t i gat i on concer ni ng si mi l ar cl ai m s, hi s com pany had been gi ven not i ce of t he al l eged i nf r i ngement ,he r an t he r adi o st at i on' s oper at i ons,and he had t he r i ghtt o super vi s et he i nf r i ngi ng act i vi t y. I d.at11 04.
nvol ved a si ngl e owner wi t h excl usi ve cont r ol over t he W hi l e Quar t et M usi ci

i n f r i ngi ng a c t i vi t i es,on ej u dge i nt hi s di s t r i c th as obs er v ed t h a tç ç sout he r n Bel ldoe sn ot
r equi r e ul t i m at e aut hor i t y, nor does i tr equi r e onl y one per son t o have aut hor i t y. '

For ei gn I mpor t ed Pr ods. & Publ ' g, I nc. v.Gr upo I ndus.Hot el er o, S. A. ,No.0722066

CI V,200 8 W L 472 4495,at * 1 4( S. D.Fl a.Oc t .24,2008 ) . Nu mer ou so t h er c ouds
suppod t hatpr oposi t i on. See,e. g. , Col um bi a Pi ct ur es I ndus. ,I nc.v.Redd H or ne,I nc. ,

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749 F. 2d 1 54,1 60 ( 3d Ci r .1 984) ( af t i r mi n g or der i mposi ng I i abi l i t y agai ns tbot ht h e
pr esi dent and sol e shar ehol der ofa def endant ent i t y,as w el las hi s br ot her ,who was

not a s t ock hol der or of f i c er but gav et he i m pr ess i on t hat he was a pr i nci pal i nt he

bu si nes sv en t ur el ;Pi c kwi c k Mus i c Cor p.v .Rec or d Pr ods . ,I nc . ,292 F.Supp.39,41

( S, D, N. Y.1 968)( f i ndi ngI i abi l i t yf ort hr eedef endant swhof or med a nd r anacor por at i on,
al t hough t hey had di f f er ent r esponsi bi l i t i es f or r ecor di ng, edi t i ng, and sel l i ng an

i nf r i ngi ng r ecor d, bu t not t wo ot her s who had G p e#or m ed m er el y mi ni s t er i al o f f i c e

f unc t i ons f ) ,' Cor por a t e of f i cer s ha ve been h el dI i abl ef or t he c opyr i gh ti nf r i ngement
com m i t t ed by t hei rcor por at e ent i t yi n a var i et y ofsi t uat i ons. ' Bl endi ngwel lM usi c,I nc.b ' ,

Moor Law,I nc . ,61 2 F.Supp.474, 482 ( D.Del .1985)( p ar ent h et i cal l yci t i ngexampl es) .
By cont r ast ,Def endant s poi ntt o no pr ecedent suggest i ng t hata m ul t i t ude of cul pabl e act or s - and t hus,t he l ack ofa si ngl e' i cent r alf i gur e' '- i s det er mi nat i ve ofl i abi l i t y. M or eover , Def endant s'cont ent i on t hat t he padi cul ar f act s of t hi s case m ake i t i ncom par abl et o any ot heri s unper suasi ve,si nce t he hal l m ar ks ofpadi ci pat i on,cont r ol , and benef i tar e undeni abl y pr esenther e. Fi r st ,Ti t ov i s a hi ghr anki ng,cent r alf i gur e at Hot f i l e. He owns a st ake i nt he com pany near l y as I ar ge as i t s ot her
and r uns i ti n equalpar t ;

shar ehol der s

and gover n Hot f i l e by

c on sensus, I n hi sr ol e,Ti t ov has adv an ce d,r e j ec t ed,a gr eed u pon orf ai l ed t o bl oc k
ever y deci si on t hathas shaped t he com pany,i ncl udi ng t he ef f or t s Hot f i l et ookt oi dent i f y

and r em o ve i n f r i ngi ng c on t ent , ' i m pl em ent i n g an d event ual l y el i mi na t i ng t h e m ast er5l e
poi i cy, and deci di ng how t o r ewar d Hot f i l e' s af f i l i at es. Mor eover , Ti t ov

was i ndi s pen sabl ei nt he compan y' sf or mat i on,cr uci alt ot he
devel opm ent of i t s busi ness m odel , and cont i nues t o be i nvol ved i n i t s busi ness

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st r at egy. Ti t ov acknow l edges possessi ng powerofat t or ney f ort he com pany and act i ng
as i t s m anagerw hen aut hor i zed.

I n addi t i on, Ti t ov has per sonal l yh ad a hand i n ev er y as pec to ft he conduc t under pi nni ng t he St udi os't heor i es of l i abi l i t yi nt hi s cas e. For ex am pl e,a tt he out se t ,
Ti t ov wr ot et he pr ogr am m i ng code t hat r uns t he Hot f i l ei nt er f ace and enabl es di r ect

i nf r i nger st o upl oad and downl oad pr ot ec t ed wor ks. M or er ecent l y, h e under t ook a m anagem entr ol ei n whi c h he over sees c ont r ac t or s wor ki n gf orHot f i l e an d padi ci p at es i n m ai nt ai ni ng Hot f i l e' ss t or age and del i ver yt echnol ogy. Ti t ov al so has a si gni f i c ant i mp ac ti n hi s wor kf or Hot f i l e' sr el at ed en t i t i es. He i st h e sol e owner , m anager and
di r ect orof Lem ur i a,whi ch owns and m ai nt ai ns t he ser ver s on w hi ch t he i nf r i ngi ng f i l es

at i ss ue ar es t or ed, an d he i st he m an agi ng di r ec t or o f Hot f i l eL t d. ,whi c hc ol l ec t s
subscr i pt i on f ees f r om user s and pays af f i l i at es. Toget her ,t hese com pani es pr ovi de m echani sm s necessar yf or Hot f i l et o'col l ect i t sr evenue, f or i t s user st o access i t s ser vi ces,and f ort he ent i r e syst em t o sust ai n busi ness and gr ow. The St udi os have al so poi nt ed t o speci f i c evi dence showi ng Ti t ov' s act ual awar eness of i nf r i ngem enton Hot f i l e' s net wor k. Forexam pl e,he under st ood f r om hi s conver sat i ons w i t h t hat Hot f i l e acqui r ed user s mi gr at i ng f r om Rapi dshar e

w ben t hat net wor k was sued f or i nf r i ngem ent . He al so expr essed t he concer nt hat

Ho t f i l e w oul d b ec om e t h e ' ' f l agsh i p' 'f or n onl i c ens ed c on t ent an d was a par t yt o
comm uni cat i ons cl ai mi ng t hat cer t ai nf i l es wer ei nf r i ngi ng. Si gni f i cant l y,Ti t ov appear s

on near l y ev er y docum en tt hatt he Couf t cons i der e di n det er mi ni n gl i abi l i t y. Ti t ov al so pu ti n pl ace Hot f i l e' s DM CA agent , who r ecei v ed m i l l i ons ofi nf r i ngem en tnot i ces. Thus,

whi l et he Cour tac knowl edges t hatTi t ov may noth av e gone s of ar as t o per sonal l y

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engage i n act s ofdi r ec ti nf r i ngem ent ,and t hatany one of hi sf unct i ons m i ghtnotgi ve r i se t oI i abi l i t y on i t s own,t he t ot al i t y oft he ci r cum s t ances suppods I i abi l i t y. I n cont r ast
t o ot her c ases, hi sr ol e j s not per i pher al , hi sf unct i on i s not t hat of m er el y a si l ent

sh ar ehol deroror di n ar yempl oy ee, an d hi sdu t i es ar en o t j us tmi ni s t er i al .
The St udi os have shown suf f i ci ent f i nanci albenef i tand cont r olf or t he Coud t o t hr egar dt ot he f i r st concl ude t hat Ti t ov i sI i abl e under a vi car i ous I i abi l i t yt heor y. Vvi
he com pany ear ned r equi r em ent - f i nanci al benef i t- t he evi dence shows t hat as t

mone yf r om ne ws u bs c r i p t i on s( s ome p odi on o fwhi chwasat t r i bu t abl et ot h e av ai l abi l i t y

ofi n f r i n gi n g ma t er i al s ) ,s o di d Ti t ov . Ti t ov al s oi ns t r uc t ed emp f o y ees t ob an on eu s er ,
dem ons t r at i ng hi s abi l i t y t o bl ock or excl ude Hot f i l e' s cl i ent el e. And, as not ed
pr evi ousl y,t he r ecor d shows Ti t ov' si m pact i n det er mi ni ng Hot f i l e' s pol i ci es and hi s dom i nanti nf l uence on t he cor por at i on. To t he ext entt hatHot f i l e can be f ound I i abl e on any oft he t heor i es di scussed above,t he Cour tf i nds t hatTi t ov was a cr i t i calac t ori nt he under l yi ng oper at i ons. Thus,t her e ar e no di sput ed f ac t st hat pr ecl ude a f i ndi ng t hat Ti t ov i s vi car i ousl yI i abl ef ort he act s ofi nf r i ngem entoccur r i ng on Hot f i l e' s net wor k. I n af i nal ef f od t o avoi dI i abi l i t y,Def endant s cont end t hatTi t ov - a Russi an ci t i zen

wh or es i des i n Bul g ar i a- i sn o ts ub j ec tt op er s on al j u r i s di c t i on i n Fl or i da. Ti t o v has
advanced t hi s assedi on atl eastt wi ce i nt hi s case: as a def ense i n hi s Ans werand by

as k i n gt he St u di os n ott os er v e hi m whi l e he a t t end ed medi at i on i nt hi sj u r i s di c t i on.
However ,Ti t ov f ai l ed t o addr ess t he i ssue i nt he m ot i on t o di sm i ss he f i l ed on M ar ch 31,

201 1( DE 50) ,whi ch ch al l eng ed onl y wh et h ert h e Comp l ai n ts t a t ed a c l ai mf or r el i e f
un derFe der alRu l eo fCi v i lPr o c edur e1 2( b ) ( 6) . Feder a lRul eo fCi v i lPr oc edur e1 2( h )
pr ovi des t hata pady wai ves cedai n def ens es t hatcoul d have been r ai sed underRul e

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1 2( b)- su ch as I ack o fp er s on alj u r i s di c t i on - b yf ai l i n gt oi nt er po s et h em i nt h ef i r s t
pl eadi n g. Rul e1 2( h) i se xp l i ci t ,r equ i r es c ompl i anc e, an d me an st h a t Ti t o vh as
g. ,Bost on Tel ecom m s.Gr p. , pr oc e du r al l ywai v e dt he per son al j u r i s di c t i on i s su e. See,e.

I nc. v. Del oi t t e Touche Tohm at su,249 F.App' x 534, 537 ( 9 t h Ci r .200 7) ( r ev er s i n g

di s t r i c tc our t ' sf i n di n go fn on wai v ero fp er s on al j ur i s di c t i on wh er ec ouns el h ad n o ts e en
a copy oft he com pl ai nt ,moved t o di sm i ss f ori nsuf f i ci ency ofpr ocess,and st at ed t hat

h er e ser v ed t h er i gh tt of i l e asup pl emen t al mot i ont o di s mi s s ) .
M or eover ,a I ong I i t any of c ases est abl i shes t he com m on I aw pr i nci pl et hat a

pady wai ves such a def ense by appear i ng gener al l y and I i t i gat i ng t he m er i t s ofa cl ai m, as Ti t ov has done her e. See, e. g. ,I ns. Cor p. of I r el and; Lt d. v. Com pagni e des

Bau x i t e sd e Gui nee, 456 U. S. 69 4, 70 6( 1 98 2)( no t i n gt h at wh er ep er s onal j ur i s di c t i on i s
I acki ng, t he def endant has t he choi ce of i gnor i ng t he pr oceedi ngs and r ai si ng a col l at er alchal l enge i n enf or cement pr oceedi ngs or appear i ng speci f i cal l yt o chal l enge

p er s onaI j ur i s di c t i onl . z 8 Af t ers t u mbl i n gu pon a per s on alj ur i s di c t i on ch al l eng e bur i ed deep i nt h es ummar yj u d gmen t br i e f i n g,t h e Coud f i n ds n oi ndi c a t i on t ha t Ti t ov i s
2 8 I n Ger ber v Ri o r dan,649 F. 3d 51 4( 6t h Ci r .2011 ) ,f or e x ampl e,a pr os e
.

d ef en dan tf i l ed a mo t i on t o di smi s sf orI ac ko fp er s on al j ur i s di c t i on,whi c h was
deni ed f or pr ocedur alr easons. The def endant t hen obt ai ned an at t or ney who ent er ed an appear anc e,m oved t os t ay pendi ng ar bi t r at i on,sought t o vacat ea

d ef au l tj udg men tt ha t ha db een en t er ed, opp os e dar eque s tf or me di a t i on,
padi ci pat ed i n a case m anagementand pr et r i alconf er ence,soughtt o enf or ce a set t l em entagr eem ent ,and engaged i n di scover y. I d.at51819. Af t ernot i ng t he I ack of pr ecedent i n t he ar ea, t he coud consi der ed whet her f i l i ngs and

a ppear anc es t ha tar e di s t i nc tf r om j ur i s di c t i onalc hal l en ge s - su ch as an y t h i n g
t hatwoul dd ' cause t he coud t o go t o some ef f od t hatwoul d be was t ed i fper sonal

j u r i s di c t i on i sI a t erf ou nd I ac k i n g' ' - wai v e a per son al j u r i s di c t i on d ef ens e. I d.a t 519 ( ci t at i ons and quot at i on om i t t ed) . W hi l e some oft hose ac t i ons mi ghthave i n di c at e dt h a tt he pady di dn o ts ub mi tt ot h ec ou d' sj u r i s di c t i on or t h at t h e
def endantsoughtm er el yt o pos t pone t he case,t he f i l i ng ofa gener al appear ance

' const i t ut ed avol unt ar yacc ept ance oft he di st r i ctcoud' sj ur i sdi ct i on. ' '
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avoi di ng a def ense oft he sui ton t he m er i t s. To t he cont r ar y,i n asser t i ng def enses,
f i l i ng m ot i ons r el at ed t ot he r ecor d,and per sonal l y at t endi ng or alar gum ent ,Ti t ov has

s ub mi t t e dt o-h as i n v ok ed - t he j u r i s di c t i on o ft hi s Coud. Th e Cou df i n ds Ti t o v' s
cont ent i ons t hatt hi s was t he ' ' f i r stavai l abl e oppoduni t y' 't or ai se t he i ssue and t hatt he St udi os l ' have wai ved any wai ver ar gum ent ' 'di si ngenuous. I f any i ssue coul d be
deem ed wai ved,t hi si s and he has.

D.

Hot f i l e' s Count er cl ai m

And f i nal l y, t he Cour tt ur ns t o Hot f i l e' s coun t er cl ai m agai ns t Pl ai nt i f fW ar ner .

Not i ces ofi nf r i ngem entar e a pr om i nentf eat ur e oft he DM CA. The st at ut e spel l s outsi x
el em ent sf ora not i ce t o be ef f ect i ve,speci f i es r equi r em ent st he s er vi ce pr ovi derm ust m eetso t hati tm ay pr oper l yr ecei ve not i ce,r equi r es ser vi c e pr ovi der st o ac ton r ecei pt

of not i ces such as by r em ovi ng i nf r i ngi ng user s'cont ent ,and pr ovi des a pr ocedur ef or
chal l engi ng copyr i ght ow ner s' desi gnat i ons. Pr ovi di ng t he I egal basi sf or Hot f i l e' s

c oun t er c l ai m,Sec t i on 51 2( 9s e t s ou ta pr i v a t ec a us eo fa c t i onf o ran y on e wh oi si n j ur ed
by a m at er i alr epr esent at i on t hatcont entorac t i vi t yi si nf r i ngi ng w hen i ti s not :
hi s sect i on . . Any per son who knowi ngl y m at er i al l ymi sr epr esent s undert t hatm at er i aloract i vi t yi si nf r i ngi ng shal lbe l i abl ef orany dam ages, i ncl udi ng cost s and at t or neys'f ees,i ncur r ed by t he al l eged i nf r i nger ,by any copyr i ght ow ner or copyr i ght ow ner ' s aut hor i zed I i censee,or by a

s er v i c e pr o vi der , wh oi si n j ur e db ys uc h mi s r epr es en t at i on, ast h er es ul to f
t he ser vi ce pr ovi der r el yi ng upon such m i sr epr esent at i on i nr em ovi ng or di sabl i ng access t ot he m at er i alor act i vi t y cl ai m ed t o be i n f r i ngi ng,or i n r epl aci ng t he r emoved m at er i alorceasi ng t o di sabl e access t oi t .

1 7 U. S. C. j 51 2( 9. Sec t i on 51 2( c) ,deal i n g wi t ht he c r ea t i on o f no t i c es,r e qu i r e st ha t no t i c es b e
ac c ompani ed b y' ' ( aJs t a t emen tt h att h ec o mpl ai ni ng pady ha sa g ood f ai t hb el i eft h at
use of t he m at er i ali nt he m anner com pl ai ned of i s not aut hor i zed by t he copyr i ght
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o wn er ,i t s agen t ,ort h el aw. ' '1 7 U. S. C.j 51 2( c ) ( 3) ( A) ( v ) . Non et h el es s,Sec t i on 51 24 9
does not i m pose l i abi l i t yf or i ssui ng a def ect i ve not i ce per se,onl yf or maki ng f al se

cl ai m s of i nf r i ngem ent . Accor di ng t ot he st at ut e' sI egi sl at i ve hi st or y, t he subsec t i on ' ' est abl i shes a r i ght of act i on agai nst any per son who knowi ngl y mi sr epr esent st hat
m at er i aloract i vi t yi si nf r i ngi ng' 'and ' ' i si nt ended t o det erknowi ngl yf al se al l egat i ons t o ser vi ce pr ovi der si nr ecogni t i on t hat such m i sr epr esent at i ons ar e det r i m ent alt or i ght s

hol d er s,s er v i c e,pr ov i d er s,an dl n t er ne tu s er s. ' ' S.Rep.No.1 05 1 90 ( 1 998 )a t50. I n
t hi sr egar d,Hot f i l e cl ai mst hatW ar nerhad ac t ualknowl edge t hatt he i dent i f i ed not i ces wer ef al se and asseds t hat i t was dam aged as a r esul t . W ar ner , conver sel y, has

mo ve df or s ummar yj u dgmen t on t h e gr oun dt h a t Ho ii l ec anno t mak e a su f f i c i en t
showi ng t o est abl i sh i t s cl ai m. Pr el i mi nar i l y, t he padi es, I i ke t he Coud, have gr appl ed wi t h sever al i ssues

su r r oun di ng en f or c emen to fSec t i on 51 2( 9, whi c hi s no twel lun der s t ood. See Gr ound

Zer o Mus eu m W or k s ho p? .Wi l s on,81 3 F.Sup p.2d 6 78,70 4( D.Md.2 011 )( ' d Th er ei s no ta gr e atde alo fc a s el a wi n t er pr et i n g( Sec t i on 51 2( 9) . ' ' ) ,UMG Rec * o r di n gs ,/ k 7 c .
Au gus t o, 558 F. Su pp. 2d 1 05 5,1 0 65 ( C. D. Cal . 20 08) , af f ' d on ot he rgr ou nds , 628 F. 3 d

11 75 ( 9 t h Ci r .201 1 )( n ot i n gI l un c eda i n t y' ' i nt he ar ea o fI a w) . Fori n s t an c e,b o t h si de s

r ec ogni z e t h at t h e s t at u t e r equi r es ac t u al ,s ub j ec t i v e k no wl edge of t h e f ac t of
noni nf r i ngem entatt he t i me t hata t akedown not i ce i s m ade,based upon t he t heor yt hat

one cannot know i ngl y mi sr epr esentwhat one does not under st and t o be f al se. See

Ros s iv .Mo t i o n Pi c t ur e As s' no fAm. ,I nc . ,391 F. 3 d1 000,1 00 405 ( 9 t h Ci r .200 4)

( h ol di ng t ha t t h e s t a t u t e t ' en c omp as s es a sub j ec t i v e, r a t h er t h an ob j ec t i v e

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( r eas onabl eness !s t andar d) . I ndeed,mi s t ak es,ev enl unr eas onabl e' ' mi s t ak es,donot nec es sar i l yc al l f orI i abi l i t y, sol ongast heyar ehon es t l ybel i ev ed./ d.( ci t i ng 1 7 U. S. C. j
51 2( 9) .
But Hot s l e ask s whet her cer t ai n' ' egr egi ous ' 'a t t r i bu t es ofW ar ner ' s sy st em t ha t

mi ghthave pr event ed i tf r om acqui dng sub j ec t i v e kn owl ed ge ( such as

un j us t l yi nsul a t eW ar nerf r om I i abi l i t yf orunr easonabl emi s t akes.Compar e,e. g. ,Onl i ne
Pol i c y Gr p.v.Di e bo l d,I nc. ,337 F.Supp.2d 1195,1 204 ( N. D.Cal .2004)( ' ' ' Kno wi ngl y'
m eans t hata pady ac t ual l yk new ,s houl d ha ve known i fi ta ct ed wi t hr eas onabl e car e or di l i gence, orwoul dh ave had n os ubst ant i al dou bthad i tb een ac t i ng i n good f ai t h, t h ati t

wa s maki ng mi sr epr esent at i ons. ' ' ) ,wi t h Cabel l ,201 0W L996007,a t* 4( ' e l Nl egl i gence i s

no tt he s t an dar df orI i abi l i t y un ders ec t i on 51 2( 9. ' ' ( ci t a t i onomi t t edl ) ,a nd Augus t o,5 58
F.Supp.2d a t1 065 ( hol di ng t hatal l egat i onst hatt he coun t er cl ai mde f endant' shoul d
have known bet t erdo no tcr eat e a genui ne i s sue o fmat er i alf ac t o ) . Hot f i l e al so ask s

2 9

e ci t ed mos to f t en i nt hi sar ea,t he own erofa webs i t e l n R os s i ch i st he cas 1 whi di r ect or y sued a m ovi e st udi ot r ade associ at i on t hatf ol l owed t he DM CA' S nct i ce endi ng t hat any r easonabl ei nvest i gat i on of hi s and t akedown pr ocedur es, cont hati tdi d notI i nk t oi nf r i ngi ng cont ent .I d.at1003. websi t e woul d have r eveal ed t

Cons i der i ng Sec t i on 512( 9' s ex pr ess I angu age and i nt er pr et i ve cas el aw deal i ng
wi t h a wi de var i et y of si mi l ar l yw or ded st at ut es,t he Ni n t h Ci r c ui t hel dt hat t he

st at ut eempl o ysanobj ec t i v es t andar d and r ul ed agai ns tt he pl ai n t i f f ./ d.at1 00405( s t at i ngt ha tt h es t at u t epr ot ec t s' ' pot ent i al vi ol at or sf r om s ubj ec t i vel yi mpr oper ac t i ons b y c opyr i ght owner s' ' ) . l ns t ead o f su bj ec t i v e kno wl edge o f
noni nf r i ngem en t , one of t he ass oci at i on' s m em ber s not i f i ed i t of possi bl e

i nf r i n gement s on t he sub j ec twebsi t e an dt he webs i t ei t s el fsugges l ed t o us er s t hatpr ot ec t ed movi es c oul d be down l oaded byj oi ni ng. / J. The cl earI ess onof Ross ii st ha t' ' asa pr er equi si t et oI i abi l i t yundersec t i on 512( 9,a d ef endantmus t
have act ualknowl edge t hati ti s m aki ng a m i sr epr esent at i on off act . ' ' Cabel lk ' .

Zi mmer man,No.09Ci v.10134( CM) , 2010W L996007,a t* 4( S. D. N. Y.Mar .1 2, 2010)( ci t at i on somi t t ed) .
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whet her

c an r ai se an i nf er ence t hatW ar ner i sl i abl ef orpos s es si ng gui l t y knowl edge or
suppor tI i abi l i t y undera wi l l f ulbl i ndness t heor y.

Some c ouds hav ec i t ed Sec t i on 51 2( c)t o sugg es tI i abi l i t ywh er e a par t ydi d not
devel op a ' i good f ai t h' 'or' ' su mci en t 'b asi st ob el i eve i nf r i ngementbef or e submi t t i ng a

no t i ce. Se e Dudni kov v .MGA Ent mA t ,I nc . , 41 0 F.Supp.2d 1 01 0,1 01 3( D. Col o.2005)

( hol di ng,i nt he cont exto fa Sect i on 51 2( 9 cl ai m,t hatt he def endant' ' was r equi r ed t o
show t hati thad a suf f i ci entbasi st of or mt he r equi r ed good f ai t h bel i eft hatt he pl ai nt i f f s'

auct i on i n f r i n ged on i t sr i ght s,an dt hati t s ac t i ons t her ef or ec om pl i ed wi t ht he not i ce and

t akedown r equi r ement s undert he DMCAI ;butsee Al J g&x 9 / o,558 F.Supp.2d at1 065 ( ' ' con gr ess i nc l uded an ex pr ess l yI i mi t ed c aus eo fac t i on f or i mpr operi n f r i ngen n en t
not i f i cat i ons, i m posi ng l i abi l i t y onl yi f a copyr i ght owner ' s not i f i cat i on i s a knowi ng

mi sr epr es en t a t i on. '( quo t at i on an dc i t at i ons omi t t edl l . 3 o On e coud,i n as er i es off our
deci si ons, w ent so f ar as t o hol d t hat pr i or t o subm i t t i ng a t akedown not i ce, t he copyr i ghthol derm ustconsi dernot onl y whet hert he m at er i alact ual î y bel ongs t oi t ,but w het her t he use of t he m at er i all acks an obvi ousl yI awf ulpur pose l i ke f ai r use. See

Le nz 7.Uni v er salMus i c Com . ,5 72 F.Supp.2d 115O ( N. D.Cal .2008) ( ' ' Lel 7 zJ ' )

( deny i n g mot i on t o di smi ss l ;Lenz v.Uni v er s alMus i c Cor p. ,No.C073 783 JFI I RS) ,
2008 W L 4790669 ( N. D.Cal .Oc t .28, 200 8)( ' Le? 7 z/ / ' ' )( den yi ng mot i on f ori nt er l oc ut or y

appeal l ;Lenz v .Uni ver s alMusi c Co@. ,No.C073783 JF,2010W L 702 46 6( N. D.Cal .
3 0 Ros s ii t sel f not ed t he f ac tt ha tt he def endan ti nt hat c as e had not ac t ual l y do w nl oaded t he f i l es,bu twenton t o descr i be ot hercom pel l i ng f ac t st hatI ed t he def endantt o bel i eve t hati nf r i ngem entofi t s wor ks was occur r i ng.
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Feb.25,2010)L u Lenz #/ ' ' )( gr ant i n g pl ai nt i f fsmot i onf orpar t i alsummar yj u dgmen ton
a f f i r ma t i v e def en ses l ;Lenz v.Uni v er salMus i c Cor p. ,No.5: 07c vO3783JF,2013 W L

271 673 ( N. D. Cal . Jan. 2 4, 2013) ( M l e nz I V' )( deny i ng mo t i ons f or su mmar y j udgmen t l . 3 l
Thus, i fW ar nerh ad s om e s i mi l art ype o fdut y, i tm i ghtf i nd i t s el fvul ner abl et o sui t bec aus e i t s pr en ot i c e r evi ew M or eo ver , even i fi t s met hodol ogy
w er er el i abl e,W ar ner was concer ned wi t h det er mi ni ng whet her i t owned t he wor ks

r a t hert han w het hert he use oft he wor k si nf r i nged on i t s cop yr i ght st o suppor ta pr oper

51 2( c)cl ai m. See So ny m et ama x, 464 U. S. at433( ' l Al nyone ... who mak esaf ai rus e oft he wor ki s notan i n f r i ngeroft he c opyr i gh twi t hr es pectt o su ch us e. ' ) ;Amar et t o
31

ephani eL en z,a usero ft he l n t er n etvi deo hos t i ng si t e You Tub e, i nt hat case, St upl oaded a vi deo o f herf am i l y danc i ng t o as on g per f or m ed by t he m u si c adi s t Pr i nc e,w hi ch t ur ned ou tt o be wi l dl y popuf ar am ong vi e wer s. Lenz 1 , 57, 2 F. Supp.2d at 1162. The ow nerof t he song,Uni ver salM usi c Cor por at i on,sent a t akedow n not i ce t ot he ser vi ce pr ovi der ,whi ch not i f i ed M s.Lenz t hat hervi deo had been r em ov ed b ec ause of a cl ai m o fcop yr i ghti n f r i ngem en t ,I d. Di sc over y r eveal ed t hatUni ver salhad an em pl oyee who was t asked wi t h usi ng YouTube' s syst em t o sear ch f ort i t l es ow ned or adm i ni st er ed by Uni ver sal . Lenz I V'2013 W L 271673,at *1. He st at ed t hat he i ssued a t akedown not i ce whenever he coul dr ecogni ze a one second orI ongerpor t i on ofa Pr i nce song i n any vi deo.as occur r ed i nt he vi deo at i ssue. I d.at* 5. Hi s boss st at ed t hatUni ver salseeks t o r em ove songs ' ' when a wr i t er i s upset or r eguest st hat padi cul ar vi deos be r em oved f r om Youl ube, 'pr om pt i ng Uni ver salt o conducta r evi ew . I d.

The c our tc oncl uded t ha t summar yj u dgmen ti nf av or of ei t her p ar t y was
i m pr oper . Ms.Lenz coul d show t hatUni ver sal ' s pr ocedur es m i ght have w i l l f ul l y bel i eved t hat t her e was a hi gh pr obabi l i t yt hat t he vi deo w as I awf ulort hat t he

bl i nded i tt o kno wl edge of her f ai ru se, bu t not t hat Uni ver s al sub j ec t i v el y

nat ur eo ff ai ru se was sel f evi dent .I d.at* 67( ci t i ng Vi ac om,676 F. 3d at3 4) . Li k ewi se,Uni v er s alc oul dn otdemons t r at et he absence ofsub j ect i v ei nt ent ./ J.
at*8.

96

Case 1:11-cv-20427-KMW Document 534 Entered on FLSD Docket 09/20/2013 Page 97 of 99

Ranch Br eedabl es,LLC v.Oz i mal s ,I nc. ,79O F.Supp.2d 1 024,10 29 ( N. D.Cal .2011 )
( not i ng t hata Sec t i on 512( 9 pl ai nt i f fc ancont es tt h e val i di t yofa t ak edown no t i f i c at i on
ev en wher e a val i dc opyr i ght ex i s t s) . And, W ar ner ' sr el i anc e on t echnol og yt o
acc ompl i sh t he t as k mi ghtpr e ven ti tf r om f or mi ng any bel i efatal l ,as t he ami cus cudae ar gues h er e an d a si mi l ar gr oup as s er t ed i n Ross t ' ' c om put er sc ondt l c t i ng aut om at ed s ear ches cannotf or m a bel i efc onsi s t en twi t ht he I an guage oft he DM CA,because t hey

cann otdi s t i ngui sh b et ween i n f r i ngi n gc ont entan d con t entt hatmer el yc on t ai ns wor ds
t hat suggest i nf r i ngem ent . ' ' Rossi , 391 F. 3d at 1005 n. 7. The Cot l r t ! however ,i s

unawar e of an y deci si on t o da t et hat ac t ual l y addr es sed t he need f or hum an r evi e w, an dt he st at ut e does not spec i f y ho w bel i e f of i n f r i ngem ent m ay be f or m ed or what
know l edge m ay be char geabl et ot he not i f yi ng ent i t y. Ul t i m at el y,w hi l et hese ar e engagi ng quest i ons sur r oundi ng W ar ner ' s know l edge' ,

i t sr es pons i bi l i t yt oi nves t i gat e' , whet heri tha d a goo df ai t h bel i e fi ni n f r i ngem enti n ea ch
i nst ance' ,and whose bur den i ti st o show orr ef ut e what- al Ii ssues off i r sti m pr essi on i n

t hi s Ci r c ui t- t her e i s su f f i ci en t ev i denc e

t he r ec or d t o sugges tt hat W ar ner

i nt ent i onal l yt ar éet ed f i l es i tk new i thad no r i ghtt or emov e. Thi s pr ecl udes s um mar y
j udgmen ti ni t sf av or . Spec i f i c al l y,Hot f i l eh as pr o vi ded t he ex ampl e ofJDownl oader ,
W hi ch W ar ner di d not m anage ' '

l t has al so show n W ar ner ' si nt er est i n an appl i cat i on of i t s

t akedow n r i ght s beyond wor ks t ha ti to w ns. And W ar nerhas noto t her wi s e ar gu ed t ha t i t had t h er i gh tt or em ove t hos ef i l es,onl yt ha ti t s mi s t akes shoul d be ex cu sed. The

Coud f i n ds t hi s mot i ve and ot herev i den ce su f f i ci en tt os us t ai n an i nf er enc et hatW ar ner

vi ol at edSec t i on51 24 9,suc ht ha tt h es ei s s uess houl dbepr esent edt ot hej ur y.

Case 1:11-cv-20427-KMW Document 534 Entered on FLSD Docket 09/20/2013 Page 98 of 99

The onl yi s s ue r emai n i n gi s whe t h erHot f i l ei s abl et o sh ow an yi n j ur yf ort h e

del et i ons,whi c hi s an el emento fa Se c t i on 51 2( 9 cl ai m an d wh i c h W ar n erq ues t i o ns .
1 $ A f ai rr eadi ng of t he st at ut e, t he I egi sl at i ve hi st or y, and si mi l ar st at ut or yI anguage

i n di c a t e st ha t j 51 2( 9 pl ai n t i f f ' s dama ges mu s tb e pr o xi ma t el yc aus e d by t he
mi sr epr esent at i on t o t he ser v i ce pr ovi der and t he ser v i ce pr ovi der ' sr el i ance or ?t he

mi s r e pr e se nt at i on. ' ' Le nz 1 1 1 ,201 0 W L 702 466,a t* 1 O( emp has i si n or i gi n al ) .I nt h i s
r egar d,t he Coud obser v es t hatt he quant i t y ofeconom i c dam ages t o Hot f i l e' s sys t em i s

necessar i l y di f f i cul tt o measur e wi t h pr eci si on and has I ed t o m uch di sagr eem ent

b et ween t h ep adi es an dt h ei rex p ed s. Not wi t hs t an di n gt hi s di f f i c ul t y,t h ef ac tofi n j ur y has b een s ho wn ,an d Ho t f i l e' se xp ed c an pr ov i de t h ej ur y wi t han on s p ec ul at i v e ba si s
t o assess dam ages. Addi t i onal l y,Lenz I I Iconcl uded t hatt he subsec t i on pr ovi des f or dam ages beyond act ualdam ages, even i ft hey ar e notsubs t ant i al .I d.at* 710. C) nt hi s

basi s,t he Coud concl udes t hatW ar neri s unabl et o est abl i sh t he absence ofa genui ne

di s pu t e ont he i s s u eo fda ma ge s an dc ann o tpr e vai l at t hi sj u nc t ur e.
1 1 1 . CO NC LUSI ON

l n accor dance wi t ht he f or egoi ng,i ti s her eby O RDERED AND ADJUDG ED as
f ol I ows:

( 1 )

Ho t f i l e' s mot i on f orpadi als ummar yj u dgmen tf orp os t compl ai n tDMCA

pr o t ec t i on ( DE 275,DE 31 8 ) , De f en dan t An t onTi t ov ' s mo t i onf ors ummar y j u dgmen ton per s on alI i ab i l i t y( DE 27 6,DE 31 6 ) ,an d W ar n er ' s mo t i on f or
s ummar yj u dgmen ta st o Hot f i l e' sc oun t er cl ai m ( DE 255, DE 301 )a r e
DEN I ED .

98

Case 1:11-cv-20427-KMW Document 534 Entered on FLSD Docket 09/20/2013 Page 99 of 99

( 2)

Pl ai nt i f f s'mot i on f orsummar yj udgmen t( DE 280,DE 322)i s GRANTED
as t ot he i ssues ofDef endant s'DM CA def ense,vi car i ous I i abi l i t y,and M r . Ti t ov' sI i abi l i t y' l ti s DENI ED i n al lot herr espect s.

( 2 )

Exceptt ot he ext ent addr ess ed h er ei n,Def endan t s 'm ot i ons t os t r i k e Dr .

W at er man' s r ebut t al r epod ( DE

st r i ke Dr . Fost er ' s r epl y

decl ar at i on( DE 452,DE 460)and c er t ai nexhi bi t s( DE 339)i nc onnec t i on

wi t h Pl ai nt i f f s 's ummar yj udgmen tbr i ef i ng;and t os t r i k ec er t ai nexhi bi t si n conn ec t i on wi t h Pl ai n t i f f s'opposi t i on t o Mr .Ti t ov' s summar yj udgment
mot i on ( DE 371 ) ,ar e DENI ED AS MOOT. Si mi l ar l y,Pl ai n t i f f s'mot i on t o
st r i k e por t i ons oft he decj ar a t i ons ofDr . Andr ew Cr om ady,Dr .Boyl e,and

Mr .Ti t ov( DE 387,DE423)i sDENI ED AS MOOT.

( 4) W ar ner ' s mot i ont o us e an ex hi bi tf r om Mr .Ti t ov' s deposi t i on att r i al( DE 241,DE 297)i s GRANTED,and Pl ai n t i f f s 'Ob j ec t i onst o Ju dge Tur nof f ' s
Repod and Rec ommendat i on ( DE DE 370) ar e OVERRULED.

J udge Tur nof f ' s Repod an d Recommendat i on ( DE 306) i s ADOPTED
AND A FFI R M ED.

( 5 )

The padi es shal lcon f erand pr o vi de t ot he Coud pr opos ed r èdac t i ons t o t hi s Or derwi t hi nf our t een ( 14)days o ft h e da t e oft hi s Or der ,so t ha tt h e
Cour tcan i ssue a publ i c ver si on oft hi s deci si on.

DO NE AND OR DERED i n cham ber si n Mi am i ,Fl or i da,t h' 2013.

day of August ,

L 99

M .W I LLI AM S

UNI TED TATES D I STRI CT J UDGF