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Docket No. 10-55946
In the

United States Court of Appeals
for the

Ninth Circuit
COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC., PARAMOUNT PICTURES CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL CITY STUDIOS LLLP, UNIVERSAL CITY STUDIOS PRODUCTIONS, LLLP and WARNER BROS. ENTERTAINMENT, INC., Plaintiffs-Appellees, v. GARY FUNG and ISOHUNT WEB TECHNOLOGIES, INC., Defendants-Appellants.
_______________________________________

Appeal from a Decision of the United States District Court for the Central District of California, No. 06-CV-05578 · Honorable Stephen V. Wilson

PETITION FOR PANEL REHEARING AND REHEARING EN BANC BY APPELLANTS GARY FUNG AND ISOHUNT WEB TECHNOLOGIES, INC.
IRA P. ROTHKEN, ESQ. ROBERT L. KOVSKY, ESQ. JARED R. SMITH, ESQ. ROTHKEN LAW FIRM 3 Hamilton Landing, Suite 280 Novato, California 94949 (415) 924-4250 Telephone (415) 924-2905 Facsimile Attorneys for Appellants, Gary Fung and isoHunt Web Technologies, Inc.

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TABLE OF CONTENTS page Index of Authorities ..….....….....….....….....….....….....….....….....…....…... I. II. III. The Panel Decision Applies Erroneous Legal Standards to Find ..…... Fung Liable on Disputed Facts and to Deny Him a Trial by Jury The Panel Decision and the District Court Opinion Combine to ……... Punish Speech that Should Be Protected by the First Amendment The Panel Decision Expands the Grokster Rule in Multiple Ways ….. that Threaten the Future of Technological Innovation A. The “Technological Background” set forth in the Panel ………. Decision ignores the “collective BitTorrent ecosystem” and erroneously identifies BitTorrent with systems in Grokster The Panel Decision erroneously expands the Grokster rule …... from applying to a distributor of a device to applying as a matter of law to any provider of data or online services The Panel Decision erroneously adopts a “loose causation …… theory” that defers actual findings of fact for later proceedings The Panel Decision’s procedure of selective matching ………... between cases is narrow and arbitrary and improperly excludes personal testimony ii 1 5 7 8

B.

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C. D.

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IV.

Dismissal of DMCA Defenses through Device Definitions and ……... Because of “Knowledge of a Broad Range of Infringing Activity” Clashes with Legal Standards Based on Trial by Jury

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Conclusion ………………………………………………...………………... Certificate of Compliance …………………………………………………… Exhibit A: Panel Decision (Columbia Pictures Industries, Inc. v. Fung), decided 3/21/2013 Exhibit B: District Court Opinion (Columbia Pictures Industries, Inc. v. Fung), decided 12/21/2009

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Certificate of Service

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INDEX OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ..................................... 1, 3, 4 Boim v. Holy Land Fdn,, 549 F.3d 685 (7th Cir. 2008), cert. den. sub nom Boim v. Salah, 130 S.Ct. 458 (2009) .....................................................12 Desrosiers v. Flight Int'l, 156 F.3d 952 (1998) .......................................................11 Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998) ........................5 Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) ........................15 Holmes v. SIPC., 503 U.S. 258 (1992) ....................................................................12 Humanitarian Law Project v. Mukasey, 552 F.3d 916 (9th Cir. Cal., 2009), aff’d & rev’d in parts sub. nom. Holder v. Humanitarian Law Project, 130 S. Ct. 2705 (2010). ............................................................................7 McCoy v. Stewart, 282 F.3d 626 (9th Cir. 2002) cert. den. 537 U.S. 993 (2002) .....6 MGM Studios, Inc. v. Grokster, 545 U.S. 913 (2005) ..................................... passim MGM v. Grokster, 380 F. 3d 1154 (9th Cir. 2004) .....................................................4 Oviatt v. Pearce, 954 F.2d 1470 (1992) ..................................................................11 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) .....................10 Perfect 10, Inc. v. CCBill, 488 F. 3d 1102 (9th Cir. 2007) ................................ 10, 14 Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007) ..................10 Provenz v. Miller, 102 F. 3d 1478 (9th Cir. 1996) .....................................................4 TW Elec. Serv. v. Pac. Elec. Contr’s Ass’n, 809 F. 2d 626 (9th Cir. 1987) ...............2 UMG Recordings v. Shelter Capital Partners, (9th Cir. 3/14/2013) ................ 12, 15 Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012) ....................... 14-15 CONSTITUTION OF THE UNITED STATES First Amendment.................................................................................................... 5-7 Seventh Amendment ..................................................................................................5

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STATUTES, COURT RULES AND APPROVED INSTRUCTIONS 17 U.S.C. § 512(a) ...................................................................................................14 Digital Millennium Copyright Act (“DMCA”) ........................................... 1, 3-4, 14 FRAP Rule 35 ............................................................................................................1 FRAP Rule 40 ............................................................................................................1 Ninth Circuit Model Jury Instructions 17.20, 17.21 and 17.18 ...............................15

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Pursuant to FRAP Rules 35 and 40, Defendants-Appellants Gary Fung and isoHunt Web Technologies ("Fung") petition for rehearing or rehearing en banc with respect to the Panel Decision (Ex. A) that was entered on March 21, 2013. This proceeding involves one or more questions of exceptional importance involving the new “Grokster rule” that imposes liability for “inducement of copyright infringement.” MGM Studios v. Grokster, 545 U.S. 913, 919 (2005). The Panel Decision defines technological categories on disputed facts and ignores evidence that entitles Fung to Trial by Jury. It bases liability on a miscellany of online “messages” that lack connections to actual infringements. Free Speech is chilled when sarcastic remarks are held to induce infringement. Expansions of Grokster liability threaten technological innovation, e.g., through creation of a “loose causation standard” that imposes liability without limit as a matter of law. Blanket dismissal of defenses under the Digital Millennium Copyright Act (“DMCA”) requires a novel procedure detached from actual infringements. I. The Panel Decision Applies Erroneous Legal Standards to Find Fung Liable on Disputed Facts and to Deny Him a Trial by Jury.

In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), the Supreme Court stated that, in ruling on a defendant’s motion for summary judgment: the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Here, in finding Fung liable under Grokster as a matter of law and in
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affirming summary judgment, the District Court and the Panel Decision hold that evidence unmistakably favors moving parties “Columbia.” Without stating a Legal Standard for affirming such a summary judgment, the Panel Decision concludes: Columbia would still have such overwhelming evidence that any reasonable jury would have to conclude that the vastly predominant use of Fung’s services has been to infringe copyrights. (Ex. A at 26.) Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his services with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise. (Id. at 29.) In sum, we affirm the district court’s holding that Columbia has carried its burden of proving, on the basis of undisputed facts, Fung’s liability for inducing others to infringe Columbia’s copyrights. (Id. at 37.) The Panel Decision disregards the proper Legal Standard, stated, e.g., in TW Elec. Serv. v. Pac. Elec. Contr’s Ass’n, 809 F. 2d 626, 630-631 (9th Cir. 1987): … the judge must view the evidence in the light most favorable to the nonmoving party: if direct evidence produced by the moving party conflicts with direct evidence produced by the nonmoving party, the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact. The Panel Decision fails to note Fung’s “direct evidence” that he wants to present to a jury. Similarly, the District Court stated that defendants “offer little of their own evidence that directly addressed Plaintiffs' factual assertions.” (Ex. B at *3.) Fung testified that he dropped out of college in 2003 to start isoHunt; that his
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only “business plan” is to succeed by his own efforts; that his systems compete in the “collective BitTorrent ecosystem,” providing services that are duplicated, e.g., by Google and Yahoo!; that he has aims and objects of technology and innovation; that he develops and promotes “noninfringing uses” of BitTorrent technology such as software distributions; that copyright infringements are important to him chiefly as sources of problems and as burdens on his freedom; that he does not have an “object” or “aim” of promoting infringement but that he opposes copyright abuse; and that he believes he satisfies his legal duties to copyright owners by setting up and maintaining a successful facility for processing “take-down” requests pursuant to the DMCA. (Appellants’ Opening Brief or “AOB” at 49-50; ER 475-500.) Based on such direct evidence and using the standard of Liberty Lobby, supra, Fung contends that “a fair-minded jury could return a verdict” in his favor. The Panel Decision is in error when it states (Ex. A at 31) that: “Fung took no steps ‘to develop filtering tools or other mechanisms to diminish the infringing activity’ by those using his services,” quoting from Grokster, supra, at 545 U.S. 939 and referring to facts in Grokster that supported liability. The Panel Decision further states (Id., n. 15) that “Fung had the means to filter content on his website when he chose to do so,” implying that Fung chose not to do so. Fung testified, in “direct evidence” that is directly contrary to the statements in the Panel Decision, that in addition to the DMCA facility and failed attempts to filter for pornography:

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We also initially attempted to filter against keywords that may lead to certain Microsoft products, but soon found [technical problems that] prevented accurate and effective filtering based on the keywords. This was thus discontinued, in favor of far more effective and accurate filtering [through the DMCA facility] based on database ID’s and dottorrent files’ globally unique info_hash string. (ER 494:1-7) The DMCA facility successfully works for “copyright owners and their agents, including, but not limited to the RIAA (Alex Tomescu, Traci Crippen primaries), WebSheriff (John Giacobbi), StarDock Corporation, GrayZone and Microsoft.” (AOB at 22, Testimony of Fung’s DMCA agent at ER 249:28-250:3.) DMCA Notices sent by plaintiffs in this case present jury issues. (Ex. B at *62.) The Panel, like the District Court, failed to note Fung’s direct evidence of “non-infringing uses” of BitTorrent that Fung promotes and helps to develop. (ER 478:14-485:19, AOB 15-16.) Fung submits that such evidence is relevant to show his intentions. Provenz v. Miller, 102 F. 3d 1478, 1483, 1489-90 (9th Cir. 1996). Under MGM v. Grokster, 380 F. 3d 1154 (9th Cir. 2004), vacated in Grokster, supra, such evidence would have supported summary judgment in Fung’s favor. The Court in Liberty Lobby, supra, stated (477 U.S. at 254-255): “It makes no sense to say that a jury could reasonably find for either party without some benchmark as to what standards govern its deliberations and within what boundaries its ultimate decision must fall, and these standards and boundaries are in fact provided by the applicable evidentiary standards.”

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Here, as to non-infringing uses, the Panel Decision fails to identify evidentiary standards that governs its deliberations, that might allow Fung’s evidence and that could provide benchmarks for future decisions by trial courts. Fung contends that he is entitled to Trial by Jury pursuant to the Seventh Amendment to the United States Constitution and Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998). Fung submits that, in a serious miscarriage of justice in a landmark case, he has been wrongfully denied Trial by Jury and found liable by judges on disputed facts through application of erroneous legal standards. Therefore, Fung petitions for a re-hearing. II. The Panel Decision and the District Court Opinion Combine to Punish Speech that Should Be Protected by the First Amendment.

Fung contends that many of the items of evidence cited by the District Court should be protected as Free Speech under the First Amendment to the Constitution and would be inadmissible at trial. As a result of decisions herein, impermissible burdens are being imposed on Fung’s speech and on the speech of other Internet users. The District Court dismissed Fung’s contention (Ex. B at *49, n. 22): In one of the main arguments in Defendants' Opposition, Defendants offer an extended discussion of the intersection between the First Amendment and the internet. (Opp. at 18-23.) Quoting from a broad selection of caselaw, Defendants largely appear to advocate that the First Amendment immunizes any and all activity on the internet. The Panel Decision does not mention Free Speech concerns. (But see AOB

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at 62-64 and Appellants’ Reply Brief at 19-21, quoting from McCoy v. Stewart, 282 F.3d 626 (9th Cir. 2002) cert. den. 537 U.S. 993 (2002).) Fung submits that individual “messages” should be separately examined in the style of a Motion in Limine. As a leading example, as shown at AOB 16-18, “Fung started isoHunt as a search engine for Internet Relay Chat” at age 19 or 20. It was only later that Fung and isoHunt became involved in BitTorrent. isoHunt first indexed communications occurring through “Internet Relay Chat,” or IRC, “a primitive protocol,” which attracted Fung in early 2003 because there was then no search tool for IRC. To acquire IRC data, isoHunt’s automated process or “bot” entered chat channels, announcing its presence. … people complained to Fung [in isoHunt forums] that the bot resembled investigators for … RIAA. Posters disliked RIAA. … In a posting on March 30, 2003, Fung quoted [a prior] posting and stated: “agreed. they accuse us for thieves, and they r right. Only we r ‘stealing’ from the lechers (them!) and not the originators (artists).” Fung altered the IRC bot to announce: “Files…are now being indexed for isoHunt.com…We completely OPPOSE RIAA & Co., so do not be alarmed by our indexing activities.” The District Court prominently quoted Fung’s messages, made in connection with IRC and RIAA, as evidence of Defendants’ intent to induce infringement of Plaintiffs’ movies and videos through BitTorrent. [AOB at 17-18, citations to record omitted.] Plaintiffs’ evidence, such as the foregoing, was obtained by sifting through massive databases. (ER 490:13-23.) Liability based on messages culled from digital storage that are remote from any specific infringements at issue will

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severely chill Free Speech. The effect of decisions herein is to make sarcasm directed at copyright enforcement or statements in support of file-sharing a reason for later imposition of liability. Cautious individuals will practice self-censorship. Outspoken individuals will avoid certain areas of technological development. Fung submits that Free Speech issues in this case should be considered like those in Hum’n Law Project v. Mukasey, 552 F.3d 916 (9th Cir. Cal., 2009), aff’d & rev’d in parts sub. nom. Holder v. Hum’n Law Proj., 130 S. Ct. 2705 (2010). III. The Panel Decision Expands the Grokster Rule in Multiple Ways that Threaten the Future of Technological Innovation.

The Panel Decision quotes the Grokster rule stated by the Supreme Court: Grokster III’s articulation was that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” [545 U.S.] at 936–37. (Ex. A at 32, n. 16.) After interpreting the rule, the Panel Decision states (Ex. A at 35): Grokster III thus held that where there is sufficient evidence of fault—that is, an unlawful objective—distributors are liable for causing the infringement that resulted from use of their products. Fung submits that expansions and interpretations set forth in the Panel Decision disregard the “sound balance” discussed in Grokster at 545 U.S. at 919 that sees value in “promoting innovation in new communication technologies by limiting the incidence of liability for copyright infringement.” This case, like

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Grokster, involves “tension between the two values.” Id. Here, however, a tool designed to achieve a balance is turned into a weapon for suppressing copyright infringement regardless of damage to new communication technologies. A. The “Technological Background” set forth in the Panel Decision ignores the “collective BitTorrent ecosystem” and erroneously identifies BitTorrent with systems in Grokster.

Despite a few citations to evidence in the Panel Decision’s “Technological Background” (Ex. A, 5-14), it mostly lacks references to the record. It starts (Id., 5): “This case concerns a peer-to-peer file sharing protocol known as BitTorrent.” The characterization of BitTorrent as a “peer-to-peer file sharing protocol,” supra, fits the Panel Decision’s later statement of the law of inducement liability that interprets Grokster as a case that was: “Considering how to apply copyright law to file sharing over P2P networks.” (Ex. A, 19.) Fung submits that BitTorrent does not fit into P2P categories constructed from prior cases. BitTorrent is not based on “‘supernode’ systems.” (Ex. A, 9.) BitTorrent…consists of a blend of client-server and peer-to-peer techniques. Content is distributed in a peer-to- peer manner, but BitTorrent relies on … a server-based component known as a tracker to help peers learn about each other. (ER 203:26-28.) BitTorrent is a testbed for development. (ER 476:22-477:1.) Fung’s experiments and innovations have objects different from those implied by descriptions in the Panel Decision, in which short-run trials (Box Office Movies

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and BTHub) become permanent stigma of infringement. (Cf. Ex. A, 30 and ER 498:4-12; Ex A, 15 and ER 487:15-19.) Testimony by defendants’ expert, Prof. Gribble, was summed up (AOB 5-6): Gribble presented a broad view where numerous BitTorrent communities engage in lawful activity, where copyright infringers are also active and where Defendants are neutral participants, a few among many, with no significant capacity to control or influence infringement. Fung testified: In a generic way, isoHunt is comparable to Google. We both provide [list of services]. … We both make our money from advertising…. A search on Google for “ext:torrent x” can return a list of dot-torrent files much like a search for “x” on isoHunt. (ER 489:22-490:6.) isoHunt, like numerous other torrent sites, is a general aggregator … I have observed, in real-time, spidering bots indexing our websites, from general search engines such as Google, as well as from search engines and aggregators specialized in BitTorrent… (ER 488:14-20.) There are important differences between BitTorrent and Grokster systems. The Grokster systems were “knock-offs” of prior technologies adapted by an infringement profiteer to serve a plan to foster infringement using his device. In contrast, BitTorrent has unique capacities and multiple components that foster creative communities. Operating in such an environment along with many classes of participants, Fung’s search engines and trackers lack clearly unlawful objects behind proprietary systems. Different technologies, serving different purposes and attracting different personalities, should not be identified as a matter of law.
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B.

The Panel Decision erroneously expands the Grokster rule from applying to a distributor of a device to applying as a matter of law to any provider of data or online services.

The Grokster rule was grounded on a focal device and on patent precedents involving tangible devices. Expansion to all kinds of networked data and services presents problems that the Panel Decision fails to consider, e.g., in Ex. A at 24: …copyright liability depends on one’s purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement. Prior cases do not support automatic expansion of the rule to all kinds of online data and services. “The software systems in Napster and Grokster were engineered, disseminated, and promoted explicitly for the purpose of facilitating piracy.” Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 801 (9th Cir. 2007). A provider’s liability should be based on “actual knowledge that specific infringing material is available using its system." Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007), quoting prior cases. Liability also depends on whether defendant “could ‘take simple measures to prevent further damage’ to copyrighted works.” (Id.) The Amazon.com court reiterated “the longstanding requirement that an actor's contribution to infringement must be material to warrant the imposition of contributory liability.” (Id. at 1172.) “We do not place the burden of determining whether photographs are actually illegal on a service provider.” Perfect 10, Inc. v. CCBill, 488 F. 3d 1102, 1114 (9th Cir. 2007).

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C.

The Panel Decision erroneously adopts a “loose causation theory” that defers actual findings of fact for later proceedings.

The Panel Decision adopts “a loose causation theory.” (Ex. A at 33.) As a result, Fung is being held personally liable for collective activity of the collective BitTorrent ecosystem. (See AOB at 43-45.) The Panel Decision states: if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of the service. (Ex. A at 32-33.) BitTorrent distributions involve “swarms” of recipients so that “[t]he possible reach of liability is enormous” under “inducement liability’s relatively lax causation requirement.” (ER 208:4-21; Ex. A at 33-34.) Apparently, the Panel Decision anticipates future fact-finding by the District Court in this case to complete the factual determination and decide on any limits. (Ex. A at 37.) The rulings are erroneous. Causation is an issue of fact for the jury. Oviatt v. Pearce, 954 F.2d 1470 (1992); Desrosiers v. Flight Int'l, 156 F.3d 952 (1998). The Panel Decision abandons traditional “but-for” causation (Ex. A, p. 35), which is shown by evidence to be lacking in the networked Internet environment: the nature of BitTorrent technology means that, if our sites went down – but not for legal reasons that might also threaten other sites – numerous other sites would take up the loss. New sites are coming online frequently and existing sites seek to increase traffic. Those seeking to infringe copyrights could use Google and other big-name resources to accomplish their desires. (Fung testimony, ER 490:7-12.)

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The Panel Decision neglects to discuss “proximate causation” that was reviewed in UMG Recordings v. Shelter Capital Partners, (9th Cir. 3/14/2013). As stated in Holmes v. SIPC., 503 U.S. 258, 268 (1992) (emphasis added): Here we use "proximate cause" to label generically the judicial tools used to limit a person's responsibility for the consequences of that person's own acts. At bottom, the notion of proximate cause reflects "ideas of what justice demands, or of what is administratively possible and convenient." [Citation.] Accordingly, among the many shapes this concept took at common law [citation] was a demand for some direct relation between the injury asserted and the injurious conduct alleged. “Loose causation” imposes liability without a “direct relation” between injury and injurious conduct” and holds Fung liable as a matter of law because of “inducing messages” posted, e.g., in “forums” that attracted only 0.31% of isoHunt traffic. (ER 492:5-7.) The Panel Decision implies a possible “rehabilitation” (Ex. A at 35) but details are lacking. Justice demands a better “limit [to] a person's responsibility for the consequences of that person's own acts.” Holmes, supra. Similar concerns were raised in Boim v. Holy Land Fdn,, 549 F.3d 685, 705 (7th Cir. 2008), cert. den. sub nom Boim v. Salah, 130 S.Ct. 458 (2009). Judge Rovner, author of the panel opinion, dissented from the en banc decision: Are we going to evaluate claims for terrorism-inflicted injuries using traditional legal standards, or are we going to re-write tort law on the ground that "terrorism is sui generis"? Ante at 23. My colleagues in the majority have opted to "relax[ ]"--I would say eliminate--the basic tort requirement that causation be proven…
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D.

The Panel Decision’s procedure of selective matching between cases is narrow and arbitrary and improperly excludes personal testimony. Fung submits that an improper procedure is used to evaluate the “usually

dispositive” element of inducement liability, which is defined at Ex. A, 26: that the “device” or service be distributed “with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” [545 U.S.] at 936–37. The Panel Decision does not state a Legal Standard to evaluate the element of unlawful objective. Rather, the procedure appears to match features of Fung’s case with features in Grokster, starting at Ex. A, p. 27: In Grokster III itself, the Court found ample evidence, of several types, to support inducement liability. The matching procedure is applied at Ex. A, p. 29: Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his services with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise. Plaintiffs searched huge databases for names of copyrighted movies and TV shows. Such names are the basis of statistical evidence and are used to fill out “evidentiary categories and cautions.” Fung’s mentioning of such names is considered proof of his unlawful objects. Name-based inferences are permissible in a jury trial but they should not become irrebuttable. They should not foreclose testimony about defendant’s actual operations and his actual objects of endeavor.

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IV.

Dismissal of DMCA Defenses through Device Definitions and Because of “Knowledge of a Broad Range of Infringing Activity” Clashes with Legal Standards Based on Trial by Jury.

The Panel Decision removes BitTorrent “trackers” from coverage under 17 U.S.C. § 512(a), which is provided for “routers.” (Ex. A, 39-41.) A tracker is like a “router,” at least presenting a jury issue. (ER 209:19-20.) The DMCA should not be subject to exclusionary definitions. CCBill, supra, at 488 F.3d 1115-16. The Panel Decision erroneously states (Ex. A at 51): “Fung unquestionably had the ability to locate infringing material.” No infringing materials touch Fung’s websites; he has no capacity to investigate or to police the Internet. (ER 477:2025, 496:7-11; 497:4-14.) Court-ordered filters work poorly. (ER 86:3-91:14.) The Panel Decision states: “Fung had ‘red flag’ knowledge of a broad range of infringing activity …, and therefore is ineligible for the [DMCA] safe harbor.” “We therefore hold that … he is outside of the … safe harbor with respect to all infringement activity on the sites that are the subject of this suit.” (Ex. A at 46, 53) Unprecedented findings of generalized knowledge and blanket disregard of defendant’s successful DMCA practices clash with Congressional intent and with Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012), where summary judgment in favor of defendant YouTube was reversed when evidence persuaded the Second Circuit that Viacom was entitled to Trial by Jury. See 676 F.3d 32-35. Unlike Fung, YouTube hosts infringing content and evidence suggests that

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YouTube has had more knowledge of infringements and clearer intentions to profit from them. Classes of inculpatory evidence in the two cases overlap with evidence presented in UMG Recordings v. Shelter Capital Partners, (9th Cir. 3/14/2013). See also Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001). Fung suggests that Viacom correctly adhered to standards that are based on Trial by Jury. In such a trial, plaintiff shows specific actual infringements and responsibility of defendant for such specific actual infringements. Defendant may then offer defenses. See Ninth Circuit Model Jury Instructions 17.20, 17.21 and 17.18. Other evidence is admissible, but a core of specific actual infringements is in constant view. In Viacom, proceedings focused on specific “clips-in-suit.” (676 F.3d at 29.) “By definition, only the current clips-in-suit are at issue in this litigation.” (Id. at 34.) Here, the District Court initially confined the case to 44 specific copyrights but the limit was later disregarded. (AOB at 24, 26-27.) CONCLUSION For the foregoing reasons, Fung requests a re-hearing. Dated: April 3, 2013 Respectfully submitted, ROTHKEN LAW FIRM /s/ Ira P. Rothken, Attorney at Law /s/ Robert L. Kovsky, Attorney at Law /s/ Jared R. Smith, Attorney at Law Attorneys for Defendants-Appellants, Gary Fung and isoHunt Web Technologies, Inc.
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CERTIFICATE OF COMPLIANCE I certify that pursuant to Circuit Rule 35-4 or 40-1, the attached Petition for Panel Rehearing and Petition for Rehearing En Banc is proportionately spaced, has a typeface of 14 points or more and contains 3,855 words. Dated: April 3, 2013 Respectfully submitted, ROTHKEN LAW FIRM /s/ Ira P. Rothken, Attorney at Law /s/ Robert L. Kovsky, Attorney at Law /s/ Jared R. Smith, Attorney at Law Attorneys for Defendants-Appellants, Gary Fung and isoHunt Web Technologies, Inc.

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EXHIBIT A PANEL DECISION (March 21, 2013)

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
COLUMBIA PICTURES INDUSTRIES, INC.; DISNEY ENTERPRISES, INC.; PARAMOUNT PICTURES CORPORATION ; TRISTAR PICTURES, INC.; TWENTIETH CENTURY FOX FILM CORPORATION ; UNIVERSAL CITY STUDIOS LLLP; UNIVERSAL CITY STUDIOS PRODUCTIONS, LLLP; WARNER BROS ENTERTAINMENT , INC., Plaintiffs-Appellees, v. GARY FUNG ; ISOHUNT WEB TECHNOLOGIES, INC., Defendants-Appellants. Appeal from the United States District Court for the Central District of California Stephen V. Wilson, District Judge, Presiding Argued May 6, 2011 Submitted March 21, 2013 Pasadena, California Filed March 21, 2013 No. 10-55946 D.C. No. 2:06-cv-05578SVW-JC OPINION

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COLUMBIA PICTURES INDUSTRIES V . FUNG Before: Harry Pregerson, Raymond C. Fisher, and Marsha S. Berzon, Circuit Judges. Opinion by Judge Berzon SUMMARY* Copyright

The panel affirmed in part and vacated in part the district court’s judgment in favor of film studios, which alleged that the services offered and websites maintained by the defendants induced third parties to download infringing copies of the studios’ copyrighted works. Affirming the district court’s summary judgment, the panel held that under Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 545 U.S. 913 (2005), the defendants were liable for contributory copyright infringement on an inducement theory because the plaintiffs established (1) distribution of a device or product, (2) acts of infringement, (3) an object of promoting the product’s use to infringe copyright, and (4) causation in the defendants’ use of the peer-to-peer file sharing protocol known as BitTorrent. The panel held that the defendants were not entitled to protection from liability under any of the safe harbor provisions of the Digital Millennium Copyright Act, including safe harbors provided by 17 U.S.C. § 512(a), (c),
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.

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and (d) for transitory digital network communications, information residing on systems or networks at direction of users, and information location tools. The panel nonetheless rejected the argument that inducement liability is inherently incompatible with protection under the safe harbors. Reversing and modifying in part the district court’s permanent injunction, the panel held that certain provisions of the injunction were too vague to meet the notice requirements of Fed. R. Civ. P. 65(d), and certain provisions were unduly burdensome. COUNSEL Ira P. Rothken, Esq. (argued), Robert L. Kovsky, Esq., and Jared R. Smith, Esq. of Rothken Law Firm, Novato, California, for Defendant-Appellants. Paul M. Smith (argued), Steven B. Fabrizio, William M. Hohengarten, Duane C. Pozza, Garret A. Levin, Caroline D. Lopez, Jenner & Block LLP, Washington, D.C.; Karen R. Thorland, Motion Picture Association of America, Inc., Sherman Oaks, California; Gianni P. Servodidio, Jenner & Block LLP, New York, New York, for Plaintiffs-Appellees. Andrew H. Schapiro, Mayer Brown LLP, New York, New York, for amicus curiae Google, Inc.

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BERZON, Circuit Judge: This case is yet another concerning the application of established intellectual property concepts to new technologies. See, e.g., UMG Recordings, Inc. v. Shelter Capital Partners, LLC, — F.3d — (9th Cir. 2013); Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007); Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). Various film studios alleged that the services offered and websites maintained by Appellants Gary Fung and his company, isoHunt Web Technologies, Inc. (isohunt.com, torrentbox.com, podtropolis.com, and ed2k-it.com, collectively referred to in this opinion as “Fung” or the “Fung sites”) induced third parties to download infringing copies of the studios’ copyrighted works.1 The district court agreed, holding that the undisputed facts establish that Fung is liable for contributory copyright infringement. The district court also held as a matter of law that Fung is not entitled to protection from damages liability under any of the “safe harbor” provisions of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512, Congress’s foray into mediating the competing interests in protecting intellectual property interests and in encouraging creative development of devices for using the Internet to make information available. By separate order, the district court permanently enjoined Fung from engaging in a number

Plaintiffs-Appellees are: Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Paramount Pictures Corporation; Tristar Pictures, Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLLP; and W arner Bros. Entertainment, Inc.; collectively referred to as “Columbia.”

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of activities that ostensibly facilitate the infringement of Plaintiffs’ works. Fung contests the copyright violation determination as well as the determination of his ineligibility for safe harbor protection under the DMCA. He also argues that the injunction is punitive and unduly vague, violates his rights to free speech, and exceeds the district court’s jurisdiction by requiring filtering of communications occurring outside of the United States. We affirm on the liability issues but reverse in part with regard to the injunctive relief granted. TECHNOLOGICAL BACKGROUND This case concerns a peer-to-peer file sharing protocol2 known as BitTorrent. We begin by providing basic background information useful to understanding the role the Fung sites play in copyright infringement. I. Client-server vs. peer-to-peer networks The traditional method of sharing content over a network is the relatively straightforward client-server model. In a client-server network, one or more central computers (called “servers”) store the information; upon request from a user (or “client”), the server sends the requested information to the client. In other words, the server supplies information resources to clients, but the clients do not share any of their resources with the server. Client-server networks tend to be relatively secure, but they have a few drawbacks: if the server goes down, the entire network fails; and if many clients make
2 A “protocol” is a set of rules used by computers to communicate with each other over a network. Webster’s II Dictionary 571 (3d ed. 2005).

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requests at the same time, the server can become overwhelmed, increasing the time it takes the server to fulfill requests from clients. Client-server systems, moreover, tend to be more expensive to set up and operate than other systems. Websites work on a client-server model, with the server storing the website’s content and delivering it to users upon demand. “Peer-to-peer” (P2P) networking is a generic term used to refer to several different types of technology that have one thing in common: a decentralized infrastructure whereby each participant in the network (typically called a “peer,” but sometimes called a “node”) acts as both a supplier and consumer of information resources. Although less secure, P2P networks are generally more reliable than client-server networks and do not suffer from the same bottleneck problems. See generally Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (“Grokster III”), 545 U.S. 913, 920 & n.1 (2005). These strengths make P2P networks ideally suited for sharing large files, a feature that has led to their adoption by, among others, those wanting access to pirated media, including music, movies, and television shows. Id. But there also are a great number of non-infringing uses for peer-topeer networks; copyright infringement is in no sense intrinsic to the technology, any more than making unauthorized copies of television shows was to the video tape recorder. Compare A&M Records v. Napster, Inc., 239 F.3d 1004, 1021 (9th Cir. 2001) with Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456 (1984). II. Architecture of P2P networks In a client-server network, clients can easily learn what files the server has available for download, because the files

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are all in one central place. In a P2P network, in contrast, there is no centralized file repository, so figuring out what information other peers have available is more challenging. The various P2P protocols permit indexing in different ways. A. “Pure” P2P networks In “pure” P2P networks, a user wanting to find out which peers have particular content available for download will send out a search query to several of his neighbor peers. As those neighbor peers receive the query, they send a response back to the requesting user reporting whether they have any content matching the search terms, and then pass the query on to some of their neighbors, who repeat the same two steps; this process is known as “flooding.” In large P2P networks, the query does not get to every peer on the network, because permitting that amount of signaling traffic would either overwhelm the resources of the peers or use up all of the network’s bandwidth (or both). See Grokster III, 545 U.S. at 920 n.1. Therefore, the P2P protocol will usually specify that queries should no longer be passed on after a certain amount of time (the so-called “time to live”) or after they have already been passed on a certain number of times (the “hop count”). Once the querying user has the search results, he can go directly to a peer that has the content desired to download it. This search method is an inefficient one for finding content (especially rare content that only a few peers have), and it causes a lot of signaling traffic on the network. The most popular pure P2P protocol was Gnutella. Streamcast, a Grokster defendant, used Gnutella to power its software

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application, Morpheus. 921–22.3

B. “Centralized” P2P networks “Centralized” P2P networks, by contrast, use a centralized server to index the content available on all the peers: the user sends the query to the indexing server, which tells the user which peers have the content available for download. At the same time the user tells the indexing server what files he has available for others to download. Once the user makes contact with the indexing server, he knows which specific peers to contact for the content sought, which reduces search time and signaling traffic as compared to a “pure” P2P protocol. Although a centralized P2P network has similarities with a client-server network, the key difference is that the indexing server does not store or transfer the content. It just tells users which other peers have the content they seek. In other words, searching is centralized, but file transfers are peer-to-peer. One consequent disadvantage of a centralized P2P network is that it has a single point of potential failure: the indexing server. If it fails, the entire system fails. Napster was a centralized P2P network, see generally Napster, 239 F.3d at 1011–13, as, in part, is eDonkey, the technology upon which one of the Fung sites, ed2k-it.com, is based.

3 Gnutella is still around, but it is now a “hybrid” system, a concept discussed below. Cf. Grokster III , 545 U.S. at 921 n.3.

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COLUMBIA PICTURES INDUSTRIES V . FUNG C. Hybrid P2P networks

Finally, there are a number of hybrid protocols. The most common type of hybrid systems use what are called “supernodes.” In these systems, each peer is called a “node,” and each node is assigned to one “supernode.” A supernode is a regular node that has been “promoted,” usually because it has more bandwith available, to perform certain tasks. Each supernode indexes the content available on each of the nodes attached to it, called its “descendants.” When a node sends out a search query, it goes just to the supernode to which it is attached. The supernode responds to the query by telling the node which of its descendant nodes has the desired content. The supernode may also forward the query on to other supernodes, which may or may not forward the query on further, depending on the protocol. See generally Grokster III, 545 U.S. at 921. The use of supernodes is meant to broaden the search pool as much as possible while limiting redundancy in the search. As with centralized P2P systems, supernodes only handle search queries, telling the nodes the addresses of the other nodes that have the content sought; they are not ordinarily involved in the actual file transfers themselves. Grokster’s software application was based on a P2P protocol, FastTrack, that uses supernodes. See Grokster III, 545 U.S. at 921. III. BitTorrent protocol

The BitTorrent protocol, first released in 2001, is a further variant on the P2P theme. BitTorrent is a hybrid protocol with some key differences from “supernode” systems. We discuss those differences after first describing BitTorrent’s distinguishing feature: how it facilitates file transfers.

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COLUMBIA PICTURES INDUSTRIES V . FUNG A. BitTorrent file transfers.

Traditionally, if a user wanted to download a file on a P2P network, he would locate another peer with the desired file and download the entire file from that peer. Alternatively, if the download was interrupted—if, for example, the peer sending the file signed off—the user would find another peer that had the file and resume the download from that peer. The reliability and duration of the download depended on the strength of the connection between those two peers. Additionally, the number of peers sharing a particular file was limited by the fact that a user could only begin sharing his copy of the file with other peers once he had completed the download. With the BitTorrent protocol, however, the file is broken up into lots of smaller “pieces,” each of which is usually around 256 kilobytes (one-fourth of one megabyte) in size. Whereas under the older protocols the user would download the entire file in one large chunk from a single peer at a time, BitTorrent permits users to download lots of different pieces at the same time from different peers. Once a user has downloaded all the pieces, the file is automatically reassembled into its original form. BitTorrent has several advantages over the traditional downloading method. Because a user can download different pieces of the file from many different peers at the same time, downloading is much faster. Additionally, even before the entire download is complete, a user can begin sharing the pieces he has already downloaded with other peers, making the process faster for others. Generally, at any given time, each user is both downloading and uploading several different pieces of a file from and to multiple other users; the

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collection of peers swapping pieces with each other is known as a “swarm.” B. BitTorrent architecture To describe the structure of BitTorrent further, an example is helpful. Let us suppose that an individual (the “publisher”) decides to share via BitTorrent her copy of a particular movie. The movie file, we shall assume, is quite large, and is already on the publisher’s computer; the publisher has also already downloaded and installed a BitTorrent “client” program on her computer.4 To share her copy of the movie file, the publisher first creates a very small file called a “torrent” or “dot-torrent” file, which has the file extension “.torrent.” The torrent file is quite small, as it contains none of the actual content that may be copyrighted but, instead, a minimal amount of vital information: the size of the (separate) movie file being shared; the number of “pieces” the movie file is broken into; a cryptographic “hash”5 that peers will use to authenticate the downloaded file as a true and complete copy of the original;
The client program is the software application used to access the P2P network. Unlike Grokster or Napster, which were “closed” systems that permitted only authorized client programs to connect to their networks, BitTorrent is an “open” system, permitting the use of any number of client programs, nearly all of which are free. The Fung sites do not supply any of the client programs necessary to use dot-torrent files to download the copies of movies or other content files; users of the Fung sites have to download such a program from elsewhere. As Plaintiffs’ expert explained, “A hash is a unique digital identifier of certain data. It is usually written as a forty-digit long hexadecimal number, where each digit can be 0–9 or A–F.” See also Arista Records LLC v. Lime Group LLC , 784 F. Supp. 2d 398, 423 n.21 (S.D.N.Y. 2011).
5 4

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and the address of one or more “trackers.” Trackers, discussed more below, serve many of the functions of an indexing server; there are many different trackers, and they typically are not connected or related to each other.6 Second, the publisher makes the torrent file available by uploading it to one or more websites (“torrent sites”) that collect, organize, index, and host torrent files. Whereas Napster and Grokster had search functionality built into their client programs, the standard BitTorrent client program has no such capability.7 BitTorrent users thus rely on torrent sites to find and share torrent files. There is no central repository of torrent files, but torrent sites strive to have the most comprehensive torrent collection possible. The Fung sites have two primary methods of acquiring torrent files: soliciting them from users, who then upload the files; and using several automated processes (called “bots,” “crawlers,” or “spiders”) that collect torrent files from other torrent sites. Because of this latter route, which other torrent sites also routinely use, torrent sites tend to have largely overlapping collections of torrents. According to a declaration Fung signed in April 2008, there were then over 400 torrent sites. Because the torrent sites typically contain only torrent files, no copyrighted material resides on these sites.

In an April 2008 declaration, Fung averred that there are “close to two thousand different trackers run by various independent operators.” The source of this statistic was not given. A few BitTorrent client programs have begun to integrate search and download processes in such a way that torrent sites become unnecessary, but that fact is not germane to any issue in this case.
7

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Lastly, the publisher leaves her computer on and connected to the Internet, with her BitTorrent program running. The publisher’s job is essentially done; her computer will continue to communicate with the tracker assigned to the torrent file she uploaded, standing ready to distribute the movie file (or, more accurately, parts thereof) to others upon request. A user seeking the uploaded movie now goes to the torrent site to which the torrent file was uploaded and runs a search for the movie. The search results then provide the torrent file for the user to download. Once the user downloads the torrent file and opens it with his BitTorrent program, the program reads the torrent file, learns the address of the tracker, and contacts it. The program then informs the tracker that it is looking for the movie associated with the downloaded torrent file and asks if there are any peers online that have the movie available for download. Assuming that publishers of that movie are online, the tracker will communicate their address to the user’s BitTorrent program. The user’s BitTorrent program will then contact the publishers’ computers directly and begin downloading the pieces of the movie. At this point, the various publishers are known as “seeders,” and the downloading user a “leecher.” Once the leecher has downloaded one or more pieces of the movie, he, too, can be a seeder by sending other leechers the pieces that he has downloaded. A final few words on trackers. Although no content is stored on or passes through trackers, they serve as a central

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hub of sorts, managing traffic for their associated torrents.8 The tracker’s primary purpose is to provide a list of peers that have files available for download. Fung avers that this function is the only one provided by his two trackers, discussed below. Because trackers are periodically unavailable—they can go offline for routine maintenance, reach capacity, be shuttered by law enforcement, and so on—torrent files will often list addresses for more than one tracker. That way, if the first (or “primary”) tracker is down, the user’s client program can proceed to contact the backup tracker(s). IV. Fung’s role

Three of Fung’s websites—isohunt.com (“isoHunt”); torrentbox.com (“Torrentbox”), and podtropolis.com (“Podtropolis”)—are torrent sites. As described above, they collect and organize torrent files and permit users to browse in and search their collections. Searching is done via keyword; users can also browse by category (movies, television shows, music, etc.).9

8 According to the record in this case, it is also possible, although less efficient, to distribute torrent files and to download their associated content without a tracker, using a technology called DHT, or distributed hash table.

As torrent files are added, isoHunt uses an automated process that attempts to place the torrent file in the appropriate category by looking for certain keywords. Torrent files with the keywords “DVD” and “cam,” for instance— the latter of which refers to a recording of a movie made with a handheld camcorder— would be categorized as movies.

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IsoHunt, however, which appears to be Fung’s “flagship” site, goes a step beyond merely collecting and organizing torrent files. Each time a torrent file is added to isoHunt, the website automatically modifies the torrent file by adding additional backup trackers to it. That way, if the primary tracker is down, the users’ BitTorrent client program will contact the backup trackers, making it more likely that the user will be successful in downloading the content sought. In other words, isoHunt alters the torrent files it hosts, making them more reliable than when they are uploaded to the site. Torrentbox and Podtropolis, in addition to being torrent sites, run associated trackers.10 Their collections of torrent files appear to be fairly small. Every torrent file available on Torrentbox and Podtropolis is tracked by the Torrentbox and Podtropolis trackers, respectively, but the Torrentbox and Podtropolis trackers are much busier than the Torrentbox and Podtropolis websites. For example, a torrent file for the movie “Casino Royale” was downloaded from Torrentbox.com 50,000 times, but the Torrentbox tracker registered approximately 1.5 million downloads of the movie. This disparity indicates that users obtain the torrent files

10 Fung’s fourth website, ed2k-it.com (“Ed2k-it”), is similar to the torrent sites, but works through technology called eDonkey. eDonkey is mostly a centralized system like Napster, but eDonkey client programs—including the popular eMule— can also search other peers directly, as in a pure P2P network. For purposes of this case, however, the distinctions between the technologies are irrelevant; as the district court noted, Fung makes no argument that Ed2k-it should be treated differently than the torrent sites. See Columbia Pictures Indus., Inc. v. Fung , No. CV 06-5578, 2009 W L 6355911, at *2 n.4 (C.D. Cal. Dec. 21, 2009).

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tracked by Torrentbox and Podtropolis from torrent sites other than Torrentbox.com and Podtropolis.com. The Torrentbox and Podtropolis websites both have continuallyupdated lists of, inter alia, the “Top 20 TV Shows,” the “Top 20 Movies,” and the “Top 20 Most Active Torrents.” These rankings are based on the number of seeders and leechers for each particular torrent file, as measured by the Torrentbox and Podtropolis trackers. IsoHunt does not run a tracker, so it cannot measure how frequently the content associated with each torrent file is downloaded; instead, it keeps a continually updated list of the “Top Searches.” IsoHunt also hosts an electronic message board, or “forum,” where users can post comments, queries, and the like. In addition to posting to the forum himself, Fung also had some role in moderating posts to the forum. PROCEDURAL HISTORY This suit, against Fung and several John Does, originally filed in the Southern District of New York, was transferred, on Fung’s motion, to the Central District of California. See Columbia Pictures Indus., Inc. v. Fung, 447 F. Supp. 2d 306 (S.D.N.Y. 2006). Columbia then filed an amended complaint, alleging that Fung was liable for vicarious and contributory copyright infringement, in violation of 17 U.S.C. § 106. On Columbia’s motion for summary judgment on liability, the district court held Fung liable for contributory infringement, for inducing others to infringe Plaintiffs’

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copyrighted material.11 See Columbia Pictures Indus., Inc. v. Fung, No. CV 06-5578, 2009 WL 6355911, at *15 (C.D. Cal. Dec. 21, 2009). Although Fung sought protection in the DMCA safe harbors for “[t]ransitory digital network communications,” 17 U.S.C. § 512(a), “[i]nformation residing on systems or networks at direction of users,” id. § 512(c), and “[i]nformation location tools,” id. § 512(d), the district court concluded that none of the safe harbors were applicable. The district court later entered a permanent injunction that prohibits, generally speaking, “knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs’ Copyrighted Works, including without limitation by engaging in” certain specified activities. The injunction applies to a “list of titles” provided by Columbia. With regard to the initial list of titles provided, Fung was required to comply with the terms of the injunction—most likely, though not necessarily, by implementing a filtering device—within 14 calendar days. Columbia may supplement the list “without restriction”; Fung must comply with the terms of the injunction as to the new titles within 24 hours of receiving any supplemented list. The injunction binds both Isohunt Web Technologies, Inc., and Fung personally, “wherever they may be found, including, without limitation, in Canada” (where Fung is from).

In light of its holding on the inducement theory, the district court did not evaluate whether Fung was liable under the “material contribution” theory of contributory infringement, see Perfect 10, Inc. v. Amazon.com, Inc. , 508 F.3d 1146, 1170–72 (9th Cir. 2007), or as vicarious copyright infringers, id. at 1173–75.

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The day after the injunction was entered, Columbia served Fung with an initial list of over 23,000 titles of copyrighted works. Many of the titles were or contained generic terms, such as “10,” “21,” “Cars,” “Dave,” etc. Other titles were identical or substantially similar to titles of works in the public domain, including “Jungle Book” and “Miracle on 34th Street,” or to titles of works to which Columbia does not own the copyrights. Citing those features of the initial list, Fung protested that the permanent injunction was too broad. In response, the district court modified the injunction to require that Columbia provide additional information about the listed copyrighted material, including the date the material was issued or reissued and the type of media their copyright covers (e.g., film or television show), so that Fung could more readily identify the material. At the same time, the court also admonished that Fung’s concerns were somewhat overblown, as any technical or inadvertent violations would not support a civil contempt finding if all reasonable steps to comply with the injunction were taken. Fung timely appealed, targeting both the liability determination and the scope of the injunction. DISCUSSION As always, we review the district court’s grant of summary judgment de novo, Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133, 1135 (9th Cir. 2010), and “may affirm the district court’s holding on any ground raised below and fairly supported by the record,” Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1226 (9th Cir. 2009). As to the permanent injunction, we review the legal conclusions de novo, the factual findings for clear error, and the decision to grant a permanent injunction, as

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well as its scope, for an abuse of discretion. See Lemons v. Bradbury, 538 F.3d 1098, 1102 (9th Cir. 2008); Sandpiper Vill. Condo. Ass’n v. Louisiana-Pacific Corp., 428 F.3d 831, 840 (9th Cir. 2005); Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9th Cir. 2002). To review for abuse of discretion, “we first look to whether the trial court identified and applied the correct legal rule . . . [then] to whether the trial court’s resolution of the motion resulted from a factual finding that was illogical, implausible, or without support in inferences that may be drawn from the facts in the record.” United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc). I. Liability A. Inducement liability under Grokster III The “inducement” theory, on which the district court’s liability holding was grounded, was spelled out in the Internet technology context by the Supreme Court in Grokster III. Considering how to apply copyright law to file sharing over P2P networks, Grokster III addressed the circumstances in which individuals and companies are secondarily liable for the copyright infringement of others using the Internet to download protected material. Grokster III’s inducement holding is best understood by first backtracking to Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), the seminal Supreme Court case concerning the use of new technologies to reproduce copyrighted material. Sony considered whether secondary liability for infringement could arise solely from the distribution of a commercial product capable of copying copyrighted material—there, the Betamax video tape

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recorder, made by Sony. Owners of copyrights to television programs maintained that Sony could be liable for copyright infringement when its customers used the Betamax to unlawfully tape television shows. There was no evidence that Sony sought to encourage copyright infringement through use of the Betamax or had taken steps to profit from unlawful taping. See id. at 437–38. Instead, the only conceivable basis for secondary liability was distribution of the product “with constructive knowledge of the fact that [Sony’s] customers may use that equipment to make unauthorized copies of copyrighted material.” Id. at 439. Finding “no precedent in the law of copyright for the imposition of vicarious liability on such a theory,” the Court borrowed from the “closest analogy” it could find, patent law’s “staple article of commerce doctrine.” Id. at 439–42. Under that doctrine, distribution of a component part of a patented device will not violate the patent if the component is suitable for substantial non-infringing uses. See id. at 440; 35 U.S.C. § 271(c). As Sony explained, the staple article of commerce doctrine balances competing interests, a copyright holder’s legitimate demand for effective—not merely symbolic—protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.

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464 U.S. at 442. As the Betamax was “capable of commercially significant noninfringing uses,” the Court held Sony not liable for contributory copyright infringement.12 Id. The other major Supreme Court case addressing the mass copying of copyrighted material—there, music and films—through technological means, Grokster III, concerned the use of software applications based on “pure” and “hybrid” P2P network protocols. The defendants, the providers of the copying software to the public, argued for a contributory liability approach similar to that adopted in Sony: as their products were indisputably capable of substantial noninfringing uses, they maintained, they could not be secondarily liable based on their knowledge that their products could be used to infringe copyrights. Instead, the Grokster defendants suggested, they could be liable for contributory infringement only if they had actual knowledge of a specific infringement at a time when they were capable of preventing it. Accepting this theory and recognizing that there was no evidence regarding timely knowledge of specific acts of infringement, the district court granted summary judgment to the defendants, Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (“Grokster I”), 259 F. Supp. 2d 1029, 1046 (C.D. Cal. 2003), and we affirmed, Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (“Grokster II”), 380 F.3d 1154, 1167 (9th Cir. 2004).
Sony declined, however, to “give precise content to the question of how much use is commercially significant.” 464 U.S. at 442. The majority opinion in Grokster III also refused “to add a more quantified description of the point of balance between protection and commerce when liability rests solely on distribution with knowledge that unlawful use will occur,” 545 U.S. at 934, though two concurring opinions discussed the issue at length, see id. at 941–49 (Ginsburg, J., concurring); id. at 949–66 (Breyer, J., concurring).
12

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The Supreme Court did not see Sony as providing such broad insulation from copyright liability. Rather, said the Court, Sony limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law. Grokster III, 545 U.S. at 934–35 (emphasis added). The “staple article of commerce doctrine” adopted in Sony, Grokster III explained, “absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than the mere understanding that some of one’s products will be misused.” Id. at 932–33 (emphasis added). “Thus, where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability.” Id. at 935. Grokster III went on to enunciate the “inducement rule,” also borrowed from patent law, providing that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Id. at 936–37. This inducement principle, as enunciated in Grokster III, has four elements: (1) the distribution of a device or product, (2)

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acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation. See id. i. Distribution of a “device” or “product” In describing the inducement liability standard, Grokster III phrased it as applying to one who distributes a “device,” see id., although it also used the word “product,” seemingly interchangeably, see id. at 934–37. The “device” or “product” was the software developed and distributed by the defendants—for Grokster, its eponymous software, based on FastTrack technology; and for StreamCast, also a defendant in Grokster, its software application, Morpheus, based on Gnutella. See id. at 940 (describing the “device” as “the software in this case”). The analogy between Grokster III and this case is not perfect. Here, Fung did not develop and does not provide the client programs used to download media products, nor did he develop the BitTorrent protocol (which is maintained by nonparty BitTorrent, Inc., a privately-held company founded by the creators of the protocol). Fung argues that because he did not develop or distribute any “device”—that is, the software or technology used for downloading—he is not liable under the inducement rule enunciated in Grokster III. We cannot agree. Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a “device.” As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the

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infringement. For example, a retail copying service that accepts and copies copyrighted material for customers after broadly promoting its willingness to do so may be liable for the resulting infringement although it does not produce any copying machines or sell them; all it provides is the “service” of copying. Whether the service makes copies using machines of its own manufacture, machines it owns, or machines in someone else’s shop would not matter, as copyright liability depends on one’s purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement. Grokster III did phrase the rule it applied principally in terms of a “device.” But that was because it was responding to the main argument made by the defendants in that case—that they were entitled to protection for commercial products capable of significant non-infringing uses, just as Sony was insulated from liability for infringing use of the Betamax. See Grokster III, 545 U.S. at 931–34. When explaining the rationale for permitting secondary infringement liability, Grokster III used more general language: When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement. Id. at 929–30 (emphases added); see also id. at 924 (describing Napster as a “notorious file-sharing service”); id.

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at 925 (describing one defendant’s efforts “to market its service as the best Napster alternative”); id. at 937–38; id. at 939 (describing the import of defendants’ “efforts to supply services to former Napster users”). Since Grokster III, we have not considered a claim of inducement liability on facts closely comparable to those here. But we have, in two cases, considered claims of inducement liability against parties providing services as opposed to products, without suggesting that the difference matters. Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 800–02 (9th Cir. 2007); Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1170 n.11 (9th Cir. 2007). The two Perfect 10 cases confirm that, as one would expect, the inducement copyright doctrine explicated in Grokster III applies to services available on the Internet as well as to devices or products. We hold that Columbia has carried its burden on summary judgment as to the first element of the Grokster III test for inducement liability. ii. Acts of infringement To prove copyright infringement on an inducement theory, Columbia also had to adduce “evidence of actual infringement by” users of Fung’s services. Grokster III, 545 U.S. at 940. This they have done. Both uploading and downloading copyrighted material are infringing acts. The former violates the copyright holder’s right to distribution, the latter the right to reproduction. See 17 U.S.C. § 106(1) & (3); Napster, 239 F.3d at 1014. Based on statistical sampling, Columbia’s expert averred that

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between 90 and 96% of the content associated with the torrent files available on Fung’s websites are for “confirmed or highly likely copyright infringing” material. Although Fung takes issue with certain aspects of the expert’s methodology, he does not attempt to rebut the factual assertion that his services were widely used to infringe copyrights. Indeed, even giving Fung the benefit of all doubts by tripling the margins of error in the expert’s reports, Columbia would still have such overwhelming evidence that any reasonable jury would have to conclude that the vastly predominant use of Fung’s services has been to infringe copyrights. In sum, as in Grokster III, “[a]lthough an exact calculation of infringing use, as a basis for a claim of damages, is subject to dispute, there is no question” that Plaintiffs have met their burden on summary judgment to warrant equitable relief. Grokster III, 545 U.S. at 940–41. iii. With the object of promoting its use to infringe copyright

The third, usually dispositive, requirement for inducement liability is that the “device” or service be distributed “with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” Id. at 936–37. As an initial matter, Fung argues that this factor includes two separate elements—the improper object and “clear expression or other affirmative steps taken to foster infringement.” Not so. “[C]lear expression or other affirmative steps” is not a separate requirement, but, rather, an explanation of how the improper object must be proven. In other words, Grokster III requires a high degree of proof

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of the improper object. Confirming that understanding of the “clear expression” phrase, Grokster III emphasized, right after articulating the inducement factor, that the improper object must be plain and must be affirmatively communicated through words or actions: We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did not find intentional inducement despite the knowledge of the [Betamax] manufacturer that its device could be used to infringe, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise. Id. at 937 (citation omitted). In Grokster III itself, the Court found ample evidence, of several types, to support inducement liability. See id. at 937–40. First, Grokster III relied in part on advertisements as proof of an impermissible, infringing purpose, noting that “[t]he classic instance of inducement is by advertisement or

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solicitation that broadcasts a message designed to stimulate others to commit violations.” Id. at 937. Both Grokster III defendants had engaged in such affirmative solicitation, advertising their software as an alternative to Napster—which notoriously facilitated wide-scale copyright infringement—at a time when Napster’s unlawful activities were about to be shuttered. See id. at 937–38. Second, Grokster III relied for proof of Grokster’s infringing purpose on communications that, while not in haec verba promoting infringing uses, provided information affirmatively supporting such uses. “[B]oth companies,” moreover, “communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials.” Id. at 938. Thus, Grokster included as evidence of an infringing purpose an electronic newsletter distributed by Grokster that linked to articles promoting Grokster’s ability to access copyrighted music. See id. at 938. A third category of “clear expression” recognized in Grokster III as pertinent to proof of improper purpose was explicit internal communication to that effect. As to one of the defendants, Streamcast, “internal communications,” including proposed advertising designs, provided “unequivocal indications of unlawful purpose.” Id. at 938. The Court explained that “[w]hether the messages were communicated [to potential customers] is not . . . the point . . . . The function of the message in the theory of inducement is to prove by a defendant’s own statements that his unlawful purpose disqualifies him from claiming protection.” Id. Thus, the Court went on, “[p]roving that a message was sent out . . . is the preeminent but not exclusive way of showing

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that active steps were taken with the purpose of bringing about infringing acts.” Id. Grokster III also mentioned two sorts of “other affirmative steps” as permissible evidence that support an inference of an intent to induce infringement, while cautioning that such sorts of circumstantial evidence would not be independently sufficient. The first was that “neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software,” which the Court said “underscore[d]” the defendants’ “intentional facilitation of their users’ infringement.” Id. at 939. The Court was careful to caution that “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement.” Id. at 939 n.12. Similarly, Grokster III pointed to the fact that the defendants “make money by selling advertising space, by directing ads to the screens of computers employing their software.” Id. at 940. Because “the extent of the software’s use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing.” Id. Here again, however, “[t]his evidence alone would not justify an inference of unlawful intent.” Id. Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his services with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise.

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As for the necessary “clear expression or other affirmative steps” evidence indicative of unlawful intent, the most important is Fung’s active encouragement of the uploading of torrent files concerning copyrighted content. For a time, for example, isoHunt prominently featured a list of “Box Office Movies,” containing the 20 highest-grossing movies then playing in U.S. theaters. When a user clicked on a listed title, she would be invited to “upload [a] torrent” file for that movie. In other words, she would be asked to upload a file that, once downloaded by other users, would lead directly to their obtaining infringing content. Fung also posted numerous messages to the isoHunt forum requesting that users upload torrents for specific copyrighted films; in other posts, he provided links to torrent files for copyrighted movies, urging users to download them.13 Though not the exclusive means of proving inducement, we have characterized a distributor’s communication of an inducing message to its users as “crucial” to establishing inducement liability. See Visa, 494 F.3d at 801 (quoting Grokster III, 545 U.S. at 937). That crucial requirement was met here. Like Grokster’s advertisements—indeed, even more so—Fung’s posts were explicitly “designed to stimulate
In addition to statements made by Fung personally, the district court relied on statements made by individuals who served as “moderators” of the isoHunt forum, finding that there was an agency relationship between those individuals and Fung. Fung maintains that he did not have the requisite control over the moderators for an agency relationship to exist. In light of the other evidence of unlawful intent, we need not and do not rely on statements made by anyone other than Fung. Nor do we rely on the generic organizational structure of Fung’s websites— i.e., that they organized files in browsable categories or used an automated indexing program that matched filenames with specific terms. These features as used by Fung do not themselves send the type of inducing “message” that would be adequate to prove an unlawful intent. See Grokster III , 545 U.S. at 937.
13

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others to commit [copyright] violations,” and so are highly probative of an unlawful intent. Grokster III, 545 U.S. at 937.14 As in Grokster, moreover, Fung “communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials.” Id. at 938. The record is replete with instances of Fung responding personally to queries for assistance in: uploading torrent files corresponding to obviously copyrighted material, finding particular copyrighted movies and television shows, getting pirated material to play properly, and burning the infringing content onto DVDs for playback on televisions. Two types of supporting evidence, insufficient in themselves—like the similar evidence in Grokster III—corroborate the conclusion that Fung “acted with a purpose to cause copyright violations by use of” their services. Id. at 938. First, Fung took no steps “to develop filtering tools or other mechanisms to diminish the infringing activity” by those using his services.15 Id. at 939. Second, Fung generates revenue almost exclusively by selling advertising space on his websites. The more users who visit

14

See infra pp. 34–35.

15 Fung did attempt to keep certain types of torrents off his websites. First, because Fung is personally opposed to pornography, he took steps to keep torrent files related to pornography out of his sites’ collections. Second, Fung attempted to remove torrent files that led to downloads of fake or corrupted content files. These efforts were not directed at “diminish[ing] the infringing activity” taking place, Grokster III , 545 U.S. at 939, and so are not pertinent to the inducement inquiry (except to show that Fung had the means to filter content on his websites when he chose to do so).

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Fung’s websites and view the advertisements supplied by Fung’s business partners, the greater the revenues to Fung. Because “the extent of the [services’] use determines the gain to [Fung], the commercial sense of [his] enterprise turns on high-volume use, which the record shows is infringing.” Id. at 940. Given both the clear expression and other affirmative steps and the supporting evidence, Fung’s “unlawful objective is unmistakable.” Id. iv. Causation Grokster III mentions causation only indirectly, by speaking of “resulting acts of infringement by third parties.” Id. at 937 (emphasis added).16 The parties here advance competing interpretations of the causation requirement adopted through that locution: Fung and amicus curiae Google argue that the acts of infringement must be caused by the manifestations of the distributor’s improper object—that is, by the inducing messages themselves. Columbia, on the other hand, maintains that it need only prove that the “acts of infringement by third parties” were caused by the product distributed or services provided. We think Columbia’s interpretation of Grokster III is the better one. On that view, if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is

As a reminder, Grokster III ’s articulation was that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Id. at 936–37.

16

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liable for the infringement that occurs through the use of the service. See id. at 937. As Grokster III explained: It is not only that encouraging a particular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Inducement liability goes beyond that, and the distribution of a product can itself give rise to liability where evidence shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable act is not merely the encouragement of infringement but also the distribution of the tool intended for infringing use. Id. at 940 n.13; see also 3-12 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.04[A][4][b] (Matthew Bender, rev. 2010). We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation requirement is that the product or service at issue was used to infringe the plaintiff’s copyrights. The possible reach of liability is enormous, particularly in the digital age. Copyright law attempts to strike a balance amongst three competing interests: those of the copyright holders in benefitting from their labor; those of entrepreneurs in having the latitude to invent new technologies without fear of being held liable if their innovations are used by others in unintended infringing ways; and those of the public in having access both to entertainment options protected by copyright

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and to new technologies that enhance productivity and quality of life. See generally Grokster III, 545 U.S. at 937; Sony, 464 U.S. at 428–32. Because copyright law’s “ultimate aim is . . . to stimulate artistic creativity for the general public good,” Sony, 464 U.S. at 432 (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)), it is important that we not permit inducement liability’s relatively lax causation requirement to “enlarge the scope of [copyright’s] statutory monopolies to encompass control over an article of commerce”—such as technology capable of substantial non-infringing uses—“that is not the subject of copyright protection.” Sony, 464 U.S. at 421. We emphasize a few points in this regard. First, as previously discussed, proper proof of the defendant’s intent that its product or service be used to infringe copyrights is paramount. “[M]ere knowledge of infringing potential or of actual infringing uses” does not subject a product distributor or service provider to liability. Grokster III, 545 U.S. at 937. When dealing with corporate or entity defendants, moreover, the relevant intent must be that of the entity itself, as defined by traditional agency law principles; liability cannot be premised on stray or unauthorized statements that cannot fairly be imputed to the entity.17 See id. at 937 (discussing the evidence that “StreamCast and Grokster,” each a corporate entity, “communicated an inducing message to their software users”). Moreover, proving that an entity had an unlawful purpose at a particular time in providing a product or service does not
There is no question in this case that Fung was authorized to and did speak on behalf of the corporate defendant, isoHunt W eb Technologies, Inc.
17

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infinitely expand its liability in either temporal direction. If an entity begins providing a service with infringing potential at time A, but does not appreciate that potential until later and so does not develop and exhibit the requisite intent to support inducement liability until time B, it would not be held liable for the infringement that occurred between time A and B. Relatedly, an individual or entity’s unlawful objective at time B is not a virus that infects all future actions. People, companies, and technologies must be allowed to rehabilitate, so to speak, through actions actively discouraging the infringing use of their product, lest the public be deprived of the useful good or service they are still capable of producing. See Grokster III, 545 U.S. at 937; Sony, 464 U.S. at 432. We also note, as Fung points out, that Grokster III seemingly presupposes a condition that is absent in this case: that there is but a single producer of the “device” in question. Only Sony sold the Betamax, and only Grokster and Streamcast distributed their respective software applications. Assessing causation was thus a straightforward task. In Sony, for example, there was no question that some customers would purchase and use the Betamax in ways that infringed copyright. Thus, in a “but-for” sense, there was no question that Sony caused whatever infringement resulted from the use of Betamax sets; the Court nonetheless held Sony not liable on the ground that even if Sony caused the infringement, it was not at fault, with fault measured by Sony’s intent. But as Grokster III explained, “nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability.” 545 U.S. at 934. Grokster III thus held that where there is sufficient evidence of fault—that is, an unlawful objective—distributors are liable for causing the infringement that resulted from use of their products. See id. at 940. In

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other words, Grokster III and Sony were able to assume causation and assess liability (or not) based on fault. In the present case, however, where other individuals and entities provide services identical to those offered by Fung, causation, even in the relatively loose sense we have delineated, cannot be assumed, even though fault is unquestionably present. Fung argues, on this basis, that some of the acts of infringement by third parties relied upon by the district court may not have involved his websites at all. He points out, for example, that by far the largest number of torrents tracked by the Torrentbox tracker are obtained from somewhere other than Torrentbox.com. If a user obtained a torrent from a source other than his websites, Fung maintains, he cannot be held liable for the infringement that resulted. Cf. Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 982 (9th Cir. 2011) (affirming the district court’s denial of a preliminary injunction based on Google’s alleged direct copyright infringement because the plaintiff, Perfect 10, failed to show “a sufficient causal connection between irreparable harm to [its] business and Google’s operation of its search engine”); Visa, 494 F.3d at 796–802 (affirming the district court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) in part because the “causal chain” between defendant credit card companies’ services and infringing activity by Internet users was too attenuated). On the other hand, Fung’s services encompass more than the provision of torrent files. Fung’s trackers manage traffic for torrent files, obtained from Torrentbox and Podtropolis as well as other torrent sites, which enables users to download copyrighted content. If Plaintiffs can show a sufficient casual connection between users’ infringing activity and the use of Fung’s trackers, the fact that torrent files were obtained from

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elsewhere may not relieve Fung of liability. See Grokster III, 545 U.S. at 940. We do not decide the degree to which Fung can be held liable for having caused infringements by users of his sites or trackers. The only issue presently before us is the permanent injunction, which, as in Grokster III, does not in this case depend on the “exact calculation of infringing use[] as a basis for a claim of damages.” 545 U.S. at 941. We therefore need not further entertain Fung’s causation arguments at this time, but leave it to the district court to consider them, in light of the observations we have made, when it calculates damages. In sum, we affirm the district court’s holding that Columbia has carried its burden of proving, on the basis of undisputed facts, Fung’s liability for inducing others to infringe Columbia’s copyrights. B. DMCA Safe Harbors Fung asserts affirmative defenses under three of the DMCA’s safe harbor provisions, 17 U.S.C. § 512(a), (c), and (d). Because the DMCA safe harbors are affirmative defenses, Fung has the burden of establishing that he meets the statutory requirements. See Balvage v. Ryderwood Improvement and Serv. Ass’n, Inc., 642 F.3d 765, 776 (9th Cir. 2011). Columbia argues, and the district court agreed, that inducement liability is inherently incompatible with protection under the DMCA safe harbors. This court has already rejected the notion that there can never be a DMCA safe harbor defense to contributory copyright liability, holding “that . . . potential liability for contributory and

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vicarious infringement [does not] render[] the [DMCA] inapplicable per se.” See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001). We note, in this connection, that the DMCA does not in terms exempt from protection any mode of copyright liability, including liability under the doctrine of inducement. Moreover, the DMCA’s legislative history confirms that Congress intended to provide protection for at least some vicarious and contributory infringement. See S. Rep. No. 105-190, 40 (1998); UMG Recordings, Inc. v. Shelter Capital Partners, LLC, — F.3d — (9th Cir. 2013) (noting that § 512(c) does not exclude from its protection vicarious or contributory liability). Nor is there any inherent incompatibility between inducement liability and the requirements that apply to all of the DMCA safe harbors. For example, a prerequisite for the safe harbors is that the service provider implement a policy of removing repeat infringers. See 17 U.S.C. § 512(i)(1)(A). Although at first glance that requirement that might seem impossible to establish where the requisites for inducing infringement are met, see In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003), on closer examination the appearance of inherent incompatibility dissipates. In some instances, for example, the Grokster standard for inducement might be met even where a service provider has a policy of removing proven repeat infringers. It is therefore conceivable that a service provider liable for inducement could be entitled to protection under the safe harbors. In light of these considerations, we are not clairvoyant enough to be sure that there are no instances in which a defendant otherwise liable for contributory copyright infringement could meet the prerequisites for one or more of the DMCA safe harbors. We therefore think it best to

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conduct the two inquiries independently— although, as will appear, aspects of the inducing behavior that give rise to liability are relevant to the operation of some of the DMCA safe harbors and can, in some circumstances, preclude their application. i. “Transitory digital network communications” (17 U.S.C. § 512(a)) The first safe harbor at issue, which Fung asserts only as to his trackers, provides as follows: A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections, if— (1) the transmission of the material was initiated by or at the direction of a person other than the service provider; (2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider;

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COLUMBIA PICTURES INDUSTRIES V . FUNG (3) the service provider does not select the recipients of the material except as an automatic response to the request of another person; (4) no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections; and (5) the material is transmitted through the system or network without modification of its content.

17 U.S.C. § 512(a). For purposes of this safe harbor only, “the term ‘service provider’ means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.” 17 U.S.C. § 512(k)(1)(A). The district court dismissed the application of this safe harbor in a footnote, stating that it did not apply to Fung “[b]ecause infringing materials do not pass through or reside on [Fung’s] system.” The district court should not have rejected this safe harbor on the ground it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d

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1102 (9th Cir. 2007), held that the § 512(a) safe harbor does not require that the service provider transmit or route infringing material, explaining that “[t]here is no requirement in the statute that the communications must themselves be infringing, and we see no reason to import such a requirement.” Id. at 1116; see also id. (“Service providers are immune for transmitting all digital online communications, not just those that directly infringe.”). We could, perhaps, end our analysis of the § 512(a) safe harbor there. The district court seemingly held Fung liable for inducement based not on Fung’s trackers’ routing services, but, instead, on the dot-torrent files Fung collects and indexes. And it is not clear that Columbia is seeking to establish liability based directly on the tracking functions of Fung’s trackers. It appears, however, that Fung’s trackers generate information concerning the torrent files transmitted that Fung then compiles and uses to induce further infringing use of his websites and trackers. In that sense, the tracking function is connected to the basis on which liability was sought and found. Without determining whether that informationgenerating use would itself affect the availability of the § 512(a) safe harbor, we hold that safe harbor not available for Fung’s trackers on other grounds. Unlike a P2P network like Napster, in which users select particular files to download from particular users, Fung’s trackers manage a “swarm” of connections that source tiny pieces of each file from numerous users; the user seeking to download a file chooses only the file, not the particular users who will provide it, and the tracker identifies the source computers to the user seeking to download a work.

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Given these characteristics, Fung’s trackers do not fit the definition of “service provider” that applies to this safe harbor. The definition provides that a “service provider” provides “connections . . . between or among points specified by a user.” 17 U.S.C. § 512(k)(1)(A) (emphasis added). Here, it is Fung’s tracker that selects the “points” to which a user’s client will connect in order to download a file. The tracker, not the requesting user, selects the publishers from which chunks of data will be transmitted. We have held that § 512(a) applies to service provides who act only as “conduits” for the transmission of information. UMG Recordings, — F.3d at — & n.10 (noting that § 512(a) applies “where the service provider merely acts as a conduit for infringing material without storing, caching, or providing links to copyrighted material” (internal quotation marks omitted)); Ellison v. Robertson, 357 F.3d 1072, 1081 (9th Cir. 2004) (discussing the definition of a “service provider” for purposes of § 512(a)); H.R. Rep. 105-551(II), 63 (1998) (explaining that the § 512(a) safe harbor is limited to service providers performing “conduit-only functions”). Because they select which users will communicate with each other, Fung’s trackers serve as more than “conduits” between computer users. Fung’s trackers therefore are not “service providers” for purposes of § 512(a), and are not eligible for the § 512(a) safe harbor. Fung asserts that these functions are “automatic technical processes” that proceed “without selection of any material by us.” Even so, for the tracker to be a “service provider” for purposes of the § 512(a) safe harbor, the tracker, whether its functions are automatic or not, must meet the special definition of “service provider” applicable to this “conduit” safe harbor. If those functions go beyond those covered by

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that definition, then it does not matter whether they are automatic or humanly controlled. See UMG, — F.3d at —; Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 39 (2d Cir. 2012) (discussing “‘conduit only’ functions under § 512(a)”); In re Charter Commc’ns, Inc., Subpoena Enforcement Matter, 393 F.3d 771, 775 (8th Cir. 2005) (noting that § 512(a) “limits the liability of [service providers] when they do nothing more than transmit, route, or provide connections for copyrighted material—that is, when the [provider] is a mere conduit for the transmission”). ii. “Information residing on systems or networks at direction of users” (17 U.S.C. § 512(c)) This safe harbor provides: (1) In general. A service provider18 shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider—

17 U.S.C. § 512(k) defines “service provider” more broadly for purposes of subsection (c) than it does for subsection (a). “As used in [] section[s] other than subsection (a), the term ‘service provider’ means a provider of online services or network access, or the operator of facilities therefor, and includes an entity described in subparagraph (A).” Id. § 512(k)(1)(B).

18

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COLUMBIA PICTURES INDUSTRIES V . FUNG (A) (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

17 U.S.C. § 512(c). The district court held that Fung is ineligible for this safe harbor for the same reason it rejected the § 512(a) safe harbor—that is, because the infringing material does not actually reside on Fung’s servers. As with § 512(a), this holding was in error. As CCBill emphasized, we will not read requirements into the safe harbors that are not contained in the text of the statute. See CCBill, 488 F.3d at 1116.

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Moreover, § 512(c) explicitly covers not just the storage of infringing material, but also infringing “activit[ies]” that “us[e] the material [stored] on the system or network.” 17 U.S.C. § 512(c)(1)(A)(i). Here, as we have explained, the infringing activity associated with Fung—the peer-to-peer transfer of pirated content—relies upon torrents stored on Fung’s websites. According to the record, sometimes those torrents are uploaded by users of the sites, while other torrents are collected for storage by Fung’s websites themselves. The former situation would be at least facially eligible for the safe harbor, assuming the other criteria are met. a. Actual and “Red (512(c)(1)(A)(i)–(ii)) Flag” Knowledge

We nonetheless hold that Fung is not eligible for the § 512(c) safe harbor, on different grounds. The § 512(c) safe harbor is available only if the service provider “does not have actual knowledge that the material or an activity using the material on the system or network is infringing,” 17 U.S.C. § 512(c)(1)(A)(i), or “is not aware of facts or circumstances from which infringing activity is apparent,” id. § 512(c)(1)(A)(ii). In UMG Recordings, — F.3d at —, this court endorsed the Second Circuit’s interpretation of § 512(c)(1)(A), that “the actual knowledge provision turns on whether the provider actually or ‘subjectively’ knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement ‘objectively’ obvious to a reasonable person.” Viacom Int’l, Inc., 676 F.3d at 31.

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Fung maintains that he lacked either type of knowledge, because Columbia failed to provide statutorily compliant notification of infringement. Under § 512(c)(3)(B), notification of infringement that fails to comply with the requirements set forth in § 512(c)(3)(A) “shall not be considered . . . in determining whether a service provider has actual knowledge or is aware of facts or circumstances from which infringing activity is apparent.” 17 U.S.C. § 512(c)(3)(B)(i). And, as Fung points out, the district court noted that there was at least a “triable issue of fact as to the adequacy of the statutory notice that Plaintiffs provided to [Fung].” We need not determine the adequacy of Columbia’s notification of claimed infringement—indeed, as the district court held, it would not be appropriate to do so at this stage. Fung had “red flag” knowledge of a broad range of infringing activity for reasons independent of any notifications from Columbia, and therefore is ineligible for the § 512(c) safe harbor. As noted, the record is replete with instances of Fung actively encouraging infringement, by urging his users to both upload and download particular copyrighted works, providing assistance to those seeking to watch copyrighted films, and helping his users burn copyrighted material onto DVDs. The material in question was sufficiently current and well-known that it would have been objectively obvious to a reasonable person that the material solicited and assisted was both copyrighted and not licensed to random members of the public, and that the induced use was therefore infringing. Moreover, Fung does not dispute that he personally used the isoHunt website to download infringing material. Thus, while Fung’s inducing actions do not necessarily render him

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per se ineligible for protection under § 512(c),19 they are relevant to our determination that Fung had “red flag” knowledge of infringement. Fung introduced no contrary facts with regard to identified torrents involved in these documented activities, responding only with the generalized assertion that he “ha[s] a robust copyright compliance system.” But “conclusory allegations, standing alone, are insufficient to prevent summary judgment.” Newman v. County of Orange, 457 F.3d 991, 995 (9th Cir. 2006) (internal quotation marks and citation omitted).20 As Fung has not carried his burden as the non-moving party of demonstrating a genuine dispute as to the material facts regarding his eligibility for the § 512(c) safe harbor, see Newman, 457 F.3d at 995; see also Fed. R. Civ. P. 56(c)(1)(A), Columbia is entitled to summary judgment as to this issue. Fed. R. Civ. P. 56(e)(3).

19

See supra pp. 37–39.

W e note that it is not clear from the language of § 512(c) or from the pertinent case law, whether exclusion from the § 512(c) safe harbor because of actual or “red flag” knowledge of specific infringing activity applies only with regard to liability for that infringing activity, or more broadly. See Viacom Int’l, Inc. , 676 F.3d at 31 (noting “[t]he limited body of case law interpreting the knowledge provisions of the § 512(c) safe harbor”). However, as we shall explain, that issue does not arise with regard to the § 512(c)(1)(B), “financial benefit/right to control” safe harbor. As we conclude that the § 512(c) safe harbor is not available to Fung on that ground as well, we need not question whether actual or red flag knowledge of specific infringing material or activity eliminates the § 512(c) safe harbor broadly, or only with respect to the known or objectively apparent infringing activity.

20

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COLUMBIA PICTURES INDUSTRIES V . FUNG b. “Financial benefit” & “the right and ability to control” (§ 512(c)(1)(B))

Under § 512(c)(1)(B), a service provider loses protection under the safe harbor if two conditions are met: (1) the provider “receive[s] a financial benefit directly attributable to the infringing activity”; and (2) the “service provider has the right and ability to control such activity.” 17 U.S.C. § 512(c)(1)(B). Fung meets both requirements and is therefore ineligible for protection under the § 512(c) safe harbor. As to the first prong of § 512(c)(1)(B), we have held, in the context of service providers who charge for their services, that a service provider receives a direct financial benefit from infringing activity where “there is a causal relationship between the infringing activity and any financial benefit a defendant reaps, regardless of how substantial the benefit is in proportion to a defendant’s overall profits.” Ellison, 357 F.3d at 1079; see also Napster, 239 F.3d at 1023; CCBill, 488 F.3d at 1117–18 (holding that the Ellison “direct financial benefit” vicarious liability standard applies under 17 U.S.C. § 512(c)(1)(B)). Thus, where a service provider obtains revenue from “subscribers,” the relevant inquiry is “‘whether the infringing activity constitutes a draw for subscribers, not just an added benefit.’” CCBill, 488 F.3d at 1117 (quoting Ellison, 357 F.3d at 1079).21
Our decisions interpreting the “financial benefit” prong of § 512(c)(1)(B) derive almost entirely from our earlier decisions discussing “direct financial benefits” in the context of vicarious liability for copyright infringement. Those cases also involved defendants who derived their revenue from consumers. In particular, our decision in Fonovisa, Inc. v. Cherry Auction, Inc. , 76 F.3d 259, 263–64 (9th Cir. 1996), has been the starting point for our subsequent § 512(c)(1)(B) decisions. In Fonovisa ,
21

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At the same time, our opinions have not suggested that the “financial benefit” prong of § 512(c)(1)(B) is peripheral or lacks teeth. Ellison ultimately concluded that the financial benefit standard was not met, because there was inadequate proof that “customers either subscribed because of the available infringing material or cancelled subscriptions because it was no longer available.” Ellison, 357 F.3d at 1079. And CCBill similarly found that evidence that the service provider hosted, for a fee, websites that contain infringing material inadequate to establish the requisite financial benefit. In so holding, CCBill cited to DMCA legislative history stating that a direct financial benefit cannot be established showing that a service provider “receive[d] a one-time set-up fee and flat, periodic payments for service from a person engaging in infringing activities.” 488 F.3d at 1118 (quoting H.R. Rep. 105-551(II), 54 (1998)). Moreover, the structure of § 512(c)(1)(B) indicates that the lack of direct financial benefit prong of the safe harbor requirement is central, rather than peripheral. The statute sets out as the requirement that the service provider “not receive a financial benefit directly attributable to the infringing activity.” It then states the “right and ability to control” in a dependent clause, describing a limitation on the financial benefit requirement to certain circumstances. The
we held that swap meet operators “reap[ed] substantial financial benefits from admission fees, concession stand sales and parking fees, all of which flow[ed] directly from customers who want[ed] to buy the counterfeit recordings” available at the swap meets. 76 F.3d at 263. In doing so, we relied on district court decisions “imposing vicarious liability on the operator[s] of [dance hall] business[es] where infringing performances enhance[d] the attractiveness of the venue[s] to potential customers.” Id. (citing Polygram Int’l Publ’g, Inc. v. Nevada/TIG, Inc ., 855 F. Supp. 1314, 1332 (D. Mass. 1994)).

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grammatical emphasis, then, is on the lack of direct financial benefit requirement, with the right to control prong secondary. Against this background, we note that we have never specified what constitutes a “financial benefit directly attributable to the infringing activity,” 17 U.S.C. § 512(c)(1)(B) (emphasis added), where, as here, the service provider’s revenue is derived from advertising, and not from users. We do so now. Here, the record shows that Fung generated revenue by selling advertising space on his websites. The advertising revenue depended on the number of users who viewed and then clicked on the advertisements. Fung marketed advertising to one advertiser by pointing to the “TV and movies . . . at the top of the most frequently searched by our viewers,” and provided another with a list of typical user search queries, including popular movies and television shows. In addition, there was a vast amount of infringing material on his websites—whether 90-96% or somewhat less—supporting an inference that Fung’s revenue stream is predicated on the broad availability of infringing materials for his users, thereby attracting advertisers. And, as we have seen, Fung actively induced infringing activity on his sites. Under these circumstances, we hold the connection between the infringing activity and Fung’s income stream derived from advertising is sufficiently direct to meet the direct “financial benefit” prong of § 512(c)(1)(B). Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what

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occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fung’s revenue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he received. With respect to the second prong of § 512(c)(1)(B), we recently explained in UMG that the “right and ability to control” infringing activity involves “something more” than “merely having the general ability to locate infringing material and terminate users’ access.” UMG, — F.3d —. Adopting the Second Circuit’s interpretation of § 512(c)(1)(B), we held that “in order to have the ‘right and ability to control,’ the service provider must [also] ‘exert[] substantial influence on the activities of users.’” Id. (quoting Viacom Int’l, Inc., 676 F.3d at 38) (second alteration in original). In doing so, we noted that “‘[s]ubstantial influence’ may include . . . purposeful conduct, as in Grokster.” Id. In the absence of any evidence of inducement or any other reason to suggest the defendant exerted substantial influence over its users’ activities, we concluded the defendant was not ineligible for protection under this provision. Id. Here, we are confronted with the opposite situation. Fung unquestionably had the ability to locate infringing material and terminate users’ access. In addition to being able to locate material identified in valid DMCA notices, Fung organized torrent files on his sites using a program that matches file names and content with specific search terms describing material likely to be infringing, such as “screener” or “PPV.” And when users could not find certain material likely to be infringing on his sites, Fung personally assisted them in locating the files. Fung also personally removed “fake[], infected, or otherwise bad or abusive torrents” in

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order to “protect[] the integrity of [his websites’] search index[es].” Crucially, Fung’s ability to control infringing activity on his websites went well beyond merely locating and terminating users’ access to infringing material. As noted, there is overwhelming evidence that Fung engaged in culpable, inducing activity like that in Grokster III. Although Fung’s inducement actions do not categorically remove him from protection under § 512(c), they demonstrate the substantial influence Fung exerted over his users’ infringing activities, and thereby supply one essential component of the financial benefit/right to control exception to the § 512(c) safe harbor. Because he meets both prongs of § 512(c)(1)(B), Fung is not eligible for protection under the § 512(c) safe harbor. We have no difficulty concluding that where the § 512(c)(1)(B) safe harbor requirements are not met, the service provider loses protection with regard to any infringing activity using the service. See supra note 20. As we held in UMG, the § 512(c)(1)(B) “right and ability to control” requirement does not depend only upon the ability to remove known or apparent infringing material. — F.3d at —. Instead, there must also be substantial influence on the infringing activities of users, indicating that it is the overall relationship between the service provider and infringing users that matters. Also, to the degree this DMCA provision had its origin in vicarious liability concepts, see CCBill 488 F.3d at 1117, those concepts rest on the overall relationship between the defendant and the infringers, rather than on specific instances of infringement. See Napster, 239 F.3d 1023–24 (discussing Napster’s general ability to “control[] and

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patrol[]” content on its system); id. at 1022 (noting that “[v]icarious copyright liability is an ‘outgrowth’ of respondeat superior” (quoting Fonovisa, 76 F.3d at 262)). The term “right and ability to control such activity” so reflects, as it emphasizes a general, structural relationship and speaks of “such activity,” not any particular activity. We therefore hold that because Fung does not meet the requirements of § 512(c)(1)(B), he is outside of the § 512(c) safe harbor with respect to all infringement activity on the sites that are the subject of this suit. iii. “Information location tools” (17 U.S.C. § 512(d)) The last safe harbor Fung invokes provides: A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider referring or linking users to an online location containing infringing material or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link, if the service provider— (1) (A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of

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COLUMBIA PICTURES INDUSTRIES V . FUNG facts or circumstances from which infringing activity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed infringement as described in s u b s e c t i o n (c)(3), res p o n d s expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity, except that, for purposes of this paragraph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate that reference or link.

17 U.S.C. § 512(d).

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We affirm the grant of summary judgment to Columbia on Fung’s claim to the § 512(d) safe harbor for the reasons just discussed with regard to § 512(c): Fung was broadly “aware of facts or circumstances from which infringing activity [wa]s apparent.” 17 U.S.C. § 512(d)(1)(B). Moreover, he received a direct financial benefit from that infringing activity, and had the “right and ability to control such activity.” Id. § 512(d)(2). II. Injunction Under 17 U.S.C. § 502(a), a district court is empowered to grant a permanent injunction “as it may deem reasonable to prevent or restrain infringement of a copyright.” Fung does not challenge the issuance of injunctive relief generally, only the scope of the injunction issued. In particular, Fung argues that the permanent injunction is vague and unduly burdensome.22 We consider each argument in turn. A. Vagueness Rule 65(d) requires “[e]very order granting an injunction” to “state its terms specifically” and to “describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required.” Fed. R.

Fung also maintains that the injunction is impermissibly extraterritorial, but that argument is wrong as a matter of fact. The injunction explicitly applies only to acts of infringement “that take place in the United States.” Fung also challenges the injunction in other respects not discussed in the text. W e have considered them and find them without merit.

22

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Civ. P. 65(d)(1)(B)–(C). “‘[O]ne basic principle built into Rule 65 is that those against whom an injunction is issued should receive fair and precisely drawn notice of what the injunction actually prohibits.’” Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d 1075, 1086–87 (9th Cir. 2004) (quoting Union Pac. R.R. v. Mower, 219 F.3d 1069, 1077 (9th Cir. 2000)). “The Rule was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood.” Id. (quoting Schmidt v. Lessard, 414 U.S. 473, 476 (1974)). Generally speaking, “an ordinary person reading the court’s order should be able to ascertain from the document itself exactly what conduct is proscribed.” 11A Charles A. Wright et al., Federal Practice & Procedure § 2955 (2d ed.). Several provisions of the permanent injunction fail to meet this standard. First, the injunction’s definition of a key phrase, “Infringement-Related Terms,” is too vague to provide the notice required by Rule 65(d). The injunction prohibits Fung from “including Infringement-Related Terms in metadata for any webpages”; “creating, maintaining or providing access to browsable website categories of Dot-torrent or similar files using or based on Infringement-Related Terms”; and “organizing, harvesting or categorizing Dot-torrent or similar files using or based on Infringement-Related Terms.” But subsection (ii) of the definition of the phrase “InfringementRelated Terms” states that it includes “terms that are widely known to be associated with copyright infringement (for example ‘warez,’ ‘Axxo,’ ‘Jaybob,’ ‘DVD Rips,’ ‘Cam,’ ‘Telesync,’ ‘Telecine,’ ‘Screener,’ or ‘PPV.’).” Beyond the specifically-named examples, no one reading this injunction

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can tell what it means for a term to be “widely known to be associated with copyright infringement.” We understand the desire to build flexibility into the injunction. But Rule 65(d), overall, prefers certainty to flexibility. See Fortyune, 364 F.3d at 1086–87. Subsection (ii) of the injunction’s definition of “Infringement-Related Terms” therefore must be modified to state simply that the phrase includes specifically named terms. Given that the district court has jurisdiction to enforce the injunction, Columbia can request modification in the future to add, upon competent proof, specific other terms as well. Other provisions suffer from similar problems. Paragraph 3(j) prohibits “soliciting or targeting a user base generally understood, in substantial part, to be engaging in infringement of, or seeking to infringe, Plaintiffs’ Copyrighted Works.” This language targets a Grokster-like situation, in which Grokster sought to attract former Napster users. But the language used is simply too imprecise, as the resort to the term “generally understood” indicates. How is one to determine what is “generally understood”—whose knowledge matters, and how widespread must the understanding be? And what is a “user base,” an undefined term? It is also unclear whether the “in substantial part” refers to the “user base,” the “generally understood” phrase, or the “engaging in infringement” phrase. Unless it can be rewritten to comply with the requirements of Rule 65(d) for fair notice through adequate specificity and detail, Paragraph 3(j) must be excised. See Rule 65(d); Fortyune, 364 F.3d at 1086–87. Similarly, paragraph 3(l) prohibits “indexing or providing access to Dot-torrent or similar files harvested or collected from well-known infringing source sites, such as ‘The Pirate

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Bay.’” Here again, Rule 65(d) requires more specificity. Paragraph 3(l) must be amended to omit the vague words “well-known infringing source sites, such as,” and to specify the particular infringing sites covered—with the caveat, again, that Plaintiffs can seek to amend the list in the future. Another provision of the injunction states that after receiving a list of titles from the Plaintiffs, Fung is required to have a mechanism in place to ensure that he is not facilitating the infringement of those titles. Fung complains that Plaintiffs’ lists of titles are error-filled and that Fung “[is] compelled to locate and correct [the errors] under threat of contempt proceedings.” Although the injunction is reasonably clear in this regard, we clarify that Fung has no burden to correct Plaintiffs’ errors. B. Unduly burdensome Fung maintains, and we agree, that certain provisions of the injunction could be interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright, even if those other companies are not themselves liable for primary or secondary copyright infringement. Fung argues that such a restriction would be unduly burdensome. “‘[I]njunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs’ before the court.” L.A. Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 664 (9th Cir. 2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979)). We agree that insofar as the injunction can be interpreted to prohibit Fung from seeking legitimate employment, it is more burdensome than necessary to provide Plaintiffs relief. Accordingly, the

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permanent injunction should be amended appropriately to limit the employment prohibition. We leave the final wording to the district court. CONCLUSION In sum, we affirm the district court’s grant of summary judgment to Plaintiffs on liability. We also affirm summary judgment to Plaintiffs on Fung’s claims that he is entitled to the safe harbors provided by 17 U.S.C. § 512(a), (c), and (d), albeit on grounds different than those relied upon by the district court. The permanent injunction is modified as noted above. Costs are awarded to the Plaintiffs. AFFIRMED IN PART, VACATED IN PART, INJUNCTION MODIFIED IN PART.

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EXHIBIT B DISTRICT COURT OPINION (December 21, 2009)

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COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs, v. GARY FUNG, et al., Defendants. CV 06-5578 SVW (JCx) I. INTRODUCTION In September 2006, Plaintiffs filed a Complaint alleging copyright infringement against Defendant Gary Fung ("Fung"). [Doc. No. 1.] Plaintiffs' Complaint contends that Fung operated a file-sharing service as well as related computer servers as a part of an ongoing file-sharing network that profits from alleged copyright infringement by its users. Plaintiffs then filed a First Amended Complaint adding Defendants Isohunt Web Technologies, Inc. ("Isohunt, Inc.") and Does 1 through 10. [Doc. No. 13.]. (The Court refers to Fung and Isohunt, Inc. collectively as "Defendants.")
1

1 The Plaintiffs in this action are: Columbia Pictures Industries, Inc.; Disney Enterprises, [*3] Inc.; Paramount Pictures Corporation; Tristar Pictures, Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLLP; Universal City Studios Productions LLLP; and Warner Bros. Entertainment, Inc. Plaintiffs now bring this Motion for Summary Judgment [Doc. No. 249] on the grounds that Defendants' users have infringed their copyrights and are liable under theories of inducement, contributory infringement, and vicarious infringement. The Court requested Supplemental Briefing in an Order dated April 3, 2008. [Doc. No. 342.] The Court requested further Supplemental Briefing and augmentation of the record in an Order dated August 25, 2009. [Doc. No. 358.] The material facts supporting Plaintiffs' claims are almost wholly unrebutted. Generally, Defendants' rest their case on legal arguments and meritless evidentiary objections, and offer little of their own evidence that directly addressed Plaintiffs' factual assertions. Accordingly, summary judgment is appropriate in the present case. Having considered the moving papers, as well as arguments presented at hearing and in supplemental briefing, the Court Grants Plaintiffs' Motion for Summary Judgment on Liability. II. [*4] FACTUAL BACKGROUND A. The Torrent Structure Plaintiffs own or control a large quantity of copyrights within the entertainment and popular media fields. (Plaintiffs' Statement of Undisputed Facts ("Pls.' SUF"), P

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1). Defendant Fung maintains and operates a number of websites, including www.isohunt.com, www.torrentbox.com, www.podtropolis.com, and www.ed2kit.com (collectively "Fung sites" or "Defendants' sites"), that allow users to download files to their computers. Plaintiffs maintain that Fung and his websites facilitate their users' infringement of copyrighted files. Specifically, Plaintiffs assert that, through his operation and promotion of the websites, Fung allows users to download infringing copies of popular movies, television shows, sound recordings, software programs, video games, and other copyrighted content free of charge. Users of the Fung sites have downloaded works that are copyrighted by Plaintiffs; these downloads have taken place without authorization from Plaintiffs. (Pls.' SUF, PP 2-3.) The Fung sites are an evolutionary modification of traditional "peer-to-peer" sharing sites such as Napster and Grokster. A peer-to-peer service provides a method for users of a network [*5] to exchange files quickly and easily between the individuals on the network - other "peers". See, e.g., Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, 919, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). (See also Horowitz Decl., at P 12.) The content of the files shared therefore resides on the computers of individual users rather than on central servers. (Horowitz Decl., at P 12.)
2

2 Ellis Horowitz is a Professor of Computer Science and Electrical Engineering at the University of Southern California. Mr. Horowitz has served as a tenured professor since 1983 and his relevant research has been in the field of software development. (Horowitz Decl., at PP 3, 5.) On summary judgment, expert opinions are admissible under the general requirements of Fed. R. Evid. 702, which requires that the testimony be based on sufficient facts and be the product of reliable principles and methods, and that the witness has applied the principles and methods reliably to the facts of the case. On summary judgment, expert testimony is also subject to Fed. R. Civ. P. 56(e)(1), which requires a showing [1] that "the affiant is competent to give an expert opinion and [2] the factual basis for the opinion is stated in the affidavit, [*6] even though the underlying factual details and reasoning upon which the opinion is based are not." Bulthuis v. Rexall Corp., 789 F.2d 1315, 1318 (9th Cir. 1985). Here, Horowitz's testimony is admissible on summary judgment. See also Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 130-31, 133, 150, 152 (S.D.N.Y. 2009) (relying on Horowitz's testimony).

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Further, the Court notes that both parties' experts (Dr. Horowitz and Dr. Waterman for Plaintiffs, and Dr. Gribble for Defendants) are generally unrebutted. (See also footnotes 7 and 13, infra, for a discussion of the other experts' qualifications.) Generally, the Court relies on the experts with respect to three matters: first, the technological structure of Defendants' websites, which is agreed-upon in all material respects by Dr. Gribble (for Defendants) and Dr. Horowitz (for Plaintiffs); second, the statistics regarding Defendants' users' downloading activities, which is set forth by Dr. Waterman (for Plaintiffs) and wholly unaddressed by Defendants' evidence; and third, the dispute over whether or not Defendants were technologically capable of filtering copyright-infringing materials from their websites, upon which Dr. [*7] Gribble and Dr. Horowitz disagree (and is discussed in greater detail infra, Part IV.B.4). Accordingly, the experts' declarations set forth admissible facts. Where unrebutted, these facts allow summary judgment in favor of the party proferring the expert testimony on that particular issue. Where the experts' disagreement raises a genuine dispute, the Court will address the dispute accordingly. Through use of the Fung sites, which are commonly known as "BitTorrent" or "torrent" sites, users download content directly from the computers of other users and not directly from the servers of the Defendants, thus operating as a sharing service of the peer-to-peer variety. (See Horwitz Decl., at P 16.) In a BitTorrent network, however, the download process is unique from that of previous systems such as Napster and Grokster. Rather than downloading a file from an individual user, users of a bittorrent network will select the file that they wish to download, and, at that point, the downloading will begin from a number of host computers that possess the file simultaneously. (See id. at PP 23-24.) BitTorrent technology relies on a variety of mechanisms in order to accomplish the ultimate downloading [*8] of an given file, including: (1) a software application that users download, which is commonly referred to as a "client application"; (2) websites, also known as "torrent sites," which allow users to select "dot-torrent files" that they wish to download; and (3) servers, also known as "trackers," that manage the download process. (Horwitz Decl., at P 17.) The client applications and trackers work together through the use of a "BitTorrent protocol" which standardizes the client-client and client-tracker communications. (Id.) These components essentially work together to allow individuals to visit a torrent site, download files, and keep track of those downloads - as well as discover additional persons to download from - through the use of trackers. In such a system the downloading of the desired content is occurring from multiple source points at the same time and allowing larger downloads to move more expeditiously. During this simul3

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taneous downloading process users form what is known as a "swarm," which allows for quick exchange of the downloading material.
4

3 Napster involved a peer-to-peer network with a central "search index" that served as Napster's collective directory for the [*9] files available on the server at any given time. In order to download the files from another user in the Napster network, the individual would search the Napster server for the desired file and then select the desired file from a list of available users in the network. Similar to other peer-to-peer networks, the actual files shared never passed through or resided on the Napster servers. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011-1013 (9th Cir. 2001). In contrast, the technology in the Grokster and Kazaa networks provided a distinct form of the peer-to-peer network. Unlike Napster, there was no central indexing of available files. Instead, an individual scanning through the Grokster software would enter a search term and the software itself, through use of a supernode - or indexing computer - would contact other computers seeking matching files. When a result was found matching the query, the information regarding the results (the IP address and other information) would be sent to the requesting computer. The searching user would then download directly from the relevant computer and the file would be placed in the designated folder of the requesting computer. See Grokster, 545 U.S. at 921. [*10] In a variation of this network, known as Gnutella, the process is similar but involves no supernodes. Instead, the peer computers communicate directly with each other through the network and requests go directly to other connected users. See id. at 922. 4 Plaintiffs acknowledge that one of the Fung sites, www.ed2k-it.com, is based on another form of technology known as "eDonkey." (Mot., at 6 n.4.) The Court agrees with Plaintiffs' expert that "the basic elements of eDonkey and BitTorrent technology play similar roles," and that the minor technical distinctions are not material to the present dispute. (See Horowitz Decl. PP 30-34.) Notably, Defendants do not provide any arguments specifically premised on the difference in technology of "eDonkey." Accordingly, in order to download files from others in a BitTorrent network, users must engage in a number of steps. First, users must install a BitTorrent client application. (Horowitz Decl., P 18.) Standing alone, a BitTorrent client application does not possess the ability to search other computers for files. Instead, as part of the second step, users must visit a torrent site for the purpose of locating dot-torrent files containing the content [*11] that they wish to download. (Id. at P 19.) These torrent sites maintain indexes of available torrent files for download that users may search, or, in the alternative, users may upload torrent files to share with others through the
5

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torrent site. (Id.) These torrent files are referred to as "dot-torrent" files in reference to their file extension name. The dot-torrent files do not contain the actual content item searched for; rather, the dot-torrent file contains the data used by the BitTorrent client to retrieve the content through a peer-to-peer transfer. (Id. at P 21.) In the third step, once the user clicks on the desired dot-torrent file, the BitTorrent client will locate and download the actual content item. (Id. at P 22.) This is accomplished through the use of trackers that are contained within the dot-torrent file. The dot-torrent file contains "hash" values that are used to identify the various pieces of the content file and the location of those pieces in the network. The BitTorrent client application then simultaneously downloads the pieces of the content file from as many users as are available at the time of the request, and then reassembles the content file on the [*12] requesting computer when the download is complete. (Id. at P 23.) Once a user downloads a given content file, he also becomes a source for future requests and downloads. (Id.)
6

5 Torrent sites are websites accessible through the use of an Internet browser. (Horowitz Decl., P 20.) 6 Accordingly, the extension of those files searched on a torrent site would be ".torrent" in contrast to prior incarnations of peer-to-peer networks where users would search for a file with an extension such as ".mp3" or ".doc". The advantage of BitTorrent technology is the cumulative nature of its downloading and economies of scale. As more users download a given file, there are more sources for the file pieces necessary for others. This process, whereby individuals maybe be uploading and/or downloading from many sources at any given time is known as a "swarm." (Id. at P 24.) This prevents a backlog of users waiting to download from one individual user with the source file. B. Sites Maintained by Defendant Fung Defendant Fung operates a number of websites, including www.isohunt.com ("Isohunt"), www.torrentbox.com ("Torrentbox"), www.podtropolis.com ("Podtropolis"), and www.ed2k-it.com ("eDonkey"). The structure [*13] and manner in which users download files from these sites differs in certain respects. The BitTorrent websites - Isohunt, Torrentbox, and Podtropolis - all provide users the ability to search for and download BitTorrent files. (Horowitz Decl., at P 26.) As explained by Defendants' expert Steven Gribble, "the defendants' Web sites collect, receive, index, and make available descriptions of content, including so-called 'dot-torrent files,' and they also provide access to 'open-access' BitTorrent Trackers." (Gribble Decl. P 4A.)
7

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7 Steven Gribble is an Associate Professor of Computer Science and Engineering at the University of Washington. Dr. Gribble's research focuses on computer systems and computer security, and has focused in the past on the operations of peer-to-peer systems. (Gribble Decl. P 1.) For the reasons discussed in footnote 2, supra, Gribble's testimony is admissible on summary judgment. Users of BitTorrent websites click on a "download torrent" button or link on the website that will begin the downloading process described above. (Id. at P 27.) The elements of the downloading process work together to bring the desired content to the user's computer without any further actions [*14] by the user. (Id.) As one of Plaintiffs' experts explains: "[t]he only purpose of a dot-torrent file is to enable users to identify, locate, and download a copy of the actual content item referenced by the dot-torrent file. . . . Once a user has clicked the 'download' torrent button or link, the . . . desired content file should begin downloading to the user's computer without any further action or input from the user." (Horowitz Supp. Decl., PP 5-6.) The BitTorrent websites, as set forth in further detail below, also contain a number of categories from which users can select files to download, including "Top Searches," "Top 20 Movies," "Top 20 TV Shows," "Box Office Movies." (SUF PP 8-12, 4755.) For example, the Isohunt home page contains a listing of "Top Searches," which provides a listing of the most commonly searched-for terms by users of the websites. This category contained code filtering out pornography-related terms from the "Top Searches" display. (Id. at P 59.) The items found within the "Top Searches" category are all associated with copyrighted content. (SUF, at P 8.) Much the same holds true for the "Top 20 Most Downloaded Torrents" on Defendant Fung's Torrentbox site. [*15] (Id. at 9.) Another of Defendants' sites, Podtropolis, simply contains lists of the "Top 20 Movies" and "Top 20 TV Shows," all of which correspond to copyrighted content. (Id. at P 10.) The ed2k-it website contains files in lists entitled "High Quality DVD Rips" and "TV Show Releases," all of which correspond to copyrighted content. (Id. at P 11.)
8 9

8 The "Box Office Movies" feature, although once available, is no longer an element of the website. (Horowitz Decl., P 39-40; Defs.' SGI, P 57.) There is no dispute, however, that this category was once on the BitTorrent website. 9 Defendant Fung attempts to dispute these facts, but not on the grounds that the factual statements are inaccurate. Instead, he contends that these elements of the website provide only a small sample of what is available on the website. Whether or not this is true, it does not rebut the factual accuracy of the claims that Plaintiffs set forth. Defendant Fung also asserts that the lists created by

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these categories are user-generated and, therefore, simply reflect user demand on the site. This argument ignores the fact that Defendants created and operated the websites in a manner that placed these "user-generated" categories [*16] on the websites. Plaintiffs note that the meta tags used on Fung's websites often included the term "warez" as a header for every page. Plaintiffs also point to certain other elements of the webpage that related to known copyrighted material. Defendants, on the home page of the Isohunt website, asked users to upload dot-torrent files of Box Office Movies and also maintained a list of the top twenty grossing movies in U.S. theaters at the time. (SUF, at PP 50-51.) These lists served the function of getting users to upload dot-torrent files of the latest blockbuster films and have them posted on the Isohunt website. (Id. at 52-54.)
10 11 12

10 Meta tags are terms commonly embedded into web pages in order to allow search engines to more quickly categorize the substance of a given webpage. 11 The term "warez" is a term used to refer to pirated content. See Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 133 (S.D.N.Y. 2009). (See also SUF, at P 25.) 12 Plaintiffs acknowledge that, at some point, the "Box Office Movies" feature was discontinued on the website. (SUF, at P 54.) Plaintiffs engaged in a randomized statistical analysis of the works available on the Isohunt and Torrentbox [*17] sites. According to Plaintiffs' expert Richard Waterman, approximately 95% of downloads occurring through Defendants' sites are downloads of copyright-infringing content. (See Waterman Decl. PP 6-7.) Waterman's study of the Torrentbox downloads used actual user downloads from log files that were made available upon discovery requests. Waterman further states that 95.6% of all dot-torrent files downloaded from Torrentbox are for either copyrighted or highly likely copyrighted material. (Id. at P 31.) In a study of the Isohunt website, Waterman found that approximately 90% of files available and 94% of dot-torrent files downloaded from the site are copyrighted or highly likely copyrighted. (Id. at PP 24, 28.) Though Defendants raise conclusory boilerplate objections to Waterman's declaration, Defendants fail to call Waterman's factual conclusions into doubt. (See Defs.' Evidentiary Objections, at 10-19.) Despite Defendants' repeated assertions that the evidence is based on "junk science," (id.) Defendants fail to rebut Waterman's statement that he relied on the standard statistical sampling techniques used in his field. (Waterman Decl. P 8 n.1.) It is also noteworthy that numerous [*18] courts have relied on such statistical sampling. See Arista Records, 633 F. Supp. 2d at 14445; MGM Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985 (C.D. Cal. 2006); A & M Records, Inc. v. Napster, 114 F. Supp. 2d 896, 902-03 (N.D. Cal. 2000), aff'd,
13

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239 F.3d 1004 (9th Cir. 2001). To the extent that the evidence suggests an unrealistic level of accuracy, the Court notes that Waterman's data shows that these numbers are accurate to a 95% confidence level, and include margins of error of plus-or-minus 5% or less. (See Waterman Decl. PP 13, 14, 18, 25, 29, 32, 34.) Further, Plaintiffs provide the specific data upon which Waterman based his categorization of available files as infringing, likely infringing, and non-infringing. (See Pls.' Ex. T, Waterman Depos., at 39, 48; Friedman Decl. PP 11, 15, 16.) In any event, for the purposes of this case, the precise percentage of infringement is irrelevant: the evidence clearly shows that Defendants' users infringed on a significant scale. It simply does not matter whether 75% (to pick a number) of available materials were copyrighted or 95% of available materials were copyrighted; and even if this distinction did matter, Defendants [*19] have simply failed to satisfy their summary judgment burden by submitting admissible evidence that raises a triable dispute regarding Plaintiffs' evidence that a substantial percentage of the available files included copyright-infringing or highly likely copyright-infringing content. 13 Richard Waterman is an Adjunct Associate Professor of Statistics at the University of Pennsylvania's Wharton School of Business. (Waterman Decl. P 1.) Dr. Waterman operates a statistics consultancy and has testified in a similar case involving secondary copyright infringement. See Arista Records LLC, 633 F. Supp. 2d at 143-44. For the reasons discussed in footnote 2, supra, Waterman's testimony is admissible on summary judgment. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) ("When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'") (internal citations omitted). C. Fung's Participation in the Websites In addition to [*20] the general structure of the pages maintained by Defendants, Defendant Fung has personally made a number of statements regarding the copyrighted nature of the works available on his sites. In one such post on the Isohunt website Defendant Fung responded to a user's post by stating "they accuse us for [sic] thieves, and they r [sic] right. Only we r [sic] 'stealing' from the lechers (them) and not the originators (artists)." (SUF, at P 14.) In an interview Fung stated: "Morally, I'm a Christian. 'Thou shalt not steal.' But to me, even copyright infringement when it

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occurs may not necessarily be stealing." (Id. at P 15.) In another post Fung stated: "We completely oppose RIAA & Co. so do not be alarmed by our indexing activities. . . ." (Id. at P 18.) In another interview Fung also stated that users were attracted to his website by the availability of a blockbuster film of the time, The Da Vinci Code. (Id. at P 20.) Fung's other statements included references to aiding individuals in the download of then-popular movie titles such as The Matrix Reloaded and The Lord of the Rings: Return of the King, pointing users to links where they could download copies of these movies through the torrent sites. [*21] (Id. at PP 27-29.) Other statements made on the website encouraged or made available the downloading of illegal content by users who were browsing the discussion forums on Fung's websites. (Id. at PP 33-46.) Plaintiffs also provide details relating to the assistance that Fung would give website users in downloading copyrighted material within the forum discussions of the various websites. In one such instance, in response to a user query on how to make a DVD from a downloaded copy of the film Pirates of the Caribbean, Fung provided a link to a website that would allow the individual to burn a DVD of the downloaded copy. (SUF, at 68.) Fung provided users with assistance on a number of occasions regarding how they could go about playing or extracting the copyrighted films that they downloaded from the Defendants' websites. (Id. at 70, 72.) Fung also provided assistance to a user who was searching for episodes of the television series Star Trek: Enterprise; Fung provided links to search possible search queries that would turn up the work. (Id. at 71.) Fung also provided technical advice regarding the use of "trackers" in response to emails containing dot-torrent files connected with copyrighted [*22] television programs, such as the NBC series The Office. (Id. at 79.) III. SUMMARY JUDGMENT STANDARD A. Rule 56 Standard Rule 56(c) requires summary judgment for the moving party when the evidence, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Tarin v. County of Los Angeles, 123 F.3d 1259, 1263 (9th Cir. 1997). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex Corp v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). When a party moves for summary judgment under Rule 56(c), that party bears the burden of affirmatively establishing all elements of its legal claim. See Southern Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885 (9th Cir.

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2003) (per curiam) (adopting District Court order as its own); see also Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) ("[I]f the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential [*23] elements of the claim or defense to warrant judgment in his favor.") (emphasis in original). Once the moving party has met its initial burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and identify specific facts that show a genuine issue for trial. See Celotex, 477 U.S. at 323-34; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact. Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is precluded only if there is a genuine dispute "where the evidence is such that a reasonable jury could return a verdict for the nonmoving party" over facts that might affect the outcome of the suit under the governing law. See Anderson, 477 U.S. at 248; see also Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001) (the nonmoving party must identify specific evidence from which a reasonable jury could return a verdict in its favor). B. Evidentiary Standards Under the Local Rules of this Court, the Court may base its judgment on the facts stated in the moving party's "Statement of Uncontroverted [*24] Facts and Conclusions of Law," L.R. 56-1, but only to the extent that the facts are "adequately supported by the moving party" -- i.e., with evidence in the record -- and are uncontroverted by evidence submitted or identified by the opposition. L.R. 56-3. "A trial court can only consider admissible evidence in ruling on a motion for summary judgment." Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002); see also Fed. R. Civ. P. 56(e). Of course, the court need only consider evidentiary objections if the Court actually relies on such evidence. Thus, to the extent that the Court relies on evidence to which a party has properly objected, the Court will address these objections in the course of this Order. IV. ANALYSIS A. Preliminary Issues Regarding Secondary Liability 1. Secondary Theories of Liability

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Plaintiffs move for summary judgment against defendants on three separate grounds: inducement of copyright infringement, material contribution to copyright infringement, and vicarious copyright infringement. The Court will only address the first theory, because Defendants' inducement liability is overwhelmingly clear. Discussion of Plaintiffs' alternative theories of liability would be unnecessarily [*25] duplicative with respect to the central question at issue in this Motion: Defendants' secondary liability for its users' copyright infringement. The first two theories (material contribution and inducement) are known collectively as "contributory liability." Perfect 10 v. Visa Int'l Serv. Ass'n, 494 F.3d 788, 795 (9th Cir. 2007) ("One contributorily infringes when he (1) has knowledge of another's infringement and (2) either (a) materially contributes to or (b) induces that infringement."), cert. denied, 128 S. Ct. 2871, 171 L. Ed. 2d 811 (2008). Despite the analytical similarities between the inducement and material contribution theories, it is now established in this Circuit that inducement and material contribution are distinct theories of contributory liability through which defendants can be found liable. Id.; see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1227 (C.D. Cal. 2007) ("Grokster V") ("material contribution and inducement are two doctrinal subsets of the contributory infringement theory of liability."). Generally, inducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright, see Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 936-37, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) [*26] ("Grokster III"); in contrast, material contribution (in the context of "computer system operator[s]") applies if the defendant "has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works." Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (internal citations and quotations omitted) (emphasis in original). The third theory, vicarious liability, is similar to contributory liability but includes some contours that differ from these other theories of liability. A defendant "infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it." Grokster III, 545 U.S. at 930. 2. Actual Infringement by Defendants' Users With respect to all three of Plaintiffs' theories of liability, Plaintiffs must first demonstrate that there has been direct infringement of their copyrights by third parties. Amazon, 508 F.3d at 1169 (citing A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n.2 (9th Cir. 2001)) ("Secondary liability for copyright infringement does not exist in [*27] the absence of direct infringement by a third party."). Plaintiffs have provided direct evidence of copyright infringement by Defendants' users, and

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Defendants have not introduced any evidence creating a triable issue of fact on this issue. To establish copyright infringement, Plaintiffs must show that they own the copyrights that have been infringed, and that third parties have made unauthorized copies, downloads, or transfers of this material. 17 U.S.C. ß 106(1), (3). Implicit in 17 U.S.C. ß 106 is a further requirement at issue in the present case: that the infringement of Plaintiffs' copyrights occur inside the United States. The Ninth Circuit has determined that "United States copyright laws do not reach acts of infringement that take place entirely abroad." Subafilms, Ltd. v. MGM-Pathe Comm'ns Co., 24 F.3d 1088, 1098 (9th Cir. 1994) (en banc), cert. denied sub nom. Subafilms, Ltd. v. United Artists Corp., 513 U.S. 1001, 115 S. Ct. 512, 130 L. Ed. 2d 419 (1994). As a later panel of that court wrote, "in order for U.S. copyright law to apply, at least one alleged infringement must be completed entirely within the United States." Allarcom Pay Television, Ltd. v. Gen'l Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995). In [*28] the context of secondary liability, an actor may be liable for "activity undertaken abroad that knowingly induces infringement within the United States." 3 Nimmer on Copyright, ß 12.04(D)(2) (citing Armstrong v. Virgin Records, Ltd., 91 F. Supp. 2d 628, 634 (S.D.N.Y. 2000); Blue Ribbon Pet Prods., Inc. v. Rolf C. Hagen (USA) Corp., 66 F. Supp. 2d 454, 462-64 (E.D.N.Y. 1999)). Once Plaintiffs have established that an act of infringement has taken place within the United States, Defendants may be held liable for their conduct that constitutes inducement, material contribution, or vicarious infringement, even if Defendants' conduct took place abroad. Id.
14

14 The Court notes that Defendants have operated computer servers in Maryland and Texas. Columbia Pictures Ind., Inc. v. Fung, 447 F. Supp. 2d 306, 310 (S.D.N.Y. 2006) (order granting motion for change of venue and transferring case to this Court). Here, there is not a genuine factual dispute over whether the users of Fung's websites infringed Plaintiffs' copyrights. It is undisputed that Plaintiffs "own or control the copyrights, or exclusive rights under copyright" for the works at issue in this case. (SUF, P 1.) It is also undisputed [*29] that Plaintiffs have not authorized the distribution of their copyrighted works by Defendants or Defendants' users. (SUF, P 3.) The only purported dispute with respect to third parties' direct infringement is whether Plaintiffs have provided any evidence that users of Fung's sites have violated 17 U.S.C. ß 106(1) and ß 106(3) by reproducing and distributing Plaintiffs' copyrighted works. (SUF, P 2; SGI, P 2.)

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Defendants argue that Plaintiffs must provide evidence that both the transferor and the transferee are located in the United States. (See Defs.' Supp. Opp. at 3-4.) However, United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringement liability. Uploading a copyrighted content file to other users (regardless of where those users are located) violates the copyright holder's ß 106(3) distribution right. Downloading a copyrighted content file from other users (regardless of where those users are located) violates the copyright holder's ß 106(1) reproduction right. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001). Accordingly, [*30] Plaintiffs need only show that United States users either uploaded or downloaded copyrighted works; Plaintiffs need not show that a particular file was both uploaded and downloaded entirely within the United States. Defendants also assert that Plaintiffs rely on inadmissible hearsay and inadmissible statistical data. (SGI, P 3.) Contrary to Defendants' assertions, Plaintiffs' expert evidence is admissible; and, in any event, Plaintiffs provide direct evidence of specific acts of infringement. There is abundant evidence of copyright infringement using Defendants' websites. Plaintiffs' expert Richard Waterman conducted a study showing that more than 95% of files available through Defendants' websites are copyrighted or are highly likely to be copyrighted. (SUF, PP 5-6.) Even taking into account Waterman's margins of error (5% or less), such overwhelming statistical evidence is sufficient to establish that Defendants' websites allowed third party users to access copyrighted material, and that users of Defendants' websites made copyrighted material available for others to access.
15

15 As noted supra, this expert evidence is admissible and unrebutted. Notably, other courts dealing with similar [*31] issues have relied on similar studies based on statistical samples of the relevant products or services. These courts have approved the basic statistical methodologies employed by Plaintiffs' expert. See, e.g., Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 145 (S.D.N.Y. 2009); Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985 (C.D. Cal. 2006); A & M Records, Inc v. Napster, Inc., 114 F.Supp.2d 896, 902-03 & n.6 (N.D. Cal. 2000), aff'd in part and rev'd on other grounds, 239 F.3d 1004 (9th Cir. 2001). Plaintiffs' broad statistical evidence is corroborated by evidence of specific instances of downloads and transfers of copyrighted works through Defendants' websites. In his deposition, Defendant Fung admitted to using the Isohunt website to download copyrighted broadcast television shows such as The Simpsons and Lost.

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(SUF, PP 2, 57, 122.) Similarly, Fung admitted to downloading the copyrighted film The Lord of the Rings: The Fellowship of the Ring. (SUF, P 58.) Declarant Chris Masciarelli stated that he used Defendants' website isohunt.com to download a copyrighted work entitled Family Guy Presents Stewie Griffin: The Untold Story. (SUF, P 2; [*32] Masicarelli Decl.). Although Defendants argue that there is no clear evidence that any infringement took place in the United States, Plaintiffs have presented admissible evidence of domestic infringement involving a copyright owned by each of Plaintiffs. Plaintiffs provide evidence based on internet protocol ("IP") address data and usage-summary data produced by Defendants themselves. Plaintiffs have also have used IP-address data to locate Defendants' users and show that particular infringing downloads took place in the United States. (Pozza Supp. Decl. PP 3, 4, Ex. 5; see also Masciarelli Decl.) Further, in an examination of roughly 400 downloads (the only available evidence containing users' IP addresses), approximately 50% of the actual downloads using Defendants websites were made from the United States. (Waterman Supp. Decl. P 7; Horowitz Supp. Decl. P 21 & Ex. 1.)
16 17

16 "An IP address is a standard way of identifying a computer that is connected to the Internet. With an IP address, a party could identify the Internet Service Provider providing internet service to the user of the computer corresponding to such IP address." (June 8, 2007 Order Granting in Part and Denying in Part [*33] Plaintiffs' Motion to Require Defendants to Preserve and Produce Server Log Data and for Evidentiary Sanctions) (Magistrate Judge) (citing United States v. Heckenkamp, 482 F.3d 1142, 1144 (9th Cir. 2007)) [docket no. 146].) Defendants' own expert has opined that IP-based location analysis is highly accurate. (Gribble Decl. P 30.) Plaintiffs' expert agrees. (Horowitz Supp. Decl. P 11.) 17 Defendants' own usage summaries show that approximately 25% of Defendants' users are located in the United States. (Horowitz Supp. Decl. P 24, Ex. 5.) This 25% figure is further supported by evidence from Alexa and Quantcast, which are third-party sources of internet traffic information. (See Horowitz Supp. Decl. P 24 & Ex. 6.) Defendants do not object to the exhibits which contain this 25% figure. (See Defs.' Objections to Horowitz Supp. Decl, P 14; Defs.' Objections to Waterman Supp. Decl., P 3.) Plaintiffs have also provided evidence that, contrary to Defendants' wholly unsupported assertions, dot-torrent files downloaded from Defendants' sites correspond to and automatically cause the downloading of Plaintiffs' copyrighted content. (Bedser Supp. Decl., P 4; Ishikawa Supp. Decl., Ex. 2; Grodsky Supp. [*34] Decl., Ex. 2;
18

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Sehested Supp. Decl., Ex. 2). Finally, Plaintiffs have linked the United States-based downloads (as identified by Plaintiffs' experts) with copyrighted works owned by each of the individual Plaintiffs. (Whitehead Supp. Decl., Ex. 1; Clinton Supp. Decl. Ex. 1; Sunderland Supp. Decl., Ex. 1; Kang Supp. Decl., Ex. 1; Cherkoori Supp. Decl., Ex. 1; Kaplan Supp. Decl., Ex. 1.) 18 The fact that the dot-torrent files automatically cause content files to be downloaded and assembled (see also supra Part II.A) rebuts Defendants' assertions that users' act of downloading dot-torrent files does not constitute actual copyright infringement. It may be true that the act of downloading a dot-torrent file is not itself a copyright-infringing action; but once that dot-torrent file triggers the process of downloading a content file, copyright infringement has taken place. Because dot-torrent files automatically trigger this content-downloading process, it is clear that dot-torrent files and content files are, for all practical purposes, synonymous. To conclude otherwise would be to elevate form over substance. Accordingly, Plaintiffs' evidence conclusively establishes that individuals located [*35] in the United States have used Fung's sites to download copies of copyrighted works. Defendants fail to introduce any evidence that raises a triable issue regarding the fact that Plaintiffs' copyrights have been infringed by third parties. B. Inducement of Infringement Plaintiffs first seek summary judgment under the "inducement" theory articulated in the Supreme Court case Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) ("Grokster III"). In an opinion by Justice Souter, the Supreme Court held that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." Grokster III, 545 U.S. at 936-37. The Supreme Court further explained, [M]ere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor [of the device] to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, [*36] culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise.

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Id. at 937 (emphasis added). Importantly, liability may attach even if the defendant does not induce specific acts of infringement. Id. at 940 n.13 (emphasis added). Instead, the court may "infer[] a patently illegal objective from statements and actions showing what [the defendant's] objective was." Id. at 941.
19

19 In its opinion, the Supreme Court noted the defendant's argument that a court must make a determination of their liability on the basis of specific past acts that encouraged inducement. Defendants here offer a similar argument. The Supreme Court, however, rejected such a proposition, stating: This contention misapprehends the basis for their potential liability. It is not only that encouraging a particular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Inducement liability goes beyond that, and the distribution of a product can itself give rise to liability where evidence shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable [*37] act is not merely the encouragement of infringement but also the distribution of the tool intended for infringing use.

Grokster III, 545 U.S. at 940 n.13 (internal citations omitted, emphasis added). An unlawful objective to promote infringement can be shown by a variety of means. "The classic instance of inducement is by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations." Id. at 937; see also Visa Int'l., 494 F.3d at 800. For example, in Grokster III, the defendants "respond[ed] affirmatively to requests for help in locating and playing copyrighted materials." 545 U.S. at 938. However, showing that the defendant sent out a specific message is "not [the] exclusive way of" demonstrating inducement. Grokster III, 545 U.S. at 938. The Supreme Court in Grokster III highlighted three facts from which a reasonable factfinder could infer intent to foster infringement in that case. First, the Court noted that the defendant's owns communications and advertising designs had expressed an intent to target Napster users, a community well-known for copyright infringement. Although it was not known whether some of the advertising designs were actually [*38] communicated to the public, "whether the messages were communicated is not to the point on this record." Id. at 938. "The function of the message in the theory of in-

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ducement is to prove by a defendant's own statements that his unlawful purpose disqualifies him from claiming protection." Id. Second, the Court found it probative that defendants did not attempt to develop filtering tools or other means of diminishing the use of its products for infringement. Taken alone, the failure to develop a filter would be insufficient to support liability; but viewed in conjunction with other evidence it underscored the defendants' unlawful objective. Id. at 939 n.12. Third, the Court considered the fact that the defendants' business model depended on highvolume use of its software, which was overwhelmingly infringing, as circumstantial evidence of intent to induce infringement. Id. at 939-40. Again, this evidence would not alone justify the imposition of liability, but it supported an inference of unlawful intent when viewed in context with other evidence in the record. Id. Based on these elements of the factual record, the Court held that the defendants' "unlawful objective is unmistakable." Id. at 940. On [*39] remand from the Supreme Court, the District Court took into account other factors in finding the defendants' intent to induce infringement, including the "the staggering scale of infringement" occurring through use of defendants' products, technical assistance provided by the defendants to users for the playback of copyrighted content, and affirmative steps taken by defendants to ensure that their products would be capable of infringing use. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985-92 (C.D. Cal. 2006) ("Grokster IV"). Upon review of all the evidence in the present case, the Court determines that evidence of Defendants' intent to induce infringement is overwhelming and beyond reasonable dispute. 1. Defendants' message to users Plaintiffs present a variety of undisputed evidence that Defendants disseminated a message "designed to stimulate others" to commit infringements. Grokster III, 545 U.S. at 916. The clearest instance of Defendants' solicitation of infringing activity is the "Box Office Movies" feature of Defendants' Isohunt site. As Defendant Fung admitted in his deposition, this feature essentially involved Defendants' periodic posting of a list [*40] of the top 20 highest-grossing films then playing in United States, which linked to detailed web-pages concerning each film. Each of these pages contained "upload torrent" links allowing users to upload dot-torrent files for the films. Though Defendants eventually discontinued this feature, they did not remove pages that had already been created. (SUF, PP 50-55.) By implementing this feature, therefore, Defendants engaged in direct solicitation of infringing activity. Defendant Fung, in his subsequent declaration filed with Defendants' Opposition, denies that this feature was intended to induce copyright infringement and asserts that the web-pages
20

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"did not lead anywhere." (Fung Decl., P 58.) However, "actions speak louder than words," Arista Records, 633 F. Supp. 2d at 153 n.20, and Fung cannot dispute the objective historical fact that the websites included a "Box Office Movies" feature at one time. This feature evidences Defendants' intent to encourage their users' infringement. 20 It goes without saying that the highest-grossing films currently in theaters are copyrighted works. See Grokster V, 454 F. Supp. 2d at 992 ("it is common knowledge that most popular music and movies are [*41] copyrighted"). Defendants have not rebutted this obvious inference. In addition to the "Box Office Movies" feature, Plaintiffs present other evidence that Defendants disseminated messages designed to stimulate inducement. In particular, Plaintiffs demonstrate that, Defendants' websites present available torrent files (the vast majority of which contain infringing content) in browseable categories and provide further information about the works contained in the files. (SUF, PP 47-48.) Defendants also generate lists of the most popular files in categories like "Top 20 Movies." (SUF, P 49.) Defendants do not dispute the presence of such information on their web-site, but instead merely assert that the lists' content originates from users or from automated processes that simply reflect user activity. (SGI P 11; Fung. Decl., PP 54-55, 57). Defendants' assertions ignore the material fact that Defendants designed the websites and included a feature that collects users' most commonly searched-for titles. The fact that these lists almost exclusively contained copyrighted works (see SUF PP 8-13) and that Defendants never removed these lists is probative of Defendants' knowledge of ongoing infringement [*42] and failure to stop this infringement. Plaintiffs also provide evidence of what the Supreme Court has termed the "classic instance of inducement" -- a statement that "broadcasts a message designed to stimulate others to commit violations." Grokster III, 545 U.S. at 938. Defendant Fung made statements on the Isohunt website encouraging or assisting infringement. He posted on his website a message telling the website's users that they should "try Peer Guardian," a software application that can be used to frustrate copyright enforcement against file sharers. (SUF, P 94.) Accord Grokster III, 545 U.S. at 937-38. Fung also provided a link to a torrent file for the recent film Lord of the Rings: Return of the King on the Isohunt site and stated, "if you are curious, download this." (SUF, P 29.) Additionally, Fung created a promotional page inviting users to upload torrent files for Matrix Reloaded, another recent film. (SUF, P 28.) It is also undisputed that certain key terms known to the pirating community, such as "warez," were meta tags embedded in the websites for reference by search engines. Additionally, the Fung websites have honorary ranking systems for those who posted

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a certain number [*43] of forum users messages; ranks include titles such as "I pir4te, therefore I am" and "All Day I Dream About W4rez." (SUF, P 22.) In other words, the websites bestowed honors by identifying users as copyright infringers. This is strong circumstantial evidence that Defendants promoted their users' infringing activities by consciously fostering a community that encouraged - indeed, celebrated - copyright infringement. Perhaps most tellingly, Fung has personally engaged in a broad campaign of encouraging copyright infringement. In a statement on the Isohunt website, Fung stated: "they accuse us for [sic] thieves, and they r [sic] right. Only we r [sic] 'stealing' from the lechers (them) and not the originators (artists)." (SUF, at P 14.) In an interview with another website Fung stated: "Morally, I'm a Christian. 'Thou shalt not steal.' But to me, even copyright infringement when it occurs may not necessarily be stealing." (Id. at P 15.) Fung's statements provide further evidence that he has encouraged third parties to engage in copyright infringement. These statements also provide probative evidence regarding Fung's intent in creating the Defendant websites to aid others' infringement. 2. [*44] Defendants' assistance to users engaging in infringement There is also evidence that Defendants directly assisted users in engaging in infringement. As in Grokster III, Defendants in the present case have "respond[ed] affirmatively to requests for help in locating and playing copyrighted materials." 545 U.S. at 938. Defendant Fung personally posted messages in the Isohunt discussion forums in which he provided technical assistance to users seeking copyrighted works. Specifically, in response to an Isohunt user who posted a message stating he did not know how to watch a file containing Lord of the Rings: Return of the King which he had recently downloaded, Defendant Fung provided directions on how to extract and play the video file. (SUF, P 69.) The record is replete with such instances of technical assistance provided to users by Defendant Fung through the forum. (See, e.g., SUF, P 70 (Fung provided technical assistant to users who downloaded the film Kill Bill); SUF, P 71 (Fung provided assistance to user searching for Star Trek: Enterprise episodes by giving search tips); SUF, P 79 (Fung explained how to attach a tracker URL to a dot-torrent file sent to him by an Isohunt user, and [*45] recommended the user use the tracker at torrentbox.com).) In addition to Fung's personal statements, statements by the "moderators" of Fung's websites provide further evidence of the Defendant websites' active inducement of infringing activities. There are numerous individuals who are known as "moderators" or "admins." The term "moderators" refers to "individuals whose job it is to look after

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the running of the forums from day to day." (SGI, P 41.) Moderators can edit, delete, and reorganize postings in the forums. (SGI, P 42.) Some moderators, referred to as "admins," also have the ability to ban selected abusive users and remove user-posted dot-torrent files. (Id.) There is no substantive dispute by Defendants regarding their relationship to these individuals. Defendants assign this status and give these individuals authority to moderate the forums and user discussions. These individuals were under the control of Defendants and assigned duties related to the administration of the web forums. Therefore, there is an agency relationship between these individual moderators (or "admins") and Defendants.
21

21 An agency relationship is created "by a principal's manifestation to an agent that, [*46] as reasonably understood by the agent, expresses the principal's assent that the agent take action on the principal's behalf." Restatement (Third) of Agency, ß 3.01 (2006); see Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S. Ct. 2166, 104 L. Ed. 2d 811 & n.31 (1989) (looking to Restatement to determine federal common law of agency under Copyright Act). Under common law principles of agency, the "moderators" were the Defendants' agents with respect to their interactions with the online message boards and forums. Even though there is no evidence that the moderators were specifically authorized to post messages in these forums, the websites' act of designating them as "moderators" and providing them with specific forum-related powers leads a "third party reasonably [to] believe[] the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations." Restatement (Third) of Agency, ß 2.03 (2006) (describing "apparent authority"). There is no genuine dispute that agency is established here, as Defendants introduce no evidence that would provide a triable issue to rebut Plaintiffs' prima facie showing of agency. Defendants merely assert that Plaintiffs [*47] evidence "suggests triable issues of fact." (Opp. at 19 n.10.) Unsupported assertions do not give rise to a genuine dispute of fact. Plaintiffs' evidence, unless refuted, compels a finding of an agency relationship. Plaintiffs' evidence has not been refuted, and agency is accordingly established. The Defendant websites are full of statements by moderators who assisted users seeking to download files or provided links to other websites containing the requested items. In a post on the Isohunt forums, moderator "Estranged" provided instructions regarding DVD ripping and conversion. (SUF, P 45.) In a post on Torrentbox, moderator "Skull and Bones" referred a user to 353 dot-torrent files including King Kong and Silent Hill, which were "very good quality" and stated that "[m]ost of your films are here at Torrentbox or search on isohunt.com." (SUF, P 46.) In a post on the web-

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site Podtropolis, moderator "NewAgePirate" responded to a user who posted a list with films such as The Godfather, A Clockwork Orange, and One Flew Over the Cuckoo's Nest, with a post that stated "Great list by the way man. Great to have you here." (SUF, P 35.) All of these statements demonstrate that there was an active [*48] role played by the administrators of the websites within the forum, encouraging and providing technical assistance for users seeking to engage in infringing activities. All of these statements demonstrate the assistance Defendant Fung and the corporate Defendant provided to the websites' users in infringing Plaintiffs' copyrights. Such actions demonstrate that Defendants did not maintain a hands-off approach to the operation of the sites. Instead, various of Defendants' representatives gave technical assistance and aid in the organized forum discussions that furthered the third parties' infringement using the sites. Defendant Fung argues that the First Amendment protects any statements made by him or the agents. Such an argument, however, is unavailing. The central premise of the Supreme Court's decision in Grokster III is that a defendant's statements can be probative of an intent to induce infringement. Explicit statements by defendants will often form the most substantial form of proof in inducement or material contribution cases. See generally Grokster III, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 ; Napster, 239 F.3d 1004. Additionally, the statements themselves are not the activity prohibited by this doctrine, [*49] but rather are evidence of the "intent to induce," which is the underlying wrongful act. It is well-established that such statements are not protected by the First Amendment: The first amendment does not provide a defense to a criminal charge simply because the actor uses words to carry out his illegal purpose. Crimes . . . frequently involve the use of speech as part of the criminal transaction. . . . To the extent . . . that [the defendant] appears to contend that he is immune from search or prosecution because he uses the printed word in encouraging and counseling others in the commission of a crime, we hold expressly that the first amendment does not provide a defense as a matter of law to such conduct.

United States v. Barnett, 667 F.2d 835, 842 (9th Cir. 1982).

22

22 In one of the main arguments in Defendants' Opposition, Defendants offer an extended discussion of the intersection between the First Amendment and the internet. (Opp. at 18-23.) Quoting from a broad selection of caselaw, Defendants largely appear to advocate that the First Amendment immunizes any and all ac-

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tivity on the internet. Defendants' various First Amendment arguments are inapposite and unavailing. See Religious Tech. Ctr. v. Netcom On-Line Communcations Svcs., 907 F. Supp. 1361, 1377-78 (N.D. Cal. 1995); [*50] see generally 4 Nimmer on Copyright ß 19E.03-04. Notably, it appears that copyright law incorporates First Amendment considerations by providing for "fair use" defenses and by distinguishing between uncopyrightable "ideas" and copyrightable "expressions." See Los Angeles News Svc. v. Tullo, 973 F.2d 791, 795-96 (9th Cir. 1992). Further, secondary copyright liability is sensitive to First Amendment concerns in that it generally regulates intentional behavior. See Grokster, 545 U.S. at 937; Amazon, 508 F.3d at 1172; cf. Universal City Studios v. Reimerdes, 111 F. Supp. 2d 294, 339-41 (S.D.N.Y. 2000) ("Anything that would impose strict liability on a web site operator for the entire contents of any web site to which the operator linked . . . would raise grave constitutional concerns") (emphasis added), aff'd on other grounds sub nom. Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2002). Finally, and most importantly, it must be emphasized that the present case involves conduct not expression, and to the extent that Defendants' expression is being curtailed, they should recall that they "could have expressed their theme without copying [Plaintiffs'] protected expression." Walt Disney Prods. v. Air Pirates, 581 F.2d 751, 759 (9th Cir. 1978), [*51] cert. denied sub nom. O'Neill v. Walt Disney Prods., 439 U.S. 1132, 99 S. Ct. 1054, 59 L. Ed. 2d 94 (1979) . 3. Defendants' implementation of technical features promoting copyright infringement Defendants' implementation of certain technical features in their web-sites is also probative of Defendants' intent to induce copyright infringement. Most obviously, Defendants' websites allow users to locate dot-torrent files. Once downloaded to a users' computer, torrent files automatically engage in a "swarm" downloading process that permits users to download a single content file simultaneously from many other users. (SUF PP 23-24.) This process expedites the exchange of large, content-rich files such as television programs and movies. Defendant Fung also implemented a "spider" program, which locates and obtains copies of dot-torrent files from other web-sites, including well-known infringing sites such as "The Pirate Bay." (SUF, PP 86-87.) Defendant Fung additionally directs the program to specific web pages containing terms like "seinfeld-videos," which one would infer contains infringing content from the television show Seinfeld. (SUF, P 88.) Defendants do not rebut this obvious inference.

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Defendants also organized files [*52] using a program that matches content filenames with specific terms. Some of the specific terms used by the program describe likely infringing content, such as "Screener" or "PPV". (SUF, PP 91-92.)
23

23 "Screener" refers to an advance copy of a film given to critics for review, while "PPV" refers to "pay-per-view." Defendants offer no authority contesting these standard meanings. Defendants no do not dispute these facts except to assert that the spider programs were automated, generic components that operated in a copyright-neutral manner. (SGI, PP 89-91.) Essentially, Defendants argue that they merely assembled a website that combined already-existing technologies, and that they did not include any unique innovations that were specifically tailored to assist the distribution of copyrighted works. These assertions are inapposite. The unrebutted factual evidence shows that Fung designed programs which improved the functioning of his websites with respect to infringing uses. Combined with other evidence regarding Defendants' improper purposes, these technological features support a finding of inducement liability.
24

24 Given that Defendants' "unlawful objective is unmistakable," see Grokster III, 545 U.S. at 940, [*53] the Court refrains from addressing the factual disputes regarding whether or not Defendants were technologically capable of implementing filtering mechanisms to reduce copyright infringement through their websites. (See SUF, PP 103, 107; SGI PP 110-11, 143.) In Grokster III, the defendants' failure to implement a copyright filter was probative circumstantial evidence of the defendants' intent to induce infringement. However, the failure to implement a copyright filter is not a determinative factor in analyzing a defendant's inducement of infringement. Rather, the relevant question is whether "the summary judgment record [establishes that the defendants] acted with a purpose to cause copyright violations by use of software suitable for illegal use." Id. at 938. This improper purpose can be shown in a variety of ways; the factors considered by the Supreme Court in Grokster were not exhaustive or exclusive. See Grokster III, 545 U.S. at 93839. In the present case, given Defendants' overwhelming affirmative conduct to encourage and assist copyright infringement, Plaintiffs are entitled to summary judgment in their favor even if Defendants were incapable of creating an effective copyright [*54] filter. Indeed, Plaintiffs have established that Defendants engaged in "[t]he classic instance of inducement . . . by advertisement or solicitation that broadcasts a message designed to stimulate others to commit viola-

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tions." See Grokster III, 545 U.S. at 937. Given that Defendants so clearly acted to induce infringement, it is immaterial that they may or may not have been able to prevent such infringement by implementing a copyright filter. 4. Defendants' business model depends on massive infringing use Plaintiffs assert that Defendants' business model depended on massive infringing use. In the instant litigation, just as with the programs at issue in Grokster III, Defendants' business generates its revenue almost exclusively by selling advertising space on the sites. (SUF, P 109; Pltf. Ex. 1, Fung Dep., at 326-27.) Similarly, the revenue depends on users visiting Defendants' sites and viewing the advertising. (SUF, P 110.) As discussed previously, Defendant Fung acknowledges that the availability of popular works is what attracts users to the sites. (See, e.g., Ex. 173 (interview of Fung admitting that the availability of the then-popular Da Vinci Code film was a key attraction to [*55] his website).) Defendant Fung also solicited advertisement on the basis of the availability of works on his website. For example, in an email to a potential advertiser, moviegoods.com, Fung wrote that Isohunt would "make a great partner, since TV and movies are at the top of the most frequently searched by our visitors." (SUF, P 112; Pls.' Ex 174.) In short, there is no factual dispute that the availability of copyright material was a major draw for users of Fung's websites, and there is no dispute that Defendants derive revenue from the websites and that this revenue increases along with the number of users. (SUF PP 109-110, 132-133.) This is further evidence of Defendants' intent to assist infringing uses.
25

25 Defendants assert that "there is no detail, no dollar amounts," (Opp. at 35), but Plaintiffs correctly point out that the present Motion involves liability not damages, so such detail is unnecessary. (Reply at 12.) 5. Additional Considerations Throughout their legal memoranda and supporting evidentiary papers, Defendants argue that there is no evidence of infringing activity. This argument obviously fails in light of the evidence discussed supra, Part IV.A.2. However, to the extent [*56] that Defendants subjectively believe that their users have not engaged in copyright infringement, Defendants' "ostrich-like refusal to discover the extent to which its system was being used to infringe copyright is merely another piece of evidence" of Defendants' purposeful, culpable conduct in inducing third party infringement. See In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003).

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6. Summary of Inducement The undisputed evidence shows that Defendants (both Fung and the websites) engaged in "purposeful, culpable expression and conduct" aimed at promoting infringing uses of the websites. See Grokster III, 545 U.S. at 937. Accordingly, Plaintiff's motion for summary judgment on Defendants' liability for inducement of infringement is GRANTED. C. Alternative Theories of Secondary Liability Having determined that Defendants are liable under an inducement theory for their users' infringing activities, the Court refrains from addressing Plaintiff's Motion for Summary Judgment on the theories of material contributory infringement and vicarious infringement. V. DEFENDANTS' DIGITAL MILLENNIUM COPYRIGHT ACT AFFIRMATIVE DEFENSES The Digital Millennium Copyright Act provides affirmative [*57] defenses for providers of certain internet services. In many ways, the Digital Millennium Copyright Act is simply a restatement of the legal standards establishing secondary copyright infringement - in many cases, if a defendant is liable for secondary infringement, the defendant is not entitled to Digital Millennium Copyright Act immunity; if a defendant is not liable for secondary infringement, the defendant is entitled to Digital Millennium Copyright Act immunity. The two sets of rules do not entirely overlap, but this framework is helpful for understanding the Act's statutory text and structure. Cf. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001) ("We do not agree that . . . potential liability for contributory and vicarious infringement renders the Digital Millennium Copyright Act inapplicable per se."). Here, the relevant section of the Digital Millennium Copyright Act, 17 U.S.C. ß 512(d), reads: Information location tools.--A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider referring or linking users to an [*58] online location containing infringing material or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link, if the service provider-

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(1) (A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed infringement as described in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity, except that, for purposes of this paragraph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disabled, [*59] and information reasonably sufficient to permit the service provider to locate that reference or link.

17 U.S.C. ß 512(d). In other words, a provider of "information location tools" (such as Defendants' websites ) must satisfy the three conjunctive requirements of ß 512(d) in order to obtain safe harbor. These three safe harbor requirements are that the defendant: [1] does not know (ß 512(d)(1)(A)) or have reason to know (ß 512(d)(1)(B)) of infringing activities, or does not remove infringing materials upon receipt of such knowledge (ß 512(d)(1)(C); and [2] does not profit from infringement where it has the power to control the infringement (ß 512(d)(2)); and [3] upon receiving notice (in the statutorily-prescribed manner) from the copyright holder, removes the infringing material (ß 512(d)(3)).
26

26 See Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146, 1175 (C.D. Cal. 2002) ("[S]ection 512(d) . . . creates a 'safe harbor' for copyright in-

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fringement resulting from the use of information location tools by service providers, which include directories, indexes, references, pointers and hypertext links."). Defendants also argue that they fall within the safe harbor provisions [*60] of 17 U.S.C. ß 512(a) ("transitory digital network communications") and 17 U.S.C. ß 512(c) ("information residing on systems or networks at direction of users"), but these categories are inapplicable to Defendants' particular technologies as well as Defendants' substantive conduct upon which Plaintiffs are suing. Defendants themselves assert that "[n]o infringing materials are posted on or pass through defendants' systems," (Opp. at 34), which is factually supported by the record because Defendants' websites are used to download dot-torrent files, not content files (Gribble Decl. P 21; Fung Decl. PP 9, 52). Because infringing materials do not pass through or reside on Defendants' system, Defendants may not rely on ß 512(a) and ß 512(c). In addition, Plaintiffs claims are unrelated to secondary liability "by reason of the storage [of data] . . . on a system or network controlled or operated by" Defendants, 17 U.S.C. ß 512(c)(1) (emphasis added), or "by reason of [Defendants'] transmitting, routing, or providing connections for[] material through a system or network controlled or operated by" Defendants, 17 U.S.C. ß 512(a) (emphasis added). Plaintiffs' claims are premised on active inducement [*61] of infringement, not passive transmission or storage of infringing materials. In the present case, Plaintiffs have established that Defendants have reason to know of their users' infringing activities. Defendants have not satisfied their summary judgment burden by identifying facts showing that Defendants were "not aware of facts or circumstances from which infringing activity [wa]s apparent." 17 U.S.C. ß 512(d)(1)(B). Further, Defendants have not introduced any evidence that they "act[ed] expeditiously to remove, or disable access to, the [infringing] material" once they became aware that this infringing activity was apparent. (See generally Defs.' SGI PP eee-lll.) Thus, Defendants are not entitled to statutory safe harbor under 17 U.S.C. ß 512(d).
27

27 The Court refrains from addressing at length the second prong of the safe harbor rule, the ß 512(d)(2) "financial benefit" requirement. Defendants have profited from their users' infringement, see supra Part IV.B.5, and Defendants undisputedly have the ability to block users from Defendants' websites. (SUF PP 136-139; see also SUF P 106, SGI P 109; SGI PP 141-142; Fung Decl. P 61.) As the Ninth Circuit explained in Napster, the "ability [*62] to block infringers'

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access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise." 239 F.3d at 1023. Accordingly, Defendants have also failed to raise a triable issue of fact regarding the second requirement for receiving ß 512(d) safe harbor, because they "receive a financial benefit directly attributable to the infringing activity," and they have "the right and ability to control such activity." 17 U.S.C. ß 512(d)(2). As for the third safe harbor requirement, there appears to be a triable issue of fact as to the adequacy of the statutory notice that Plaintiffs provided to Defendants. (See Parker Decl. PP 9, 12-14.) However, because Defendants have not identified any triable issues of facts regarding the first two safe harbor requirements, summary judgment is appropriate in Plaintiffs' favor. In order to obtain safe harbor, a defendant cannot have knowledge of ongoing infringing activities. This "knowledge" standard is defined as "actual knowledge" or "willful ignorance." According to the widely-cited House and Senate Report on the law, "if the service provider becomes aware of a 'red flag' from which infringing activity is apparent, [*63] it will lose the limitation of liability if it takes no action." H.R. Rep. 105-551(II), at 53; see also Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1114 (9th Cir. 2007). The Congressional Report notes that the service provider is only liable if it "turned a blind eye to 'red flags' of obvious infringement." H.R. Rep. 105-551(II), at 57. Other courts have applied this test as requiring "willful ignorance of readily apparent infringement." UMG Recordings, Inc. v. Veoh Networks Inc.,665 F. Supp. 2d 1099, 2009 U.S. Dist. LEXIS 86932, 2009 WL 3422839, at *7 (C.D. Cal. 2009) (citing Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1108 (W.D. Wash. 2004)). Even under this stringent "willful ignorance" test, it is apparent that Defendants have "turned a blind eye to 'red flags' of obvious infringement." See H.R. Rep. 105551(II), at 57. Most importantly, Defendant Fung himself has engaged in unauthorized downloads of copyrighted material; even if those downloads were done abroad and were not actionable under United States copyright law (and thus would not provide "actual knowledge" of illegal activity for purposes of 17 U.S.C. ß 512(d)(1)(A)), Fung's actions show that Fung was aware that infringing material was [*64] available on the Defendant websites. Given the "worldwide" nature of the world-wide web, it would have been obvious that United States-based users could access these same infringing materials and thus engage in infringing acts. Defendants provide no evidence to rebut this obvious conclusion that United States-based users would have been able to download the same copyrighted works that Fung himself downloaded.

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Furthermore, Plaintiffs introduce evidence produced by Defendants themselves that shows that approximately 25% of Defendants' websites' users were based in the United States. (Horowitz Supp. Decl. P 24, Ex. 5.) This evidence further shows that, at its height, over ten million unique users visited Defendants' websites each month (see Horowitz Supp. Decl., Ex. 5 at 25; Horowitz Supp. Decl., P 19 n.4), which strongly suggests that some 2.5 million United States citizens visited Defendants' websites each month. Further, this evidence shows that at one point, Defendants' websites were accessed over 50 million times from the United States in a single month. (Horowitz Supp. Decl., Ex. 5 at 32.) Upon accessing Defendants' websites, these American users would have found that 90% to 95% [*65] of the available materials contained copyrighted content. (See Waterman Decl. PP 6, 7, 24, 28, 31.) Defendants fail to introduce any evidence rebutting this overwhelming evidence, and thus fail to raise a triable issue of fact as to whether Defendants had actual knowledge of copyright infringement or were willfully ignorant of ongoing copyright infringement. There is a variety of other evidence of Defendants' willful ignorance to ongoing infringement. Defendants designed their website to include lists such as "Top Searches," "Top 20 Movies," "Top 20 TV Shows," and "Box Office Movies," and Defendants designed these lists to automatically update to reflect user activities. These lists included numerous copyrighted works. (SUF PP 8-12, 47-55.) See Grokster, 454 F. Supp. 2d at 992 ("it is common knowledge that most popular music and movies are copyrighted"). Thus, unless Defendants somehow refused to look at their own webpages, they invariably would have been known that (1) infringing material was likely to be available and (2) most of Defendants' users were searching for and downloading infringing material. In addition, Plaintiffs submit overwhelming statistical evidence of the prevalence [*66] of copyrighted material available through Defendants' websites. (SUF PP 5-7.) This evidence shows that 90%-95% of the material was likely to be copyright infringing, a percentage that is nearly identical to the facts in Napster, in which "eightyseven percent of the files available on Napster may be copyrighted." 239 F.3d at 1011. In that case, the district court rejected the defendant's plainly meritless arguments seeking safe harbor under ß 512(d). A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919 & n.24 (N.D. Cal. 2000), aff'd in part and rev'd in part, 239 F.3d 1004 (9th Cir. 2001). Given that Defendants' own statistics show that millions of Defendants' users are located in the United States (Horowitz Supp. Decl. P 24, Ex. 5), Defendants were certainly "aware of a 'red flag' from which infringing activity is apparent." H.R. Rep. 105-551(II), at 57. Defendants do not introduce any evidence to raise a triable issue of fact on this question.

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In light of this overwhelming evidence, the only way Defendants could have avoided knowing about their users' infringement is if they engaged in an "ostrich-like refusal to discover the extent to which [their] system[s] w[ere] being [*67] used to infringe copyright." See In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003). In other words, to avoid actual knowledge of infringement, Defendants would have had to engage in willful blindness. There is one last reason why Defendants are unable to benefit from the 17 U.S.C. ß 512 safe harbors. As stated by Judge Posner in In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003): The common element of its safe harbors is that the service provider must do what it can reasonably be asked to do to prevent the use of its service by 'repeat infringers.' 17 U.S.C. ß 512(i)(1)(A). Far from doing anything to discourage repeat infringers of the plaintiffs' copyrights, Aimster invited them to do so, showed them how they could do so with ease using its system, and by teaching its users how to encrypt their unlawful distribution of copyrighted materials disabled itself from doing anything to prevent infringement.

In other words, inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory. Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive [*68] good faith conduct aimed at operating a legitimate internet business. Here, as discussed supra, Defendants are liable for inducement. There is no safe harbor for such conduct. Accordingly, Defendants are not entitled to the affirmative defenses provided by the Digital Millennium Copyright Act. VI. DEFENDANTS' RULE 56(f) REQUEST Defendants argue that they must conduct more discovery. Defendants seek information regarding the practices of online search companies such as Google and Yahoo. (Opp., at 33-35; Rothken 56(f) Decl. P 6.) Defendants also seek information related to the likelihood that Defendants' technologies will be used for non-infringing tasks in the future. (Rothken 56(f) Decl. PP 7-9.) Finally, Defendants seek information related to the potential for Plaintiffs to create a centralized database listing copyright-infringing works and copyright-infringing users.
28

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28 Defendants further seek information regarding the prevalence of Defendants' non-United States users (Rothken 56(f) Decl. P 5); however, Plaintiffs' supplemental evidence regarding U.S.-based infringement has directly answered each one of Defendants' purportedly unanswered questions. Defendants failed to renew or amend [*69] their Rule 56(f) request in light of Plaintiffs' new evidence, and their previous requests for additional discovery have been mooted by Plaintiffs evidence. Further, in light of the IP address-based location methods discussed supra, Defendants have been in possession of the sought-after evidence throughout the course of this litigation. Rule 56(f) requires "specified reasons" that are "essential" to the opposition. Defendants meet neither requirement. Such discovery is utterly irrelevant to the present Order, which relates specifically to Defendants' efforts directed at inducing third parties' infringement. Inducement liability does not turn on whether other actors would or not be liable (as with Google and Yahoo), or whether Defendants' websites' future uses might be lawful. Nor does inducement liability turn on whether Plaintiffs could have mitigated their damages by making efforts to reduce third party infringement. Rather, inducement liability turns on whether Defendants, through their own conscious conduct, actively encouraged others to infringe Plaintiffs' copyrights. Defendants provide no evidence as to how the further discovery would diminish their liability in the instant action. [*70] Indeed, the relevant evidence, as presented by Plaintiffs' Motion for Summary Judgment and discussed throughout the present Order, is largely undisputed and, further, is in Defendants' possession. Accordingly, Defendants' Rule 56(f) request is DENIED. VII. CONCLUSION This case contains the same general pattern presented in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005), A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), and, more recently, Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124 (S.D.N.Y. 2009). The Defendants in the present case attempt to distinguish their situation on three main grounds: first, that the BitTorrent technology is different from the other technologies because users do not download content files through Defendants' websites; second that Defendants' conduct is protected by the First Amendment; and third, that Defendants' users are located across the globe, not just in the United States. On the evidence presented to the Court, none of these arguments raises a triable question of fact for the jury to decide. Defendants' technology is nothing more than

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old wine in a new bottle. Instead of logging into a proprietary [*71] network in order to download files from each others' computers, Defendants' users access Defendants' generally-accessible website in order to download those files. And instead of downloading content files directly through Defendants' website, Defendants' users download dot-torrent files that automatically trigger the downloading of content files. These technological details are, at their core, indistinguishable from the previous technologies. In fact, Defendants' technologies appear to improve upon the previous technologies by permitting faster downloads of large files such as movies. Such an improvement quite obviously increases the potential for copyright infringement. Regarding Defendants' second main argument, caselaw establishes that Defendants are misguided if they think that the First Amendment provides blanket protection to all internet-based activities, particularly where those activities involve copyright infringement. Finally, Defendants third main argument ignores the unrebutted fact that millions of United States citizens have accessed Defendants' websites, and a substantial proportion of the files made available to them through those websites contained copyrighted or highly-likely [*72] copyrighted works. Further, Plaintiffs have provided undisputed evidence of specific infringing acts done in the United States. Thus, as in Grokster, summary judgment is appropriate on the question of inducement liability. For the foregoing reasons, the Court GRANTS Plaintiff' Motion for Summary Judgment on Liability as to inducement of infringement. The Court sets a status conference for January 11, 2010, at 1:30 p.m. IT IS SO ORDERED. DATED: December 21, 2009 /s/ Stephen V. Wilson STEPHEN V. WILSON UNITED STATES DISTRICT JUDGE

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CERTIFICATE OF SERVICE I hereby certify that on April 3, 2013, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system.

s/

Stephen Moore

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