Liam O'Grady, United States District Judge
In this copyright action, the putative owners of more than 1,400 musical composition copyrights seek to hold Cox Communications, Inc. and Cox Com, LLC (collectively, "Cox") contributorily and vicariously liable for alleged copyright infringement taking place over its high-speed internet service. At the close of extensive discovery, the parties cross-moved for summary judgment. Following oral argument, the Court issued an Order (Dkt. No. 675) granting in part and denying in part Plaintiffs' Motion for Partial Summary Judgment (Dkt. No. 310) and denying Cox's Motion for Summary Judgment (Dkt. No. 305) for the reasons stated in this memorandum opinion.
Cox provides high-speed internet service to customers nationwide. Plaintiffs BMG Rights Management (US), LLC ("BMG") and Round Hill Music LP are the putative owners or administrators of approximately 1,400 musical composition copyrights. Plaintiffs allege users of Cox internet service employ BitTorrent, a type of peer-to-peer ("P2P") file sharing, to illegally upload and download music files, thereby violating Plaintiffs' exclusive rights.
The innovation of P2P file sharing is that it allows "user's computers [to] communicate directly with each other," rather than through a central server. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005). All P2P protocols 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." Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1024 (9th Cir. 2013). While P2P protocols have many benefits and non-infringing uses, see Grokster, 545 U.S. at 920, 125 S.Ct. 2764 (noting that P2P networks are "employed to store and distribute files by universities, government agencies, corporations, and libraries, among others"), they have also been harnessed for less meritorious purposes by "those wanting access to pirated media, [such as] music, movies, and television shows." Columbia Pictures Indus., Inc., 710 F.3d at 1025.
The BitTorrent protocol is unique in "how it facilitates file transfers." Id. at 1026. BitTorrent breaks files into pieces, which "permits users to download lots of different pieces at the same time from different peers." Id. It also allows users to begin sharing before the complete file has downloaded, meaning "at any given time, each user is both downloading and uploading several different pieces of a file from and to multiple other users." Id. at 1027.
Plaintiffs enlisted Rightscorp, Inc. ("Rightscorp") as their agent to identify infringing uses of their copyrighted works. Rightscorp's software searches websites that index torrent files and identifies files that appear to contain one or more of the Plaintiffs' copyrighted works. Defs.' SUMF ¶ 19. A torrent file does not actually
Cox's Acceptable Use Policy ("AUP") provides that account holders may not use Cox's internet service "to post, copy, transmit, or disseminate any content that infringes the patents, copyrights, trade secrets, trademark, moral rights, or propriety rights of any party." Theodore Decl. Ex. 10; Trickey Decl. ¶ 11. The AUP further provides that "[v]iolation of any terms of this AUP may result in the immediate suspension or termination of either ... access to the Service and/or [the] Cox account." Theodore Decl. Ex. 10; Trickey Decl. ¶ 11. Cox informs account holders of the policy in subscriber agreements. Trickey Decl. ¶ 12. The terms on Cox's website also incorporate the AUP's policy by reference. Id. ¶ 13.
Cox's abuse department handles misconduct on Cox's network. Abuse ranges from copyright infringement to hacking to excessive bandwidth usage. Pls.' SUMF ¶ 17. Cox offers copyright owners an email address, abuse@cox.net, to which they can send notices of infringement. Beck Decl. ¶ 3. Cox processes the notices it receives using a largely automated system called CATS — Cox Abuse Tracking System. Pls.' SUMF ¶ 19. CATS scans the messages in the inbox and culls certain information, such as the date of the alleged abuse, the IP address, and so on. Beck Decl. ¶ 7. That information is then used to create a "ticket." Id. ¶ 3.
Three features of the CATS system are worth mentioning. First, when Cox receives multiple complaints in one day for a single account, the tickets are "rolled up," meaning Cox counts only the first ticket. Id. ¶ 8 & n.4; Zabek Decl. ¶ 9; Theodore Decl. Ex. 1 at 155-56. Second, Cox imposes a "hard limit" on the number of complaints a complainant can submit that will receive customer-facing action. Beck Decl. ¶ 8. If a
Cox handles tickets generated by CATS according to its graduated response procedure. Beck Decl. ¶ 12; Theodore Decl. Ex. 39 at 10; id. Ex. 17. This process, which Cox does not publicize to customers, progresses from warnings to suspensions and ultimately, the possibility of termination. Theodore Decl. Ex. 17 at 11-12. Cox takes no action on an account's first ticket because a "substantial percentage" of accounts never receive a second complaint within one abuse cycle. Zabek Decl. ¶ 9; Theodore Decl. Ex. 17 at 11; id. Ex. 39 at 13. When a second complaint arrives, CATS generates an email to the account holder that includes a letter from Cox explaining the alleged infringement as well as the complete text of the infringement notice Cox received from the copyright owner.
When Cox receives an eighth notice, it suspends the account and places the account holder in what Cox calls a "soft-walled garden." Beck Decl. ¶ 9. That means the account holder's internet access is temporarily limited to a single webpage that displays a warning message. Id.; Zabeck Decl. ¶ 9. The account holder can exit the soft-walled garden and self-reactivate service by clicking a link on the webpage. Beck Decl. Ex. 3 ("After deleting the files and disabling file sharing, you may click here to reactivate your service." (emphasis omitted)); Theodore Decl. Ex. 17 at 11; id. Ex. 2 at 178-79. On the ninth complaint, the account holder is again sent to the soft-walled garden. Beck Decl. ¶ 9; Theodore Decl. Ex. 17 at 11.
The tenth complaint results in what Cox calls a "hard-walled garden." Beck Decl. ¶ 9. The account holder is now directed to a webpage with instructions to call Cox customer service. Theodore Decl. Ex. 17 at 11. When the account holder calls Cox, he or she can request reactivation. Id.; id. Ex. 1 at 73. The eleventh complaint is the same. Id. Ex. 17 at 11. The twelfth and thirteenth complaints also place account holders in the hard-walled garden, but now they must speak to higher-level Cox customer service representatives to request reactivation. Id.; id. Ex. 1 at 79-80. When Cox receives the fourteenth complaint in an abuse cycle, it will review the full account history and consider termination. Id. Ex. 17 at 12. Termination is never automatic, however, and is left to the discretion of Cox employees. Beck Decl. ¶ 13. In the "vast majority" of cases, Cox says it is able
Rightscorp includes within its standard infringement notice an offer of settlement. Specifically, the notices say, "This notice is an offer of settlement. If you click on the link below and login to the Rightscorp, Inc. automated settlement system, for $10.00 [or $20.00] per infringement, you will receive a legal release from the copyright owner." Beck Decl. Ex. 6. As a policy, Cox does not accept or process infringement notices that contain settlement offers. Beck Decl. ¶ 17-18; Zabek Decl. ¶ 31. Cox's in-house privacy counsel set the policy after concluding that such notices are improper and fall outside the "spirit" of the DMCA. Theodore Decl. Ex. 5 at 77-78; Zabek Decl. ¶ 31.
When Cox receives a complaint with a settlement offer, it asks the complainant to conform the notice and explains that the notice will not be forwarded unless and until it is amended. Beck Decl. ¶ 17; Zabeck Decl. ¶ 34. Until a complainant complies, Cox "blacklists" all complaints received from that complainant by configuring CATS to auto-delete messages received from that complainant's email address. Beck Decl. ¶ 17.
On March 9, 2011, Cox received its first notice of infringement from Rightscorp. Id. ¶ 19. Cox asked Rightscorp to remove its settlement offers, but Rightscorp declined to do so and continued to send Cox notices. Zabek Decl. ¶¶ 32, 35; id. Ex. 13. On March 14, Cox blacklisted Rightscorp, meaning from that point on, Cox auto-deleted Rightscorp's emails and never retrieved the information from the body of those notices. Beck Decl. ¶ 20; Theodore Decl. Ex. 41 at 10, 12-13. The following October, Cox claims Rightscorp "started inundating" its inbox, sending as many as 24,000 notices in one day. Beck Decl. ¶ 21; Zabek Decl. ¶ 33. In response, Cox blocked Rightscorp. Blocking messages goes one step beyond blacklisting: now Rightscorp's notices never even entered Cox's inbox. Theodore Decl. Ex. 2 at 339-40; id. Ex. 41 at 10, 13; Beck Decl. ¶ 21. When a complainant is blacklisted, Cox still has a record of the emails received and deleted. When a complainant is blocked at the server level, there is no record of any message received. Theodore Decl. Ex. 41 at 10.
In November 2014, Plaintiffs filed suit against Cox alleging contributory and vicarious copyright infringement for direct infringements occurring between February 2012 and November 2014. As relief, Plaintiffs seek statutory damages, injunctive relief, fees, and costs.
Plaintiffs seek to hold Cox liable for the direct infringing activities of individuals
After setting out the applicable standard of review, the Court addresses each motion for summary judgment separately, as it must. See Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir.2011).
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A genuine issue of material fact exists where, after reviewing the record as a whole, a court finds that a reasonable jury could return a verdict for the nonmoving party." McAirlaids, Inc. v. Kimberly-Clark Corp., 756 F.3d 307, 310 (4th Cir. 2010). "It is an axiom that in ruling on a motion for summary judgment, the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. (alteration omitted) (quoting Tolan v. Cotton, ___ U.S. ___, 134 S.Ct. 1861, 1863, 188 L.Ed.2d 895 (2014) (per curiam)) (internal quotation marks omitted). Although the Court "must draw all reasonable inferences in the light most favorable to the nonmoving party, it is ultimately the nonmovant's burden to persuade [the Court] that there is indeed a dispute of material fact." CoreTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364, 370 (4th Cir.2014). That showing requires "more than a scintilla of evidence — and not merely conclusory allegations or speculation — upon which a jury could properly find in its favor." Id.
Plaintiffs move for partial summary judgment on two issues. First, Plaintiffs seek a ruling that they own the copyrights at issue. Second, Plaintiffs ask the Court to find as a matter of law that Cox is not entitled to protection under the DMCA's safe harbor provisions. Cox opposes the motion and asks the Court to deny the motion or alternatively enter summary judgment in its favor on both issues.
To establish a claim of infringement, Plaintiffs must establish their ownership of the 1,421 musical composition copyrights allegedly infringed.
For this first category of copyrights, Plaintiffs have produced certificates of registration that list BMG as the claimant. See Briggs Decl. Apps. A1-A7, A13 (composition titles and copyright registration numbers); id. Exs. B1-B137, B391, B934 (certificates). The Copyright Act provides that "[i]n any judicial proceedings the certificate of a registration made before or within five years after the first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate." 17 U.S.C. § 410(c). Included in the facts entitled to the presumption of validity is ownership. Univ. Furniture Int'l, Inc., 618 F.3d at 428. Because Plaintiffs produced the certificates they have met their initial burden, and the burden shifts to Cox to "prove that the claimed copyrights are invalid." Id. (citing M. Kramer Mfg. Co. v. Andrews, 783 F.2d 421, 434 (4th Cir.1986)).
Cox agrees that the copyright registrations create a rebuttable presumption of ownership, see Defs.' Opp'n at 25, but it contends that the evidence needed to rebut the presumption and shift the burden back to Plaintiffs to conclusively establish ownership is not heavy. Indeed, the Fourth Circuit has cautioned that "the Copyright Office's practice of summarily issuing registrations... counsels against placing too much weight on registrations as proof of a valid copyright," and has instructed "reviewing court[s to] assess other relevant indicia of ownership, such as the parties' intent and the terms of transfer agreements and other documents establishing a chain of title." Univ. Furniture Int'l, Inc., 618 F.3d at 428; see also 3-12 Nimmer on Copyright § 12.11 ("[A]lthough certain prima facie presumptions are thereby created, the courts are free to examine the underlying facts and to rebut those presumptions, should the facts so warrant.").
The question, then, is whether Cox has come forward with sufficient evidence to rebut Plaintiffs' prima facie case of ownership or create a genuine issue of material fact as to ownership. Cox argues that testimony by BMG's Vice President of Copyright Administration, Robert Briggs, about BMG's registration process undermines the presumption of validity. Specifically, Cox claims the testimony establishes that BMG does not check to see if it owns copyrights before it registers them. In response, Plaintiffs argue that Cox greatly mischaracterizes Briggs's testimony and that the testimony is insufficient to rebut the presumption.
During his deposition, Briggs was asked whether and how BMG verifies its ownership of a copyright prior to filing a registration application. When asked whether BMG checks to see if there is a valid assignment agreement before filing the registration, Briggs responded, "I can't say specifically," and "[g]enerally, this is speculation on my part but I think that they are not checking each song." Bridges Decl. Ex. 19 at 23. He also testified that he did not know whether BMG has or checks its files for complete documentation of ownership following registration. But Briggs also explained that when a "song is delivered to our department, it's delivered by departments who are working on an understanding that there is an active agreement with that writer or client." Id.
When Briggs's testimony is read in full, it is not enough to cast doubt on BMG's ownership. Although "a defendant sued for infringement `must simply offer some evidence or proof to dispute or deny the plaintiff's prima facie case of infringement,'" Palladium Music, Inc. v. EatSleepMusic, Inc., 398 F.3d 1193, 1196 (10th Cir.2005) (quoting Entm't Res. Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1217 (9th Cir.1997)), a finding that Briggs's testimony is sufficient would render the statutory presumption meaningless. "[M]ore than conjecture is required to rebut the presumption," 3-12 Nimmer on Copyright § 12.11 n.28.18, and conjecture is all that Cox offers from the testimony. Cox has presented no "specific evidence that rebuts the presumption of validity which attaches to a duly issue[d] registration." Complex Sys., Inc. v. ABN Ambro Bank N.V., 979 F.Supp.2d 456, 470 (S.D.N.Y.2013). Because there is insufficient evidence in the record to rebut the presumption, the Court grants Plaintiffs' motion for partial summary judgment with respect to the copyrights that list BMG as the claimant on the certificate of registration.
The next group of copyrights lists a BMG predecessor entity as the claimant on the certificates of registration. See Briggs Decl. Apps. A8-A12, A14-A19, A20-A33, A36 (composition titles and registration numbers); id. Exs. B138-B390, B392-B700, B704, B932-B933 (certificates). Because BMG is not listed as the claimant, Plaintiffs must produce additional evidence of the chain of title from the claimant listed on the registration to BMG.
To meet their burden, Plaintiffs have produced both the certificates of registration and the merger and acquisition agreements between BMG and the entity (or a d/b/a of the entity) listed as the claimant on the certificates. See Briggs Decl. Exs. 1-12. Cox makes two general challenges to the chain of title evidence. First, Cox contends that the Court should require the chain of title to extend beyond the claimant listed on the certificate to the original author of the work. Second, Cox argues that the merger and acquisition agreements produced by Plaintiffs are insufficient to establish chain of title because they do not specify the individual works acquired. See Defs.' Opp'n at 28 ("Without conclusive evidence of which songs it acquired through mergers, BMG cannot prove that it owns the ... works."). Neither argument is persuasive.
There is no basis for Cox's argument that the chain of title must relate back to the author instead of the original claimant. The weight of authority supports finding the latter sufficient. See 4-13 Nimmer on Copyright § 13.01 ("The only evidence required of the plaintiff, in addition to the registration certificate, is evidence of plaintiff's chain of title from the original copyright registrant." (emphasis added)); see also Montgomery Cty. Ass'n of Realtors, Inc. v. Realty Photo Master Corp., 878 F.Supp. 804, 809-10 (D.Md. 1995) (quoting Nimmer for the proposition that the evidence of chain of title is "from the original copyright registrant"), aff'd, 91 F.3d 132 (4th Cir.1996). Moreover, the only case cited by Cox did not require the
Cox's second argument is that Plaintiffs cannot establish ownership because the merger agreements do not list the specific copyrights acquired. Cox cites no authority for the proposition that the writing used to transfer copyrights must list the specific assets acquired. Moreover, there is an exception to the Copyright Act's general requirement that the transfer of exclusive rights be made in writing where such a transfer occurs by "operation of law." 17 U.S.C. § 204(a). In Universal Furniture International, Inc. v. Collezione Europa USA, the Fourth Circuit recognized that "although the Copyright Act generally requires a writing to transfer copyright ownership, it makes exceptions for transfers that occur by `operation of law.'" 618 F.3d at 429 (quoting 17 U.S.C. § 204(a)). The court went on to note that "certain of our sister circuits have ruled that mergers transfer copyrights `by operation of law' and obviate the writing requirement." Id. (citing Taylor Corp. v. Four Seasons Greetings, LLC, 403 F.3d 958, 963 (8th Cir.2005), and Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 721 (9th Cir.1984)); see also Soc'y of Holy Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 41 (1st Cir.2012). If no writing is required to transfer copyright ownership in a merger, Cox cannot be correct that there must be a list of the specific copyrights acquired. See Design Basics, L.L.C. v. DeShano Cos., Inc., No. 10-14419, 2012 WL 4321313, at *4-5 (E.D.Mich.2012) (finding plaintiff established ownership with certificate of registration and proof of merger). The Court finds Plaintiffs have established ownership by the production of the certificates of registration and the relevant merger and acquisition agreements.
Finally, Cox disputes five individual copyrights in this category. In response, Plaintiffs withdrew their claim of ownership as to one copyright, see Pls.' Reply at 5 n.3 (withdrawing Exhibit B403), but argue that the remaining challenges are baseless. The Court agrees. Cox first disputes the copyright for "Call of the Zombie," see Briggs Decl. Ex. B468, because "Bug Music" (a BMG predecessor) is handwritten under "claimant" on the certificate of registration. Plaintiffs respond that the handwritten name is immaterial. Neither party cites any authority on this point. The Court need not decide whether a handwritten notation would be sufficient to undermine a claim of ownership because the unofficial copyright registration available on the public catalog, of which the Court may take judicial notice,
There is no genuine issue of material fact as to the ownership of these copyrights. Accordingly, the Court grants Plaintiffs' motion with respect to this category of copyrights, with the exception of the withdrawn claim of ownership as to Exhibit B403.
The third category consists of copyrights that BMG (or a BMG predecessor) purchased or otherwise acquired from third parties. Plaintiffs have produced the certificates of registration for these works, see Briggs Decl. Apps. A35, A37-102; id. Exs. B702-B703, B705-B931, and the underlying purchase agreements, see id. Exs. 8-9, 13-105.
Cox first argues that "BMG relies on incomplete co-publication or administration agreements." Id. at 29. These agreements, Cox argues, "grant BMG various rights to songs in attachments that do not exist" and thus "do not establish chain of title because they do not identify the objects of a transfer." Id. As examples, Cox cites two agreements that assign exclusive rights to copyrights to be listed in an attachment but that fail to include the named attachment. Relatedly, Cox argues that BMG "relies on vague agreements that also fail to identify the works." Id. As examples, Cox cites agreements that give BMG rights "to any and all compositions," to works acquired after the agreement, and to "all musical compositions, including but not limited to" works listed in a non-existent schedule. Id. These agreements, Cox contends, fail to establish a chain of title
Plaintiffs respond that each agreement meets the Copyright Act's requirement that transfers of ownership by assignment or exclusive license be signed and in writing. See 17 U.S.C. § 204(a). There is no requirement, they argue, that each work be identified, and they note that Cox does not cite to a single case or other authority supporting such a proposition. Indeed, courts often say that "a qualifying writing under Section 204(a) need not contain an elaborate explanation nor any particular `magic words,' but must simply show an agreement to transfer copyright." Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591, 600 (4th Cir.2013) (citations omitted) (internal quotation marks omitted); see also Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir.1990) ("It doesn't have to be the Magna Charta; a one-line pro forma statement will do.").
Even assuming that to satisfy the chain-of-title requirement Plaintiffs must submit evidence of the specific copyrights covered by each agreement, they have done so via declaration testimony. For instance, Cox cites Exhibit 29, a Music Publishing Administration Agreement between John Legend Music, Inc. and BMG, as an example of an incomplete agreement. The agreement gives BMG exclusive rights to administer the musical compositions listed in Annex 1, but Annex 1 is left blank. In his declaration, Briggs testified that the agreement relates to the twenty-five works listed in Appendix A25. See Briggs Decl. ¶¶ 60-61. There is similar testimony relating to each transaction. Cf. Arista Records LLC v. Lime Grp. LLC, No. 06 CV 5936, 2011 WL 1641978, at *4 (S.D.N.Y. Apr. 29, 2011) (finding declaration testimony sufficient to supplement the chain of title). Cox's mere denial of these facts is not sufficient to rebut the presumption of ownership or to create a genuine issue of material fact.
Finally, Cox argues that "BMG relies on a few agreements that allegedly transferred to rights from others [sic] to BMG but those other parties appear nowhere in the agreements." Defs.' Opp'n at 30 (citing Briggs Decl. Exs. A76, A77, A89, A95, A101). It is not entirely clear what Cox is arguing here, but Plaintiffs address each challenged agreement in their reply and identify the parties to the transfers. Pls.' Reply at 6-7.
Accordingly, the Court grants summary judgment to Plaintiffs on the ownership of the copyrights in this category.
The final category consists of (1) copyrights that list Round Hill Music, LLC as the claimant on the copyright registrations and (2) copyrights that Round Hill Music, LLC purchased or otherwise acquired from third parties. Gillis Decl. Apps. A1-A5 (composition titles and registration numbers); id. Exs. C1-C22 (certificates);
Section 501(b) of the Copyright Act provides that only "[t]he legal or beneficial owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501(b); see also X-It Prods., L.L.C. v. Walter Kidde Portable Equip., Inc., 155 F.Supp.2d 577, 602 (E.D.Va.2001). Section 106 lists the six exclusive rights available under a copyright.
Plaintiffs do not contend that Round Hill Music LP was assigned legal title to any of the copyrights at issue. They claim Round Hill Music LP was given an exclusive license to use each of the copyrights at issue for any and all of the exclusive rights listed in § 106. Thus, it must be the case that Round Hill Music LP not only "received one or more divisible rights," but also that its interest in those rights is exclusive — that is, Round Hill
Three agreements are relevant here. The first is the Asset Purchase Agreement that assigned the copyrights from Round Hill Music, LLC, the entity listed on the copyright registrations, to Round Hill Music Royalty Fund LP (the "Fund"). See Gillis Decl. Ex. RH1. It is undisputed that the Fund owns legal title to the copyrights.
The second is the Third Amended and Restated Agreement of Limited Partnership of Round Hill Music Royalty Fund LP (the "Fund Agreement"). See id. Ex. RH2. The Fund Agreement created a limited partnership consisting of a general partner — Round Hill Music Royalty Fund GP LP (the "General Partner") — and a sole limited partner — Joshua Gruss. The Fund Agreement states that "management of the Partnership shall be vested exclusively in the General Partner ... and the General Partner shall have full control over the business, assets, conduct and affairs of the Partnership." Id. at 32. The agreement also contemplates the appointment of a Management Company "to manage the affairs of the Partnership," id. at 29, and a Copyright Administrator, defined as "any Person (including an Affiliate of the General Partner) employed or retained by the Partnership and at the Partnership's expense, to provide services in connection with the administration, preparation and processing or any similar service of any copyrights owned by, or assigned to, the Partnership." Id. at 6. With respect to the role of Copyright Administrator, the Fund Agreement also states:
Id. at 31.
The third relevant agreement, executed the same day as the Fund Agreement, is the Management Agreement. See Gillis Decl. Ex. RH3. The Management Agreement was entered into by the Fund, the General Partner, and Plaintiff Round Hill Music LP. Id. at 1. It appointed Round Hill Music LP as the Management Company, and within that role, the Copyright Administrator. See id. (appointing Round Hill Music LP to "provide management or other services, including acting as a Copyright
Plaintiffs rely on the combined effect of the Fund Agreement's grant to the General Partner of "full control over the ... assets" and the Management Agreement's statement that Round Hill Music LP "shall have the same rights, duties and obligations" as the General Partner. Putting the two together, Plaintiffs claim the Fund gave Round Hill Music LP "the exclusive ownership rights to administer and exploit the copyrights," Gruss Decl. ¶ 3, including "all of the exclusive rights described in ... § 106." Pls.' Supp. Memo. in Supp. at 4.
The Court disagrees. The plain language of the agreements only gives Round Hill Music LP the "same rights" as the General Partner — including "full control over the ... assets" — when it is "providing the services performed by the Manager." Thus, the language begs the question of what "services" the Manager, and within that role, the Copyright Administrator, performs with respect to the copyrights. There is little, if any, indication that these "services" performed contemplated the transfer any legally cognizable right in any of the copyrights, much less that such permission was exclusive. The Fund Agreement explains the role of Copyright Administrator as "provid[ing] the services of administrator of copyrights." Gillis Decl. Ex. RH2 at 31. But the responsibilities listed are "day-to-day administrative services" for which the Copyright Administrator will be reimbursed. Id. Similarly, the agreement defines Copyright Administrator as an entity "provid[ing] services in connection with the administration, preparation and process or any similar service of any copyrights" owned by the Partnership. Id. at 6. While Plaintiffs are correct that administration agreements can transfer a sufficient ownership interest, there is no other indication aside from the word "administration" that suggests the agreement transferred any interest at all. There is no reference, for example, to any of the actions contemplated by § 106 — for example, the right to reproduce or distribute. Instead, the word "administration" is surrounded by language that paints Round Hill Music LP's role as administrative and acting directly on behalf of the Partnership.
The language in the agreements aligns much more closely with Cox's contention that the Fund merely hired Round Hill Music LP "to provide services related to copyrights it did not own" and that "[t]his employment did not result in any assignment of rights to" Plaintiff. Defs.' Opp'n at 25. As the Southern District of New York recently noted, "Considering the preeminence of exclusive rights in copyright cases, it is axiomatic that if the ... Agreement did not specify that exclusive rights were being transferred, no such rights were in fact transferred." John Wiley & Sons, Inc. v. DRK Photo, 998 F.Supp.2d 262, 278 (S.D.N.Y.2014).
Even assuming that the agreements did convey a license to use the copyrights, there is no indication that the license was exclusive. An exclusive license is transferred when an "individual or entity is given the right to use a copyright" and "the owner promises not to convey that right to anyone outside of those persons or entities who have an interest in the license." Warner/Chappell Music, Inc., 2011 WL 662691, at *4 (quoting I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir.
Plaintiffs also rely on the declaration of Joshua Gruss, the managing member of the Round Hill entities, in which he testified that "[s]ince the Management Agreement was executed, Round Hill LP has acted as the exclusive worldwide administrator of the copyrights and other properties owned by the Partnership. No other individual or entity, including the Partnership, has acted or has the right to act as the administrator of its copyrights, including those at issue in this case." Gruss Decl. ¶ 5. As noted above, the Court looks to the substance of the agreements to determine whether standing exists and not the post hoc label placed on the agreements by Plaintiffs. The plain language of the agreements does not support finding a transfer of any exclusive license. Nor is Gruss's declaration particularly helpful, as it does not shed any light on what the role of "exclusive worldwide administrator" entails.
Rather than attempting to explain what language in the agreements conveyed an exclusive license, Plaintiffs devoted most of their initial briefing to challenging Cox's ability to make its standing challenge. Plaintiffs cite a line of cases that say an alleged third-party infringer cannot attempt to avoid liability by arguing that an underlying assignment of copyright failed to comply with the Copyright Act's writing requirement. See 17 U.S.C. § 204(a) ("A transfer of copyright ownership ... is not valid unless an instrument of conveyance... is in writing and signed by the owner of the rights conveyed...."). The principle arose out of cases where there had been an oral transfer of rights and the question was whether a later written memorialization of the transfer was sufficient to comply with the writing requirement. Because the purpose § 204 is to resolve disputes between transferors and transferees, those courts concluded that "it would be anomalous to permit a third party infringer to invoke this [writing] provision against the licensee." Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27, 36 (2d Cir.1982); see also X-It Prods., 155 F.Supp.2d at 603-04 (citing Eden Toys and collecting cases that support the proposition that "an oral assignment of copyright rights is an effective assignment if the oral assignment is subsequently memorialized in a written document").
Plaintiffs ask the Court to apply this principle broadly and hold that Cox, as an alleged third-party infringer, cannot challenge the assignment between the Fund and Round Hill Music LP because there is no dispute between them regarding what was transferred. The Court does not believe the principle extends as far as Plaintiffs urge. Cox is not invoking § 204's writing requirement or relying on the informality of the transfer to avoid liability. Rather, it is pointing to the language within the written agreements and asking if that language conveyed the type of right necessary to support standing to bring an infringement claim. See Marya v. Warner/Chappell Music, Inc., No. CV13-4460, 131 F.Supp.3d 975, 1001-02, 2015 WL 5568497, at *19 (C.D.Cal. Sept. 22, 2015) ("Eden Toys do[es] not stand for the proposition that so long as an alleged transferor and transferee say that a transfer occurred, a third-party has no choice but to take them at their word. Rather, these cases stand for the proposition that, if there is evidence of a transfer, the informality with which the transfer was conducted does not prevent the transferee from asserting an interest in the copyright.").
Because Round Hill Music LP does not co-own the copyrights or have an exclusive license for any use of the copyrights, it is without standing to bring this infringement action. Accordingly, the Court finds Round Hill Music LP cannot proceed in this action and its claims for infringement against Cox are dismissed.
BMG also moves for summary judgment on Cox's entitlement to its DMCA safe-harbor defense.
Title II of the DMCA, titled the Online Copyright Infringement Liability Limitation Act, was Congress's answer to the potentially enormous liability that ISPs faced for the materials being transmitted over their networks. See Viacom Int'l, Inc. v. YouTube, Inc., 676 F.3d 19, 27 (2d Cir. 2013). To that end, Congress created four safe harbors that protect ISPs from liability for copyright infringement when their involvement is limited to certain activities — transitory digital networking communications, system caching, information residing on systems or networks at the direction of users, and information location tools. See 17 U.S.C. §§ 512(a)-(d). Cox invokes the first of these safe harbors, § 512(a), which "limits the liability of ISPs when they do nothing more than transmit, route, or provide connections for copyrighted material — that is, when the ISP is a mere conduit for transmission." In re Charter Commc'ns, Inc., 393 F.3d 771, 775 (8th Cir.2005).
To benefit from any one of the safe harbors, Congress imposed certain threshold requirements on all ISPs. As is relevant here, a service provider must demonstrate that it has "adopted and reasonably implemented, and informed subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers." 17 U.S.C. § 512(i)(1)(A). The requirement that service providers implement a repeat-infringer policy is a "fundamental safeguard for copyright owners" and "essential to maintain[ing] the strong incentives for service providers to prevent their services from becoming safe havens or conduits for known repeat copyright infringers." Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627, 637 (S.D.N.Y.2011) (internal quotation marks omitted).
The dispute in this case centers on what it means for a service provider to "reasonably implement[]" its policy. The phrase is not defined in the statute. In deciphering its meaning, courts have split the phrase into two separate requirements: (1) whether a service provider implemented its policy; and (2) whether that implementation was reasonable. See, e.g., Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109-10 (9th Cir.2010). Courts have identified several "threshold functions" that must be present in order for a service provider to implement any repeat-infringer policy. Disney Enters., Inc. v. Hotfile Corp., No 11-20427, 2013 WL 6336286, at *21 (S.D.Fla. Sept. 20, 2013). For example, a service provider
A service provider's implementation is reasonable if it terminates a repeat infringer's access in appropriate circumstances. See CCBill LLC, 488 F.3d at 1111. This raises the dual questions of when a service provider should consider a subscriber or account holder to be a repeat infringer and when circumstances become appropriate for termination. As Professor Nimmer points out, "repeat infringer" could have a number of meanings. On one end of the spectrum, an infringer could be "an adjudicated copyright infringer." See 4-12B Nimmer on Copyright § 12B.10. In the middle may be someone against whom an unadjudicated charge has been made, but the service provider has actual knowledge of, or is aware of facts and circumstances suggesting, infringement. On the other end, an infringer could be someone against whom "an unadjudicated charge of infringement has been preferred." Id. Although Cox asks the Court to hold that one can be labeled an infringer only when adjudicated as such, the Court finds no support in caselaw for that interpretation. Instead, courts have articulated a knowledge standard: "A policy is unreasonable ... if the service provider failed to respond when it had knowledge of the infringement." CCBill LLC, 488 F.3d at 1113 (emphasis added); see also MP3tunes, LLC, 821 F.Supp.2d at 638 ("While knowledge is not an element of copyright infringement, it is relevant to a service provider's decision whether appropriate circumstances exist to terminate a user's account.").
Even if a service provider has knowledge of infringement, however, the Act requires termination only in "appropriate circumstances." The inclusion of this phrase implies that there are some circumstances under which termination of a repeat infringer may not be appropriate. For example, courts have noted that there are different degrees of online copyright infringement, from the inadvertent and noncommercial, to the willful and commercial. See H.R. Rep. 105-551, pt. 2 at 61 (1998). Another common benchmark, taken from the House and Senate Reports, is that "those who repeatedly or flagrantly abuse their access to the Internet through disrespect for intellectual property rights of others should know that there is a realistic threat of losing that access." Id. Thus, appropriate circumstances clearly cover account holders who repeatedly or flagrantly infringe copyright, particularly infringement of a willful and commercial nature. See Capitol Records, LLC v. Vimeo, LLC, 972 F.Supp.2d 500, 514 (S.D.N.Y. 2013). Equally clear is that this standard cannot be applied in such a way as to impose an affirmative duty on service providers to monitor for infringement. See 17 U.S.C. § 512(m)(1) ("Nothing in this section shall be construed to condition the applicability of subsections (a) through (d) on ... a service provider monitoring its service or affirmatively seeking facts indicating infringing activity...."); CCBill LLC, 488 F.3d at 1111 ("To identify and terminate repeat infringers, a service provider need not affirmatively police its users for evidence of repeat infringement.").
In sum, the Court finds § 512(i) covers, "at a minimum, instances where a
BMG identifies three reasons why Cox did not reasonably implement its repeat infringer policy. First, BMG says Cox cannot be said to be implementing its policy if it refuses to accept Rightscorp's infringement notices merely because they contain settlement offers. And even beyond Cox's blanket refusal to forward those notices to its account holders, BMG argues it is also unreasonable that Cox makes no effort to record the other information contained in the notices, such as the date and time of the infringing activity and the account holder's IP address. Second, BMG argues that with millions of subscribers, Cox's use of a "hard limit" on the number of infringement notices it will receive in a twenty-four-hour period is additional evidence of unreasonableness. Third, BMG argues that Cox does not terminate access of repeat infringers under appropriate circumstances.
The Court finds this last ground sufficient, standing alone, to bar Cox from invoking the DMCA's protection.
The record conclusively establishes that before the fall of 2012 Cox did not implement its repeat infringer policy. Instead, Cox publicly purported to comply with its policy, while privately disparaging and intentionally circumventing the DMCA's requirements. Cox employees followed an unwritten policy put in place by senior members of Cox's abuse group by which accounts used to repeatedly infringe copyrights would be nominally terminated, only to be reactivated upon request. Once these
Numerous emails in the record, portions of which are reproduced below, support these conclusions. Even viewed in the light most favorable to Cox, the Court finds the contents of the emails cannot be explained away. Cox's attempts to recast the emails are unavailing. Nor can they be pinned on low level employees whose views had no real significance. The name that appears again and again on these emails is Jason Zabek, Cox's Manager of Customer Abuse Operations.
In 2009, Zabek sent an email titled, "DMCA Terminations," to the abuse group that said:
Theodore Decl. Ex. 18.
In a January 2010 email exchange, Zabek was asked by an employee what to do in the following scenario:
Id. Ex. 19. In other words, this customer had progressed through Cox's graduated response procedure and Cox had ultimately determined appropriate circumstances existed to terminate this customer for six months. One month into the termination, the customer was reactivated and soon thereafter, Cox received another notice of infringement tied to the account.
This was Zabek's response:
Id.
In a series of emails in June of that year, a customer service representative asked whether she needed the abuse group's "okay" to reactivate an account after "a customer is terminated for the
In August, a representative sent the abuse group an email to confirm that, after a customer is terminated and then reactivated, the next complaint Cox received "is to be treated as a brand new complaint" and the customer is to be "given a clean slate." Id. Ex. 21. Zabek responded:
Id.; see also id. Ex. 2 at 201, 222 (confirming that the process would begin anew following reactivation).
In March 2011, a customer service representative sent Zabek an email, saying: "Spoke to the customer this morning and he flat out is refusing to do anything on his side and insists nothing is coming from it despite multiple tickets.... If possible, please give me some insight on where we should go from this point; ie suspension or something of the sort." Id. Ex. 24. This was Zabek's instruction:
Id. (emphasis added).
In another March email, a representative emailed Zabek: "Here is another example of a customer that I consider a[] habitual abuser. In a year was terminated twice and turned back on. I suspended him again since no e-mail address and according to procedure he start over [sic] in the process." Id. Ex. 45 (emphasis added). Zabek responded, "It is fine. We need the customers." Id. In an April exchange, a customer service representative sent this inquiry: "This is the customers [sic] third termination. He is waiting call [sic]. What do I tell him when I call him?" Id. Ex. 22. Zabek wrote, "DMCA = reactivate," and then by separate email, "You can make him wait a day or so if you want.;-)[.]" Id.
In August, Brent Beck, a software engineer, wrote, "I understand that recently the termination procedure has been relaxed a bit, so as to involve suspending the customer's modem instead of removing the services (since most are reactivated, this was faster and easier)." Id. Ex. 46. In the same email chain, Zabek wrote, "Remember that we must terminate to receive protection under the save [sic] harbor
A January 2012 AOL instant messenger conversation between Sikes and Beck discussed the meaning of the term, "soft terminate." Id. Ex. 13. When asked what a "soft term" was, Sikes explained: "basically, a suspension that is called a termination with the likelihood of reactivation." Id. Then he said, "for DMCA — we don't want to loose [sic] the revenue." Id. And in response to further questions from Beck, Sikes said, "this is a relatively new process that we've been doing for the past year, again, to retain revenue." Id. Sikes warned Beck that the "Hard/Soft verbiage stays amongst us only.... It's kind of an `under the table' procedure, again, to preserve revenues, when we were loosing [sic] Subscribers, but it only happens about once per month." Id. Finally, a February 2012 email from a Cox employee to the abuse group said, "I was chatting with Daryl and it seems no one has let them know in SAN that DMCA Terms are not really Terminations any longer." Id. Ex. 52 (emphasis added).
To implement the repeat infringer policy contemplated by § 512(i), the penalty imposed by service providers must be termination. Terminate means "[t]o put an end to; to bring to an end." Black's Law Dictionary (10th ed. 2014). Service providers cannot skirt the termination requirement by imposing something short of complete termination of a subscriber or account holder. The District Court for the Southern District of New York recently examined the DMCA's termination requirement and reasoned that the "definition suggests that Congress intended service providers to have a policy in place that would end or discontinue the accounts of repeat infringers, not something short of that such as limiting repeat infringers' user privileges." Capital Records, LLC, 2015 WL 1402049, at *10 (emphasis added). That is exactly what Cox did. In Zabek's words, "DMCA = reactivate." Theodore Decl. Ex. 22. Although Cox asserts that "its policy has always been to terminate account holders in appropriate circumstances," Defs.' Opp'n at 22, that bare assertion is not enough to defeat summary judgment.
The Fourth Circuit has said that the immunity granted by Congress to service providers "is not presumptive" and is to be "granted only to innocent service providers." ALS Scan, Inc. v. RemarQ Cmtys., Inc., 239 F.3d 619, 625 (4th Cir.2001) (internal quotation marks omitted). The emails in the record strip Cox of any innocence. They make clear that it was Cox's policy to intentionally circumvent the DMCA. Despite having a repeat-infringer policy on the books, Cox's implementation rendered the policy an "absolute mirage." In re Aimster Copyright Litig., 252 F.Supp.2d 634, 659 n. 18 (N.D.Ill.2002), aff'd, 334 F.3d 643 (7th Cir.2003); see also MP3Tunes, LLC, 821 F.Supp.2d at 637 ("Thus, service providers that purposefully... fail to terminate users despite their persistent and flagrant infringement are not eligible for protection under the safe harbor."). In sum, no reasonable juror could find that Cox implemented a repeat-infringer policy before the fall of 2012.
In October 2012, Cox added two additional suspension steps to its graduated response procedure. See Theodore Decl. Ex. 39 at 10-13. BMG concedes that around the same time that Cox adopted
The numbers bear out BMG's first argument. From January 2010 until August 2012, Cox terminated an average of 15.5 account holders a month. Theodore Decl. Ex. 39 at 25-27. Between September 2012 and November 2014 when this suit was filed, Cox terminated an average of 0.8 accounts per month, with a total of 22 terminations.
BMG has also presented evidence of specific instances in which Cox did not terminate account holders despite knowing that they were using Cox's service to repeatedly infringe. For instance, in a March 2014 exchange, a customer service representative wrote, "Customer has been told multiple times that he needs to secure his open wireless router. He has also been warned that the next complaint can result in termination of service." Roberts Decl. Ex. 6. Sikes responded, "Yep, this is their absolute last chance to either secure their wireless router and/or remove ALL P2P clients from their systems. Next complaint = 6 month termination." Id. A few weeks later, the same service representative emailed to say, "Last ticket ... customer was warned that further complaints would result in termination. We have received an additional complaint." Id. Ex. 5.
Sikes responded:
Id. The rep responded, "Looks like PTP programs were discussed back on ticket 15711339 (Which was also a final suspension as well)." Id. Sikes responded,
Id.
In May, a representative sent an email to the abuse group that said, "Request for termination review — Cats Ticket 19991279. This is the 3
In June, a senior engineer in the abuse group said this about a customer who had been given a final suspension and advised to remove all P2P file-sharing programs: "This customer will likely fail again, but let's give him one more change [sic]. [H]e pays 317.63 a month." Id. Ex. 34. Also in June, a customer service representative emailed the abuse group about a different customer, saying, "This customer is well aware of his actions and is upset that `after years of doing this' he is now getting caught. Customer was advised to shop sharing, check his wireless and remove his PTP programs." Id. Ex. 47. Sikes responded, "Please advise this Customer that this is their final termination & reactivation. If we receive one more complaint, we will, regretfully, not be able to provide them with data service for 6 months." Id.
Instead, Cox hangs its hat on the notion that an "infringer" is someone who has been adjudicated an infringer in court. Working from that baseline, Cox argues that "as a matter of choice and not obligation, Cox applies its process to mere accusations involving its accounts." Defs.' Opp'n at 15-16. In other words, Cox's policy goes above and beyond what the DMCA requires, so its failure to act based on notices of infringement cannot render Cox ineligible for the safe harbor's protection. Cox also argues that by not defining "appropriate circumstances" Congress left it to the service provider to make its own determination of when such circumstances exist.
Although Cox was under no duty to monitor for infringement, Cox did not have leeway to wait until an account holder was adjudicated as an infringer to find that circumstances were appropriate for termination. As explained above, the Court disagrees that a repeat infringer policy applies only to those who have been held liable in a copyright suit. Rather, an account holder must be considered an infringer, at minimum, when the service provider has actual knowledge that the account holder is using its services for infringing purposes. Nor do service providers have complete discretion to define "appropriate circumstances." Appropriate circumstances arise when an account holder is repeatedly or flagrantly infringing copyrights. Thus, when Cox had actual knowledge of particular account holders who blatantly or repeatedly infringed, the responsibility shifted to Cox to terminate their accounts.
Cox makes the additional argument that knowledge of infringement cannot be established by notices submitted by copyright holders.
Moreover, the account holders referenced in the emails above had already been through Cox's entire graduated response procedure. That means Cox had received, not one or two, but at least fourteen infringement notices tied to their accounts in a six-month period. And Cox customer service representatives worked with the customers on each of their four "hard-walled garden" suspensions to identify the cause of the infringement notices — including the possibilities of malware, an unsecured wireless network, or a file-sharing program on another computer in the household. By the time an account holder reaches the end of Cox's graduated response procedure, the chance that the account holder is not a willful infringer has substantially lessened.
Finally, and critically, the emails in the record reveal that Cox had knowledge that at least some of its account holders were intentionally and repeatedly infringing. See, e.g., Theodore Decl. Ex. 47 ("This customer is well aware of his actions and is upset that `after years of doing this' he is now getting caught. Customer was advised to shop sharing, check his wireless and remove his PTP programs." (emphases added)); id. Ex. 49 ("This Customer knows `it's his fault' ...." (emphasis added)). As one court explained, "[a]lthough efforts to pin down exactly what amounts to knowledge of blatant copyright infringement may be difficult, it requires, at a minimum, that a service provider who receives a notice of a copyright violation be able to tell merely from looking at the user's activities, statements, or conduct that copyright infringement is occurring." Corbis Corp., 351 F.Supp.2d at 1104-05. It is clear that Cox was able to tell from these account holders' statements and conduct that infringement was occurring. Yet, Cox continued to provide service.
Implementation of a repeat-infringer policy is "unreasonable when service providers fail[] to terminate users who `repeatedly or blatantly infringe copyright.'" Capitol Records, LLC v. Vimeo, LLC, 972 F.Supp.2d 500, 514 (S.D.N.Y. 2013) (quoting CCBill, 488 F.3d at 1109). Cox has not come forward with any evidence that would raise a genuine issue of material fact as to whether it has done so. Accordingly, BMG is entitled to summary judgment on Cox's safe-harbor defense. If Cox is determined to be liable for contributory or vicarious copyright infringement, BMG will not be limited in the remedies it seeks.
Cox moves for summary judgment on five grounds: (1) whether there is evidence of direct infringement by third parties; (2) whether there is evidence of Cox's contributory infringement; (3) whether there is evidence of Cox's vicarious liability; (4) whether BMG failed to mitigate its damages; and (5) whether BMG's unclean hands bar its claims. After a careful review of the record in the light most favorable to BMG, the Court finds summary judgment on any of the first four grounds is inappropriate. Issues of material fact remain for the jury to decide at trial. The Court finds
BMG cannot hold Cox liable for contributory or vicarious infringement absent evidence of underlying direct infringement. See Softech Worldwide, LLC v. Internet Tech. Broad. Corp., 761 F.Supp.2d 367, 375 (E.D.Va.2011); U-Haul Int'l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723, 731 (E.D.Va.2003). Direct infringement requires proof of (1) ownership of a valid copyright and (2) copying. Copying is established when any of the exclusive rights listed in § 106 are violated. See 17 U.S.C. § 501(a) ("Anyone who violates any of the exclusive rights of the copyright owner ... is an infringer of the copyright...."). In the complaint, BMG alleged that its exclusive rights of reproduction and distribution, see §§ 106(1), (3), "are directly infringed each time a Cox subscriber without authorization uploads or downloads through the Cox system a recording that embodies a composition." Am. Compl. at 12. Cox claims there is no evidence in the record to support that allegation.
It is undisputed that BMG has not identified a specific individual Cox account holder who utilized a BitTorrent protocol on Cox's internet service to upload or download music files that infringed BMG's copyrights. Cox believes this is a critical deficiency in BMG's evidence. In Cox's view, BMG should have brought John Doe lawsuits and used subpoenas to establish at least one account holder as a direct infringer. Cox argues Rightscorp's identifications of IP addresses associated with Cox accounts is insufficient to establish that any infringing act was committed by a Cox account holder rather than some third party who tapped into the account holder's network — for example, a neighbor accessing an unsecured wireless network or a babysitter on a Friday night.
The Court disagrees with Cox's articulation of what is required of a copyright owner in a secondary liability suit. First, imposing a rule that would require copyright owners to litigate John Doe lawsuits before bringing claims of secondary liability would undermine a key purpose of secondary liability claims. As the Supreme Court explained, "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 liability." Grokster, 545 U.S. at 929-30, 125 S.Ct. 2764; see also Aimster, 334 F.3d at 645.
Second, Cox's argument ignores the fact that BMG may establish direct infringement using circumstantial evidence that gives rise to an inference that Cox account holders or other authorized users accessed its service to directly infringe. See Capitol Records, Inc. v. Thomas, 579 F.Supp.2d 1210, 1225 (D.Minn.2008) ("[D]irect proof of actual dissemination is not required by the Copyright Act. Plaintiffs are free to employ circumstantial evidence to attempt to prove [a violation]."). As explained more fully below, Rightscorp claims to have identified 2.5 million instances of Cox users making BMG's copyrighted works available for download, and Rightscorp itself downloaded approximately 100,000 full copies of BMG's works using Cox's service. BMG has presented more than enough evidence to raise a genuine issue of material fact as to whether Cox account holders directly infringed its exclusive rights.
Cox tries to counter this by arguing that BMG cannot rely solely on evidence
Finally, Cox makes much of the distinction between infringement by the individual named on the account and infringement by other users with access to Cox service. Cox overstates the import of the distinction. Taking a scenario posed by Cox at oral argument, it is typical for each member of a multimember household to access the internet via an agreement between Cox and one individual in the household. Certainly, evidence that any one of those users infringed would be sufficient, notwithstanding the fact that the individual's name does not appear on the bill. While identity is a key issue in many individual infringement suits, it has little relevance in a large-scale secondary liability suit. On the other hand, Cox's liability for infringement over its network is not boundless. Cox is free to present evidence at trial that might weaken any inference raised by BMG's evidence of infringement. For instance, Cox can present evidence of the prevalence of stolen access to wireless networks or what it believes to be Rightscorp's imprecise methods of identifying IP addresses.
Cox devotes most of its argument to the scope of § 106(3)'s distribution right, arguing that BMG's evidence of Cox account holders making copyrighted works available for download is insufficient to show distribution. Cox asserts that BMG must show actual dissemination of the copyrighted works and that BMG has failed to
Section 106(3) grants "the owner of copyright ... the exclusive rights to ... distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. § 106(3). The right was "largely dormant" before the emergence of file-sharing technology. Peter S. Menell, In Search of Copyright's Lost Ark: Interpreting the Right to Distribute in the Internet Age, 59 J. Copyright Soc'y 1, 6 (2011). As copyright owners have increasingly relied on the distribution right in the digital age, district courts and academia alike have split on how to define distribution.
One source of disagreement among courts is the question of how to understand early cases that discussed the distribution right in contexts far afield from online file sharing. The most commonly cited case in this debate comes from the Fourth Circuit. In Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir.1997), the church obtained an authorized copy of the plaintiffs' copyrighted research materials for its main library's collection. The church then made unauthorized microfiche copies of the research and sent the copies to its branch libraries. Upon discovering a copy at one of the branches, the copyright owners sued, alleging a violation of his distribution right. Because the library did not keep records of who used the microfiche, the church argued that the plaintiffs could not establish distribution because there was no evidence that a member of the public had ever used it. The Fourth Circuit disagreed.
After stating the general principle that "[i]n order to establish `distribution' of a copyrighted work, a party must show that an unlawful copy was disseminated `to the public,'" id. at 203 (citing Nat'l Car Rental v. Computer Assocs., 991 F.2d 426, 434 (8th Cir.1993)), the court held:
Id.
The Fourth Circuit has never returned to its holding in Hotaling and thus has not had the opportunity to consider whether evidence that sound recordings were made available for download without authorization via BitTorrent would be enough to show distribution. Cf. Menell, supra, at 8 (noting that Hotaling "arose in arcane circumstances far removed from the file-sharing context"). BMG contends that Hotaling announced a broadly applicable "making available" definition of distribution that applies equally to file-sharing and that the Court is bound by that definition. While the Court is bound by Fourth Circuit precedent, the Court does not read Hotaling as broadly as BMG urges.
The Hotaling court announced the definition of distribution when it said, "In order to establish `distribution' of a copyrighted work, a party must show that an unlawful copy was disseminated `to the
Goldstein on Copyright § 7.5.1 (3d ed. 2012 Supp.) (footnotes omitted); see also Patry on Copyright § 13:9 ("[T]he majority's decision can be saved only if it is read to rest on an evidentiary probability that there had been an actual loan of the copy.").
To be sure, some courts have construed the holding in Hotaling broadly and held that making works available on file-sharing programs is distribution.
BMG argues in response that reading distribution to include a "making available" right is consistent with other provisions in the Copyright Act. As examples, BMG cites the definition of "publication" in § 101, which includes "offering to distribute copies," and § 506(a)(1)(C), a criminal provision that provides that "the distribution of a work" may be accomplished by "making it available on a computer network accessible to members of the public." Courts have debated whether the definition of "publication" in § 101 supports a broader reading of the distribution right. Some courts have concluded that "distribution" and "publication" are synonymous terms under the Copyright Act and, working from that baseline, use the definition of "publication" to define "distribution." This logic is flawed for several reasons.
At the threshold, the Court questions the evidence relied on by those courts that purportedly establishes that distribution is interchangeable with publication. Those courts build upon comments in legislative history as well as an excerpt from the Supreme Court's decision in Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). Legislative history cannot override the plain meaning of "distribution" under § 106(3), however, and Harper & Row involved a narrow discussion of first publication and not the meaning of distribution and publication generally. Cf. Thomas, 579 F.Supp.2d at 1219-20.
Nor does the definition of "publication" support a broader reading of the distribution right. The Act defines "publication" as
17 U.S.C. § 101. The first sentence of the definition tracks the language in § 106(3), making it clear that all distributions are publications. It does not follow from that proposition that the inverse — all publications are distributions — is also true. See Patry on Copyright § 13:11.50 (noting that courts that assume the inverse is true fall within "the logical fallacy of affirming the consequent" (internal quotation marks omitted)). The "offering to distribute" language forms an additional category of publications that are not distributions. See London-Sire, 542 F.Supp.2d at 169; see also Howell, 554 F.Supp.2d at 985 ("A plain reading of the statute indicates that a publication can be either a distribution or
Section 506(a)(1)(C), a criminal provision that imposes penalties for "the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public," likewise convinces the Court that its reading of § 106(3) is correct. This provision and § 101 establish that "when Congress intends distribution to encompass making available or offering to transfer, it has demonstrated that it is quite capable of explicitly providing that in the statute." Thomas, 579 F.Supp.2d at 1218.
BMG makes three additional arguments for a "making available" interpretation that the court finds equally unpersuasive. First, BMG says that "making available" is "the view of definitive treatises." Pls.' Opp'n at 12. That is not correct. There is a split in the academic debate, with Menell and Nimmer advocating for a "making available" right and Patry and Goldstein advocating for actual distribution.
BMG also argues that interpreting the right broadly is essential to comport with the United States's obligations under the World Intellectual Property Organization ("WIPO") Copyright Treaty. While the WIPO Treaty does recognize a "making available" right, the treaty is "not self-executing and [it] lack[s] any binding legal authority separate from [its] implementation through the Copyright Act." Thomas, 579 F.Supp.2d at 1226; see also Medellin v. Texas, 552 U.S. 491, 505, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008) (stating that treaties "are not domestic law unless Congress has either enacted implementing statutes or the treaty itself conveys an intention that it be `self-executing' and is ratified on those terms"). Moreover, courts employ the so-called Charming Betsy canon of statutory interpretation only when "constru[ing] ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations." F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 164, 124 S.Ct. 2359, 159 L.Ed.2d 226 (2004) (emphasis added); see also Murray v. Schooner Charming Betsy,
Finally, BMG points to a letter written by Marybeth Peters, the former Register of Copyrights, that embraces a "making available" reading of the statute. See Letter from Marybeth Peters, Register of Copyrights, to Rep. Howard L. Berman (Sept. 25, 2002). The opinions expressed in the letter have no controlling weight and the Court does not consider them. See Elektra Entm't Grp., Inc., 551 F. Supp. 2d at 242-43 n. 7 (declining to rely on the Peters letter); Thomas, 579 F.Supp.2d at 1217 ("[O]pinion letters from the Copyright Office to Congress on matters of statutory interpretation are not binding and are `entitled to respect insofar as they are persuasive.'" (quoting Broad. Music, Inc. v. Roger Miller Music, Inc., 396 F.3d 762, 778 (6th Cir.2005))).
Although the Court agrees with Cox up to this point, Cox makes two additional arguments regarding the contours of the distribution right that the Court does not accept. First, Cox contends "copies or phonorecords" cover only tangible, material objects and the distribution right is not infringed by electronic, rather than physical, transfers. Second, Cox argues that the transactional language in the statute — "by sale or other transfer of ownership, or by rental, lease, or lending" — requires that there be a consummated "transfer" of copy or phonorecord and that there is no evidence of such a transfer in this case. The Court believes Cox is mistaken on both counts.
The distribution right extends only to "copies" and "phonorecords." 17 U.S.C. § 106(3). Phonorecords are "material objects in which sounds ... are ... fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device."
Not only can electronic files be "material objects," but transferring files using a BitTorrent protocol satisfies the transactional element of distribution. Section 106(3) requires a distribution "by sale or other transfer of ownership, or by rental, lease, or lending." While BitTorrent transfers do not fit within our ordinary conception of a "transfer of ownership" because the transferor retains his or her own copy of the file, the Court finds the London-Sire court's reasoning on this issue persuasive. "[I]t is the newly minted ownership rights held by the transferee that concern it, not whether the transferor gives up his own." 542 F.Supp.2d at 173. In other words, what matters is that "when the transaction is completed, the distributee has a material object." Id. at 174.
In sum, to establish a direct infringement of its distribution right, BMG must show an actual dissemination of a copyrighted work. BMG contends that even under this standard, it has produced more than enough evidence to show actual dissemination. First, Rightscorp identified Cox subscribers sharing torrents that Rightscorp had also found on torrent indexing websites. Because each torrent contains a unique "hash," an identifying code that is only created once, BMG argues these Cox users must have downloaded the torrents at some point. Second, Rightscorp downloaded over 700,000 copies of copyrighted works from Cox subscribers using Cox's internet service and 100,000 of those copies were of the works at issue in this case.
The Court finds BMG has demonstrated that there is a genuine issue of material fact as to whether its distribution right was directly infringed.
A contributory infringer is one who, (1) "with knowledge of the infringing activity," (2) "induces, causes or materially contributes to the infringing conduct of another." CoStar Grp., Inc., 373 F.3d at 550 (quoting Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971)). BMG's claim is that Cox knew, had reason to know, or was willfully blind to its users' infringement and materially contributed to that infringement. Cox raises two general challenges to BMG's claim. First, Cox contends that only an inducement theory of contributory infringement survived the Supreme Court's decision in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005). Because BMG concedes for purposes of summary judgment that there is no evidence that Cox induced infringement, see Defs.' SUMF 8, Cox asks for summary judgment. Second, even if the Court finds a "material contribution" theory is still viable, Cox argues that BMG has
The Court finds no support for Cox's reading of Grokster. Grokster clarified the scope of inducement; it did not explicitly or implicitly reject a material contribution theory of liability.
Cox argues that even if a "material contribution" theory survived Grokster, BMG cannot succeed because there is no evidence that Cox had knowledge of infringing activity.
BMG asserts that Cox had knowledge of its users' infringing activity because Rightscorp sent Cox more than two million infringement notices pertaining to its copyrighted works. Despite Cox's arguments to the contrary, DMCA-compliant notices are evidence of knowledge. See Capitol Records, LLC, 2015 WL 1402049, at *43; Giganews, Inc., 2014 WL 8628031, at *7; see also Corbis Corp., 351 F.Supp.2d at 1107 (stating in another context that notices are "the most powerful evidence of a service
BMG argues that Cox's unreasonable decision not to receive Rightscorp's notices gave Cox reason to know of the infringing activity. In support, BMG draws a comparison to Ellison v. Robertson, 357 F.3d 1072 (9th Cir.2004). In that case, AOL changed the email address it used to accept infringement notices but did not immediately register the change with the U.S. Copyright Office or put a mechanism in place to forward or return messages received at its old address. The Ninth Circuit concluded that "[b]ecause there [was] evidence indicating that AOL changed its e-mail address in an unreasonable manner and that AOL should have been on notice of infringing activity," a trier of fact could find AOL had reason to know of the infringing activity occurring. Id. at 1077. BMG says Cox's blacklisting of its notices was similarly unreasonable and that, as in Ellison, there is other evidence in the record that put Cox on notice of specific infringing activity.
First, BMG claims that when Cox refused to forward its notices, it gave Cox access to a searchable and sortable "dashboard" that contained all of the information pertaining to the alleged infringements occurring at each IP address. Although Cox received an email from Rightscorp with instructions on how to access the dashboard, Cox maintains that it never in fact accessed the dashboard and thus it could not have been a source of knowledge. Second, BMG says after Cox blocked Rightscorp's notices, Rightscorp sent emails to Zabek, the abuse group, and Cox's in-house privacy counsel identifying IP addresses with a significant amount of infringing activity. See Allan Decl. Exs. 14, 61. Finally, BMG reprises the statements by members of Cox's abuse group discussed above that describe specific customers with phrases like "habitual abuser" or "well aware of his actions."
Considering all of this together, the Court finds a reasonable jury could conclude that Cox's refusal to accept Rightscorp's notices was unreasonable and that additional notice provided to Cox gave it
BMG also argues that the record establishes Cox's willful blindness to the direct infringement. As noted above, willful blindness is the equivalent of knowledge in copyright law. See Aimster, 334 F.3d at 650. "A person is `willfully blind' or engages in `conscious avoidance' amounting to knowledge where the person was aware of a high probability of the fact in dispute and consciously avoided confirming that fact." Viacom Int'l, Inc., 676 F.3d at 35 (internal quotation marks omitted). Willful blindness requires more than negligence or recklessness. See Luvdarts, LLC, 710 F.3d at 1073. There must be evidence that the defendant took "deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts." Global-Tech Appliances, Inc. v. S.B.A., 563 U.S. 754, 131 S.Ct. 2060, 2070, 179 L.Ed.2d 1167 (2011) (addressing willful blindness in the context of patent infringement).
BMG argues that Cox's failure to terminate repeat infringers from its service and its deliberate avoidance of Rightscorp's notices establishes its willful blindness. In response, Cox points to the actions it does take when it receives what it considers proper infringement notices. Cox says that it forwards hundreds of thousands of infringement notices annually, that it works with account holders to identify and stop the activities causing the notices, and that it suspends and when necessary terminates account holders. But this generalized evidence that Cox does not always turn a blind eye to infringement, does not mean that it has never done so. Cf. Capitol Records, Inc. v. MP3tunes, LLC, 2013 WL 1987225, at *3 (May 14, 2013) ("[Defendant's] ability to identify repeat infringers does not mean that it never looked the other way when confronted by a high probability that certain conduct was infringing."). Cox also argues that BMG cannot show that its decision to block Rightscorp notices was made with the intent to avoid knowledge of infringement because Cox works with complainants to remove "improper language" from notices. Because Cox offered to do the same with Rightscorp's notices, Cox argues there is no evidence that it was deliberately avoiding knowledge of illegal activity. While this would certainly be a reasonable inference for a jury to draw, it is not the only inference available.
BMG paints a very different picture of a company unhappy with the burdens of complying with the DMCA and using the settlement offers in Rightscorp's notices as a red herring to distract from its goal of reducing the number of infringement notices Cox receives. Given the evidence, this is also a justifiable inference. It will be the jury's task, not the Court's, to weigh the evidence and choose among the competing inferences. See Columbia Union Coll. v. Clarke, 159 F.3d 151, 164 (4th Cir.1998) ("Where the party challenging the grant of summary judgment can show that the inferences they suggest are reasonable in light of the competing inferences, summary judgment must be denied." (internal quotation marks omitted)).
BMG also alleges that Cox is liable for vicarious infringement. A variant on respondeat superior, vicarious liability holds a defendant accountable for third-party infringement if he "(1) possessed the right and ability to supervise the infringing activity; and (2) possessed an obvious and direct financial interest in the exploited copyrighted materials." Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505,
The first element requires that the defendant "declin[ed] a right to stop or limit" the direct infringement. Grokster, 545 U.S. at 930, 125 S.Ct. 2764. Cox expressly retains the right in its AUP to suspend or terminate its account holders' access to internet service. See Viacom Int'l, Inc., 676 F.3d at 37 ("Under the common law vicarious liability standard, the ability to block infringers' access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise." (internal quotation marks and alterations omitted)). Thus, Cox has the contractual right to condition the availability of its internet access to users who do not use that service to violate copyrights. If users listen when Cox exercises that power, infringement stops. If users do not and Cox terminates them, that also stops or at least limits infringement.
In addition to its legal control, Cox also has the practical ability to stop or limit infringement. There cannot be any serious dispute that internet service is an essential component of the infringing activity alleged by BMG. File-sharing programs are completely dependent on the internet to facilitate the download and upload of files. It is therefore a reasonable inference that the result of an internet service provider exercising its ability to suspend or terminate account holders stops or limits infringement.
Cox maintains that despite a legal right to stop or limit infringing activity by terminating accounts, there must also be evidence in the record that Cox's current architecture would allow it to exercise physical control over the infringing activity. Cox reasons that the provision of general internet service is much different than the swap market in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262 (9th Cir.1996), where the defendant not only had the right to terminate vendors, but also "controlled the access of customers to the swap meet area." It is also distinguishable, Cox contends, from defendants like Napster, which had "the ability to locate infringing material listed on its search indices." A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1024 (9th Cir. 2001).
In support, Cox relies on two more recent cases from the Ninth Circuit, Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir.2007), and Perfect 10, Inc. v. Visa International Service Association, 494 F.3d 788 (9th Cir.2007). This Court is of course not bound by either decision, nor does the Court find the reasoning in those decisions warrants summary judgment here. In Amazon, the owner of copyrighted images sued Google unsuccessfully on two theories of vicarious liability. The first was that Google was vicariously liable for linking search results to third-party websites that contained the infringing images. The Ninth Circuit found the "control" element was missing because the plaintiff "ha[d] not shown that Google has contracts with third-party websites that empower Google to stop or limit them from reproducing, displaying, and distributing infringing copies" of the infringing images. 508 F.3d at 1173. The second theory was that Google had control via contracts underlying
By contrast, here Cox has the contractual right to control, which allows it to stop or limit individuals from infringing BMG's copyrights. Moreover, unlike the scenario in which Google terminated a contract with an AdSense partner, when Cox terminates or suspends the relationship with an account holder, it takes away an essential component of direct infringement. When an AdSense partner was terminated, the only result was that the ads were no longer sourced by Google. It would have no effect on how the website worked. Without the internet, individuals cannot upload or download illegal content.
In Visa, the Ninth Circuit held that Visa could not be vicariously liable for processing credit card payments on websites hosting infringing conduct. The court's holding was grounded in a concern that vicarious liability may be extended to entities whose ability to take steps against infringement would have only an "indirect effect of reducing infringing activity on the Internet at large." 494 F.3d at 803. The court believed that were Visa to exercise its contractual right to terminate relationships, it would exert at most "indirect economic pressure." Id. at 805. Here, the connection cannot be described as indirect. When Cox exercises its contractual right, Cox blocks a direct infringer's access to the internet. That individual is thereafter precluded from participation in the infringing activity. The Visa court even reasoned that Visa could only "block access to their payment system, but they cannot themselves block access to the Internet, to any particular websites, or to search engines enabling the location of such websites." Id. (emphasis added).
Nor does the Court agree with the Visa court's attempt to distinguish cases like Fonovisa and Napster where the defendant has physical control over the infringing activity. As Judge Kozinski explained in his dissent, "[p]hysical control over the infringing activity is one way to stop infringers, but it's certainly not the only way. Withdrawing crucial services, such as financial support, can be just as effective, and sometimes more effective, than technical measures that can often be circumvented." Id. at 821 (Kozinzki, J., dissenting).
In sum, Cox has a contractual relationship with its users and that relationship gives Cox the legal right to withhold service in the face of infringing conduct. Cox also provides a crucial service to the infringements alleged in this case, which gives Cox the practical ability to stop or limit infringement. That is enough to raise a genuine issue of material fact as to whether BMG can establish the first element of its vicarious liability claim.
The second element requires 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 (emphasis omitted). Financial benefit can be shown by evidence that "users are attracted to a defendant's product because it enables infringement, and that use of the product for infringement financially benefits the defendant." Arista Records, LLC v. Lime Grp. LLC, 784 F.Supp.2d 398, 435 (S.D.N.Y.2011). To show users' attraction, a plaintiff must only establish that "the availability of infringing material acts as a
Cox provides a content-neutral commercial service that makes a wide selection of services and activities available to its subscribers, including email, social networking, web surfing, gaming, P2P file sharing, and more. See Allan Decl. Ex. 37. Cox charges the same flat monthly fees to its users whether they use Cox's service for infringing or non-infringing purposes. Those "flat periodic payments for service... ordinarily would not constitute receiving a financial benefit directly attributable to the infringing activity," unless "the value of the service lies in providing access to infringing material." Ellison, 357 F.3d at 1079 (alteration omitted) (quoting S. Rep. 105-90, at 44). Thus, the relevant inquiry "where a service provider obtains revenue from `subscribers,'" as here, is "whether the infringing activity constitutes a draw for subscribers, not just an added benefit." Fung, 710 F.3d at 1044 (quoting Ellison, 357 F.3d at 1079) (internal quotation marks omitted). In other words, Cox's receipt of monthly fees is only evidence of direct financial benefit if some portion of those fees is generated from subscribers that are drawn to Cox's service at least in part because of the infringing activity alleged in this case. Without that evidence, the requisite causal connection between the benefit and the infringing activity is not established.
BMG offers evidence of the "draw" of infringing activity in the form of a survey conducted by its expert, Stephen Nowlis. The study of Cox internet subscribers concluded that 16% of subscribers "download or upload free digital music through sites such as ThePirateBay, KickAssTorrents, and Torrentz," and of that 16%, 70% characterized the ability to do so as a reason they subscribe to Cox.
Cox also raises BMG's alleged failure to mitigate its damages as a ground for summary judgment. Specifically, Cox argues BMG failed to mitigate by declining
To the extent failure to mitigate damages is applicable to the award of statutory damages, a genuine issue of material fact remains as to whether BMG in fact failed to mitigate its damages.
Finally, Cox contends that BMG's unclean hands bar its claims. Courts, including the Fourth Circuit, have "on occasion invoke[d] the equitable doctrine of unclean hands as a defense in a copyright infringement action."
Cox argues BMG has unclean hands for two reasons. Cox first claims BMG "failed to supervise [its agent] Rightscorp and cast a blind eye towards its extortionate scheme to profit from threats to cut off Internet service." Defs.' Memo. in Supp. at 27. The only conduct by Rightscorp with a direct nexus to this litigation is the inclusion of settlement offers in the notices sent
Cox next submits that BMG is not entitled to relief because Rightscorp downloaded thousands of sound recordings and there is no evidence that Rightscorp had authorization to do so from the owners of the sound recording copyrights (as opposed to authorization from BMG, which owns the musical composition copyrights). However, "use of ... undercover investigators and the like to ferret out infringement is routine, and provides no defense." 4-13 Nimmer on Copyright § 13.09[B] (citing Sega Enters. v. MAPHIA, 948 F.Supp. 923, 930 (N.D.Cal.1996)). Moreover, the downloading did not personally injure Cox. Thus, this conduct cannot be used as the basis of an unclean hands defense. Cf. Positive Black Talk Inc., 394 F.3d at 379. Accordingly, the Court finds Cox's unclean hands defense fails as a matter of law.
For the reasons stated above, the Court
17 U.S.C. § 106.
(Dkt. No. 501).
