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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. COUNSEL PRESS · (800) 3-APPEAL PRINTED ON RECYCLED PAPER Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 1 of 114

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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.

COUNSEL PRESS · (800) 3-APPEAL

PRINTED ON RECYCLED PAPER

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TABLE OF CONTENTS page

Index of Authorities ..….....….....….....….....….....….....….....….....…....…... ii

I. The Panel Decision Applies Erroneous Legal Standards to Find ..…... Fung Liable on Disputed Facts and to Deny Him a Trial by Jury

1

II. The Panel Decision and the District Court Opinion Combine to ……...Punish Speech that Should Be Protected by the First Amendment

5

III. The Panel Decision Expands the Grokster Rule in Multiple Ways ….. that Threaten the Future of Technological Innovation

7

A. The “Technological Background” set forth in the Panel ………. Decision ignores the “collective BitTorrent ecosystem” and erroneously identifies BitTorrent with systems in Grokster

8

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

10

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

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D. The Panel Decision’s procedure of selective matching ………...between cases is narrow and arbitrary and improperly excludes personal testimony

13

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

14

Conclusion ………………………………………………...………………... 15

Certificate of Compliance …………………………………………………… 16

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

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 dot-

torrent 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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14

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 477:20-

25, 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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15

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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16

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 APPEALSFOR THE NINTH CIRCUIT

COLUMBIA PICTURES INDUSTRIES,INC.; DISNEY ENTERPRISES, INC.;PARAMOUNT PICTURESCORPORATION; TRISTAR PICTURES,INC.; TWENTIETH CENTURY FOXFILM CORPORATION; UNIVERSALCITY STUDIOS LLLP; UNIVERSALCITY STUDIOS PRODUCTIONS, LLLP;WARNER BROS ENTERTAINMENT,INC.,

Plaintiffs-Appellees,

v.

GARY FUNG; ISOHUNT WEBTECHNOLOGIES, INC.,

Defendants-Appellants.

No. 10-55946

D.C. No.2:06-cv-05578-

SVW-JC

OPINION

Appeal from the United States District Courtfor the Central District of California

Stephen V. Wilson, District Judge, Presiding

Argued May 6, 2011Submitted March 21, 2013

Pasadena, California

Filed March 21, 2013

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COLUMBIA PICTURES INDUSTRIES V. FUNG2

This summary constitutes no part of the opinion of the court. It has*

been prepared by court staff for the convenience of the reader.

Before: Harry Pregerson, Raymond C. Fisher, andMarsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon

SUMMARY*

Copyright

The panel affirmed in part and vacated in part the districtcourt’s judgment in favor of film studios, which alleged thatthe services offered and websites maintained by thedefendants induced third parties to download infringingcopies of the studios’ copyrighted works.

Affirming the district court’s summary judgment, thepanel held that under Metro-Goldwyn-Mayer Studios, Inc. v.Grokster Ltd., 545 U.S. 913 (2005), the defendants wereliable for contributory copyright infringement on aninducement 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 infringecopyright, and (4) causation in the defendants’ use of thepeer-to-peer file sharing protocol known as BitTorrent.

The panel held that the defendants were not entitled toprotection from liability under any of the safe harborprovisions of the Digital Millennium Copyright Act,including safe harbors provided by 17 U.S.C. § 512(a), (c),

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COLUMBIA PICTURES INDUSTRIES V. FUNG 3

and (d) for transitory digital network communications,information residing on systems or networks at direction ofusers, and information location tools. The panel nonethelessrejected the argument that inducement liability is inherentlyincompatible with protection under the safe harbors.

Reversing and modifying in part the district court’spermanent injunction, the panel held that certain provisionsof the injunction were too vague to meet the noticerequirements of Fed. R. Civ. P. 65(d), and certain provisionswere unduly burdensome.

COUNSEL

Ira P. Rothken, Esq. (argued), Robert L. Kovsky, Esq., andJared 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, NewYork, for amicus curiae Google, Inc.

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COLUMBIA PICTURES INDUSTRIES V. FUNG4

Plaintiffs-Appellees are: Columbia Pictures Industries, Inc.; Disney1

Enterprises, Inc.; Paramount Pictures Corporation; Tristar Pictures, Inc.;Twentieth Century Fox Film Corporation; Universal City Studios LLLP;and Warner Bros. Entertainment, Inc.; collectively referred to as“Columbia.”

OPINION

BERZON, Circuit Judge:

This case is yet another concerning the application ofestablished intellectual property concepts to newtechnologies. See, e.g., UMG Recordings, Inc. v. ShelterCapital Partners, LLC, — F.3d — (9th Cir. 2013); Perfect10, 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 (2dCir. 2012). Various film studios alleged that the servicesoffered and websites maintained by Appellants Gary Fungand his company, isoHunt Web Technologies, Inc.(isohunt.com, torrentbox.com, podtropolis.com, anded2k-it.com, collectively referred to in this opinion as “Fung”or the “Fung sites”) induced third parties to downloadinfringing copies of the studios’ copyrighted works. The1

district court agreed, holding that the undisputed factsestablish that Fung is liable for contributory copyrightinfringement. The district court also held as a matter of lawthat Fung is not entitled to protection from damages liabilityunder any of the “safe harbor” provisions of the DigitalMillennium Copyright Act (“DMCA”), 17 U.S.C. § 512,Congress’s foray into mediating the competing interests inprotecting intellectual property interests and in encouragingcreative development of devices for using the Internet tomake information available. By separate order, the districtcourt permanently enjoined Fung from engaging in a number

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A “protocol” is a set of rules used by computers to communicate with2

each other over a network. Webster’s II Dictionary 571 (3d ed. 2005).

of activities that ostensibly facilitate the infringement ofPlaintiffs’ works.

Fung contests the copyright violation determination aswell as the determination of his ineligibility for safe harborprotection under the DMCA. He also argues that theinjunction is punitive and unduly vague, violates his rights tofree speech, and exceeds the district court’s jurisdiction byrequiring filtering of communications occurring outside of theUnited States. We affirm on the liability issues but reverse inpart 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 basicbackground information useful to understanding the role theFung sites play in copyright infringement.

I. Client-server vs. peer-to-peer networks

The traditional method of sharing content over a networkis the relatively straightforward client-server model. In aclient-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 theclient. In other words, the server supplies informationresources to clients, but the clients do not share any of theirresources with the server. Client-server networks tend to berelatively secure, but they have a few drawbacks: if the servergoes down, the entire network fails; and if many clients make

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requests at the same time, the server can becomeoverwhelmed, increasing the time it takes the server to fulfillrequests from clients. Client-server systems, moreover, tendto be more expensive to set up and operate than othersystems. Websites work on a client-server model, with theserver storing the website’s content and delivering it to usersupon demand.

“Peer-to-peer” (P2P) networking is a generic term used torefer to several different types of technology that have onething in common: a decentralized infrastructure whereby eachparticipant in the network (typically called a “peer,” butsometimes called a “node”) acts as both a supplier andconsumer of information resources. Although less secure,P2P networks are generally more reliable than client-servernetworks and do not suffer from the same bottleneckproblems. 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 forsharing 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 therealso are a great number of non-infringing uses for peer-to-peer networks; copyright infringement is in no sense intrinsicto the technology, any more than making unauthorized copiesof television shows was to the video tape recorder. CompareA&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 whatfiles 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 whatinformation 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 whichpeers have particular content available for download will sendout a search query to several of his neighbor peers. As thoseneighbor peers receive the query, they send a response backto the requesting user reporting whether they have anycontent matching the search terms, and then pass the query onto 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, becausepermitting that amount of signaling traffic would eitheroverwhelm the resources of the peers or use up all of thenetwork’s bandwidth (or both). See Grokster III, 545 U.S. at920 n.1. Therefore, the P2P protocol will usually specify thatqueries should no longer be passed on after a certain amountof time (the so-called “time to live”) or after they havealready been passed on a certain number of times (the “hopcount”). Once the querying user has the search results, he cango directly to a peer that has the content desired to downloadit.

This search method is an inefficient one for findingcontent (especially rare content that only a few peers have),and it causes a lot of signaling traffic on the network. Themost popular pure P2P protocol was Gnutella. Streamcast, aGrokster defendant, used Gnutella to power its software

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Gnutella is still around, but it is now a “hybrid” system, a concept3

discussed below. Cf. Grokster III, 545 U.S. at 921 n.3.

application, Morpheus. See Grokster III, 545 U.S. at921–22.3

B. “Centralized” P2P networks

“Centralized” P2P networks, by contrast, use a centralizedserver to index the content available on all the peers: the usersends the query to the indexing server, which tells the userwhich peers have the content available for download. At thesame time the user tells the indexing server what files he hasavailable for others to download. Once the user makescontact with the indexing server, he knows which specificpeers to contact for the content sought, which reduces searchtime and signaling traffic as compared to a “pure” P2Pprotocol.

Although a centralized P2P network has similarities witha client-server network, the key difference is that the indexingserver does not store or transfer the content. It just tells userswhich 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 isthat it has a single point of potential failure: the indexingserver. If it fails, the entire system fails. Napster was acentralized P2P network, see generally Napster, 239 F.3d at1011–13, as, in part, is eDonkey, the technology upon whichone of the Fung sites, ed2k-it.com, is based.

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C. Hybrid P2P networks

Finally, there are a number of hybrid protocols. The mostcommon 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 supernodeis a regular node that has been “promoted,” usually becauseit has more bandwith available, to perform certain tasks.Each supernode indexes the content available on each of thenodes attached to it, called its “descendants.” When a nodesends out a search query, it goes just to the supernode towhich it is attached. The supernode responds to the query bytelling the node which of its descendant nodes has the desiredcontent. The supernode may also forward the query on toother supernodes, which may or may not forward the queryon further, depending on the protocol. See generallyGrokster III, 545 U.S. at 921.

The use of supernodes is meant to broaden the search poolas much as possible while limiting redundancy in the search.As with centralized P2P systems, supernodes only handlesearch queries, telling the nodes the addresses of the othernodes that have the content sought; they are not ordinarilyinvolved in the actual file transfers themselves. Grokster’ssoftware 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 furthervariant on the P2P theme. BitTorrent is a hybrid protocolwith some key differences from “supernode” systems. Wediscuss those differences after first describing BitTorrent’sdistinguishing feature: how it facilitates file transfers.

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A. BitTorrent file transfers.

Traditionally, if a user wanted to download a file on a P2Pnetwork, he would locate another peer with the desired fileand download the entire file from that peer. Alternatively, ifthe download was interrupted—if, for example, the peersending the file signed off—the user would find another peerthat had the file and resume the download from that peer.The reliability and duration of the download depended on thestrength of the connection between those two peers.Additionally, the number of peers sharing a particular file waslimited by the fact that a user could only begin sharing hiscopy of the file with other peers once he had completed thedownload.

With the BitTorrent protocol, however, the file is brokenup into lots of smaller “pieces,” each of which is usuallyaround 256 kilobytes (one-fourth of one megabyte) in size.Whereas under the older protocols the user would downloadthe entire file in one large chunk from a single peer at a time,BitTorrent permits users to download lots of different piecesat the same time from different peers. Once a user hasdownloaded all the pieces, the file is automaticallyreassembled into its original form.

BitTorrent has several advantages over the traditionaldownloading method. Because a user can download differentpieces of the file from many different peers at the same time,downloading is much faster. Additionally, even before theentire download is complete, a user can begin sharing thepieces he has already downloaded with other peers, makingthe process faster for others. Generally, at any given time,each user is both downloading and uploading several differentpieces of a file from and to multiple other users; the

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The client program is the software application used to access the P2P4

network. Unlike Grokster or Napster, which were “closed” systems thatpermitted only authorized client programs to connect to their networks,BitTorrent is an “open” system, permitting the use of any number of clientprograms, nearly all of which are free. The Fung sites do not supply anyof the client programs necessary to use dot-torrent files to download thecopies of movies or other content files; users of the Fung sites have todownload such a program from elsewhere.

As Plaintiffs’ expert explained, “A hash is a unique digital identifier of5

certain data. It is usually written as a forty-digit long hexadecimalnumber, where each digit can be 0–9 or A–F.” See also Arista RecordsLLC v. Lime Group LLC, 784 F. Supp. 2d 398, 423 n.21 (S.D.N.Y. 2011).

collection of peers swapping pieces with each other is knownas a “swarm.”

B. BitTorrent architecture

To describe the structure of BitTorrent further, anexample is helpful. Let us suppose that an individual (the“publisher”) decides to share via BitTorrent her copy of aparticular movie. The movie file, we shall assume, is quitelarge, and is already on the publisher’s computer; thepublisher has also already downloaded and installed aBitTorrent “client” program on her computer.4

To share her copy of the movie file, the publisher firstcreates a very small file called a “torrent” or “dot-torrent”file, which has the file extension “.torrent.” The torrent fileis quite small, as it contains none of the actual content thatmay be copyrighted but, instead, a minimal amount of vitalinformation: the size of the (separate) movie file beingshared; the number of “pieces” the movie file is broken into;a cryptographic “hash” that peers will use to authenticate the5

downloaded file as a true and complete copy of the original;

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In an April 2008 declaration, Fung averred that there are “close to two6

thousand different trackers run by various independent operators.” Thesource of this statistic was not given.

A few BitTorrent client programs have begun to integrate search and7

download processes in such a way that torrent sites become unnecessary,but that fact is not germane to any issue in this case.

and the address of one or more “trackers.” Trackers,discussed more below, serve many of the functions of anindexing server; there are many different trackers, and theytypically are not connected or related to each other.6

Second, the publisher makes the torrent file available byuploading it to one or more websites (“torrent sites”) thatcollect, organize, index, and host torrent files. WhereasNapster and Grokster had search functionality built into theirclient programs, the standard BitTorrent client program hasno such capability. BitTorrent users thus rely on torrent sites7

to find and share torrent files. There is no central repositoryof torrent files, but torrent sites strive to have the mostcomprehensive torrent collection possible.

The Fung sites have two primary methods of acquiringtorrent files: soliciting them from users, who then upload thefiles; and using several automated processes (called “bots,”“crawlers,” or “spiders”) that collect torrent files from othertorrent sites. Because of this latter route, which other torrentsites also routinely use, torrent sites tend to have largelyoverlapping collections of torrents. According to adeclaration Fung signed in April 2008, there were then over400 torrent sites. Because the torrent sites typically containonly torrent files, no copyrighted material resides on thesesites.

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Lastly, the publisher leaves her computer on andconnected to the Internet, with her BitTorrent programrunning. The publisher’s job is essentially done; hercomputer will continue to communicate with the trackerassigned to the torrent file she uploaded, standing ready todistribute the movie file (or, more accurately, parts thereof)to others upon request.

A user seeking the uploaded movie now goes to thetorrent site to which the torrent file was uploaded and runs asearch for the movie. The search results then provide thetorrent file for the user to download. Once the userdownloads the torrent file and opens it with his BitTorrentprogram, the program reads the torrent file, learns the addressof the tracker, and contacts it. The program then informs thetracker that it is looking for the movie associated with thedownloaded torrent file and asks if there are any peers onlinethat have the movie available for download. Assuming thatpublishers of that movie are online, the tracker willcommunicate their address to the user’s BitTorrent program.The user’s BitTorrent program will then contact thepublishers’ computers directly and begin downloading thepieces of the movie. At this point, the various publishers areknown as “seeders,” and the downloading user a “leecher.”Once the leecher has downloaded one or more pieces of themovie, he, too, can be a seeder by sending other leechers thepieces that he has downloaded.

A final few words on trackers. Although no content isstored on or passes through trackers, they serve as a central

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According to the record in this case, it is also possible, although less8

efficient, to distribute torrent files and to download their associatedcontent without a tracker, using a technology called DHT, or distributedhash table.

As torrent files are added, isoHunt uses an automated process that9

attempts to place the torrent file in the appropriate category by looking forcertain keywords. Torrent files with the keywords “DVD” and “cam,” forinstance—the latter of which refers to a recording of a movie made witha handheld camcorder—would be categorized as movies.

hub of sorts, managing traffic for their associated torrents.8

The tracker’s primary purpose is to provide a list of peers thathave files available for download. Fung avers that thisfunction is the only one provided by his two trackers,discussed below.

Because trackers are periodically unavailable—they cango offline for routine maintenance, reach capacity, beshuttered by law enforcement, and so on—torrent files willoften list addresses for more than one tracker. That way, ifthe first (or “primary”) tracker is down, the user’s clientprogram 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, theycollect and organize torrent files and permit users to browsein and search their collections. Searching is done viakeyword; users can also browse by category (movies,television shows, music, etc.).9

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Fung’s fourth website, ed2k-it.com (“Ed2k-it”), is similar to the10

torrent sites, but works through technology called eDonkey. eDonkey ismostly a centralized system like Napster, but eDonkey clientprograms—including the popular eMule—can also search other peersdirectly, as in a pure P2P network. For purposes of this case, however, thedistinctions between the technologies are irrelevant; as the district courtnoted, Fung makes no argument that Ed2k-it should be treated differentlythan the torrent sites. See Columbia Pictures Indus., Inc. v. Fung, No. CV06-5578, 2009 WL 6355911, at *2 n.4 (C.D. Cal. Dec. 21, 2009).

IsoHunt, however, which appears to be Fung’s “flagship”site, goes a step beyond merely collecting and organizingtorrent files. Each time a torrent file is added to isoHunt, thewebsite automatically modifies the torrent file by addingadditional backup trackers to it. That way, if the primarytracker is down, the users’ BitTorrent client program willcontact the backup trackers, making it more likely that theuser will be successful in downloading the content sought. Inother words, isoHunt alters the torrent files it hosts, makingthem more reliable than when they are uploaded to the site.

Torrentbox and Podtropolis, in addition to being torrentsites, run associated trackers. Their collections of torrent10

files appear to be fairly small. Every torrent file available onTorrentbox and Podtropolis is tracked by the Torrentbox andPodtropolis trackers, respectively, but the Torrentbox andPodtropolis trackers are much busier than the Torrentbox andPodtropolis websites. For example, a torrent file for themovie “Casino Royale” was downloaded fromTorrentbox.com 50,000 times, but the Torrentbox trackerregistered approximately 1.5 million downloads of the movie.This disparity indicates that users obtain the torrent files

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tracked by Torrentbox and Podtropolis from torrent sitesother than Torrentbox.com and Podtropolis.com. TheTorrentbox and Podtropolis websites both have continually-updated lists of, inter alia, the “Top 20 TV Shows,” the “Top20 Movies,” and the “Top 20 Most Active Torrents.” Theserankings are based on the number of seeders and leechers foreach particular torrent file, as measured by the Torrentboxand Podtropolis trackers. IsoHunt does not run a tracker, soit cannot measure how frequently the content associated witheach torrent file is downloaded; instead, it keeps a continuallyupdated list of the “Top Searches.”

IsoHunt also hosts an electronic message board, or“forum,” where users can post comments, queries, and thelike. In addition to posting to the forum himself, Fung alsohad some role in moderating posts to the forum.

PROCEDURAL HISTORY

This suit, against Fung and several John Does, originallyfiled in the Southern District of New York, was transferred,on Fung’s motion, to the Central District of California. SeeColumbia Pictures Indus., Inc. v. Fung, 447 F. Supp. 2d 306(S.D.N.Y. 2006). Columbia then filed an amendedcomplaint, alleging that Fung was liable for vicarious andcontributory copyright infringement, in violation of 17 U.S.C.§ 106.

On Columbia’s motion for summary judgment onliability, the district court held Fung liable for contributoryinfringement, for inducing others to infringe Plaintiffs’

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In light of its holding on the inducement theory, the district court did11

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 copyrightinfringers, id. at 1173–75.

copyrighted material. See Columbia Pictures Indus., Inc. v.11

Fung, No. CV 06-5578, 2009 WL 6355911, at *15 (C.D. Cal.Dec. 21, 2009). Although Fung sought protection in theDMCA safe harbors for “[t]ransitory digital networkcommunications,” 17 U.S.C. § 512(a), “[i]nformationresiding on systems or networks at direction of users,” id.§ 512(c), and “[i]nformation location tools,” id. § 512(d), thedistrict court concluded that none of the safe harbors wereapplicable.

The district court later entered a permanent injunction thatprohibits, generally speaking, “knowingly engaging in anyactivities having the object or effect of fostering infringementof Plaintiffs’ Copyrighted Works, including withoutlimitation by engaging in” certain specified activities. Theinjunction applies to a “list of titles” provided by Columbia.With regard to the initial list of titles provided, Fung wasrequired to comply with the terms of the injunction—mostlikely, though not necessarily, by implementing a filteringdevice—within 14 calendar days. Columbia may supplementthe list “without restriction”; Fung must comply with theterms of the injunction as to the new titles within 24 hours ofreceiving any supplemented list. The injunction binds bothIsohunt Web Technologies, Inc., and Fung personally,“wherever they may be found, including, without limitation,in Canada” (where Fung is from).

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The day after the injunction was entered, Columbiaserved Fung with an initial list of over 23,000 titles ofcopyrighted works. Many of the titles were or containedgeneric terms, such as “10,” “21,” “Cars,” “Dave,” etc. Othertitles were identical or substantially similar to titles of worksin the public domain, including “Jungle Book” and “Miracleon 34th Street,” or to titles of works to which Columbia doesnot own the copyrights. Citing those features of the initiallist, Fung protested that the permanent injunction was toobroad. In response, the district court modified the injunctionto require that Columbia provide additional information aboutthe listed copyrighted material, including the date the materialwas issued or reissued and the type of media their copyrightcovers (e.g., film or television show), so that Fung couldmore readily identify the material. At the same time, thecourt also admonished that Fung’s concerns were somewhatoverblown, as any technical or inadvertent violations wouldnot support a civil contempt finding if all reasonable steps tocomply with the injunction were taken.

Fung timely appealed, targeting both the liabilitydetermination and the scope of the injunction.

DISCUSSION

As always, we review the district court’s grant ofsummary 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 anyground 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 reviewthe legal conclusions de novo, the factual findings for clearerror, 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); SandpiperVill. 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 ofdiscretion, “we first look to whether the trial court identifiedand applied the correct legal rule . . . [then] to whether thetrial court’s resolution of the motion resulted from a factualfinding that was illogical, implausible, or without support ininferences 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 IIIThe “inducement” theory, on which the district court’s

liability holding was grounded, was spelled out in the Internettechnology context by the Supreme Court in Grokster III.Considering how to apply copyright law to file sharing overP2P networks, Grokster III addressed the circumstances inwhich individuals and companies are secondarily liable forthe copyright infringement of others using the Internet todownload protected material.

Grokster III’s inducement holding is best understood byfirst backtracking to Sony Corp. of America v. Universal CityStudios, Inc., 464 U.S. 417 (1984), the seminal SupremeCourt case concerning the use of new technologies toreproduce copyrighted material. Sony considered whethersecondary liability for infringement could arise solely fromthe distribution of a commercial product capable of copyingcopyrighted material—there, the Betamax video tape

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recorder, made by Sony. Owners of copyrights to televisionprograms maintained that Sony could be liable for copyrightinfringement when its customers used the Betamax tounlawfully tape television shows. There was no evidence thatSony sought to encourage copyright infringement through useof the Betamax or had taken steps to profit from unlawfultaping. See id. at 437–38. Instead, the only conceivable basisfor secondary liability was distribution of the product “withconstructive knowledge of the fact that [Sony’s] customersmay use that equipment to make unauthorized copies ofcopyrighted material.” Id. at 439.

Finding “no precedent in the law of copyright for theimposition of vicarious liability on such a theory,” the Courtborrowed from the “closest analogy” it could find, patentlaw’s “staple article of commerce doctrine.” Id. at 439–42.Under that doctrine, distribution of a component part of apatented device will not violate the patent if the componentis suitable for substantial non-infringing uses. See id. at 440;35 U.S.C. § 271(c). As Sony explained, the staple article ofcommerce doctrine balances competing interests,

a copyright holder’s legitimate demand foreffective—not merely symbolic—protectionof the statutory monopoly, and the rights ofothers freely to engage in substantiallyunrelated areas of commerce. Accordingly,the sale of copying equipment, like the sale ofother articles of commerce, does notconstitute contributory infringement if theproduct is widely used for legitimate,unobjectionable purposes. Indeed, it needmerely be capable of substantial noninfringinguses.

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Sony declined, however, to “give precise content to the question of12

how much use is commercially significant.” 464 U.S. at 442. Themajority opinion in Grokster III also refused “to add a more quantifieddescription of the point of balance between protection and commercewhen liability rests solely on distribution with knowledge that unlawfuluse will occur,” 545 U.S. at 934, though two concurring opinionsdiscussed the issue at length, see id. at 941–49 (Ginsburg, J., concurring);id. at 949–66 (Breyer, J., concurring).

464 U.S. at 442. As the Betamax was “capable ofcommercially significant noninfringing uses,” the Court heldSony not liable for contributory copyright infringement. Id.12

The other major Supreme Court case addressing the masscopying of copyrighted material—there, music andfilms—through technological means, Grokster III, concernedthe use of software applications based on “pure” and “hybrid”P2P network protocols. The defendants, the providers of thecopying software to the public, argued for a contributoryliability approach similar to that adopted in Sony: as theirproducts were indisputably capable of substantial non-infringing uses, they maintained, they could not besecondarily liable based on their knowledge that theirproducts could be used to infringe copyrights. Instead, theGrokster defendants suggested, they could be liable forcontributory infringement only if they had actual knowledgeof a specific infringement at a time when they were capableof preventing it. Accepting this theory and recognizing thatthere was no evidence regarding timely knowledge of specificacts of infringement, the district court granted summaryjudgment 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).

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The Supreme Court did not see Sony as providing suchbroad insulation from copyright liability. Rather, said theCourt, Sony

limits imputing culpable intent as a matter oflaw from the characteristics or uses of adistributed product. But nothing in Sonyrequires courts to ignore evidence of intent ifthere is such evidence, and the case was nevermeant to foreclose rules of fault-basedliability 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 ofselling an item with substantial lawful as well as unlawfuluses, and limits liability to instances of more acute fault thanthe mere understanding that some of one’s products will bemisused.” Id. at 932–33 (emphasis added). “Thus, whereevidence goes beyond a product’s characteristics or theknowledge that it may be put to infringing uses, and showsstatements or actions directed to promoting infringement,Sony’s staple-article rule will not preclude liability.” Id. at935.

Grokster III went on to enunciate the “inducement rule,”also borrowed from patent law, providing that “one whodistributes a device with the object of promoting its use toinfringe copyright, as shown by clear expression or otheraffirmative steps taken to foster infringement, is liable for theresulting acts of infringement by third parties.” Id. at 936–37.This inducement principle, as enunciated in Grokster III, hasfour elements: (1) the distribution of a device or product, (2)

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acts of infringement, (3) an object of promoting its use toinfringe copyright, and (4) causation. See id.

i. Distribution of a “device” or “product”

In describing the inducement liability standard, GroksterIII phrased it as applying to one who distributes a “device,”see id., although it also used the word “product,” seeminglyinterchangeably, see id. at 934–37. The “device” or“product” was the software developed and distributed by thedefendants—for Grokster, its eponymous software, based onFastTrack technology; and for StreamCast, also a defendantin Grokster, its software application, Morpheus, based onGnutella. See id. at 940 (describing the “device” as “thesoftware in this case”).

The analogy between Grokster III and this case is notperfect. Here, Fung did not develop and does not provide theclient programs used to download media products, nor did hedevelop the BitTorrent protocol (which is maintained by non-party BitTorrent, Inc., a privately-held company founded bythe creators of the protocol). Fung argues that because he didnot develop or distribute any “device”—that is, the softwareor technology used for downloading—he is not liable underthe inducement rule enunciated in Grokster III.

We cannot agree. Unlike patents, copyrights protectexpression, not products or devices. Inducement liability isnot limited, either logically or as articulated in Grokster III,to those who distribute a “device.” As a result, one caninfringe a copyright through culpable actions resulting in theimpermissible reproduction of copyrighted expression,whether those actions involve making available a device orproduct or providing some service used in accomplishing the

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infringement. For example, a retail copying service thataccepts and copies copyrighted material for customers afterbroadly promoting its willingness to do so may be liable forthe resulting infringement although it does not produce anycopying machines or sell them; all it provides is the “service”of copying. Whether the service makes copies usingmachines of its own manufacture, machines it owns, ormachines in someone else’s shop would not matter, ascopyright liability depends on one’s purposeful involvementin the process of reproducing copyrighted material, not theprecise nature of that involvement.

Grokster III did phrase the rule it applied principally interms of a “device.” But that was because it was respondingto the main argument made by the defendants in thatcase—that they were entitled to protection for commercialproducts capable of significant non-infringing uses, just asSony was insulated from liability for infringing use of theBetamax. See Grokster III, 545 U.S. at 931–34. Whenexplaining the rationale for permitting secondaryinfringement liability, Grokster III used more generallanguage:

When a widely shared service or product isused to commit infringement, it may beimpossible to enforce rights in the protectedwork effectively against all direct infringers,the only practical alternative being to goagainst the distributor of the copying devicefor secondary liability on a theory ofcontributory 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 itsservice as the best Napster alternative”); id. at 937–38; id. at939 (describing the import of defendants’ “efforts to supplyservices to former Napster users”).

Since Grokster III, we have not considered a claim ofinducement liability on facts closely comparable to thosehere. But we have, in two cases, considered claims ofinducement liability against parties providing services asopposed to products, without suggesting that the differencematters. Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d788, 800–02 (9th Cir. 2007); Perfect 10, Inc. v. Amazon.com,Inc., 508 F.3d 1146, 1170 n.11 (9th Cir. 2007). The twoPerfect 10 cases confirm that, as one would expect, theinducement copyright doctrine explicated in Grokster IIIapplies to services available on the Internet as well as todevices or products.

We hold that Columbia has carried its burden onsummary judgment as to the first element of the Grokster IIItest for inducement liability.

ii. Acts of infringement

To prove copyright infringement on an inducementtheory, Columbia also had to adduce “evidence of actualinfringement by” users of Fung’s services. Grokster III,545 U.S. at 940. This they have done.

Both uploading and downloading copyrighted material areinfringing acts. The former violates the copyright holder’sright 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 torrentfiles available on Fung’s websites are for “confirmed orhighly likely copyright infringing” material. Although Fungtakes issue with certain aspects of the expert’s methodology,he does not attempt to rebut the factual assertion that hisservices were widely used to infringe copyrights. Indeed,even giving Fung the benefit of all doubts by tripling themargins of error in the expert’s reports, Columbia would stillhave such overwhelming evidence that any reasonable jurywould have to conclude that the vastly predominant use ofFung’s services has been to infringe copyrights.

In sum, as in Grokster III, “[a]lthough an exactcalculation of infringing use, as a basis for a claim ofdamages, is subject to dispute, there is no question” thatPlaintiffs have met their burden on summary judgment towarrant equitable relief. Grokster III, 545 U.S. at 940–41.

iii. With the object of promoting its use toinfringe copyright

The third, usually dispositive, requirement for inducementliability is that the “device” or service be distributed “with theobject of promoting its use to infringe copyright, as shown byclear expression or other affirmative steps taken to fosterinfringement.” Id. at 936–37.

As an initial matter, Fung argues that this factor includestwo separate elements—the improper object and “clearexpression or other affirmative steps taken to fosterinfringement.” Not so. “[C]lear expression or otheraffirmative 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, rightafter articulating the inducement factor, that the improperobject must be plain and must be affirmatively communicatedthrough words or actions:

We are, of course, mindful of the need to keepfrom trenching on regular commerce ordiscouraging the development of technologieswith lawful and unlawful potential.Accordingly, just as Sony did not findintentional inducement despite the knowledgeof the [Betamax] manufacturer that its devicecould be used to infringe, mere knowledge ofinfringing potential or of actual infringinguses would not be enough here to subject adistributor to liability. Nor would ordinaryacts incident to product distribution, such asoffering customers technical support orproduct updates, support liability inthemselves. The inducement rule, instead,premises liability on purposeful, culpableexpression and conduct, and thus does nothingto compromise legitimate commerce ordiscourage innovation having a lawfulpromise.

Id. at 937 (citation omitted).

In Grokster III itself, the Court found ample evidence, ofseveral types, to support inducement liability. See id. at937–40. First, Grokster III relied in part on advertisementsas 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 stimulateothers to commit violations.” Id. at 937. Both Grokster IIIdefendants had engaged in such affirmative solicitation,advertising their software as an alternative to Napster—whichnotoriously facilitated wide-scale copyright infringement—ata time when Napster’s unlawful activities were about to beshuttered. See id. at 937–38.

Second, Grokster III relied for proof of Grokster’sinfringing purpose on communications that, while not in haecverba promoting infringing uses, provided informationaffirmatively supporting such uses. “[B]oth companies,”moreover, “communicated a clear message by respondingaffirmatively to requests for help in locating and playingcopyrighted materials.” Id. at 938. Thus, Grokster includedas evidence of an infringing purpose an electronic newsletterdistributed by Grokster that linked to articles promotingGrokster’s ability to access copyrighted music. See id. at938.

A third category of “clear expression” recognized inGrokster III as pertinent to proof of improper purpose wasexplicit internal communication to that effect. As to one ofthe 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 werecommunicated [to potential customers] is not . . . the point. . . . The function of the message in the theory of inducementis to prove by a defendant’s own statements that his unlawfulpurpose disqualifies him from claiming protection.” Id.Thus, the Court went on, “[p]roving that a message was sentout . . . is the preeminent but not exclusive way of showing

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that active steps were taken with the purpose of bringingabout infringing acts.” Id.

Grokster III also mentioned two sorts of “otheraffirmative steps” as permissible evidence that support aninference of an intent to induce infringement, whilecautioning that such sorts of circumstantial evidence wouldnot be independently sufficient. The first was that “neithercompany attempted to develop filtering tools or othermechanisms to diminish the infringing activity using theirsoftware,” which the Court said “underscore[d]” thedefendants’ “intentional facilitation of their users’infringement.” Id. at 939. The Court was careful to cautionthat “in the absence of other evidence of intent, a court wouldbe unable to find contributory infringement liability merelybased on a failure to take affirmative steps to preventinfringement.” Id. at 939 n.12.

Similarly, Grokster III pointed to the fact that thedefendants “make money by selling advertising space, bydirecting ads to the screens of computers employing theirsoftware.” Id. at 940. Because “the extent of the software’suse determines the gain to the distributors, the commercialsense of their enterprise turns on high-volume use, which therecord shows is infringing.” Id. Here again, however, “[t]hisevidence alone would not justify an inference of unlawfulintent.” Id.

Using these Grokster III evidentiary categories andcautions as templates, we conclude that there is more thanenough unrebutted evidence in the summary judgment recordto prove that Fung offered his services with the object ofpromoting their use to infringe copyrighted material. Noreasonable jury could find otherwise.

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In addition to statements made by Fung personally, the district court13

relied on statements made by individuals who served as “moderators” ofthe isoHunt forum, finding that there was an agency relationship betweenthose individuals and Fung. Fung maintains that he did not have therequisite control over the moderators for an agency relationship to exist.In light of the other evidence of unlawful intent, we need not and do notrely on statements made by anyone other than Fung. Nor do we rely onthe generic organizational structure of Fung’s websites—i.e., that theyorganized files in browsable categories or used an automated indexingprogram that matched filenames with specific terms. These features asused by Fung do not themselves send the type of inducing “message” thatwould be adequate to prove an unlawful intent. See Grokster III, 545 U.S.at 937.

As for the necessary “clear expression or other affirmativesteps” evidence indicative of unlawful intent, the mostimportant is Fung’s active encouragement of the uploading oftorrent files concerning copyrighted content. For a time, forexample, isoHunt prominently featured a list of “Box OfficeMovies,” containing the 20 highest-grossing movies thenplaying in U.S. theaters. When a user clicked on a listed title,she would be invited to “upload [a] torrent” file for thatmovie. In other words, she would be asked to upload a filethat, once downloaded by other users, would lead directly totheir obtaining infringing content. Fung also postednumerous messages to the isoHunt forum requesting thatusers upload torrents for specific copyrighted films; in otherposts, he provided links to torrent files for copyrightedmovies, urging users to download them. Though not the13

exclusive means of proving inducement, we havecharacterized a distributor’s communication of an inducingmessage to its users as “crucial” to establishing inducementliability. 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 moreso—Fung’s posts were explicitly “designed to stimulate

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See infra pp. 34–35.14

Fung did attempt to keep certain types of torrents off his websites.15

First, because Fung is personally opposed to pornography, he took stepsto keep torrent files related to pornography out of his sites’ collections.Second, Fung attempted to remove torrent files that led to downloads offake 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 showthat Fung had the means to filter content on his websites when he choseto do so).

others to commit [copyright] violations,” and so are highlyprobative of an unlawful intent. Grokster III, 545 U.S. at937.14

As in Grokster, moreover, Fung “communicated a clearmessage by responding affirmatively to requests for help inlocating and playing copyrighted materials.” Id. at 938. Therecord is replete with instances of Fung responding personallyto queries for assistance in: uploading torrent filescorresponding to obviously copyrighted material, findingparticular copyrighted movies and television shows, gettingpirated material to play properly, and burning the infringingcontent onto DVDs for playback on televisions.

Two types of supporting evidence, insufficient inthemselves—like the similar evidence in GroksterIII—corroborate the conclusion that Fung “acted with apurpose to cause copyright violations by use of” theirservices. Id. at 938. First, Fung took no steps “to developfiltering tools or other mechanisms to diminish the infringingactivity” by those using his services. Id. at 939. Second,15

Fung generates revenue almost exclusively by sellingadvertising space on his websites. The more users who visit

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As a reminder, Grokster III’s articulation was that “one who16

distributes a device with the object of promoting its use to infringecopyright, as shown by clear expression or other affirmative steps takento foster infringement, is liable for the resulting acts of infringement bythird parties.” Id. at 936–37.

Fung’s websites and view the advertisements supplied byFung’s business partners, the greater the revenues to Fung.Because “the extent of the [services’] use determines the gainto [Fung], the commercial sense of [his] enterprise turns onhigh-volume use, which the record shows is infringing.” Id.at 940. Given both the clear expression and other affirmativesteps and the supporting evidence, Fung’s “unlawfulobjective is unmistakable.” Id.

iv. Causation

Grokster III mentions causation only indirectly, byspeaking of “resulting acts of infringement by third parties.”Id. at 937 (emphasis added). The parties here advance16

competing interpretations of the causation requirementadopted through that locution: Fung and amicus curiaeGoogle argue that the acts of infringement must be caused bythe manifestations of the distributor’s improper object—thatis, by the inducing messages themselves. Columbia, on theother hand, maintains that it need only prove that the “acts ofinfringement by third parties” were caused by the productdistributed or services provided.

We think Columbia’s interpretation of Grokster III is thebetter one. On that view, if one provides a service that couldbe used to infringe copyrights, with the manifested intent thatthe service actually be used in that manner, that person is

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liable for the infringement that occurs through the use of theservice. See id. at 937. As Grokster III explained:

It is not only that encouraging a particularconsumer to infringe a copyright can give riseto secondary liability for the infringement thatresults. Inducement liability goes beyondthat, and the distribution of a product canitself give rise to liability where evidenceshows that the distributor intended andencouraged the product to be used to infringe.In such a case, the culpable act is not merelythe encouragement of infringement but alsothe distribution of the tool intended forinfringing use.

Id. at 940 n.13; see also 3-12 Melville B. Nimmer & DavidNimmer, Nimmer on Copyright § 12.04[A][4][b] (MatthewBender, rev. 2010).

We are mindful, however, of the potential severity of aloose causation theory for inducement liability. Under thistheory of liability, the only causation requirement is that theproduct or service at issue was used to infringe the plaintiff’scopyrights. The possible reach of liability is enormous,particularly in the digital age.

Copyright law attempts to strike a balance amongst threecompeting interests: those of the copyright holders inbenefitting from their labor; those of entrepreneurs in havingthe latitude to invent new technologies without fear of beingheld liable if their innovations are used by others inunintended infringing ways; and those of the public in havingaccess both to entertainment options protected by copyright

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There is no question in this case that Fung was authorized to and did17

speak on behalf of the corporate defendant, isoHunt Web Technologies,Inc.

and to new technologies that enhance productivity and qualityof life. See generally Grokster III, 545 U.S. at 937; Sony,464 U.S. at 428–32. Because copyright law’s “ultimate aimis . . . to stimulate artistic creativity for the general publicgood,” Sony, 464 U.S. at 432 (quoting Twentieth CenturyMusic Corp. v. Aiken, 422 U.S. 151, 156 (1975)), it isimportant that we not permit inducement liability’s relativelylax causation requirement to “enlarge the scope of[copyright’s] statutory monopolies to encompass control overan article of commerce”—such as technology capable ofsubstantial non-infringing uses—“that is not the subject ofcopyright protection.” Sony, 464 U.S. at 421.

We emphasize a few points in this regard. First, aspreviously discussed, proper proof of the defendant’s intentthat its product or service be used to infringe copyrights isparamount. “[M]ere knowledge of infringing potential or ofactual infringing uses” does not subject a product distributoror 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 definedby traditional agency law principles; liability cannot bepremised on stray or unauthorized statements that cannotfairly be imputed to the entity. See id. at 937 (discussing the17

evidence that “StreamCast and Grokster,” each a corporateentity, “communicated an inducing message to their softwareusers”).

Moreover, proving that an entity had an unlawful purposeat a particular time in providing a product or service does not

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infinitely expand its liability in either temporal direction. Ifan entity begins providing a service with infringing potentialat time A, but does not appreciate that potential until later andso does not develop and exhibit the requisite intent to supportinducement liability until time B, it would not be held liablefor the infringement that occurred between time A and B.Relatedly, an individual or entity’s unlawful objective at timeB 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 theinfringing use of their product, lest the public be deprived ofthe 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 IIIseemingly 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 andStreamcast distributed their respective software applications.Assessing causation was thus a straightforward task. In Sony,for example, there was no question that some customerswould purchase and use the Betamax in ways that infringedcopyright. Thus, in a “but-for” sense, there was no questionthat Sony caused whatever infringement resulted from the useof Betamax sets; the Court nonetheless held Sony not liableon the ground that even if Sony caused the infringement, itwas not at fault, with fault measured by Sony’s intent. But asGrokster III explained, “nothing in Sony requires courts toignore evidence of intent if there is such evidence, and thecase was never meant to foreclose rules of fault-basedliability.” 545 U.S. at 934. Grokster III thus held that wherethere is sufficient evidence of fault—that is, an unlawfulobjective—distributors are liable for causing the infringementthat resulted from use of their products. See id. at 940. In

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other words, Grokster III and Sony were able to assumecausation and assess liability (or not) based on fault. In thepresent case, however, where other individuals and entitiesprovide services identical to those offered by Fung, causation,even in the relatively loose sense we have delineated, cannotbe assumed, even though fault is unquestionably present.

Fung argues, on this basis, that some of the acts ofinfringement by third parties relied upon by the district courtmay not have involved his websites at all. He points out, forexample, that by far the largest number of torrents tracked bythe Torrentbox tracker are obtained from somewhere otherthan Torrentbox.com. If a user obtained a torrent from asource other than his websites, Fung maintains, he cannot beheld 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 preliminaryinjunction based on Google’s alleged direct copyrightinfringement 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’sdismissal under Federal Rule of Civil Procedure 12(b)(6) inpart because the “causal chain” between defendant credit cardcompanies’ services and infringing activity by Internet userswas too attenuated).

On the other hand, Fung’s services encompass more thanthe provision of torrent files. Fung’s trackers manage trafficfor torrent files, obtained from Torrentbox and Podtropolis aswell as other torrent sites, which enables users to downloadcopyrighted content. If Plaintiffs can show a sufficient casualconnection between users’ infringing activity and the use ofFung’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 heldliable for having caused infringements by users of his sites ortrackers. The only issue presently before us is the permanentinjunction, which, as in Grokster III, does not in this casedepend on the “exact calculation of infringing use[] as a basisfor a claim of damages.” 545 U.S. at 941. We therefore neednot further entertain Fung’s causation arguments at this time,but leave it to the district court to consider them, in light ofthe observations we have made, when it calculates damages.

In sum, we affirm the district court’s holding thatColumbia has carried its burden of proving, on the basis ofundisputed facts, Fung’s liability for inducing others toinfringe Columbia’s copyrights.

B. DMCA Safe Harbors

Fung asserts affirmative defenses under three of theDMCA’s safe harbor provisions, 17 U.S.C. § 512(a), (c), and(d). Because the DMCA safe harbors are affirmativedefenses, Fung has the burden of establishing that he meetsthe statutory requirements. See Balvage v. RyderwoodImprovement and Serv. Ass’n, Inc., 642 F.3d 765, 776 (9thCir. 2011).

Columbia argues, and the district court agreed, thatinducement liability is inherently incompatible withprotection under the DMCA safe harbors. This court hasalready rejected the notion that there can never be a DMCAsafe 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 thisconnection, that the DMCA does not in terms exempt fromprotection any mode of copyright liability, including liabilityunder the doctrine of inducement. Moreover, the DMCA’slegislative history confirms that Congress intended to provideprotection for at least some vicarious and contributoryinfringement. See S. Rep. No. 105-190, 40 (1998); UMGRecordings, Inc. v. Shelter Capital Partners, LLC, — F.3d —(9th Cir. 2013) (noting that § 512(c) does not exclude from itsprotection vicarious or contributory liability).

Nor is there any inherent incompatibility betweeninducement liability and the requirements that apply to all ofthe DMCA safe harbors. For example, a prerequisite for thesafe harbors is that the service provider implement a policy ofremoving repeat infringers. See 17 U.S.C. § 512(i)(1)(A).Although at first glance that requirement that might seemimpossible to establish where the requisites for inducinginfringement are met, see In re Aimster Copyright Litig.,334 F.3d 643, 655 (7th Cir. 2003), on closer examination theappearance of inherent incompatibility dissipates. In someinstances, for example, the Grokster standard for inducementmight be met even where a service provider has a policy ofremoving proven repeat infringers. It is therefore conceivablethat a service provider liable for inducement could be entitledto protection under the safe harbors.

In light of these considerations, we are not clairvoyantenough to be sure that there are no instances in which adefendant otherwise liable for contributory copyrightinfringement could meet the prerequisites for one or more ofthe DMCA safe harbors. We therefore think it best to

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conduct the two inquiries independently— although, as willappear, aspects of the inducing behavior that give rise toliability are relevant to the operation of some of the DMCAsafe harbors and can, in some circumstances, preclude theirapplication.

i. “Transitory digital network communications”(17 U.S.C. § 512(a))

The first safe harbor at issue, which Fung asserts only asto his trackers, provides as follows:

A service provider shall not be liable formonetary relief, or, except as provided insubsection (j), for injunctive or other equitablerelief, for infringement of copyright by reasonof the provider’s transmitting, routing, orproviding connections for, material through asystem or network controlled or operated byor for the service provider, or by reason of theintermediate and transient storage of thatmaterial in the course of such transmitting,routing, or providing connections, if—

(1) the transmission of the material wasinitiated by or at the direction of a personother than the service provider;

(2) the transmission, routing, provision ofconnections, or storage is carried out throughan automatic technical process withoutselection of the material by the serviceprovider;

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(3) the service provider does not select therecipients of the material except as anautomatic response to the request of anotherperson;

(4) no copy of the material made by theservice provider in the course of suchintermediate or transient storage is maintainedon the system or network in a mannerordinarily accessible to anyone other thananticipated recipients, and no such copy ismaintained on the system or network in amanner ordinarily accessible to suchanticipated recipients for a longer period thanis reasonably necessary for the transmission,routing, or provision of connections; and

(5) the material is transmitted through thesystem or network without modification of itscontent.

17 U.S.C. § 512(a). For purposes of this safe harbor only,“the term ‘service provider’ means an entity offering thetransmission, routing, or providing of connections for digitalonline communications, between or among points specifiedby a user, of material of the user’s choosing, withoutmodification to the content of the material as sent orreceived.” 17 U.S.C. § 512(k)(1)(A). The district courtdismissed the application of this safe harbor in a footnote,stating that it did not apply to Fung “[b]ecause infringingmaterials do not pass through or reside on [Fung’s] system.”

The district court should not have rejected this safe harboron 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 doesnot require that the service provider transmit or routeinfringing material, explaining that “[t]here is no requirementin the statute that the communications must themselves beinfringing, and we see no reason to import such arequirement.” Id. at 1116; see also id. (“Service providers areimmune for transmitting all digital online communications,not just those that directly infringe.”).

We could, perhaps, end our analysis of the § 512(a) safeharbor there. The district court seemingly held Fung liablefor inducement based not on Fung’s trackers’ routingservices, but, instead, on the dot-torrent files Fung collectsand indexes. And it is not clear that Columbia is seeking toestablish liability based directly on the tracking functions ofFung’s trackers.

It appears, however, that Fung’s trackers generateinformation concerning the torrent files transmitted that Fungthen compiles and uses to induce further infringing use of hiswebsites and trackers. In that sense, the tracking function isconnected to the basis on which liability was sought andfound. Without determining whether that information-generating use would itself affect the availability of the§ 512(a) safe harbor, we hold that safe harbor not availablefor Fung’s trackers on other grounds.

Unlike a P2P network like Napster, in which users selectparticular files to download from particular users, Fung’strackers manage a “swarm” of connections that source tinypieces of each file from numerous users; the user seeking todownload a file chooses only the file, not the particular userswho will provide it, and the tracker identifies the sourcecomputers to the user seeking to download a work.

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Given these characteristics, Fung’s trackers do not fit thedefinition of “service provider” that applies to this safeharbor. The definition provides that a “service provider”provides “connections . . . between or among points specifiedby a user.” 17 U.S.C. § 512(k)(1)(A) (emphasis added).Here, it is Fung’s tracker that selects the “points” to which auser’s client will connect in order to download a file. Thetracker, not the requesting user, selects the publishers fromwhich chunks of data will be transmitted.

We have held that § 512(a) applies to service provideswho act only as “conduits” for the transmission ofinformation. UMG Recordings, — F.3d at — & n.10 (notingthat § 512(a) applies “where the service provider merely actsas a conduit for infringing material without storing, caching,or providing links to copyrighted material” (internal quotationmarks omitted)); Ellison v. Robertson, 357 F.3d 1072, 1081(9th Cir. 2004) (discussing the definition of a “serviceprovider” for purposes of § 512(a)); H.R. Rep. 105-551(II),63 (1998) (explaining that the § 512(a) safe harbor is limitedto service providers performing “conduit-only functions”).Because they select which users will communicate with eachother, Fung’s trackers serve as more than “conduits” betweencomputer users. Fung’s trackers therefore are not “serviceproviders” for purposes of § 512(a), and are not eligible forthe § 512(a) safe harbor.

Fung asserts that these functions are “automatic technicalprocesses” that proceed “without selection of any material byus.” Even so, for the tracker to be a “service provider” forpurposes of the § 512(a) safe harbor, the tracker, whether itsfunctions are automatic or not, must meet the specialdefinition of “service provider” applicable to this “conduit”safe harbor. If those functions go beyond those covered by

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17 U.S.C. § 512(k) defines “service provider” more broadly for18

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

that definition, then it does not matter whether they areautomatic 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 donothing more than transmit, route, or provide connections forcopyrighted material—that is, when the [provider] is a mereconduit for the transmission”).

ii. “Information residing on systems or networks atdirection of users” (17 U.S.C. § 512(c))

This safe harbor provides:

(1) In general. A service provider shall not18

be liable for monetary relief, or, except asprovided in subsection (j), for injunctive orother equitable relief, for infringement ofcopyright by reason of the storage at thedirection of a user of material that resides ona system or network controlled or operated byor for the service provider, if the serviceprovider—

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(A) (i) does not have actual knowledgethat the material or an activity using thematerial on the system or network isinfringing;

(ii) in the absence of such actualknowledge, is not aware of facts orcircumstances from which infringing activityis apparent; or

(iii) upon obtaining such knowledge orawareness, acts expeditiously to remove, ordisable access to, the material;

(B) does not receive a financial benefitdirectly attributable to the infringing activity,in a case in which the service provider has theright and ability to control such activity; and

(C) upon notification of claimed infringementas described in paragraph (3), respondsexpeditiously to remove, or disable access to,the material that is claimed to be infringing orto be the subject of infringing activity.

17 U.S.C. § 512(c).

The district court held that Fung is ineligible for this safeharbor for the same reason it rejected the § 512(a) safeharbor—that is, because the infringing material does notactually reside on Fung’s servers. As with § 512(a), thisholding was in error. As CCBill emphasized, we will notread requirements into the safe harbors that are not containedin 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 ofinfringing 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, theinfringing activity associated with Fung—the peer-to-peertransfer of pirated content—relies upon torrents stored onFung’s websites. According to the record, sometimes thosetorrents are uploaded by users of the sites, while othertorrents are collected for storage by Fung’s websitesthemselves. The former situation would be at least faciallyeligible for the safe harbor, assuming the other criteria aremet.

a. Actual and “Red Flag” Knowledge(512(c)(1)(A)(i)–(ii))

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

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Fung maintains that he lacked either type of knowledge,because Columbia failed to provide statutorily compliantnotification of infringement. Under § 512(c)(3)(B),notification of infringement that fails to comply with therequirements set forth in § 512(c)(3)(A) “shall not beconsidered . . . in determining whether a service provider hasactual knowledge or is aware of facts or circumstances fromwhich infringing activity is apparent.” 17 U.S.C.§ 512(c)(3)(B)(i). And, as Fung points out, the district courtnoted that there was at least a “triable issue of fact as to theadequacy of the statutory notice that Plaintiffs provided to[Fung].”

We need not determine the adequacy of Columbia’snotification of claimed infringement—indeed, as the districtcourt held, it would not be appropriate to do so at this stage.Fung had “red flag” knowledge of a broad range of infringingactivity for reasons independent of any notifications fromColumbia, and therefore is ineligible for the § 512(c) safeharbor.

As noted, the record is replete with instances of Fungactively encouraging infringement, by urging his users toboth upload and download particular copyrighted works,providing assistance to those seeking to watch copyrightedfilms, and helping his users burn copyrighted material ontoDVDs. The material in question was sufficiently current andwell-known that it would have been objectively obvious to areasonable person that the material solicited and assisted wasboth copyrighted and not licensed to random members of thepublic, and that the induced use was therefore infringing.Moreover, Fung does not dispute that he personally used theisoHunt website to download infringing material. Thus,while Fung’s inducing actions do not necessarily render him

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See supra pp. 37–39.19

We note that it is not clear from the language of § 512(c) or from the20

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

per se ineligible for protection under § 512(c), they are19

relevant to our determination that Fung had “red flag”knowledge of infringement.

Fung introduced no contrary facts with regard toidentified torrents involved in these documented activities,responding only with the generalized assertion that he “ha[s]a robust copyright compliance system.” But “conclusoryallegations, standing alone, are insufficient to preventsummary judgment.” Newman v. County of Orange, 457 F.3d991, 995 (9th Cir. 2006) (internal quotation marks andcitation omitted).20

As Fung has not carried his burden as the non-movingparty of demonstrating a genuine dispute as to the materialfacts regarding his eligibility for the § 512(c) safe harbor, seeNewman, 457 F.3d at 995; see also Fed. R. Civ. P.56(c)(1)(A), Columbia is entitled to summary judgment as tothis issue. Fed. R. Civ. P. 56(e)(3).

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Our decisions interpreting the “financial benefit” prong of21

§ 512(c)(1)(B) derive almost entirely from our earlier decisions discussing“direct financial benefits” in the context of vicarious liability for copyrightinfringement. Those cases also involved defendants who derived theirrevenue from consumers. In particular, our decision in Fonovisa, Inc. v.Cherry Auction, Inc., 76 F.3d 259, 263–64 (9th Cir. 1996), has been thestarting point for our subsequent § 512(c)(1)(B) decisions. In Fonovisa,

b. “Financial benefit” & “the right and abilityto control” (§ 512(c)(1)(B))

Under § 512(c)(1)(B), a service provider loses protectionunder the safe harbor if two conditions are met: (1) theprovider “receive[s] a financial benefit directly attributable tothe infringing activity”; and (2) the “service provider has theright and ability to control such activity.” 17 U.S.C.§ 512(c)(1)(B). Fung meets both requirements and istherefore ineligible for protection under the § 512(c) safeharbor.

As to the first prong of § 512(c)(1)(B), we have held, inthe context of service providers who charge for their services,that a service provider receives a direct financial benefit frominfringing activity where “there is a causal relationshipbetween the infringing activity and any financial benefit adefendant reaps, regardless of how substantial the benefit isin 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 “directfinancial benefit” vicarious liability standard applies under17 U.S.C. § 512(c)(1)(B)). Thus, where a service providerobtains revenue from “subscribers,” the relevant inquiry is“‘whether the infringing activity constitutes a draw forsubscribers, not just an added benefit.’” CCBill, 488 F.3d at1117 (quoting Ellison, 357 F.3d at 1079).21

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we held that swap meet operators “reap[ed] substantial financial benefitsfrom admission fees, concession stand sales and parking fees, all of whichflow[ed] directly from customers who want[ed] to buy the counterfeitrecordings” available at the swap meets. 76 F.3d at 263. In doing so, werelied on district court decisions “imposing vicarious liability on theoperator[s] of [dance hall] business[es] where infringing performancesenhance[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)).

At the same time, our opinions have not suggested thatthe “financial benefit” prong of § 512(c)(1)(B) is peripheralor lacks teeth. Ellison ultimately concluded that the financialbenefit standard was not met, because there was inadequateproof that “customers either subscribed because of theavailable infringing material or cancelled subscriptionsbecause it was no longer available.” Ellison, 357 F.3d at1079. And CCBill similarly found that evidence that theservice provider hosted, for a fee, websites that containinfringing material inadequate to establish the requisitefinancial benefit. In so holding, CCBill cited to DMCAlegislative history stating that a direct financial benefit cannotbe established showing that a service provider “receive[d] aone-time set-up fee and flat, periodic payments for servicefrom a person engaging in infringing activities.” 488 F.3d at1118 (quoting H.R. Rep. 105-551(II), 54 (1998)).

Moreover, the structure of § 512(c)(1)(B) indicates thatthe lack of direct financial benefit prong of the safe harborrequirement is central, rather than peripheral. The statute setsout as the requirement that the service provider “not receivea financial benefit directly attributable to the infringingactivity.” It then states the “right and ability to control” in adependent clause, describing a limitation on the financialbenefit requirement to certain circumstances. The

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grammatical emphasis, then, is on the lack of direct financialbenefit requirement, with the right to control prongsecondary.

Against this background, we note that we have neverspecified what constitutes a “financial benefit directlyattributable to the infringing activity,” 17 U.S.C.§ 512(c)(1)(B) (emphasis added), where, as here, the serviceprovider’s revenue is derived from advertising, and not fromusers. We do so now.

Here, the record shows that Fung generated revenue byselling advertising space on his websites. The advertisingrevenue depended on the number of users who viewed andthen clicked on the advertisements. Fung marketedadvertising to one advertiser by pointing to the “TV andmovies . . . at the top of the most frequently searched by ourviewers,” and provided another with a list of typical usersearch queries, including popular movies and televisionshows. In addition, there was a vast amount of infringingmaterial on his websites—whether 90-96% or somewhatless—supporting an inference that Fung’s revenue stream ispredicated on the broad availability of infringing materials forhis users, thereby attracting advertisers. And, as we haveseen, Fung actively induced infringing activity on his sites.

Under these circumstances, we hold the connectionbetween the infringing activity and Fung’s income streamderived from advertising is sufficiently direct to meet thedirect “financial benefit” prong of § 512(c)(1)(B). Fungpromoted advertising by pointing to infringing activity;obtained advertising revenue that depended on the number ofvisitors to his sites; attracted primarily visitors who wereseeking 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 revenuestream was tied directly to the infringing activity involvinghis websites, both as to his ability to attract advertisers and asto the amount of revenue he received.

With respect to the second prong of § 512(c)(1)(B), werecently explained in UMG that the “right and ability tocontrol” infringing activity involves “something more” than“merely having the general ability to locate infringingmaterial 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 andability to control,’ the service provider must [also] ‘exert[]substantial influence on the activities of users.’” Id. (quotingViacom Int’l, Inc., 676 F.3d at 38) (second alteration inoriginal). In doing so, we noted that “‘[s]ubstantial influence’may include . . . purposeful conduct, as in Grokster.” Id. Inthe absence of any evidence of inducement or any otherreason to suggest the defendant exerted substantial influenceover its users’ activities, we concluded the defendant was notineligible for protection under this provision. Id.

Here, we are confronted with the opposite situation. Fungunquestionably had the ability to locate infringing materialand terminate users’ access. In addition to being able tolocate material identified in valid DMCA notices, Fungorganized torrent files on his sites using a program thatmatches file names and content with specific search termsdescribing material likely to be infringing, such as “screener”or “PPV.” And when users could not find certain materiallikely to be infringing on his sites, Fung personally assistedthem 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’] searchindex[es].”

Crucially, Fung’s ability to control infringing activity onhis websites went well beyond merely locating andterminating users’ access to infringing material. As noted,there is overwhelming evidence that Fung engaged inculpable, inducing activity like that in Grokster III. AlthoughFung’s inducement actions do not categorically remove himfrom protection under § 512(c), they demonstrate thesubstantial influence Fung exerted over his users’ infringingactivities, and thereby supply one essential component of thefinancial benefit/right to control exception to the § 512(c)safe harbor.

Because he meets both prongs of § 512(c)(1)(B), Fung isnot 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, theservice provider loses protection with regard to any infringingactivity using the service. See supra note 20. As we held inUMG, the § 512(c)(1)(B) “right and ability to control”requirement does not depend only upon the ability to removeknown or apparent infringing material. — F.3d at —.Instead, there must also be substantial influence on theinfringing activities of users, indicating that it is the overallrelationship between the service provider and infringing usersthat matters. Also, to the degree this DMCA provision had itsorigin in vicarious liability concepts, see CCBill 488 F.3d at1117, those concepts rest on the overall relationship betweenthe defendant and the infringers, rather than on specificinstances 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’ ofrespondeat superior” (quoting Fonovisa, 76 F.3d at 262)).The term “right and ability to control such activity” soreflects, as it emphasizes a general, structural relationship andspeaks of “such activity,” not any particular activity.

We therefore hold that because Fung does not meet therequirements of § 512(c)(1)(B), he is outside of the § 512(c)safe harbor with respect to all infringement activity on thesites 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 formonetary relief, or, except as provided insubsection (j), for injunctive or other equitablerelief, for infringement of copyright by reasonof the provider referring or linking users to anonline location containing infringing materialor infringing activity, by using informationlocation tools, including a directory, index,reference, pointer, or hypertext link, if theservice provider—

(1) (A) does not have actualknowledge that the material or activityis infringing;

(B) in the absence of suchactual knowledge, is not aware of

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facts or circumstances from whichinfringing activity is apparent; or

(C) upon obtaining suchknowledge or awareness, actsexpeditiously to remove, or disableaccess to, the material;

(2) does not receive a financial benefitdirectly attributable to the infringingactivity, in a case in which the serviceprovider has the right and ability tocontrol such activity; and

(3) upon notification of claimedinfringement as described insubsec t ion (c)(3) , respondsexpeditiously to remove, or disableaccess to, the material that is claimedto be infringing or to be the subject ofinfringing activity, except that, forpurposes of this paragraph, theinformation described in subsection(c)(3)(A)(iii) shall be identification ofthe reference or link, to material oractivity claimed to be infringing, thatis to be removed or access to which isto be disabled, and informationreasonably sufficient to permit theservice provider to locate thatreference or link.

17 U.S.C. § 512(d).

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Fung also maintains that the injunction is impermissibly22

extraterritorial, but that argument is wrong as a matter of fact. Theinjunction explicitly applies only to acts of infringement “that take placein the United States.” Fung also challenges the injunction in otherrespects not discussed in the text. We have considered them and findthem without merit.

We affirm the grant of summary judgment to Columbiaon Fung’s claim to the § 512(d) safe harbor for the reasonsjust discussed with regard to § 512(c): Fung was broadly“aware of facts or circumstances from which infringingactivity [wa]s apparent.” 17 U.S.C. § 512(d)(1)(B).Moreover, he received a direct financial benefit from thatinfringing activity, and had the “right and ability to controlsuch activity.” Id. § 512(d)(2).

II. Injunction

Under 17 U.S.C. § 502(a), a district court is empoweredto grant a permanent injunction “as it may deem reasonableto prevent or restrain infringement of a copyright.” Fungdoes not challenge the issuance of injunctive relief generally,only the scope of the injunction issued.

In particular, Fung argues that the permanent injunctionis vague and unduly burdensome. We consider each22

argument in turn.

A. Vagueness

Rule 65(d) requires “[e]very order granting an injunction”to “state its terms specifically” and to “describe in reasonabledetail—and not by referring to the complaint or otherdocument—the act or acts restrained or required.” Fed. R.

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Civ. P. 65(d)(1)(B)–(C). “‘[O]ne basic principle built intoRule 65 is that those against whom an injunction is issuedshould receive fair and precisely drawn notice of what theinjunction 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 (9thCir. 2000)). “The Rule was designed to prevent uncertaintyand confusion on the part of those faced with injunctiveorders, and to avoid the possible founding of a contemptcitation on a decree too vague to be understood.” Id. (quotingSchmidt v. Lessard, 414 U.S. 473, 476 (1974)). Generallyspeaking, “an ordinary person reading the court’s ordershould be able to ascertain from the document itself exactlywhat conduct is proscribed.” 11A Charles A. Wright et al.,Federal Practice & Procedure § 2955 (2d ed.). Severalprovisions of the permanent injunction fail to meet thisstandard.

First, the injunction’s definition of a key phrase,“Infringement-Related Terms,” is too vague to provide thenotice required by Rule 65(d). The injunction prohibits Fungfrom “including Infringement-Related Terms in metadata forany webpages”; “creating, maintaining or providing access tobrowsable website categories of Dot-torrent or similar filesusing or based on Infringement-Related Terms”; and“organizing, harvesting or categorizing Dot-torrent or similarfiles using or based on Infringement-Related Terms.” Butsubsection (ii) of the definition of the phrase “Infringement-Related Terms” states that it includes “terms that are widelyknown to be associated with copyright infringement (forexample ‘warez,’ ‘Axxo,’ ‘Jaybob,’ ‘DVD Rips,’ ‘Cam,’‘Telesync,’ ‘Telecine,’ ‘Screener,’ or ‘PPV.’).” Beyond thespecifically-named examples, no one reading this injunction

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can tell what it means for a term to be “widely known to beassociated with copyright infringement.”

We understand the desire to build flexibility into theinjunction. But Rule 65(d), overall, prefers certainty toflexibility. See Fortyune, 364 F.3d at 1086–87. Subsection(ii) of the injunction’s definition of “Infringement-RelatedTerms” therefore must be modified to state simply that thephrase includes specifically named terms. Given that thedistrict court has jurisdiction to enforce the injunction,Columbia can request modification in the future to add, uponcompetent proof, specific other terms as well.

Other provisions suffer from similar problems. Paragraph3(j) prohibits “soliciting or targeting a user base generallyunderstood, in substantial part, to be engaging in infringementof, or seeking to infringe, Plaintiffs’ Copyrighted Works.”This language targets a Grokster-like situation, in whichGrokster sought to attract former Napster users. But thelanguage used is simply too imprecise, as the resort to theterm “generally understood” indicates. How is one todetermine what is “generally understood”—whose knowledgematters, and how widespread must the understanding be?And what is a “user base,” an undefined term? It is alsounclear whether the “in substantial part” refers to the “userbase,” the “generally understood” phrase, or the “engaging ininfringement” phrase. Unless it can be rewritten to complywith the requirements of Rule 65(d) for fair notice throughadequate specificity and detail, Paragraph 3(j) must beexcised. See Rule 65(d); Fortyune, 364 F.3d at 1086–87.

Similarly, paragraph 3(l) prohibits “indexing or providingaccess to Dot-torrent or similar files harvested or collectedfrom 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 specifythe 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 afterreceiving a list of titles from the Plaintiffs, Fung is requiredto have a mechanism in place to ensure that he is notfacilitating the infringement of those titles. Fung complainsthat Plaintiffs’ lists of titles are error-filled and that Fung “[is]compelled to locate and correct [the errors] under threat ofcontempt proceedings.” Although the injunction isreasonably clear in this regard, we clarify that Fung has noburden to correct Plaintiffs’ errors.

B. Unduly burdensome

Fung maintains, and we agree, that certain provisions ofthe injunction could be interpreted to prevent Fung from everworking for any technology company whose services othersmight use to infringe copyright, even if those other companiesare not themselves liable for primary or secondary copyrightinfringement. Fung argues that such a restriction would beunduly burdensome.

“‘[I]njunctive relief should be no more burdensome to thedefendant than necessary to provide complete relief to theplaintiffs’ before the court.” L.A. Haven Hospice, Inc. v.Sebelius, 638 F.3d 644, 664 (9th Cir. 2011) (quoting Califanov. Yamasaki, 442 U.S. 682, 702 (1979)). We agree thatinsofar as the injunction can be interpreted to prohibit Fungfrom seeking legitimate employment, it is more burdensomethan necessary to provide Plaintiffs relief. Accordingly, the

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permanent injunction should be amended appropriately tolimit the employment prohibition. We leave the finalwording to the district court.

CONCLUSION

In sum, we affirm the district court’s grant of summaryjudgment to Plaintiffs on liability. We also affirm summaryjudgment to Plaintiffs on Fung’s claims that he is entitled tothe safe harbors provided by 17 U.S.C. § 512(a), (c), and (d),albeit on grounds different than those relied upon by thedistrict court. The permanent injunction is modified as notedabove. 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., Plain-

tiffs, v. GARY FUNG, et al., Defendants.

CV 06-5578 SVW (JCx)

I. INTRODUCTION

In September 2006, Plaintiffs 1 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 Iso-

hunt 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 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; Uni-

versal 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' fac-

tual 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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2009 U.S. Dist. LEXIS 122661, *; 96 U.S.P.Q.2D (BNA) 1620;

Copy. L. Rep. (CCH) P29,877

1). Defendant Fung maintains and operates a number of websites, including

www.isohunt.com, www.torrentbox.com, www.podtropolis.com, and www.ed2k-

it.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 promo-

tion 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" shar-

ing 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 al-

so Horowitz 2 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 Ellis Horowitz is a Professor of Computer Science and Electrical Engineer-

ing at the University of Southern California. Mr. Horowitz has served as a ten-

ured 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 re-

quirements 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. Wa-

terman for Plaintiffs, and Dr. Gribble for Defendants) are generally unrebutted.

(See also footnotes 7 and 13, infra, for a discussion of the other experts' qualifi-

cations.)

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 Plain-

tiffs); 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 un-

rebutted, 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, how-

ever, the download process is unique from that of previous systems such as Napster

and Grokster. 3 Rather than downloading a file from an individual user, users of a bit-

torrent 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 simul-

taneously. (See id. at PP 23-24.) BitTorrent technology relies on a variety of mecha-

nisms in order to accomplish the ultimate downloading [*8] of an given file, includ-

ing: (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 down-

loading of the desired content is occurring from multiple source points at the same

time and allowing larger downloads to move more expeditiously. During this simul-

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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 Nap-

ster 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. Sim-

ilar 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 su-

pernode - or indexing computer - would contact other computers seeking match-

ing files. When a result was found matching the query, the information regard-

ing the results (the IP address and other information) would be sent to the re-

questing 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, De-

fendants 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 applica-

tion. (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 con-

taining the content [*11] that they wish to download. (Id. at P 19.) 5 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

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torrent site. (Id.) These torrent files are referred to as "dot-torrent" files in reference to

their file extension name. 6 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 con-

tains "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 down-

loads a given content file, he also becomes a source for future requests and down-

loads. (Id.)

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 download-

ing 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 down-

load 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 ("Podtropo-

lis"), 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 web-

sites - Isohunt, Torrentbox, and Podtropolis - all provide users the ability to search for

and download BitTorrent files. (Horowitz Decl., at P 26.) As explained by Defend-

ants' expert Steven Gribble, 7 "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.)

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7 Steven Gribble is an Associate Professor of Computer Science and Engineer-

ing 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 admis-

sible 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 Plain-

tiffs' 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 Search-

es," "Top 20 Movies," "Top 20 TV Shows," "Box Office Movies." (SUF PP 8-12, 47-

55.) 8 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 con-

tent. 9 (Id. at P 11.)

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 10 used on Fung's websites often included the term

"warez" as a header for every page. 11 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 up-

load dot-torrent files of the latest blockbuster films and have them posted on the Iso-

hunt website. (Id. at 52-54.) 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 Rec-

ords 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 Wa-

terman, 13 approximately 95% of downloads occurring through Defendants' sites are

downloads of copyright-infringing content. (See Waterman Decl. PP 6-7.) Water-

man'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 144-

45; 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,

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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 pro-

vide 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 mat-

ter 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, De-

fendants [*19] have simply failed to satisfy their summary judgment burden by sub-

mitting 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 ad-

missible 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 genu-

ine 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 copy-

righted 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 state-

ments 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 web-

site 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 re-

garding 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 assis-

tance to a user who was searching for episodes of the television series Star Trek: En-

terprise; 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 judg-

ment 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 nonmov-

ing 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 ev-

idence that is merely colorable or not significantly probative does not present a genu-

ine 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 evi-

dence 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 An-

derson, 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 Conclu-

sions of Law," L.R. 56-1, but only to the extent that the facts are "adequately support-

ed 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 ob-

jections 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. Dis-

cussion 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 collec-

tively 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 an-

other's infringement and (2) either (a) materially contributes to or (b) induces that in-

fringement."), 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, in-

ducement requires that the defendant has undertaken purposeful acts aimed at assist-

ing 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 in-

fringing material is available using its system, and can take simple measures to pre-

vent further damage to copyrighted works, yet continues to provide access to infring-

ing 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 con-

tours that differ from these other theories of liability. A defendant "infringes vicari-

ously 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 par-

ties. 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 copy-

rights 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 in-

fringement must be completed entirely within the United States." Allarcom Pay Tele-

vision, 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 un-

dertaken 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 es-

tablished that an act of infringement has taken place within the United States, De-

fendants 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 Mary-

land 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 web-

sites 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 distribu-

tion 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' copyright-

ed 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.) How-

ever, 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 hold-

er'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 us-

ers 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 inadmissi-

ble statistical data. (SGI, P 3.) Contrary to Defendants' assertions, Plaintiffs' expert

evidence is admissible; and, in any event, Plaintiffs provide direct evidence of specif-

ic 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 mar-

gins of error (5% or less), such overwhelming statistical evidence is sufficient to es-

tablish that Defendants' websites allowed third party users to access copyrighted ma-

terial, 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' ex-

pert. 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 in-

stances of downloads and transfers of copyrighted works through Defendants' web-

sites. 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 copy-

righted 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 do-

mestic infringement involving a copyright owned by each of Plaintiffs. Plaintiffs pro-

vide evidence based on internet protocol ("IP") address 16 data and usage-summary da-

ta 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.) 17

16 "An IP address is a standard way of identifying a computer that is connect-

ed 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 De-

fendants' 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 con-

tain 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 unsup-

ported assertions, dot-torrent files downloaded from Defendants' sites correspond to

and automatically cause the downloading of Plaintiffs' copyrighted content. 18 (Bedser

Supp. Decl., P 4; Ishikawa Supp. Decl., Ex. 2; Grodsky Supp. [*34] Decl., Ex. 2;

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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' asser-

tions 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 trig-

gers 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 Jus-

tice 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 af-

firmative steps taken to foster infringement, is liable for the resulting acts of in-

fringement 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 liabil-

ity. Nor would ordinary acts incident to product distribution, such as offer-

ing 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 compro-

mise legitimate commerce or discourage innovation having a lawful prom-

ise.

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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). 19 In-

stead, the court may "infer[] a patently illegal objective from statements and actions

showing what [the defendant's] objective was." Id. at 941.

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 in-

fringe. In such a case, the culpable [*37] act is not merely the en-

couragement of infringement but also the distribution of the tool in-

tended 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 "re-

spond[ed] affirmatively to requests for help in locating and playing copyrighted mate-

rials." 545 U.S. at 938.

However, showing that the defendant sent out a specific message is "not [the] ex-

clusive way of" demonstrating inducement. Grokster III, 545 U.S. at 938. The Su-

preme Court in Grokster III highlighted three facts from which a reasonable factfind-

er 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] com-

municated 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 dis-

qualifies 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 evi-

dence it underscored the defendants' unlawful objective. Id. at 939 n.12. Third, the

Court considered the fact that the defendants' business model depended on high-

volume 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 copy-

righted content, and affirmative steps taken by defendants to ensure that their prod-

ucts 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 evi-

dence of Defendants' intent to induce infringement is overwhelming and beyond rea-

sonable 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 ad-

mitted 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. 20 Each of these pages con-

tained "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, there-

fore, Defendants engaged in direct solicitation of infringing activity. Defendant Fung,

in his subsequent declaration filed with Defendants' Opposition, denies that this fea-

ture was intended to induce copyright infringement and asserts that the web-pages

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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 ob-

jective 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"). De-

fendants 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 particu-

lar, 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 de-

signed 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 in-

fringement.

Plaintiffs also provide evidence of what the Supreme Court has termed the "classic

instance of inducement" -- a statement that "broadcasts a message designed to stimu-

late 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' infring-

ing activities by consciously fostering a community that encouraged - indeed, cele-

brated - copyright infringement.

Perhaps most tellingly, Fung has personally engaged in a broad campaign of en-

couraging 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' in-

fringement.

2. [*44] Defendants' assistance to users engaging in infringement

There is also evidence that Defendants directly assisted users in engaging in in-

fringement. As in Grokster III, Defendants in the present case have "respond[ed] af-

firmatively 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. Specifi-

cally, 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 as-

sistance 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 epi-

sodes 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 Fun-

g'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 individ-

uals 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 as-

sent 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 Defend-

ants' 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 be-

half 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 in-

troduce no evidence that would provide a triable issue to rebut Plaintiffs' prima

facie showing of agency. Defendants merely assert that Plaintiffs [*47] evi-

dence "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 re-

futed, 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, mod-

erator "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 corpo-

rate 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 tech-

nical 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 inap-

posite and unavailing. See Religious Tech. Ctr. v. Netcom On-Line Communca-

tions 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 consid-

erations by providing for "fair use" defenses and by distinguishing between un-

copyrightable "ideas" and copyrightable "expressions." See Los Angeles News

Svc. v. Tullo, 973 F.2d 791, 795-96 (9th Cir. 1992). Further, secondary copy-

right liability is sensitive to First Amendment concerns in that it generally regu-

lates 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 op-

erator 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 in-

fringement

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 us-

ers' 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 file-

names with specific terms. Some of the specific terms used by the program describe

likely infringing content, such as "Screener" or "PPV". 23 (SUF, PP 91-92.)

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 dis-

putes regarding whether or not Defendants were technologically capable of im-

plementing filtering mechanisms to reduce copyright infringement through their

websites. (See SUF, PP 103, 107; SGI PP 110-11, 143.) In Grokster III, the de-

fendants' failure to implement a copyright filter was probative circumstantial ev-

idence of the defendants' intent to induce infringement. However, the failure to

implement a copyright filter is not a determinative factor in analyzing a defend-

ant's inducement of infringement.

Rather, the relevant question is whether "the summary judgment record [es-

tablishes 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 938-

39.

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 effec-

tive copyright [*54] filter. Indeed, Plaintiffs have established that Defendants

engaged in "[t]he classic instance of inducement . . . by advertisement or solici-

tation 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, De-

fendants' 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 rev-

enue 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 at-

traction 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 poten-

tial advertiser, moviegoods.com, Fung wrote that Isohunt would "make a great part-

ner, since TV and movies are at the top of the most frequently searched by our visi-

tors." (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 de-

rive revenue from the websites and that this revenue increases along with the number

of users. (SUF PP 109-110, 132-133.) 25 This is further evidence of Defendants' intent

to assist infringing uses.

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 in-

fringement, Defendants' "ostrich-like refusal to discover the extent to which its sys-

tem was being used to infringe copyright is merely another piece of evidence" of De-

fendants' 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) en-

gaged in "purposeful, culpable expression and conduct" aimed at promoting infring-

ing 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 infringe-

ment 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 vicari-

ous infringement.

V. DEFENDANTS' DIGITAL MILLENNIUM COPYRIGHT ACT AFFIRMA-

TIVE DEFENSES

The Digital Millennium Copyright Act provides affirmative [*57] defenses for

providers of certain internet services. In many ways, the Digital Millennium Copy-

right Act is simply a restatement of the legal standards establishing secondary copy-

right infringement - in many cases, if a defendant is liable for secondary infringe-

ment, 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 Digi-

tal Millennium Copyright Act immunity. The two sets of rules do not entirely over-

lap, but this framework is helpful for understanding the Act's statutory text and struc-

ture. 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 infringe-

ment 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 pro-

vider referring or linking users to an [*58] online location containing in-

fringing 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 ac-

tivity is infringing;

(B) in the absence of such actual knowledge, is not aware of

facts or circumstances from which infringing activity is appar-

ent; or

(C) upon obtaining such knowledge or awareness, acts expe-

ditiously 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 re-

moved or access to which is to be disabled, [*59] and infor-

mation 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 26) must satisfy the three conjunctive requirements of ß 512(d) in order to ob-

tain 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 ac-

tivities, 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 statutori-

ly-prescribed manner) from the copyright holder, removes the infringing material (ß

512(d)(3)).

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 pro-

viders, 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 technolo-

gies 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 [Defend-

ants'] 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 be-

came 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 re-

garding 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 Defend-

ants. (See Parker Decl. PP 9, 12-14.) However, because Defendants have not

identified any triable issues of facts regarding the first two safe harbor require-

ments, summary judgment is appropriate in Plaintiffs' favor.

In order to obtain safe harbor, a defendant cannot have knowledge of ongoing in-

fringing 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 ac-

tivity 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 on-

ly 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. 105-

551(II), at 57. Most importantly, Defendant Fung himself has engaged in unauthor-

ized downloads of copyrighted material; even if those downloads were done abroad

and were not actionable under United States copyright law (and thus would not pro-

vide "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 in-

fringing 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 ma-

terials contained copyrighted content. (See Waterman Decl. PP 6, 7, 24, 28, 31.) De-

fendants 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 infringe-

ment.

There is a variety of other evidence of Defendants' willful ignorance to ongoing

infringement. Defendants designed their website to include lists such as "Top Search-

es," "Top 20 Movies," "Top 20 TV Shows," and "Box Office Movies," and Defend-

ants 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 down-

loading 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 infring-

ing, a percentage that is nearly identical to the facts in Napster, in which "eighty-

seven 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 argu-

ments 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 De-

fendants' 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 ap-

parent." 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 sys-

tem, and by teaching its users how to encrypt their unlawful distribution of

copyrighted materials disabled itself from doing anything to prevent in-

fringement.

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 har-

bor 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 infor-

mation regarding the practices of online search companies such as Google and Ya-

hoo. (Opp., at 33-35; Rothken 56(f) Decl. P 6.) Defendants also seek information re-

lated 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 infor-

mation 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 Defend-

ants' 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 evi-

dence, 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 evi-

dence throughout the course of this litigation.

Rule 56(f) requires "specified reasons" that are "essential" to the opposition. De-

fendants 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 lia-

bility 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 De-

fendants' 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 situa-

tion 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 down-

loading content files directly through Defendants' website, Defendants' users down-

load 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 Defend-

ants 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 pro-

portion of the files made available to them through those websites contained copy-

righted 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 in-

ducement 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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