David v. CBS Interactive, Inc. [1]

On Nov. 14, 2011, a group of musicians and music companies claiming to be the legal owners of copyrighted works available for unlicensed use through various peer-to-peer (P2P) BitTorrent clients filed suit [2] against CBS Interactive, Inc. (CBSI) and CNET Networks, Inc., claiming that the companies were liable for infringement of Plaintiffs' copyrighted works because of their alleged role in distributing and popularizing P2P BitTorrent programs.

CNET is a "network of technology media websites that publishes news articles, blogs, reviews, ratings and podcasts about technology, software, and consumer electronics"; Download.com, a CNET website, "is the world's largest comprehensive software directory and rating service, providing reviews, ratings, and download links" for third-party software. Download.com provides links to sites where users can download P2P BitTorrent software, including uTorrent, Vuze, Frostwire, and BitComet; CNET reports extensively on the software, including the P2P software. CNET and Download.com are owned and operated by CBSI.

Plaintiffs alleged that Defendants have promoted and are promoting a "massive piracy culture" by distributing P2P software that they know is primarily used for copyright infringement and by publishing articles, videos, and reviews encouraging users to download the software and use it to infringe copyrighted material. Plaintiffs also alleged that CBSI profits from users downloading P2P software and using it to infringe. Based on those allegations, Plaintiffs asserted claims for vicarious, contributory, and inducement infringement and requested injunctive relief and actual and statutory damages.

Plaintiffs claimed that Defendants are liable for vicarious infringement because they have the "right and ability to control and/or supervise the infringing conduct of P2P client software publishers and individual users (whether by contract or as a matter of practical control)" and a direct financial interest in the infringing conduct. Specifically, they claimed Defendants could refuse to list and link to P2P software and cease "publishing articles promoting and instructing users on the use of P2P software." Plaintiffs claimed Defendants benefited financially from infringement through "fees and revenues earned from downloads on download.com," "advertising revenues generated from encouraging users to seek out and download clients from download.com," and "cross-promotion on P2P client download pages for other sites."

Plaintiffs alleged Defendants committed contributory infringement by providing tools and instruction for infringement and had actual and constructive "knowledge of the massive infringement that has occurred through P2P software they . . . distributed, and promoted." To demonstrate the Defendants' knowledge, Plaintiffs listed a number of articles and user comments on CNET and Download.com comparing clients currently listed on Download.com to illegally operated systems like Grokster and Napster (which were removed from the Download.com directory after courts found them liable for copyright infringement). They also cited side-by-side comparisons of various BitTorrent clients and videos of product demonstrations by CNET editors in which copyrighted songs appeared in search results.

Plaintiffs claimed that Defendants induced copyright infringement by both distributing P2P software that is used to infringe copyrights and promoting the software's infringing use by "inform[ing] users that the software [i]s optimized for infringement" and instructing users "on how to most effectively use" it. Plaintiffs claimed that Defendants' intent to induce infringement is clear, because the Defendants maintain a "business model to profit directly from the demand for infringing P2P clients," "purposefully target[] and cater[] to the P2P infringement community," and continue to "provide downloads for P2P software that fails to block or diminish access to infringing material even though there are technological means to do so."

Motion to Dismiss

Defendants moved to dismiss [3] the complaint on March 5, 2012, stating that Plaintiffs' theory that "offering truthful descriptions, evaluations, and links to lawful P2P software" could subject them to liability for "violations by end-users of that software," was an "unprecedented attempt to expand the law of copyright infringement." According to Defendants, only "a tiny fraction" of "hundreds of thousands of products listed in the Download.com directory" includes P2P software, and Defendants do not host P2P software but rather provide links to third-party sites where it can be downloaded. Defendants further argued that such an interpretation of copyright law would unconstitutionally restrict speech.

Defendants argued that Plaintiffs failed to state a claim for vicarious infringement because they did not allege facts supporting the claim that Defendants have the right and ability to control direct infringement by P2P client users, or that Defendants "can even identify those who use the service to find infringing content." Based on Perfect 10, Inc. v. Amazon.com, Inc. [4], 508 F.3d 1146 (9th Cir. 2007) ("Perfect 10-Amazon") and Perfect 10, Inc. v. Visa [5], 494 F.3d 788 (9th Cir. 2007) ("Perfect 10-Visa"), they argued that "the law is clear that ability to block or remove links to P2P software altogether is not sufficient control." Because their lack of control was fatal to the claim, defendants argued, they did not need to address whether they received a financial benefit from infringement, but stated that they are not paid per download, and, even if they were, a financial benefit from users downloading the software would not be a benefit from infringement.

Defendants argued that the contributory copyright infringement claim failed because the complaint did not allege that Defendants had actual knowledge of specific infringement. Defendants claimed that "the sale of copying equipment . . . does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes," and BitTorrent technology has numerous advantages that are not related to copyright infringement, including faster downloads, more stable mechanisms, and more efficient data transfer that reduces internet traffic. Defendants noted that educational institutions including Stanford and the TED Conferences use such technology for these benefits and argued that, when a product has such substantial non-infringing uses, "evidence of actual knowledge of specific acts of infringement is required" to show contributory infringement. They stated that Plaintiffs cited no evidence that Defendants knew of "specific instances of infringement of Plaintiffs' works" and that, based on the Supreme Court's decision in Sony Corp. v. Universal City Studios [6], 464 U.S. 417 (1984), "constructive knowledge predicated on alleged knowledge of pervasive general infringement" cannot be a basis for contributory infringement.

Defendants further argued that the inducement claim was inadequately pleaded, because the complaint did not allege "purposeful, culpable expression and conduct," as required under Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. [7], 454 U.S. 913 (2005). They argued that a defendant may only be liable for inducement under Grokster if the defendant intended to induce infringement and that Plaintiffs produced no evidence that Defendants "supported or promoted any P2P service that was known to be unlawful at the time, and as such they have not alleged that Defendants knew they were inducing . . . copyright infringement." In fact, Defendants stated that they automatically "warn anyone clicking on a link to P2P software against using it for purposes of copyright infringement." Additionally, Defendants stated that the Ninth Circuit made clear in Perfect 10-Amazon that a defendant must have promoted its own services for purposes of infringement to be liable for inducement, and the Complaint did not allege that. In fact, Defendants stated, CBSI does not create or own any P2P BitTorrent software.

Finally, Defendants argued that imposing liability on them for their "reporting, opinions, [and] descriptions [on] matters of public interest and concern" would violate the First Amendment. The Defendants argued that Plaintiffs sought to impose Grokster inducement liability without Grokster's culpable intent requirement, thereby violating the First Amendment. They noted that they could not be liable for merely linking to P2P software, and therefore a penalty based on linking plus speech would be a penalty for speech. They also said that liability would "compromise legitimate commerce or discourage innovation having a lawful promise" in violation of Grokster.

Opposition to Motion to Dismiss

Plaintiffs opposed [8]the motion to dismiss on June 4, 2012. They argued that the First Amendment was irrelevant to their claims, because the Defendant's speech was not being penalized for its content, but was merely important evidence of CBSI's intent. According to plaintiffs, the case "involves conduct not expression."

Plaintiffs argued that their vicarious liability claim should survive the motion because, based on Fonovisa, Inc. v. Cherry Auction Inc. [9], 76 F.3d 259 (9th Cir. 1996), there are two valid tests for vicarious liability: (1) the "right or ability to control direct infringers" and (2) "pervasive participation" in the "formation and direction" of the direct infringers. They alleged that Defendants did have the right or ability to control infringers, and that the amount of control they had is necessarily "fact specific," and would be filled in by discovery. At the very least, they argued, they had alleged that Defendants were engaged in "pervasive participation" in the "formation and direction" of infringers.

Plaintiffs also argued that their contributory liability claim should stand because they demonstrated constructive knowledge, which, under A&M Records, Inc. v. Napster [10], 239 F.3d 1004 (9th Cir. 2001), is sufficient. They argued that a device's substantial non-infringing uses only come into play when liability is predicated only on that device's capabilities and that since, "a range of conduct may show constructive or actual knowledge," the conduct cited in the complaint is sufficient to infer knowledge. Additionally, Plaintiffs argued that requiring actual knowledge of specific infringement would "give rise to strategic ignorance of monstrous proportions."

Plaintiffs further argued that their inducement claim was adequately pleaded, because inducement liability does not require that an entity distribute its own product. Plaintiffs also claimed that they had produced sufficient evidence of the Defendants' culpable intent, arguing that, "the defendant's own communications and advertising designs evinced an intent to target . . . a community well-known for infringement," "defendants' business model depended on high-volume use of software which was overwhelmingly infringing," and Defendants failed to take steps to stop infringement. Finally, according to Plaintiffs, generalized knowledge of infringement is sufficient for inducement liability-defendants do not need to have knowledge of the specific songs infringed or "malicious intent." Plaintiffs stated that CBSI "cannot seriously insist that it was unaware of the massive and illegal infringement carried out by the software it distributed."

Reply to the Opposition to the Motion to Dismiss

Defendants replied [11] to the opposition to their motion to dismiss on June 16, 2012. They argued that the correct test for vicarious liability is whether a defendant had the "right or ability to control direct infringers," and that Plaintiffs' argument that "pervasive participation" in the "formation and direction" of infringement is sufficient was incorrect. Citing Perfect 10-Visa, the Defendants argued that the Ninth Circuit had made it clear that control is a necessary element of vicarious liability.

Defendants also argued that Plaintiffs failed to meet the standard for contributory liability laid out in Perfect 10-Amazon, which requires actual knowledge of specific acts of infringement of a plaintiff's works. According to Defendants, Napster did not hold that constructive knowledge was sufficient.

Finally, Defendants argued that their relationship to the infringement is too attenuated to constitute inducement-it is "merely a resource for locating . . . software" and is therefore "distinct from file-sharing software services that existed primarily to promote infringement." Defendants argued that the inducement liability cases Plaintiffs relied on are distinguishable because, in those cases, the defendants encouraged users to download infringing torrent files, whereas here, CBSI merely encouraged users to download a tool with numerous noninfringing uses. Further, Defendants argued that Global-Tech Appliances v. SEB S.A., 131 S.Ct. 2060 (2011) [12], clarified that, to be liable for inducing infringement, a defendant must have knowledge of the specific plaintiff's interests and encourage others to invade those rights. "Linking to peer-to-peer services combined with public statements that the services can be used to copy files is not sufficient."

Order

On July 7, 2012, the court held a hearing [13]on the Defendants' motion, and, on July 13, the court issued an order [14] dismissing the vicarious liability claim and the traditional contributory liability claim, but allowing the inducement liability claim to proceed.

The court dismissed the vicarious liability claim based on Plaintiffs' failure to show that Defendants had a legal right to stop the infringement. Under Grokster, the court stated, vicarious liability requires "more than just an opportunity to control the infringement, [Defendants] must have a legal right to do so." The court noted that, in Perfect 10-Amazon, "the Ninth Circuit affirmed the dismissal of a vicarious copyright infringement claim against an internet search engine because it had neither a contractual nor implied right to ‘stop direct infringement by third-party websites,' despite its ability to control its index, search results, and web pages." In that case, the court noted, the Ninth Circuit recognized that even if a search engine stopped linking to a website that website could continue to infringe copyrights. Similarly, in this case, the court noted, "if Defendants removed the links to P2P software from their site, infringing third-parties would not be prevented from seeking the software out elsewhere and continuing to pirate copyrighted music."

The court dismissed the claim for traditional "material contribution" contributory liability because the complaint did not allege that Defendants' had the requisite knowledge or that Defendants materially contributed to infringement. The court stated that, contrary to Defendant's assertions, constructive knowledge could be sufficient, because Napster "did not discard constructive knowledge as a sufficient basis for contributory liability." However, the court held, Defendants must have knowledge-actual or constructive-of infringement of specific works of the Plaintiffs. The court therefore found that "[a]llegations that Defendants had knowledge that the overarching purpose of the P2P software was piracy are not enough to satisfy the knowledge standard laid out by the Ninth Circuit in Napster." Additionally, the court noted that Defendants did not materially contribute to infringement because no copyrighted material is available through Defendants' website, Defendants' services do not allow for direct infringement, and Defendants could not take simple steps to stop the infringement.

The court allowed the claim for inducement liability to proceed, stating that "[t]his is not a particularly close or challenging case." The court held that, under the "inducement" variation of contributory copyright infringement, Plaintiff must plead that Defendants distributed 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," and "evidence of actual infringement by recipients of the device."

Here, the court stated, Plaintiff alleged sufficient facts to show intent because "Defendants are alleged to have taken the unusual and ill-advised steps of distributing software programs that are capable of widespread copyright infringement while simultaneously demonstrating how to infringe copyrights using that software and evaluating the various programs as to their effectiveness in copying copyrighted material." The court found that it was irrelevant that Plaintiffs had not alleged that specific files had been infringed.

Finally, the court held that the First Amendment was not directly implicated, because Defendants' "behavior" in distributing P2P software and providing "explicit commentary on that software's effectiveness in infringing copyright" "moves beyond opinion into the realm of conduct and does not directly implicate any First Amendment issues."

Amended Complaint and Answer

Plaintiffs filed an amended complaint [15] on July 25, 2012 making only an inducement liability claim. Defendants answered [16] the complaint on August 13, 2012, denying all charges and asserting 24 affirmative defenses, including that the claim is barred "because application of the Copyright Act to impose liability in this case would violate the First Amendment" and "because any alleged injury or loss sustained by Plaintiffs was the fault and responsibility of third parties over whom Defendant had and has no control."

Motion for Preliminary Injunction

On November 9, 2012, Plaintiffs moved for a preliminary injunction [17], asking the court to enjoin defendants from (1) facilitating, permitting, assisting, soliciting, encouraging, or inducing anyone in downloading P2P BitTorrent software; (2) hosting, linking to or otherwise providing for download P2P BitTorrent software; and, (3) encouraging, soliciting, or inducing the infringement of copyrighted works, directly or indirectly, through the use of P2P software. Plaintiffs asserted that they were entitled to preliminary relief because: (1) they "own registered copyright interests" in specific works available for download through the P2P software at issue; (2) Defendants "continue to provide for free download bittorrent applications capable of illegally downloading Plaintiffs' works in a manner of minutes;" (3) "Defendants know that the bittorrent applications they distribute are being used to infringe musical works on a massive scale;" and (4) Defendants' "websites provide clear instruction on how to use bittorrent applications for purposes of infringement."

Plaintiffs claimed that "[t]hese facts demonstrate a strong likelihood of success on the merits of Plaintiffs' inducement claim," and that "Defendants' conduct evinces a brazen intent to continue their misconduct even after the Court's . . . strong admonishment."

Citing Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc. [18], WL 3715350 at *16 (D. Md. Aug. 27, 2012), Plaintiffs also claimed that they could not practically stop P2P software users from downloading their works, so their only "practical alternative" was to try to stop the distribution of P2P software.

They also argued that their interest in "protecting their copyright interests" outweighed the Defendants' "hypothetical" interest in "maintaining their illegal activity" and that an injunction would serve the public interest because the public is interested in the societal benefits of copyright. They quoted Grokster's language: "In sum, where an article is ‘good for nothing else' but infringement, [citation omitted] there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to infringe," and argued that, "although bittorrent technology potentially has non-infringing uses, Defendants are well-aware that its primary use is for infringing copyrights and it is this use alone which Defendants have promoted, encouraged, instructed and profited from."

Plaintiffs also reiterated their claim that the case does not implicate the First Amendment, because the Defendant's speech is only being used as evidence of the intent to induce.

Opposition to the Motion for Preliminary Injunction

Defendants filed an opposition [19] to the motion for a preliminary injunction on January 25, 2013, stating that Plaintiffs had the burden of establishing all factors for preliminary injunctive relief and had failed to do so.

First, Defendants argued that Plaintiffs were not likely to succeed on the merits because they had not shown ownership of the works at issue, reliable evidence of direct infringement, connection between any infringement and the Defendants, or evidence that the Defendants intended to promote P2P software's use to infringe. Defendants stated that the Plaintiff's motion includes no evidence of ownership other than printouts from the Copyright Office's website, which identify other parties as the copyright owners, and that there is no reliable evidence of direct infringement because there is no evidence that anyone who used Defendants' websites to locate the software used it to download Plaintiffs' works. Defendants also argued that Plaintiffs cannot show that Defendants intended to promote P2P software's use to infringe, because their true purpose is to inform the public, and"[t]heir business model is legitimate, based on creation and aggregation of content, not its infringement." Defendants also pointed out that most of the reviews of P2P BitTorrent protocols that Plaintiffs alleged show intent to induce infringement were written before Grokster introduced the inducement theory of liability in 2005.

Second, Defendants argued that a lack of harm is evidenced by the "years of delay" between Plaintiffs' works becoming available through BitTorrent and their "filing this action, and another full year of delay in bringing this motion after filing suit." Defendants argued that the delay is dispositive.

Third, Defendants argued that Plaintiffs failed to show that the balance of equities tips sharply in their favor. On the contrary, they argued that the injunction Plaintiffs proposed would "substantially damage CBSI's business of providing a comprehensive index of software applications and editorial information about them" and would not stop any individual from downloading P2P BitTorrent software from other sources. This would hurt the public, they argued, because the public would be denied "legitimate and truthful information about pervasive technology."

Fourth, the Defendants contended that the proposed injunction was "unconstitutionally and inequitably vague and overbroad" because it would "require CBSI to cease functions that are not even alleged to constitute inducement." They argued that the "injunction would cover ... content that simply describes [BitTorrent software's] function or use and links to the software itself. This could include news articles" as well as, "not only torrent software, but all P2P software, including products such as Skype or messaging services having nothing to do with Plaintiffs' alleged copyrights." Finally, they claimed that the injunction did not clarify what statements would be prohibited, and that such "[v]ague and broad requests for injunctive relief ... targeting speech or the press raise serious First Amendment issues."

Denial of the Motion for Preliminary Injunction

On February 19, 2013, the district court denied [20]the motion for a preliminary injunction, stating that "Plaintiffs have not shown any likelihood that Defendants will be found liable for their continuing activities," and an injunction is not appropriate when "there is no evidence of any ongoing distribution" of software with the "intent of promoting its use to infringe copyright." Here, the court stated, "Plaintiffs' only solid evidence of possible inducement comes from reviews that were published a decade ago," leading the court to conclude that there was "no reason to believe that Defendants will purposefully encourage copyright infringement now or in the foreseeable future."

Finally, the court concluded that an injunction would not serve the public interest because most of the articles Plaintiffs objected to "are straightforward, legitimate news articles that do not in any way encourage or induce copyright infringement." This suggested to the court that "Plaintiffs' goal goes far beyond stopping actual infringement by Defendants and extends instead to silencing public discussion of P2P technologies."

On February 25, 2013, the court filed another order [21] dismissing CNET Networks, Inc. from the case and amending the case caption to reflect that change as well as the fact that Alkiviades David's claims were previously dismissed. The case caption is now Sugar Hill Music, et al. v. CBS Interactive, Inc.