This morning, the Ninth Circuit Court of Appeals made a strong statement about the liability of sites that willingly facilitate online copyright infringement and overwhelmingly affirmed the United States District Court for the Central District of California’s decision in Columbia Pictures Industries Inc., et al., v. isoHunt Web Technologies, Inc.
The decision comes after a nearly seven year legal battle between film studios and Gary Fung’s filesharing websites over the latter’s inducement of copyright infringement. The case concerned BitTorrent peer-to-peer file sharing and was originally brought in September of 2006, when a series of film studios filed a complaint alleging that the defendant’s websites “induced third parties to download infringing copies of the studios’ copyrighted works.” The websites in question, run by Gary Fung and his company isoHunt Web Technologies, included both “trackers,” which coordinated connections between peers, and “indexers,” which list available torrents to download. IsoHunt, Fung’s “flagship” site, not only indexed torrents and allowed searches, but also automatically modified indexed torrents by adding backup trackers to them, thereby making them more reliable for downloaders.
For a full procedural history and additional information about Fung’s appeal, please see Jesse Creed’s recent post Ninth Circuit poised to address torrent site liability. In his appeal to the Ninth Circuit, Fung attempted to negate the lower court’s finding of liability. The Ninth Circuit stood by the lower court’s ruling and in addition begins with a comprehensive discussion of BitTorrent technology and the online torrent ecosystem that will be invaluable to future courts faced with deciding these issues.
In assessing liability for inducement, the court relied on four elements of inducement liability enunciated in the Supreme Court’s 2005 Grokster decision: “(1) the distribution of a device or product, (2) acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation.” After rejecting isoHunt’s argument that Grokster only applied to “devices” and not services, the court found that the plaintiff’s met their burden of showing that the defendant’s actions were sufficient to satisfy each element and left further evaluation of causation to the District Court for use in calculating damages.
The court went on to examine the applicability of the DMCA’s safe harbor provisions, available to shield and in some cases severely limit the liability of service providers in the event infringing material is found on their site(s). The Ninth Circuit rejected all of Fung’s safe harbor arguments. In holding that Fung was not protected under the safe harbor for material stored at the direction of users, the court relied on the fact that “Fung had ‘red flag’ knowledge of a broad range of infringing activity . . . ” as well as an ability to control the activity and a financial benefit for the ongoing infringing activity. Not only was 90-96% of the content associated with torrent files available on Fung’s websites “confirmed or highly likely copyright infringement” material, but the court pointed to numerous instances in which Fung was instrumental in assisting users in finding, acquiring, and burning infringing content. The court also explained how Fung profited off this infringement:
Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fung’s revenue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he received.
The import of this part of the holding is significant. Courts in recent years have narrowed the scope of “red flag” knowledge to the point that it could almost be said to be nonexistent. The Ninth Circuit reverses this trend, which could provide more efficacy in the DMCA takedown process for copyright owners. In addition, though the court stops short of providing a per se rule that DMCA safe harbors are incompatible with inducement liability, the fact that it has used evidence of inducement as evidence that the requirements for safe harbor have not been met suggests that it would be extremely difficult to imagine a situation where a service provider can induce infringement yet be protected by a safe harbor.
It is welcoming to see a court recognize that a service profiting off widespread, intentional infringement cannot cower behind safe harbors intended to shield legitimate service providers from liability for unintended infringement. The case now returns to the district court to calculate damages and determine the scope of an injunction against isoHunt.