No.

In the Supreme Court of the United States

______________ GARY FUNG, ISOHUNT WEB TECHNOLOGIES, INC., PETITIONERS v. COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC., PARAMOUNT PICTURES CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL CITY STUDIOS LLP, UNIVERSAL CITY STUDIOS PRODUCTIONS, LLP, AND WARNER BROS. ENTERTAINMENT, INC., RESPONDENTS ______________
ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

______________

PETITION FOR A WRIT OF CERTIORARI ______________ MICHAEL S. ELKIN THOMAS PATRICK LANE Winston & Strawn LLP 200 Park Avenue New York, NY 10166 (212) 294-6700 IRA P. ROTHKEN JARED R. SMITH Rothken Law Firm 3 Hamilton Landing Suite 280 Novato, CA 94949 (415) 924-4250 LINDA T. COBERLY Counsel of Record Winston & Strawn LLP 35 W. Wacker Drive Chicago, IL 60601 (312) 558-8768 lcoberly@winston.com JENNIFER A. GOLINVEAUX ERIN R. RANAHAN THOMAS J. KEARNEY Winston & Strawn LLP 101 California Street San Francisco, CA 94111 (415) 591-1506

Counsel for Petitioners

QUESTION PRESENTED In Grokster III, this Court set forth the standard for liability for secondary copyright infringement: if a party distribute[s] 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, he will be liable for the resulting acts of infringement. MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919 (2005) (Grokster III) (emphasis added). The question presented is whether a court assessing secondary liability must determine whether the relevant acts of infringement actually result[ed] from the partys distribution of a device or technologythe element of causationor whether, as the Ninth Circuit concluded, this analysis may be short-circuited, liability established, and a broad and sweeping permanent injunction imposed where but for causation has not yet been provena test referred to by the Ninth Circuit as loose causation.

ii PARTIES TO THE PROCEEDINGS Petitioners are Gary Fung, a resident of Canada, and his company isoHunt Web Technologies, Inc. Pursuant to Rule 29.6, Petitioners state that Mr. Fung is an individual, and his company isoHunt Web Technologies, Inc. has no parent corporation, nor does any publicly held company own more than 10% of its stock. Respondents are a series of major motion picture companies: Columbia Pictures Industries, Inc., Disney Enterprises, Inc., Paramount Pictures Corporation, Tristar Pictures, Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLP, Universal City Studios Production, LLP, and Warner Brothers Entertainment, Inc. The amici curiae submitting briefs in this case in support of Petitioners position in the Ninth Circuit were Google, Inc. and the Electronic Frontier Foundation.

iii TABLE OF CONTENTS Page QUESTION PRESENTED ........................................... i PARTIES TO THE PROCEEDINGS .......................... ii TABLE OF CONTENTS............................................. iii TABLE OF AUTHORITIES ........................................ v INTRODUCTION ........................................................ 1 OPINIONS BELOW .................................................... 2 JURISDICTION .......................................................... 3 STATUTES INVOLVED ............................................. 3 STATEMENT OF THE CASE..................................... 4 I. Factual Background .............................................. 4 A. BitTorrent Technology .................................... 4 B. Torrents, Trackers, and Swarms.................... 5 C. Petitioners Business ...................................... 7 II. Procedural History ................................................ 7 A. District Court Proceedings ............................. 7 B. The Ninth Circuits Decision .......................... 9 REASONS FOR GRANTING THE WRIT ................ 11 I. The causation requirement in Grokster III has its roots in the common law and serves a critical function, particularly in our current Digital Age.............................................. 13

iv II. The Ninth Circuits loose causation test and willingness to find liability even without proof of but for causation is inconsistent with Grokster III............................. 15 CONCLUSION .......................................................... 19 APPENDIX A U.S. Court of Appeal for the Ninth Circuit Opinion (March 21, 2013) .......................................... 1a APPENDIX B U.S. District Court Central District of California Order (December 21, 2009) ..................................... 58a APPENDIX C U.S. District Court Central District of California Order (March 23, 2010) ......................................... 106a APPENDIX D U.S. District Court Central District of California Order (August 5, 2013) .......................................... 122a

v TABLE OF AUTHORITIES CASES Page(s)

Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) .............................................. 14 Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ........................................ 14, 15 Columbia Pictures Industries, Inc., et al. v. Fung, et al., 710 F.3d 1020 (9th Cir. 2013)............ 3 Columbia Pictures Industries, Inc., et al. v. Fung, et al., No. CV 06-5578 SVW/2009 WL 6355911 (C. D. Cal. Dec. 21, 2009) ........................ 3 CSX Transp., Inc. v. McBride, 131 S. Ct. 2630 (2011) .......................................... 13 Feist Publns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991) ........................................ 17, 18 MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) ....................................... passim Sony Corp. of Am. v. Universal Studios Inc., 464 U.S. 417 (1984) .................................. 10, 11, 17 Univ. of Texas Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013) .......................................... 13 FEDERAL STATUTES 17 U.S.C. 501............................................................. 3 17 U.S.C. 502(a) ........................................................ 3 17 U.S.C. 512............................................................. 8

vi 28 U.S.C. 1254(1) ...................................................... 3 28 U.S.C. 1292(a)(1) .................................................. 9 RULES Supreme Court Rule 13.3 ............................................ 3

INTRODUCTION One of the most important forces behind the Digital Age has been the development of technology that enables users to search for and share content freely across the Internet. This technology and the information revolution it has produced has changed the world, touching nearly every aspect of human existence. The innovation in this important field continues every day, making access to information faster, better, more cost-effective, and more reliable, for the benefit of both the users of the information and those who seek to distribute it. To be sure, the unprecedented flow of information in todays world presents an increased risk that some intellectual property rights will be infringed. But as this Court and Congress have recognized, imposing broad secondary liability for copyright infringement carries risks of its own, in terms of its chilling effect on innovation. An entrepreneur who introduces technology capable of many usesinfringing and non-infringingdoes not control the ways in which that technology is used, either on its own or in combination with other providers technologies. And while the developers of search engines and similar technologies may be easier for plaintiffs to find than the infringers themselves, forcing the developers of the technology to bear all responsibility for infringement will effectivelyand, in the case of permanent injunctions, literallybring innovation and the flow of information to a halt. This Courts decision in Grokster III represented a careful balancing of these countervailing risks. That decision made clear that mere distribution of a device that could be used for infringement is not a

2 basis for liability; there must also be evidence that the distributor had 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 919. Further, the scope of the secondary liability is limited to the acts of infringement resulting from the distributors actions. Ibid. Both of these elementsintention and causationare critical to avoid overburdening the innovators and developers of technology, transforming them into insurers against the bad behavior of the many other actors in the system. The Ninth Circuits decision below disrupts that balance and threatens to undercut basic foundations of causation well established in all areas of lawfrom the common law, to patent law, and now to the law of copyright. Under this decision, a court may enter a finding of liability and use a permanent injunction to inject itself into an ongoing businessimposing broad new requirements or limitations, or even calling a halt to the entire operationwithout a showing that the infringement result[ed] from the defendants particular device or website, much less from any efforts to foster infringement. The Ninth Circuits willingness to short-cut the causation inquiry is in direct conflict with Grokster III and threatens to stifle the very sort of innovation that produced the Information Age. This Court should grant review to ensure fidelity to Grokster III and to avoid a massive expansion of secondary copyright liability. OPINIONS BELOW The opinion of the Ninth Circuit affirming the district courts decision on summary judgment finding liability for inducement of copyright

3 infringement is published at Columbia Pictures Industries, Inc., et al. v. Fung, et al., 710 F.3d 1020 (9th Cir. 2013) (the Ninth Circuit Decision) and reprinted here as Appendix A. The order of the U.S. District Court for the Central District of California finding Defendants/Petitioners Gary Fung and isoHunt Web Technologies, Inc. (Petitioners) liable is available at Columbia Pictures Industries, Inc., et al. v. Fung, et al., No. CV 06-5578 SVW (JCx), 2009 WL 6355911 (C. D. Cal. Dec. 21, 2009), and is also reprinted here as Appendix B. The district courts order granting a permanent injunction, which was modified in part on August 5, 2013, is available at Docket 551 and is reprinted here in original and modified form as Appendices C and D, respectively. JURISDICTION The Ninth Circuit issued its decision in this matter on March 21, 2013. Petitioners timely filed a petition for rehearing en banc, which was denied on May 15, 2013. Under Supreme Court Rule 13.3, the deadline for this petition was 90 days later, or August 13, 2013. Justice Kennedy granted Petitioners application for an extension of time, setting a new deadline of September 12, 2013. This Court has jurisdiction to hear this appeal under 28 U.S.C. 1254(1). STATUTES INVOLVED 17 U.S.C. 501 provides that [a]nyone who violates any of the exclusive rights of the copyright owner . . . is an infringer of the copyright. 17 U.S.C. 502(a) authorizes a district court to grant a final injunction on such terms as it may

4 deem reasonable to prevent or restrain infringement of a copyright. STATEMENT OF THE CASE I. Factual Background Petitioner-Defendant Gary Fung was born in Hong Kong in 1983 and moved to Canada in 1994, where he now resides. Mr. Fung founded, owns, and operates a series of websites that use a peer-to-peer file sharing protocol known as BitTorrent. Mr. Fungs isoHunt Web Technologies websites facilitate user searches and access to informationusing a similar type of search engine functionality as Yahoo! or Googleand neither store nor transmit any copyrighted material in the process of servicing user requests for search results. Pet. App. 11a12a, 39a 40a. The firm of isoHunt Web Technologies, Inc. itself is a Defendant in this suit and joins in this petition. A. BitTorrent Technology BitTorrent technology is a kind of peer-to-peer technology, enabling one user to find and share material with others over the Internet, rather than providing access to a centralized repository of files. Id. at 10a11a. This technology is employed by a variety of websites and providers. Users can employ this technology to locate, access, share, and distribute a vast array of content originating from all over the globe. This includes a wide range of non-copyrighted materialincluding music, films, and other material in the public domainas well as software, movies, games, music, and other entertainment programming that may be protected by copyright law, for which the

5 copyright holders may or may not have authorized or licensed free distribution. Traditionally, if a user wishes to download a file on a peer-to-peer network, he would use a search function to locate a peer that has the file and then download the entire file from that peer. Id. at 9a. This method of file sharing has some built-in limitations. The download may be interrupted if the peer sending the file goes offline, for example, and the peer downloading the file cannot begin sharing it with others until the download is complete. Ibid. BitTorrent technology solves these problems by breaking up the file into many smaller pieces or data packets. Accordingly, instead of downloading an entire file from a single user, BitTorrent permits users to download lots of different pieces from different peers at the same time. Ibid. Once all the pieces of a file have been downloaded, the file is automatically assembled into its original form. Ibid. Using BitTorrent technology, therefore, the process of downloading and sharing content is much faster and more stable. Id. at 10a. Further, because the recipients of the materials then become subdistributors, transferring materials to other recipients, BitTorrent is a cheaper way for the original publisher to distribute the material than a pure client-server system on a website that sends the entire contents directly to each. Ibid. B. Torrents, Trackers, and Swarms To share copies of games, films, music, and the like using BitTorrent technology, a publisher first creates very small files called torrents or dottorrent files, which have the file extension .torrent.

6 Torrents are small, special-purpose data packets with metadata describing much larger content files and include instructions for software to initiate download of actual content files off-site. Torrents are not subject to copyright protection. Then, the publisher makes the torrent files available by uploading them to one or more websites that collect, organize, and index them. Id. at 11a. Torrent files are indexed by a variety of search engines, including Google, Yahoo!, and Bing. General purpose search engines like these are participants in the multi-actor marketplace of BitTorrent, along with isoHunt and many others. Indeed, the vast majority (more than 95%) of torrent files searchable on isoHunt are also searchable on Google, Yahoo!, or Bing. After the torrents are created and made available, participating users trade pieces among themselves. The transient, changing group of participants is called a swarm, and it is not associated with any particular device, provider, service, or website. Id. at 10a. The content of files that are published or exchanged is typically identified by the name of the files, but such content is not actually ascertainable except by joining the swarm. Swarm members can include users located domestically and abroad. The exchange of information through the swarm is facilitated by trackers, which act like an index and manage traffic. Id. at 11a. [N]o content is stored on or passes through trackers. Id. at 13a. The trackers primary purpose is to provide a list of peers that have files associated with a particular torrent file available for download. Ibid.

7 C. Petitioners Business Three of Petitioner/Defendant Gary Fungs websitesisoHunt.com (isoHunt), Torrentbox.com, and Podtropolis.comare torrent sites. They collect and organize torrent fileswhich, again, are not copyright protectedand permit users to search their collections. Users search these sites by keyword or category (like games, movies, television shows, music, and so on). Ibid. The isoHunt site also has one additional feature: each time a torrent file is added to it, the website automatically adds additional backup trackers to it to make it more reliable. Id. at 14a. As for Torrentbox and Podropolis, these two sites, which have relatively small collections of torrent files, also run trackers that are used by users on other, nonaffiliated torrent sites. Id. at 14a15a. Since 2007, Petitioners have employed blocking technology that prevents U.S. users from using isoHunt trackers. II. Procedural History A. District Court Proceedings Plaintiffs/Respondents are a group of major motion picture studios. They filed this action on February 23, 2006, in the Southern District of New York. On Petitioners motion, the case was transferred to the Central District of California. Pet. App. 15a. Exhibit A to Respondents first amended complaint identified forty-four specific copyrights that had allegedly been infringed. Respondents then moved for summary judgment on liability and sought a permanent injunction. The district court granted summary judgment on liability, holding Petitioners liable for inducing others to infringe Respondents copyrighted material. See

8 Pet. App. 80a95a. The court also concluded that as a factual matter, Petitioners were not entitled to claim any of the safe harbors for transitory digital network communications provided in the Digital Millennium Copyright Act (DMCA), 17 U.S.C. 512(a), and were not entitled to claim protections for information residing on systems or networks at direction of users under 512(c) or information location tools under 512(d). See Pet. App. 95a 102a and n.26. Nowhere in the district courts decision did the court mention the element of causation or consider whether there was any causal relationship between any inducement by Petitioners and any infringement of the forty-four works. Based on that finding of liability, the district court entered a permanent injunction that prohibits Petitioners from knowingly engaging in any activities having the object or effect of fostering infringement of Respondents Copyrighted Works, referring to a list of titles provided by Respondents. Id. at 16a; see also id. at 106a, 122a. The injunction also required Petitioners to take affirmative steps potentially, though not necessarily, implementing a filtering devicethat prevents downloading of any one of the titles on the list, as well as any new titles identified by Respondents. The injunction binds both Mr. Fung and his company, and it has already imposed extremely significant costs on them. The day after the injunction was entered, Respondents served Petitioners with an initial list of more than 23,000 titles of copyrighted works. Id. at 16a. That list included some works in the public domain and others for which Respondents do not own the copyrights. Ibid. Petitioners protested the

9 breadth and vagueness of the injunction, so the district court modified it by requiring more information for each work listed. The court also suggested that Mr. Fungs concerns were somewhat overblown, as the injunction would not support a finding of civil contempt if Petitioners took reasonable steps to comply with it. Petitioners took an immediate appeal under 28 U.S.C. 1292(a)(1), which provides for appellate jurisdiction over interlocutory orders granting injunctive relief. The appeal concerned the finding of liability underlying the injunction, the application of the DMCA safe harbors, and the scope of the injunction itself. A trial on damages and a proposed schedule going forward is being set in the district court now, which has the potential to expose Mr. Fung to close to a billion dollars in liability for 5,000 works (still as yet unidentified), for a case that assessed liability when only about forty-four works were at issue, the infringements of which were not even identified before liability was found. B. The Ninth Circuits Decision The Ninth Circuit concluded that Respondents had established both the inducement element and the acts of infringement element of secondary liability under Grokster III. Pet. App. 21a25a. The court also found evidence of a clear expression and other affirmative steps showing an intent by Petitioners to induce infringement. Id. at 25a30a. With respect to causation, however, the Ninth Circuit departed from Grokster IIIs requirement that a finding of liability requires a showing that the acts

10 of infringement result[ed] from Petitioners acts. Instead, the court held that a loose causation theory is enough. Id. at 32a. According to the court, 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 that service. Id. at 31a. In applying that test, however, the Ninth Circuit made clear that it was willing to entertain a causal theory that was even looser than this language would suggest. For purposes of an award of summary judgment on liabilityand for purposes of a permanent injunctionthe court was willing to shortcut the causation element entirely. The court noted Mr. Fungs argument that the acts of infringement may not have involved his websites in the first place, and it also noted that it was not yet clear whether plaintiffs could show a sufficient causal connection between the users infringing activity and the use of Fungs trackers. Id. at 34a35a. Effectively, then, the Ninth Circuit allowed a finding of liability and a permanent injunction to stand even though it did not believe any finding of but for causation had been made at all. The Ninth Circuit acknowledged that this case does not present the same causal link as in Grokster III. The defendants in that case were the producers of a single devicethe StreamCast application which made [a]ssessing causation * * * a straightforward task. Id. at 34a (citing Sony Corp. of Am. v. Universal Studios Inc., 464 U.S. 417 (1984)). In that sense, Grokster III followed directly from this Courts decision in Sony, which involved claims of

11 inducing infringement through a physical object, the Betamax device. In Sony, there was no question that some customers would purchase and use the Betamax in ways that infringed copyright and thus in a but-for sense, there was no question that Sony caused whatever infringement resulted from the use of Betamax sets. Pet. App. 34a. Likewise, in Grokster III, identifying infringement that took place through StreamCast was straightforward. Ibid. In the present case, however, where Mr. Fungs websites represent only a part of a multi-actor BitTorrent environment, and other individuals and entities provide services identical to those he offers, the Ninth Circuit noted that causation, even in the relatively loose sense we have delineated, cannot be assumed and had not been proven. Ibid. To be sure, the Ninth Circuit made clear that no damages would be assessed without a more detailed finding of causation. The court declined to further entertain Fungs causation arguments at this time, but leave it to the district court to consider them, in light of the observations we have made, when it calculates damages. Id. at 35a36a. Nevertheless, even without resolving these causation issuesor finding but for causation at allthe court affirmed the district courts award of summary judgment on liability and the entry of the permanent injunction. REASONS FOR GRANTING THE WRIT The flow of information across the Internet has changed the world in ways that no one could have imagined a generation or two ago. The printing press made it possible for publishers to share information on a large scale; the search engine has magnified that capability exponentially, giving every human

12 being with access to a computer the power to produce, publish, distribute, locate, and share a vast array of information all over the globe. The amount of information we produce today is measured in exabytes and exceeds, on a yearly basis, the total accumulation of information since the days of chisel and stone. Todays unprecedented flow of information touches every aspect of our existence how we live, how we work, what we eat, how we learn, and how we are entertained. Our current and robust marketplace of digital information is the product of innovation and entrepreneurialismand, in particular, the efforts of those who offer technologies for locating and sharing information. As discussed below, however, the Ninth Circuits approach to causationthat is, its willingness to defer causation entirely at the point of considering liability and imposing broad permanent injunctionsthreatens the very same innovation and entrepreneurialism that have created the Digital Age. By creating a new and relaxed standard for secondary liability, the Ninth Circuit has empowered plaintiffsincluding the massive entertainment companies that brought this lawsuitto isolate specific participants in a multi-actor marketplace, threaten them with vast liability for inducing infringement by others, and obtain broad injunctive relief, effectively shutting them down. This is a dangerous and costly power that could have vast ramifications, if the Ninth Circuits approach is allowed to stand.

13 I. The causation requirement in Grokster III has its roots in the common law and serves a critical function, particularly in our current Digital Age.

Inducement of copyright infringement under Grokster III premises liability on purposeful, culpable expression and conduct, when a service provider exerts substantial influence on the activities of users and, effectively, causes their infringement. 545 U.S. at 937. To that end, Grokster III holds that a defendant who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. Id. at 91819. In other words, a plaintiff seeking to impose liability and injunctive relief for inducement must prove both the fault by the defendantthat is, that the defendant acted with the object of promoting infringement, as evidenced by clear expression or affirmative stepsand that the infringing acts at issue occurred as a result of the inducing activity they identify. Under the plain terms of Grokster III, even where there is proof that a defendant is culpable, it can only be found liable for the infringements it actually caused. This is nothing new; the element of causation is and has always been required for any kind of common-law liability to attach. See, e.g., Univ. of Texas Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2522 (2013) (The requisite relation between prohibited conduct and compensable injury is governed by the principles of causation, a subject most often arising in elaborating the law of torts); CSX Transp., Inc. v.

14 McBride, 131 S. Ct. 2630, 2633 (2011) (recognizing the traditional common-law formulation of proximate causation); Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 46061 (2006) (the connection between the conduct and the injury was not direct enough for the injury to be by reason of the violation because by reason of language required that the alleged violation le[ad] directly to the plaintiffs injuries); Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 655 (2008) (acknowledging Courts reliance on common-law proximate-causation principles). The Courts standard for secondary liability in Grokster III draws upon these very same, basic common-law requirements. Indeed, the Court explicitly contemplated that courts evaluating secondary liability for copyright infringement would apply rules of fault-based liability derived from the common law. 545 U.S. at 93435. Given its common-law roots, it is no surprise that the standard articulated in Grokster III expressly incorporates the element of causation, through its requirement that the court identify and limit liability to the acts of infringement resulting from the defendants conduct. Id. at 91819. In the context of Internet information-sharing in particular, the element of causation plays a vital role. The Supreme Court and Congress have recognized that in assessing claims of copyright infringement in a digitally networked environment, the protections of copyright law must be balanced against the fundamental importance of encouraging technological innovation. As this Court explained in Grokster III, administration of copyright law is an exercise in

15 managing the tradeoff between technological innovation and artistic protection. 545 U.S. at 928. Given the tremendous speed and availability of information on the Interneta pace that would have been inconceivable just a decade agoa relaxed standard for secondary liability could expose developers of technology to vast, uncontrolled, and crippling liability. Limiting liability to infringement that actually result[ed] from the defendants actions provides a critical backstop. Indeed, without this element, the distributor of a service or device would become, effectively, an insurer against infringement by a wide range of other actors. Such liability would amplify the burdens on the very parties who are driving innovation in this field. II. The Ninth Circuits loose causation test and willingness to find liability even without proof of but for causation is inconsistent with Grokster III. To show a relevant underlying direct infringement, Respondents must establish that the works at issue were actually downloaded or supplied by at least one United States user. Then, to show secondary liability under Grokster III, they must show that these defendants distribute[d] 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. 545 U.S. at 93637. Finally, they must show causation, identifying acts of infringement resulting from the defendants conduct. Ibid.

16 Although the Ninth Circuits decision pays lip service to the element of causation, its analysisand its ultimate decision affirming the entry of summary judgment on liabilityshort circuits causation entirely. Relying on a footnote in Grokster III, the Ninth Circuit concluded that the causation question is whether infringement flowed from the distribution of the tool or technology itself, rather than the separate acts by the defendant that represent an affirmative inducement to infringe. Pet. App. 31a 32a (citing 545 U.S. at 940 n.13). On that theory, the Ninth Circuit explained, 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. Id. at 31a. But even assuming that this is the correct standard, the Ninth Circuits ultimate decision in this case did not require even that much. As discussed above, the Ninth Circuits decision appears to stand for the proposition that a plaintiff may be entitled to summary judgment on liability and to the entry of a permanent injunctionbased solely on a finding of fault or intent to induce, even if there has not been any showing of infringement that was causally linked to any persons use of the [Defendants] service. Ibid. In the instant case, for example, the question whether any particular act of infringement result[ed] from Petitioners actions requires a detailed assessment of exactly howand whyeach act of infringement occurred. There is no dispute that this inquiry did not happen before the award of summary judgment on liability.

17 Petitioners here are not the producers of unique and free-standing devices or software programs like those at issue in Grokster III and Sony, where [a]ssessing causation was thus a straightforward task. Pet. App. 34a. To the contrary, Petitioners did not develop the BitTorrent protocol and operate only a handful of websites that make up the BitTorrent environment. Id. at 34a35a. To the extent that Petitioners websites host any data at all, that data is in tiny packets that are not themselves subject to copyright protection. See, e.g., Feist Publns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 360 (1991) (bits of information failed to meet the requirements for copyright protection). Thus, these Petitioners do not traffic, distribute, or transmit any copyrighted information, and it is by no means clear that they played any role at all in causing an act of inducement by any U.S. user. A person who ultimately obtains a complete, copyrighted work through BitTorrent technology retrieves only a tiny portion of the relevant data from any one website. Here, for example, by far the largest number of torrents tracked by [Mr. Fungs] Torrentbox tracker are obtained from somewhere other than [Mr. Fungs] Torrentbox.com. Pet. App. 34a35a. As for the trackers themselveswhich serve to direct traffic in the BitTorrent environmentthey do not contain and are not tied to any copyrighted information; they merely serve to connect users with one another. Id. at 11a, 13a. And the mere availability of Mr. Fungs trackers could not have caused any particular act of infringement if the very same role could have been played by an

18 identical tracker offered by one of the many, many other producers in this environment. Moreover, Mr. Fung himself is from Canada, and his websites and trackers are used by users all around the world. The fact that someone, somewhere in the world, may have used his trackers as part of an effort to obtain material protected by U.S. copyright does not show that his actions resulted in any infringement actionable under U.S. law. Accordingly, the expert evidence adduced in this case at the summary judgment stagean analysis of the noncopyright-protected torrent files available on Petitioners websites (see id. at 24a)did nothing to show any particular act of infringement by any U.S. user for which Petitioners websites played a substantial causal role. In light of the injunction already entered here, any assessment of causation at the damages phase will be too little, too late. The injunction has already imposed onerous and extraordinarily costly consequences on Petitioners and their business. Presumably, the issue of causation will be explored in more detail in the district court before any statutory damages are awarded; if not, the problem with the Ninth Circuits analysis will be amplified even further. But even at the present stage, the Ninth Circuits approach is both dangerous and costly in terms of innovation. Allowing Respondents to obtain a finding of liability and a permanent injunction without any showing of causation gives them an immense powera power they may use to isolate a particular participant in a broader Internet marketplace and effectively shut down his operation.

19 Even before the assessment of any damages, this is an unacceptable and dangerous result. This Court is already well aware of the dangers of unlimited secondary liability, particularly in the context of intellectual property rights in our complex, cross-border, multi-actor digital world. Currently pending before the Court is a petition for a writ of certiorari to the Federal Circuit in a patent case dealing with a technology that reduces Internet congestion, where secondary liability for inducement was found despite the absence of any direct infringement at all. See Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786. The Court has requested the views of the Solicitor General in this matter and will resolve the petition sometime next Term. The issue in the instant case is similar and equally important, as the Ninth Circuits decision like the Federal Circuits decisionthreatens expansive secondary liability without a proven link to any direct infringement of intellectual property rights. The fact that the issue arises under patent law in one case and copyright law in the other does not diminish the commonality between them; Grokster III expressly drew its standard for secondary copyright liability from patent law, see 545 U.S. at 936, and the same policy concernspromoting innovation and creativityanimate both areas of law and will necessarily drive the Courts analysis. CONCLUSION For the foregoing reasons, the Court should grant the petition for a writ of certiorari or, alternatively, summarily reverse the Ninth Circuits decision.

20

Respectfully submitted. MICHAEL S. ELKIN THOMAS PATRICK LANE Winston & Strawn LLP 200 Park Avenue New York, NY 10166 (212) 294-6700 IRA P. ROTHKEN JARED R. SMITH Rothken Law Firm 3 Hamilton Landing Suite 280 Novato, CA 94949 (415) 924-4250 LINDA T. COBERLY Counsel of Record Winston & Strawn LLP 35 W. Wacker Drive Chicago, Illinois 60601 (312) 558-8768 lcoberly@winston.com JENNIFER A. GOLINVEAUX ERIN R. RANAHAN THOMAS J. KEARNEY Winston & Strawn LLP 101 California Street San Francisco, CA 94111 (415) 591-1506

SEPTEMBER 2013

APPENDIX

1a APPENDIX A FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT COLUMBIA PICTURES INDUSTRIES, INC.; DISNEY ENTERPRISES, INC.; PARAMOUNT PICTURES CORPORATION; TRISTAR PICTURES, INC.; TWENTIETH CENTURY FOX FILM CORPORATION; UNIVERSAL CITY STUDIES LLLP; UNIVERSAL CITY STUDIOS PRODUCTIONS, LLLP; WARNER BROS ENTERTAINMENT, INC., Plaintiffs-Appellants, v. GARY FUNG; ISOHUNT WEB TECHNOLOGIES, INC., Defendants-Appellees. No. 10-55946, D.C. No. 2:06-cv-05578-SVW-JC Appeal from the United States District Court for the Central District of California Stephen V. Wilson, District Judge, Presiding Argued May 6, 2011 Submitted March 21, 2013 Pasadena, California Filed March 21, 2013 Before: Harry Pregerson, Raymond C. Fishre, and Marsha S. Berzon, Circuit Judges. Opinion by Judge Berzon

2a SUMMARY 1 Copyright The panel affirmed in part and vacated in part the district courts judgment in favor of film studios, which alleged that the services offered and websites maintained by the defendants induced third parties to download infringing copies of the studios copyrighted works. Affirming the district courts summary judgment, the panel held that under Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 545 U.S. 913 (2005), the defendants were liable for contributory copyright infringement on an inducement theory because the plaintiffs established (1) distribution of a device or product, (2) acts of infringement, (3) an object of promoting the products use to infringe copyright, and (4) causation in the defendants use of the peer-to-peer file sharing protocol known as BitTorrent. The panel held that the defendants were not entitled to protection from liability under any of the safe harbor provisions of the Digital Millennium Copyright Act, including safe harbors provided by 17 U.S.C. 512(a), (c), and (d) for transitory digital network communications, information residing on systems or networks at direction of users, and information location tools. The panel nonetheless rejected the argument that inducement liability is inherently incompatible with protection under the safe harbors. Reversing and modifying in part the district courts permanent injunction, the panel held that certain proThis summary constitutes no part of the op inion of the court. It has been prepared b y court staff for the convenience o f the reader.
1

3a visions of the injunction were too vague to meet the notice requirements of Fed. R. Civ. P. 65(d), and certain provisions were unduly burdensome. COUNSEL Ira P. Rothken, Esq. (argued), Robert L. Kovsky, Esq., and Jared R. Smith, Esq. of Rothken Law Firm, Novato, California, for Defendant-Appellants. Paul M. Smith (argued), Steven B. Fabrizio, William M. Hohengarten, Duane C. Pozza, Garret A. Levin, Caroline D. Lopez, Jenner & Block LLP, Washington, D.C.; Karen R. Thorland, Motion Picture Association of America, Inc., Sherman Oaks, California; Gianni P. Servodidio, Jenner & Block LLP, New York, New York, for Plaintiffs-Appellees. Andrew H. Schapiro, Mayer Brown LLP, New York, New York, for amicus curiae Google, Inc. OPINION BERZON, Circuit Judge: This case is yet another concerning the application of established intellectual property concepts to new technologies. See, e.g., UMG Recordings, Inc. v. Shelter Capital Partners, LLC, F.3d (9th Cir. 2013); Perfect 10, Inc. v. Visa Intl Serv. Assn, 494 F.3d 788 (9th Cir. 2007); Viacom Intl, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). Various film studios alleged that the services offered and websites maintained by Appellants Gary Fung and his company, isoHunt Web Technologies, Inc. (isohunt.com, torrentbox.com, podtropolis.com, and ed2k-it.com, collectively referred to in this opinion as Fung or the Fung sites) induced third parties to download infringing copies of

4a the studios copyrighted works. 2 The district court agreed, holding that the undisputed facts establish that Fung is liable for contributory copyright infringement. The district court also held as a matter of law that Fung is not entitled to protection from damages liability under any of the safe harbor provisions of the Digital Millennium Copyright Act (DMCA), 17 U.S.C. 512, Congresss foray into mediating the competing interests in protecting intellectual property interests and in encouraging creative development of devices for using the Internet to make information available. By separate order, the district court permanently enjoined Fung from engaging in a number of activities that ostensibly facilitate the infringement of Plaintiffs works. Fung contests the copyright violation determination as well as the determination of his ineligibility for safe harbor protection under the DMCA. He also argues that the injunction is punitive and unduly vague, violates his rights to free speech, and exceeds the district courts jurisdiction by requiring filtering of communications occurring outside of the United States. We affirm on the liability issues but reverse in part with regard to the injunctive relief granted. TECHNOLOGICAL BACKGROUND This case concerns a peer-to-peer file sharing protocol 3 known as BitTorrent. We begin by providing
2 Plaintiffs-Appellees are: Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Paramount Pictures Corporation; Tristar Pictures, Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLLP; and Warner Bros. Entertainment, Inc.; collectively referred to as Columbia. 3

A pro tocol is a set of rules used by computers to communicate with each other o ver a network. W eb sters II D ictionary 57 1 (3d ed. 20 05).

5a basic background information useful to understanding the role the Fung sites play in copyright infringement. I. Client-server vs. peer-to-peer networks The traditional method of sharing content over a network is the relatively straightforward client-server model. In a client-server network, one or more central computers (called servers) store the information; upon request from a user (or client), the server sends the requested information to the client. In other words, the server supplies information resources to clients, but the clients do not share any of their resources with the server. Client-server networks tend to be relatively secure, but they have a few drawbacks: if the server goes down, the entire network fails; and if many clients make requests at the same time, the server can become overwhelmed, increasing the time it takes the server to fulfill requests from clients. Clientserver systems, moreover, tend to be more expensive to set up and operate than other systems. Websites work on a client-server model, with the server storing the websites content and delivering it to users upon demand. Peer-to-peer (P2P) networking is a generic term used to refer to several different types of technology that have one thing in common: a decentralized infrastructure whereby each participant in the network (typically called a peer, but sometimes called a node) acts as both a supplier and consumer of information resources. Although less secure, P2P networks are generally more reliable than client-server networks and do not suffer from the same bottleneck problems. See generally Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (Grokster III), 545 U.S. 913, 920 & n.1 (2005). These strengths make P2P networks

6a ideally suited for sharing large files, a feature that has led to their adoption by, among others, those wanting access to pirated media, including music, movies, and television shows. Id. But there also are a great number of non-infringing uses for peer-to- peer networks; copyright infringement is in no sense intrinsic to the technology, any more than making unauthorized copies of television shows was to the video tape recorder. Compare A&M Records v. Napster, Inc., 239 F.3d 1004, 1021 (9th Cir. 2001) with Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456 (1984). II.II. Architecture of P2P networks In a client-server network, clients can easily learn what files the server has available for download, because the file are all in one central place. In a P2P network, in contrast, there is no centralized file repository, so figuring out what information other peers have available is more challenging. The various P2P protocols permit indexing in different ways. A. Pure P2P networks In pure P2P networks, a user wanting to find out which peers have particular content available for download will send out a search query to several of his neighbor peers. As those neighbor peers receive the query, they send a response back to the requesting user reporting whether they have any content matching the search terms, and then pass the query on to some of their neighbors, who repeat the same two steps; this process is known as flooding. In large P2P networks, the query does not get to every peer on the network, because permitting that amount of signaling traffic would either overwhelm the resources of the peers or use up all of the networks bandwidth (or both). See Grokster III, 545 U.S. at 920 n. 1 . Therefore, the P2P

7a protocol will usually specify that queries should no longer be passed on after a certain amount of time (the so-called time to live) or after they have already been passed on a certain number of times (the hop count). Once the querying user has the search results, he can go directly to a peer that has the content desired to download it. This search method is an inefficient one for finding content (especially rare content that only a few peers have), and it causes a lot of signaling traffic on the network. The most popular pure P2P protocol was Gnutella. Streamcast, a Grokster defendant, used Gnutella to power its software application, Morpheus. See Grokster III, 545 U.S. at 921-22.4 B. Centralized P2P networks Centralized P2P networks, by contrast, use a centralized server to index the content available on all the peers: the user sends the query to the indexing server, which tells the user which peers have the content available for download. At the same time the user tells the indexing server what files he has available for others to download. Once the user makes contact with the indexing server, he knows which specific peers to contact for the content sought, which reduces search time and signaling traffic as compared to a pure P2P protocol. Although a centralized P2P network has similarities with a client-server network, the key difference is that the indexing server does not store or transfer the content. It just tells users which other peers have the content they seek. In other words, searching is central4

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

8a ized, but file transfers are peer-to-peer. One consequent disadvantage of a centralized P2P network is that it has a single point of potential failure: the indexing server. If it fails, the entire system fails. Napster was a centralized P2P network, see generally Napster, 239 F.3d at 1011-13, as, in part, is eDonkey, the technology upon which one of the Fung sites, ed2k-it.com, is based. C. Hybrid P2P networks Finally, there are a number of hybrid protocols. The most common type of hybrid systems use what are called supernodes. In these systems, each peer is called a node, and each node is assigned to one supernode. A supernode is a regular node that has been promoted, usually because it has more bandwith available, to perform certain tasks. Each supernode indexes the content available on each of the nodes attached to it, called its descendants. When a node sends out a search query, it goes just to the supernode to which it is attached. The supernode responds to the query by telling the node which of its descendant nodes has the desired content. The supernode may also forward the query on to other supernodes, which may or may not forward the query on further, depending on the protocol. See generally Grokster III, 545 U.S. at 921. The use of supernodes is meant to broaden the search pool as much as possible while limiting redundancy in the search. As with centralized P2P systems, supernodes only handle search queries, telling the nodes the addresses of the other nodes that have the content sought; they are not ordinarily involved in the actual file transfers themselves. Groksters software application was based on a P2P protocol, FastTrack,

9a that uses supernodes. See Grokster III, 545 U.S. at 921. III. BitTorrent protocol The BitTorrent protocol, first released in 2001, is a further variant on the P2P theme. BitTorrent is a hybrid protocol with some key differences from supernode systems. We discuss those differences after first describing BitTorrents distinguishing feature: how it facilitates file transfers. A. BitTorrent file transfers. Traditionally, if a user wanted to download a file on a P2P network, he would locate another peer with the desired file and download the entire file from that peer. Alternatively, if the download was interrupted if, for example, the peer sending the file signed off the user would find another peer that had the file and resume the download from that peer. The reliability and duration of the download depended on the strength of the connection between those two peers Additionally, the number of peers sharing a particular file was limited by the fact that a user could only begin sharing his copy of the file with other peers once he had completed the download. With the BitTorrent protocol, however, the file is broken up into lots of smaller pieces, each of which is usually around 256 kilobytes (one-fourth of one megabyte) in size. Whereas under the older protocols the user would download the entire file in one large chunk from a single peer at a time, BitTorrent permits users to download lots of different pieces at the same time from different peers. Once a user has downloaded all the pieces, the file is automatically reassembled into its original form.

10a BitTorrent has several advantages over the traditional downloading method. Because a user can download different pieces of the file from many different peers at the same time, downloading is much faster. Additionally, even before the entire download is complete, a user can begin sharing the pieces he has already downloaded with other peers, making the process faster for others. Generally, at any given time, each user is both downloading and uploading several different pieces of a file from and to multiple other users; the collection of peers swapping pieces with each other is known as a swarm. B. BitTorrent architecture To describe the structure of BitTorrent further, an example is helpful. Let us suppose that an individual (the publisher) decides to share via BitTorrent her copy of a particular movie. The movie file, we shall assume, is quite large, and is already on the publishers computer; the publisher has also already downloaded and installed a BitTorrent client program on her computer. 5 To share her copy of the movie file, the publisher first creates a very small file called a torrent or dottorrent file, which has the file extension .torrent. The torrent file is quite small, as it contains none of the actual content that may be copyrighted but, in5

The client program is the software application used to access the P2P network. Unlike Grokster or Napster, which were closed systems that permitted only authorized client programs to connect to their networks, BitTorrent is an open system, permitting the use of any number of client programs, nearly all of which are free. The Fung sites do not supply any of the client programs necessary to use dot-torrent files to download the copies of movies or other content files; users of the Fung sites have to download such a program from elsewhere.

11a stead, a minimal amount of vital information: the size of the (separate) movie file being shared; the number of pieces the movie file is broken into; a cryptographic hash 6 that peers will use to authenticate the downloaded file as a true and complete copy of the original; and the address of one or more trackers. Trackers, discussed more below, serve many of the functions of an indexing server; there are many different trackers, and they typically are not connected or related to each other. 7 Second, the publisher makes the torrent file available by uploading it to one or more websites (torrent sites) that collect, organize, index, and host torrent files. Whereas Napster and Grokster had search functionality built into their client programs, the standard BitTorrent client program has no such capability.8 BitTorrent users thus rely on torrent sites to find and share torrent files. There is no central repository of torrent files, but torrent sites strive to have the most comprehensive torrent collection possible. The Fung sites have two primary methods of acquiring torrent files: soliciting them from users, who then upload the files; and using several automated
As Plaintiffs expert explained, A hash is a unique digital identifier of certain data. It is usually written as a forty-digit long hexadecimal number, where each digit can be 0-9 or AF. See also Arista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 398, 423 n.21 (S.D.N.Y. 2011).
6

In an April 2008 declaration, Fung averred that there are close to two thousand different trackers run by various independent operators. The source of this statistic was not given.
7 8

A few BitTorrent client programs have begun to integrate search and download processes in such a way that torrent sites become unnecessary, but that fact is not germane to any issue in this case.

12a processes (called bots, crawlers, or spiders) that collect torrent files from other torrent sites. Because of this latter route, which other torrent sites also routinely use, torrent sites tend to have largely overlapping collections of torrents. According to a declaration Fung signed in April 2008, there were then over 400 torrent sites. Because the torrent sites typically contain only torrent files, no copyrighted material resides on these sites. Lastly, the publisher leaves her computer on and connected to the Internet, with her BitTorrent program running. The publishers job is essentially done; her computer will continue to communicate with the tracker assigned to the torrent file she uploaded, standing ready to distribute the movie file (or, more accurately, parts thereof) to others upon request. A user seeking the uploaded movie now goes to the torrent site to which the torrent file was uploaded and runs a search for the movie. The search results then provide the torrent file for the user to download. Once the user downloads the torrent file and opens it with his BitTorrent program, the program reads the torrent file, learns the address of the tracker, and contacts it. The program then informs the tracker that it is looking for the movie associated with the downloaded torrent file and asks if there are any peers online that have the movie available for download. Assuming that publishers of that movie are online, the tracker will communicate their address to the users BitTorrent program. The users BitTorrent program will then contact the publishers computers directly and begin downloading the pieces of the movie. At this point, the various publishers are known as seeders, and the downloading user a leecher. Once the leecher has downloaded one or more pieces of the movie, he, too,

13a can be a seeder by sending other leechers the pieces that he has downloaded. A final few words on trackers. Although no content is stored on or passes through trackers, they serve as a central hub of sorts, managing traffic for their associated torrents. 9 The trackers primary purpose is to provide a list of peers that have files available for download. Fung avers that this function is the only one provided by his two trackers, discussed below. Because trackers are periodically unavailable they can go offline for routine maintenance, reach capacity, be shuttered by law enforcement, and so on torrent files will often list addresses for more than one tracker. That way, if the first (or primary) tracker is down, the users client program can proceed to contact the backup tracker(s). IV. Fungs role Three of Fungs websitesisohunt.com (isoHunt); torrentbox.com (Torrentbox), and podtropolis.com (Podtropolis)are torrent sites. As described above, they collect and organize torrent files and permit users to browse in and search their collections. Searching is done via keyword; users can also browse by category (movies, television shows, music, etc.). 10
According to the record in this case, it is also possible, although less efficient, to distribute torrent files and to download their associated content without a tracker, using a technology called DHT, or distributed hash table.
9 10

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

14a IsoHunt, however, which appears to be Fungs flagship site, goes a step beyond merely collecting and organizing torrent files. Each time a torrent file is added to isoHunt, the website automatically modifies the torrent file by adding additional backup trackers to it. That way, if the primary tracker is down, the users BitTorrent client program will contact the backup trackers, making it more likely that the user will be successful in downloading the content sought. In other words, isoHunt alters the torrent files it hosts, making them more reliable than when they are uploaded to the site. Torrentbox and Podtropolis, in addition to being torrent sites, run associated trackers. 11 Their collections of torrent files appear to be fairly small Every torrent file available on Torrentbox and Podtropolis is tracked by the Torrentbox and Podtropolis trackers, respectively, but the Torrentbox and Podtropolis trackers are much busier than the Torrentbox and Podtropolis websites. For example, a torrent file for the movie Casino Royale was downloaded from Torrentbox.com 50,000 times, but the Torrentbox tracker registered approximately 1.5 million downloads of the movie. This disparity indicates that users obtain the torrent files tracked by Torrentbox and Podtropolis from torrent sites other than Torrentbox.com and Pod11 Fungs fourth website, ed2k-it.com (Ed2k-it), is similar to the torrent sites, but works through technology called eDonkey. eDonkey is mostly a centralized system like Napster, but eDonkey client programsincluding the popular eMulecan also search other peers directly, as in a pure P2P network. For purposes of this case, however, the distinctions between the technologies are irrelevant; as the district court noted, Fung makes no argument that Ed2k-it should be treated differently than the torrent sites. See Columbia Pictures Indus., Inc. v. Fung, No. CV 06-5578, 2009 WL 6355911, at *2 n.4 (C.D. Cal. Dec. 21, 2009).

15a tropolis.com. The Torrentbox and Podtropolis websites both have continually-updated lists of, inter alia, the Top 20 TV Shows, the Top 20 Movies, and the Top 20 Most Active Torrents. These rankings are based on the number of seeders and leechers for each particular torrent file, as measured by the Torrentbox and Podtropolis trackers. IsoHunt does not run a tracker, so it cannot measure how frequently the content associated with each torrent file is downloaded; instead, it keeps a continually updated list of the Top Searches. IsoHunt also hosts an electronic message board, or forum, where users can post comments, queries, and the like. In addition to posting to the forum himself, Fung also had some role in moderating posts to the forum. PROCEDURAL HISTORY This suit, against Fung and several John Does, originally filed in the Southern District of New York, was transferred, on Fungs motion, to the Central District of California. See Columbia Pictures Indus., Inc. v. Fung, 447 F. Supp. 2d 306 (S.D.N.Y. 2006). Columbia then filed an amended complaint, alleging that Fung was liable for vicarious and contributory copyright infringement, in violation of 17 U. S.C. 106. On Columbias motion for summary judgment on liability, the district court held Fung liable for contributory infringement, for inducing others to infringe Plaintiffs copyrighted material. 12 See Columbia Pictures Indus., Inc. v. Fung, No. CV 06-5578, 2009 WL
In light of its holding on the inducement theory, the district court did not evaluate whether Fung was liable under the material contribution theory of contributory infringement, see Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146,1170-72 (9th Cir. 2007), or as vicarious copyright infringers, id. at 1173-75.
12

16a 6355911, at *15 (C.D. Cal. Dec. 21, 2009). Although Fung sought protection in the DMCA safe harbors for [t]ransitory digital network communications, 17 U. S.C. 512(a), [i]nformation residing on systems or networks at direction of users, id. 512(c), and [i]nformation location tools, id. 512(d), the district court concluded that none of the safe harbors were applicable. The district court later entered a permanent injunction that prohibits, generally speaking, knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs Copyrighted Works, including without limitation by engaging in certain specified activities. The injunction applies to a list of titles provided by Columbia. With regard to the initial list of titles provided, Fung was required to comply with the terms of the injunctionmost likely, though not necessarily, by implementing a filtering devicewithin 14 calendar days. Columbia may supplement the list without restriction; Fung must comply with the terms of the injunction as to the new titles within 24 hours of receiving any supplemented list. The injunction binds both Isohunt Web Technologies, Inc., and Fung personally, wherever they may be found, including, without limitation, in Canada (where Fung is from). The day after the injunction was entered, Columbia served Fung with an initial list of over 23,000 titles of copyrighted works. Many of the titles were or contained generic terms, such as 10, 21, Cars, Dave, etc. Other titles were identical or substantially similar to titles of works in the public domain, including Jungle Book and Miracle on 34th Street, or to titles of works to which Columbia does not own the copyrights. Citing those features of the initial list,

17a Fung protested that the permanent injunction was too broad. In response, the district court modified the injunction to require that Columbia provide additional information about the listed copyrighted material, including the date the material was issued or reissued and the type of media their copyright covers (e.g., film or television show), so that Fung could more readily identify the material. At the same time, the court also admonished that Fungs concerns were somewhat overblown, as any technical or inadvertent violations would not support a civil contempt finding if all reasonable steps to comply with the injunction were taken. Fung timely appealed, targeting both the liability determination and the scope of the injunction. DISCUSSION As always, we review the district courts grant of summary judgment de novo, Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133, 1135 (9th Cir. 2010), and may affirm the district courts holding on any ground raised below and fairly supported by the record, Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1226 (9th Cir. 2009). As to the permanent injunction, we review the legal conclusions de novo, the factual findings for clear error, and the decision to grant a permanent injunction, as well as its scope, for an abuse of discretion. See Lemons v. Bradbury, 538 F.3d 1098, 1102 (9th Cir. 2008); Sandpiper Vill. Condo. Ass n v. Louisiana-Pacific Corp., 428 F.3d 831, 840 (9th Cir. 2005); Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9th Cir. 2002). To review for abuse of discretion, we first look to whether the trial court identified and applied the correct legal rule . . . [then] to whether the trial courts resolution of the motion

18a resulted from a factual finding that was illogical, implausible, or without support in inferences that may be drawn from the facts in the record. United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc). I. Liability A. Inducement liability under Grokster III The inducement theory, on which the district courts liability holding was grounded, was spelled out in the Internet technology context by the Supreme Court in Grokster III. Considering how to apply copyright law to file sharing over P2P networks, Grokster III addressed the circumstances in which individuals and companies are secondarily liable for the copyright infringement of others using the Internet to download protected material. Grokster IIIs inducement holding is best understood by first backtracking to Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), the seminal Supreme Court case concerning the use of new technologies to reproduce copyrighted material. Sony considered whether secondary liability for infringement could arise solely from the distribution of a commercial product capable of copying copyrighted materialthere, the Betamax video tape recorder, made by Sony. Owners of copyrights to television programs maintained that Sony could be liable for copyright infringement when its customers used the Betamax to unlawfully tape television shows. There was no evidence that Sony sought to encourage copyright infringement through use of the Betamax or had taken steps to profit from unlawful taping. See id. at 437-38. Instead, the only conceivable basis for secondary liability was distribution of the product with constructive

19a knowledge of the fact that [Sonys] customers may use that equipment to make unauthorized copies of copyrighted material. Id. at 439. Finding no precedent in the law of copyright for the imposition of vicarious liability on such a theory, the Court borrowed from the closest analogy it could find, patent laws staple article of commerce doctrine. Id. at 439-42. Under that doctrine, distribution of a component part of a patented device will not violate the patent if the component is suitable for substantial non-infringing uses. See id. at 440; 35 U. S.C. 271(c). As Sony explained, the staple article of commerce doctrine balances competing interests, a copyright holders legitimate demand for effectivenot merely symbolic protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses. 464 U.S. at 442. As the Betamax was capable of commercially significant noninfringing uses, the Court held Sony not liable for contributory copyright infringement. 13 Id.
Sony declined, however, to give precise content to the question of how much use is commercially significant. 464 U.S. at 442. The majority opinion in Grokster III also refused to add a more quantified description of the point of balance between pro13

20a The other major Supreme Court case addressing the mass copying of copyrighted materialthere, music and filmsthrough technological means, Grokster III, concerned the use of software applications based on pure and hybrid P2P network protocols. The defendants, the providers of the copying software to the public, argued for a contributory liability approach similar to that adopted in Sony: as their products were indisputably capable of substantial non-infringing uses, they maintained, they could not be secondarily liable based on their knowledge that their products could be used to infringe copyrights. Instead, the Grokster defendants suggested, they could be liable for contributory infringement only if they had actual knowledge of a specific infringement at a time when they were capable of preventing it. Accepting this theory and recognizing that there was no evidence regarding timely knowledge of specific acts of infringement, the district court granted summary judgment to the defendants, Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (Grokster I), 259 F. Supp. 2d 1029, 1046 (C.D. Cal. 2003), and we affirmed, Metro-GoldwynMayer Studios, Inc. v. Grokster, Ltd. (Grokster IT), 380 F.3d 1154, 1167 (9th Cir. 2004). The Supreme Court did not see Sony as providing such broad insulation from copyright liability. Rather, said the Court, Sony limits imputing culpable intent as a matter of law from the characteristics or
tection and commerce when liability rests solely on distribution with knowledge that unlawful use will occur, 545 U.S. at 934, though two concurring opinions discussed the issue at length, see id. at 941-49 (Ginsburg, J., concurring); id. at 949-66 (Breyer, J., concurring).

21a uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law. Grokster III, 545 U.S. at 934-35 (emphasis added). The staple article of commerce doctrine adopted in Sony, Grokster III explained, absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than the mere understanding that some of ones products will be misused. Id. at 932-33 (emphasis added). Thus, where evidence goes beyond a products characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sonys staple-article rule will not preclude liability. Id. at 935. Grokster III went on to enunciate the inducement rule, also borrowed from patent law, providing that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. Id. at 936-37. This inducement principle, as enunciated in Grokster III, has four elements: (1) the distribution of a device or product, (2) acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation. See id. i. Distribution of a device or product In describing the inducement liability standard, Grokster III phrased it as applying to one who distributes a device, see id., although it also used the word

22a product, seemingly interchangeably, see id. at 93437. The device or product was the software developed and distributed by the defendantsfor Grokster, its eponymous software, based on FastTrack technology; and for StreamCast, also a defendant in Grokster, its software application, Morpheus, based on Gnutella. See id. at 940 (describing the device as the software in this case). The analogy between Grokster III and this case is not perfect. Here, Fung did not develop and does not provide the client programs used to download media products, nor did he develop the BitTorrent protocol (which is maintained by non-party BitTorrent, Inc., a privately-held company founded by the creators of the protocol). Fung argues that because he did not develop or distribute any devicethat is, the software or technology used for downloadinghe is not liable under the inducement rule enunciated in Grokster III. We cannot agree. Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a device. As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the infringement. For example, a retail copying service that accepts and copies copyrighted material for customers after broadly promoting its willingness to do so may be liable for the resulting infringement although it does not produce any copying machines or sell them; all it provides is the service of copying. Whether the service makes copies using machines of its own manufacture, machines it owns, or machines in someone elses shop

23a would not matter, as copyright liability depends on ones purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement. Grokster III did phrase the rule it applied principally in terms of a device. But that was because it was responding to the main argument made by the defendants in that casethat they were entitled to protection for commercial products capable of significant non-infringing uses, just as Sony was insulated from liability for infringing use of the Betamax. See Grokster III, 545 U.S. at 931-34. When explaining the rationale for permitting secondary infringement liability, Grokster III used more general language: When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement. Id. at 929-30 (emphases added); see also id. at 924 (describing Napster as a notorious file-sharing service); id. at 925 (describing one defendants efforts to market its service as the best Napster alternative); id. at 937-38; id. at 939 (describing the import of defendants efforts to supply services to former Napster users). Since Grokster III, we have not considered a claim of inducement liability on facts closely comparable to those here. But we have, in two cases, considered claims of inducement liability against parties provid-

24a ing services as opposed to products, without suggesting that the difference matters. Perfect 10, Inc. v. Visa Int'l Serv. Assn, 494 F.3d 788, 800-02 (9th Cir. 2007); Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1170 n.11 (9th Cir. 2007). The two Perfect 10 cases confirm that, as one would expect, the inducement copyright doctrine explicated in Grokster III applies to services available on the Internet as well as to devices or products. We hold that Columbia has carried its burden on summary judgment as to the first element of the Grokster III test for inducement liability. ii. Acts of infringement To prove copyright infringement on an inducement theory, Columbia also had to adduce evidence of actual infringement by users of Fungs services. Grokster III, 545 U.S. at 940. This they have done. Both uploading and downloading copyrighted material are infringing acts. The former violates the copyright holders right to distribution, the latter the right to reproduction. See 17 U.S.C. 106(1) & (3); Napster, 239 F.3d at 1014. Based on statistical sampling, Columbias expert averred that between 90 and 96% of the content associated with the torrent files available on Fungs websites are for confirmed or highly likely copyright infringing material. Although Fung takes issue with certain aspects of the experts methodology, he does not attempt to rebut the factual assertion that his services were widely used to infringe copyrights. Indeed, even giving Fung the benefit of all doubts by tripling the margins of error in the experts reports, Columbia would still have such overwhelming evidence that any reasonable jury would have to conclude that the vastly predominant use of Fungs ser-

25a vices has been to infringe copyrights. In sum, as in Grokster III, although an exact calculation of infringing use, as a basis for a claim of damages, is subject to dispute, there is no question that Plaintiffs have met their burden on summary judgment to warrant equitable relief. Grokster III, 545 U.S. at 940-41. iii. With the object of promoting its use to infringe copyright The third, usually dispositive, requirement for inducement liability is that the device or service be distributed with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement. Id. at 936-37. As an initial matter, Fung argues that this factor includes two separate elementsthe improper object and clear expression or other affirmative steps taken to foster infringement. Not so. [C]lear expression or other affirmative steps is not a separate requirement, but, rather, an explanation of how the improper object must be proven. In other words, Grokster III requires a high degree of proof of the improper object. Confirming that understanding of the clear expression phrase, Grokster III emphasized, right after articulating the inducement factor, that the improper object must be plain and must be affirmatively communicated through words or actions: We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did

26a not find intentional inducement despite the knowledge of the [Betamax] manufacturer that its device could be used to infringe, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise Id. at 937 (citation omitted). In Grokster III itself, the Court found ample evidence, of several types, to support inducement liability. See id. at 937-40. First, Grokster III relied in part on advertisements as proof of an impermissible, infringing purpose, noting that [t]he classic instance of inducement is by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations. Id. at 937. Both Grokster III defendants had engaged in such affirmative solicitation, advertising their software as an alternative to Napsterwhich notoriously facilitated wide-scale copyright infringementat a time when Napsters unlawful activities were about to be shuttered. See id. at 937-38. Second, Grokster III relied for proof of Groksters infringing purpose on communications that, while not

27a in haec verba promoting infringing uses, provided information affirmatively supporting such uses. [B]oth companies, moreover, communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials. Id. at 938. Thus, Grokster included as evidence of an infringing purpose an electronic newsletter distributed by Grokster that linked to articles promoting Groksters ability to access copyrighted music. See id. at 938. A third category of clear expression recognized in Grokster III as pertinent to proof of improper purpose was explicit internal communication to that effect. As to one of the defendants, Streamcast, internal communications, including proposed advertising designs, provided unequivocal indications of unlawful purpose. Id. at 938. The Court explained that [w]hether the messages were communicated [to potential customers] is not . . . the point . . . . The function of the message in the theory of inducement is to prove by a defendants own statements that his unlawful purpose disqualifies him from claiming protection. Id. Thus, the Court went on, [p]roving that a message was sent out . . . is the preeminent but not exclusive way of showing that active steps were taken with the purpose of bringing about infringing acts. Id. Grokster III also mentioned two sorts of other affirmative steps as permissible evidence that support an inference of an intent to induce infringement, while cautioning that such sorts of circumstantial evidence would not be independently sufficient. The first was that neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software, which the Court said underscore[d] the defendants intentional facilitation of their users infringement. Id. at 939. The

28a Court was careful to caution that in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement. Id. at 939 n.12. Similarly, Grokster III pointed to the fact that the defendants make money by selling advertising space, by directing ads to the screens of computers employing their software. Id. at 940. Because the extent of the softwares use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing. Id. Here again, however, [t]his evidence alone would not justify an inference of unlawful intent. Id. Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his services with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise. As for the necessary clear expression or other affirmative steps evidence indicative of unlawful intent, the most important is Fungs active encouragement of the uploading of torrent files concerning copyrighted content. For a time, for example, isoHunt prominently featured a list of Box Office Movies, containing the 20 highest-grossing movies then playing in U.S. theaters. When a user clicked on a listed title, she would be invited to upload [a] torrent file for that movie. In other words, she would be asked to upload a file that, once downloaded by other users, would lead directly to their obtaining infringing content. Fung also posted numerous messages to the isoHunt forum requesting

29a that users upload torrents for specific copyrighted films; in other posts, he provided links to torrent files for copyrighted movies, urging users to download them. 14 Though not the exclusive means of proving inducement, we have characterized a distributors communication of an inducing message to its users as crucial to establishing inducement liability. See Visa, 494 F.3d at 801 (quoting Grokster III, 545 U.S. at 937). That crucial requirement was met here. Like Groksters advertisementsindeed, even more soFungs posts were explicitly designed to stimulate others to commit [copyright] violations, and so are highly probative of an unlawful intent. Grokster III, 545 U.S. at 937. 15 As in Grokster, moreover, Fung communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materials. Id. at 938. The record is replete with instances of Fung responding personally to queries for assistance in: uploading torrent files corresponding to obviously copyrighted material, finding particular copyrighted
14

In addition to statements made by Fung personally, the district court relied on statements made by individuals who served as moderators of the isoHunt forum, finding that there was an agency relationship between those individuals and Fung. Fung maintains that he did not have the requisite control over the moderators for an agency relationship to exist. In light of the other evidence of unlawful intent, we need not and do not rely on statements made by anyone other than Fung. Nor do we rely on the generic organizational structure of Fungs websitesi.e., that they organized files in browsable categories or used an automated indexing program that matched filenames with specific terms. These features as used by Fung do not themselves send the type of inducing message that would be adequate to prove an unlawful intent. See Grokster III, 545 U.S. at 937. See infra pp. 34-35.

15

30a movies and television shows, getting pirated material to play properly, and burning the infringing content onto DVDs for playback on televisions. Two types of supporting evidence, insufficient in themselveslike the similar evidence in Grokster /H corroborate the conclusion that Fung acted with a purpose to cause copyright violations by use of their services. Id. at 938. First, Fung took no steps to develop filtering tools or other mechanisms to diminish the infringing activity by those using his services. 16 Id. at 939. Second, Fung generates revenue almost exclusively by selling advertising space on his websites. The more users who visit Fungs websites and view the advertisements supplied by Fungs business partners, the greater the revenues to Fung. Because the extent of the [services] use determines the gain to [Fung], the commercial sense of [his] enterprise turns on high-volume use, which the record shows is infringing. Id. at 940. Given both the clear expression and other affirmative steps and the supporting evidence, Fungs unlawful objective is unmistakable. Id. iv. Causation Grokster III mentions causation only indirectly, by speaking of resulting acts of infringement by third
16 Fung did attempt to keep certain types of torrents off his websites. First, because Fung is personally opposed to pornography, he took steps to keep torrent files related to pornography out of his sites collections. Second, Fung attempted to remove torrent files that led to downloads of fake or corrupted content files. These efforts were not directed at diminish[ing] the infringing activity taking place, Grokster III, 545 U.S. at 939, and so are not pertinent to the inducement inquiry (except to show that Fung had the means to filter content on his websites when he chose to do so).

31a parties. Id. at 937 (emphasis added). 17 The parties here advance competing interpretations of the causation requirement adopted through that locution: Fung and amicus curiae Google argue that the acts of infringement must be caused by the manifestations of the distributors improper objectthat is, by the inducing messages themselves. Columbia, on the other hand, maintains that it need only prove that the acts of infringement by third parties were caused by the product distributed or services provided. We think Columbias interpretation of Grokster III is the better one. On that view, if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of the service. See id. at 937. As Grokster III explained: It is not only that encouraging a particular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Inducement liability goes beyond that, and the distribution of a product can itself give rise to liability where evidence shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable act is not merely the encouragement of in-

17

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

32a fringement but also the distribution of the tool intended for infringing use. Id. at 940 n.13; see also 3-12 Melville B. Nimmer & David Nimmer, Nimmer on Copyright 12.04[A] [4] [b] (Matthew Bender, rev. 2010). We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation requirement is that the product or service at issue was used to infringe the plaintiff s copyrights. The possible reach of liability is enormous, particularly in the digital age. Copyright law attempts to strike a balance amongst three competing interests: those of the copyright holders in benefitting from their labor; those of entrepreneurs in having the latitude to invent new technologies without fear of being held liable if their innovations are used by others in unintended infringing ways; and those of the public in having access both to entertainment options protected by copyright and to new technologies that enhance productivity and quality of life. See generally Grokster III, 545 U.S. at 937; Sony, 464 U.S. at 428-32. Because copyright laws ultimate aim is . . . to stimulate artistic creativity for the general public good, Sony, 464 U.S. at 432 (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)), it is important that we not permit inducement liabilitys relatively lax causation requirement to enlarge the scope of [copyrights] statutory monopolies to encompass control over an article of commercesuch as technology capable of substantial non-infringing usesthat is not the subject of copyright protection. Sony, 464 U.S. at 421. We emphasize a few points in this regard. First, as

33a previously discussed, proper proof of the defendants intent that its product or service be used to infringe copyrights is paramount. [M]ere knowledge of infringing potential or of actual infringing uses does not subject a product distributor or service provider to liability. Grokster III, 545 U.S. at 937. When dealing with corporate or entity defendants, moreover, the relevant intent must be that of the entity itself, as defined by traditional agency law principles; liability cannot be premised on stray or unauthorized statements that cannot fairly be imputed to the entity. 18 See id. at 937 (discussing the evidence that StreamCast and Grokster, each a corporate entity, communicated an inducing message to their software users). Moreover, proving that an entity had an unlawful purpose at a particular time in providing a product or service does not infinitely expand its liability in either temporal direction. If an entity begins providing a service with infringing potential at time A, but does not appreciate that potential until later and so does not develop and exhibit the requisite intent to support inducement liability until time B, it would not be held liable for the infringement that occurred between time A and B. Relatedly, an individual or entitys unlawful objective at time B is not a virus that infects all future actions. People, companies, and technologies must be allowed to rehabilitate, so to speak, through actions actively discouraging the infringing use of their product, lest the public be deprived of the useful good or service they are still capable of producing. See Grokster III, 545 U.S. at 937; Sony, 464 U.S. at 432.
There is no question in this case that Fung was authorized to and did speak on behalf of the corporate defendant, isoHunt Web Technologies, Inc.
18

34a We also note, as Fung points out, that Grokster III seemingly presupposes a condition that is absent in this case: that there is but a single producer of the device in question. Only Sony sold the Betamax, and only Grokster and Streamcast distributed their respective software applications. Assessing causation was thus a straightforward task. In Sony, for example, there was no question that some customers would purchase and use the Betamax in ways that infringed copyright. Thus, in a but-for sense, there was no question that Sony caused whatever infringement resulted from the use of Betamax sets; the Court nonetheless held Sony not liable on the ground that even if Sony caused the infringement, it was not at fault, with fault measured by Sonys intent. But as Grokster III explained, nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability. 545 U.S. at 934. Grokster III thus held that where there is sufficient evidence of faultthat is, an unlawful objective distributors are liable for causing the infringement that resulted from use of their products. See id. at 940. In other words, Grokster III and Sony were able to assume causation and assess liability (or not) based on fault. In the present case, however, where other individuals and entities provide services identical to those offered by Fung, causation, even in the relatively loose sense we have delineated, cannot be assumed, even though fault is unquestionably present. Fung argues, on this basis, that some of the acts of infringement by third parties relied upon by the district court may not have involved his websites at all. He points out, for example, that by far the largest number of torrents tracked by the Torrentbox tracker

35a are obtained from somewhere other than Torrentbox.com. If a user obtained a torrent from a source other than his websites, Fung maintains, he cannot be held liable for the infringement that resulted. Cf. Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 982 (9th Cir. 2011) (affirming the district courts denial of a preliminary injunction based on Googles alleged direct copyright infringement because the plaintiff, Perfect 10, failed to show a sufficient causal connection between irreparable harm to [its] business and Googles operation of its search engine); Visa, 494 F.3d at 796-802 (affirming the district courts dismissal under Federal Rule of Civil Procedure 12(b)(6) in part because the causal chain between defendant credit card companies services and infringing activity by Internet users was too attenuated). On the other hand, Fungs services encompass more than the provision of torrent files. Fungs trackers manage traffic for torrent files, obtained from Torrentbox and Podtropolis as well as other torrent sites, which enables users to download copyrighted content. If Plaintiffs can show a sufficient casual connection between users infringing activity and the use of Fungs trackers, the fact that torrent files were obtained from elsewhere may not relieve Fung of liability. See Grokster III, 545 U.S. at 940. We do not decide the degree to which Fung can be held liable for having caused infringements by users of his sites or trackers. The only issue presently before us is the permanent injunction, which, as in Grokster III, does not in this case depend on the exact calculation of infringing use [] as a basis for a claim of damages. 545 U.S. at 941. We therefore need not further entertain Fungs causation arguments at this time, but leave it to the district court to consider them, in light

36a of the observations we have made, when it calculates damages. In sum, we affirm the district courts holding that Columbia has carried its burden of proving, on the basis of undisputed facts, Fungs liability for inducing others to infringe Columbias copyrights. B. DMCA Safe Harbors Fung asserts affirmative defenses under three of the DMCAs safe harbor provisions, 17 U. S.C. 512(a), (c), and (d). Because the DMCA safe harbors are affirmative defenses, Fung has the burden of establishing that he meets the statutory requirements. See Balvage v. Ryderwood Improvement and Serv. Ass n, Inc., 642 F.3d 765, 776 (9th Cir. 2011). Columbia argues, and the district court agreed, that inducement liability is inherently incompatible with protection under the DMCA safe harbors. This court has already rejected the notion that there can never be a DMCA safe harbor defense to contributory copyright liability, holding that . . . potential liability for contributory and vicarious infringement [does not] render[] the [DMCA] inapplicable per se. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001). We note, in this connection, that the DMCA does not in terms exempt from protection any mode of copyright liability, including liability under the doctrine of inducement. Moreover, the DMCAs legislative history confirms that Congress intended to provide protection for at least some vicarious and contributory infringement. See S. Rep. No. 105-190, 40 (1998); UMG Recordings, Inc. v. Shelter Capital Partners, LLC, F.3d (9th Cir. 2013) (noting that 512(c) does not exclude from its protection vicarious or contributory liability).

37a Nor is there any inherent incompatibility between inducement liability and the requirements that apply to all of the DMCA safe harbors. For example, a prerequisite for the safe harbors is that the service provider implement a policy of removing repeat infringers. See 17 U.S.C. 512(i)(1)(A). Although at first glance that requirement that might seem impossible to establish where the requisites for inducing infringement are met, see In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003), on closer examination the appearance of inherent incompatibility dissipates. In some instances, for example, the Grokster standard for inducement might be met even where a service provider has a policy of removing proven repeat infringers. It is therefore conceivable that a service provider liable for inducement could be entitled to protection under the safe harbors. In light of these considerations, we are not clairvoyant enough to be sure that there are no instances in which a defendant otherwise liable for contributory copyright infringement could meet the prerequisites for one or more of the DMCA safe harbors. We therefore think it best to conduct the two inquiries independently although, as will appear, aspects of the inducing behavior that give rise to liability are relevant to the operation of some of the DMCA safe harbors and can, in some circumstances, preclude their application. i. Transitory digital network communications (17 U.S.C. 512(a)) The first safe harbor at issue, which Fung asserts only as to his trackers, provides as follows: A service provider shall not be liable for monetary relief, or, except as provided

38a in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the providers transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections, if-(1) the transmission of the material was initiated by or at the direction of a person other than the service provider; the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider; (2) the service provider does not select the recipients of the material except as an automatic response to the request of another person; (3) no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably

39a necessary for the transmission, routing, or provision of connections; and (4) the material is transmitted through the system or network without modification of its content. 17 U.S.C. 512(a). For purposes of this safe harbor only, the term service provider means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the users choosing, without modification to the content of the material as sent or received. 17 U.S.C. 512(k)(1)(A). The district court dismissed the application of this safe harbor in a footnote, stating that it did not apply to Fung [b]ecause infringing materials do not pass through or reside on [Fungs] system. The district court should not have rejected this safe harbor on the ground it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), held that the 512(a) safe harbor does not require that the service provider transmit or route infringing material, explaining that [t]here is no requirement in the statute that the communications must themselves be infringing, and we see no reason to import such a requirement. Id. at 1116; see also id. (Service providers are immune for transmitting all digital online communications, not just those that directly infringe.). We could, perhaps, end our analysis of the 512(a) safe harbor there. The district court seemingly held Fung liable for inducement based not on Fungs trackers routing services, but, instead, on the dot-torrent files Fung collects and indexes. And it is not clear that Columbia is seeking to establish liability based directly on the tracking functions of Fungs trackers.

40a It appears, however, that Fungs trackers generate information concerning the torrent files transmitted that Fung then compiles and uses to induce further infringing use of his websites and trackers. In that sense, the tracking function is connected to the basis on which liability was sought and found. Without determining whether that information-generating use would itself affect the availability of the 512(a) safe harbor, we hold that safe harbor not available for Fungs trackers on other grounds. Unlike a P2P network like Napster, in which users select particular files to download from particular users, Fungs trackers manage a swarm of connections that source tiny pieces of each file from numerous users; the user seeking to download a file chooses only the file, not the particular users who will provide it, and the tracker identifies the source computers to the user seeking to download a work. Given these characteristics, Fungs trackers do not fit the definition of service provider that applies to this safe harbor. The definition provides that a service provider provides connections . . . between or among points specified by a user. 17 U.S.C. 512(k)(1)(A) (emphasis added). Here, it is Fungs tracker that selects the points to which a users client will connect in order to download a file. The tracker, not the requesting user, selects the publishers from which chunks of data will be transmitted. We have held that 512(a) applies to service provides who act only as conduits for the transmission of information. UMG Recordings, F.3d at & n.10 (noting that 512(a) applies where the service provider merely acts as a conduit for infringing material without storing, caching, or providing links to copy-

41a righted material (internal quotation marks omitted)); Ellison v. Robertson, 357 F.3d 1072, 1081 (9th Cir. 2004) (discussing the definition of a service provider for purposes of 512(a)); H.R. Rep. 105-551(11), 63 (1998) (explaining that the 512(a) safe harbor is limited to service providers performing conduit-only functions). Because they select which users will communicate with each other, Fungs trackers serve as more than conduits between computer users. Fungs trackers therefore are not service providers for purposes of 512(a), and are not eligible for the 512(a) safe harbor. Fung asserts that these functions are automatic technical processes that proceed without selection of any material by us. Even so, for the tracker to be a service provider for purposes of the 512(a) safe harbor, the tracker, whether its functions are automatic or not, must meet the special definition of service provider applicable to this conduit safe harbor. If those functions go beyond those covered by that definition, then it does not matter whether they are automatic or humanly controlled. See UMG, F.3d at ; Viacom Intl, Inc. v. YouTube, Inc., 676 F.3d 19, 39 (2d Cir. 2012) (discussing conduit only functions under 512(a)); In re Charter Commcns, Inc., Subpoena Enforcement Matter, 393 F.3d 771, 775 (8th Cir. 2005) (noting that 512(a) limits the liability of [service providers] when they do nothing more than transmit, route, or provide connections for copyrighted materialthat is, when the [provider] is a mere conduit for the transmission). ii. Information residing on systems or networks at direction of users (17 US.C. 512(c)) This safe harbor provides:

42a (1) In general. A service provider 19 shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider-(A) (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

17 U.S.C 512(k) defines service provider more broadly for purposes of subsection (c) than it does for subsection (a). As used in n section[s] other than subsection (a), the term service provider means a provider of online services or network access, or the operator of facilities therefor, and includes an entity described in subparagraph (A). Id. 512(k)(1)(B).
19

43a (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity. 17 U.S.C. 512(c). The district court held that Fung is ineligible for this safe harbor for the same reason it rejected the 512(a) safe harborthat is, because the infringing material does not actually reside on Fungs servers. As with 512(a), this holding was in error. As CCBill emphasized, we will not read requirements into the safe harbors that are not contained in the text of the statute. See CCBill, 488 F.3d at 1116. Moreover, 512(c) explicitly covers not just the storage of infringing material, but also infringing activit[ies] that us [e] the material [stored] on the system or network. 17 U.S.C. 512(c)(1)(A)(i). Here, as we have explained, the infringing activity associated with Fungthe peerto-peer transfer of pirated contentrelies upon torrents stored on Fungs websites. According to the record, sometimes those torrents are uploaded by users of the sites, while other torrents are collected for storage by Fungs websites themselves. The former situation would be at least facially eligible for the safe harbor, assuming the other criteria are met. a. Actual and Red 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) safe harbor is available only if the service provider does not have actual knowledge that the material or an activity using the material on the system or

44a network is infringing, 17 U.S.C. 512(c)(1)(A)(i), or is not aware of facts or circumstances from which infringing activity is apparent, id. 512(c)(1)(A)(ii). In UMG Recordings, F.3d at , this court endorsed the Second Circuits interpretation of 512(c)(1)(A), that the actual knowledge provision turns on whether the provider actually or subjectively knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement objectively obvious to a reasonable person. Viacom Intl, Inc., 676 F.3d at 31. Fung maintains that he lacked either type of knowledge, because Columbia failed to provide statutorily compliant notification of infringement. Under 512(c)(3)(B), notification of infringement that fails to comply with the requirements set forth in 512(c)(3)(A) shall not be considered . . . in determining whether a service provider has actual knowledge or is aware of facts or circumstances from which infringing activity is apparent. 17 U.S.C. 512(c)(3)(B)(i). And, as Fung points out, the district court noted that there was at least a triable issue of fact as to the adequacy of the statutory notice that Plaintiffs provided to [Fung]. We need not determine the adequacy of Columbias notification of claimed infringementindeed, as the district court held, it would not be appropriate to do so at this stage. Fung had red flag knowledge of a broad range of infringing activity for reasons independent of any notifications from Columbia, and therefore is ineligible for the 512(c) safe harbor. As noted, the record is replete with instances of Fung actively encouraging infringement, by urging his

45a users to both upload and download particular copyrighted works, providing assistance to those seeking to watch copyrighted films, and helping his users burn copyrighted material onto DVDs. The material in question was sufficiently current and well-known that it would have been objectively obvious to a reasonable person that the material solicited and assisted was both copyrighted and not licensed to random members of the public, and that the induced use was therefore infringing. Moreover, Fung does not dispute that he personally used the isoHunt website to download infringing material. Thus, while Fungs inducing actions do not necessarily render him per se ineligible for protection under 512(c), 20 they are relevant to our determination that Fung had red flag knowledge of infringement. Fung introduced no contrary facts with regard to identified torrents involved in these documented activities, responding only with the generalized assertion that he ha[s] a robust copyright compliance system. But conclusory allegations, standing alone, are insufficient to prevent summary judgment. Newman v. County of Orange, 457 F.3d 991, 995 (9th Cir. 2006) (internal quotation marks and citation omitted). 21
20 21

We note that it is not clear from the language of 512(c) or from the pertinent case law, whether exclusion from the 512(c) safe harbor because of actual or red flag knowledge of specific infringing activity applies only with regard to liability for that infringing activity, or more broadly. See Viacom Intl, Inc., 676 F.3d at 31 (noting Mlle limited body of case law interpreting the knowledge provisions of the 512(c) safe harbor). However, as we shall explain, that issue does not arise with regard to the 512(c)(1)(B), financial benefit/right to control safe harbor. As we conclude that the 512(c) safe harbor is not available to Fung on that ground as well, we need not question whether ac-

See supra pp. 37-39.

46a As Fung has not carried his burden as the nonmoving party of demonstrating a genuine dispute as to the material facts regarding his eligibility for the 512(c) safe harbor, see Newman, 457 F.3d at 995; see also Fed. R. Civ. P. 56(c)(1)(A), Columbia is entitled to summary judgment as to this issue. Fed. R. Civ. P. 56(e)(3). b. Financial benefit & the right and ability to control ( 512(c)(1)(13)) Under 512(c)(1)(B), a service provider loses protection under the safe harbor if two conditions are met: (1) the provider receive [s] a financial benefit directly attributable to the infringing activity; and (2) the service provider has the right and ability to control such activity. 17 U.S.C. 512(c)(1)(B). Fung meets both requirements and is therefore ineligible for protection under the 512(c) safe harbor. As to the first prong of 512(c)(1)(B), we have held, in the context of service providers who charge for their services, that a service provider receives a direct financial benefit from infringing activity where there is a causal relationship between the infringing activity and any financial benefit a defendant reaps, regardless of how substantial the benefit is in proportion to a defendants overall profits. Ellison, 357 F.3d at 1079; see also Napster, 239 F.3d at 1023; CCBill, 488 F.3d at 1117-18 (holding that the Ellison direct financial benefit vicarious liability standard applies under 17 U.S.C. 512(c)(1)(B)). Thus, where a service provider obtains revenue from subscribers, the relevant intual or red flag knowledge of specific infringing material or activity eliminates the 512(c) safe harbor broadly, or only with respect to the known or objectively apparent infringing activity.

47a quiry is whether the infringing activity constitutes a draw for subscribers, not just an added benefit. CCBill, 488 F.3d at 1117 (quoting Ellison, 357 F.3d at 1079). 22 At the same time, our opinions have not suggested that the financial benefit prong of 512(c)(1)(B) is peripheral or lacks teeth. Ellison ultimately concluded that the financial benefit standard was not met, because there was inadequate proof that customers either subscribed because of the available infringing material or cancelled subscriptions because it was no longer available. Ellison, 357 F.3d at 1079. And CCBill similarly found that evidence that the service provider hosted, for a fee, websites that contain infringing material inadequate to establish the requisite financial benefit. In so holding, CCBill cited to DMCA legislative history stating that a direct financial benefit cannot be established showing that a service provider receive[d] a one-time set-up fee and flat, period22 Our decisions interpreting the financial benefit prong of 512(c)(1)(B) derive almost entirely from our earlier decisions discussing direct financial benefits in the context of vicarious liability for copyright infringement. Those cases also involved defendants who derived their revenue from consumers. In particular, our decision in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 263-64 (9th Cir. 1996), has been the starting point for our subsequent 512(c)(1)(B) decisions. In Fonovisa, we held that swap meet operators reap [ed] substantial financial benefits from admission fees, concession stand sales and parking fees, all of which flow[ed] directly from customers who want[ed] to buy the counterfeit recordings available at the swap meets. 76 F.3d at 263. In doing so, we relied on district court decisions imposing vicarious liability on the operator[s] of [dance hall] business[es] where infringing performances enhance [d] the attractiveness of the venue [s] to potential customers. Id. (citing Polygram Intl Publg, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1332 (D. Mass. 1994)).

48a ic payments for service from a person engaging in infringing activities. 488 F.3d at 1118 (quoting H.R. Rep. 105-551(II), 54 (1998)). Moreover, the structure of 512(c)(1)(B) indicates that the lack of direct financial benefit prong of the safe harbor requirement is central, rather than peripheral. The statute sets out as the requirement that the service provider not receive a financial benefit directly attributable to the infringing activity. It then states the right and ability to control in a dependent clause, describing a limitation on the financial benefit requirement to certain circumstances. The grammatical emphasis, then, is on the lack of direct financial benefit requirement, with the right to control prong secondary. Against this background, we note that we have never specified what constitutes a financial benefit directly attributable to the infringing activity, 17 U.S.C. 512(c)(1)(B) (emphasis added), where, as here, the service providers revenue is derived from advertising, and not from users. We do so now. Here, the record shows that Fung generated revenue by selling advertising space on his websites. The advertising revenue depended on the number of users who viewed and then clicked on the advertisements. Fung marketed advertising to one advertiser by pointing to the TV and movies . . . at the top of the most frequently searched by our viewers, and provided another with a list of typical user search queries, including popular movies and television shows. In addition, there was a vast amount of infringing material on his websiteswhether 90-96% or somewhat less supporting an inference that Fungs revenue stream is predicated on the broad availability of infringing ma-

49a terials for his users, thereby attracting advertisers. And, as we have seen, Fung actively induced infringing activity on his sites. Under these circumstances, we hold the connection between the infringing activity and Fungs income stream derived from advertising is sufficiently direct to meet the direct financial benefit prong of 512(c)(1)(B). Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fungs revenue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he received. With respect to the second prong of 512(c)(1)(B), we recently explained in UMG that the right and ability to control infringing activity involves something more than merely having the general ability to locate infringing material and terminate users access. UMG, F.3d . Adopting the Second Circuit s interpretation of 512(c)(1)(B), we held that in order to have the right and ability to control, the service provider must [also] exert[] substantial influence on the activities of users. Id. (quoting Viacom Intl, Inc., 676 F.3d at 38) (second alteration in original). In doing so, we noted that [s]ubstantial influence may include . . . purposeful conduct, as in Grokster. Id. In the absence of any evidence of inducement or any other reason to suggest the defendant exerted substantial influence over its users activities, we concluded the defendant was not ineligible for protection under this

50a provision. Id. Here, we are confronted with the opposite situation. Fung unquestionably had the ability to locate infringing material and terminate users access. In addition to being able to locate material identified in valid DMCA notices, Fung organized torrent files on his sites using a program that matches file names and content with specific search terms describing material likely to be infringing, such as screener or PPV. And when users could not find certain material likely to be infringing on his sites, Fung personally assisted them in locating the files. Fung also personally removed Taken, infected, or otherwise bad or abusive torrents in order to protect[] the integrity of [his websites] search index[es]. Crucially, Fungs ability to control infringing activity on his websites went well beyond merely locating and terminating users access to infringing material. As noted, there is overwhelming evidence that Fung engaged in culpable, inducing activity like that in Grokster III. Although Fungs inducement actions do not categorically remove him from protection under 512(c), they demonstrate the substantial influence Fung exerted over his users infringing activities, and thereby supply one essential component of the financial benefit/right to control exception to the 512(c) safe harbor. Because he meets both prongs of 512(c)(1)(B), Fung is not eligible for protection under the 512(c) safe harbor. We have no difficulty concluding that where the 512(c)(1)(B) safe harbor requirements are not met, the service provider loses protection with regard to any infringing activity using the service. See supra note

51a 20. As we held in UMG, the 512(c)(1)(B) right and ability to control requirement does not depend only upon the ability to remove known or apparent infringing material. F.3d at . Instead, there must also be substantial influence on the infringing activities of users, indicating that it is the overall relationship between the service provider and infringing users that matters. Also, to the degree this DMCA provision had its origin in vicarious liability concepts, see CCBill 488 F.3d at 1117, those concepts rest on the overall relationship between the defendant and the infringers, rather than on specific instances of infringement. See Napster, 239 F.3d 1023-24 (discussing Napsters general ability to control[] and patrol[] content on its system); id. at 1022 (noting that [v]icarious copyright liability is an outgrowth of respondeat superior (quoting Fonovisa, 76 F.3d at 262)). The term right and ability to control such activity so reflects, as it emphasizes a general, structural relationship and speaks of such activity, not any particular activity. We therefore hold that because Fung does not meet the requirements of 512(c)(1)(B), he is outside of the 512(c) safe harbor with respect to all infringement activity on the sites that are the subject of this suit. iii. Information location tools (17 U.S.C. 512(d)) The last safe harbor Fung invokes provides: A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider referring or linking users to an online location containing infringing material or infringing activity, by using information

52a location tools, including a directory, index, reference, pointer, or hypertext link, if the service provider (1) (A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed infringement as described in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity, except that, for purposes of this paragraph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate that reference or link

53a 17 U.S.C. 512(d). We affirm the grant of summary judgment to Columbia on Fungs claim to the 512(d) safe harbor for the reasons just discussed with regard to 512(c): Fung was broadly aware of facts or circumstances from which infringing activity [wa]s apparent. 17 U.S.C. 512(d)(1)(B). Moreover, he received a direct financial benefit from that infringing activity, and had the right and ability to control such activity. Id. 512(d)(2). II. Injunction Under 17 U.S.C. 502(a), a district court is empowered to grant a permanent injunction as it may deem reasonable to prevent or restrain infringement of a copyright. Fung does not challenge the issuance of injunctive relief generally, only the scope of the injunction issued. In particular, Fung argues that the permanent injunction is vague and unduly burdensome. 23 We consider each argument in turn. A. Vagueness Rule 65(d) requires [e]very order granting an injunction to state its terms specifically and to describe in reasonable detailand not by referring to the complaint or other documentthe act or acts restrained or required. Fed. R. Civ. P. 65(d)(1)(B)(C). [O]ne basic principle built into Rule 65 is that those
Fung also maintains that the injunction is impermissibly extraterritorial, but that argument is wrong as a matter of fact. The injunction explicitly applies only to acts of infringement that take place in the United States. Fung also challenges the injunction in other respects not discussed in the text. We have considered them and find them without merit.
23

54a against whom an injunction is issued should receive fair and precisely drawn notice of what the injunction actually prohibits. Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d 1075, 1086-87 (9th Cir. 2004) (quoting Union Pac. R.R. v. Mower, 219 F.3d 1069, 1077 (9th Cir. 2000)). The Rule was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood. Id. (quoting Schmidt v. Lessard, 414 U.S. 473, 476 (1974)). Generally speaking, an ordinary person reading the courts order should be able to ascertain from the document itself exactly what conduct is proscribed. 11A Charles A. Wright et al., Federal Practice & Procedure 2955 (2d ed.). Several provisions of the permanent injunction fail to meet this standard. First, the injunctions definition of a key phrase, Infringement-Related Terms, is too vague to provide the notice required by Rule 65(d). The injunction prohibits Fung from including Infringement-Related Terms in metadata for any webpages; creating, maintaining or providing access to browsable website categories of Dot-torrent or similar files using or based on Infringement-Related Terms; and organizing, harvesting or categorizing Dot-torrent or similar files using or based on Infringement-Related Terms. But subsection (ii) of the definition of the phrase Infringement-Related Terms states that it includes terms that are widely known to be associated with copyright infringement (for example warez, Axxo, Jaybob, DVD Rips, Cam, Telesync, Telecine, Screener, or PPV.). Beyond the specifically-named examples, no one reading this injunction can tell what it means for a term to be widely known to be associated with copyright infringement.

55a We understand the desire to build flexibility into the injunction. But Rule 65(d), overall, prefers certainty to flexibility. See Fortyune, 364 F.3d at 1086-87. Subsection (ii) of the injunctions definition of Infringement-Related Terms therefore must be modified to state simply that the phrase includes specifically named terms. Given that the district court has jurisdiction to enforce the injunction, Columbia can request modification in the future to add, upon competent proof, specific other terms as well. Other provisions suffer from similar problems. Paragraph 3(j) prohibits soliciting or targeting a user base generally understood, in substantial part, to be engaging in infringement of, or seeking to infringe, Plaintiffs Copyrighted Works. This language targets a Grokster-like situation, in which Grokster sought to attract former Napster users. But the language used is simply too imprecise, as the resort to the term generally understood indicates. How is one to determine what is generally understoodwhose knowledge matters, and how widespread must the understanding be? And what is a user base, an undefined term? It is also unclear whether the in substantial part refers to the user base, the generally understood phrase, or the engaging in infringement phrase. Unless it can be rewritten to comply with the requirements of Rule 65(d) for fair notice through adequate specificity and detail, Paragraph 3(j) must be excised. See Rule 65(d); Fortyune, 364 F.3d at 1086-87. Similarly, paragraph 3(1) prohibits indexing or providing access to Dot-torrent or similar files harvested or collected from well-known infringing source sites, such as The Pirate Bay. Here again, Rule 65(d) requires more specificity. Paragraph 3(1) must be amended to omit the vague words well-known infring-

56a ing source sites, such as, and to specify the particular infringing sites coveredwith the caveat, again, that Plaintiffs can seek to amend the list in the future. Another provision of the injunction states that after receiving a list of titles from the Plaintiffs, Fung is required to have a mechanism in place to ensure that he is not facilitating the infringement of those titles. Fung complains that Plaintiffs lists of titles are errorfilled and that Fung [is] compelled to locate and correct [the errors] under threat of contempt proceedings. Although the injunction is reasonably clear in this regard, we clarify that Fung has no burden to correct Plaintiffs errors. B. Unduly burdensome Fung maintains, and we agree, that certain provisions of the injunction could be interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright, even if those other companies are not themselves liable for primary or secondary copyright infringement. Fung argues that such a restriction would be unduly burdensome. [I]njunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs before the court. L.A. Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 664 (9th Cir. 2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979)). We agree that insofar as the injunction can be interpreted to prohibit Fung from seeking legitimate employment, it is more burdensome than necessary to provide Plaintiffs relief. Accordingly, the permanent injunction should be amended appropriately to limit the employment prohibition. We leave the final wording to the district court.

57a CONCLUSION In sum, we affirm the district courts grant of summary judgment to Plaintiffs on liability. We also affirm summary judgment to Plaintiffs on Fungs claims that he is entitled to the safe harbors provided by 17 U.S.C. 512(a), (c), and (d), albeit on grounds different than those relied upon by the district court. The permanent injunction is modified as noted above. Costs are awarded to the Plaintiffs. AFFIRMED IN PART, VACATED IN PART, INJUNCTION MODIFIED IN PART.

58a APPENDIX B UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs, v. GARY FUNG, et al., Defendants.

ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT ON LIABILITY [249] CASE NO. CV 06-5578 SVW (JCx)

59a 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 Isohunt Web Technologies, Inc. (Isohunt, Inc.) and Does 1 through 10. [Doc. No. 13.]. (The Court refers to Fung and Isohunt, Inc. collectively as Defendants.) Plaintiffs now bring this Motion for Summary Judgment [Doc. No. 249] on the grounds that Defendants users have infringed their copyrights and are liable under theories of inducement, contributory infringement, and vicarious infringement. The Court requested Supplemental Briefing in an Order dated April 3, 2008. [Doc. No. 342.] The Court requested further Supplemental Briefing and augmentation of the record in an Order dated August 25, 2009. [Doc. No. 358.] The material facts supporting Plaintiffs claims are almost wholly unrebutted. Generally, Defendants rest their case on legal arguments and meritless evidentiary objections, and offer little of their own evidence that directly addressed Plaintiffs factual assertions. Accordingly, summary judgment is appropriate in the present case. Having considered the moving
The Plaintiffs in this action are: 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;
1

60a papers, as well as arguments presented at hearing and in supplemental briefing, the Court Grants Plaintiffs Motion for Summary Judgment on Liability. II. 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), 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 promotion of the websites, Fung allows users to download infringing copies of popular movies, television shows, sound recordings, software programs, video games, and other copyrighted content free of charge. Users of the Fung sites have downloaded works that are copyrighted by Plaintiffs; these downloads have taken place without authorization from Plaintiffs. (Pls. SUF, 2-3.) The Fung sites are an evolutionary modification of traditional peer-to-peer sharing sites such as Napster and Grokster. A peer-to- peer service provides a method for users of a network 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 (2005).

61a (See also Horowitz 2 Decl., at 12.)

Ellis Horowitz is a Professor of Computer Science and Electrical Engineering at the University of Southern California. Mr. Horowitz has served as a tenured professor since 1983 and his relevant research has been in the field of software development. (Horowitz Decl., at 3, 5.) On summary judgment, expert opinions are admissible under the general requirements of Fed. R. Evid. 702, which requires that the testimony be based on sufficient facts and be the product of reliable principles and methods, and that the witness has applied the principles and methods reliably to the facts of the case. On summary judgment, expert testimony is also subject to Fed. R. Civ. P. 56(e)(1), which requires a showing [1] that the affiant is competent to give an expert opinion and [2] the factual basis for the opinion is stated in the affidavit, 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, Horowitzs 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 Horowitzs testimony). Further, the Court notes that both parties experts (Dr. Horowitz and Dr. Waterman for Plaintiffs, and Dr. Gribble for Defendants) are generally unrebutted. (See also footnotes 7 and 13, infra, for a discussion of the other experts qualifications.) Generally, the Court relies on the experts with respect to three matters: first, the technological structure of Defendants websites, which is agreed-upon in all material respects by Dr. Gribble (for Defendants) and Dr. Horowitz (for Plaintiffs); second, the statistics regarding Defendants users downloading activities, which is set forth by Dr. Waterman (for Plaintiffs) and wholly unaddressed by Defendants evidence; and third, the dispute over whether or not Defendants were technologically capable of filtering copyright- infringing materials from their websites, upon which Dr. Gribble and Dr. Horowitz disagree (and is discussed in greater detail infra, Part IV.B.4). Accordingly, the experts declarations set forth admissible
2

62a The content of the files shared therefore resides on the computers of individual users rather than on central servers. (Horowitz Decl., at 12.) 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 peerto-peer variety. (See Horwitz Decl., at 16.) In a BitTorrent network, however, the download process is unique from that of previous systems such as Napster and Grokster. 3 Rather than downloading a file from
facts. Where unrebutted, these facts allow summary judgment in favor of the party proferring the expert testimony on that particular issue. Where the experts disagreement raises a genuine dispute, the Court will address the dispute accordingly.
3

In contrast, the technology in the Grokster and Kazaa networks provided a distinct form of the peer-to-peer network. Unlike Napster, there was no central indexing of available files. Instead, an individual scanning through the Grokster software would enter a search term and the software itself, through use of a supernode or indexing computer would contact other computers seeking matching files. When a result was found matching the query, the information regarding the results (the IP address and other information) would be sent to the requesting computer. The searching user would then download directly from the relevant computer and the file would be placed in the designated folder of the requesting computer. See Grok-

Napster involved a peer-to-peer network with a central search index that served as Napsters collective directory for the files available on the server at any given time. In order to download the files from another user in the Napster network, the individual would search the Napster server for the desired file and then select the desired file from a list of available users in the network. Similar to other peer-to-peer networks, the actual files shared never passed through or resided on the Napster servers. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011-1013 (9th Cir. 2001).

63a 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 simultaneously. (See id. at 23-24.) BitTorrent technology relies on a variety of mechanisms in order to accomplish the ultimate downloading of an given file, including: (1) a software application that users download, which is commonly referred to as a client application; (2) websites, also known as torrent sites, which allow users to select dot-torrent files that they wish to download; and (3) servers, also known as trackers, that manage the download process. (Horwitz Decl., at 17.) The client applications and trackers work together through the use of a BitTorrent protocol which standardizes the client-client and client-tracker communications. (Id.) These components essentially work together to allow individuals to visit a torrent site, download files, and keep track of those downloads as well as discover additional persons to download from through the use of trackers. In such a system the downloading of the desired content is occurring from multiple source points at the same time and allowing larger downloads to move more expeditiously. During this simultaneous downloading process users form what is known as a swarm, which allows for quick exchange of the downloading material. 4
ster, 545 U.S. at 921. 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.ed2kit.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

64a Accordingly, in order to download files from others in a BitTorrent network, users must engage in a number of steps. First, users must install a BitTorrent client application. (Horowitz Decl., 18.) Standing alone, a BitTorrent client application does not possess the ability to search other computers for files. Instead, as part of the second step, users must visit a torrent site for the purpose of locating dot-torrent files containing the content that they wish to download. (Id. at 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 torrent site. (Id.) These torrent files are referred to as dot-torrent files in The dotreference to their file extension name. 6 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 21.) In the third step, once the user clicks on the desired dottorrent file, the BitTorrent client will locate and download the actual content item. (Id. at 22.) This is accomplished through the use of trackers that are contained within the dot-torrent file. The dot- torrent file contains hash values that are used to identify the various pieces of the content file and the location of
play similar roles, and that the minor technical distinctions are not material to the present dispute. (See Horowitz Decl. 3034.) Notably, Defendants do not provide any arguments specifically premised on the difference in technology of eDonkey.
5

Accordingly, the extension of those files searched on a torrent site would be .torrent in contrast to prior incarnations of peerto-peer networks where users would search for a file with an extension such as .mp3 or .doc.
6

Torrent sites are websites accessible through the use of an Internet browser. (Horowitz Decl., 20.)

65a 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 requesting computer when the download is complete. (Id. at 23.) Once a user downloads a given content file, he also becomes a source for future requests and downloads. (Id.) The advantage of BitTorrent technology is the cumulative nature of its downloading and economies of scale. As more users download a given file, there are more sources for the file pieces necessary for others. This process, whereby individuals maybe be uploading and/or downloading from many sources at any given time is known as a swarm. (Id. at 24.) This prevents a backlog of users waiting to download from one individual user with the source file. B. Sites Maintained by Defendant Fung Defendant Fung operates a number of websites, including www.isohunt.com (Isohunt), www.torrentbox.com (Torrentbox), www.podtropolis.com (Podtropolis), and www.ed2kit.com (eDonkey). The structure and manner in which users download files from these sites differs in certain respects. The BitTorrent websites Isohunt, Torrentbox, and Podtropolis all provide users the ability to search for and download BitTorrent files. (Horowitz Decl., at 26.) As explained by Defendants expert Steven Gribble, 7 the defendants Web sites col7

Steven Gribble is an Associate Professor of Computer Science and Engineering at the University of Washington. Dr. Gribbles research focuses on computer systems and computer security, and has focused in the past on the operations of peer-to-peer systems. (Gribble Decl. 1.)

66a lect, 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. 4A.) 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 27.) The elements of the downloading process work together to bring the desired content to the users computer without any further actions by the user. (Id.) As one of Plaintiffs experts explains: [t]he only purpose of a dot-torrent file is to enable users to identify, locate, and download a copy of the actual content item referenced by the dot-torrent file. . . . Once a user has clicked the download torrent button or link, the . . . desired content file should begin downloading to the users computer without any further action or input from the user. (Horowitz Supp. Decl., 5-6.) The BitTorrent websites, as set forth in further detail below, also contain a number of categories from which users can select files to download, including Top Searches, Top 20 Movies, Top 20 TV Shows, Box Office Movies. (SUF 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.
For the reasons discussed in footnote 2, supra, Gribbles testimony is admissible on summary judgment.
8

The Box Office Movies feature, although once available, is no longer an element of the website. (Horowitz Decl., 39-40; Defs. SGI, 57.) There is no dispute, however, that this category was once on the BitTorrent website.

67a (Id. at 59.) The items found within the Top Searches category are all associated with copyrighted content. (SUF, at 8.) Much the same holds true for the Top 20 Most Downloaded Torrents on Defendant Fungs Torrentbox site. (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 10.) The ed2k-it website contains files in lists entitled High Quality DVD Rips and TV Show Releases, all of which correspond to copyrighted content. 9 (Id. at 11.) Plaintiffs note that the meta tags 10 used on Fungs 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
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 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 on the websites.
9 10

The term warez is a term used to refer to pirated content. See Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 133 (S.D.N.Y. 2009). (See also SUF, at 25.)
11

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.

68a the top twenty grossing movies in U.S. theaters at the time. (SUF, at 50-51.) These lists served the function of getting users to upload dot-torrent files of the latest blockbuster films and have them posted on the Isohunt website. (Id. at 52-54.)12 Plaintiffs engaged in a randomized statistical analysis of the works available on the Isohunt and Torrentbox sites. According to Plaintiffs expert Richard Waterman, 13 approximately 95% of downloads occurring through Defendants sites are downloads of copyright- infringing content. (See Waterman Decl. 6-7.) Watermans 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 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 24, 28.) Though Defendants raise conclusory boilerplate objections to Watermans declaration, Defendants fail to call Watermans factual conclusions into doubt. (See Defs. EviPlaintiffs acknowledge that, at some point, the Box Office Movies feature was discontinued on the website. (SUF, at 54.)
12 13

Richard Waterman is an Adjunct Associate Professor of Statistics at the University of Pennsylvanias Wharton School of Business. (Waterman Decl. 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, Watermans testimony is admissible on summary judgment.

69a dentiary Objections, at 10-19.) Despite Defendants repeated assertions that the evidence is based on junk science, (id.) Defendants fail to rebut Watermans statement that he relied on the standard statistical sampling techniques used in his field. (Waterman Decl. 8 n.1.) It is also noteworthy that numerous 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), affd, 239 F.3d 1004 (9th Cir. 2001). To the extent that the evidence suggests an unrealistic level of accuracy, the Court notes that Watermans 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. 13, 14, 18, 25, 29, 32, 34.) Further, Plaintiffs provide the specific data upon which Waterman based his categorization of available files as infringing, likely infringing, and noninfringing. (See Pls. Ex. T, Waterman Depos., at 39, 48; Friedman Decl. 11, 15, 16.) In any event, for the purposes of this case, the precise percentage of infringement is irrelevant: the evidence clearly shows that Defendants users infringed on a significant scale. It simply does not matter whether 75% (to pick a number) of available materials were copyrighted or 95% of available materials were copyrighted; and even if this distinction did matter, Defendants have simply failed to satisfy their summary judgment burden by submitting admissible evidence that raises a triable dispute regarding Plaintiffs evidence that a substantial percentage of the available files included copyright-infringing or highly likely copyright-infringing content. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (When

70a the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.) (internal citations omitted). C. Fungs Participation in the Websites In addition to the general structure of the pages maintained by Defendants, Defendant Fung has personally made a number of statements regarding the copyrighted nature of the works available on his sites. In one such post on the Isohunt website Defendant Fung responded to a users 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 14.) In an interview Fung stated: Morally, Im a Christian. Thou shalt not steal. But to me, even copyright infringement when it occurs may not necessarily be stealing. (Id. at 15.) In another post Fung stated: We completely oppose RIAA & Co. so do not be alarmed by our indexing activities. . . . (Id. at 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 20.) Fungs other statements included references to aiding individuals in the download of then-popular movie titles such as Matrix Reloaded and Lord of the Rings: Return of the King, pointing users to links where they could download copies of these movies through the torrent sites. (Id. at 27-29.) Other statements made on the website encouraged or made available the downloading of illegal content by users who were browsing the discussion forums on Fungs websites. (Id. at 33-46.)

71a Plaintiffs also provide details relating to the assistance that Fung would give website users in downloading copyrighted material within the forum discussions of the various websites. In one such instance, in response to a user query on how to make a DVD from a downloaded copy of the film Pirates of the Caribbean, Fung provided a link to a website that would allow the individual to burn a DVD of the downloaded copy. (SUF, at 68.) Fung provided users with assistance on a number of occasions regarding how they could go about playing or extracting the copyrighted films that they downloaded from the Defendants websites. (Id. at 70, 72.) Fung also provided assistance to a user who was searching for episodes of the television series Star Trek: Enterprise; Fung provided links to search possible search queries that would turn up the work. (Id. at 71.) Fung also provided technical advice regarding the use of trackers in response to emails containing dot-torrent files connected with copyrighted television programs, such as the NBC series The Office. (Id. at 79.) III. SUMMARY JUDGMENT STANDARD A. Rule 56 Standard Rule 56(c) requires summary judgment for the moving party when the evidence, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Tarin v. County of Los Angeles, 123 F.3d 1259, 1263 (9th Cir. 1997). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex Corp v. Catrett, 477 U.S. 317, 323-24

72a (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. 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 elements of the claim or defense to warrant judgment in his favor.) (emphasis in original). Once the moving party has met its initial burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and identify specific facts that show a genuine issue for trial. See Celotex, 477 U.S. at 32334; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact. Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is precluded only if there is a genuine dispute where the evidence is such that a reasonable jury could return a verdict for the nonmoving party over facts that might affect the outcome of the suit under the governing law. See Anderson, 477 U.S. at 248; see also Aprin 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

73a base its judgment on the facts stated in the moving partys Statement of Uncontroverted Facts and Conclusions of Law, L.R. 56-1, but only to the extent that the facts are adequately supported by the moving party - i.e., with evidence in the record - and are uncontroverted by evidence submitted or identified by the opposition. L.R. 56-3. A trial court can only consider admissible evidence in ruling on a motion for summary judgment. Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002); see also Fed. R. Civ. P. 56(e). Of course, the court need only consider evidentiary objections if the Court actually relies on such evidence. Thus, to the extent that the Court relies on evidence to which a party has properly objected, the Court will address these objections in the course of this Order. IV. ANALYSIS A. Preliminary Issues Regarding Secondary Liability 1. Secondary Theories of Liability Plaintiffs move for summary judgment against defendants on three separate grounds: inducement of copyright infringement, material contribution to copyright infringement, and vicarious copyright infringement. The Court will only address the first theory, because Defendants inducement liability is overwhelmingly clear. Discussion of Plaintiffs alternative theories of liability would be unnecessarily duplicative with respect to the central question at issue in this Motion: Defendants secondary liability for its users copyright infringement. The first two theories (material contribution and inducement) are known collectively as contributory liability. Perfect 10 v. Visa Intl Serv. Assn, 494 F.3d

74a 788, 795 (9th Cir. 2007) (One contributorily infringes when he (1) has knowledge of anothers infringement and (2) either (a) materially contributes to or (b) induces that infringement.), cert. denied, 128 S.Ct. 2871 (2008). Despite the analytical similarities between the inducement and material contribution theories, it is now established in this Circuit that inducement and material contribution are distinct theories of contributory liability through which defendants can be found liable. Id.; see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1227 (C.D. Cal. 2007) (Grokster V) (material contribution and inducement are two doctrinal subsets of the contributory infringement theory of liability.). Generally, inducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright, see Metro-GoldwynMayer Studios, Inc. v. Grokster, 545 U.S. 913, 936-37 (2005) (Grokster III); in contrast, material contribution (in the context of computer system operator[s]) applies if the defendant has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (internal citations and quotations omitted) (emphasis in original). The third theory, vicarious liability, is similar to contributory liability but includes some contours that differ from these other theories of liability. A defendant infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it. Grokster III, 545 U.S. at 930. 2. Actual Infringement by Defendants Users

75a With respect to all three of Plaintiffs theories of liability, Plaintiffs must first demonstrate that there has been direct infringement of their copyrights by third parties. Amazon, 508 F.3d at 1169 (citing A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n.2 (9th Cir. 2001)) (Secondary liability for copyright infringement does not exist in the absence of direct infringement by a third party.). Plaintiffs have provided direct evidence of copyright infringement by Defendants users, and Defendants have not introduced any evidence creating a triable issue of fact on this issue. To establish copyright infringement, Plaintiffs must show that they own the copyrights that have been infringed, and that third parties have made unauthorized copies, downloads, or transfers of this material. 17 U.S.C. 106(1), (3). Implicit in 17 U.S.C. 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 Commns 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 (1994). As a later panel of that court wrote, in order for U.S. copyright law to apply, at least one alleged infringement must be completed entirely within the United States. Allarcom Pay Television, Ltd. v. Genl Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995). In the context of secondary liability, an actor may be liable for activity undertaken abroad that knowingly induces infringement within the United States. 3 Nimmer on Copyright, 12.04(D)(2) (citing Arm-

76a strong v. Virgin Records, Ltd., 91 F. Supp. 2d 628, 634 (S.D.N.Y. 2000); Blue Ribbon Pet Prods., Inc. v. Rolf C. Hagen (USA) Corp., 66 F. Supp. 2d 454, 462-64 (E.D.N.Y. 1999)). Once Plaintiffs have established that an act of infringement has taken place within the United States, Defendants may be held liable for their conduct that constitutes inducement, material contribution, or vicarious infringement, even if Defendants conduct took place abroad. Id. 14 Here, there is not a genuine factual dispute over whether the users of Fungs websites infringed Plaintiffs copyrights. It is undisputed that Plaintiffs own or control the copyrights, or exclusive rights under copyright for the works at issue in this case. (SUF, 1.) It is also undisputed that Plaintiffs have not authorized the distribution of their copyrighted works by Defendants or Defendants users. (SUF, 3.) The only purported dispute with respect to third parties direct infringement is whether Plaintiffs have provided any evidence that users of Fungs sites have violated 17 U.S.C. 106(1) and 106(3) by reproducing and distributing Plaintiffs copyrighted works. (SUF, 2; SGI, 2.) Defendants argue that Plaintiffs must provide evidence that both the transferor and the transferee are located in the United States. (See Defs. Supp. Opp. at 3-4.) However, United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringeThe Court notes that Defendants have operated computer servers in Maryland and Texas. Columbia Pictures Inds., 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).
14

77a ment liability. Uploading a copyrighted content file to other users (regardless of where those users are located) violates the copyright holders 106(3) distribution right. Downloading a copyrighted content file from other users (regardless of where those users are located) violates the copyright holders 106(1) reproduction right. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001). Accordingly, Plaintiffs need only show that United States users either uploaded or downloaded copyrighted works; Plaintiffs need not show that a particular file was both uploaded and downloaded entirely within the United States. Defendants also assert that Plaintiffs rely on inadmissible hearsay and inadmissible statistical data. (SGI, 3.) Contrary to Defendants assertions, Plaintiffs expert evidence is admissible; and, in any event, Plaintiffs provide direct evidence of specific acts of infringement. There is abundant evidence of copyright infringement using Defendants websites. Plaintiffs expert Richard Waterman conducted a study showing that more than 95% of files available through Defendants websites are copyrighted or are highly likely to be copyrighted. (SUF, 5-6.) Even taking into account Watermans margins of error (5% or less), such overwhelming statistical evidence is sufficient to establish that Defendants websites allowed third party users to access copyrighted material, and that users of Defendants websites made copyrighted material available for others to access. 15
15 As noted supra, this expert evidence is admissible and unrebutted. Notably, other courts dealing with similar issues have relied on similar studies based on statistical samples of the relevant products or services. These courts have approved the basic statistical methodologies employed by Plaintiffs expert. See,

78a Plaintiffs broad statistical evidence is corroborated by evidence of specific instances of downloads and transfers of copyrighted works through Defendants websites. In his deposition, Defendant Fung admitted to using the Isohunt website to download copyrighted broadcast television shows such as The Simpsons and Lost. (SUF, 2, 57, 122.) Similarly, Fung admitted to downloading the copyrighted film The Lord of the Rings: The Fellowship of the Ring. (SUF, 58.) Declarant Chris Masciarelli stated that he used Defendants website isohunt.com to download a copyrighted work entitled Family Guy Presents Stewie Griffin: The Untold Story. (SUF, 2; Masicarelli Decl.). Although Defendants argue that there is no clear evidence that any infringement took place in the United States, Plaintiffs have presented admissible evidence of domestic infringement involving a copyright owned by each of Plaintiffs. Plaintiffs provide evidence based on internet protocol (IP) address 16 data

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), affd in part and revd on other grounds, 239 F.3d 1004 (9th Cir. 2001).

16 An IP address is a standard way of identifying a computer that is connected to the Internet. With an IP address, a party could identify the Internet Service Provider providing internet service to the user of the computer corresponding to such IP address. (June 8, 2007 Order Granting in Part and Denying in Part 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].)

79a and usage-summary data produced by Defendants themselves. Plaintiffs have also have used IP-address data to locate Defendants users and show that particular infringing downloads took place in the United States. (Pozza Supp. Decl. 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. 7; Horowitz Supp. Decl. 21 & Ex. 1.)17 Plaintiffs have also provided evidence that, contrary to Defendants wholly unsupported assertions, dottorrent files downloaded from Defendants sites correspond to and automatically cause the downloading of Plaintiffs copyrighted content. 1818 (Bedser Supp.
Defendants own expert has opined that IP-based location analysis is highly accurate. (Gribble Decl. 30.) Plaintiffs expert agrees. (Horowitz Supp. Decl. 11.)
17 Defendants own usage summaries show that approximately 25% of Defendants users are located in the United States. (Horowitz Supp. Decl. 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. 24 & Ex. 6.) Defendants do not object to the exhibits which contain this 25% figure. (See Defs. Objections to Horowitz Supp. Decl, 14; Defs. Objections to Waterman Supp. Decl., 3.)

18 The fact that the dot-torrent files automatically cause content files to be downloaded and assembled (see also supra Part II.A) rebuts Defendants assertions that users act of downloading dottorrent files does not constitute actual copyright infringement. It may be true that the act of downloading a dot-torrent file is not itself a copyright-infringing action; but once that dot-torrent file triggers the process of downloading a content file, copyright infringement has taken place. Because dot-torrent files automatically trigger this content-downloading process, it is clear that dot-torrent files and content files are, for all practical pur-

80a Decl., 4; Ishikawa Supp. Decl., Ex. 2; Grodsky Supp. Decl., Ex. 2; 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.) Accordingly, Plaintiffs evidence conclusively establishes that individuals located in the United States have used Fungs 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 (2005) (Grokster III). In an opinion by Justice Souter, the Supreme Court held that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. Grokster III, 545 U.S. at 936-37. The Supreme Court further explained, [M]ere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor [of
poses, synonymous. To conclude otherwise would be to elevate form over substance.

81a the device] to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise. 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 Instead, the court may infer[] a patently illegal objective from statements and actions showing what [the defendants] objective was. Id. at 941.
In its opinion, the Supreme Court noted the defendants 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:
19

This contention misapprehends the basis for their potential liability. It is not only that encouraging a particular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Inducement liability goes beyond that, and the distribution of a product can itself give rise to liability where evidence shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable act is not merely the encouragement of infringement but also the distribution of the tool intended for infringing use.

Grokster III, 545 U.S. at 940 n.13 (internal citations omitted, emphasis added).

82a 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 Intl., 494 F.3d at 800. For example, in Grokster III, the defendants respond[ed] affirmatively to requests for help in locating and playing copyrighted materials. 545 U.S. at 938. However, showing that the defendant sent out a specific message is not [the] exclusive way of demonstrating inducement. Grokster III, 545 U.S. at 938. The Supreme Court in Grokster III highlighted three facts from which a reasonable factfinder could infer intent to foster infringement in that case. First, the Court noted that the defendants 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 communicated to the public, whether the messages were communicated is not to the point on this record. Id. at 938. The function of the message in the theory of inducement is to prove by a defendants own statements that his unlawful purpose disqualifies him from claiming protection. Id. Second, the Court found it probative that defendants did not attempt to develop filtering tools or other means of diminishing the use of its products for infringement. Taken alone, the failure to develop a filter would be insufficient to support liability; but viewed in conjunction with other evidence it underscored the defendants unlawful objective. Id. at 939 n.12. Third, the Court considered the fact that the defendants business model depended on high-volume use of its software, which was overwhelmingly infringing, as circumstantial evidence of intent to induce infringement.

83a 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 remand from the Supreme Court, the District Court took into account other factors in finding the defendants intent to induce infringement, including the the staggering scale of infringement occurring through use of defendants products, technical assistance provided by the defendants to users for the playback of copyrighted content, and affirmative steps taken by defendants to ensure that their products would be capable of infringing use. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985-92 (C.D. Cal. 2006) (Grokster IV). Upon review of all the evidence in the present case, the Court determines that evidence of Defendants intent to induce infringement is overwhelming and beyond reasonable dispute. 1. Defendants message to users Plaintiffs present a variety of undisputed evidence that Defendants disseminated a message designed to stimulate others to commit infringements. Grokster III, 545 U.S. at 916. The clearest instance of Defendants solicitation of infringing activity is the Box Office Movies feature of Defendants Isohunt site. As Defendant Fung admitted in his deposition, this feature essentially involved Defendants periodic posting of a list of the top 20 highest-grossing films then playing in United States, which linked to detailed web-

84a pages concerning each film. 20 Each of these pages contained upload torrent links allowing users to upload dot-torrent files for the films. Though Defendants eventually discontinued this feature, they did not remove pages that had already been created. (SUF, 50-55.) By implementing this feature, therefore, Defendants engaged in direct solicitation of infringing activity. Defendant Fung, in his subsequent declaration filed with Defendants Opposition, denies that this feature was intended to induce copyright infringement and asserts that the web- pages did not lead anywhere. (Fung Decl., 58.) However, actions speak louder than words, Arista Records, 633 F. Supp. 2d at 153 n.20, and Fung cannot dispute the objective historical fact that the websites included a Box Office Movies feature at one time. This feature evidences Defendants intent to encourage their users infringement. In addition to the Box Office Movies feature, Plaintiffs present other evidence that Defendants disseminated messages designed to stimulate inducement. In particular, Plaintiffs demonstrate that, Defendants websites present available torrent files (the vast majority of which contain infringing content) in browseable categories and provide further information about the works contained in the files. (SUF, 4748.) Defendants also generate lists of the most popular files in categories like Top 20 Movies. (SUF, 49.) Defendants do not dispute the presence of such information on their web-site, but instead merely as20

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 copyrighted). Defendants have not rebutted this obvious inference.

85a sert that the lists content originates from users or from automated processes that simply reflect user activity. (SGI 11; Fung. Decl., 54-55, 57). Defendants assertions ignore the material fact that Defendants designed the websites and included a feature that collects users most commonly searched-for titles. The fact that these lists almost exclusively contained copyrighted works (see SUF 8-13) and that Defendants never removed these lists is probative of Defendants knowledge of ongoing infringement and failure to stop this infringement. Plaintiffs also provide evidence of what the Supreme Court has termed the classic instance of inducement a statement that broadcasts a message designed to stimulate others to commit violations. Grokster III, 545 U.S. at 938. Defendant Fung made statements on the Isohunt website encouraging or assisting infringement. He posted on his website a message telling the websites users that they should try Peer Guardian, a software application that can be used to frustrate copyright enforcement against file sharers. (SUF, 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, 29.) Additionally, Fung created a promotional page inviting users to upload torrent files for Matrix Reloaded, another recent film. (SUF, 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 a certain number of forum users messages; ranks include titles

86a such as I pir4te, therefore I am and All Day I Dream About W4rez. (SUF, 22.) In other words, the websites bestowed honors by identifying users as copyright infringers. This is strong circumstantial evidence that Defendants promoted their users infringing activities by consciously fostering a community that encouraged indeed, celebrated copyright infringement. Perhaps most tellingly, Fung has personally engaged in a broad campaign of encouraging copyright infringement. In a statement on the Isohunt website, Fung stated: they accuse us for [sic] thieves, and they r [sic] right. Only we r [sic] stealing from the lechers (them) and not the originators (artists). (SUF, at 14.) In an interview with another website Fung stated: Morally, Im a Christian. Thou shalt not steal. But to me, even copyright infringement when it occurs may not necessarily be stealing. (Id. at 15.) Fungs statements provide further evidence that he has encouraged third parties to engage in copyright infringement. These statements also provide probative evidence regarding Fungs intent in creating the Defendant websites to aid others infringement. 2. Defendants assistance to users engaging in infringement There is also evidence that Defendants directly assisted users in engaging in infringement. As in Grokster III, Defendants in the present case have respond[ed] affirmatively to requests for help in locating and playing copyrighted materials. 545 U.S. at 938. Defendant Fung personally posted messages in the Isohunt discussion forums in which he provided technical assistance to users seeking copyrighted works. Specifically, in response to an Isohunt user who posted

87a 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, 69.) The record is replete with such instances of technical assistance provided to users by Defendant Fung through the forum. (See, e.g., SUF, 70 (Fung provided technical assistant to users who downloaded the film Kill Bill); SUF, 71 (Fung provided assistance to user searching for Star Trek: Enterprise episodes by giving search tips); SUF, 79 (Fung explained how to attach a tracker URL to a dottorrent file sent to him by an Isohunt user, and recommended the user use the tracker at torrentbox.com).) In addition to Fungs personal statements, statements by the moderators of Fungs 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 the running of the forums from day to day. (SGI, 41.) Moderators can edit, delete, and reorganize postings in the forums. (SGI, 42.) Some moderators, referred to as admins, also have the ability to ban selected abusive users and remove user-posted dot- torrent files. (Id.) There is no substantive dispute by Defendants regarding their relationship to these individuals. Defendants assign this status and give these individuals authority to moderate the forums and user discussions. These individuals were under the control of Defendants and assigned duties related to the administration of the web forums. Therefore, there is an agency relationship between these individual moderators (or ad-

88a mins) and Defendants. 21 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, 45.) In a post on Torrentbox, moderator Skull and Bones referred a user to 353 dot-torrent files including King Kong and Silent Hill, which were very good quality and stated that [m]ost of your films are here at TorAn agency relationship is created by a principals manifestation to an agent that, as reasonably understood by the agent, expresses the principals assent that the agent take action on the principals behalf. Restatement (Third) of Agency, 3.01 (2006); see Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 & n.31 (1989) (looking to Restatement to determine federal common law of agency under Copyright Act).
21

There is no genuine dispute that agency is established here, as Defendants introduce no evidence that would provide a triable issue to rebut Plaintiffs prima facie showing of agency. Defendants merely assert that Plaintiffs evidence suggests triable issues of fact. (Opp. at 19 n.10.) Unsupported assertions do not give rise to a genuine dispute of fact. Plaintiffs evidence, unless refuted, compels a finding of an agency relationship. Plaintiffs evidence has not been refuted, and agency is accordingly established.

Under common law principles of agency, the moderators were the Defendants agents with respect to their interactions with the online message boards and forums. Even though there is no evidence that the moderators were specifically authorized to post messages in these forums, the websites act of designating them as moderators and providing them with specific forum-related powers leads a third party reasonably [to] believe[] the actor has authority to act on behalf of the principal and that belief is traceable to the principals manifestations. Restatement (Third) of Agency, 2.03 (2006) (describing apparent authority).

89a rentbox or search on isohunt.com. (SUF, 46.) In a post on the website Podtropolis, moderator NewAgePirate responded to a user who posted a list with films such as The Godfather, Clockwork Orange, and One Flew Over the Cuckoos Nest, with a post that stated Great list by the way man. Great to have you here. (SUF, 35.) All of these statements demonstrate that there was an active role played by the administrators of the websites within the forum, encouraging and providing technical assistance for users seeking to engage in infringing activities. All of these statements demonstrate the assistance Defendant Fung and the corporate Defendant provided to the websites users in infringing Plaintiffs copyrights. Such actions demonstrate that Defendants did not maintain a hands-off approach to the operation of the sites. Instead, various of Defendants representatives gave technical assistance and aid in the organized forum discussions that furthered the third parties infringement using the sites. Defendant Fung argues that the First Amendment protects any statements made by him or the agents. Such an argument, however, is unavailing. The central premise of the Supreme Courts decision in Grokster III is that a defendants 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; Napster, 239 F.3d 1004. Additionally, the statements themselves are not the activity prohibited by this doctrine, but rather are evidence of the intent to induce, which is the underlying wrongful act. It is

90a 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 activity on the internet. Defendants various First Amendment arguments are inapposite and unavailing. See Religious Tech. Ctr. v. Netcom On-Line Communcations Svcs., 907 F. Supp. 1361, 1377-78 (N.D. Cal. 1995); see generally 4 Nimmer on Copyright 19E.03-04.

Notably, it appears that copyright law incorporates First Amendment considerations by providing for fair use defenses and by distinguishing between uncopyrightable ideas and copyrightable expressions. See Los Angeles News Svc. v. Tullo, 973 F.2d 791, 795-96 (9th Cir. 1992). Further, secondary copyright liability is sensitive to First Amendment concerns in that it generally regulates intentional behavior. See Grokster, 545 U.S. at 937; Amazon, 508 F.3d at 1772; cf. Universal City Studi-

91a 3. Defendants implementation of technical features promoting copyright infringement Defendants implementation of certain technical features in their web-sites is also probative of Defendants intent to induce copyright infringement. Most obviously, Defendants websites allow users to locate dot-torrent files. Once downloaded to a users computer, torrent files automatically engage in a swarm downloading process that permits users to download a single content file simultaneously from many other users. (SUF 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, 8687.) Defendant Fung additionally directs the program to specific web pages containing terms like seinfeldvideos, which one would infer contains infringing content from the television show Seinfeld. (SUF, 88.) Defendants do not rebut this obvious inference.
os v. Reimerdes, 111 F. Supp. 2d 294, 339-41 (S.D.N.Y. 2000) (Anything that would impose strict liability on a web site operator for the entire contents of any website to which the operator linked . . . would raise grave constitutional concerns) (emphasis added), affd 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), cert. denied sub nom. ONeill v. Walt Disney Prods., 439 U.S. 1132 (1979).

92a Defendants also organized files using a program that matches content filenames with specific terms. Some of the specific terms used by the program describe likely infringing content, such as Screener or PPV. 23 (SUF, 91-92.) 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, 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
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. 24

Given that Defendants unlawful objective is unmistakable, see Grokster III, 545 U.S. at 940, the Court refrains from addressing the factual disputes regarding whether or not Defendants were technologically capable of implementing filtering mechanisms to reduce copyright infringement through their websites. (See SUF, 103, 107; SGI 110-11, 143.) In Grokster III, the defendants failure to implement a copyright filter was probative circumstantial evidence of the defendants intent to induce infringement. However, the failure to implement a copyright filter is not a determinative factor in analyzing a defendants inducement of infringement. Rather, the relevant question is whether the summary judgment record [establishes that the defendants] acted with a purpose to cause copyright

93a 4. Defendants business model depends on massive infringing use Plaintiffs assert that Defendants business model depended on massive infringing use. In the instant litigation, just as with the programs at issue in Grokster III, Defendants business generates its revenue almost exclusively by selling advertising space on the sites. (SUF, 109; Pltf. Ex. 1, Fung Dep., at 326-27.) Similarly, the revenue depends on users visiting Defendants sites and viewing the advertising. (SUF, 110.) As discussed previously, Defendant Fung acknowledges that the availability of popular works is what attracts users to the sites. (See, e.g., Ex. 173 (interview of Fung admitting that the availability of the then-popular Da Vinci Code film was a key attraction to his website).) Defendant Fung also solicited advertisement on the basis of the availability of works on his website. For example, in an email to a potential advertiser, moviegoods.com, Fung wrote that Isohunt would make a great partner, since TV and movies are at the top of the most frequently searched by our visiviolations 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 effective copyright filter. Indeed, Plaintiffs have established that Defendants engaged in [t]he classic instance of inducement . . . by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations. 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.

94a tors. (SUF, 112; Pls. Ex 174.) In short, there is no factual dispute that the availability of copyright material was a major draw for users of Fungs websites, and there is no dispute that Defendants derive revenue from the websites and that this revenue increases along with the number of users. (SUF 109-110, 132-133.) 25 This is further evidence of Defendants intent to assist infringing uses. 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 that Defendants subjectively believe that their users have not engaged in copyright infringement, Defendants ostrich-like refusal to discover the extent to which its system was being used to infringe copyright is merely another piece of evidence of Defendants purposeful, culpable conduct in inducing third party infringement. See In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003). 6. Summary of Inducement The undisputed evidence shows that Defendants (both Fung and the websites) engaged in purposeful, culpable expression and conduct aimed at promoting infringing uses of the websites. See Grokster III, 545 U.S. at 937. Accordingly, Plaintiffs motion for sumDefendants 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.)
25

95a mary judgment on Defendants liability for inducement of infringement is GRANTED. C. Alternative Theories of Secondary Liability Having determined that Defendants are liable under an inducement theory for their users infringing activities, the Court refrains from addressing Plaintiffs Motion for Summary Judgment on the theories of material contributory infringement and vicarious infringement. V. DEFENDANTS DIGITAL MILLENNIUM COPYRIGHT ACT AFFIRMATIVE DEFENSES The Digital Millennium Copyright Act provides affirmative defenses for providers of certain internet services. In many ways, the Digital Millennium Copyright Act is simply a restatement of the legal standards establishing secondary copyright infringement in many cases, if a defendant is liable for secondary infringement, the defendant is not entitled to Digital Millennium Copyright Act immunity; if a defendant is not liable for secondary infringement, the defendant is entitled to Digital Millennium Copyright Act immunity. The two sets of rules do not entirely overlap, but this framework is helpful for understanding the Acts statutory text and structure. Cf. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001) (We do not agree that . . . potential liability for contributory and vicarious infringement renders the Digital Millennium Copyright Act inapplicable per se.). Here, the relevant section of the Digital Millennium Copyright Act, 17 U.S.C. 512(d), reads: Information location tools.--A service provider shall not be liable for monetary relief, or, except as provided in subsec-

96a tion (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider referring or linking users to an online location containing infringing material or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link, if the service provider (1) (A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed infringement as described in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity, except that, for purposes of this paragraph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disa-

97a bled, and information reasonably sufficient to permit the service provider to locate that reference or link. 17 U.S.C. 512(d). In other words, a provider of information location tools (such as Defendants websites 26) must satisfy the three conjunctive requirements of 512(d) in order to obtain safe harbor. These three safe harbor requirements are that the defendant: [1] does not know ( 512(d)(1)(A)) or have reason to know ( 512(d)(1)(B)) of infringing activities, or does not remove infringing
26

Defendants also argue that they fall within the safe harbor provisions of 17 U.S.C. 512(a) (transitory digital network communications) and 17 U.S.C. 512(c) (information residing on systems or networks at direction of users), but these categories are inapplicable to Defendants particular technologies as well as Defendants substantive conduct upon which Plaintiffs are suing. Defendants themselves assert that [n]o infringing materials are posted on or pass through defendants systems, (Opp. at 34), which is factually supported by the record because Defendants websites are used to download dot-torrent files, not content files (Gribble Decl. 21; Fung Decl. 9, 52). Because infringing materials do not pass through or reside on Defendants system, Defendants may not rely on 512(a) and 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. 512(c)(1) (emphasis added), or by reason of [Defendants] transmitting, routing, or providing connections for[] material through a system or network controlled or operated by Defendants, 17 U.S.C. 512(a) (emphasis added). Plaintiffs claims are premised on active inducement of infringement, not passive transmission or storage of infringing materials.

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 infringement resulting from the use of information location tools by service providers, which include directories, indexes, references, pointers and hypertext links.).

98a materials upon receipt of such knowledge ( 512(d)(1)(C); and [2] does not profit from infringement where it has the power to control the infringement ( 512(d)(2)); and [3] upon receiving notice (in the statutorily- prescribed manner) from the copyright holder, removes the infringing material ( 512(d)(3)). 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. 512(d)(1)(B). Further, Defendants have not introduced any evidence that they act[ed] expeditiously to remove, or disable access to, the [infringing] material once they became aware that this infringing activity was apparent. (See generally Defs. SGI eee-lll.) Thus, Defendants are not entitled to statutory safe harbor under 17 U.S.C. 512(d). 2727
The Court refrains from addressing at length the second prong of the safe harbor rule, the 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 136-139; see also SUF 106, SGI 109; SGI 141-142; Fung Decl. 61.) As the Ninth Circuit explained in Napster, the ability to block infringers access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise. 239 F.3d at 1023.
27

Accordingly, Defendants have also failed to raise a triable issue of fact regarding the second requirement for receiving 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. 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

99a In order to obtain safe harbor, a defendant cannot have knowledge of ongoing infringing activities. This knowledge standard is defined as actual knowledge or willful ignorance. According to the widely- cited House and Senate Report on the law, if the service provider becomes aware of a red flag from which infringing activity is apparent, it will lose the limitation of liability if it takes no action. H.R. Rep. 105-551(II), at 53; see also Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1114 (9th Cir. 2007). The Congressional Report notes that the service provider is only liable if it turned a blind eye to red flags of obvious infringement. H.R. Rep. 105-551(II), at 57. Other courts have applied this test as requiring willful ignorance of readily apparent infringement. UMG Recordings, Inc. v. Veoh Networks Inc., F. Supp. 2d , 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 unauthorized downloads of copyrighted material; even if those downloads were done abroad and were not actionable under United States copyright law (and thus would not provide actual knowledge of illegal activity for purposes of 17 U.S.C. 512(d)(1)(A)), Fungs actions show that Fung was aware that infringing material was available on
that Plaintiffs provided to Defendants. (See Parker Decl. 9, 12-14.) However, because Defendants have not identified any triable issues of facts regarding the first two safe harbor requirements, summary judgment is appropriate in Plaintiffs favor.

100a the Defendant websites. Given the worldwide nature of the world-wide web, it would have been obvious that United States-based users could access these same infringing materials and thus engage in infringing acts. Defendants provide no evidence to rebut this obvious conclusion that United States-based users would have been able to download the same copyrighted works that Fung himself downloaded. 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. 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., 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% of the available materials contained copyrighted content. (See Waterman Decl. 6, 7, 24, 28, 31.) Defendants fail to introduce any evidence rebutting this overwhelming evidence, and thus fail to raise a triable issue of fact as to whether Defendants had actual knowledge of copyright infringement or were willfully ignorant of ongoing copyright infringement. There is a variety of other evidence of Defendants willful ignorance to ongoing infringement. Defendants designed their website to include lists such as Top Searches, Top 20 Movies, Top 20 TV Shows, and Box Office Movies, and Defendants designed these

101a lists to automatically update to reflect user activities. These lists included numerous copyrighted works. (SUF 8-12, 47-55.) See Grokster V, 454 F. Supp. 2d at 992 (it is common knowledge that most popular music and movies are copyrighted). Thus, unless Defendants somehow refused to look at their own webpages, they invariably would have been known that (1) infringing material was likely to be available and (2) most of Defendants users were searching for and downloading infringing material. In addition, Plaintiffs submit overwhelming statistical evidence of the prevalence of copyrighted material available through Defendants websites. (SUF 57.) This evidence shows that 90%-95% of the material was likely to be copyright infringing, a percentage that is nearly identical to the facts in Napster, in which 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 defendants plainly meritless arguments seeking safe harbor under 512(d). A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919 & n.24 (N.D. Cal. 2000), affd in part and revd in part, 239 F.3d 1004 (9th Cir. 2001). Given that Defendants own statistics show that millions of Defendants users are located in the United States (Horowitz Supp. Decl. 24, Ex. 5), Defendants were certainly aware of a red flag from which infringing activity is apparent. H.R. Rep. 105-551(II), at 57. Defendants do not introduce any evidence to raise a triable issue of fact on this question. 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 used to infringe copyright. See

102a 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. 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. 512(i)(1)(A). Far from doing anything to discourage repeat infringers of the plaintiffs copyrights, Aimster invited them to do so, showed them how they could do so with ease using its system, and by teaching its users how to encrypt their unlawful distribution of copyrighted materials disabled itself from doing anything to prevent infringement. In other words, inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory. Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business. Here, as discussed supra, Defendants are liable for inducement. There is no safe harbor for such conduct. Accordingly, Defendants are not entitled to the affirmative defenses provided by the Digital Millennium Copyright Act.

103a VI. DEFENDANTS RULE 56(f) REQUEST Defendants argue that they must conduct more discovery. Defendants seek information regarding the practices of online search companies such as Google and Yahoo. (Opp., at 33-35; Rothken 56(f) Decl. 6.) Defendants also seek information related to the likelihood that Defendants technologies will be used for non-infringing tasks in the future. (Rothken 56(f) Decl. 7-9.) Finally, Defendants seek information related to the potential for Plaintiffs to create a centralized database listing copyright-infringing works and copyright- infringing users. 28 Rule 56(f) requires specified reasons that are essential to the opposition. Defendants meet neither requirement. Such discovery is utterly irrelevant to the present Order, which relates specifically to Defendants efforts directed at inducing third parties infringement. Inducement liability does not turn on whether other actors would or not be liable (as with Google and Yahoo), or whether Defendants websites future uses might be lawful. Nor does inducement liability turn on whether Plaintiffs could have mitigated their damages by making efforts to reduce third party infringement. Rather,
28 Defendants further seek information regarding the prevalence of Defendants non-United States users (Rothken 56(f) Decl. 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 their Rule 56(f) request in light of Plaintiffs new evidence, and their previous requests for additional discovery have been mooted by Plaintiffs evidence. Further, in light of the IP address-based location methods discussed supra, Defendants have been in possession of the sought-after evidence throughout the course of this litigation.

104a 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. Indeed, the relevant evidence, as presented by Plaintiffs Motion for Summary Judgment and discussed throughout the present Order, is largely undisputed and, further, is in Defendants possession. Accordingly, Defendants Rule 56(f) request is DENIED. VII. CONCLUSION This case contains the same general pattern presented in Metro- Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), and, more recently, Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124 (S.D.N.Y. 2009). The Defendants in the present case attempt to distinguish their situation on three main grounds: first, that the BitTorrent technology is different from the other technologies because users do not download content files through Defendants websites; second that Defendants conduct is protected by the First Amendment; and third, that Defendants users are located across the globe, not just in the United States. On the evidence presented to the Court, none of these arguments raises a triable question of fact for the jury to decide. Defendants technology is nothing more than old wine in a new bottle. Instead of logging into a proprietary network in order to download files from each others computers, Defendants users access Defendants generally- accessible website in order to download those files. And instead of downloading con-

105a tent files directly through Defendants website, Defendants users download dot-torrent files that automatically trigger the downloading of content files. These technological details are, at their core, indistinguishable from the previous technologies. In fact, Defendants technologies appear to improve upon the previous technologies by permitting faster downloads of large files such as movies. Such an improvement quite obviously increases the potential for copyright infringement. Regarding Defendants second main argument, caselaw establishes that Defendants are misguided if they think that the First Amendment provides blanket protection to all internet-based activities, particularly where those activities involve copyright infringement. Finally, Defendants third main argument ignores the unrebutted fact that millions of United States citizens have accessed Defendants websites, and a substantial proportion of the files made available to them through those websites contained copyrighted or highly-likely copyrighted works. Further, Plaintiffs have provided undisputed evidence of specific infringing acts done in the United States. Thus, as in Grokster, summary judgment is appropriate on the question of inducement liability. For the foregoing reasons, the Court GRANTS Plaintiff Motion for Summary Judgment on Liability as to inducement of infringement. The Court sets a status conference for January 11, 2010, at 1:30 p.m.

106a APPENDIX C UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs, v. GARY FUNG, et al., Defendants. ORDER RE: PLAINTIFFS MOTION FOR PERMANENT INJUNCTION [395] CASE NO. CV 06-5578 SVW (JCx)

Stephen V. Wilson, United States District Judge

107a As stated at the March 22, 2010 hearing, the Courts proposed deletions and additions are contained herein. The parties responses to the Courts alterations and only the Courts alterations shall be filed according to the following schedule: Defendants response of no more than eight pages: March 29, 2010; Plaintiffs reply of no more than eight pages: April 5, 2010; Defendants sur-reply of no more than five pages: April 12, 2010. Upon receiving the parties briefing, the Court will issue such further orders as are necessary.

The Courts proposed additions are highlighted in UNDERLINED BOLD and deletions in strikethrough text. On December 21, 2009, the Court granted Plaintiffs Motion for Summary Judgment on Liability, Docket # 391 (the Order), finding that Defendants Gary Fung and Isohunt Web Technologies, Inc. (collectively, Defendants) induced infringement of Plaintiffs copyrights in violation of United States copyright law. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). The Court found that evidence of Defendants intent to induce infringement is overwhelming and beyond reasonable dispute, Order at 25, and therefore that Defendants inducement liability is overwhelmingly clear, id. at 15. On the issue of a permanent injunction, the Court has considered the briefs filed by the parties and the argument presented at the hearing on this matter. Based on the foregoing and all matters of record in this action, pursuant to Federal Rule of Civil Procedure 65 and 17 U.S.C. 502, the Court en-

108a ters a Permanent Injunction in favor of Plaintiffs and against Defendants in accordance with the terms contained herein. The Court concludes that a permanent injunction should issue to restrain further infringement of Plaintiffs copyrights. Plaintiffs have satisfied their burden under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), (1) that [they have] suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. at 391. Plaintiffs have demonstrated that they have suffered irreparable harm, and would suffer further irreparable harm from Defendants continued infringement, in three independent ways. First, given the staggering volume of infringement of Plaintiffs copyrights, it is extremely unlikely that Defendants will be able fully to compensate Plaintiffs monetarily for the infringements Defendants have induced in the past, or the infringements they could induce in the future. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1217 (C.D. Cal. 2007) (Grokster V). Second, given the way in which Defendants system works, when Defendants end-users download one of Plaintiffs works, the end-users automatically and simultaneously further distribute the work to innumerable others as a required part of the download process; additionally, at the conclusion of the download, Defendants end-users obtain an unprotected digital copy of Plaintiffs work that those end-users can fur-

109a ther distribute indefinitely at will.1 Thus, when Defendants induce infringement, Plaintiffs copyrighted works can be unstoppably and near-instantaneously infringed throughout the computer-literate world with the files obtained by [Defendants] end-users. Plaintiffs power to control their rights has been so compromised by the means through which [Defendants] encouraged end-users to infringe (digital files plus the internet) that the inducement amounts to irreparable harm. Id. at 1218-19. Third, it is axiomatic that the availability of free infringing copies of Plaintiffs works through Defendants websites irreparably undermines the growing legitimate market for consumers to purchase access to the same works. E.g., Metro-GoldwynMayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 928-29, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) (digital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file-sharing software to download copyrighted works); A&M Records, Inc. v.
The Court notes that Defendants argue that the Supreme Courts holding in Grokster was limited solely to "devices that induce infringement. Defendants further argue that they are immune from an injunction against their "activities. (Opp. at 6-7, 19.) Defendants argument lacks merit. Nothing in Grokster requires that there be a "device; the central inquiry is based on the defendants purposeful, culpable expression and conduct. Grokster, 545 U.S. at 937. The Supreme Courts holding in Grokster was not limited solely to devices. The Supreme Court used terms such as "device, "product, and "tool interchangeably. Id. at 940 n.13. In addition, the clear import of the Supreme Courts opinion was that a defendant may be secondarily liable for his conduct and activities wholly separate and apart from any products, devices, or tools.
1

110a Napster, Inc., 239 F.3d 1004, 1017 (9th Cir. 2001) (citing Napsters deleterious effect on the present and future digital download market). For many of the same reasons, Plaintiffs have demonstrated that they do not have an adequate remedy at law for the harm that has been or could be caused by Defendants infringement. Damages are no remedy at all if they cannot be collected. Grokster V, 518 F. Supp. 2d at 1219 (quoting Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 716 (1990)). Likewise, [a] legal remedy is inadequate if it would require a multiplicity of suits. Id. at 1220 (quoting Laycock, 103 Harv. L. Rev. at 714) (alteration in original). Here, especially given the multiplicity of infringements of Plaintiffs works caused by a single user downloading a single dot-torrent file from Defendants sites, see Order at 6-7, it would be untenable for Plaintiffs to track and proceed against each infringing end-user. Additionally, Plaintiffs would not be able to recover damages from Defendants for the inevitable derivative infringements that would occur outside Defendants websites when copyrighted content acquired as a result of Defendants inducement is further distributed by Defendants users. These further infringements are a continuing threat, making remedies at law insufficient to compensate for Plaintiffs injuries. The only realistic method for remedying such future harm from Defendants inducement is by way of a permanent injunction. Grokster V, 518 F. Supp. 2d at 1220. The balance of hardships between Defendants and Plaintiffs also warrants the issuance of a permanent injunction. As described, absent an injunction, Plaintiffs would suffer a severe hardship as a result of Defendants inducement of infringement. The injunction

111a being ordered by the Court would not pose a corresponding hardship on Defendants. The Court has already found that Defendants websites are used overwhelmingly for copyright infringement, with upwards of 95% of all dot-torrent files downloaded from Defendants websites corresponding to works that are infringing or at least highly likely to be infringing. Liability Order at 10-11. Obviously, the harm to Defendants from no longer being able to exploit and profit from that infringement is not a hardship the Court need consider. See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (defendant cannot complain of the harm that will befall it when properly forced to desist from its infringing activities (citation and internal quotation marks omitted)). Beyond that, the Courts injunction is limited to Plaintiffs copyrights and will not substantially interfere with any claimed noninfringing aspects of Defendants system. The Court is further persuaded that Defendants would likely continue to induce infringement in the absence of a permanent injunction. As this Court observed in Grokster: [A] successful inducer will sometimes have no need to repeat the infringing message ad infinitum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing purposes, and requires little or no specialized training to operate. At a certain point, the inducer can simply continue to distribute the product without any additional active encouragement, recognizing that the marketplace

112a will respond in turn. Thus, once the market has internalized the inducers promotion of infringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message. Grokster V, 518 F. Supp. 2d at 1233-34. The Court finds those observations fully applicable to this case. For years, Defendants operated their websites as popular destinations for copyright infringement and etched their niche in the market for infringement. Defendants were enormously successful in building a user-base of infringers that, by Defendants own account, number in the millions. See Order at 42. As stated, the evidence of Defendants illegal objective was overwhelming and the resulting amount of infringement of Plaintiffs copyrights has been staggering. Defendants websites remain[] inexorably linked to [Defendants] historical efforts to promote infringement. Grokster V, 518 F. Supp. 2d at 1235. Absent an injunction directing Defendants to prevent infringement of Plaintiffs works, it is highly likely that Defendants existing users and new users would continue to use Defendants system to infringe Plaintiffs copyrights. Moreover, the Courts conclusion that Defendants are likely to continue to induce copyright infringement is warranted by (1) the great extent to which Defendants have actively encouraged copyright infringement in the past; (2) the fact that Defendants very business model, at its core, depends upon copyright infringement, and Defendants would financially benefit from

113a further infringement; and (3) the fact that, even since the Courts Order finding Defendants liable for inducing copyright infringement, Defendants have not taken steps to mitigate the infringement of Plaintiffs works. Defendants proposed primal or lite website contains all of the same indexing and searching functions as the original websites, only with a different interface for the users to operate. (See Servodido Reply Decl., Ex. G, at 15-21.) In fact, Defendants have not even ceased the actively inducing conduct that the Court expressly indicated in its Order plainly encourages and promotes copyright infringement. Defendant Fung has affirmatively stated that he will not take steps to prevent infringement on his websites unless he is ordered to do so by this Court. (Fung interview, quoted in Defs. Opp. at 3.) In short, Defendants past and present statements and conduct establish that Defendants fully intendr1 to continue [their] distribution of the tools that are central to their inducement of copyright infringement. See Grokster V, 518 F. Supp. 2d at 1229-30. Finally, the Court agrees that the public interest will be served with a permanent injunction, since it will protect Plaintiffs copyrights against increased and unrestrained infringement. Id. at 1222. Although Defendants argue that the BitTorrent ecosystem would be harmed by the present injunction (Opp. at 15-17), this injunction is aimed solely at Defendants unlawful use of BitTorrent and similar technology, not at third parties lawful use of BitTorrent and similar technology.

114a The Court thus finds that the four part eBay test favors the imposition of a permanent injunction to restrain Defendants infringement. In its discretion, the Court deems it appropriate for a permanent injunction to issue. [It will therefore be ordered, adjudged, and decreed that:] 1. For the purposes of this Permanent Injunction, the following definitions shall apply: (a) Defendants shall mean Gary Fung and Isohunt Web Technologies, Inc., whether acting jointly or individually. (b) Isohunt System shall mean the websites www.isohunt.com, www.podtropolis.com, www.torrentbox.com, and www.ed2k-it.com, and shall further include any servers, trackers, software, and electronic data that make up or support such websites. (c) Comparable System shall mean any website, system or software that provides users access to Plaintiffs Copyrighted Works, using BitTorrent or any peer-to-peer or other file-sharing or content delivery technology. (d) Copyrighted Works shall mean each of those works, or portions thereof, whether now in existence or later created, in which any Plaintiff (or parent, subsidiary or affiliate of any Plaintiff), at the time of Defendants conduct in question, owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. 101 et seq., and which Plaintiffs have identified to Defendants by the title of the work. (e) Dot-torrent or similar files shall mean dot-

115a torrent files, magnet links, hash links, or other functionally similar files, links or identifiers. (f) Infringement-Related Terms shall mean: (i) terms that refer to the titles or commonly understood names of Plaintiffs Copyrighted Works (for example, the title or common name of a television series); (ii) terms that signal the availability of Plaintiffs Copyrighted Works (for example, Television, Box Office Movies, DVD Rips, Cam, Telesync, Telecine, Screener or PPV); or (iii) terms that are widely associated with copyright infringement (for example warez, Axxo, or Jaybob). 2. Subject to the terms of Paragraph 5 below, Defendants shall be permanently enjoined from knowingly engaging in any of the following activities in connection with the Isohunt System or any Comparable System: (a) hosting, indexing, linking to, or otherwise providing access to any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (b) assisting with end-user reproductions or transmissions of any of the Copyrighted Works through a tracker server, or any other server or software that assists users in locating, identifying or obtaining files from other users offering any of the Copyrighted Works for transmission; or (c) hosting or providing access to any of the Copyrighted Works.

116a 3. Defendants shall immediately and permanently be enjoined from knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs Copyrighted Works, including without limitation, by engaging in any of the following activities: (a) advertising or promoting access to or the availability of Plaintiffs Copyrighted Works; (b) encouraging or soliciting users to reproduce or distribute Plaintiffs Copyrighted Works; (c) encouraging or soliciting users to upload, post or index any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (d) encouraging or soliciting users to link to copies of Plaintiffs Copyrighted Works; (e) providing technical assistance or support services to users engaged in infringement of, or seeking to infringe, Plaintiffs Copyrighted Works; (f) creating, maintaining, highlighting or otherwise providing access to lists of top downloads of, or search terms for, Dot-torrent or similar files that include, refer to or signal the availability of Plaintiffs Copyrighted Works; (g) including Infringement-Related Terms in metadata for any webpages; (h) creating, maintaining or providing access to browsable website categories of Dottorrent or similar files using or based on Infringement-Related Terms;

117a (i) organizing, harvesting or categorizing Dot-torrent or similar files using or based on Infringement-Related Terms; (j) soliciting or targeting a user base generally understood, in substantial part, to be engaging in infringement of, or seeking to infringe, Plaintiffs Copyrighted Works; (k) transferring or redirecting users of the Isohunt System to any other service that, directly or indirectly, provides access to unauthorized copies of Plaintiffs Copyrighted Works; (l) indexing or providing access to Dot-torrent or similar files harvested or collected from well-known infringing source sites, such as The Pirate Bay; (m) soliciting revenue from third party advertisers or advertising brokers based on (or by referring to or highlighting) the availability of Plaintiffs Copyrighted Works. 4. The terms of Paragraphs 2 and 3 of this Permanent Injunction shall not apply to any Copyrighted Work for which Defendants have obtained express written authorization or license for the use being made of such Copyrighted Work from each Plaintiff that owns or controls the rights to such Copyrighted Work, provided such authorization or license is in force and valid at the time of Defendants use of the Copyrighted Work. 5. Defendants shall not be in violation of this Permanent Injunction as to Copyrighted Works that Plaintiffs, or representatives of Plaintiffs, have not (a) identified to Defendants by title of the work, and

118a (b) represented to Defendants that, based on a reasonable review and good faith belief, a Plaintiff (or a parent, subsidiary or affiliate of a Plaintiff) owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. 101 et seq. in the work (a list of titles). (a) Plaintiffs shall be permitted to supplement and update their list of titles without restriction, including without limitation with works soon-to-be but not yet released to the public. (b) Plaintiffs shall provide Defendants with the list of titles in electronic form. (c) Defendants shall promptly provide Plaintiffs with a valid email address to use for the lists of titles, and Defendants shall immediately notify Plaintiffs in writing of any change in such email address. A list of titles shall be deemed delivered when sent to the most current email provided by Defendants. (d) With regard to the initial list of titles provided by Plaintiffs pursuant to this Permanent Injunction, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 14 calendar days from the date Plaintiffs deliver the initial list of titles. (e) For all subsequent lists of titles, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 24 hours from the time Plaintiffs deliver the list of titles. (f) In the event a commercial vendor or other third party becomes able to provide De-

119a fendants with a reliable list of Plaintiffs Copyrighted Works, Plaintiffs may apply to the Court for an order modifying this Permanent Injunction to relieve them of the obligation of providing Defendants with lists of titles, even if there is a cost to Defendants of securing the lists of titles from the commercial vendor or third party. 6. Prior to Defendants entering into any agreement or transaction whatsoever to sell, lease, license, assign, convey, give away, distribute, loan, barter, hypothecate, encumber, pledge or otherwise transfer, whether or not for consideration or compensation, any part of the software, source code, data files, other technology, domain names, trademarks, brands, or Dot-torrent or similar files used in connection with the Isohunt System or any Comparable System (a Transfer of Isohunt-Related Assets), Defendants shall require, as a condition of any such transaction, that the transferee: (a) submit to the Courts jurisdiction and venue; (b) and agree to be bound by the terms herein;

(c) apply to the Court for an order adding it as a party to this Permanent Injunction. Defendants shall not permit any Transfer of IsohuntRelated Assets to close until the Court has entered such an order. Defendants further shall not engage in a Transfer of Isohunt-Related Assets with or to any person whom Defendants know to be engaged in, or intending to be engaged in, conduct that would violate the terms of Paragraphs 2 or 3 above.

120a 7. This Permanent Injunction shall bind Gary Fung, individually, and Isohunt Web Technologies, Inc., and their officers, agents, servants, employees, attorneys, successors, and assigns, and all those in active concert or participation with any of them, who receive actual notice of this Permanent Injunction by personal service or otherwise. Defendants shall provide a copy of this Permanent Injunction to each of their respective officers, agents, servants, employees, attorneys, principals, shareholders, current and future administrators or moderators for the Isohunt System (or Comparable System) or any online forums associated with the Isohunt System (or Comparable System), and any domain name registries or registrars responsible for any domain names used in connection with the Isohunt System (or Comparable System). 8.Nothing in this Permanent Injunction shall limit the right of Plaintiffs to seek to recover damages under 17 U.S.C. 504, or costs, including attorneys fees, under 17 U.S.C. 505. 9. For purposes of clarity, as the Court has personal jurisdiction over Defendants and has concluded that the conduct of Defendants induces infringement of Plaintiffs Copyrighted Works in the United States under the copyright laws of the United States, this Permanent Injunction enjoins the conduct of Defendants wherever they may be found, including without limitation in Canada. 10. The Court further clarifies that this injunction only covers acts of infringement, as defined in 17 U.S.C. 106, that take place in the United States. To the extent that an act of reproducing, copying, distributing, performing,

121a or displaying takes place in the United States, it may violate 17 U.S.C. 106, subject to the generally applicable requirements and defenses of the Copyright Act. Further, as explained in the Courts December 23, 2009 Order, "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. Summary Judgment Order at 19. 11. Violation of this Permanent Injunction shall expose the Defendants, and all others properly bound by it, to all applicable penalties, including for contempt of Court. 12. The Court shall maintain jurisdiction over this action for the purposes of enforcing this Permanent Injunction. IT IS SO ORDERED. Stephen V. Wilson, United States District Judge

122a APPENDIX D UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA COLUMBIA PICTURES INDUSTRIES, INC.; et al. Plaintiffs, v. GARY FUNG; et al., Defendants. Case No. 2:06-cv-05578-SVW-(JCx) Modified Order Granting Plaintiffs Motion for Permanent Injunction Honorable Stephen V. Wilson United States District Judge

123a I. BACKGROUND On December 21, 2009, the Court granted Plaintiffs Motion for Summary Judgment on Liability (the Order, docket no. 391), finding that Defendants Gary Fung and Isohunt Web Technologies, Inc. (collectively, Defendants) induced infringement of Plaintiffs copyrights in violation of United States copyright law. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). The Court found that evidence of Defendants intent to induce infringement is overwhelming and beyond reasonable dispute, Order at 25, and therefore that Defendants inducement liability is overwhelmingly clear, id. at 15. On the issue of a permanent injunction, the Court has considered the briefs filed by the parties, the arguments presented at the March 22, 2010 hearing on this matter, and the proposed language and arguments presented by the parties in response to the Courts proposed order. The Court has also considered the instructions of the Ninth Circuit regarding the permanent injunction in its opinion dated March 21, 2013. Columbia Pictures Indus. v. Fung, 710 F.3d 1020, 1047-1049 (9th Cir. 2013). Based on the foregoing and all matters of record in this action, pursuant to Federal Rule of Civil Procedure 65 and 17 U.S.C. 502, the Court enters a Permanent Injunction in favor of Plaintiffs and against Defendants in accordance with the terms contained herein. II. DISCUSSION The Court concludes that a permanent injunction should issue to restrain further infringement of Plaintiffs copyrights. Plaintiffs have satisfied their burden under eBay Inc. v. MercExchange, L.L.C., 547 U.S.

124a 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), (1) that [they have] suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. at 391. A. Irreparable Harm Plaintiffs have demonstrated that they have suffered irreparable harm, and would suffer further irreparable harm from Defendants continued infringement, in three independent ways. First, given the staggering volume of infringement of Plaintiffs copyrights, it is extremely unlikely that Defendants will be able fully to compensate Plaintiffs monetarily for the infringements Defendants have induced in the past, or the infringements they could induce in the future. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1217 (C.D. Cal. 2007) (Grokster V). Second, given the way in which Defendants system works, when Defendants end-users download one of Plaintiffs works, the end-users automatically and simultaneously further distribute the work to innumerable others as a required part of the download process; additionally, at the conclusion of the download, Defendants end-users obtain an unprotected digital copy of Plaintiffs work that those end-users can further distribute indefinitely at will.1 Thus, when De1

Defendants argue that the Supreme Courts holding in Grokster was limited solely to devices that induce infringement. Defendants further argue that they are immune from an injunction against their activities. (Opp. at 6-7, 19.) Defendants argument lacks merit. Nothing in Grokster requires

125a fendants induce infringement, Plaintiffs copyrighted works can be unstoppably and near-instantaneously infringed throughout the computer-literate world with the files obtained by [Defendants] end-users. Plaintiffs power to control their rights has been so compromised by the means through which [Defendants] encouraged endusers to infringe (digital files plus the internet) that the inducement amounts to irreparable harm. Id. at 1218-19. Third, it is axiomatic that the availability of free infringing copies of Plaintiffs works through Defendants websites irreparably undermines the growing legitimate market for consumers to purchase access to the same works. E.g., Metro-GoldwynMayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 928-29, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) (digital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file-sharing software to download copyrighted works); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1017 (9th Cir. 2001) (citing Napsters deleterious effect on the present and future digital download market). B. Inadequate Remedy at Law

that there be a device; the central inquiry is based on the defendants purposeful, culpable expression and conduct. Grokster, 545 U.S. at 937. The Supreme Courts holding in Grokster was not limited solely to devices. The Supreme Court used terms such as device, product, and tool interchangeably. Id. at 940 n.13. In addition, the clear import of the Supreme Courts opinion was that a defendant may be secondarily liable for his conduct and activities, separate and apart from any products, devices, or tools he distributes.

126a For many of the same reasons, 2 Plaintiffs have demonstrated that they do not have an adequate remedy at law for the harm that has been or could be caused by Defendants infringement. Damages are no remedy at all if they cannot be collected. Grokster V, 518 F. Supp. 2d at 1219 (quoting Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 716 (1990)). Likewise, [a] legal remedy is inadequate if it would require a multiplicity of suits. Id. at 1220 (quoting Laycock, 103 Harv. L. Rev. at 714) (alteration in original). Here, as in Grokster V, [t]he irreparable harm analysis centers on two basic themes: (1) [Defendant] has and will continue to induce far more infringement than it could ever possibly redress with damages; and (2) Plaintiffs copyrights (especially those of popular works) have and will be rendered particularly vulnerable to continuing infringement on an enormous scale due to [Defendants] inducement. Grokster V, 518 F. Supp. 2d at 1217. Both of these elements are present in this case as well. In the Summary Judgment Order, the Court concluded that the evidence strongly suggests that some 2.5 million United States citizens visited Defendants websites each month and that at one point, Defendants websites were accessed over 50 million times from the United States in a single month. Order at 41. The Court also concluded that Plaintiffs statistical evidence showed that over 90% of the downloads using Defendants websites were associated with copyrightinfringing materials. Accord A& M Records, Inc. v.
The irreparable harm and inadequate remedies at law inquiries are essentially identical. Grokster V, 518 F. Supp. 2d at 1219
2

127a Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001) (relying on statistical evidence to show extent of infringement); Grokster V, 518 F. Supp. 2d at 1217-19 (same). Defendants have introduced no evidence to rebut these showings. In addition, given the multiplicity of infringements of Plaintiffs works caused by a single user downloading a single dot-torrent file from Defendants sites, see Order at 6-7, it would be untenable for Plaintiffs to track and proceed against each infringing end-user. Additionally, Plaintiffs would not be able to recover damages from Defendants for the inevitable derivative infringements that would occur outside Defendants websites when copyrighted content acquired as a result of Defendants inducement is further distributed by Defendants users. These further infringements are a continuing threat, making remedies at law insufficient to compensate for Plaintiffs injuries. The only realistic method for remedying such future harm from Defendants inducement is by way of a permanent injunction. Grokster V, 518 F. Supp. 2d at 1220. C. Balance of Hardships The balance of hardships between Defendants and Plaintiffs also warrants the issuance of a permanent injunction. As described, absent an injunction, Plaintiffs would suffer a severe hardship as a result of Defendants inducement of infringement. The injunction being ordered by the Court would not pose a corresponding hardship on Defendants. The Court has already found that Defendants websites are used overwhelmingly for copyright infringement, with upwards of 95% of all dot-torrent files downloaded from Defendants websites corresponding to works that are infringing or at least highly likely to be infringing.

128a Summary Judgment Order at 10-11. Obviously, the harm to Defendants from no longer being able to exploit and profit from that infringement is not a hardship the Court need consider. See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (defendant cannot complain of the harm that will befall it when properly forced to desist from its infringing activities) (citation and internal quotation marks omitted). Beyond that, the Courts injunction is limited to Plaintiffs copyrights and will not substantially interfere with any claimed non- infringing aspects of Defendants system. The Court is further persuaded that Defendants would likely continue to induce infringement in the absence of a permanent injunction. As this Court observed in Grokster: [A] successful inducer will sometimes have no need to repeat the infringing message ad infinitum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing purposes, and requires little or no specialized training to operate. At a certain point, the inducer can simply continue to distribute the product without any additional active encouragement, recognizing that the marketplace will respond in turn. Thus, once the market has internalized the inducers promotion of infringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message.

129a Grokster V, 518 F. Supp. 2d at 1233-34. The Court finds those observations fully applicable to this case. For years, Defendants operated their websites as popular destinations for copyright infringement and etched their niche in the market for infringement. Defendants were enormously successful in building a user-base of infringers that, by Defendants own account, number in the millions. See Order at 42. As stated, the evidence of Defendants illegal objective was overwhelming and the resulting amount of infringement of Plaintiffs copyrights has been staggering. Defendants websites remain[] inexorably linked to [Defendants] historical efforts to promote infringement. Grokster V, 518 F. Supp. 2d at 1235. Absent an injunction directing Defendants to prevent infringement of Plaintiffs works, it is highly likely that Defendants existing users and new users would continue to use Defendants system to infringe Plaintiffs copyrights. Moreover, the Courts conclusion that Defendants are likely to continue to induce copyright infringement is warranted by (1) the great extent to which Defendants have actively encouraged copyright infringement in the past; (2) the fact that Defendants very business model, at its core, depends upon copyright infringement, and Defendants would financially benefit from further infringement; and (3) the fact that, even since the Courts Order finding Defendants liable for inducing copyright infringement, Defendants have not taken meaningful steps to mitigate the infringement of Plaintiffs works. Defendants proposed primal or lite website contains all of the same indexing and searching functions as the original websites, only with a different interface for the users to operate. (See Servodidio Reply Decl., Ex. G, at 15-21.) In fact, Defend-

130a ants have not even ceased all of the active conduct of encouraging and promoting infringement which the Court specifically identified in its Summary Judgment Order. A number of features shows and movies feature; a top searches feature (which invariably includes all, or almost all, copyrighted works); and access to Plaintiffs works that are specifically identified as the subject of this action. (Pls. Reply at 10.) Defendant Fung has affirmatively stated that he will not take steps to prevent infringement on his websites unless he is ordered to do so by this Court. (Fung interview, quoted in Defs. Opp. at 3.) In short, Defendants past and present statements and conduct establish that Defendants fully intend[] to continue [their] distribution of the tools that are central to their inducement of copyright infringement. See Grokster V, 518 F. Supp. 2d at 1229-30. As this Court explained at length in Grokster V, a defendant who is liable for inducing infringement may be enjoined from distributing his products in the future, even if he no longer promotes an inducing message. Although the quote is lengthy, it is worth setting forth in full: The Court is mindful of the following critical passage from the Supreme Courts opinion in this case: 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

131a shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable act is not merely the encouragement of infringement but also the distribution of the tool intended for infringing use. Grokster, 545 U.S. at 940 n. 13, 125 S.Ct. 2764. In effect, the culpable act, which induces third parties to infringement, certainly manifests itself once two components are present--distribution and promotion/ encouragement. See Amazon.com, 487 F.3d at 727 n. 11; Visa, 494 F.3d at 800-01. It is important to recognize that the Supreme Court did not impose any strict timing relationship between specific acts promoting infringements, distribution, and the direct infringements themselves. For a party to be liable for inducement, distribution may begin prior to any promotion of infringement, distribution and promotion can occur at the same time, and most critically, distribution can follow past promotion. This highlighted portion of the above sentence is crucial. As a matter of common sense, a successful inducer will sometimes have no need to repeat the infringing message ad infinitum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing purposes, and requires little or no special-

132a ized training to operate. At a certain point, the inducer can simply continue to distribute the product without any additional active encouragement, recognizing that the marketplace will respond in turn. Thus, once the market has internalized the inducers promotion of infringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message. There is no difference between these infringements and those that are consummated while the defendant is still engaging in the active promotion of infringement. Critically, Justice Souter recognized the importance of this relationship between past promotion and future distribution during the Supreme Courts oral argument in this case: But I dont ... understand how you can separate the past from the present in that fashion. One, I suppose, could say, Well, Im going to make inducing remarks Monday through Thursday, and Im going to stop, Thursday night. The sales of the product on Friday are still going to be sales which are the result of the inducing remarks Monday through Wednesday. And youre asking, in effect--youre asking usto ignore Monday through Thursday.

133a Metro-Goldwyn-Mayer Studios, Inc., v. Grokster, Ltd., No. 04-480, Mar. 29, 2005 (Oral Argument Transcript), at 30. Thus, distribution of a product capable of substantial noninfringing uses, even after the promotion/encouragement of infringement ceases, can by itself constitute inducement. StreamCasts future distribution is undoubtedly connected to past promotional efforts. In its September 27, 2006 Order, this Court recounted in detail, among other undisputed facts, StreamCasts efforts to promote its software to the Napster market as a mechanism for infringing Plaintiffs copyrighted works. Grokster, 454 F.Supp.2d at 985-86. These promotional efforts proved to be wildly successful, especially because StreamCast marketed itself to Napster users at a particularly important juncture--while Napster was in imminent legal jeopardy. Enduser infringement exponentially increased, evidencing that StreamCasts express and implied messages of promotion were received, absorbed, and responded to by the market. Or as more recently stated by the Ninth Circuit: The software systems in ... Grokster were engineered, disseminated, and promoted explicitly for the purpose of facilitating piracy of copyrighted music and reducing legitimate sales of such music to that extent. Most ... users under-

134a stood this and primarily used those systems to purloin copyrighted music. Further, the ... operators explicitly targeted thencurrent users of the Napster program by sending them ads for its OpenNap program. Visa Intl Serv. Assn, 494 F.3d at 801. StreamCasts revenues skyrocketed as a result. Furthermore, StreamCast could not reasonably claim ignorance of the infringements perpetrated by Morpheus endusers. Grokster, 454 F.Supp.2d at 992. StreamCast has etched its niche in the market for infringement. Under the facts of this case, and the doctrinal point raised by Justice Souter, neither the simple passage of time nor the entry of judgment in this case can remedy StreamCasts past promotion as the next Napster. The fact that a permanent injunction is imposed also does not leave Morpheus magically reborn as a product safe for unfiltered distribution under Sony. As stated by Justice Scalia to StreamCasts counsel at oral argument, the point is that those past acts [of encouragement] are what have developed your clients current clientele. Oral Argument Transcript at 29. ...

135a StreamCast is not being punished for its past actions; rather, StreamCasts past activity is relevant to what future actions constitute inducement going forward. An unfiltered Morpheus, which StreamCast intends to distribute if provided the opportunity, necessarily capitalizes on and remains inexorably linked to its historical efforts to promote infringement. The bell simply cannot be unrung. Accordingly, Morpheuss connection to the past promotion of infringement means that StreamCasts continued distribution of Morpheus alone constitutes inducement. This Court is empowered to regulate Morpheus under 17 U.S.C. 502(a) in order to prevent this distribution from causing future harm to Plaintiffs rights. Grokster V, 518 F. Supp. 2d at 1233-35. D. Public Interest Finally, the Court agrees that the public interest will be served with a permanent injunction, since it will protect Plaintiffs copyrights against increased and unrestrained infringement. Id. at 1222. Although Defendants argue that the BitTorrent ecosystem would be harmed by the present injunction, Defendants have not introduced any evidence to show the harmful wider implications of this injunction, nor have they shown that further discovery is warranted because the relevant evidence is exclusively within Plaintiffs possession. (See Opp. at 15-17.) In addition, this injunction is aimed solely at Defendants unlawful

136a use of BitTorrent and similar technology, not at third parties lawful use of BitTorrent and similar technology. The public interest will not be harmed by the injunction. E. Summary The Court thus finds that the four part eBay test favors the imposition of a permanent injunction to restrain Defendants infringement. In its discretion, the Court deems it appropriate for a permanent injunction to issue. In issuing the injunction, the Court is cognizant that [t]he fact that absolutely perfect compliance is unattainable does not of itself preclude an injunction. Withrow v. Concannon, 942 F.2d 1385, 1388 (9th Cir. 1991). If a violating party has taken all reasonable steps to comply with the court order, technical or inadvert[e]nt violations of the order will not support a finding of civil contempt. Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986) (citation omitted). Ultimately, Defendants have the option and the burden of deciding how they will comply with the following injunction. Triad Systems Corp. v. Southeastern Exp. Co., 64 F.3d 1330, 1337 (9th Cir. 1995) (Putting this burden on Southeastern is appropriate because Southeastern is the infringer.), overruled on other grounds by Gonzales v. Texaco Inc., 344 Fed. Appx. 304, 306 (9th Cir. 2009). III. INJUNCTION It is therefore ORDERED, ADJUDGED, and DECREED that: 1. For the purposes of this Permanent Injunction, the following definitions shall apply: (a) Defendants shall mean Gary Fung and Iso-

137a hunt Web Technologies, Inc., whether acting jointly or individually. (b) Isohunt System shall mean the websites www.isohunt.com, www.podtropolis.com, www.torrentbox.com, and www.ed2k-it.com, and shall further include any servers, trackers, software, and electronic data that make up or support such websites. (c) Comparable System shall mean any website, system or software that provides users access to Plaintiffs Copyrighted Works, using BitTorrent or any peer-to-peer or other file-sharing or content delivery technology. (d) Copyrighted Works shall mean each of those works, or portions thereof, whether now in existence or later created, in which any Plaintiff (or parent, subsidiary or affiliate of any Plaintiff), at the time of Defendants conduct in question, owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. 101 et seq., and which Plaintiffs have identified to Defendants by the title of the work. (e) Dot-torrent or similar files shall mean dottorrent files, magnet links, hash links, or other functionally similar files, links or identifiers. (f) Infringement-Related Terms shall mean: (i) terms that refer to the titles or commonly understood names of Plaintiffs Copyrighted Works (for example, the full title or common name of a television series); (ii) the following terms: warez, Axxo, Jaybob, DVD Rips, Cam, Telesync, Telecine, Screener, PPV, or R5;

138a (iii) Plaintiffs may request that this Court modify (ii) above to include additional terms upon competent proof that such terms should be included in Paragraph 1(f)(ii). 2. Subject to the terms of Paragraph 5 below, Defendants shall be permanently enjoined from knowingly engaging in any of the following activities in connection with the Isohunt System or any Comparable System: (a) hosting, indexing, linking to, or otherwise providing access to any Dot- torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (b) assisting with end-user reproductions or transmissions of any of the Copyrighted Works through a tracker server, or any other server or software that assists users in locating, identifying or obtaining files from other users offering any of the Copyrighted Works for transmission; or (c) hosting or providing access to any of the Copyrighted Works. Defendants shall be in knowing violation of this paragraph if they fail to act in response to the list of titles as set forth in Paragraph 5.1. 3. Defendants shall immediately and permanently be enjoined from knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs Copyrighted Works, including without limitation, by engaging in any of the following activities: (a) advertising or promoting access to or the availability of Plaintiffs Copyrighted Works; (b) encouraging or soliciting users to reproduce or

139a distribute Plaintiffs Copyrighted Works; (c) encouraging or soliciting users to upload, post or index any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (d) encouraging or soliciting users to link to copies of Plaintiffs Copyrighted Works; (e) providing technical assistance or support services to users engaged in infringement of, or seeking to infringe, Plaintiffs Copyrighted Works; (f) creating, maintaining, highlighting or otherwise providing access to lists of top downloads of, or search terms for, Dot-torrent or similar files that include, refer to or signal the availability of Plaintiffs Copyrighted Works; (g) including Infringement-Related metadata for any webpages; Terms in

(h) creating, maintaining or providing access to browsable website categories of Dot-torrent or similar files using or based on Infringement- Related Terms; (i) organizing, harvesting or categorizing Dottorrent or similar files using or based on Infringement-Related Terms; (j) engaging in any of the following activities with regard to the Sites defined below: (i) using the names of any of the Sites in meta tags on any web pages; (ii) bidding on, purchasing or using the names of any of the Sites as keywords in any advertising campaigns;

140a (iii) placing advertisements on any of the Sites; and (iv) advertising by referring to any of the Sites by name. For purpose of this provision, Sites shall mean: The Pirate Bay, Torrentspy, Aimster, Kazaa, Grokster, Morpheus, Newzbin, BT Junkie, Torrentreactor.net, kat.ph, torrents.net, SurftheChannel.com, Kino.to, Movie2k.to, and/or Dl4all.com. (v) Plaintiffs may request that this Court modify the injunction to include additional websites upon competent proof that such websites should be added to Paragraph 3(j). (k) transferring or redirecting users of the Isohunt System to any other service that, directly or indirectly, provides access to unauthorized copies of Plaintiffs Copyrighted Works; (l) indexing or providing access to Dot-torrent or similar files harvested or collected from the following sites or services: The Pirate Bay, Torrentspy, BT Junkie, Torrentreactor.net, kat.ph or torrents.net; (i) Plaintiffs may request that modify the injunction to include source websites upon competent such websites should be added to 3(l). this Court additional proof that Paragraph

(m) soliciting revenue from third party advertisers or advertising brokers based on (or by referring to or highlighting) the availability of Plaintiffs Copyrighted Works. 4. The terms of Paragraphs 2 and 3 of this Permanent Injunction shall not apply to any Copyrighted

141a Work for which Defendants have obtained express written authorization or license for the use being made of such Copyrighted Work from each Plaintiff that owns or controls the rights to such Copyrighted Work, provided such authorization or license is in force and valid at the time of Defendants use of the Copyrighted Work. 5. Defendants shall not be in violation of this Permanent Injunction as to Copyrighted Works that Plaintiffs, or representatives of Plaintiffs, have not (a) identified to Defendants by title of the work, and (b) represented to Defendants that, based on a reasonable review and good faith belief, a Plaintiff (or a parent, subsidiary or affiliate of a Plaintiff) owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. 101 et seq. in the work (a list of titles). (a) Plaintiffs shall be permitted to supplement and update their list of titles without restriction, including without limitation with works soon-to-be but not yet released to the public. (b) Plaintiffs shall provide Defendants with the list of titles in electronic form. (c) Defendants shall promptly provide Plaintiffs with a valid email address to use for the lists of titles, and Defendants shall immediately notify Plaintiffs in writing of any change in such email address. A list of titles shall be deemed delivered when sent to the most current email provided by Defendants. (d) With regard to the initial list of titles provided by Plaintiffs pursuant to this Permanent Injunction, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 14

142a calendar days from the date Plaintiffs deliver the initial list of titles. (e) For all subsequent lists of titles, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 24 hours from the time Plaintiffs deliver the list of titles. (f) In the event a commercial vendor or other third party becomes able to provide Defendants with a reliable list of Plaintiffs Copyrighted Works, Plaintiffs may apply to the Court for an order modifying this Permanent Injunction to relieve them of the obligation of providing Defendants with lists of titles, even if there is a cost to Defendants of securing the lists of titles from the commercial vendor or third party. 6. Prior to Defendants entering into any agreement or transaction whatsoever to sell, lease, license, assign, convey, give away, distribute, loan, barter, hypothecate, encumber, pledge or otherwise transfer, whether or not for consideration or compensation, any part of the software, source code, data files, other technology, domain names, trademarks, brands, or Dot-torrent or similar files used in connection with the Isohunt System or any Comparable System (a Transfer of Isohunt-Related Assets), Defendants shall require, as a condition of any such transaction, that the transferee: (a) submit to the Courts jurisdiction and venue; (b) agree to be bound by the terms herein; and (c) apply to the Court for an order adding it as a party to this Permanent Injunction. Defendants shall not permit any Transfer of IsohuntRelated Assets to close until the Court has entered

143a such an order. Defendants further shall not engage in a Transfer of Isohunt-Related Assets with or to any person whom Defendants know to be engaged in, or intending to be engaged in, conduct that would violate the terms of Paragraphs 2 or 3 above. 7. This Permanent Injunction shall bind Gary Fung, individually, and Isohunt Web Technologies, Inc., and their officers, agents, servants, employees, attorneys, successors, and assigns, and all those in active concert or participation with any of them, who receive actual notice of this Permanent Injunction by personal service or otherwise. Defendants shall provide a copy of this Permanent Injunction to each of their respective officers, agents, servants, employees, attorneys, principals, shareholders, current and future administrators or moderators for the Isohunt System (or Comparable System) or any online forums associated with the Isohunt System (or Comparable System), and any domain name registries or registrars responsible for any domain names used in connection with the Isohunt System (or Comparable System). 8. Nothing in this Permanent Injunction shall limit the right of Plaintiffs to seek to recover damages under 17 U.S.C. 504, or costs, including attorneys fees, under 17 U.S.C. 505. 9. For purposes of clarity, as the Court has personal jurisdiction over Defendants and has concluded that the conduct of Defendants induces infringement of Plaintiffs Copyrighted Works in the United States under the copyright laws of the United States, this Permanent Injunction enjoins the conduct of Defendants wherever they may be found, including without limitation in Canada.

144a 10. The Court further clarifies that this injunction covers any acts of direct infringement, as defined in 17 U.S.C. 106, that take place in the United States. To the extent that an act of reproducing, copying, distributing, performing, or displaying takes place in the United States, it may violate 17 U.S.C. 106, subject to the generally applicable requirements and defenses of the Copyright Act. As explained in the Courts December 23, 2009 Order, 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. Summary Judgment Order at 19. Each download or upload of Plaintiffs copyrighted material violates Plaintiffs copyrights if even a single United States- based user is involved in the swarm process of distributing, transmitting, or receiving a portion of a computer file containing Plaintiffs copyrighted content. 11. Violation of this Permanent Injunction shall expose the Defendants, and all others properly bound by it, to all applicable penalties, including for contempt of Court. 12. The Court shall maintain jurisdiction over this action for the purposes of enforcing this Permanent Injunction and for amending the injunction in response to future changes in the law or factual circumstances. See Grokster V, 518 F. Supp. 2d at 1239-40 (collecting cases). 13. Gary Fung, individually, shall not be deemed to be in violation of this injunction solely as a result of his being a bona fide employee or independent contractor of a third party entity that may be engaged in acts that violate this injunction or whose services

145a might be used by third parties to engage in infringement, provided that Mr. Fung does not personally direct or participate in conduct that violates this injunction. IT IS SO ORDERED. DATED: August 5, 2013 _________________________ THE HON. STEPHEN V. WILSON UNITED STATES DISTRICT JUDGE