By Dennis Crouch
Columbia Pictures v. Gary Fung (9th Circuit 2013)
Fung's servers (such as torrentbox.com) help users find illicit copies of videos to download and stream. Columbia, Disney, and others sued Fung for inducing copyright infringement while Fung claimed immunity from suit under the safe-harbor provisions of the DMCA. 17 U.S.C. § 512. The district court sided with the copyright holders and the 9th Circuit has now affirmed.
Unlike prior cases such as Grokster & Napster, Fung does not actually distribute any software to support the downloading of copyrighted work. No matter, he can still be liable for inducement.
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 else's shop would not matter, as copyright liability depends on one's purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement.
Here, the actual acts of infringement are the uploading (distribution) and downloading (reproduction) of the copyrighted works without license. About 90% of the links on Fung's site are directed to this type of material and Fung does not dispute that the site is used by those who wish to infringe a copyright. A key element of inducement under Grokster is that the acts have to have been intended to cause infringement. Here, Fung showed his intent in several ways, including posts to the ISOhunt forum encouraging folks to upload content. The appellate court also identified two ancillary acts as indicative of intent to cause infringement. First, Fung took no steps to keep folks from posting copyrighted material and did not create any filtering technology. Second, Fung made his money through advertisements. [?]
Regarding DMCA Safeharbors: The DMCA offers a safe-harbor for entities who facilitate copyright infringement with its notice-and-takedown provisions of 17 U.S.C. 512(c). The safe-harbor does not excuse intentional acts of infringemente and so you might think that a finding of inducement necessarily negates application of the safe-harbor. In an interesting twist, the Ninth Circuit held that it is possible for the safe-harbor to apply even when inducement has been proven because the knowledge requirement under the safe-harbor is stricter and requires different particularized proof than that of inducement. Here, however, the court found sufficient evidence that Fung had red-flag knowledge of particular instances of infringement.