Studios Win Court Victory in Peer-to-Peer Piracy Case

Upholds lower court decision that websites contributed to theft

By John Eggerton -- Broadcasting & Cable, 3/22/2013 7:51:33 AM

A federal court has ruled that websites that facilitated peer-to-peer file sharing of illegal content were secondarily liable for copyright infringement.

The U.S. Court of Appeals for the Ninth Circuit Thursday upheld a Central California District Court's summary judgment that Gary Fung and Isohunt Web Technologies were liable for contributory copyright infringement.

Pointing to the Supreme Court decision in the Grokster case, the Ninth Circuit said the defendant was liable under the inducement theory because the studios established that the defendant had as an object of the sites promoting the use of the BitTorrent file-sharing protocol to infringe copyrighted TV shows and movies.

The court found that the defendant was not entitled to protection from liability under any safe harbor provisions of the Digital Millennium Copyright Act.

"[I]f 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," said the Court. That intent included not taking any steps to filter infringing content and promoting the site for the purposes of infringing.

The district court had held that Fung was not covered by safe harbors because the files resided on his servers. The appeals court said that was wrong, but found other reasons to deny the harbors.

The Ninth Circuit said that while the "torrents" of files reside on Fung websites, if they were uploaded by users of the site rather than the site itself, Fung would, at least facially, be eligible for safe harbor assuming other criteria.

But he was not eligible because he had "red flag" knowledge that the content was infringing. "[T]he record is replete with instances of Fung actively encouraging infringement, by urging his 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," said the court It also concluded that Fung had ample ability to control the infringement, but did not exercise it.

The film and TV studios who sought the summary judgment included Columbia Pictures, Disney, Paramount, Tristar, Twentieth Century Fox, Universal and Warner Bros.

"Today's ruling represents an important step toward realizing the enormous potential of the Internet as a platform for legitimate commerce and job creation -- including millions of workers in the creative industries," said Henry Hoberman, VP and global general counsel for the Motion Picture Association of America, in a statement. "This ruling affirms a core principle of copyright law: Those who build businesses around encouraging, enabling, and helping others to commit copyright infringement are themselves infringers, and will be held accountable for their illegal actions.  It also strikes an important blow in the fight to preserve the jobs of millions of workers in the creative industries, whose hard work and investments are exploited by rogue websites for their own profit."