tertiary liability – Techdirt (original) (raw)

News Site About Popcorn Time App Goes To Court To Get Back Seized Domain

Over and over again, we’re told that copyright is not about censorship, and yet time and time again we see how it is used to censor speech quite frequently. Back in March, we wrote about the somewhat horrifying bit of news that a news website that posted stories about the app Popcorn Time had been seized by Norwegian police. The “crime” according to the police was that the site — which never hosted the app at all — did link to some other sites where you could download Popcorn Time. This is so far removed from the actual infringement as to be crazy. Yes, some users of Popcorn Time use the software to infringe on copyright-covered works. No one doubts that. But the software itself — like a VCR — can also be used for legitimate purposes as well. If a user infringes, go after the user. But the software itself shouldn’t be targeted (even though it is). But, then you go another step removed to sites that host the app. And then a further step removed to a news site that links to sites that link to the software that a user might use to infringe.

And the police deemed that worthy of seizing? Even though the site also had a ton of news articles that would normally be considered protected expression?

I want to repeat this just to show how crazy it is. The police in Norway didn’t go after actual infringers, they went after a news site that links to sites that host an app that might be used to infringe. Oh, and they did it using an asset seizure procedure that has basically no due process prior to an entire news website disappearing. That’s messed up.

Apparently, Electronic Frontier Norway (EFN — which is unrelated but similar to the EFF here in the States) — and the Norwegian Unix User Group (NUUG) went to court over this, but had that rejected (perhaps reasonably) for lack of standing. However, TorrentFreak is reporting that the case is being appealed… but this time with the legal owner of the site:

With the new party the groups hope to have sufficient standing to have the case heard. In their appeal there?s a strong focus on the free speech element, and they hope the court will clarify when domain seizures are appropriate.

?We feel that this is an important case that addresses the limits of free speech,? EFN?s managing director Tom Fredrik Blenning tells TorrentFreak.

NUUG leader Hans-Petter Fjeld adds that the authorities shouldn?t be allowed to seize the domain name of a news site, which writes about open source software that by itself is not infringing.

?Part of what makes us upset is that the domain name of a news site about a piece of free software that has both legal and illegal uses, has been seized without judicial scrutiny,? Fjeld says.

This use of asset seizure to take down news sites that might be distantly related to infringement is extremely troubling. It’s happened in the US, including just recently returning some domains it had seized five years prior, without ever having any evidence of actual infringement associated with those news sites.

The idea that this form of blatant censorship is being used globally should be yet another warning of how copyright law is regularly abused for censorship.

Filed Under: censorship, domains, news, popcorn time, secondary liability, seizures, tertiary liability

Sending Liability Up The Stack: Domain Registrars Potentially Liable For Infringement By End Users

from the tertiary-liability dept

For quite some time now, we’ve been concerned about the continued expansion of “secondary liability” concepts, adding more and more liability for copyright infringement to parties who are often far removed from any actual infringement. There are two major concerns with this. First, putting liability on one party for the actions of another just seems generally problematic. But, perhaps more importantly, when you put potential liability on an unrelated party, the end result is almost always excessive policing in a manner that hinders or entirely blocks perfectly legitimate activity and speech.

That’s why a recent court ruling in Germany is so problematic. It’s the followup to an earlier ruling that found a domain registrar, Key-Systems, liable for actions done by the users of a torrent tracking site H33T. H33T just hosted the torrent (which, we should remind you, is not the actual infringing file), and some users used that tracker to torrent the album Blurred Lines. When H33T failed to respond to a takedown notice, Universal Music went after the registrar, and the court said it was Key-System’s responsibility to stop the infringement. Of course, the only way for the registrar to do that is to yank the entire domain.

The case was appealed, but the appeals court upheld the lower court ruling. Even though the registrar pointed out (accurately) that it had no way of knowing if the torrent was actually infringing, the court said that the registrar was responsible for assuming it must be infringing once it had contacted the domain owners and not received a response. That’s an interesting shifting of the burden of proof. The court also seems unconcerned that the only way the registrar can remedy the situation is to take everything down, saying that if the website didn’t want this to happen it should have responded promptly to the takedown notices it had received.

Much of this seems to focus on assuming guilt unless one can prove innocence, and further believing that it’s somehow “obvious” to recognize when someone is infringing on copyrights. As the Universal Music lawyer tells TorrentFreak in the link above, the company is quite excited about this new power, and will “have this in mind when looking at other domains.”

Filed Under: copyright, germany, liability, registrars, secondary liability, tertiary liability
Companies: h33t, key-systems

Judge Adjusts MP3Tunes Ruling, Blasts Everyone

from the some-good,-some-bad dept

We’ve been following Capitol Records’ (EMI) lawsuit against MP3Tunes and Michael Robertson for a long time now, in part because the lawsuit has been going on forever, with lots of back and forth (and it’s still at the district court level!). Back in March, the jury hit Robertson with a bill for over $40 million for his personal involvement with MP3Tunes. As we noted, there were plenty of issues with the ruling, especially with the idea that MP3Tunes was “willfully blind” in creating its music locker. Robertson challenged many of the jury’s findings, and we noted that the most important one was the willful blindness.

The judge, William Pauley, has now ruled and it’s a mixed bag of just about everything, including the judge berating both parties for their approach to this lawsuit. On the whole, Robertson still loses big time, but not quite as big as before. And, on the issue we found most important — willful blindness — the judge has overruled the jury, noting that under the standard in the Viacom v. YouTube case, MP3Tunes was not willfully blind (except for one track where they had been alerted to an infringing copy). That’s big and very important, given the potential chilling effects the willful blindness ruling would have had on other startups in the digital locker space.

Red flag knowledge requires awareness of facts that would have made specific instances of infringement objectively obvious to a reasonable person…. General knowledge is insufficient. For example, knowledge that a high percentage of content on a domain is infringing does not establish actual or red flag knowledge of particular instances of infringement…. In this case, MP3tunes lacked even general knowledge. Even if MP3tunes tracked domains posting infringing files, a fact not in evidence…, MP3tunes would still need to investigate how much content the domain hosted before it could calculate what percentage was infringing.

To ascribe red flag knowledge to MP3tunes because it was possible for MP3tunes to research and identify other instances of infringing content hosted by these domains and sideloaded by users would “mandate an amorphous obligation to ‘take commercially reasonable steps’ in response to generalized awareness of infringement.” … But the DMCA imposes a duty on providers to track repeat infringement by users, not third parties….

The same reasoning disposes of the willful blindness argument. Imputing knowledge to MP3tunes would impose an obligation to affirmatively monitor content, which would contravene section 512(m)’s clear instruction that no such obligation exists…. Therefore, Robertson’s motion for judgment as a matter of law is granted as to his liability for secondary infringement of tracks sideloaded by users from these domains.

This is the good news from the ruling. Robertson also more or less won on the issue of whether or not the cover art images that showed up in MP3Tunes were infringing. That was one of the many ridiculous side notes in the whole thing.

One other thing that turned out somewhat well was on the question of whether some of the penalties given to Robertson by the jury were unconstitutionally excessive. This is a claim that has previously been tried (unsuccessfully) in the famed Jamie Thomas Rasset and Joel Tenenbaum trials. But here, it actually worked somewhat. The court goes through the different factors to determine if a monetary award is excessive, given the actual harm, and concludes:

Viewed holistically, the punitive damages award violates due process.

Still, the judge argues there’s plenty of reasons to punish Robertson, just not to the punitive damages tune of 7.5millionasthejuryoriginallydecided.Thecourtreducesthatto7.5 million as the jury originally decided. The court reduces that to 7.5millionasthejuryoriginallydecided.Thecourtreducesthatto750,000, but offers EMI the chance to hold yet another trial just over this issue (which would only add yet another chapter in this incredibly long saga). And of course, none of this even touches on the possibility of appeals (from both sides), which may still happen…

However, there’s plenty of worrisome aspects to this new ruling as well. After the willful blindness issue, our biggest concern was the tertiary liability claims that EMI was making against Robertson. That is, we’ve now seen that secondary liability is a possible for copyright infringement (i.e., you can be guilty for someone else’s infringement), even though that makes little sense. However, in this case, EMI advanced an even more tenuous argument: that Robertson was tertiarily liable for MP3Tunes’ secondary liability of its users direct infringement. Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus “tertiary liability” is a perfectly reasonable thing. That’s going to have some serious chilling effects — just wait and see.

The court also makes one interesting note concerning the Aereo ruling. EMI sought to use the Aereo ruling as evidence that MP3Tunes was guilty of “public performance” of the works as well, but the judge (thankfully) shut that down, noting that the Supreme Court in Aereo was clear that the ruling only applied narrowly to that specific case:

Plaintiffs also argue that the Supreme court’s opinion in Aereo establishes that the third-party websites performed the work publicly. But the Supreme Court expressly excluded “novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course.'” … Because the third-party domains here are not “substantially similar” to a community antenna television provider, they are beyond Aereo’s reach.

Phew. Aereo bullet dodged there, for now.

Then we get around to the berating. The judge gets on the EMI execs’ cases for how they treated the case, and their ongoing refusal to reveal the dates of the releases of various songs, despite being asked repeatedly. But the real slamming comes for Robertson, who apparently put on quite a show on the witness stand. While that may work in Hollywood movies, or made-for-CNN trials, it doesn’t often work in real life, and it appears not to have worked here. The judge’s own description of Robertson’s appearance indicates that no one bought the performance at all:

This Court observed Robertson’s demeanor on the witness stand. No transcript can capture his whole affect; you really had to be there.

The judge then reposts Robertson’s somewhat lengthy and bizarre discussion of childhood abuse, which seemed to serve no purpose other than to (try to) tug at the heartstrings of the jury. The court (and the jury) were not impressed:

This seemingly rehearsed, five-minute fable-like narrative left the jury nonplussed and Plaintiffs’ counsel shell-shocked. It was a dramatic presentation. Even if true, Robertson’s decision to spin this yarn backfired on him. The jury saw it for what it was–a transparent attempt to tug at their heartstrings. Plainfiffs’ counsel failed to appreciate what the jury grasped and reflexively moved for a mistrial claiming unfair prejudice. But Robertson’s manipulative conduct only prejudiced him and that prejudice was not unfair. In denying Plaintiffs’ motion, this Court observed “[j]urors see through performances, and the Oscars are over for this year.” The jury’s verdict demonstrated that this Court’s observation was spot on.

Ouch.

Filed Under: copyright, michael robertson, red flag knowledge, secondary liability, tertiary liability, willful blindness
Companies: capitol records, emi, mp3tunes

from the red-flags-indeed dept

Earlier this year, we wrote about the troubling ruling against MP3Tunes.com, in which it was found to be “willfully blind” to infringement on its music locker service — raising serious questions for basically any cloud service provider. EMI, the record label suing, used an incredibly low standard for what it considered to be willful blindness, but the jury bought it. On top of that, it found MP3Tunes founder Michael Robertson not just personally liable for certain infringement, but said he’d have to pay somewhere around $41 million for it.

In response, Robertson is fighting back, asking the judge to basically overrule the jury on a number of different matters. There’s a lot in the filing that’s worth reading, but it highlights just how crazy some of the details are in this case. The biggest issue is the whole “willful blindness” issue or “red flag knowledge.” As other courts have noted, this has to be in reference to specific instances of infringement — but that wasn’t shown for many of the files in this case. Rather, the jury was only told of general infringement. This was the issue at the center of the big YouTube/Viacom case, in which YouTube won the argument that Viacom had to show red flag knowledge of specific infringement, rather than just arguing general knowledge of infringement. Yet, in this case, the issue seems to have been flipped.

There’s also the troubling aspect of how the jury found Robertson guilty of not just direct infringement (of 22 files), but also “vicarious and contributory liability” on a list of over 2000 additional works. But, as Robertson notes, for that to be the case, EMI would have to have shown Robertson receiving a direct financial benefit from that infringing activity, and, in fact, Robertson received nothing from the infringement, or the company — instead, he lost millions.

The trial record is devoid of evidence that Robertson received any such direct financial benefit. In fact, not only did Robertson not receive any direct financial benefit from MP3tunes’ and its users’ infringing activity, he personally invested and lost over $6.8 million. Moreover, uncontroverted trial testimony shows that Robertson has (a) never taken a salary or a bonus from MP3tunes… and (b) never received any dividends or any distribution, even directly or indirectly through any of the trusts, from MP3tunes…

Tellingly, Plaintiffs do not dispute these facts. Instead, they argued that Robertson could have made money, if his plan had been a success…. But the Liability Charge rejected such hypothetical conjecture; rather, it requires that “Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.” …. Indeed, the very conjecture Plaintiffs assert is itself an implicit admission that Robertson did not receive a financial benefit. … (“Had he succeeded and signed up millions of users, he could have taken the company public, gotten investors or sold the company”) (emphasis added)). Such speculative conjecture is too remote to support vicarious copyright liability

Furthermore, it notes how the jury appears to have confused benefit for the company with benefit for Robertson directly. Furthermore, he argues that some of the arguments seem entirely based on a made up concept of tertiary liability. Basically, the jury argued that MP3Tunes has secondary liability for the actions of its users (already a questionable statement, given its compliance with the DMCA’s safe harbors), and beyond that Robertson thus has tertiary liability for MP3Tunes’ secondary liability. Anyone who believes in the nature of a limited liability corporation, and separating the liability of the company from its staff, might want to pay attention to that issue.

Under the charge, Robertson may be liable for MP3tunes’ secondary liability without any proof of his knowledge of, benefit from, or contribution in, the users’ direct infringement; and without any direct infringement by MP3tunes. That simply is not the law, and is contrary to the fundamental limits of secondary liability.

On the willful blindness/red flag issue, Robertson notes the made up and artificial standard that EMI uses, that if they had recieved DMCA notices with 10 or more links to a particular website, they had red flag knowledge that all links from that website must be infringing.

Plaintiffs simply counted the number of occurrences of domains in their takedown notices, and when the count reached 10, assigned to MP3tunes willful blindness or red flag knowledge that all sideloads from such domain were infringing. That is insufficient. MP3tunes could not discern any specific instances of infringement merely from the fact that any particular domain was present more than 10 times on takedown notices. In fact, counting the number of occurrences on takedown notices does not even rise to a showing of “a high probability of general infringement” or “a generalized awareness of infringement,” which are not enough to establish willful blindness or red flag knowledge.

In addition, the number “10” was plucked from thin air. Why not three? Why not 15 or 20? Where was the evidence showing the significance of 10 occurrences? Moreover, the lack of notice of specifically infringed works means MP3tunes had to conduct an investigation to determine which works were infringed: (i) which domains met the threshold of 10; (ii) which works were owned by Plaintiffs; and (iii) which works were sideloaded without authorization.

He further presents proof that EMI itself miscounted. Five out of thirteen domains they listed had errors. On top of that, he points out that EMI itself authorized free MP3s on many of those domains. In other words, there were authorized works on those same sites, which EMI insists Robertson must have known were infringing.

There are other issues raised in the filing as well, which you can read below, including questions about liability on cover art images. The specific legal issues in the case concerning secondary liability and red flag knowledge are quite important, because it will absolutely be cited as precedent in other cases as well. Unfortunately, as we’ve noted for a while there’s sometimes a difference between “real law” and “file sharing law” in which courts decide if something feels like infringement and then twists itself to make it so. This case has all the indications of a court feeling like Robertson did something wrong, even if it doesn’t seem to actually fit under the law. Thus, the effort here may be quite a long shot. Unfortunately, the ramifications of that will be felt by tons of other services, especially those in the cloud computing space.

Filed Under: contributory infringement, copyright, dmca, michael robertson, red flag knowledge, safe harbors, secondary liability, tertiary liability
Companies: emi, mp3tunes

Publishers Can't Just Blame Ad Network For Having Ads On A Site That Links To Infringing Content

from the properly-applying-liability dept

As we’ve seen in some cases, there is a belief among some that many of the worst provisions in SOPA already exist under US copyright law. The latest story involves publishers Elsevier and John Wiley going after ad networks Chitika and Clicksor, because their ads showed up on a site that linked to (but did not host) some content that allegedly infringed. We mentioned this case earlier in the year, but the latest ruling is at least a slight limit on this attempt at what appears to be fourth party liability, rather than third party liability. Note the distance. Someone puts up a website with some infringing content. Someone else links to that content. Someone else provides advertising on that site that links… and the copyright holder claims the advertiser is liable? Huh?

The ruling does go against the publishers here, but only because they failed to first send a notice alerting Chitika, so the court said that Chitika didn’t know that the content was infringing:

Plaintiffs do not allege facts showing that Chitika was familiar with the content of the Pharmatext website, or knew (or had reason to know) that such content was infringing. Thus, plaintiffs fail to support with plausible facts their conclusory allegations that Chitika ?must have had knowledge? of the alleged infringement of plaintiffs? books…and that Chitika ?plac[ed] ads on the Pharmatext site because [it] believe[d] that Pharmatext users ? in other words, people seeking to obtain pirated copies of copyrighted books ? are a target audience for particular advertisers.?

Of course, as Eric Goldman notes in his analysis (linked above), this suggests that if Elsevier had sent notice, then it might have a claim… and suddenly we’re back in SOPA territory, since that has a notice provision for advertisers.

There is also some discussion in the case of whether or not US jurisdiction is proper, seeing as the site was directed at users in India. Elsevier claimed that because its investigators downloaded the content in the US, that means it’s proper to apply US laws, but the court isn’t entirely sure of that:

While it appears that Chitika may eventually be entitled to judgment on this ground (that is, plaintiffs? failure to allege any act of direct infringement occurring entirely within the United States), factual issues involving the structure of the Internet and the locus of the infringing activity remain (Where did the copying take place? Where are the third-party websites and servers, from which unauthorized copies of plaintiffs? books were downloaded?). These issues preclude the granting of the motion on this ground.

Of course, even pre-SOPA, the Justice Department and ICE like to claim that any .com or .org is automatically subject to US jurisdiction. Either way, it’s a reminder that even without SOPA or PIPA in place, the courts may be creating very similar caselaw anyway. That’s pretty scary.

Especially when it comes to such fourth party, or tertiary liability, since it seems positively crazy to think that someone so disconnected from any law breaking might be legally liable for it. Again, as Goldman notes:

Notice that this court totally sidestepped (or missed?) the tertiary liability aspect of this case–that Chitika was a support provider to a site that only provided links to allegedly infringing files. To me, it would be entirely appropriate for the court to say that any tertiary player categorically lacks the ability to materially contribute to infringing activity. Otherwise, once we start doing a dragnet for service providers to service providers to infringers, the universe of potential defendants grows to a ridiculous size.

If anything this is why we should be creating further safe harbors for parties, not decimating them with things like SOPA and PIPA.

Filed Under: ad networks, fourth party liability, secondary liability, sopa, tertiary liability, third party liability
Companies: chitika, clicksor, elsevier, john wiley