Under Pressure: Mass Copyright Infringement Actions Face New Challenges

Online piracy of copyrighted works isn’t going away soon. There are just too many reasons why downloading digital content by various means remains attractive to people. For one thing, it fulfills a basic need in our time: instant gratification. It’s also incredibly easy to do. Even better is that it’s free.

Of course, the challenge for many copyright holders is to compete with those realities. Most fail.

Those that succeed do so by offering their content through a service—such as Apple’s iTunes store, or Netflix and others like it—that’s easy to use, reasonably priced and minus the risks associated with downloading digital content illegally.

For some other copyright holders, there’s another option. They persist in trying to penalize file sharers and other infringers by working the legal system to wring settlements from alleged downloaders—earning significant sums in the process. It’s a questionable but potentially lucrative business model, in fact.

But the practice of chasing alleged infringers for profit is changing. Recent appellate court decisions have all but signaled an end to the viability of mass copyright infringement actions against individuals using the popular peer-to-peer BitTorrent platform, for example, to download movies, TV shows, software and other digital assets.

An Influential Decision

The days of using a single lawsuit to accuse hundreds or even thousands of “John Doe” defendants of downloading and sharing copyrighted videos (often with salacious titles) were never uniformly halcyon, but they were sufficiently rewarding in enough jurisdictions across the country to encourage a few plaintiffs to press their cases with zeal.

In those cases, the plaintiffs would seek court orders that forced Internet Service Providers (ISPs) to release the personal information for subscribers identified only by Internet Protocol (IP) addresses, which were gleaned by monitoring BitTorrent traffic and connecting it to content downloaded without authorization. Those orders were frequently obtained, perhaps partly because the mechanics of peer-to-peer file sharing were not well understood.

Even so, issues related to jurisdiction and joinder were soon raised, along with questions concerning potential abuse of the legal system.

One case, in which the plaintiff succeeded in obtaining subpoenas for the disclosure of personal information for over a thousand John Does, compelled a district court judge to note that a division in opinion existed for the key legal questions involved and resulted in a decision that was immediately certified for appeal. The case was eventually brought before the U.S. Court of Appeals for the District of Columbia Circuit.

In May 2014, the appellate court vacated the district court’s order, holding that issues of personal jurisdiction and venue could be raised by ISPs in response to subpoenas. In fact, the court made it clear in AF Holdings, LLC v. Does 1-1058 that “a plaintiff must have a good faith basis for contending that personal jurisdiction and venue are proper when filing suit and that the practice of suing numerous ‘John Doe’ defendants without regard to likely geolocation is patently improper,” as one legal commentator noted [an enhanced version of this opinion is available to lexis.com subscribers].

The court also addressed whether joinder of multiple BitTorrent users in a single lawsuit is appropriate. It paraphrased an analogy offered by amicus counsel at oral argument, stating that those users are like individuals who play cards at a casino at different times. “They may have won the same amount of money, employed the same strategy, and perhaps even played with the same dealer, but they have still engaged in entirely separate transactions,” the court said. It ruled that simply committing the same type of violation in the same way “does not link defendants together for the purposes of joinder.”

With that, the court sent a strong and likely influential signal concerning two fundamental issues that hitherto frequently tilted the playing field in favor of plaintiffs in mass copyright infringement suits and against John Doe defendants.

Indeed, as one of the few such cases to reach an appellate court, it has already been cited, including by the Minnesota Court of Appeals in an unpublished August 2014 ruling that upheld the imposition of attorney-fee sanctions for the bad-faith pursuit of litigation against several attorneys who, while representing a plaintiff, sought discovery of the identities of Internet subscribers in a computer hacking suit.

However, not everyone was fully pleased by the D.C. Circuit opinion. In fact, it has been roundly criticized by at least one attorney who frequently represents defendants in BitTorrent suits and also covers copyright matters for Torrent Lawyer, his firm’s legal blog.

A Contrary View

According to Robert Z. Cashman of the Houston-based Cashman Law Firm, PLLC, in certifying its decision for appeal the D.C. district court asked if personal jurisdiction and joinder were relevant in a plaintiff’s discovery request, which the appellate court answered in the affirmative. Yet it did so in a way that was strictly limited to the question put to it without elaborating meaningfully, Cashman argued in an article posted soon after the court’s decision was released.

“The ruling [means] essentially that a court may justifiably force a plaintiff ‘copyright troll’ to establish that it has personal jurisdiction over the John Doe Defendants who are implicated in the lawsuit before it allows that copyright troll to obtain (through discovery) the list of names and addresses belonging to the internet subscribers,” he explained. Moreover, the ruling resolved nothing about the hundreds of smaller lawsuits (e.g., v. Does 1-20) in court dockets across the country, where copyright troll plaintiffs have figured out that “you sue a defendant where a defendant lives.”

That view is supported by several recent cases in which the U.S. District Court for the District of Columbia cited the decision in AF Holdings to grant the plaintiff’s motion for expedited discovery (see here, for example). The plaintiff in those cases argued that it used a sophisticated IP address geolocation technology to ascertain that the single John Doe defendant in each complaint resided within the district, which satisfied the requirement to show good cause for contending that personal jurisdiction and venue were proper when filing suit.

That same plaintiff, Malibu Media, LLC—a California-based company that produces content for its own adult website—has filed thousands of such suits across the country in recent years, according to a May 2014 article in The New Yorker that profiled the litigious firm.

Another active copyright litigant, Dallas Buyers Club, LLC, also relies on geolocation technology to isolate defendants and establish both jurisdiction and venue. So far it has surpassed 3,500 Does in actions for allegedly downloading the company’s Academy Award-winning film. Although typically it names only a few dozen Does in each case, it has often filed multiple cases in district courts to ultimately cover hundreds of alleged infringers at the same time.

More Uncertainty

Cashman also criticized the D.C. ruling for how it addressed the question of joinder. “The ruling was essentially that you can only sue John Doe defendants together in one lawsuit as long as they were part of the same BitTorrent swarm,” he wrote, referring to the number of individuals engaged in uploading and downloading portions of a file. What was missing, he said, was a clearer definition. “The judge mentioned absolutely nothing as to what the scope of a BitTorrent swarm is, and how long one lasts—whether a swarm continues for minutes, days or weeks at a time, and who is properly connected in a BitTorrent swarm to be sued together in a lawsuit.”

To illustrate his concern, Cashman elaborated. The ruling, he wrote, suggested that “if Tom and Dick were downloading at the same time, they can be sued together in a lawsuit; joinder here would be proper. However, if Tom finished downloading and logged off five minutes before Dick logged on, would this be considered the ‘same transaction or occurrence’ to allow the two of them to be sued together? What happens if Tom finishes downloading and logs off, and by the time Dick logged on to the BitTorrent swarm everyone who was part of that swarm (e.g., all 10 or 20 people) also logged off and new people logged on?”

For Cashman, those and other questions went unanswered, “so we are still left with uncertainty.”

Judicial Economy Not Served

Others have raised their own concerns about the scope and duration of a BitTorrent swarm and the appropriateness of joinder in file sharing suits.

In Missouri, for example, a district judge adopted a view taken by some courts that John Doe defendants do not participate in “the same transaction or occurrence, or the same series of transactions or occurrences.” Citing the rationale from another case, the judge noted in Purzel Video GMBH v. Does 1-91: “Any ‘pieces’ of the work copied or uploaded by any individual Doe may have gone to any other Doe or to any of the potentially thousands who participated in a given swarm [enhanced version].”

In the same decision, which directly affected more than a dozen similar cases before the court, the judge also refuted the “judicial economy” justification. “Even if joinder of the Doe Defendants in this action met the requirements of Rule 20(a), the Court finds it is appropriate to exercise its discretion to sever and dismiss all but one Doe Defendant to avoid causing prejudice and unfairness to Defendants, and in the interest of justice. Rule 20(a)’s purpose of promoting judicial economy and trial convenience would not be served by allowing the number of defendants in this case because the ensuing discovery and variety of defenses could prove unwieldy for a single case.”

“I suspect [the judge] made her ruling with the understanding that everything in the justifications for judicial economy is true … if the plaintiffs are running a settlement extortion scheme,” Cashman opined in an article covering the September 2013 decision. “However, if the plaintiffs indeed intend in good faith to move forward with their case ‘on the merits,’ then as the judge points out the ‘judicial economy’ approach falls flat.”

Looking Ahead

Do the unique features found in the BitTorrent file sharing platform—most notably those involving the transfer of portions of complete works among individuals—allow copyright owners to successfully join many users as defendants pursuant to Federal Rules of Civil Procedure?

Can copyright holders overcome potential problems associated with litigating against individuals based on an IP address and personal jurisdiction issues?

Those are increasingly hot topics for many in the legal profession.

Meanwhile, as cases continue to be filed, some copyright holders have tried other methods of pursuing relief from those who illegally download content.

One method that is proving to be increasingly popular is to monitor BitTorrent servers to obtain IP addresses for alleged infringers and then issuing notices of infringement (also known as “DMCA Letters” after the Digital Millennium Copyright Act) to ISPs and others, which are forwarded to account holders.

Those demand letters, which have no court oversight, accuse individuals of infringement and offer to settle claims for as little as $20, although the amount is usually $250 to $300 per downloaded title.

Of course, copyright holders have another option when they discover that works they own are copied illegally: they can issue DMCA takedown notices that oblige the owners of websites or BitTorrent servers to remove the offending material, making it unavailable to illegal downloaders.

Sadly, the response to that suggested course of action is frequently the same as what many attorneys will know follows when parties in a dispute earnestly insist, “It’s not about the money; it’s about the principle.”

It’s always about the money.

Join the conversation about today’s hot topics at This is Real Law.

For more information about LexisNexis products and solutions, please connect with us through our corporate site.